A new regime for landholder compensation?

Oct 2018

The Queensland government last night passed the Mineral, Water and Other Legislation Amendment Bill 2018, ushering in the latest changes to the land access and compensation regime in Queensland.

The Mineral, Water and Other Legislation Amendment Bill 2018 (the Bill ) was introduced into the Legislative Assembly and referred to the State Development, Natural Resources and Agricultural Industry Development Committee on 15 February 2018.

The explanatory notes explain that the primary objectives of the Bill are to:

  1. give effect to the Queensland Government’s response to four recommendations of the Independent Review of the Gasfields Commission Queensland;
  2. remove the automatic referral of compensation matters to the Land Court of Queensland under the Mineral Resources Act;
  3. ensure the consideration of the water-related effects of climate change on water resources is explicit in the water planning framework;
  4. provide for the inclusion of cultural outcomes in water plans to support the protection of the cultural values of water resources for Aboriginal peoples and Torres Strait Islanders;
  5. provide a mechanism to allow for temporary access to unallocated water held in strategic water infrastructure reserves;
  6. establish new powers for dealing with urgent water quality issues.

The Bill also contemplates a myriad of ' streamlining ' changes, including new flexibility allowing existing coal projects to apply for infrastructure tenures ' over-the-counter' , rather then via the usual land release and tender program, as well as amendments to the overlapping tenure framework.

On commencement, the new legislation will bring changes to the Mineral Resources Act 1989 , the Mineral and Energy Resources (Common Provisions) Act 2014 , the Coal Mining Safety and Health Act 1999 , the Petroleum and Gas (Production and Safety) Act 2004 , the Petroleum Act 1923 , the Geothermal Energy Act 2010 , the Greenhouse Gas Storage Act 2009 and the Water Act 2000 .

Changes to the negotiated land access regime in Queensland

Some of the most prominent changes to be introduced on commencement of the new legislation will be in the land access and compensation space.

General liability to compensate

During consultation, concerns were raised by non-mining sector stakeholders regarding the proposed amendment to s 81 of the Mineral and Energy Resources (Common Provisions) Act 2014 (the MERCP Act ), which establishes the general liability of resource authority holders to compensate the owners and occupiers of public and private land.

The changes clarify the intent of the Parliament to confirm that compensation under the statutory regime will only apply where authorised activities have been carried out ' on the eligible claimant’s land' .

In submissions made during consultation on the Bill, concern was raised regarding the removal of the rights of neighbours within the resource authority area, but without authorised activities on their land, to claim compensation for the impacts of nearby activities.

A last-minute amendment to the Bill was proposed by the member for Maiwar (Greens – Michael Berkman), on concerns regarding the potential to narrow the definition of compensatable effects. The amendment, if passed, would have left it open for the owners of neighbouring properties to bring a claim for compensation under the MERCP Act. The motion did not garner the support of either of the major parties, and was defeated.

As a result, the change to s 81 of the MERCP Act will reduce uncertainty for industry around the extent of its compensation liability under the statutory regime, and cast doubt upon the precedential value of the decision of the Land Court in Nothdurft & Anor v QGC Pty Limited & Ors [2017] QLC 41.

A new regime for alternative dispute resolution

In circumstances where a resource authority holder and an eligible claimant cannot reach agreement on the terms of a conduct and compensation agreement, the new legislation will provide a mechanism by which a method of non-binding alternative dispute resolution ( ADR ) may be proposed by either party to negotiations.

The ADR may be rejected by the counter-party, or an alternative method of ADR or ADR facilitator may be proposed.

Costs associated with any ADR conducted in accordance with the new statutory mechanism (including the preparation and negotiation costs of the landholder) will be for the resource authority holder.

Binding arbitration

In addition to the new ADR regime, the new legislation will introduce the ability for either party to a compensation negotiation to request binding arbitration in circumstances where agreement cannot be reached.

Arbitration may be proposed as an alternative to ADR, or after an unsuccessful ADR process has been undertaken. The arbitrator will have the authority to decide the dispute by the issuance of an award, and must do so within 6 months of the arbitrator’s appointment.

The parties will not be permitted to have legal representation in the arbitration unless both parties agree otherwise, or the arbitrator consents.

The arbitrator’s costs will be for the resources authority holder if arbitration is elected without the parties first participating in ADR. Each party will bear their own costs of participating in the arbitration, unless otherwise directed by the arbitrator.

The arbitrator’s decision may only be appealed to the Supreme Court on allegation of jurisdictional error.

Land Court determination

A party will only be able to refer a compensation liability dispute for determination by the Land Court if the parties have first participated in an ADR process.

Land Court determination may not be sought if the parties have otherwise agreed to determine the dispute by binding arbitration.

Liability for negotiation and preparation costs

The new legislation will also introduce changes to the liability of resource authority holders to pay costs incurred by an eligible claimant in negotiations for a conduct and compensation agreement.

The changes will expressly include the costs of an agronomist in the definition of ' negotiation and preparation costs' . The government did not take steps to include express reference to landholders’ time in this definition, notwithstanding a number of submissions supporting such a change.

The new legislation also confirms the liability of resource authority holders to pay landholders’ negotiation and preparation costs in circumstances where no agreement is ultimately reached, and negotiations are abandoned.

During consultation on the new legislation, some concern was raised with respect to the removal of the costs liability provisions from the overarching compensation liability under s 81 of the MERCP Act. The suggestion is that the costs will be treated differently if they are not considered to be part of the overall ' compensatable effects' , for which the compensation liability is calculated.

For example, in their submission to the Parliamentary Council during the consultation process, Shine Lawyers commented that:

'Moving it out of the head of compensation means it stands independently of that process, and a Landholder may well have to pay his own costs of arguing whether their professional assistance was “reasonable” with absolutely no bargaining power because the CCA will have been forced upon them or entered into without this issue being addressed. 

Companies will try to argue that the CCA process now stands independently of the issues surrounding costs so a landholder will necessarily find out later how much of the compensation they actually receive.”

The Parliamentary Committee made recommendations in its report into the MWOLA Bill for amendments to be made to avoid any potential unintended consequences of this change, but these changes were resisted by the government.

The new legislation also gives the Land Court the jurisdiction to hear disputes over negotiation and preparation costs.

Timing for the changes

The key changes to be introduced to the MERCP Act in respect of the land access and compensation regime are expressed to commence on a date to be fixed by proclamation.

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