Controlled allocation FAQs

1. What is the controlled allocation order?

There are some groundwater sources in NSW that are not fully committed, and water access licences can be bought through controlled allocation orders. For other water sources in NSW that are fully committed, water access licences can only be bought through the water trading market.

The Controlled Allocation Order (Various Groundwater Sources) 2020 (the Order) was made on Friday, 29 May 2020. It provides an opportunity to register interest in buying new aquifer access licences through a process that begins on Tuesday, 23 June 2020.

Under the Controlled Allocation Order 2020, new aquifer access licences are being made available in 43 groundwater sources.

Detailed information about the controlled allocation process is available in the Order’s terms and conditions.

​Note: Buying water through a controlled allocation gives the new licence holder a share in the water source. This does not guarantee that groundwater ​of sufficient yield or quality will be found at the required location to suit the participant’s particular purpose. This is because ​groundwater yield and quality can vary within a groundwater source.

2. What type of access licence can be bought through a controlled allocation process?

The Controlled Allocation Order allows shares to be bought for the category ‘aquifer access licence’ in the specified groundwater sources.

3. Why is the department selling water during drought and COVID-19?

Controlled allocations of groundwater commenced in 2009 and have been operating since then to allow new access to groundwater for urban, regional and rural industries and communities.

There are still many areas affected by drought in NSW and most industries, especially primary industries, continue to operate during the COVID-19 pandemic.  A controlled allocation will provide another avenue to those wanting to buy groundwater for existing, new or expanding businesses.

4. How does the controlled allocation process work?

Registration of Interest

Persons or companies will be invited to submit a Registration of Interest form during the Registration of Interest period (23 June 2020 to 22 July 2020), with details including:

  • The groundwater source they want to buy water in,
  • The amount of water they want to buy, (expressed in unit shares for example one unit share), and
  • The price per unit share (at or above the minimum price) they are willing to pay.

Assessment of applications

After the Registration of Interest period closes, the Department of Planning, Industry and Environment (the Department) will assess all registrations received, in accordance with the Order’s terms and conditions. Participants who submit a Registration of Interest with an offer to pay the highest price per unit share (at or above the minimum price) will be identified as successful.

If water is still available after satisfying the highest priced bids, the participant willing to pay the next highest price (at or above the minimum price) may also be successful, and so on until all available shares have been exhausted.

If more than one participant is offering the same price per share in the same groundwater source and there is insufficient water to be allocated, the water will be split proportionately among the participants who offered that price.

Notifying participants

Once the Department has assessed all the applications received, participants will be informed in writing on whether their Registration of Interest was successful or unsuccessful.

Payment

If a participant is notified by the Department that their Registration of Interest was successful, they have 30 days to pay the total purchase price for that water.

If a participant does not pay the total purchase price within the 30 days, or does not withdraw from the process, they will be in default under the Order’s terms and conditions and may lose any right to apply for an access licence or may not be allowed to participate in future controlled allocation processes.

Successful participants to put in an access licence application

Once a participant has paid the total purchase price for the water, they have another 30 days to put in a valid aquifer access licence application to the relevant water licensing authority (either WaterNSW or NRAR).

Licence application decided

The licensing authority will process the participant’s licence application and notify them of the outcome.

If an application for an access licence is refused by the licensing authority, the Department will refund the total purchase price paid by the participant.

5. Can I withdraw from the controlled allocation process at any stage? 

Participants can withdraw:

  • After they submit their Registration of Interest application form, however their application fee will not be refunded.
  • Participants have 30 days from the date that they are notified they are successful to withdraw from the process. This must be done in writing by notifying the Executive Director specified on the Successful Notice that they are withdrawing.

If participants do not either withdraw or apply for their licence after the 30 days, they will be considered in default under the order’s terms and conditions. This means that they may lose any right to apply for an access licence, or could be precluded from participating in future controlled allocation order processes.

See Schedule 2 of the Controlled Allocation Order for the terms and conditions dealing with withdrawing and default. These terms and conditions ensure the process does not disadvantage other genuine participants.

The Registration of Interest application fee, licence application fee and total purchase price will not be refunded if participants choose to withdraw from the process after the 30 days.

6. What is unassigned water?

A water source has ‘unassigned water’ when current water users’ requirements (including licensed volumes and water required to meet basic landholder rights) are:

  • Less than the long term average annual extraction limit (extraction limit) in the water sharing plan, and
  • For water sources in the Murray-Darling Basin, those requirements are also less than the sustainable diversion limit in the Basin Plan.

For more information on how unassigned groundwater is determined, see the Strategy for the controlled allocation of groundwater.

7. Why are minimum prices set?

For information on the method for setting the minimum prices, see the Strategy for the controlled allocation of groundwater.

8. How much water is released under this controlled allocation order?

Schedule 1 in the 2020 order sets out the amount of shares being made available and the groundwater sources included in this order.

A portion of unassigned water is made available in each of the groundwater sources included in the order. This precautionary approach, consistent with the Strategy for the controlled allocation of groundwater,  allows the release of up to 80% of the extraction limit or sustainable diversion limit set for groundwater sources.

The volumes to be released under the 2020 order have been reviewed to ensure that enough groundwater remains available to meet future demands for urban water supply and basic landholder rights’ needs, particularly during drought.

9. Is there a limit to the number of shares that a bid can be made for?

A limited number of shares is being released in specific groundwater sources. Participants can register interest in any number of shares up to the total number of shares made available in these groundwater sources.

One unit share equates to one megalitre if the available water determination for aquifer access licences is 100%.

10. What if an enterprise wants more water than can be bought through this controlled allocation process?

The Minister may make further controlled allocation orders in groundwater sources with unassigned water. Water can also be bought through the trading market.

11. Are there restrictions on taking groundwater under the new aquifer access licences?

The aquifer access licences allocated under this order will only allow water to be taken from the particular groundwater source to which the shares apply.

In addition, groundwater made available through this controlled allocation order cannot be taken from the following water management zones:

  • The Lachlan Fold Belt MDB (Mudgee) Management Zone, in the Lachlan Fold Belt MDB Groundwater Source, and
  • The Gunnedah-Oxley Basin MDB (Spring Ridge) Management Zone, in the Gunnedah-Oxley Basin MDB Groundwater Source, or

Holding an aquifer access licence alone does not allow water to be physically taken from the groundwater source or used. A successful participant must also nominate a water supply work or other extraction point and must hold the appropriate approval (unless an exemption applies), as described in FAQ 12.

12. What other approvals are required before the water can be taken?

Approvals under the Water Management Act 2000

Before water can be taken from a groundwater source, a water supply work approval or other type of approval is required. Water supply work approvals allow a person to construct and use a water supply work, such as a pump or bore, to take water at a specified location.

water use approval may also be required to use the water for a specific purpose (such as irrigation) at a specific location.

These approvals, under the Water Management Act 2000, are not required for State significant development including mining projects, or State significant infrastructure.

Approvals for State significant development or State significant infrastructure

State significant development and State significant infrastructure require approvals under the Environmental Planning and Assessment Act 1979. As for all other types of development, water taken by State significant development and State significant infrastructure projects must hold a water access licence under the Water Management Act 2000 and for that licence to nominate a work or other extraction point.

Approvals may also be required under Commonwealth legislation.

Depending on the existing level of development in the groundwater source and the predicted impacts of the proposed activity, extraction from the work/extraction point may have limits placed on it designed to ensure that impacts on water sources, other users or the environment are acceptable.

13. Can an aquifer access licence obtained under this controlled allocation process be traded?

Yes. The water access licence can be traded in accordance with the rules in the relevant water sharing plan and the Access Licence Dealing Principles Order 2004.

14. How do water sharing plan rules apply to water access licences obtained through the controlled allocation?

Water sharing plan rules will apply to these water access licences in the same way that they apply to any other water access licence in the groundwater source.

Water sharing plans include rules specifying the circumstances in which water can be taken from a water source, for example rules for crediting water allocations to the water allocation account of a water access licence through available water determinations.

15. Can the controlled allocation order be extended or repealed? If so, what happens then?

Yes. The controlled allocation order can be extended if necessary. It can also be repealed at any time by the Minister, or his or her delegate. Another order can also be made to apply to these or other water sources while this order exists. If this order is amended or repealed, arrangements will be made for any licence applications that have already been lodged.

16. How does this controlled allocation order relate to the Aquifer Interference Policy (2012)?

The NSW Aquifer Interference Policy (PDF 505.5 KB) covers aquifer interference activities including mining, exploration, quarrying and dewatering for construction or ongoing maintenance.

This Policy sets out the water licensing requirements for aquifer interference activities to ensure the water taken by them is properly licensed and accounted for in all affected water sources. Anyone who takes water when carrying out an aquifer interference activity must hold a water access licence unless an exemption applies.

The Policy defines the minimal impact considerations when assessing the impacts associated with aquifer interference activities.

The minimal impact considerations are also used to assess the impacts of State significant development and State significant infrastructure proposals that are aquifer interference activities and form the basis for the advice that is provided to the relevant approval body – generally the Planning and Assessment Division of the Department of Planning, Industry and Environment.

17. Will the release of licences with a share component under this controlled allocation process affect the water available for food production or the environment?

No. The process will not affect existing licences (shares) held in a groundwater source and will not reduce the amount of water able to be taken and used to grow food, or reduce planned environmental water.

Water licences are only made available in groundwater sources with unassigned water. Only a portion of the unassigned water is released to ensure that the total water extractions in a groundwater source remains below the limits set in the Basin Plan or the relevant water sharing plan.

18. Will the release of water under this controlled allocation process allow water to be taken from connected surface water systems?

No. All groundwater systems that are highly connected to surface water are fully committed. Under this order, water is only being released from groundwater systems that are not highly connected to surface water.

Water sharing plans for groundwater set rules to manage impacts of groundwater extraction on surface water.

The potential impacts of any new proposal on highly connected surface water systems must be considered when an environmental assessment is being done as part of the proposal’s approval process.

19. Why would a participant be offered less unit shares than the amount they registered interest in?

Under the order’s terms and conditions, if there is insufficient water available to satisfy successful bids at the same price in the same groundwater source, then the available water will be allocated proportionately among the applications that have put in a bid at that same price. If this occurs, the participant may be offered a lesser amount of shares than were bid for in their registration of interest.

20. When will I receive access to my water?

Water will be credited to the accounts of licensed water users after the water access licence have been issued (this will be a pro-rata amount for the water year until an available water determination is made) in accordance with section 85 (4) of the Water Management Act 2000.

21. Can I get a refund with my application fee if I change my mind?

Once participants have paid their application fee, it will not be refunded if they change their mind. However, if the water source that the participant nominates is withdrawn during the Registration of Interest period, their application fee will be refunded.

22. Can I seek financial assistance for paying the total purchase price?

No, but participants have the option to withdraw from the controlled allocation process at any time before the total purchase price is due, this being 30 days following notification in writing that their application was successful.

23. How do I know if my water source is available under a controlled allocation?

Schedule 1 of the 2020 Controlled Allocation Order lists the water sources available for the registration of interest period.

Where a water source is not included, it may be possible to buy water through the water market.

24. How will I know which water source to apply for?

The map Groundwater Covered by Controlled Allocation Order May 2020 shows the groundwater sources in which water is being made available.

Contact WaterNSW (1300 662 077) to confirm the groundwater sources at a specific location.

25. Do I have to apply for an access licence if I already one? 

Yes, water bought through a controlled allocation is new water and a new aquifer access licence is required.  If participants would like to merge this new licence with their existing licence, this can be done later through a dealing (contact WaterNSW on 1300 662 077 for more information on how to do this).

26. Can I combine my surface water with my groundwater?

No, groundwater cannot be combined with, or stored, in surface water infrastructure.

Contact WaterNSW (1300 662 077) to discuss your options.

27. What happens if I don’t find suitable quantity or quality of groundwater when I drill a bore in my location? 

Buying water through a controlled allocation gives the new licence holder a share in the resource. This does not guarantee that groundwater ​of enough yield or quality will be found to suit the participant’s purpose. This is because ​groundwater yield and quality can vary within a groundwater source.

​If participants are unable to find suitable groundwater, they have the option to ​sell their licence on the water market.