The “finalised” CSG reforms: What it means for the CSG and agricultural industries

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On 28 January 2014, the NSW Government announced that it “has finalised landmark” coal seam gas (CSG) reforms which aim to safeguard homes and high quality farmland in New South Wales.  These reforms include:

  • applying CSG exclusion zones to 2.7 million hectares of the State, including Critical Industry Clusters (CICs), residential zones, an additional seven rural villages and future growth areas in 55 local government areas;
  • implementing CICs for 60,000 ha of viticulture (vineyards) land and 254,000 ha of equine (horse breeding) land in the Upper Hunter; and
  • mapping of more than one million additional hectares of the State’s most valuable farming land as Biophysical Strategic Agricultural Land (BSAL).   

Background

On 4 October 2013, the NSW Government introduced changes which prohibit CSG development in or under all residential areas in the State, the North West and South West Growth Centres of Sydney, and within 2km of such zones.  These reforms were introduced by amendments to State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP).  More details about these reforms are provided in an earlier Corrs In Brief

Over the next few months, the NSW Government exhibited information and consulted with the public and stakeholders in relation to further exclusion zones including “future residential growth areas”, “additional rural village land” and “critical cluster land” across the State.  

The “Final” Reforms

On 28 January 2014, the “final” CSG reforms were introduced with the commencement of State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Coal Seam Gas) 2014 (SEPP Amendment). 

The SEPP Amendment introduces a prohibition on CSG development on or under:

  • “Additional rural village land” as identified on the Additional Rural Village Land Map.  Seven villages have been identified as satisfying the village criteria (developed by the Department of Planning and Infrastructure (DPI)) in the Byron, Singleton, Lismore and Wingecarribee local government areas.   
  • Additional “future residential growth areas”, as identified on the Future Residential Growth Areas Land Map, including five areas in the Gosford and Great Lakes local government areas.  To qualify as a “future residential growth area”, such areas must be identified in an environmental planning instrument (e.g. local environmental plan) or Government endorsed planning strategies.  Consequently, there are likely to be further areas added in the future.
  • Revised “Critical Industry Clusters” as identified on the Strategic Agricultural Land Map.  The evaluation process undertaken by the Department of Trade and Investment has resulted in an increase of about 22,000 ha within the horse breeding cluster (to 254,900 ha) and a reduction of about 3,000 ha within the wine cluster (to 60,000 ha).     

The CSG exclusion zones areas covered by these reforms and the reforms introduced in October 2013 are all usefully shown on the CSG Exclusion Zones Map prepared by DPI.  As a consequence of both sets of reforms, approximately 95 per cent of dwellings covered by current petroleum licences are protected from exploration and production activities. 

Although all new CSG development (including pipelines) is banned within the exclusion zones, pipelines associated with CSG development are permitted within the 2km buffer zones (subject to approval).  

Prior to these recent reforms, some 1.74 million hectares of BSAL was mapped in the Upper Hunter and New England North West Regions, and given legal effect by earlier amendment to the Mining SEPP.  However, following public consultation of the draft mapping in October and November 2013, the NSW Government has increased the amount of BSAL across the State by approximately one million hectares.  These new areas of BSAL have been given legal effect by the SEPP Amendment and amendments to the Strategic Agricultural Land Map

The additional land identified as BSAL includes land in the Central West, Mid and Far North Coast, Southern Highlands, Western Region, South Coast and the Illawarra.  For ease of reference, a consolidated Map showing BSAL across the State has been released by DPI.

If any State significant mining or CSG development is proposed on BSAL, a proponent must obtain a Gateway Certificate prior to lodging a development application.  In addition, such proposals must be referred to the Commonwealth Independent Expert Scientific Committee and the NSW Minister for Primary Industries for advice on potential impacts on water resources.  More details about the Gateway process and referrals are provided in an earlier Corrs In Brief

Next Steps

In light of the fact that the mapping of BSAL across the State is covered by the SEPP Amendment, Strategic Regional Use Plans will no longer be implemented for the Central West, Mid and Far North Coast, Southern Highlands, Western, South Coast and the Illawarra Regions.  Instead, the NSW Government proposes to prepare Regional Growth Plans (RGPs) for these areas. 

RGPs will be developed in consultation with the community and stakeholders, and will comprise a comprehensive framework for managing growth and natural resources.  It is clear that RGPs will have a strong focus on the protection of high quality agricultural land.      

Implications

The Media Release jointly released by Andrew Stoner MP and Brad Hazzard MP states that the Government considers that these reforms have got the “balance right” and provide “clarity, consistency and confidence for the community and a variety of industries across NSW”.  However, some stakeholders appear to be discontent with the recent reforms, particularly:

  • The Australian Petroleum Production and Exploration Association (APPEA) who slammed the scope and timing of the recent reforms given that the NSW Chief Scientist’s final report on the impacts of CSG development has not been released.  Further, APPEA asserts that the tight environmental restrictions (which see NSW recently ranked 145th out of 157 jurisdictions) are likely to result in gas prices soaring in the long term.
  • NSW Farmers who have expressed frustration at the reforms and questioned their meaningfulness given that the Gateway process merely creates an additional hurdle for CSG development and does not prohibit unacceptable development.     
  • Lobby group Lock the Gate who has said that the reforms do not go far enough. 

Some might say that the dissent amongst key stakeholders may indicate that the NSW Government has struck the right balance.  Having said that, the real winners of the latest reforms appear to be those located in the metropolitan and residential areas where CSG development is prohibited.

In terms of clarity, consistency and confidence, there remains continuing uncertainty as to whether the recent reforms will stimulate the necessary investment in CSG development to prevent the looming gas shortage.  Perhaps one of the greatest bars to such investment is the potential for CSG development to be stifled, even after significant investment in exploration activities, by the rezoning of adjoining land as a “residential zone” or identified as a “future residential growth area”, “additional rural village” or a CIC.  As a consequence, the CSG industry is likely to have no confidence that its investment in exploration activities will be realised in the production stage many years later.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Louise Camenzuli

Partner. Sydney
+61 2 9210 6621

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