NSW Government finalises Strategic Regional Land Use Plans

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1 September 2012 By James Plumb, Partner and Laura Letts, Associate and Danny Maxwell, Graduate Lawyer NSW Government finalises Strategic Regional Land Use Plans The New South Wales Strategic Regional Land Use Plans (SRLUPs) for the Upper Hunter and New England North West were released on Tuesday 11 September. Maps of the Upper Hunter and New England North West are available from the Department of Planning and Infrastructure s website. In addition to the release of the SRLUPs, the New South Wales Government also released the Aquifer Interference Policy and two CSG codes of practice - Well Integrity and Fracture Stimulation Activities. SRLUPs for the Southern Highlands and Central West regions are currently being drafted. SRLUPs for the Murrumbidgee, Alpine and Western regions will then follow. The release of the SRLUPs follows months of extensive consultation on earlier, draft SRLUPs, in which more than 2,000 submissions were received by the Government. Key concepts Changes to the draft SRLUPs were made following public consultation. In particular, the exceptional circumstances provision that would have allowed projects to bypass the Gateway assessment process has been scrapped. View a table of the key changes attached. Areas with particularly high agricultural values identified and mapped. Maps identify biophysical agricultural land and critical industry clusters (equine and viticulture). Introduction of the Gateway Process an independent and scientific assessment of how a State significant mining or CSG proposals on strategic agricultural land will impact the agricultural values of that land. The Gateway Process will apply to all coal and petroleum production and most exploration activities. All State significant development and infrastructure proposals which would potentially impact agricultural resources or industries must prepare an Agricultural Impact Statement. New Land and Water Commissioner to provide advice during the assessment of exploration activity on strategic agricultural land (this was not included in the draft SRLUPs). The Gateway Process will be given statutory force through amendments to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (Mining SEPP). Strategic agricultural land - mapping The mapping provided on the Department of Planning and Infrastructure s website is on a regional scale and provides a regional-level indication of areas that potentially have strategically significant agricultural value. The strategic agricultural land mapping will be used to trigger the new Gateway Process. Two categories of strategic agricultural land have been identified based on characteristics such as soil and water resources, as well as socio-economic value such as high productivity, infrastructure availability and access to markets. Biophysical strategic agricultural land is land that, because of its natural resources, is highly suitable for agricultural. A process to verify biophysical strategic agricultural land will be established. The verification process will likely include: if a site is mapped as biophysical strategic agricultural land, an applicant for a State significant mining or CSG proposal can accept that the land is strategic agricultural land, or may choose to have the land verified; if a site is not mapped as biophysical strategic agricultural land, an applicant must verify whether the land meets the criteria for biophysical strategic agricultural land; if it does, the Gateway Process will apply; and the ability for landholders to apply for a site verification certificate to verify whether their property contains biophysical strategic agricultural land. The critical industry clusters are localised concentrations of interrelated productive industries based on either horse breeding or viticulture that provide significant employment opportunities and contribute to the identity of the region. Field works and consultation with landowners and industry groups will be undertaken to ensure that areas mapped as critical industry clusters meet the criteria. Carter Newell com

2 Gateway Process Under the Gateway Process, a development application for State significant mining and CSG development that requires a new or extended mining lease cannot be lodged and considered unless the proposed development has been issued a Gateway certificate, or the land has been verified as not containing strategic agricultural land. Relevantly, the expansion of any existing mine or CSG project within the existing lease area will not be subject to the Gateway Process. State significant mining and CSG development The Gateway Process will apply to State significant development for mining and CSG. State significant development includes: development for the purpose of coal mining; development for the purpose of mining that is in an environmentally sensitive area of State significance; development for the purpose of mining that has a capital investment value of more than $30 million; extracting a bulk sample as part of resource appraisal of more than 20,000 tonnes of coal; development for the purpose of petroleum production; development for the purpose of drilling or operating petroleum exploration wells (not including stratigraphic boreholes, monitoring wells, or a set of 5 or fewer wells that is more than 3 kilometres from any other petroleum well); and development for the purpose of drilling or operating petroleum exploration wells (not including stratigraphic boreholes or monitoring wells) that is carried out in an environmentally sensitive area of State significance. Obtaining a Gateway Certificate The Gateway assessment will be undertaken by the Mining and CSG Gateway Panel; an independent panel of experts in fields such as agricultural science, water and mining. While some potential criteria are set out in the SRLUPs, the criteria to be considered by the Panel are still to be developed and will form part of the amendments to the Mining SEPP. Once the Panel has considered the Gateway application, it must issue either: an unconditional certificate if the Panel considers that the proposal meets the Gateway criteria; or a certificate subject to conditions if the Panel considers that the proposal has not demonstrated that it meets some or all of the Gateway criteria. The conditions of the Gateway certificate will comprise requirements that must be addressed by the applicant in its development application and considered by the Planning Assessment Commission in determining the development application. The Panel may not refuse to issue a Gateway certificate. Once a Gateway certificate has been issued, a development application can be lodged and a full merit assessment, including public consultation, will occur. The development will also be assessed against the Aquifer Interference Policy. Agricultural Impact Statement All State significant development and infrastructure proposals which would potentially impact on agricultural resources or industries will be required to prepare an Agricultural Impact Statement to demonstrate that the impacts on agricultural land and resources are avoided or minimised to acceptable levels. The requirement to undertake an Agricultural Impact Statement was included in the final SRLUPs in place of the proposal in the draft SRLUPs that would have seen State significant mining and CSG projects on land within two kilometres of mapped strategic agricultural land be required to pass through the Gateway Process. The requirement to prepare an Agricultural Impact Statement will apply to mining and CSG proposals that would potentially impact on agricultural resources or industries, regardless of whether the proposal is within a mapped strategic agricultural land and regardless of whether the proposal has passed the Gateway. An Agricultural Impact Statement will also be required for exploration activities that require Part 5 approval under the Environmental Planning and Assessment Act. Carter Newell com

3 Land and Water Commissioner Authors The SRLUPs provide for the creation of a Land and Water Commissioner position that was not included in the draft SRLUPs. The Land and Water Commissioner will provide advice during the assessment of exploration activity on mapped strategic agricultural land. The SRLUPs anticipate that the Commissioner s role will include assisting with the management of land access agreements between farmers and miners as well as providing advice on exploration activities proposed on strategic agricultural land. The Land and Water Commissioner will also collate and publish remuneration information on land access agreements to assist parties in negotiating future agreements. James Plumb Partner T (07) E jplumb@carternewell.com Laura Letts Associate T (07) E lletts@carternewell.com Danny Maxwell Graduate Lawyer T (07) E dmaxwell@carternewell.com What next? The final SRLUPs depart from the draft SRLUPs in a number of ways and present a more complex regime for mining and CSG proponents. The Gateway Process will likely increase the time required to obtain development approval for projects located in areas of strategic agricultural land. The full impact of the SRLUPs, Aquifer Interference Policy and CSG codes of practice will not be known until the policy package is given statutory effect through amendments to the Mining SEPP. The amendments, which are currently being drafted, will provide for matters such as which projects the Gateway Process will apply to, the rule and functions of the Gateway Panel and the matters to be considered through the Gateway Process. The proposed amendments will be released for public comment. Only those projects for which Director-General requirements have already been issued will be exempt from the requirement to obtain a Gateway certificate. However, such projects will not be exempt from the requirement for an Agricultural Impact Statement and assessment against the Aquifer Interference Statement. Carter Newell Elevation Carter Newell is pleased to announce the elevation of Laura Letts to Associate in the firm's Resources team. Having joined the firm in January 2011, Laura's appointment to Associate reflects Carter Newell's ongoing strategy which focuses on development from within. Working closely with Resources partners Bronwyn Clarkson and James Plumb, Laura focuses on the sale and acquisition of mining and petroleum projects and state-based petroleum and mining regulatory regimes, national electricity legislation, sale and agency agreements for renewal energy certificates and gas electricity certificates, operating and joint venture agreements, reporting requirements and health and safety issues. Laura is presently undertaking her Master of Laws at the University of Queensland, specialising in energy and resources law. On the back of Carter Newell's recent appointment of two new partners and eight elevations, Laura's elevation demonstrates the continued depth of specialist knowledge Carter Newell offers clients. Carter Newell com

4 The Resources and Energy Law Association 2012 Annual Conference Brisbane 31 October 3 November 2012 Carter Newell is proud to be a major sponsor. Others Members of CN Resources Bronwyn Clarkson Partner T (07) E bclarkson@carternewell.com Carson Salzmann Solicitor T (07) E csalzmann@carternewell.com Johanna Fraser Senior Associate T (07) E jfraser@carternewell.com Jasmine Wood Solicitor T (07) E jwood@carternewell.com Kelly Pain Senior Associate T (07) E kpain@carternewell.com

5 Comparison between the Draft Strategic Regional Land Use Plan (Upper Hunter) and the Final Strategic Land Use Plan (Upper Hunter) Note: Chapters 3 11, of both the Final Policy Response and Draft Policy Response represent a different area of discussion and outline the policy actions intended to be implemented for that area. This table outlines the differences/changes contained in the Final Policy Response when compared to the initial Draft Policy Response. Chapter 3 - Balancing Agriculture and Resources Development 1. Biophysical Strategic Agricultural Land was to be identified using the following criteria: land that falls under soil fertility classes high or moderately high under the Draft Inherent General Fertility of NSW (OEH), and land capability classes II or III under the Land and Soil Capability Mapping of NSW (OEH), and reliable water of suitable quality, characterised by land having rainfall of greater than 350mm per annum (9 out of 10 years) or land within 150m of the following surface or groundwater resource: - o a regulated river, or o unregulated rivers where there are flows for at least 95% of the time (ie the 95th percentile flow of each month of the year is greater than zero) or 5 th order and higher rivers, or o groundwater aquifers (excluding miscellaneous alluvial aquifers, also known as small storage aquifers) which have a yield rate greater than 5L/s and total dissolved solids of less than 1,500mg/L. Minimum 20 hectares in areas (based on minimum area required for commercial food production). Biophysical Strategic Agricultural Land in the Final Policy Response can be identified using two distinct groups of criteria instead of only one in the Draft Policy Response. The first group of criteria replicates the draft identifiable criteria listed in the left column but removes the following requirement: Minimum 20 hectares in areas (based on minimum area required for commercial food production). The second new group of criterion that can be as an alternative means of identifying Biophysical Strategic Agricultural Land is as follows: land that falls under soil fertility classes moderate under the Draft Inherent General Fertility of NSW (OEH), and land capability classes I or II under the Land and Soil Capability Mapping of NSW (OEH), and reliable water of suitable quality, characterised by having rainfall of 350mm or more per annum (9 out of 10 years); or properties within 150m of a regulated river, or unregulated rivers where there are flows for at least 95% of the time (ie the 95 th percentile flow of each month of the year is greater than zero) or 5th order and higher rivers; or groundwater aquifers (excluding miscellaneous alluvial aquifers, also known as small storage aquifers) which

6 (Page 17) have a yield rate greater than 5L/s and total dissolved solids of less than 1,500mg/L. (Page 21) 2. In relation to the application of strategic agricultural land mapping it states: All State significant development and infrastructure proposals (including mining and coal seam gas proposals that have passed the gateway) located on strategic agricultural land will also be required to prepare an Agricultural Impact Statement (AIS) to demonstrate that impacts on agricultural land and resources are avoided or minimised to acceptable levels. (Page 19) In relation to the application of strategic agricultural land mapping there has been a change (in bold) to the paragraph in the previous column as follows: All State significant development and infrastructure proposals (including mining and coal seam gas proposals that have passed the Gateway) which would potentially impact on agricultural resources or industries are required to prepare an Agricultural Impact Statement (AIS) to demonstrate that impacts on agricultural land and resources are avoided or minimised to acceptable levels. The Final Policy Response also includes the following paragraph under the heading of Agricultural Impact Statements which was not included in the Draft Policy Response: The new Land and Water Commission will provide advice during the assessment of exploration activity on mapped strategic agricultural land. (Page 23) 3. Contained within the Action Table under item 3.4 is the following government action: Require an agricultural impact statement for the following: a. until the relevant Strategic Regional Land Use Plan is finalised all new State Significant Development applications f or mining and coal seam gas proposals (as well as applications for associated State Significant Infrastructure such as pipelines) which have the potential to impact on agricultural resources or industries; b. following the finalisation of the relevant Strategic Regional Land Use Plan - all State Significant Development and Infrastructure applications (including mining and coal seam gas proposals that have passed the gateway) located on strategic agricultural land. Contained within the Action Table under 3.2 is the following government action to be implemented which stipulates who must undertake an AIS: Require an agricultural impact statement for: All State significant mining and coal seam gas development applications that may impact agricultural resources whether or not they are located on mapped strategic agricultural land. Exploration activity requiring approval under Part 5 of the Environmental Planning and Assessment Act 1979 (Page 24)

7 (Page 20) 4. Not Applicable. The following government policy action under item 3.4 has also been included which was not included in the Draft Policy Response: Undertake a regional-scale review and verification of the equine and viticulture critical industry cluster maps to produce revised, ground-truthed maps which accurately reflect the location of the critical industry clusters (Page 24) 5. The date for implementation of the Gateway process was originally June (Page 20) The date for implementation of the Gateway process is now November (Page 24) Chapter 4 Infrastructure No significant changes between the Draft Policy Response and the Final Policy Response.

8 Chapter 5 - Economic Development and Employment 1. Not Applicable. The implementation of the government action item under item 5.3 working with mining and coal seam gas companies to develop a regional apprenticeship program to be funded by these industries has been changed from 2012 to (Page 48) 2. No other significant changes between the Draft Policy Response and the Final Policy Response. Chapter 6 Housing and Settlement 1. Not Applicable. The following government action item under item 6.6 was not included in the Draft Policy Response: Prepare guidelines for temporary workers accommodation for mining projects (Department of Planning & Infrastructure Timeframe 2013) (Page 54)

9 Chapter 7 Community Health and Amenity 1. Not Applicable. Added to the Final Policy Response, in the section relating to Water Pollution, are the following two paragraphs: In addition, the NSW Government has introduced a ban on the use of BTEX compounds in drilling and hydraulic fracturing and a ban on the use of evaporation ponds to protect groundwater and surface water resources. The Government has also introduced a new regulation requiring water licences where explorers take more than 3 megalitres of water per year from an exploration licence area. The Aquifer Interference Policy has been introduced Statewide to protect the state s crucial water resources, including impacts associated with mining and CSG activities. The policy outlines how the volumes of water taken as part of an aquifer interference activity will be licensed and accounted for. It also sets out the minimal impact considerations against which the NSW Office of Water will assess proposals to ensure that impacts on groundwater systems are minimised. (Page 59) 2. Not Applicable. The following government action item under 7.4 was not present in the Draft Policy Response: Require open cut coal mines to develop strategies to manage and minimise blast fumes (Department of Planning & Infrastructure Timeframe December 2012) (Page 62) 3. The implementation of some policy actions have been pushed back.

10 Chapter 8 Natural Environment 1. The implementation of some policy actions have been pushed back. (Page 66) 2. No other significant changes between the Draft Policy Response and the Final Policy Response. Chapter 9 - Natural Hazards and Climate Change No significant changes between the Draft Policy Response and the Final Policy Response. Chapter 10 Cultural Heritage 1. The implementation of some policy actions have been pushed back. (Page 74) 2. No other significant changes between the Draft Policy Response and the Final Policy Response.

11 Chapter 11 Implementation 1. The following paragraph is included in the Draft Policy Response: Under the gateway process, a development application for mining and coal seam gas development on or within two kilometres of strategic agricultural land cannot be lodged and considered unless it has been issued a gateway certificate. (Page 82) The Final Policy Response made alterations to the paragraph. The new paragraph is as follows: Under the Gateway process, a development application (DA) for State significant mining and coal seam gas development that requires a new or extended mining lease cannot be lodged and considered unless: - the proposed development has been issued a gateway certificate or - the land has been verified as not containing strategic agricultural land. The criteria for State significant mining and coal seam gas proposals are listed under clauses 5 and 6 of Schedule 1 of State Environmental Planning Policy (State and Regional Development) The Gateway process applies to State significant mining and coal seam gas proposals that extend beyond an existing mining lease or petroleum production lease area and are located on strategic agricultural land. The process applies to both greenfield proposals (new standalone projects) and brownfield projects that involve an extension beyond the existing mining or petroleum production lease area. (Page 76) 2. Not Applicable. The final version clarifies what types of mines and CSG projects the Gateway process applies to: Gateway will apply to: Greenfield Mines New stand alone mines or CSG projects or project extensions beyond existing lease area (advisory only at DA stage if DGRs already issued) Brownfield mine expansion beyond lease area Expansions of an existing mine or CSG project partially outside the existing lease area. (advisory only at DA stage if DGRs already issued) Gateway will not apply to: Brownfield mine expansion within lease area Expansions of an existing mine or CSG project within the existing lease area (with

12 such proposals still subject to the usual environmental assessment process under the Planning Act, including the requirement for an AIS and comprehensive assessment against the provisions of the Aquifer Interference Policy). (Page 77) 3. A) The Draft Policy Response gave the Gateway Panel discretion as to whether to issue a Gateway certificate. B) The following was an included criteria for determining whether or not to issue a gateway certificate: A) The Final Policy Response requires the Gateway Panel to issue a Gateway Certificate this can be conditional or unconditional. B) The criteria relating to the Cost Benefit Consideration has been removed in the Final Policy Response. Cost Benefit Consideration 4. Whether the proposal would be in the public interest through a cost benefit analysis undertaken in accordance with the Government s published cost benefit methodology (see below for an explanation of the proposed cost benefit assessment methodology) (Page 84) C) In relation to the Cost Benefit Consideration the following paragraph was included in the Draft Policy Response: A key focus of the strategic regional land use plan is to resolve competition between the coal mining and coal seam gas industries and agriculture, biodiversity and other land uses and address the community concerns about the amenity, health, environmental and land use impacts. To support this task, the NSW Government is developing a methodology to undertake a cost benefit analysis of alternative land uses in the Upper Hunter region that could be used to better inform decision making. The cost benefit analysis methodology may be used to inform identification of strategically significant land at a regional scale. At a project level, the cost benefit analysis is proposed to be incorporated into the gateway criteria to be considered by the Mining and Coal Seam Gas Gateway Panel. Specifically, the cost benefit methodology will be published for use by applicants as a key input to their gateway certificate application and subsequently assessed by the panel as part of its consideration of the whether or not the proposal is in the public interest. C) In relation to the Cost Benefit Consideration the following paragraph was included in the Final Policy Response which replaced the paragraph in the left column: As the Gateway assessment will be limited to a scientific assessment of the agricultural and water impacts of proposals, triple bottom line cost benefit analysis will not be considered at the Gateway stage. Instead, cost benefit analysis will be available to applicants at the DA stage for consideration through the comprehensive merit assessment process. This will assist in the consideration of the potential economic, social and other benefits of a proposal against its possible impacts. It will be particularly relevant to projects for which the Gateway has issued a conditional certificate. If a cost benefit analysis is prepared by the proponent it will be independently peer reviewed and considered by the Planning Assessment Commission in its determination of the DA. (Page 81)

13 (Page 86) 4. The Draft Policy Response proposed an exceptional circumstance provision : It is also proposed that Cabinet may declare a project to be an exceptional circumstance project if the subject resource is of exceptional value to the state. For an exceptional circumstance project, the requirement for a gateway certificate would not apply and the project would proceed to full merit assessment at the development application stage. The exceptional circumstance provision is not included in the Final Policy Response. (Page 86) 5. The following criteria was included in the Draft Policy Response in order to determine whether to issue a Gateway certificate: Consultation The consideration of: a) any submissions received from relevant agencies, council(s) and the community; and b) any advice received from the Commonwealth Independent Expert Scientific Committee (Page 84) The following paragraph relating to whether to issue a conditional or unconditional Gateway certificate has amended the paragraph in the Draft Policy Response: Consultation Any advice on water impacts received from the Commonwealth Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development (Page 78) 6. Not Applicable. The Final Policy Response also notes that there will be an additional initiative that is intended to improve the assessment, regulation and enforcement of mining related land uses as follows: An industry levy to fund additional enforcement resources within the Division of Resources and Energy (Page 82)

14 (Diagram of proposed Gateway process) 1. (Page 85)

15 (Diagram of proposed Gateway process) 1. (Page 80)