Mine subsidence system reforms

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Reforms to the Mine Subsidence Compensation Act 1961

Subsidence Advisory NSW (SA NSW) is changing the way mine subsidence damage is compensated to make the process fairer, faster and more community responsive. The reforms will take effect from 2018 following the recent passage of the Coal Mine Subsidence Compensation Bill 2017 in NSW Parliament.

The changes will see claims for subsidence damage caused by active mining compensated by the mine operator responsible.

All claims for compensation will continue to be lodged with SA NSW through a new claims portal. SA NSW will assign a case manager to each claim to support property owners and ensure they are treated fairly.

Claims will be independently assessed by a new panel of expert assessors, and mine operators will be required to compensate property owners accordingly. Mine operators will be required to comply with guidelines to ensure that claimants are treated fairly and claims are processed within strict timeframes.

New dispute resolution pathways will provide claimants with access to independent determination without having to resort to costly litigation.

SA NSW will continue to compensate homeowners whose properties are damaged by subsidence from inactive mine workings using the Mine Subsidence Compensation Fund. Mine operators will continue to pay a reduced levy to compensate for impacts arising from inactive mining.

SA NSW is being repositioned to oversee and manage the new claims process, and will be tasked with providing advocacy and support to local communities affected by subsidence. Dedicated case managers will be on hand to guide claimants through the new process.

The changes follow a review of the Mine Subsidence Compensation Act 1961 by the Department of Finance, Services & Innovation in 2016 and significant consultation over the last 12 months.

Frequently Asked Questions
1. Why is Government changing the compensation system?

The system is changing following a review of the Mine Subsidence Compensation Act 1961 (the Act) in 2016. Government undertook the review in response to community and industry concerns about the former Mine Subsidence Board’s (MSB) operation. The legislation has not been subject to a comprehensive review since commencement

The review identified a need to improve the claims experience for property owners, the compensation framework and the MSB’s administration of the system. The review also found that the Act was outdated and no longer fit for purpose. The legislation was originally set up to provide security to home owners that were impacted by legacy subsidence damage from historical bord and pillar mines. Following a shift to longwall mining, around 90% of claims now relate to damage from active mines rather than historic non-active mines. The review also found the levy paid by mine operators is disproportionate to the subsidence damage they cause.

Following the review, the MSB was renamed SA NSW and various operational improvements were made. SA NSW has moved to a new compensation model to ensure claims are settled more quickly and introduced a new Case Advisory function to support claimants. The legislative changes form 1 January 2018 will build on SA NSW’s recent improvements and ensure mine operators are accountable for the damage they cause.

2. How does the current compensation system work?

Under current arrangements, all active coal mines in NSW pay a levy towards the Mine Subsidence Compensation Fund that is administered by SA NSW. The levy paid by each coal mine is based land value and coal production and does not have any correlation to the amount of subsidence damage they cause.

If a property is damaged by mine subsidence, the property owner lodges a claim for compensation with SA NSW. SA NSW assesses the claim, inspects the damage and may accept or reject the claim. If the claim is accepted, SA NSW generally provides compensation to the property owner. Alternatively, SA NSW may choose to engage contractors to repair the damage or acquire the property.

If claimants are unhappy with SA NSW’s determination of their claim, they can appeal SA NSW’s decision in the Land and Environment Court.

3. How will the new compensation system work?

Claims for compensation for damage caused by mine subsidence will be lodged with SA NSW through its online portal. A SA NSW Case Advisor will be allocated to the claim, supporting property owners and providing a dedicated point of contact throughout the process.

SA NSW will assess whether the claim is within the zone of an active or non-active underground coal mine. If the claim is in an active mining area, SA NSW will notify the relevant mine operator. SA NSW will also assess whether subsidence at the property is complete. If not, SA NSW will defer assessment until subsidence has settled. This is because it is possible the property may sustain further damage as the ground settles. In most cases, subsidence impacts occur within three years of longwall mining.

Claims in active mining areas will be assessed by an independent expert from a panel of assessors managed by SA NSW. Claims in non-active mining areas will be assessed by an SA NSW Project Manager with expertise in mine subsidence damage. SA NSW may also engage an independent expert from the technical panel, such as a geotechnical engineer, to carry out additional assessments on more complex claims in non-active mining areas.

SA NSW or the Mine Operator (in active mining areas) is required to determine the claim and, if accepted, prepare an offer of compensation for the property owner in accordance with the findings of the expert assessments. SA NSW will then provide the property owner with the claim determination, compensation offer, and expert reports for acceptance.

If the property owner accepts the determination and offer of compensation, SA NSW will coordinate payment of compensation. If the property owner disagrees with the determination or compensation offer, they can request an independent review of the claim by the Secretary of DFSI or their delegate.

SA NSW is currently preparing guidelines on the process for claiming mine subsidence compensation to provide property owners with detailed information and guidance on each stage of the claims process. These guidelines will be a public document available at www.subsidenceadvisory.nsw.gov.au/claims from December 2017.

4. What are the main changes to the compensation system?

The most significant change is that operators of active underground coal mines are being made financially accountable for the subsidence damage they cause. All coal mine operators will still be required to pay a levy towards the Mine Subsidence Compensation Fund. SA NSW will continue to use the fund for compensation claims caused by subsidence from legacy mining activity.

SA NSW will continue to manage all claims for compensation, irrespective of whether damage is caused by an active or non-active mine. All claims will be lodged with SA NSW through a new online claims portal. A SA NSW Case Advisor will be assigned to each claim, providing property owners with focused support and a dedicated point of contact throughout the process. For claims in active mining areas, SA NSW will facilitate mine operator involvement at key points of the claim process.

Mine operators will be financially accountable for the subsidence damage they cause

If a property is damaged by mine subsidence caused by an active coal mine, the mine operator will be required to compensate property owners for the cost of the damage. This is consistent with how property owners might be directly compensated for mine-related damages arising from blasting, noise and dust, water supplies and for access to land for exploration and mining activities. SA NSW will continue to manage the claim process.

Claims will be assessed by technical experts

Claims in active mining areas will be independently assessed using a panel of expert technical assessors managed by SA NSW. Mine operators will be required to provide compensation in accordance with the assessment, plus any other compensation the property owner may be eligible for.

Claims in non-active mining areas will be assessed by a SA NSW Project Manager with expertise in mine subsidence damage. SA NSW will also engage assessors from the panel for claims in non-active mining areas where additional assessments, such as geotechnical investigations, are required.

New dispute resolution pathways

A robust dispute resolution process will provide property owners with access to a broader range of options to obtain an independent determination, without resorting to expensive litigation. Property owners who are unhappy with the outcome of their claim will be able to request a free, independent review of their claim by the Secretary of Department of Finance, Services and Innovation (DFSI) or their delegate.

More effective case management of claims

SA NSW’s case management function will be strengthened to provide greater support and advocacy to claimants. A SA NSW Case Advisor will be allocated to each claim to oversee the claim management process, coordinate the assessment of damage, and facilitate mine operator involvement at key points of the claims process where damage is the result of an active mining operation.

To improve the claims experience, claimants will be able to lodge and manage their claims through SA NSW’s new online portal. Claimants will be able to return to the portal at any time to track the status of their claim in real time, access all information relating to their claim in one location, and interact with SA NSW.

5. How will the changes benefit home owners affected by subsidence?

The new system has been carefully designed around improving the experience for claimants in the following way:

- Claimants will benefit from a streamlined claims process and new dispute resolution procedures, providing timely decisions and greater certainty

- Claimants have access to support and advice from SA NSW, delivering greater assistance to homeowners;

- Guidelines will provide claimants with clear information on the steps to seek compensation, providing property owners with a better understanding of the process; and

- Claimants will have access to SA NSW’s new online portal to track and manage their claim throughout the process.

6. Will there be longer timeframes for claims to be processed?

No. It is expected that the timeframe for processing claims will be substantially reduced under the new system.

Both SA NSW and underground coal mine operators will be required to report against key performance indicators (KPIs) to ensure claimants are treated fairly, including minimum response timeframes and number of disputed claims.

7. Will there be any additional costs for homeowners?

No. There will be no additional costs for landowners under the reforms to the compensation process.

8. Will there be any compensation for losses such as relocation costs?

The independent assessment of damage will include an estimation of the costs to remediate the damage. Mine operators and SA NSW may also provide further compensation for other expenses incurred by the property owner such as relocation costs and loss of rent where applicable.

9. Is lodging a claim for compensation different for active or non-active mining operations?

No. All claims for compensation will be lodged with SA NSW through its online portal. If the claim is within the zone of an active mining operation, SA NSW will notify the relevant Mine Operator that the claim has been received and involve them at key points of the process.

Regardless of whether the damage relates to an active or non-active mine, all claims for compensation will be:

- lodged with SA NSW through an online portal

- allocated a SA NSW case advisor to oversee the assessment of the claim and provide a single point of contact for the claimant

- assessed for any further compensation for other expenses incurred by the property owner such as relocation costs or loss of rent.

11. What happens if a claim is refused, or a claimant does not agree with the amount of compensation?

A new independent claims and dispute resolution process will ensure fair and timely decision making, and provide an avenue for review without resorting to expensive litigation.

Determination of compensation is based on a technical assessment of damages and associated costs. If claimants are unhappy with determinations, they will be able to request an independent review by the Secretary of the Department of Finance, Services and Innovation or their delegate.

12. How does the Secretary independently review claims?

The Secretary of the Department of Finance, Services and Innovation or their delegate will review documents from the preliminary triage of the claim, the independent technical assessment and any other investigations conducted. The Secretary may also request further investigations as part of the review process.

The Secretary or their delegate will then determine the claim or relevant dispute.

The Secretary or delegate’s decision is binding and the claimant is unable to revert back to the original determination. However, the Secretary’s determination can be appealed to the Land and Environment Court.

The approved procedures include a detailed guide on the Secretary review process.

13. Can any party appeal a determination to the Land and Environment Court before a review by the Secretary has been undertaken?

No. A review by the Secretary is the first avenue of review for a claimant or coal mine operator. The objective of this is to provide access to an independent review without having to resort to expensive litigation, thereby reducing costs for claimants. It will also assist in reducing the number of claims proceeding to the Land and Environment Court, by resolving disputes prior to legal action.

Costs for the review will be determined by the Secretary to be paid by the coal mine proprietor, the Mine Subsidence Compensation Fund, or require a contribution from the claimant. The approved procedures for determination of claims will set out the responsibility for the costs associated with reviews by the Secretary.

14. What happens if a mine operator does not compensate claimants in accordance with the expert assessment?

If a mine operator does not determine a claim in accordance with the findings of the expert assessment or approved procedures, SA NSW may exercise its powers to step in and determine the claim.

SA NSW will have strengthened compliance and enforcement powers under the new legislation to allow it to effectively oversee and enforce mine operator compliance.

Relevant mine operators may be required to report to SA NSW on various matters, which SA NSW will use to inform any compliance and enforcement activity. To address instances of non-compliance such as not determining claims in accordance with expert assessments, SA NSW will have the ability to issue warnings, directions and fines. Seriousness of non-compliance and compliance history will be considered when determining appropriate compliance and enforcement action.

Furthermore, the mine operator’s record of compliance and their performance in upholding community protections will be considered to determine whether the mine proprietor is a fit and proper person for the purposes of the Mining Act 1992. A determination that a proprietor is not a fit and proper person may result in a decision to refuse to grant, renew, cancel or transfer a mining right, suspend operations under a mining right, or restrict operations through imposition or variation of conditions.

15. I have a current claim for compensation with SA NSW. What happens now?

Any claim lodged with SA NSW prior to 1 January 2018 will not be impacted by the changes. . This means that any claim for subsidence damage lodged with SA NSW prior to January 2018 that is accepted will be compensated by SA NSW using the Mine Subsidence Compensation Fund.

16. What is the portal? How do I access it?

The portal is an online platform managed by SA NSW where the public can lodge and manage claims for compensation for mine subsidence damage and applications to build or subdivide within mine subsidence districts.

Claimants will be able to return to SA NSW’s portal at any time to track the status of their claim, access relevant information including dedicated case advisory services, and interact with SA NSW.

The portal will go live on 15 January 2018. Once live, you can access the portal through SA NSW’s website.

17. When do the changes take effect?

The new legislation, including the major changes to the levy framework, will take effect on 1 January 2018.

18. How can I find out more about the changes to the compensation system?

You can find out more by contacting SA NSW directly on (02) 4908 4300 or at sa-mail@finance.nsw.gov.au.

19. What is mine subsidence?

Mine subsidence refers to the movement of the ground following underground coal mining. Sometimes after coal is extracted from beneath the ground, the above soil and rock can fall and fill the void left behind causing movement of the ground surface.

Underground mining does not always cause subsidence and there are many examples where mining has occurred without causing any movement of the land above. When subsidence does occur, the impacts vary depending on a number of factors including how deep the mine workings are, how the coal was extracted, and the geology of the land.

Subsidence can occur without any effect on buildings and structures. However, in some cases it can result in damage. Generally, buildings damaged by subsidence remain safe and people can continue to occupy them until they are repaired.

Sometimes subsidence from old inactive mine workings at a shallow depth can result in a hole in the surface of the ground known as a ‘pothole’. Subsidence potholes are generally localised and only affect a single property. Most potholes are relatively small but they can all be dangerous. It is always important to keep a safe distance from potholes as the ground around them may be unstable and can easily collapse. If you see a pothole, you should immediately report it to SA NSW’s 24 Hour Emergency Hotline on 1800 248 083.

Find out more about mine subsidence at www.subsidenceadvisory.nsw.gov.au/mine-subsidence.

20. What does subsidence damage look like?

Most homes and structures that are mined beneath will never be impacted by mine subsidence.

If a property is damaged as a result of mine subsidence in NSW, the property owner can lodge a claim for compensation with SA NSW. Damage to buildings and structures can range from hairline cracks and doors jamming to structural damage.

Generally, buildings damaged by subsidence remain safe and people can continue to occupy them until they are repaired.

In the rare situation you have a safety or security concern as a result of mine subsidence, you should report it immediately to SA NSW’s 24 Hour Emergency Hotline on 1800 248 083.

Further information is available at www.subsidenceadvisory.nsw.gov.au/mine-subsidence.

21. How are subsidence safety issues managed?

Subsidence safety issues are attended to by SA NSW’s emergency response team. There are no changes to SA NSW’s emergency service.

Safety is the highest priority for SA NSW. A 24 Hour Emergency Hotline - 1800 248 083 - is available to all members of the public to report subsidence safety issues. This service operates both within and outside of mine subsidence districts (districts).

Once notified of a subsidence safety issue, SA NSW coordinates an immediate response to ensure the affected area is made safe.

In addition to the emergency service, SA NSW also controls development in districts to mitigate potential subsidence damage. Developed areas are more likely to have large and complex structures which can present greater safety risks if impacted by mine subsidence. By specifying the construction conditions, SA NSW can help keep homes and buildings safe.

22. What are ‘non-active mines’ and ‘active mines’?

Subsidence can be caused by either active or non-active mines. Classification of active and non-active mining is set out in the Coal Mine Subsidence Compensation Regulation 2017.

Active mining refers to underground coal mines that are currently in operation or where mining occurs after 1 January 2018. Generally, active underground mines extract coal using longwall mining methods where subsidence typically occurs within a few months of extraction, with full subsidence usually occurring over a three year period after extraction. Generally, open cut coal mining operations do not cause subsidence damage to property.

Non-active mines are underground mines that are no longer in operation. This includes abandoned mining operations and historic coal mines where mining occurred in parts of NSW over 150 years ago predominately using bord and pillar extraction methods. These non-active mines generally go unnoticed as the mine workings are considered stable. Occasionally, parts of these mines collapse. Some areas have always had potential for mine subsidence from this historic mining activity, but damage only occurs when these areas are developed for urban purposes.

SA NSW manages all claims and supports property owners throughout the process regardless of whether the subsidence damage is from non-active or active mines.