ERC and financial assurance transitional arrangements

    Will there be an ERC decision in effect for existing sites upon commencement?

    The transitional provisions ensure that on commencement of the financial provisioning scheme every existing environmental authority holder for a resource activity (that also has a financial assurance requirement included as a condition on the environmental authority) will be deemed to have an ERC decision and have an ERC period allocated.

    The ERC decision amount will be the financial assurance amount.

    The ERC period will be as follows:

    • For mining activities relating to a mining lease the period of the plan of operations will be deemed to be the ERC period. This transitional provision ensures that when the plan of operations requirement is phased out for mining activities, an ERC period is in force to trigger a re-calculation of cost.
    • For ineligible petroleum activities or activities carried out on a 1923 petroleum lease, the period will be the earlier of the plan of operations period or three years after commencement.
    • For other environmental authority holders, the ERC period will be the date all resource activities carried out under the environmental authority have ended.

    If a resource environmental authority holder does not have a financial assurance condition on the environmental authority, but has paid financial assurance as required under a notice, the ERC decision amount is taken to be the amount of financial assurance paid and the ERC period is taken to be three years starting on commencement.

    Where there is no condition imposed on a resource environmental authority holder to provide financial assurance (e.g. environmental authorities issued for activities carried out as part of a petroleum survey licence), the ERC decision amount will be deemed to be zero and the ERC period is taken to be three years starting on commencement.

    What happens to any existing financial assurance held, upon commencement?

    Upon commencement of the financial provisioning scheme, any financial assurance held by the administering authority will be transferred to the scheme manager as surety.

    For ERC amounts greater than $100,000 the scheme manager is required to make an initial risk category allocation, within three years of scheme commencement, to determine whether the environmental authority holder will continue to give a surety or pay a contribution to the scheme fund.

    What happens if financial assurance has not been provided on commencement?

    Financial assurance may not have been provided at commencement of the financial provisioning scheme in the following circumstances:

    • Prior to commencement, the environmental authority holder had been issued a decision notice by the administrating authority about the amount and form of financial assurance (under section 296 of the pre-amended Environmental Protection Act 1994), but had not yet complied with the notice. In this circumstance, the condition in the environmental authority to provide financial assurance will continue to have effect until the financial assurance is provided. That financial assurance is then deemed to be the ERC amount.
    • Prior to commencement, the environmental authority holder had a condition on the environmental authority requiring provision of financial assurance, they had made an application for financial assurance, but a decision about the amount and form of financial assurance (under 296 of the pre-amended Environmental Protection Act 1994) had not been made. In this circumstance the pre-amended Environmental Protection act 1994 will continue to apply until a decision on the amount and form of financial assurance is made. The condition in the environmental authority will continue to have effect until the financial assurance is provided.

    In both of these circumstances, the administering authority must transfer the financial assurance it receives to the scheme manager.

    • Prior to commencement, the environmental authority holder had a condition on the environmental authority requiring provision of financial assurance but the holder has not made an application for financial assurance.

    In this circumstance, the ERC decision amount will be deemed to be zero and the ERC period is taken to be three years starting on commencement. The ERC amount accounts for no disturbance on site and therefore prior to the holder commencing operations, they must apply for a new ERC decision and provide the scheme manager surety or provide a contribution to the scheme fund.

    When will financial assurance discounts be removed?

    Existing financial assurance discounts will be removed over the course of the three-year transitional period, as the initial ERC periods expire.

    The initial ERC decision amount at commencement of the financial provisioning scheme (calculated with an industry calculator and/or discounts) will remain valid until either the initial ERC period expires or the environmental authority holder changes activities in such a way that the ERC decision would change.

    If the initial ERC decision expires or is changed, the environmental authority holder must apply for a new ERC decision for which discounts and the use of industry calculators will not apply.