On 21 March 2013, the NSW Department of Planning and Infrastructure (Department) released the draft State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Coal Seam Gas Exclusion Zones) 2013 (NSW) (Draft SEPP) for public comment. Significantly, the Draft SEPP prohibits coal seam gas (CSG) development on or under land within 2km of residential zones or future residential growth areas, and within critical industry clusters.
On 19 February 2013, in response to community concerns, Premier Barry O’Farrell announced tough new measures to strengthen the regulation of the CSG industry in NSW by declaring country towns and suburbs across the State ‘no go zones’.
In addition, the NSW Government foreshadowed that all exploration, assessment and production titles will be required to hold an Environment Protection Licence and the NSW Environment Protection Authority will be responsible for monitoring compliance and enforcement.
In order to implement these measures, an amendment is required to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (Mining SEPP). As part of the process of amending the Mining SEPP, the NSW Government has released the Draft SEPP for public comment until 12 April 2013.
Under the Draft SEPP, the carrying out of CSG development is prohibited on or under land:
1. Within a residential zone or land within 2km of a residential zone. The term ‘residential zone’ means any of the following land use zones:
(a) Zone R1 General Residential;
(b) Zone R2 Low Density Residential;
(c) Zone R3 Medium Density Residential;
(d) Zone R4 High Density Residential; and
(e) Zone RU5 Village,
or a land use zone that is equivalent to any of the above zones.
2. R5 Large Lot Residential Land that meets the Department’s criteria of land of a village character or within 2km of that land. The Department intends to publish these criteria during the public exhibition period for the Draft SEPP.
3. Identified as future residential growth area land or within 2km of that area. At this stage, the only areas identified in the Draft SEPP as ‘future residential growth areas’ are the North West and South West Growth Centres. Following the exhibition period, the Department intends to include other future residential growth areas across the State.
4. Within critical industry clusters (CICs). Currently, the map identifying land as CICs includes land used by:
(a) the equine industry in parts of the local government areas of Mid-Western Regional, Upper Hunter, Muswellbrook and Singleton; and
(b) the viticulture industry in parts of the local government areas of Muswellbrook, Singleton and Cessnock.
The Department has indicated that these maps will be revised as necessary following the completion of the regional CIC verification process currently being undertaken by the NSW Department of Trade and Investment as part of the implementation of the Strategic Regional Land Use Policy.
Interestingly, the Draft SEPP includes a mechanism by which councils may request that an area of land be removed from the exclusion zone to enable CSG development to occur, subject to the obtaining of all necessary approvals.
The term ‘coal seam gas development’ is defined in the Draft SEPP to include CSG exploration and production activities. The definition expressly excludes the recovery, obtaining or removal of CSG in the course of mining and development identified as exempt under clauses 10 and 10A of the Mining SEPP.
The savings and transitional provisions provide that the exclusion zones will apply in respect of all of the following:
that have not been finally determined before the commencement of the exclusion zones clause (new clause 9A). However, the exclusion zones will not apply in respect of CSG developments that have the benefit of a Part 3A approval or development consent.
If made, the Draft SEPP will have significant implications for holders of CSG exploration licences over land in the exclusion zones as they will now be prohibited from producing CSG on that land, that are not the subject of an existing approval. Further, CSG explorers who have invested significant expenditure into prospecting operations on or under land in the exclusion zones will ultimately not make a return on their investment in these areas unless they obtain project approval or development consent prior to the commencement of the Draft SEPP.
Although CSG explorers and producers may continue to investigate and identify land that is not within an exclusion zone in the Draft SEPP, the ability of the Department to include other future residential growth centres and CICs as exclusion zones makes investment in the CSG industry in the State uncertain in the short term.
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