Chapter 3
Key issues
3.1
The committee received a significant amount of evidence on the specific
clauses in the bill that would provide for the proposed landholders' right to
refuse access to their land and that would implement a ban on hydraulic
fracturing. Another overarching key issue in the evidence received by the
committee, however, is whether the Commonwealth actually has a legitimate role
in enacting legislation that relates to these matters. In addition to these key
issues, stakeholders also highlighted potential drafting issues.
3.2
This chapter considers the bill in detail. The evidence received
regarding the proposed landholders' right to refuse access to land is examined
first, followed by the evidence received on the proposed hydraulic fracturing
ban, the role of the Commonwealth and, finally, the potential drafting issues.
Right to refuse access to land
3.3
The submissions received by the committee commented on the overall
merits of the proposed right to refuse access to land and particular issues
that this aspect of the bill may present. This section outlines the issues
raised.
Overall observations
3.4
Mrs Shay Dougall, the founder of the Hopeland Community Sustainability
Group, provided the following heartfelt explanation as to why she supports the
right for landholders to refuse gas and coal activities from being undertaken
on their land:
I spend every day and many nights fighting to maintain the
line in the sand that this legislation is all about. It is all about what we
have already done for ourselves. Hopeland has had a gas-free declaration, which
was for our area to remain gas free. We stood up for our own rights. We said
no. I want to support the financial, emotional and physical wellbeing of my
family, my kids and my community, because the area will be unliveable and a
disastrous financial loss to us because of this industry. Even if we did leave,
where would we go?...If this legislation does not go through, no-one gets to say
no to all of those petroleum leases. There is nowhere to go. This bill is life
changing. After years of screaming into pillows, one simple act to uphold human
rights by this government will at least level the playing field in this
country. If the government will not protect us and help us protect our
children, our food and our water security, at least give me and my community
the right to protect them for you and the right to refuse gas and coal.[1]
3.5
Mr Drew Hutton, President, Lock the Gate Alliance, argued that a right
for landholders to refuse gas and coal activities from being undertaken on
their land is needed as negotiations between mining companies and farmers are
not equal. Mr Hutton characterised such negotiations as occurring 'with a
gun at the head of the landowner' as landholders who do not want mining on
their land 'simply do not have the right to say no in the long run'.[2]
3.6
The EDOs of Australia submitted that it supports the bill because of
various inadequacies in the state regulatory frameworks. The submission stated:
Significant community concerns exist regarding notification,
clear information, and local engagement in decision making processes for coal
mining and unconventional gas activities. This includes initial licensing
decisions, equity in negotiation of access arrangements, upfront consideration
of environmental and social impacts, landholder and community appeal rights,
and landholder access to compensation if activities cause damage.[3]
3.7
The EDOs of Australia further argued that it supports intervention by
the Commonwealth in landholder rights as, in its view, the issue is 'of
national significance in urgent need of national regulation'.[4]
3.8
The National Farmers' Federation (NFF) submitted that it supports 'the
principle of requiring a landholder's agreement before extractive industries
progress on private farmland'. Mr Charlie Thomas from the NFF explained:
The NFF's view is that a forced negotiation, where the
landholder does not have the option to refuse an agreement, is not an equal or
fair negotiation. Fixed outcome negotiation provides an unfair advantage to
well-resourced mining and gas companies, which employ skilled professionals to
negotiate these types of agreements on a regular basis.[5]
3.9
Despite supporting the principle of landholder agreement, Mr Thomas recognised
some limitations with such an approach. For example, Mr Thomas observed that 'a
right of veto is no substitute for effective science-based regulatory
mechanisms which protect agricultural land and water assets'.[6]
Mr Thomas also noted that although there are international jurisdictions that
provide landholders with more influence over whether or not minerals can be
accessed, these arrangements have 'not necessarily led to better environmental
outcomes'. Mr Thomas concluded that the NFF favours the consideration of:
...regulatory mechanisms that can actually protect the land and
water resources rather than require landholders to make the final determination.[7]
3.10
The NFF also cited various 'shortcomings' in how the bill is drafted as
a reason why it does not support the bill.[8]
These concerns are examined later in this chapter.
3.11
Although he supported the overall approach taken by the bill and noted
that it 'is certainly a very strong way' of dealing with the issues facing
landholders, Mr Leslie Manning from p&e Law noted that the bill was not the
only way forward:
There are things like disclosing greater information,
disclosing more relevant information and entering agreements that say the
company has to describe the impacts on this farm in exact detail so that any
impact outside of that means a fresh claim for compensation. That can be done
to incrementally improve it.[9]
3.12
Industry stakeholders did not support the proposed landholders' right to
refuse access to resources. The following statement from the Australian
Petroleum Production and Exploration Association (APPEA) is an example of the
types of arguments that were presented to the committee by these stakeholders:
There is no systemic issue that requires the Australian
Government to take regulatory action and override State laws. There is ample
evidence showing that farming and gas extraction can and does co-exist through
responsible cooperation – and this is already demonstrated by the vast majority
of oil and gas operations across the country.[10]
3.13
Industry submitters that oppose the bill also raised several specific issues,
such as how the bill would interact with existing state frameworks and how
various terms or concepts in the bill would be interpreted. Supporters,
opponents and other interested parties gave evidence that provided various
insights into these issues, which the following paragraphs discuss.
Interaction with existing state
frameworks
3.14
Ms Kate Galloway argued that in the competition between a landowner's
rights and a miner's rights, the existing state legislative frameworks favour
the miner's rights. Regarding the Queensland framework that provides for
conduct and compensation agreements, Ms Galloway argued that the bill would
address the 'differential power between the parties however potentially leaves
landholders open to political and financial pressure'. Ms Galloway suggested
that the current compensation arrangements under state legislation 'represents
a form of distributive justice', but fail 'to address the underlying
competition between property interests'.[11]
Ms Galloway concluded:
Both the purpose and the method of the Bill uphold the extent
and nature of the landholding interest against the competing mining interest.
The Bill affords priority to landholders' prior and more extensive interest,
over the lesser mining interest that remains derivative of the State. In doing
so, it upholds private property interests, but it leaves in place the State legislation
that allows for distributive justice through compensation if the landowner
chooses to consent.
The Bill therefore supports private property interests and is
thus a better reflection of the property norms that are generally accepted to
form the foundation of Australian landholding systems.[12]
3.15
p&e Law criticised the current Queensland legislation that requires
conduct and compensation agreements. p&e Law suggested that the use of the
term 'agreement' in the Queensland legislation 'is a misnomer'. It argued:
An agreement in relation to land would normally be reached by
an owner wishing to sell an interest and a purchaser wishing to buy an
interest. Both the owner and purchaser have relatively equal access to
information and knowledge. Either party can decide not to proceed.
If as a consequence of negotiations under petroleum and
mining legislation no agreement is reached, mining companies can take court
action to determine the terms upon which they can enter land and conduct
advanced activities. A landholder is compelled to allow access. In other areas
of law relating to contracts a person entering into a contract as a result of
'compulsion' can have the contract set aside.[13]
3.16
Other organisations, however, argued that the state frameworks are
effective. For example, APPEA submitted that 'land access can be and is
being successfully managed', as shown by the 'thousands of land access
agreements and compensation arrangements' between petroleum companies and
farmers.[14]
3.17
Non-statutory resolutions to land use conflicts were also highlighted,
with the committee informed that agreements regarding principles for land
access have been entered into between certain CSG companies and agricultural
organisations. AGL Energy submitted that in March 2014, it signed an
Agreed Principles of Land Access with Santos, NSW Farmers Association, Cotton
Australia and the NSW Irrigators Council. AGL stated that these principles
reconfirm 'that we will respect the wishes of landholders regarding any
exploration and production operations that take place on their land, meaning
that landholders are free to say "yes" or "no".'[15]
AGL added that it has 'never accessed a person's land without their
explicit permission or exercised arbitration rights available under law for CSG
exploration or production'. AGL stated that it:
...is therefore confident that landholders will only sign
access agreements with us that are considered by them to be fair and
reasonable, and are in their commercial interests. Often landholders will value
the diversification of revenue streams for their property and the stable and
predictable payments that arise from hosting gas activities, which are not
dependent on weather or other seasonal variances.[16]
3.18
Some submitters questioned how the state frameworks could operate if the
bill is enacted. Professor Hepburn, for example, argued that the bill would
conflict with state laws for access and compensation and the state licensing
laws. In particular, Professor Hepburn suggested that 'it is difficult to see
how state laws that seek to regulate the terms and conditions of access
entitlements are to function' if a private landholder can veto access to the
land. She added that the 'detailed regimes' for dealing with resource title
holders' notification, compensation and conduct obligations 'will become
redundant'.[17]
Further, Professor Hepburn suggested that the bill would undermine the states'
licensing frameworks. She argued:
It is simply not possible for a state department to approve
authorised activities within a license and then have those activities overruled
by a landholder refusing to authorise access and/or subject to a civil penalty
should the resource title holder ignore this refusal. This would create
licensing chaos and generate unfair differences between licences issued pre the
implementation of the Bill (which would not be subject to a right of veto) and
licences issued after the implementation of the Bill (which would be).[18]
3.19
Mr Thomas from the NFF queried whether the agreements specified under
state legislation, such as Queensland's conduct and compensation agreements,
would constitute the written authorisation required by clause 12 of the bill.
Mr Thomas stated that if the state agreements satisfied the requirements of
clause 12, then 'the right to refuse provisions under division 1 of this bill
would be rendered redundant'.[19]
'Ownership interest', dispute
resolution and compensation
3.20
Mining and petroleum companies and their representative organisations
argued that the bill would be unworkable because of the definition of
'ownership interest', which is defined in the bill as a person who has a legal
or equitable interest in the land or a right to occupy it.[20]
This is a key concept in the bill as a person with an ownership interest in the
land can bring action if they have not given written authorisation for the
activities referred to in the bill to take place.
3.21
It was argued that the scope of 'ownership interest' is too broad. The
Minerals Council of Australia (MCA) argued that the definition does not align
with definitions of 'ownership' or 'landholder' used by the states.
Accordingly, the MCA argued that the definition 'is highly problematic as it
extends protection to a broad group of persons, well beyond the occupier of the
land'.[21]
The MCA argued:
This would create an impossible situation for companies, as
these other interest holders are not listed in mainstream land ownership
registers and would therefore be very difficult to identify.[22]
3.22
The MCA also noted that the bill 'is silent on the matter of
compensation'. The MCA suggested that to obtain a written authorisation,
it is likely that a company will be required to negotiate compensation with
every person with an ownership interest. The MCA suggested that this would consume
company time and resources, and could lead to cumulative compensation costs
that were high enough to stop projects.[23]
3.23
The MCA also noted that the bill does not provide a dispute resolution
process or a statutory timeframe within which an agreement on written
authorisation needs to be reached. As a result, the MCA argued that the bill
provides an 'absolute veto' over a project for any person with an ownership
interest.[24]
The MCA suggested that the definition of ownership interest would mean the
process 'will be open to abuse', as:
-
parties could seek unreasonable amounts of compensation; and
-
parties that object to the coal industry could 'seek derivate
rights over land and use their veto to ensure projects do not proceed'.[25]
3.24
A further issue raised by the MCA is that the bill 'does not make
provision for prior written authorisation to bind a successor entitled to the
land'. The MCA argued that it appears the requirement to obtain written
authorisation from any of the parties with an ownership interest would be
triggered every time a change in the holder of the ownership interest occurred.[26]
3.25
Creevey Russell Lawyers noted that the definition used in the bill is
broader than the definition of 'landholder' used in Queensland law. Although
subclause 10(3) provides that the corporation would not commit an offence by
entering land for a gas or coal mining activity or engaging in such an activity
if they have prior written authorisation, the note to subclause 10(3) provides
that the defendant (the corporation) bears an evidential burden to show that
they had prior written authorisation. Creevey Russell Lawyers observed
that:
...people with an equitable interest in land may be impossible
for a tenement holder to identify prior to commencing activities. There is
therefore a high risk of tenement holders breaching clause 10(3) despite their
best efforts to comply.[27]
3.26
Further, Creevey Russell Lawyers suggested that people who have an
ownership interest (as defined by the bill) but who are not eligible for
compensation or to be a party to negotiations under the state legislation would
likely 'refuse consent to all activities on principle'. In instances where the
landholder wanted to negotiate an agreement under state law 'the interference
of these other people with an "ownership interest" as defined in the
bill could deny landholders that opportunity'.[28]
3.27
The NFF also noted that the broad definition of ownership interest 'would
be difficult to administer and would...not sit well with the existing
requirements under state and territory legislation'.[29]
3.28
Some submitters, however, argued that the scope of the bill should be
broadened further. The Latrobe Valley Sustainability Group argued that
communities should be given the right to veto unconventional gas activities as
'CSG affects whole communities, not just individual landholders'.[30]
Native title
3.29
Ms Kate Galloway argued that under the bill, the status of undeclared
native title interests is unclear. Ms Galloway explained:
The source of native title lies in customary law, potentially
recognised by common law through statutory process. Once native title is
determined, it is likely to have the status of a legal interest in land as it
is recognised pursuant to the law. But before native title is determined, its
status as a legal or equitable interest in land is less certain. Whether or not
traditional owner groups have lodged a native title claim (that is yet to be
determined) they may have a right to negotiate in respect of mining activity,
which is a future act under the Native Title Act 1993 (Cth). Further,
such groups may enter into an Indigenous Land Use Agreement, which may afford
rights to the group. While the right to negotiate is a right afforded by law,
its status as a 'legal or equitable interest in land' is uncertain—it reflects
connection with land, it is a right afforded by law, but it is not strictly a
legal interest in land.[31]
3.30
Ms Galloway argued that the bill should be amended to specifically
include 'native title rights and interests within its scope'.[32]
3.31
Another issue raised in relation to native title was put forward by QGC.
QGC objected to a statement made in the sponsoring senator's second
reading speech about native title holders being excluded from decisions about
activities on land. QGC submitted that the statement in question 'is
incorrect':
QGC has eight registered Indigenous Land Use Agreements
across our footprint which are managed and implemented in close consultation
with claimants and native title holders. Native Title is protected and governed
under distinct legislation, the Native Title Act 1993. This Act protects
native title holders and ensures that all industries are obliged to undertake
activities with consideration of traditional owners.[33]
Requirement for an independent
assessment
3.32
The bill would require that prior written authorisation must contain
certain information including, among other things, 'an independent assessment
of the current and future risks associated with the proposed gas or coal mining
activity on, or affecting, the land and any associated groundwater systems'.[34]
3.33
Although he was not commenting on the specific independent assessment
requirement in the bill, the evidence given by Mr Drew Hutton about the
information that accompanies project applications appears to be relevant to
this aspect of the bill. Mr Hutton argued that amount of information that
accompanies project applications is 'quite often' minimal. Mr Hutton stated:
If you look, for example, at the applications by Santos and
BG and Origin here in Queensland for their projects, with the first two in
particular, there is virtually no substantial evidence to back their claims
about water. There is almost nothing on water modelling and nothing on how they
will mitigate the impacts of their activities on underground water in
particular.[35]
3.34
Dr Matthew Currell, a lecturer of hydrogeology and environmental engineering
at RMIT University, wrote that the independent assessment requirement 'is a
welcome idea'. However, he noted that questions may arise regarding the level
of detail required in the independent assessments. On this matter, Dr Currell commented:
In my experience, assessments of this nature commissioned by
mining companies often include lengthy 'desktop' studies of the hydrogeology of
a region, but the scale may be inappropriate (too large or too small) and they
typically do not include adequate resources and time to install new groundwater
monitoring wells and other infrastructure, so that baseline conditions can be
comprehensively documented. This is vital so that any modelling predictions about
the impacts of mining can be conducted with a high level of confidence.
Numerous examples of problems in predicting impacts due to inadequate
monitoring data can be seen in cases referred to the Independent Expert
Scientific Committee on Large Coal Mining and Coal Seam Gas.[36]
3.35
Dr Currell suggested that the bill could be amended to prevent this
issue.[37]
He also argued that these assessments should include surface water, as well
as groundwater systems.[38]
3.36
There is some uncertainty as to whether existing environmental
assessments would meet the test proposed by the bill. Mr Dean Knudson of the
Department of the Environment explained that 'it is a bit of a question of
speculation' as to whether environmental assessments undertaken by the department
would satisfy the bill's requirement. Nevertheless, he argued that 'an
environmental assessment that is undertaken under the EPBC Act, for example, is
self-funded by the proponent and does have that rigour...that provides us with
the substantiation we need to make an approval decision'.[39]
Ban on hydraulic fracturing
3.37
This section outlines the arguments in support of, and against, the introduction
of a ban on hydraulic fracturing.
Arguments in support of a ban
3.38
Arguments in favour of a ban on hydraulic fracturing were based on environmental
and health concerns. Several submissions that supported a ban on fracking
pointed to the moratoriums that are in place in Australia (in Tasmania and
Victoria)[40]
and the bans and moratoriums in place overseas.[41]
For example, Dr Emma Carmody from EDO New South Wales stated:
The proposal to ban fracking is hardly a radical one when you
consider it at an international level. There is precedent. For example, there
are moratoriums in place in France, Scotland and Germany. These countries have
other leading practice environmental laws. So I do not think Australia would be
going out on a limb if it decided at the national level to ban this practice.[42]
3.39
Submitters argued that there is a need to better understand the
long-term environment effects associated with hydraulic fracturing. Dr Matthew
Currell highlighted potential pollution risks associated with various aspects
of hydraulic fracturing operations. Dr Currell submitted that:
Since 2010, a growing body of research has been carried out
worldwide (particularly in the United States) to understand the impacts to the environment
and human health associated with unconventional gas. Major risks from hydraulic
fracturing to groundwater and surface water include:
- Risk of increasing stray or
'fugitive' gas into shallow aquifers and/or the near surface atmosphere.
- Risk of increasing pathways and
connections for fluids (including potential contaminants) to travel between
different geological layers, potentially into important groundwater or surface
water bodies.
- Pollution risks associated with
'flow-back' or 'produced' water that is generated during hydraulic fracturing
and/or gas well development (note that 'produced' waste water is generated from
coal seam gas mining regardless of whether hydraulic fracturing is employed or
not, and is a pollution risk in most unconventional gas developments).[43]
3.40
Dr Currell concluded:
On balance, my opinion is that there are grounds for
seriously considering enacting such as ban, because there are major potential
risks to the environment and human health associated with hydraulic fracturing,
and unconventional gas extraction more generally (regardless of whether it
involves hydraulic fracturing or not).[44]
3.41
Submitters argued that hydraulic fracturing should be banned while there
was uncertainty about the risks involved.[45]
The EDOs of Australia argued that, 'at a minimum', a moratorium on hydraulic
fracturing should be implemented nationally 'until such time as the significant
list of knowledge gaps highlighted in reports and peer-reviewed literature have
been properly addressed'.[46]
NSW Young Lawyers highlighted the 'precautionary principle' to similarly argue that
a ban on hydraulic fracturing would be 'a proportionate response to the serious
threats which have been recognised in relation to that practice'. NSW Young
Lawyers submitted:
Scientists have long cautioned that the process of blasting
sand, water and chemicals into coal seams or shale formations in order to
release trapped gas could lead to irreversible and severe environmental damage
and so warrants a precautionary approach. The precautionary principle is a
cardinal element of the overarching concept of ecologically sustainable
development that informs environmental law. The principle holds that '[w]here
there are threats of serious or irreversible environmental damage, lack of full
scientific certainty should not be used as a reason for postponing measures to
prevent environmental degradation'...Given the potential serious impacts of
hydraulic fracturing on Australia's aquifer systems, including the Great Artesian
Basin, a halt on the practice is appropriate, at least until it is proven to be
safe.[47]
3.42
Mr Drew Hutton, the President of the Lock the Gate Alliance, told the
committee that most of the monitoring work that is currently undertaken on the
effect that CSG activities have on water 'is done on a complaints basis, not on
a proactive basis'. Although there is 'now some monitoring going on with regard
to water and the impacts on water', he observed that 'because the timeline on
this goes for decades, not for a couple of years, it is very difficult to
predict with any great certainty what is likely to happen in the years ahead'.
As a result, he questioned whether it is possible for the make good agreements for
water that are required under Queensland law to 'be effective in the years
ahead'.[48]
3.43
Witnesses also questioned the effectiveness of the current state regulatory
frameworks for hydraulic fracturing. For example, although the use of BTEX
chemicals (benzene, toluene, ethylbenzene and xylene) in hydraulic fracturing
has been banned by the states where hydraulic fracturing is undertaken and in
the Northern Territory, the EDOs of Australia expressed its concern that the
New South Wales ban is not enforced under legislation and '[c]onsequently, it
could be reversed without parliamentary scrutiny.[49]
3.44
Dr Emma Carmody from EDO New South Wales explained that hydraulic
fracturing is regulated by 'a set of piecemeal laws and policies'. Dr Carmody
outlined her organisation's concerns about this as follows:
For example, we have a code of practice for fracture
stimulation, which some people have argued is perhaps best practice in
Australia. That may be true; however, it is not linked to any specific piece of
legislation and, to that extent, its implementation is not mandatory, which we
think is problematic. At a legislative level, most CSG production will be
considered what is called the state significant development under the
Environmental Planning and Assessment Act. For state significant development,
the minister has broad discretion to determine how the likely environmental
impacts of a project are assessed and then to determine whether or not the
project will be approved. We consider that that is problematic because the
legislation is not prescriptive enough or detailed enough, requiring the
minister to take into account specific elements.[50]
Arguments against a ban
3.45
The Department of Industry and Science submitted that fracking is used
in approximately 20–40 per cent of Australia's CSG wells, and has been
successfully used in Australia for over 40 years.[51]
The department concluded that:
...this experience suggests the
technical risks can be managed through a well-designed regulatory regime,
underpinned by effective monitoring and enforcement of compliance where
activities are permitted. Unconventional gas operations are regulated by
international standards, national and state legislations, guidelines and codes
of practice.[52]
3.46
The Department of Agriculture advised that it did not support the
proposed legislative ban on fracking. The department provided the following
explanation of its position:
While regulators must ensure that hydraulic fracturing
operations are carefully planned, operated and monitored, scientific evidence
confirms that hydraulic fracturing can be undertaken without causing long-term
damage to natural resources. Community confidence in shale and coal seam gas extraction
will be improved by monitoring the impact of hydraulic fracturing activities on
local environments, including water resources.[53]
3.47
Mr Ian Thompson, Department of Agriculture, explained that the department
would prefer not to have a blanket ban on fracking as it is focused on
regulating outcomes, rather than particular techniques. Mr Thompson made the
following observations:
Hydraulic fracturing has been occurring in the gas industry
for many, many years. Depending on the chemicals used and how it is applied,
there can be some risks associated with that. Some of the worst chemicals that
can be used and have been used in some instances are not permitted in
Australia, from my understanding, so that risk is minimised. Fracking in the
gas industry that is subject to appropriate controls and monitoring can
continue. We are not in the business of making choices about how companies do
their business. It is what outcome is achieved. Through the work of the states
to look after groundwater and surface water, they are examining the impacts of
fracking on water resources. So we would prefer not to have a blanket ban.[54]
3.48
Further, the Department of Industry and Science stated that it:
-
is concerned that 'community concerns have been exacerbated by
lack of accessible information on the nature of the activities being
undertaken, existing regulatory protections, and responses underway at all
levels of government';
-
considers 'there is unnecessary confusion' about CSG and shale
gas, and that 'international experiences of best practice can help inform
Australia's regulatory frameworks'; and
-
considers the 'goal of achieving mutually beneficial outcomes has
been complicated by hydraulic fracturing or "fracking" becoming an
unnecessarily emotive topic'.[55]
3.49
Submitters also argued that misinformation about fracking is widespread.[56]
APPEA argued that the proposed ban is 'not based on science or evidence and
therefore should be rejected'. APPEA submitted that:
The Australian Government, every state and the Northern
Territory have undertaken reviews of unconventional gas, hydraulic fracturing
or both. Every scientific and government review in Australia has so far reached
the same conclusion—with a robust regulatory regime in place, the environmental
risks associated with onshore gas operations, including hydraulic fracturing,
can be managed effectively.[57]
3.50
The Petroleum Exploration Society of Australia wrote that 'the risk of
fracture propagation leading to fracture stimulation fluids contaminating
shallow aquifers is negligible'. It explained:
The small volumes of chemical that remain in the fracture
stimulated reservoirs cannot realistically migrate upwards to aquifers (used by
people and industries) from the fracture stimulated intervals due to many
overlying natural aquitards and low permeability rocks adjacent to, but
unaffected by the fracture stimulation. Hence, the small volumes of chemicals
pumped into, and not flowed back from fracture stimulated intervals are
expected to remain in the fracture stimulated petroleum reservoirs indefinitely.
It is worth remembering that after the initial hydraulic fracturing the
producing formation may be dewatered, that is formation water is pumped to the
surface. This results in a lower formation pressure allowing gas contained in
cleats and micro-fractures in the coal or tight sand/shale to flow into the
fractures produced by hydraulic fracturing then into the well bore and finally
to the surface. The important point is that the producing interval is now at a
lower pressure than the surrounding rocks so that any contained fluids in the
surrounding rocks and in communication with the producing horizon will flow
back towards the producing horizon and well bore.[58]
3.51
The Northern Territory Government argued that the industry 'has shown
itself to be sensitive to public concerns about chemicals used in hydraulic
fracturing fluids and has responded by using, where possible, compounds that
will have minimum impacts'.[59]
3.52
Finally, APPEA cited a report by the New South Wales Chief Scientist and
Engineer, which observed that all industries 'have risks and, like any other,
it is inevitable that the CSG industry will have some unintended consequences,
including as the result of accidents, human error, and natural disaster'. The
report concluded that the most appropriate response to this risk is that
industry, governments and the community should 'work together to plan
adequately to mitigate such risks, and be prepared to respond to problems if
they occur'.[60]
Role of the Commonwealth
3.53
As this report has outlined, the states have primary responsibility for
land access matters and for regulating onshore minerals and petroleum
exploration and production. Despite the firmly put and well-articulated
arguments for or against the introduction of a landholders' right to refuse gas
or coal activities and the introduction of a ban on hydraulic fracturing, it is
necessary to consider whether it is appropriate for the Commonwealth to be
involved in these matters at all. This section considers the evidence received
about the role of the Commonwealth with respect to the matters the bill seeks
to address.
Arguments in favour
3.54
In support of Commonwealth involvement, some submitters argued that
state and territory legislatures have failed to deal with the issues addressed
by the bill, and that intervention by the Commonwealth is, therefore,
appropriate. For example, the EDOs of Australia argued that the issues related
to access to land and fracking 'have generated significant community concern
across many Australian jurisdictions, in part due to the inadequacy of state
and territory laws'. As a result, the EDOs of Australia argued that these
matters are 'therefore issues of national significance in urgent need of
national regulation'.[61]
3.55
The Lock the Gate Alliance similarly submitted that the 'consistent
failure of the state legislatures...has necessitated this kind of legislative
proposal' at the Commonwealth level. The Lock the Gate Alliance added:
...although we believe that the power of veto should properly
sit with the states...[t]he obvious conflict of interest between state royalty
income on one hand and the states' duty to regulate to protect the environment
and community on the other, renders it unlikely that states will ever uniformly
provide veto rights for landholders.[62]
3.56
Further, the Lock the Gate Alliance argued that water resources 'of
continental scale and significance, such as the Great Artesian Basin' should be
conserved by the Commonwealth as 'the states, local governments and individual
landholders and companies cannot be expected to take a broad perspective on
their own use of such a resource'.[63]
Arguments against
3.57
Submissions that argued against the use of the corporations power
generally focused on the idea of the Commonwealth legislating in a way that
affects the ability of the states and territories to recover Crown property and
whether the bill is an appropriate use of the Commonwealth's constitutional
powers. How the bill would interact with existing state law was also
questioned.
3.58
Professor Samantha Hepburn argued that as state governments retain
control over, and the power to regulate, the resources in their jurisdictions,
'it would appear to be beyond the constitutional mandate' of the Commonwealth
to 'expressly override state legislation that confers access entitlements upon
the holders of resource titles'.[64]
To illustrate her argument, Professor Hepburn referred to section 6 of the Petroleum
(Onshore) Act 1991 (NSW), which she described as a 'powerful' provision:
...[Section 6] makes it very clear that all petroleum existing
in a natural state below the surface of any land is the property of the Crown
and is taken to have always been so. It is actually retrospective.
The states have ownership and ownership carries
responsibility. So the states should be responsible for implementing a coordinated
access regime that supports and does not undermine private landholder rights
and that engages private landholders effectively...I think that that
responsibility should not go to the Commonwealth because it would create a
chaotic situation.[65]
3.59
Australian government departments, state and territory governments, the NFF
and peak petroleum industry bodies opposed the approach taken by the bill.
For example, the Northern Territory Government submitted that the bill 'would
represent an unacceptable intrusion on matters that are rightly the purview of
the Territory Government'.[66]
APPEA argued that there 'is no systemic issue that requires the Australian
Government to take regulatory action and override state laws'.[67]
3.60
The Department of Agriculture provided the following statement that
explained why it does not support the bill:
The Bill is not an appropriate use of the Commonwealth's
constitutional powers. While the department supports better land access
arrangements for landholders, we believe that this should be progressed at a
state level. Creating strong relationships between landholders and gas
companies will not only help to address many concerns of agricultural
stakeholders, but also promote responsible development of gas resources in a
way that can benefit regional communities.[68]
3.61
The department added:
The Australian Government has
limited involvement in land access matters. While some work has been progressed
on land access principles, the Australian Government cannot bind the states and
territories to a resolution on land access. Improvements to land access
arrangements should be pursued at a state and territory level.[69]
3.62
The South Australian Government questioned whether the bill would be
constitutionally valid if enacted into law. The South Australian Government
explained that, although there are laws in its jurisdiction that enable
landholders to object to unreasonable access and provide compensation for any
economic loss, 'there is no law in South Australia or Australia, constitutional
or otherwise that would preclude responsible development in the public
interest'. The South Australian Government questioned whether the bill would be
consistent with the head of power under paragraph 51(xx) of the Constitution, 'under
which the bill would purportedly be enacted'.[70]
3.63
The NFF, which 'supports the principle of requiring a landholder's
agreement before extractive industries progress on private farmland',
nevertheless argued that this principle should be introduced at the state
level. Mr Charlie Thomas from the NFF stated:
State and territory provisions are not perfect, but given the
significant body of regulation that applies to this process at the state and
territory level, it is unnecessary for the Commonwealth to also seek to
regulate relations between landholders and resource companies as this bill
seeks to do. Current state and territory provisions already outline the
requirements of an access agreement with greater sophistication than what is
proposed in the landholders' rights to refuse bill. It is the NFF's view that
existing state and territory legislation provides a superior starting point for
strengthening landholders' rights than this proposed Commonwealth intervention.[71]
3.64
Submitters also questioned whether the bill:
-
amounted to 'an effective transfer of property rights from the
Crown to select private landholders';[72]
-
would limit the ability of the states and territories to extract
their resources, thereby limiting the benefits to the community that arise from
Crown ownership;[73]
-
would have financial and economic impacts for states and the
Commonwealth;[74]
-
would provide a precedent for other Commonwealth action regarding
other private sector land uses, such as road or rail projects;[75]
and
-
has the potential to result in 'a marked increase in acquisitions
of agricultural land by government and resource companies, with a consequential
reduction in the productive use of the acquired land'.[76]
3.65
Further, the Northern Territory Government commented specifically on the
suggestion in the sponsoring senator's second reading speech that governments
could acquire land on just terms. The Northern Territory Government argued that
this proposal would be 'undesirable and impractical because it would impact
significantly on state and territory budgets, and potentially remove primary producer
families whose ongoing stewardship of the land is essential to its
productivity'.[77]
3.66
The Department of Industry and Science and the South Australian Chamber
of Mines and Energy (SACOME) suggested that any concerns regarding matters of
land access could be addressed by agreement between the states and territories.[78]
SACOME submitted that the appropriate forum would be the COAG Energy Council,
which it argued could 'assess legislation in each jurisdiction against best
practice regulatory frameworks'.[79]
3.67
The NFF similarly suggested that the Commonwealth could facilitate
discussions and otherwise encourage states to adopt best practice regulatory
frameworks. Mr Thomas from the NFF highlighted aspects of the New South
Wales framework that could be improved upon and then replicated elsewhere:
The New South Wales government...through its process of the
strategic agricultural land framework, has attempted to define areas where
there is further regulatory prescription and assessment prior to these kinds of
developments taking place. We think that a model like that—albeit an improved
model, because we realise there are flaws in that model as well—could be taken
up by other states and implemented across the board. There could be a role for
the Commonwealth in facilitating some of those discussions and encouraging
states to adopt best practice, based on what has been successful elsewhere.[80]
Potential drafting issues and areas of uncertainty
3.68
Regardless of whether they supported or opposed the bill, various
submitters commented on the drafting of specific clauses. The following
paragraphs outline these comments.
Resources covered by the bill
3.69
A key term in the bill is 'gas or coal', as the bill proposes that gas
or coal mining activities undertaken without prior written authorisation from
landholders would be unlawful. Clause 4 defines 'gas or coal' as meaning coal,
CSG, shale gas and tight gas. Similarly, the proposed ban on hydraulic
fracturing is defined by reference to the recovery (or the potential or
enhanced recovery) of CSG, shale gas or tight gas.[81]
3.70
Submitters questioned the rationale behind the limited application of
the bill to specific resources. For example, in relation to the proposed ban on
hydraulic fracturing, SACOME argued that the proposed ban 'is not based on any
logical reasoning when the bill continues to allow hydraulic fracturing for
geothermal energy and tight or shale oil'. It concluded that the proposed ban
is 'in effect a direct ban on the extraction of natural gas'.[82]
3.71
Dr Matthew Currell suggested that shale oil, which is not mentioned in
the bill, may be a significant resource in Australia. He advised that the
extraction of shale oil 'also generally requires hydraulic fracturing' and may
therefore be associated with the similar risks considered to apply to CSG
extraction.[83]
3.72
Creevey Russell Lawyers suggested that, should the bill be passed in its
current form, landholders would not be able to refuse activities relating to
petroleum, geothermal energy and greenhouse gas storage. Creevey Russell
Lawyers noted that this is despite those activities involving similar
technologies, posing similar risks to land and water, and being regulated under
the same legislation as CSG in Queensland.
3.73
Ms Laura Hogarth, a solicitor at Creevey Russell Lawyers, remarked that
the distinction between the resources covered by the bill and other petroleum
activities 'does not make sense to me'. Ms Hogarth added:
I think petroleum activities would have the same impacts that
CSG activities would have. You are still drilling. You still have gathering
lines—pipelines buried in a grid network throughout the property. I assume you
would have a similar amount of access, as in frequency of drilling rigs
returning to the land every year or two to work over the wells. I think it
would have all the same environmental impacts and impacts on a farming or
grazing business and on a family home on the land as well...I would want to see
the bill applying across the board to all petroleum, mining and energy
activities.[84]
Technology-specific approach used
by the bill
3.74
The technology-specific approach taken by the bill was also questioned.
Creevey Russell Lawyers suggested that legislation 'should focus on the
environmental outcomes (rather than specific activities)', with prosecutions
'only in instances where environmental damage occurs, rather than banning a
particular engineering practice or technology'. According to Creevey Russell,
an advantage of this approach is that the legislation would be 'more adaptable
to new technologies and practices, where the potential risks may be unknown',
as opposed to the technology-specific approach taken under the bill. Creevey
Russell concluded that 'any environmental risks associated with hydraulic
fracturing for gas and coal production are more appropriately legislated for
under existing environmental laws'.[85]
Application only to constitutional
corporations
3.75
The bill only applies to constitutional corporations. NSW Young Lawyers
noted that constitutional corporations are generally the entities involved in
mining and CSG activities, however, it questioned whether these entities 'could
potentially be re‑structured into a different type of business vehicle'
to avoid being captured by the bill.[86]
Similarly, Professor Hepburn suggested that the bill 'will potentially create
chaos' that will encourage companies to seek to avoid the application of the
bill to them. Professor Hepburn told the committee:
In the future, mining companies are going to want to avoid
the prospect of simply being unable to access the resource. At the moment,
there are clearly impediments; for example, in Queensland you obviously have to
go through the notification, conduct, compensation and all that negotiation
process, but there is not that provision at the state level which allows the
landholder to simply say, 'No, I don't consent' and have that upheld, because
that would clearly create chaos for the issuance of the resource title. So what
will happen is that companies will seek to avoid the application of the
Commonwealth provisions....They will seek to recalibrate their organisations.[87]
3.76
To avoid such an outcome, NSW Young Lawyers suggested that the bill
should also rely on the Commonwealth's power to legislate in respect of
interstate and international trade, as provided for in paragraph 51(i) of the
Constitution. Under this approach, the offences and civil penalty provisions in
the bill could also be drafted so that they apply to persons who, for the
purposes of trade or commerce, engaged in the prohibited conduct. NSW Young
Lawyers noted that this approach has been used in section 24D of the Environment
Protection and Biodiversity Conservation Act 1999.[88]
Ultimate effectiveness of the bill
3.77
The final set of observations that this chapter will address is the
effect that the landholders' right to refuse component of the bill is likely to
have on coal mining operations. As has been noted, this aspect of the bill would
make gas or coal mining activities undertaken by a constitutional corporation
without prior written authorisation from landholders unlawful. However, the
committee heard that it is 'ordinary business procedure' for coal mining
companies to purchase the land they require.[89]
Ms Leys from the NSW Farmers Association used the Shenhua Watermark mine as an
example:
Shenhua owns all of the land that they plan to undertake
their operations on, certainly within the mining area and the disturbance area
and parcels of land around that, in a buffer. Early on they took a decision
that they would go and make quite lucrative offers to landholders in that area
to secure the area they wanted to mine.[90]
3.78
This observation is supported by the evidence received from a landholder
in the area, who estimated that 17 people were 'bought out' to facilitate the
Shenhua project.[91]
3.79
Ms Leys stated that the bill does not address NSW Farmers' main concern,
which is that the planning laws allow mining to be undertaken on 'what we
consider to be some of our best agricultural land'. Ms Leys concluded:
A right to refuse does not address the issue of up-front
planning processes that identify areas where industries may be able to go and
identify industries that should be off limits.[92]
3.80
Mr Paul Nankivell from Save Our Soils Liverpool Plains similarly
highlighted the importance of planning arrangements. Although he argued that
landholders should have the ability to veto access to their land, he added that
'the real question should be: why are these mining companies allowed to go
everywhere?'[93]
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