5 October, 2017
What you need to know
The Australian Government has introduced the Coastal Trading (Revitalising Australian Shipping) Bill 2017(Cth) into Parliament.
The Bill seeks to simplify coastal trading regulation by removing the minimum five-voyage requirement to apply for a temporary licence, streamline the variation and notification processes, increasing acceptable tolerance limits, and abolishing emergency licences.
Significantly, the Bill also applies the coastal trading regime to vessels carrying liquid fuel products from offshore facilities to an Australian port where some or all of the liquid fuel product is offloaded.
What you need to do
Offshore industry participants should consider whether their transportation arrangements will fall within the expanded scope of coastal trading (if the Bill is passed).
Other industry participants should also familiarise themselves with the contents of the Bill and its effects on their existing and planned future coastal trading arrangements.
Interested parties should also bear in mind that a 2015 proposal to amend Australia's coastal trading regime was rejected by the Senate and the fate of the current proposal remains uncertain. If passed, the amendments are expected to take effect in March 2018.
Key stakeholders may wish to contact their Federal Member of Parliament to discuss and provide their feedback on the passage of the Bill through Parliament.
Background to the Bill
On 13 September 2017, the Australian Government introduced the Coastal Trading (Revitalising Australian Shipping) Bill 2017 (Cth) (Bill) into Parliament.
If passed, the Bill will amend the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) (Coastal Trading Act) to simplify and expand the scope of Australia's coastal trading regime, and in particular, reduce the administrative burden associated with the use of temporary licences.
The introduction of the Bill follows:
- a move to introduce a single-tiered licence system in 2015 which was ultimately rejected by the Senate; and
- a recent coastal trading consultation process conducted by the Department of Infrastructure and Regional Development.
The Bill attempts to address and modify the arrangements set out in the current system without completely overhauling the existing coastal trading framework.
Key amendments proposed to Coastal Trading Act
Application of coastal trading regime to offshore facilities
The Bill amends the Coastal Trading Act to include the transport of liquid fuel product from offshore facilities to an Australian port (where some or all of it is offload) as coastal trading.
This means that vessels undertaking voyages from offshore facilities to an Australian port (including, for eg, from floating, production, storage and offtake facilities (FPSOs) to floating storage units (FSUs) in Australian ports), will require a licence.
The Government has indicated that this is to encourage the use of Australian refineries as the lack of coverage of such movements has resulted in shipments of crude oil being sent to international refineries, rather than Australian refineries, for processing.
Removal of five-voyage requirement for temporary licences
Currently, a temporary licence can only be obtained by an owner, charterer, master or agent of a vessel, or a shipper, for five or more voyages and the details of those voyages must be known in advance.
The Bill proposes to remove the five-voyage restriction and to require that temporary licence applicants provide the vessel's IMO number if known.
Removal of automatic consultation requirement for temporary licence applications and variations
The Bill removes the requirement that every temporary licence application be published on the Department of Infrastructure and Regional Development's website and notified to general licence holders and other affected parties.
Instead, the Minister will be given the power to designate types of passengers and cargo in respect of which consultation must take place.
This means that consultation will no longer be necessary where there is no Australian ship holding a general licence capable of competing with a foreign ship for particular voyages (for eg because there is no Australian ship capable of carrying the particular cargo, such as oil and gas tankers engaged in the coastal trade).
Applications to vary a temporary licence will be treated in the same way.
Reduced approval timeframes for temporary licences
The Bill reduces the timeframe in which the Minister must decide an application for a temporary licence for non-emergency situations from 15 business days to 10 business days.
This is intended to provide additional certainty to industry and reduce the costs associated with time delays in obtaining a temporary licence. Temporary licences issued in non-emergency situations will continue to be valid for 12 months.
Notification requirements for temporary licence holders
Temporary licence holders will not be required to notify the Minister of the particulars of a voyage before the loading date if those particulars were provided as part of the application for, or to vary, a temporary licence.
A person will also be able to vary a voyage after it has been notified at any time before the voyage commences.
Abolition of emergency licences and energy security situations
The Bill proposes to abolish emergency licences and permit the owner, charterer, master or agent of a vessel, or a shipper, to apply for a temporary licence in emergency situations.
The Minister will continue to have three business days to decide an application for a temporary licence in emergency situations. Such licences will be valid for 65 days.
We do not expect that the kinds of emergency for which a licence may be obtained will change significantly. These situations are prescribed under the Coastal Trading (Revitalising Australian Shipping) Regulation 2012(Cth) and are currently:
- an event that is a cyclone, earthquake, flood (including flash flood), landslide, mudslide, storm surge, thunderstorm, tornado, tsunami or wildfire;
- that endangers or threatens to endanger, life, property or the environment; and
- that requires a significant and coordinated response.
Provisions in the Coastal Trading Act applying in energy security situations will also be removed.
Higher tolerance limits for temporary licences
The number of passengers and volume of cargo that is authorised to be carried on a vessel under a temporary licence are subject to a 20% tolerance limit (that is, the number or volume is authorised if it is within 20% of the number or volume set out in the licence).
The Bill proposes to increase these tolerances to 200% more than, or 100% less than, the number of passengers or volume of cargo set out in the licence. This permits greater variations in the number of passengers or volume of cargo to be carried under a temporary licence without the licence holder needing to request a variation to the licence.
The Bill also amends the current acceptable tolerance limit in relation to loading dates from five days to 30 days before/after the loading date authorised in the temporary licence.
Protections from importation of vessels
The Bill permits chartered recreational vessels that typically embark and disembark from the same port to be covered by a declaration that the Coastal Trading Act applies to the vessel.
This mechanism, as well as amendments to section 112, will mean that those vessels and vessels in dry dock or docked for maintenance, repairs, cleaning or painting (which are not undertaking a voyage) are not considered to have been imported into Australia for the purposes of the Customs Act 1901 (Cth) (thereby avoiding having to pay import duty on those vessels).
Implications for shipping stakeholders
At this stage, the fate of the Bill is uncertain given that earlier proposed amendments to the Coastal Trading Act in 2015 to introduce a single-tiered licence system was rejected by the Senate.
If passed by the Commonwealth Parliament, Australia may see an increase in the levels of coastal trading engaged in by foreign vessels where there is no Australian ship capable of undertaking the same voyages (for eg, due to there being no Australian-flagged gas carriers engaged in the coastal trade). We expect this will be facilitated by crews on those vessels entering Australia and working on licensed vessels under the maritime crew (subclass 988) visa.
Industry participants can generally expect a number of "quality of life" improvements to the coastal trading regime that will streamline the temporary licence application and variation processes.
However, the extension of the application of the Coastal Trading Act to vessels transporting liquid fuel products between offshore facilities and Australian ports will mean that offshore industry participants will need to consider their transportation arrangements and determine whether a coastal trading licence will be needed.
For further information, please contact:
Shane Bosma, Ashurst