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Govt outlines Crown Minerals Act reform in Cabinet paper

Govt outlines plans to reform Crown Minerals Act in Cabinet paper

First published in Energy and Environment on September 12, 2019.

The Government is planning to change the Crown Minerals Act’s purpose from “promoting” mining in light of changing priorities including environmental concerns.

A Cabinet paper seeking agreement to the terms of reference for the Crown Minerals Act Review, shows the Government’s priorities in the review include whether the purpose of the law should more closely reflect “wellbeing” principles. It also wants to make changes to land access provisions to take into account the Government’s proposal to ban mining on conservation land. The paper also discusses ending the Block Offer process for oil and gas exploration.

The Government recently released it Petroleum and Minerals Resource Strategy and the Cabinet Paper said the plan was to release a further discussion document in October on the CMA review.

Energy and Resources Minister Megan Woods told ministers that issues proposed to be in-scope of Tranche Two (Tranche One was the decision to ban new oil and gas exploration permits outside onshore Taranaki) included; the fundamental role of the CMA and the purpose statement; Land access arrangements; Non-interference provisions; Liability and financial assurance; Iwi engagement and community participation and Petroleum permitting.

Issues proposed as outside the scope of Tranche Two are; Crown’s ownership; Royalties; Changes made in the Crown Minerals (Petroleum) Amendment Act 2018; and Removal of the Crown’s ability to allocate new petroleum permits within onshore Taranaki.

Woods said the CMA focuses primarily on economic considerations in terms of allocating permits and the purpose which underlines interpretation of the law. Section 1A of the CMA currently reads: ‘To promote prospecting for, exploration for and mining of Crown-owned minerals for the benefit of NZ’.

“The use of the term ‘promote’ and the interpretation of ‘for the benefit of NZ’ may have to be addressed in light of changing government priorities. I intend to consider whether the CMA should incorporate other broader wellbeing considerations while taking care not to duplicate functions provided by other regimes such as the Resource Management Act.”

Woods said reviewing the fundamental role of the CMA presents risks to the timeline, but this would depend on whether there was just a change in the word “promote” in the purpose statement; or a change in this as well as changes to the allocation criteria of permits to include environmental considerations.

Land access arrangements will also be reviewed to include options resulting from the ‘No New Mines on Conservation Land’ policy work stream.

Woods said changes to the CMA in 2013 to prevent interference with vessels undertaking activities under an offshore permit would also be looked at. “I intend to evaluate whether the current provisions unnecessarily restrict free protest, and whether the CMA is the most appropriate Act for these provisions.”

There was also some concern the CMA currently fails to appropriately identify and manage the risks of financial default especially as several petroleum fields in NZ are nearing their end-of-life.

The CMA is silent on decommissioning (the process is managed under the RMA and the Health and Safety regime). “The review could consider ways to protect the Crown against non-compliance… Currently, the Crown cannot compel permit holders to plug abandoned wells, nor is there any statutory timeline for plugging and abandoning wells. The CMA could be strengthened to protect third parties.”

The review would also look at strengthening current compliance and enforcement tools in the CMA. There would also be moves to address the lack of consultation requirements with iwi.

In terms of petroleum permitting “Tranche Two could consider issues to ensure the CMA is still delivering competitive and efficient outcomes… For example, we could consider onshore Taranaki petroleum permit allocation methods post 2020. The allocation of new exploration permits in the onshore Taranaki area is currently restricted to the Block Offer process. We could consider whether alternative allocation methods for onshore Taranaki are more appropriate to deliver on the Government’s desired outcomes.”

The paper also says, “decisions regarding whether to continue allocating new petroleum permits will be for future governments to decide.”

First published in Energy and Environment on September 12, 2019.

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