Australian offshore energy projects update

1 Guideline

NOPSEMA is the Australian offshore petroleum regulator. One of NOPSEMA’s functions is accepting environment plans pursuant to reg 10(1)(a) of the Environment Regulations (Environment Plans).

The Guideline² applies from 15 December 2022 and is to be read in conjunction with NOPSEMA’s existing Environment Plan Assessment Policy, Environment Plan Decision Making Guidelines, and Environment Plan Content Requirements Guidance Note³.

The Guideline seeks to clarify the consultation requirements for titleholders when preparing their Environment Plans and to assist NOPSEMA when assessing Environment Plans against the consultation requirements of the Environment Regulations. The Guideline draws heavily on the Appeal Decision in setting out the requirements for consultation.

1.1 Requirement for consultation

Regulation 11A of the Environment Regulations imposes a duty on titleholders to consult with all relevant persons in preparing an Environment Plan.

NOPSEMA must then assess whether or not that duty has been discharged. In particular, NOPSEMA must not accept an Environment Plan unless it is reasonably satisfied that the Environment Plan demonstrates:

• That the duty to consult has been discharged; and
• That the measures adopted for consultation are (or were) appropriate.⁴

1.2 Purpose of consultation

The Guideline states that the purpose of consultation under regulation 11A is to ensure that authorities, persons or organisations that are potentially affected by the proposed activities are consulted, and their input considered in the development of Environment Plans.

The consultation processes designed by the titleholder must have regard to the objects of the Environment Regulations. These objects are to ensure that any offshore petroleum or greenhouse gas activity is carried out in a manner:

• consistent with the principles of ecologically sustainable development set out in section 3A of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act);
• by which the environmental impacts and risks of the activity will be reduced as low as reasonably practicable; and

• by which the environmental impacts and risks of the activity will be of an acceptable level.⁵

Additionally, the consultation process should assist the titleholder to meet its obligations under the Offshore Petroleum and Greenhouse Gas Storage Act to carry out the petroleum or greenhouse gas activity in a manner that does not interfere with:

• navigation, fishing, conservation of resources of the sea and seabed;
• other offshore electricity infrastructure and petroleum activities; and
• the enjoyment of native title rights and interests (within the meaning of the Native Title Act 1993 (Cth) (Native Title Act), to a greater extent than is necessary for the reasonable exercise of the titleholder’s rights and obligations.⁶

1.3 Relevant persons

Titleholders must identify and consult each category of relevant persons set out in regulation 11A(1).

The Guideline specifies that an Environmental Plan must set out the processes and rationale that have been applied to identify and determine who is a “relevant person”, as well as the processes undertaken for consultation.

Whether an authority, person or organisation is a relevant person will vary depending on factors such as the nature of the activity, the environment in which the activity is being undertaken, and possible impacts and risks of the activity.

The process for identifying relevant persons must provide for sufficiently broad capture of ascertainable persons and organisations who may have their functions, interests or activities affected or that may be affected by the activity. In this regard, NOPSEMA note that a specific person’s failure to participate may not necessarily be fatal to satisfaction of the consultation requirement, however, the process should include references to multiple sources of information. The Guideline provides examples such as publicly available materials, review of databases and registers, published guidance, previous history, as well as advice from authorities and other relevant persons.

1.4 Sufficient information

Information provided to relevant persons must be sufficient to allow an informed assessment of the possible consequences of the activity on the functions, interests or activities of the relevant person.

How this requirement is to be satisfied in the context of the specific project is a decision for the titleholder who, according to the Guideline, should consider the functions, interests or activities of relevant persons and the impacts and risks that affect them.

These considerations are relevant because the level of information necessary is likely to vary for different relevant persons and may depend on the degree to which a relevant person is affected. To this point, the Guideline states that the Environment Plan should demonstrate that the process was tailored to the type of relevant person. The Guideline also encourages titleholders to consider the value of iterative release of information and to engage with relevant persons around the type and level of detail of information required.

1.5 Reasonable period

Titleholders must provide a ‘reasonable period’ for the relevant person to make an informed assessment of the possible consequences of the proposed activity on their functions, interests or activities and so they are able to respond with any concerns.

What is a reasonable period will be informed by the context of the proposed activities and the extent and severity of the potential impacts on a relevant person’s functions, interests or activities. Titleholders are encouraged to engage with relevant persons on their views of what constitutes reasonable timeframes considering their availability and accessibility.

1.6 Requests for information

The titleholder must inform each relevant person that the titleholder consults with, of their right to request the non-publication of particular information the relevant person provides in the consultation. The titleholder must evidence that this requirement has been met, by documenting compliance in their Environment Plan.

1.7 Reporting on consultation

A report on all consultations between the titleholder and all relevant persons is to be included in the Environment Plan.⁷ This report must include:

1. a summary of each response made by a relevant person;
2. an assessment of the merits of any objection or claim about adverse impact of each activity to which the environment plan relates;
3. a statement of the titleholder’s response, or proposed response, if any, to each objection or claim; and
4. a copy of the full, unedited text of any response by a relevant person, including documentation of verbal communications.

The Guideline states that the report on consultation should include clear and precise identification of claims and objections presented, an assessment of the merit of each objection or claim with sufficient rationale provided to support that assessment, and a demonstration of the suitability of any measures adopted as a result of the consultation.

1.8 Effective consultation

The overarching requirement of the Guideline is for effective consultation, being genuine and meaningful two-way dialogue in which relevant persons are given sufficient information and time to allow them to make an informed assessment of the possible consequences of the activity on their functions, interests or activities.

Consultation needs to be tailored to the relevant person and take into account the level of participation in the process required for different relevant persons.

Where interests are communally held, contact with each and every person is not mandated, but consultation on a group basis should include reasonable efforts to notify group members of the consultation with clear, simple and directly expressed terms. Superficial or tokenistic consultation will not be enough. All group members should be afforded a reasonable opportunity to participate in decision-making. A process of public notification and ‘self-identification’ alone is unlikely to be sufficient to demonstrate appropriate representation and a reasonable opportunity to participate.

In the context of Traditional Owners’ interests in land and sea country, the Guideline recommends input from First Nations groups. It reiterates the position set out in the Appeal Decision that there is no shortage of guidance in decisions relating to consultation processes under the Native Title Act, illustrating how a seemingly rigid statutory obligation to consult persons holding a communal interest may operate in a workable manner.

1.9 NOPSEMA Assessment

The Guideline notes that NOPSEMA may make its own reasonable enquiries to assist it when assessing Environment Plans under regulation 10(1) of the Environment Regulation, and in forming a view as to whether the duty of the titleholder to consult under regulation 11(A) has been discharged. This specifically includes using information from other sources in addition to those provided by the titleholder.

2 Original Tipakalippa Decision

On 21 September 2022, Bromberg J of the Federal Court handed down his decision in Tipakalippa v National Offshore Petroleum Safety and Environmental Management Authority (No 2)⁸(Tipakalippa Decision).

His Honour found that the NOPSEMA decision to accept Santos’ Environment Plan for the Barossa offshore gas project should be set aside on the grounds that NOPSEMA could not have been lawfully satisfied that Santos had complied with the pre-requisite consultation provisions within the Environment Regulations.

NOPSEMA’s acceptance of Santos’ Environment Plan gave Santos the right to carry out the petroleum activity detailed within the Environment Plan.  Santos had planned to extract natural gas in an area located approximately 300 km north of Darwin and 138 km north of the Tiwi Islands (Operational Area).    

The Traditional Owners of the Tiwi Islands include the Munupi clan of which the applicant, Dennis Murphy Tipakalippa, is an elder and senior law man. Mr Tipakalippa claimed that he and other traditional owners of the Tiwi Islands, had interests in sea country in the Timor Sea, extending to and beyond the Operational Area, and that those interests and activities were referred to within Santos’ Environment Plan.  By virtue of this claim and Santos’ failure to consult with Mr Tipakalippa or others of the Munupi clan, Mr Tipakalippa applied for judicial review of NOPSEMA’s decision.  He asserted that NOPSEMA could not have been ‘reasonably satisfied’ that the Environment Plan ‘demonstrated’ that Santos had carried out the requisite consultation.

Bromberg J found that the parts of Santos’ Environment Plan that dealt with stakeholder consultation did not demonstrate that the process of identifying relevant persons was carried out in accordance with reg 11A(1). In reaching this conclusion, his Honour noted the importance of identifying the totality of the sensitivities and values considered relevant, and how each was evaluated to uncover their possible interaction with the functions, interests and activities of particular people or organisations. In the view of the Court, this was notably absent from Santos’ Environment Plan.

Bromberg J also held that Santos’ Environment Plan included material which revealed that Santos’ proposed activities may affect the functions, interests or activities of the Traditional Owners of the Tiwi Islands. In this regard, NOPSEMA was required to consider this information to the extent it was probative of whether Santos’ Environment Plan demonstrated that each and every relevant person had been consulted. In the view of the Court, certain ‘sea country material’ within the Environment Plan was probative, but not considered by NOPSEMA.

Accordingly, Bromberg J found that NOPSEMA had reached its state of satisfaction without the requisite information to substantiate that each person who met the description in reg 11A(1)(d) of the Environment Regulations was identified as a relevant person in the Environment Plan. This made NOPSEMA’s approval of the Environment Plan unlawful.

3 Santos Appeal Decision

Santos appealed the Tipakalippa Decision in Santos NA Barossa Pty Ltd v Tipakalippa⁹ (Appeal Decision). On 2 December 2022 the Full Federal Court of Australia delivered its judgment, upholding the primary judge’s decision to set aside the approval of the Environment Plan.

The Full Court agreed with the primary judge that Mr Tipakalippa and the Munupi clan were relevant persons within the meaning of reg 11A(1)(d) of the Environment Regulations and therefore NOPSEMA could not have been ‘reasonably satisfied’ that the required consultation was carried out.

The Full Court found that a narrow construction of the words ‘functions, interests or activities’ would not promote the principles set out in section 3A of the EPBC Act which are also objects of the Environment Regulations.

The Full Court held that purpose of the consultation requirements under the Environment Regulations is to ensure the titleholder provides all information relevant to NOPSEMA’s consideration of the environmental impacts and risks. A narrow interpretation of ‘functions, interests, or activities’ would be inconsistent with this purpose and was therefore rejected.

In analysing each word in the phrase ‘functions, interests or activities’ separately, the Full Court found:

• traditional owners can have ‘functions’ within the meaning of 11A(1)(d) due to their spiritual and cultural connections to land and sea country;
• ‘interests’ in the context of reg 11A(1)(d) should have the same meaning as the concept of ‘interest’ in other areas of public administrative law, which goes beyond ‘legal interests’; and
• ‘activities’ does not have the same meaning as in reg 4 of the Environment Regulations, as to construe the meaning of “activity” this narrowly would defeat the object of reg 11A and the Environment Regulations more broadly.

The Full Court also rejected the argument that a concept of ‘interests’ analogous to the context of procedural fairness imposes a duty to consult with the public at large. The Full Court accepted that the persons with ‘interests’ must be reasonably capable of ascertainment, and First Nations groups’ traditional connection to land and sea are often reasonably ascertainable. In this case, the Full Court found that NOPSEMA had access to documentation which identified the First Nations groups whose interests may be affected.

4 Implications

The Appeal Decision and the Guideline puts Australian offshore project proponents on notice that consultation required under the Environment Regulations needs to be targeted, bespoke and iterative, taking into account the nature of the activities proposed and the nature of the impacts on the relevant persons.

The Appeal Decision confirmed that consultation is a legal duty on titleholders that must be discharged before an Environment Plan can be approved, and the relevant activity commenced.

The clarified consultation requirements bring expectations on offshore petroleum proponents in line with requirements being imposed on onshore energy proponents across other statutory regimes, particularly with respect to consultation with Traditional Owners.

For example, as part of its Electricity Infrastructure Roadmap, the NSW Government has released both generic and region-specific First Nations consultation guidelines, as well as practice notes and case studies on First Nations community engagement for renewable energy projects.¹⁰

Similarly, the Guideline continues the trend observed following the destruction of the caves at the Juukan Gorge and the ensuing Parliamentary inquiry,¹¹ that First Nations peoples and groups must be genuinely and meaningfully consulted. It is foreseeable that similar requirements could soon be imposed through the introduction of a national standard on community consultation as part of EPBC Act reforms.¹²  The Guideline specifically refers to the existing EPBC Act guideline for engagement with Traditional Owners.¹³

Australian offshore wind and electricity transmission proponents should also take note of the Guideline. Whilst the Environment Regulations relating to environmental management are yet to be introduced under OEI Act, it is expected that this interim Guideline will be adopted in a similar form and apply in a similar manner to the future management plans required under the OEI Act.