Tools we use to regulate

• What we regulate
• How we decide what compliance tool to use
• The tools and interventions we can use

What we regulate

Being granted a permit under the Crown Minerals Act (the Act) is just one of the steps operators need to take to be able to mine Crown-owned minerals in New Zealand. We issue these permits and make sure permit holders are complying with its conditions.

For example, we make sure:

• New Zealand is getting a fair financial return for our resources– operators must pay fees and royalties
• operators are providing us with data on what they are mining, for example geoscience data and related drilling samples
• permit holders are complying with the other conditions of their permit, like minimum work programme conditions.

There are other New Zealand agencies and stakeholders that manage other regulations and approvals that affect mining operators in New Zealand, for example environmental consents.

More information about other regulators can be found here:

Minerals and petroleum regulatory environment

How we decide what compliance tool to use

We have different interventions and tools that we can use to encourage compliance or respond to non-compliance.

The tools we use depend on the situation, for example we have:

• proactive tools like information and education to help people understand what they need to do to comply with the Act, and
• reactive tools like warnings, prosecution, enforceable undertakings, compliance notices, infringements fees and cancelling permits for when people don’t comply with the Act.

To help us decide what tools to use in different situations, we operate using the VADE model.

The VADE model

The VADE model (Voluntary, Assisted, Directed, Enforced) helps us decide what the best tool is to use on the regulated party (for example, a permit holder) to achieve behaviour change and compliance with the Act.

This model is commonly used by other regulators.

We decide on what approach or action to take based on

• the level of risk
• the clarity of guidance available, and
• the willingness of the regulated party to comply with the law.  

The VADE model

The compliance tools and interventions we can use

Here we describe some of the tools we can use to encourage compliance or respond to non-compliance.

This is not a full list. It gives an overview of the tools that are available to us.

For more detailed information on each enforcement tool you can see the legislation or view our compliance approach document.

New Zealand Petroleum and Minerals Compliance Approach [PDF 769KB]

Voluntary behaviour tools

Here we use tools to make it easy to comply by:

Providing information, guidance and support to permit holders

This includes information on the website, presentations at events, forums, newsletters and other targeted communication.

Simplifying compliance and promoting responsibility

We work to make our systems and processes easier to use so permit holders can take responsibility for making sure they comply.

Actively monitoring and detecting non-compliance and risk

We monitor the regulated parties to find any risks for, or non-compliance, and opportunities to promote compliance before there is a breach.

Assisted behaviour tools

Here we help people comply by:

Encouraging people to tell us early about any errors or mistakes

Mistakes happen. We may be more understanding if mistakes or errors are voluntarily disclosed to us early. If we know early, we may be able to help.

We may take firmer action against mistakes or errors where we haven’t been told, or there has been a deliberate effort to hide it from us.

Requiring information, inspecting and auditing compliance

We can require information from regulated parties and do inspections (announced or unannounced) to check if a permit holder is complying with the Act or the conditions of the permit.
We can also do in-depth audits to check for compliance. We can appoint an independent auditor and require permit holders to pay these costs in some cases.

Doing investigations

We can investigate alleged breaches of the Act. These investigations are usually done in response to significant or serious non-compliance.

Directed behaviour tools

Here we warn and direct action to be taken to fix non-compliance by:

Giving infringement notices

Infringement offences are instant fees for when someone doesn’t comply with certain requirements.

They can only be used when the permit holder has failed to do a specific action that is listed in the regulations. They can be used when people don’t:

• submit information, records and reports within the time specified
• provide a royalty return or pay a royalty by the due date
• make required payments, such as annual fees, within the time specified or by the due date.

The regulations to support infringement notices are currently being developed. We cannot use them until these regulations are in force.

Issuing formal written warnings

We may issue a formal written warning instead of prosecuting or taking other enforcement action.

A formal written warning is a written letter or email identifying non-compliance. The warning will outline what needs to be done to achieve compliance (if applicable) and give a summary of possible consequences if the non-compliance is not remedied or is repeated.

Our Formal Written Warning Operational Policy outlines how we, as the regulator, decide whether to issue a formal written warning. This Policy is available below:

Operational Policy – Formal Written Warning [PDF 266KB]

Proposals to change work programmes

In some cases, non-compliance can be fixed, with the agreement of the permit holder, by having new obligations on the permit’s work programme.

Enforcement tools

Here we use the full force of the law.

Enforceable undertakings

An enforceable undertaking is an alternative to prosecution.

It is a legally binding agreement between the regulator and a non-compliant party that the regulator will not prosecute if the non-compliant party agrees to certain conditions, activities, or actions.
It is a criminal offence to not do what is agreed to in the enforceable undertaking. On conviction, the Court can impose a fine of up to $200,000.

Compliance notices

A compliance notice is a direction from the regulator to a regulated party to fix or prevent a breach of the Act or regulations within a specified period. It will clearly say what needs to be done and may also include recommendations to prevent breaches in the future.

It is a criminal offence to not comply with a compliance notice, if convicted the Court can impose a fine of up to $200,000.

This tool is unlikely to be used alone for serious breaches.

Prosecution

Following an investigation where there is enough evidence for a Court to find that an offence has been committed and it is in the public interest, prosecution is an option. We may also consider our regulatory system objectives and enforcement priorities when deciding whether a prosecution is appropriate.

Cancelling permits

We can cancel (revoke) permits if the permit holder has breached a condition of the permit, the Act or its regulations, or if a payment has not been made within 90 days after the due date.

This tool would be used for very serious and/or persistent breaches and where other ways to achieve compliance have been exhausted.

Pecuniary penalties

A pecuniary penalty is a fine imposed by the Court for breaches to the requirements to decommission petroleum infrastructure, plugging and abandoning of wells, and establishment and maintenance of an adequate financial security. We can seek pecuniary penalties in relation to conduct which is also the subject of a criminal prosecution.

More information

Our diversion policy [PDF 201KB]