Crown Minerals Amendment Bill

Crown Minerals Amendment Bill

Government Bill

47—2

As reported from the Economic Development, Science and Innovation Committee

Commentary

Recommendation

The Economic Development, Science and Innovation Committee has examined the Crown Minerals Amendment Bill and recommends that it be passed with the amendments shown.

About the bill as introduced

The Crown Minerals Amendment Bill is a Government bill in the name of Hon Dr Megan Woods. The bill seeks to amend the Crown Minerals Act 1991 to maintain the effectiveness and efficiency of the permitting regime established by that Act.

The bill aims to address regulatory duplication, gaps, errors, and inconsistencies within the Act, and to clarify and update statutory provisions. This would ensure an appropriate permitting regime for the future.

Proposed amendments

This commentary covers the main amendments we recommend to the bill as introduced. We do not discuss minor or technical amendments.

Offence regarding change of control

Clause 8 would insert new section 41AB into the Crown Minerals Act. It sets out how consent should be obtained for the change of control of a permit operator holding a Tier 1 permit, and what would constitute a contravention of the consent process.

As introduced, new section 41AB(3)(b) states that if a person knows, or ought reasonably to know, that they have obtained the power to exercise, or control the exercise of, 50% or more of the voting rights of a permit operator without the prior consent of the Minister, they can be convicted of an offence under section 100(2A).

We recommend amending new section 41AB(3)(b), along with clause 18, new section 100(2A)(a), to make it clear that a person can only be convicted of an offence if they knew, or should have reasonably known prior to the change in control, that they will obtain the power.

Late applications for consent to change of control

We recommend amending clause 8, new section 41AC(2), to confirm that a late application for a change of control must be made before the change of control is complete. This makes it clear that a late application cannot be made once a person is already in breach of the rules.

We also recommend inserting new section 41AC(2A). This provides for a situation where a late application was properly made, but was still being considered by the Minister when the change of control took place. The bill as introduced did not address this situation, and there was concern that an applicant might be unduly punished if the Minister had not made a decision before a change of control took place. The new subsection states that the person could not be charged with an offence while their application was under consideration, and would only be in contravention if their application was denied.

Consent to change of control of permit operator

Under clause 8 as introduced, new section 41AE provides the criteria the Minister would use to test whether a change of control should be approved. We recommend removing the reference to the Maritime Transport Act 1994 in section 41AE(1)(b). This would ensure that capability assessments are in line with those required by section 41C and provide consistency within the Act.

Clarification of authorisation of geophysical surveys on adjacent land

As introduced, clause 11 would amend section 42A(2) to clarify that an application to undertake geophysical surveys on land adjacent to the land the permit relates to would be subject to this legislation as if it were a permit of the same type held by the relevant permit holder.

We considered this unclear as different permits allow for different types of activities including prospecting, exploration, or mining. We recommend amending this section to ensure it is clear that no other activity is authorised to occur on adjacent land apart from a geophysical survey.

Access to Schedule 4 land: limit to common marine and coastal areas

As introduced, clause 14 would insert section 54A allowing permit-holders access to Schedule 4 land. We note that the policy intention was that this provision should only apply to Schedule 4 land in common marine and coastal areas. We recommend an amendment to make this clear.

Section 54A as introduced also provides that “the permit holder may prospect, explore, or mine on or in land to which the permit relates”. This provision was intended to allow the permit holder to exercise their permit, but did not make it clear that the person could only undertake activities that the permit already allowed. We recommend amending this section to clarify that the provision only applies when the permit holder exercises the permit for the activities allowed under the permit.

Transitional provisions

The Schedule to the bill would insert a new Part 2 in Schedule 1 of the Crown Minerals Act. We recommend an amendment to insert new clause 23 in that new Part 2 of Schedule 1.

The bill as introduced does not expressly provide for a situation where a change of control of a permit operator was commenced but not completed prior to the new provisions of the bill coming into effect. This could result in an unintentional breach of the new provisions in the Act.

Our proposed new clause 23 would confirm that transactions entered into before the new provisions commence would not be subject to the new provisions (instead, the old law would continue to apply to existing transactions). This would give certainty and clarity to commercial transactions being undertaken currently and in the future.

Appendix

Committee process

The Crown Minerals Amendment Bill was referred to the committee on 3 May 2018. The closing date for submissions was 22 June 2018. We received and considered 11 submissions from interested groups and individuals. We heard oral evidence from five submitters at hearings in Wellington.

We received advice from the Ministry of Business, Innovation and Employment.

Committee membership

Jonathan Young (Chairperson)

Tamati Coffey

Paul Eagle (until 15 August 2018)

Andrew Falloon

Hon Paul Goldsmith

Gareth Hughes

Melissa Lee

Jo Luxton (from 15 August 2018)

Clayton Mitchell

Hon Aupito William Sio (until 24 October 2018)

Poto Williams (from 24 October 2018)

Lawrence Yule

Key to symbols used

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Hover your cursor over an amendment for information about that amendment. Download the PDF version to see this information in a form that can be printed out.

Hon Dr Megan Woods

Crown Minerals Amendment Bill

Government Bill

47—2

Contents

Commentary
Key
1Title
2Commencement
3Principal Act
4Section 8 amended (Restrictions on prospecting or exploring for, or mining, Crown owned minerals)
5Section 19 amended (Issue of minerals programmes)
6Section 28A amended (Declaration that permits not to be issued or extended for specified land for specified period)
7Section 39 amended (Revocation or transfer of permit)
8New sections 41AA to 41AF inserted
41AAMeaning of change of control of permit participant or guarantor
41ABChange of control of permit operator of Tier 1 permit
41ACApplication for consent for change of control
41ADMinister may require information or documents to be supplied
41AEWhen Minister may consent to change of control of permit operator
41AFRevocation of permit if change of control made without consent
9Section 41A amended (Change of control of permit participants)
10Section 41D amended (General provisions relating to transfers, dealings, and changes of permit operator)
11Section 42A amended (Authorisation of geophysical surveys on adjacent land)
12Section 53 amended (Access to land for petroleum)
13Section 54 amended (Access to land for minerals other than petroleum)
14New section 54A inserted (Access to Schedule 4 land)
54AAccess to Schedule 4 land in common marine and coastal area
15Section 57 amended (Meaning of entry on land)
16Section 58 amended (Disputes as to classification of land and activities)
17Section 61 amended (Access arrangements in respect of Crown land and land in common marine and coastal area)
18Section 100 amended (Offences)
19Section 101 amended (Penalties)
20Schedule 1 amended
21Schedule 4 amended
Legislative history

The Parliament of New Zealand enacts as follows:

1 Title

This Act is the Crown Minerals Amendment Act 2018.

2 Commencement

This Act comes into force on the day after the date of Royal assent.

3 Principal Act

This Act amends the Crown Minerals Act 1991 (the principal Act).

Part 1 Amendments to Parts 1 to 1B of principal Act

4 Section 8 amended (Restrictions on prospecting or exploring for, or mining, Crown owned minerals)

In section 8(1)(b), replace “and 54” with “, 54, and 54A.

5 Section 19 amended (Issue of minerals programmes)

Replace section 19(3) with:

(3)

A minerals programme—

(a)

is a disallowable instrument for the purposes of the Legislation Act 2012 and must be presented to the House of Representatives under section 41 of that Act; but

(b)

is not a legislative instrument for the purposes of the Legislation Act 2012 (see section 20 of this Act); and

(c)

is not to be drafted by the PCO under section 59(2)(a) of the Legislation Act 2012.

6 Section 28A amended (Declaration that permits not to be issued or extended for specified land for specified period)

(1)

Replace section 28A(1) with:

(1)

The Minister may declare that, during a specified period, specified kinds of permits—

(a)

will not be granted in respect of specified land; and

(b)

will not have the area of land that those permits apply to extended to include any of that specified land.

(1A)

For the purposes of subsection (1),—

(a)

the declaration may be made only if the Minister believes that the declaration is necessary to better meet the purpose of this Act:

(b)

the declaration must be made by notice in the Gazette.

(2)

In section 28A(2), (3), and (4), replace “subsection (1)” with subsection (1A)(b).

(3)

After section 28A(4)(b), insert:

(ba)

power to extend the duration of a permit; or

7 Section 39 amended (Revocation or transfer of permit)

(1)

After section 39(1), insert:

(1A)

The Minister may also revoke a permit—

(a)

as referred to in section 41A(7); or

(b)

in accordance with section 41AF (but, in this case, subsections (2) to (4) of this section do not apply).

(2)

After section 39(2), insert:

(2A)

In the case of an intention to revoke a permit under section 41A(7)(b) where the change of control has been notified in accordance with section 41A(2), the Minister may only serve a notice under subsection (2) within 3 months after the later of the following:

(a)

the date on which the permit participant notifies the Minister of the change of control in accordance with section 41A(2):

(b)

the date by which the permit participant provides to the Minister all of the information and documents requested under section 41A(5) (if any).

(3)

In section 39(3), replace “41 working days after the date on which the notice under subsection (2) is served” with “specified in the notice”.

(4)

After section 39(3), insert:

(3A)

In the case of section 41A(7)(a), the following applies:

(a)

the Minister may, by serving written notice on the permit holder, revoke the permit with effect on the date specified in the notice if the Minister is satisfied that the permit should be revoked:

(b)

the Minister may be so satisfied even if the Minister becomes satisfied of the matter set out in section 41A(7)(b) (for example, the Minister may be satisfied that the permit should be revoked because there is no good reason to excuse the contravention of section 41A(2)).

(3B)

The notice under subsection (3) or (3A) may be served only on or after the date that is 40 working days after the date on which the notice under subsection (2) is served.

(5)

In section 39(5), after “(3)”, insert “or (3A).

8 New sections 41AA to 41AF inserted

After section 41, insert:

41AA Meaning of change of control of permit participant or guarantor

(1)

In sections 41AB to 41A, a corporate body undergoes a change of control if—

(a)

a person (person A) obtains the power (whether directly or indirectly) to exercise, or control the exercise of, 50% or more of the voting rights in the corporate body; or

(b)

a person (person A) obtains, together with 1 or more specified persons, the power (whether directly or indirectly) to exercise, or control the exercise of, 50% or more of the voting rights in the corporate body.

(2)

In subsection (1)(b), a specified person, in relation to person A, means—

(a)

a person who is acting or will act jointly or in concert with person A in respect of exercising, or controlling the exercise of, the voting rights of the permit participant; or

(b)

a person who acts, or is accustomed to acting, in accordance with the wishes of person A.

41AB Change of control of permit operator of Tier 1 permit

(1)

This section applies if a corporate body that is a permit operator of a Tier 1 permit undergoes a change of control.

(2)

Every person who obtains the power referred to in section 41AA(1) contravenes this subsection if the change of control is made without the prior consent of the Minister (see sections 41AC to 41AE, which relate to obtaining that consent).

(3)

A contravention of subsection (2) by a person may result in either or both of the following:

(a)

the revocation of the permit under section 41AF:

(b)

an offence under section 100(2A) if the person knows, or ought reasonably to know, that the person has obtained the power referred to in section 41AA(1).

(b)

an offence under section 100(2A) if, before the power referred to in section 41AA(1) is obtained, the person knows, or ought reasonably to know, that the person will obtain the power.

(4)

The permit operator must notify the Minister in accordance with subsection (5) if—

(a)

subsection (2) is contravened; and

(b)

the permit operator knows, or ought reasonably to know, that it has undergone a change of control.

(4A)

Subsection (4) does not apply in the case of a contravention referred to in section 41AC(2A)(c).

(5)

For the purposes of subsection (4), the notification must—

(a)

be given as soon as is reasonably practicable, but in any event not later than 3 months after the permit operator becomes aware, or ought reasonably to have become aware, that it has undergone a change of control; and

(b)

be accompanied by a copy of any agreement or other document that specifies the change of control.

41AC Application for consent for change of control

(1)

An application for consent referred to in section 41AB(2) must—

(a)

be made—

(i)

by the relevant person; or

(ii)

if there is more than 1 relevant person, by all of the relevant persons; and

(b)

be made at least 3 months before the date on which the proposed change of control takes effect; and

(c)

include the following information:

(i)

the name of each relevant person:

(ii)

if a relevant person is a corporate body, the name of each director of the body and of each shareholder or member of the body referred to in subsection (3):

(iii)

particulars about how the change of control is proposed to be undertaken:

(iv)

particulars about when the change of control is proposed to take effect; and

(d)

be accompanied by—

(i)

a copy of any agreement or other document that specifies the change of control; and

(ii)

information or documents that show how the test in section 41AE(1) is satisfied.

(2)

If the Minister is satisfied that there are compelling reasons why a relevant person could not comply with subsection (1)(b), the Minister may receive an application by a later date agreed by the Minister (which date must not be later than the date on which the proposed change of control takes effect).

(2A)

The following applies if an application is properly made in accordance with this section (including subsection (1)(b) or (2)) but the application is still being considered by the Minister when the change of control takes effect:

(a)

section 41AB(2) is not contravened while the application is being considered by the Minister; and

(b)

if the Minister gives his or her consent, section 41AB(2) is not contravened; but

(c)

if the Minister declines to give his or her consent, section 41AB(2) must be treated as being contravened from the date of the Minister’s decision.

(3)

For the purposes of subsection (1)(c)(ii), the shareholders or members of the corporate body that must be named are,—

(a)

if the body has equity securities quoted on a stock exchange,—

(i)

the shareholders or members who hold the 10 largest numbers of equity securities; or

(ii)

if there is more than 1 class of equity securities, the persons holding the 10 largest numbers of equity securities in each class:

(b)

in any other case, all of the shareholders or members.

(4)

In this section and sections 41AD and 41AE,—

director has the same meaning as in section 6(1) of the Financial Markets Conduct Act 2013

equity security has the same meaning as in section 8(2) of the Financial Markets Conduct Act 2013

relevant person means a person referred to in section 41AA(1) who is proposed to obtain the power referred to in that subsection

stock exchange has the same meaning as in section 2(1) of the Companies Act 1993.

41AD Minister may require information or documents to be supplied

(1)

A permit participant, or a relevant person, must, if requested to do so, provide to the Minister information or documents relevant to the matters referred to in section 41AE(1).

(2)

Subsection (1) applies to a permit participant whether or not that participant is the permit operator.

41AE When Minister may consent to change of control of permit operator

(1)

The Minister may consent to the change of control of a permit operator for the purposes of section 41AB only if the Minister is satisfied that—

(a)

the permit holder, given the proposed change in control,—

(i)

has the financial capability to meet its obligations under the permit; and

(ii)

is likely to comply with, and give proper effect to, the work programme for the permit; and

(iii)

is likely to comply with the relevant obligations under this Act or the regulations in respect of reporting and the payment of fees and royalties; and

(b)

in the case of a Tier 1 permit for exploration or mining, the permit operator, after undergoing the change of control, has, or is likely to have by the time the relevant work in the permit is undertaken, the capability and systems that are likely to be required to meet the health and safety requirements of the Health and Safety at Work Act 2015 and the Maritime Transport Act 1994 for the types of activities to be carried out under the permit.

(2)

Section 29A(3) and (4) applies for the purposes of subsection (1)(b), with all necessary modifications.

41AF Revocation of permit if change of control made without consent

(1)

This section applies if section 41AB(2) is contravened.

(2)

The Minister may serve on the permit holder written notice of his or her intention to revoke the permit. The notice must—

(a)

refer to this section; and

(b)

state, with reasons, that the Minister considers that section 41AB(2) has been contravened; and

(c)

give the holder 40 working days after the date on which the notice is served to—

(i)

show that section 41AB(2) has not been contravened; or

(ii)

provide reasons why the permit should not be revoked (including showing why the Minister should be satisfied of the matters set out in section 41AE and why the contravention should be excused).

(3)

A notice under subsection (4) may be served on or after the date that is 40 working days after the date on which the notice under subsection (2) is served.

(4)

After considering any thing provided under subsection (2)(c), the Minister may, by serving written notice on the permit holder, revoke the permit with effect on a date specified in the notice if the Minister is satisfied that—

(a)

section 41AB(2) has been contravened; and

(b)

the permit should be revoked.

(5)

The Minister may be satisfied under subsection (4)(b) even if the Minister becomes satisfied of the matters set out in section 41AE (for example, the Minister may be satisfied that the permit should be revoked because there is no good reason to excuse the contravention of section 41AB(2)).

(6)

Section 39(5) to (7) applies to a revocation under this section, with all necessary modifications.

9 Section 41A amended (Change of control of permit participants)

(1)

In the heading to section 41A, after participants, insert (other than operators of Tier 1 permits).

(2)

Repeal section 41A(1) and (8).

(3)

Replace section 41A(2) with:

(2)

A permit participant must notify the Minister in accordance with subsection (3) if—

(a)

the permit participant—

(i)

is a corporate body; and

(ii)

knows, or ought reasonably to know, that it has undergone a change of control; or

(b)

the permit participant knows, or ought reasonably to know, that a corporate body that has provided a guarantee for the permit participant’s obligations under the permit (a guarantor) has undergone a change of control.

(2A)

However, this section does not apply to a change of control of a permit participant who is a permit operator of a Tier 1 permit (see instead sections 41AB to 41AF).

(4)

In section 41A(3), replace “of the change of control and” with “after the permit participant becomes aware, or ought reasonably to have become aware, of the matters referred to in subsection (2) and must”.

(4A)

In section 41A(5), after person A concerned, insert (as referred to in section 41AA(1)).

(5)

Replace section 41A(7) with:

(7)

The Minister may revoke the permit in accordance with the procedure set out in section 39 if—

(a)

subsection (2) is contravened; or

(b)

the Minister is not satisfied that, following the change of control, the permit holder has the financial capability to meet its obligations under the permit.

10 Section 41D amended (General provisions relating to transfers, dealings, and changes of permit operator)

In section 41D(1), after “41,”, insert 41AE,”.

11 Section 42A amended (Authorisation of geophysical surveys on adjacent land)

Replace section 42A(2) with:

(2)

An authorisation granted under this section is subject to the provisions of this Act as if the authorisation were a permit of the same type as the permit held by the permit holder and referred to in subsection (1).

Replace section 42A(2) with:

(2)

An authorisation granted under this section

(a)

is subject to the provisions of this Act as if the authorisation were a permit of the same type as the permit held by the permit holder and referred to in subsection (1); but

(b)

does not authorise any activity other than the carrying out of a geophysical survey.

12 Section 53 amended (Access to land for petroleum)

Replace section 53(3)(b) with:

(b)

land in the common marine and coastal area.

13 Section 54 amended (Access to land for minerals other than petroleum)

(1)

In section 54(2), replace “in land” with “on or in land”.

(2)

Replace section 54(3)(b) with:

(b)

land in the common marine and coastal area.

14 New section 54A inserted (Access to Schedule 4 land)

After section 54, insert:

54A Access to Schedule 4 land in common marine and coastal area

Despite sections 53 and 54, if a permit relates to land in the common marine and coastal area that is described in Schedule 4, the permit holder may prospect, explore, or mine on or in land to which the permit relates exercise the permit only—

(a)

in respect of land that is not subject to a customary marine title order or agreement; and

(b)

in accordance with an access arrangement agreed in writing—

(i)

between the permit holder, the Minister, and the appropriate Minister in relation to an activity set out in section 61(1A)(a) to (e) (if the permit is in respect of petroleum):

(ii)

between the permit holder and the appropriate Minister in relation to an activity set out in section 61(1A)(a) to (e) (if the permit is in respect of a mineral other than petroleum).

15 Section 57 amended (Meaning of entry on land)

In section 57, replace “53 and 54” with “53 to 54A.

16 Section 58 amended (Disputes as to classification of land and activities)

In section 58(1)(c), replace “section 53 or section 54” with “any of sections 53 to 54A.

17 Section 61 amended (Access arrangements in respect of Crown land and land in common marine and coastal area)

(1)

In section 61(1) and (1AA), replace “sections 53(3) and 54(3)” with section 54A.

(2)

In section 61(1A), replace “The Minister of Conservation or the Minister and the Minister of Conservation, as the case may be,” with “The appropriate Minister (in the case of subsection (1)) or the Minister and the appropriate Minister (in the case of subsection (1AA))”.

(3)

In section 61(2), replace “appropriate Minister, or the Minister and the appropriate Minister, as the case may be,” with “appropriate Minister (in the case of subsection (1)) or the Minister and the appropriate Minister (in the case of subsection (1AA))”.

(4)

Replace section 61(2)(e) with:

(e)

any other matters that that Minister or those Ministers consider relevant.

18 Section 100 amended (Offences)

After section 100(2), insert:

(2A)

Every person commits an offence against this Act who contravenes, or permits a contravention of,—

(a)

section 41AB(2) (which relates to obtaining prior consent for a change of control of a permit operator of a Tier 1 permit) if the person knows, or ought reasonably to know, that the power referred to in section 41AA(1) has been obtained; or

(a)

section 41AB(2) (which relates to obtaining prior consent for a change of control of a permit operator of a Tier 1 permit) if, before the power referred to in section 41AA(1) is obtained, the person knows, or ought reasonably to know, that the person will obtain the power; or

(b)

section 41AB(4) (which relates to notifying the Minister of a change of control of a permit operator of a Tier 1 permit); or

(c)

section 41A(2) (which relates to notifying the Minister of a change of control of certain permit participants).

19 Section 101 amended (Penalties)

After section 101(2), insert:

(2A)

Every person who commits an offence against section 100(2A) is liable on conviction to the following:

(a)

in the case of section 100(2A)(a), a fine not exceeding $800,000:

(b)

in the case of section 100(2A)(b), a fine not exceeding $200,000:

(c)

in the case of section 100(2A)(c), a fine not exceeding $50,000.

Part 2 Amendments to schedules of principal Act

20 Schedule 1 amended

(1)

In Schedule 1, replace clause 4(1) with:

(1)

Despite anything in clause 3, new section 105A, or regulations made under new section 105A, any royalties to be calculated under a permit or a subsequent permit that is granted in exchange for an existing permit must continue to be calculated in accordance with—

(a)

the minerals programme that applied when the existing permit (or, if the existing permit is a subsequent permit, the initial permit to that subsequent permit) was granted; or

(b)

the minerals programme for minerals (excluding petroleum) that came into force on 1 February 2008 if the permit holder opted into that programme in accordance with clause 1.7(2) of that minerals programme and old section 22(1)(a) (as in force before that section was replaced by the Amendment Act).

(1A)

Subclause (1) applies on and after 24 May 2013 (the date on which this schedule was replaced by the Amendment Act).

(1B)

The chief executive, on application by a permit holder who opted in as referred to in subclause (1)(b), may refund an overpaid royalty, or reduce a royalty amount payable, for a reporting period that applied (in whole or in part) on or after 24 May 2013 until the commencement of this subclause (so that the royalty that is paid or payable is consistent with that paragraph subclause (1)(b)).

(2)

In Schedule 1, after clause 12(2), insert:

(2A)

Despite subclause (1), the prohibition in section 240A of the Mining Act 1971 on a Minister delegating a power conferred by section 145 of that Act no longer applies to an existing privilege.

(3)

In Schedule 1, after Part 1, insert the Part 2 set out in the Schedule of this Act.

21 Schedule 4 amended

In the Schedule 4 heading, replace “53(3), 54(3)” with 54A.

Schedule New Part 2 inserted into Schedule 1

s 20(3)

Part 2 Provisions relating to Crown Minerals Amendment Act 2018

22 Consequential amendments to minerals programme

Nothing in section 17 or 18 of this Act applies to any change to a minerals programme if the change that is made is consequential to the amendments made to this Act by the Crown Minerals Amendment Act 2018 (including any change to remove inconsistencies between the minerals programme and this Act as amended).

23 Existing transactions not affected

(1)

The amendments made by sections 7 to 10, 18, and 19 of the Crown Minerals Amendment Act 2018 apply only to transactions entered into on or after commencement (and this Act, as in force immediately before commencement, continues to apply to a transaction entered into before commencement as if the Crown Minerals Amendment Act 2018 had not been enacted).

(2)

In this clause, a transaction must be treated as being entered into before commencement even if, immediately before commencement, the transaction is subject to a condition precedent.

(3)

In this clause,

change of control means a change of control (within the meaning of section 41A(1) and (8) of this Act (as in force immediately before commencement)

commencement means the commencement of the Crown Minerals Amendment Act 2018

transaction means a contract or an arrangement that has or will have the effect of a corporate body undergoing a change of control.

Legislative history

5 April 2018

Introduction (Bill 47–1)

3 May 2018

First reading and referral to Economic Development, Science and Innovation Committee