Managing residual risks in Queensland’s resource industry

Residual risk requirements

What are residual risks?

Residual risks are those risks, or costs, that remain at a rehabilitated resource site after the environmental authority is surrendered. Residual risks can include the risk of remedial action being required because of the failure of post-surrender landforms, infrastructure, or other structures. Residual risks can also include the risk that ongoing management activities will be required, such as monitoring and maintenance activities.

What changes have been made to the residual risk requirements?

The residual risk requirements have existed in the Environmental Protection Act 1994 (EP Act) since 2015. However, feedback from stakeholders indicated that existing methodologies and processes linked to the residual risk requirements needed further development. In response to stakeholder feedback, in 2020 amendments were made to:

improve the consistency and clarity regarding the residual risk information required to accompany a surrender application
introduce a post-surrender management report, that includes a risk assessment of the land, which must accompany a surrender application if a resource activity was carried out
remove provisions that allow for residual risk payments to be collected as part of progressive certification
clarify that residual risk payments may be collected for non-use management areas in addition to rehabilitated areas
require residual risks to be noted against the relevant land title if a risk management plan is required
establish a pooled ‘scheme fund’ to consistently manage residual risk payments
expand the remit of the scheme manager of the Financial Provisioning Scheme to include managing the residual risks fund.

These amendments provide stakeholders with greater certainty and confidence in the surrender process, while also providing for more appropriate management of residual risks and residual risks payments to protect the State’s environmental and financial interests.

Who do the residual risk requirements apply to?

Residual risks must be considered by all environmental authority holders that have carried out the relevant activity and are applying to surrender their environmental authority for a resource activity. The residual risk requirements do not apply where an operator is not legally required to hold an environmental authority (e.g., small-scale mining activities), or where an environmental authority exists but the relevant activity was not carried out.

What is the Residual Risk Assessment Guideline?

The residual risk framework requires all environmental authority holders for a resource activity to carry out a risk assessment of the land that complies with the Residual Risk Assessment Guideline (ESR/2020/5433). The purpose of the Guideline is to provide a quantitative residual risk assessment method to satisfy the requirement under section 264A of the EP Act.

The Guideline provides EA holders with a clear, consistent and replicable method to identify, assess and estimate the costs and expenses of remaining risks on the land after a resource site has been appropriately managed and rehabilitated. This Guideline applies to all surrender applications for an EA for a resource activity where any activity has taken place and ground disturbance has occurred.

What is the post-surrender management report?

The post-surrender management report must include information about the site being surrendered (for example a map of the land), information about contaminated land and residual risks and any assumptions made in relation to the rehabilitation and future use of the land. The post-surrender management report will also include information on the estimated costs and expenses associated with managing any residual risks of the land. This will ensure consistency across the resource industry for considering residual risk and increase certainty around how to meet the residual risk requirements.

When must a risk management plan be included in the post-surrender management report?

The requirement to include a risk management plan with a post-surrender management report is linked to the level of residual risk for a site. A risk management plan must be included with the post-surrender management report only if the risk assessment identifies residual risks that may require ongoing management activities and/or remedial action. Therefore, not all surrender applications require a risk management plan. Where a risk management plan is required, an administrative note will be made on the relevant land title.

When will a residual risk payment be required and how is it calculated?

The Residual Risk Assessment Guideline provides a transparent and consistent approach to assessing residual risks of the land and evaluating when a residual risk payment will be required. If residual risks have been identified through the risk assessment process, the estimated costs and expenses for managing those residual risks will also be provided as part of the assessment.

In calculating the residual risk payment amount, the risk assessment will estimate both the costs related to ongoing management activities (ongoing costs) and the likely costs in relation to the risk of remedial actions (risk costs). The methodology utilises a discount rate to determine the net present value of future ongoing costs associated with residual risks.

Although the risk assessment will provide an estimated payment amount, the payment decision will ultimately sit with the administering authority under the Environmental Protection Act 1994.The administering authority must have regard to the Residual Risk Assessment Guideline in deciding the payment amount. Requiring a residual risk payment from the environmental authority holder at surrender means the State should not have to rely on taxpayer funds in future to manage or remediate ex-resource sites.

What is the discount rate and how does it relate to the residual risks framework?

All of the risk assessment options (e.g., the residual risk calculator tool and the expert panel process) utilise the discount rate. The discount rate represents the difference between the rate of interest and the rate of inflation. The calculator has been designed to use a single rate to reflect these two measures. The discount rate itself is a percentage recommended by Queensland Treasury and must be used when calculating the net present value of residual risks costs.

In what circumstances will a residual risk administrative note be made on the land title?

An administrative note will only be made on the land title if the risk assessment of the land identifies that ongoing management activities and/or remedial actions may be required for the land. In effect, this means a notation will only be made if a risk management plan exists for the land.

The intent is that a notation on title will only be made for relevant Lot on Plan blocks of land, not on all lots that may be covered by a resource tenure or an environmental authority. This means that landholders located within the resource tenure that do not have ongoing management activities or remedial action on their land, will not have residual risks noted on their land title.

Noting the existence of residual risks on the land title will ensure both current and future landholders are aware of the ongoing management activities and possible remedial actions associated with the land now and into the future. If the risk assessment identifies that there are no material residual risks on the land, a notation will not be made on the land title. There is no administrative burden to industry or landholders as the government manages the administrative note on title process.

What risk assessment methodology is required by the Residual Risk Assessment Guideline?

The Residual Risk Assessment Guideline sets out a quantitative risk assessment methodology which must be used by EA holder to assess where there are any remaining risks on the land to be surrendered, and if there are, determine the actions and activities that may need to be undertaken to manage those risks, and a corresponding payment amount.

While the Guideline sets out multiple options for carrying out the risk assessment, they all adopt the same quantitative risk assessment methodology, which involves the following steps:

Determine sources of risk (i.e., the site features remaining on the land)
Identify all credible risk events for the site
Identify and apply relevant risk treatments (i.e., ongoing management activities)
Identify potential remedial actions based on material credible risk events
Estimated the residual risk costs and expenses for the land being surrendered (if any).

What are site features?

Sources of residual risk typically stem from features or facilities that remain on, or affect the behaviour of, the land post-surrender. These are called ‘site features’.

Site features are defined in the Environmental Protection Act 1994 as:

surface and subsurface infrastructure on the land related to resource activities;
other structures on the land related to resource activities;

modifications of the land related to resource activities carried out on the land.

Examples of modifications of land— tailings storage facilities, voids, waste rock dumps.

What site features are considered as part of the risk assessment?

While the definition of site features is broad, the Guideline makes it clear the residual risk assessment process is not intended to capture all possible disturbance or activities that occurred on a resource site, only those that pose residual risks to the land after the EA has been surrendered. Where infrastructure exists during operations but did not cause a permanent change to the landform, and has been completely removed and rehabilitated (e.g., processing facilities, temporary camps), it is generally accepted that there will be no source of residual risk needing to be managed post-surrender.

If any of the following, in whole or in part, remain on the land they must be considered during the risk assessment process:

process waste emplacements (e.g., tailings storage facilities, tailings storage facilities within waste rock dumps, gypsum stacks)
waste rock emplacements (e.g., waste rock dumps, overburden dumps, heap leach pads, co-disposal tailings and waste rock)
open voids/ pits (e.g., open cut pits, wholly or partially filled voids, box cuts, major burrow pits)
underground voids/pits (e.g., all underground excavations and workings, voids that have been wholly or partially backfilled)
water management structures (e.g., major drainage channels, bunds, levees, river diversions)
water holding facilities (e.g., dams, ponds, evaporation ponds)
waste facilities (e.g., landfills containing contaminated soils, solid salt storage)
bores, wells and pipelines (e.g., plugged and abandoned petroleum and gas wells, mining exploration boreholes and buried pipeline).

These site features must be considered as they remain a permanent change to the landform following rehabilitation and may require some form of management or remediation in future. Note the above list of site features is not exhaustive. The list represents the minimum range and type of site features that must be considered (as far as they are relevant for the site being assessed).

What options are available for carrying out the risk assessment?

To reflect the diversity of the resource industry in Queensland, four risk assessment options have been developed to support EA holders to assess their residual risks. EA holders must select a risk assessment option that is applicable for their site. The four options include:

Pre-assessed risk category: This option is for a range of low-risk activities. Sites must meet the criteria to be considered eligible. Table 2 of the Residual Risk Assessment Guideline (the Guideline) has further information. Sites that meet the risk categories will not require further assessment or a residual risk payment.
Residual Risk Calculator: This option is suitable for most sites that cannot satisfy the requirements of the pre-assessed risk categories. For further information, please refer to the Guideline and calculator user manual below.
Expert panel process: This option is recommended where the calculator is unable to adequately assess remaining site features, for example on large and complex sites. This option is available to all EA holders. This option must be used for Geothermal and Greenhouse Gas storage activities. For further information, please refer to the guideline.
Combination of expert panel and Residual Risk Calculator: This option is suitable for sites where some of the site features can be appropriately assessed by the residual risk calculator, but others are either too complex or the EA holder does not believe that the residual risk calculator appropriately assesses the level of risk.

All risk assessment options use the quantitative risk assessment method and are underpinned by the calculator. The options have been designed to maximise consistency and minimise unnecessary administrative burdens where possible for both the resource industry and the Queensland Government.

What is a pre-assessed risk category?

The administering authority has used the calculator to assess the potential residual risks of a site that meets the categories set out below and has determined that these do not trigger ongoing management activities or potential remedial action (i.e., no residual risk requirements).

Note that this option cannot be selected by an EA holder if any of the following site features were present on the land when the resource activity was carried out: open voids, underground voids, waste rock emplacements, process waste emplacements, permanent water management structures (e.g., major drainage channels, bunds, levees, river diversions), or waste facilities.

Under this option, a risk management plan is not required to accompany the post-surrender management report. However, EA holders must provide evidence that demonstrates the site meets the relevant pre-assessed risk category.

Risk Category 1: No site features remain on the land the subject of the surrender application.
Risk Category 2: 20 or less mining exploration bores and wells that have been plugged and abandoned. No buried pipeline remaining on the land. No other site features remain on the land.
Risk Category 3: 80 or less conventional and other non-conventional petroleum and gas bores and wells that have been plugged and abandoned. No buried pipeline. No other site features remain on the land.
Risk Category 4: 100 or less coal seam gas bores and wells that have been plugged and abandoned. No buried pipeline. No other site features remain on the land.

Resources for Residual Risk

The following resources have been developed to support implementation of the Residual Risk Framework and calculation of residual risk requirements for resource EA holders:

Note: for further information relating to financial assurance and residual risk, see Financial assurance, provisioning and rehabilitation for environmental authorities and related pages.