Chapter 3
Property, mineral and petroleum rights in Australia
3.1
In this chapter, property, mineral and petroleum rights in Australia are
examined, and the committee sets out information on land access issues and land
access negotiation.
3.2
The committee sets out some of the first-hand experiences of landowners
facing these issues in the next chapter.
3.3
In addition, this chapter sets out the legislative and regulatory
framework for unconventional gas mining activity in Australia, and provides
some information on the international experience of unconventional gas mining.
Property, mineral and petroleum rights
3.4
Land in Australia is usually classified in one of the following ways:
Freehold land (including forms of freehold land tenure that
are held by traditional owner groups including Aboriginal and Torres Strait
Islander land)
Non-freehold land or Crown land, which may either be leased
or licensed.[1]
3.5
Irrespective of whether land is freehold or not, the mineral and
petroleum resources on the land will continue to belong to the Crown. The
acquisition of rights to minerals and petroleum is located in separate
legislative frameworks for each state and territory.
3.6
In general terms, landowners are owners of the surface of the land and
have no automatic right to the minerals and petroleum, including unconventional
gas, which may be on the land. They do not receive any royalties and cannot
refuse access to holders of petroleum exploration or mining permits, licences
or leases.[2]
Should landholders refuse access, the resource companies involved can force
access and enter negotiations for damage to their property or livelihood
associated with the property.
3.7
The relevant state and territory legislation, codes and frameworks
provide initially for exploration of the resource and then if applicable, approval
for further grant of mining or minerals production leases or licences. The
state and territory legislation also 'provides for the payment of royalties to
the State and to compensate the owners or occupiers of the land'.[3]
Native title
3.8
Native title can be held exclusively or in conjunction with other types
of land tenure, however applications for use of land deemed to be under native
title must comply with the statutory process set out in the Native Title Act
1993 (NTA).[4]
3.9
A registered native title claim gives a party to that claim certain
procedural rights when it comes to allowing applications to mine, explore or
prospect for minerals on areas covered by the claim. These include:
-
an indigenous land use agreement (ILUA); or
-
the 'right to negotiate' with applicants to form a future acts
agreement.[5]
3.10
It is important to note that in addition to the NTA, access to land in
the states and territories may also be subject to state and territory specific
native title, land rights and aboriginal heritage legislation. Sites of
significance to Aboriginal and Torres Strait Islander peoples are given
protection under federal and various state and territory laws on all land
tenure types in Australia.[6]
Land access issues
3.11
The states and territories retain mineral rights and may permit
companies to extract resources. State and territory governments have attempted
to address land access issues in varying ways.[7]
3.12
The process for access to land by resource companies will differ between
the states and territories,[8]
but the following process which applies in Queensland provides an example of
the steps involved in in establishing a land access agreement:
-
in Queensland, the right to explore for and extract CSG (tenure),
is granted under the Petroleum and Gas (Production and Safety) Act 2004
(PAG Act). This grant is called a Petroleum Authority and can be in the form of
a lease, licence or authority to prospect. The CSG company party to the tenure
is called the 'tenement holder';[9]
-
before any access or activity can occur, all CSG related
Petroleum Authorities require an Environmental Authority which sets out the environmental
conditions that a CSG company must comply with;
-
Environmental Authorities are issued by the Department of Environment
and Heritage Protection (EHP) under the Environmental Protection Act 1994
(Qld) (EP Act).[10]
-
the PAG Act governs the interactions between landholders and CSG
companies and provides for landholders to be compensated for 'the diminution in
value and disturbance resulting from CSG activities on their land'.[11]
This compensation is articulated in the form of a Conduct and Compensation
Agreement (CCA), the content of which is negotiated between the CSG company and
the landowner. Under the PAG Act all parties must use 'all reasonable endeavours'
to negotiate a CCA.[12]
-
All CCAs should indicate:
-
how and when the tenement holder can enter the land in question;
-
how the CSG company's activities must be carried out; and
-
the compensation or any future compensation the CSG company is to
provide.[13]
3.13
The committee considers that this example not only highlights the lack
of power and support landholders feel in relation to land access, it also
indicates the overall level of complexity associated with land access involving
unconventional gas mining.
3.14
The following table sets out a comparison of protections for access to
private land for exploration across all states and territories:
Protection
|
NSW
|
Vic
|
Qld
|
WA
|
SA
|
Tas
|
Land access
arrangement agreed to with landholder before the explorer can access land
|
Yes
|
Yes
|
Yes
|
Yes
|
No1
|
No2
|
Compensation
available to land holder for loss or damage arising from exploration activity
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Compensation for
legal costs incurred by land holders in negotiating access agreements
|
Yes
|
No3
|
Yes
|
Yes
|
Yes
|
No3
|
Compensation for
other costs associated with negotiating access agreements
|
No
|
No3
|
Yes4
|
Yes5
|
Yes6
|
No3
|
Exploration
prohibited within specific distances of buildings and other improvements
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Landholder veto over
exploration on agricultural land
|
No
|
No7
|
No
|
Yes8
|
Yes9
|
No
|
Table 2:
Comparison of state protections for access to private land for exploration[14]
Note: The Northern Territory is not included as most
private land is restricted to cities and towns. Outside of the urban areas,
around half of all land is Aboriginal land and the other half is Crown land
under pastoral lease.
- Authorisation to enter private land can be provided
through the written consent of the land holder or by serving the land holder a
statutory form (Notice of entry on land) under the Mining Act 1971 (SA).
- No formal agreement is required between the
landholder and the explorer before exploration commences. However, where
exploration involves ground disturbance, officers from the Department of
Infrastructure, Energy and Resources are generally involved in the oversight of
exploration activities to ensure that these activities adhere to the work plan.
- Although there is no specific reference to
compensation for legal, or other, costs incurred by land holders in
negotiations with explorers, the legislation does not 'rule out' the provision
of such compensation.
- The Queensland Land Access Code provides for the
compensation of reasonable accounting and land valuation costs incurred by the
landholder.
- The Mining Act 1978 (WA) provides for
reasonable legal or other costs of negotiation for private land under
cultivation.
- The South Australian guidelines make specific
reference to compensation for legal costs and the Mining Act 1971 (SA)
provides for the reasonable costs incurred by the landholder in connection with
negotiations.
- The Minister can have agricultural land excised
from the licence where the economic benefit of continuing to use that land for
agricultural purposes is greater than the work proposed in the licence.
- This applies to mineral
tenements, but not to oil and gas tenements.
- Exploration on cultivated land requires landholder
consent. Where agreement cannot be reached, the explorer has the option of
seeking a determination through the courts.
Source: Productivity Commission, Mineral and Energy
Resource Exploration, Report no. 65, September 2013, p. 121.
3.15
The committee notes that this table is based on 2013 data, however, the
committee is of the view that it strongly illustrates the fact that landholders
are subject to a different set of rules across the states and territories when
it comes to land access.
3.16
The committee notes that efforts have been made to deliver more
uniformity at a Commonwealth, state and territory level through codes and
frameworks to clarify process, rights and responsibilities in relation to land
use, access and compensation.
3.17
In Queensland, for example, the Land Access Code was introduced in 2010
and sets out the mandatory conditions that all resource companies conducting
exploration and development activities in Queensland must comply with in order
to meet legislative requirements. It was released in conjunction with the Land
Access Framework (LAF) which has the aim of
...balancing the interests of landholders and resource
authority holders, through a particular focus on compensation arrangements and
the need for good communication and relationships. The framework specifically
introduced requirements for:
-
Providing landholders with entry notices for 'preliminary activities'
-
Negotiating a CCA before accessing private land to undertake 'advanced
activities'
-
A statutory graduated negotiation and dispute resolution process for
CCAs, with the Land Court being the last resort
-
Compensating landholders for reasonable and necessary accounting, legal
or valuation costs incurred in negotiating or preparing a CCA.[15]
3.18
At a Commonwealth level, the then Standing Council of Energy and
Resources, now the COAG Energy Council, endorsed the Multiple Land Use Framework
(MLUF) in 2013.[16]
The MLUF sought to provide a consistent approach to land use development and
planning across all jurisdictions and was:
...designed to operate within established regulatory and policy
frameworks relating to land ownership, usage and access. The principles and components
will not alter existing land rights assigned under Crown land, freehold, native
title and pastoral leases. However, the framework may influence the way in
which rights and obligations related to land tenure are imposed on users by
State and Territory Governments.[17]
3.19
However, the committee heard from many submitters that despite the
existence of codes and frameworks many landowners felt powerless, downtrodden
and as if they do not have sufficient control over their land. This issue is
discussed in more detail later in the report.
Land access negotiation
3.20
The committee noted that a key issue with state and territory access and
compensation arrangements is that they do not address the imbalance in
bargaining power nor the often competing interests between the individual
landowner and the energy company. This concern was stated in the submission
from p&e law which indicated that:
If as a consequence of negotiations under the PAG Act no
agreement is reached, CSG 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.
Individual landowners have other business demands and
interests and they do not include the need to be aware of current and potential
obligations of the CSG companies. They do not have immediate easy access to
those documents, even through internet searching, and those documents, where
they are known, are often not readily provided following request to the mining
companies. There is no legal obligation, for example, to provide documents to
landholders disclosing the likely noise impacts from CSG mining, despite there
being a requirement to undertake modelling of the potential noise impacts on
landowners![18]
3.21
The National Farmers' Federation (NFF) also indicated that:
...land access agreements may be the only time where
landholders can actually seek to positively influence the process, and receive
some protections and assurances from the mineral and petroleum industries.
However, it is worthwhile noting that farmers may be
overwhelmed, confused and under stress...[19]
3.22
The concerns raised by these and other submitters in relation to
negotiating land access, land use and compensation matters as related to
unconventional gas mining, were consistent throughout the inquiry. Many stories
of emotional distress perceived to be a result of the forced, expensive and
stressful nature of the negotiations and interactions with various energy
companies were conveyed to the committee.[20]
3.23
While the committee heard that there were many examples of uneasy,
acrimonious and irreconcilable relationships between landholders and energy
companies, AgForce submitted that, in their view, relationships had improved:
...the operating landscape for Queensland landholders dealing
with CSG has greatly improved during this time. We would also acknowledge the
significant and necessary improvements in the approach by resource companies to
negotiations and dealings with landholders, from a heavy-handed, legal-rights
enforcement approach to a greater understanding of the need for long-term,
mutually-beneficial relationships with landholders.[21]
3.24
Santos advised the committee that they conduct unconventional gas mining
operations in six onshore basins in Australia and are proud of their reputation
with landholders.[22]
3.25
The committee noted a number of suggestions which may assist in
overcoming some of the continuing issues between landholders and energy
companies. The NFF suggested that land access agreements 'should be activities
based, and subject to renegotiation should the schedule of activities change'.[23]
They also suggested that agreements should include as a minimum:
-
Appropriate recompense for the full range of costs including
those associated with the preparation of agreements, the use of assets and
access;
-
Clear agreements with landholders regarding the disposal and
acquisition of any exploration/extraction licence;
-
Mining practices including complying with drilling legislation,
and the use of chemicals;
-
Biosecurity arrangements;
-
OH&S requirements;
-
Rehabilitation of land;
-
Appropriate insurance and bond arrangements;
-
Clear specification of responsibility for, and insurance
arrangements to cover, accidental damage to mining infrastructure as a result
of farming operations;
-
Provisions for insurance to protect farming land from accidental
damage caused by mining processes and infrastructure;
-
Arrangements for normal agricultural operations;
-
Any and all conduct whilst operating within the landscape; and
-
Protocols regarding notification prior to access.[24]
3.26
A large number of submitters, including p&e law, advocated for
legislative change to provide landholders with 'the right to refuse CSG mining
on their land'.[25]
The committee noted a large number of suggestions by landholders that they be
given the urgent right to refuse mining on their land, avoiding the need for
them to enter into any forced agreements with energy companies. Many also
advocated for the creation of a statutory obligation for energy companies 'to
recommend to landholders that they seek independent advice prior to entering
agreements',[26]
whether that comprises legal advice or otherwise.
3.27
AgForce also made a number of suggestions in relation to improving
outcomes for landholders when dealing with resource companies. While these
suggestions are based on the Queensland experience, the committee considers
that they have wider application:
-
A review of the existing 'Make Good' framework and greater
transparency regarding the outcome of negotiations and bore
assessment/investigations. This has been agreed to by the State Government and
the Department of Environment and Heritage Protection are undertaking a review
of the 'make good' framework in 2016;
-
Ability for landholders to seek and be reimbursed for independent
hydrogeological advice as part of the 'make good' process;
-
Greater consistency of groundwater legislation and regulations
between resource sectors (mining and gas) and avoidance and then proactive
mitigation of residual impacts;
-
Greater consistency between companies, and fairness and
transparency of Conduct and Compensation Agreements (CCAs);
-
Greater 'front-loading' of technical studies prior to project
development including potential impacts to water supplies and users (ground and
surface), confirmation of available alternative groundwater supplies for 'make
good' negotiations and direct analysis of impacts to agricultural and grazing
lands;
-
Continued support and funding to provide factual and independent
information and support to landholders; and
-
Implementation of an independent ombudsmen to act as an
adjudicator in disputes between resource companies and landholders to avoid
Land Court proceedings.[27]
3.28
The committee considers that although energy companies and governments
may consider that the legislative and regulatory frameworks governing
unconventional gas are adequate,[28]
the committee has found that the majority of submitters and witnesses to this
inquiry do not agree.[29]
The committee has considered evidence from many witnesses and submitters who
have made strong calls for a right to say no to unconventional gas mining on
their land.[30]
3.29
The committee notes that a private senator's bill, the Landholders'
Right to Refuse (Gas and Coal) Bill 2015, was considered by the Senate
Economics Environment and Communications References Committee in September
2015. This bill sought to place a ban on hydraulic fracturing, and to provide
landholders with the right to say no to gas and coal activities on their land.
While a majority report did not recommend that the bill be passed, it should be
noted that the bill was supported by the Australian Greens and Senator Glenn
Lazarus. Further, the committee considers that it provides a useful example of
a legislative proposal to strengthen the rights of individual land holders.
3.30
Many landowners advised the committee of their difficult and stressful
dealings with resource companies. They advised that they had been bullied,
harassed, intimidated and pressured into accepting compensation arrangements
because they were not able to refuse resource companies access to their land.
Landholders also stated that resource companies threatened them by telling them
that if they did not allow companies onto their land, they would be taken to
the Land Court.
Legislative and regulatory framework
3.31
In this section, the legislative and regulatory framework for
unconventional gas mining activity in Australia will be set out, along with:
-
information provided on regulation at the Commonwealth, state and
territory levels;
-
the program of harmonisation of regulation, and international
experiences of unconventional gas mining; and
-
the international experience of unconventional gas mining
regulation.
Commonwealth
3.32
Regulation of unconventional gas mining is largely the responsibility of
the states and territories. The Commonwealth's role is limited in its
application and relates only to aspects of environmental and industrial
chemical regulation. The committee notes that Australia lacks a national
strategy or approach to the conduct of the unconventional gas mining industry.
3.33
The Commonwealth Environment Protection and Biodiversity Conservation
Act 1999 (EPBC Act) regulates coal seam gas mining where it may have a significant
impact on water resources.[31]
The Commonwealth Department of the Environment also has oversight of the
resource development approval process through the administration of the EPBC
Act.
3.34
The EPBC Act established the Independent Expert Scientific Committee on
Coal Seam Gas and Large Coal Mining Development (IESC) as a statutory committee
in 2012. The IESC provides:
-
Expert scientific advice on coal seam gas and large coal mining
proposals as requested by the Australian Government and state government regulators.
This advice is provided to enable
the regulator's decisions about coal seam gas and large coal mining
developments to be informed by the best available science about the potential
water related impacts associated with those developments.
-
Advice to the Australian Government on bioregional assessments,
other research projects and research priorities.[32]
3.35
The Commonwealth works with the states and territories through the
Council of Australian Governments (COAG) Energy Council (formerly the Standing
Council of Energy and Resources (SCER)) in order to enable 'collaboration on
developing an integrated and coherent national energy policy'.[33]
This Council states that through it, respective Commonwealth, state and
territory ministers 'are working together to bring scientific and regulatory
expertise to support the responsible development of unconventional gas supplies'
to meet increasing gas demand.[34]
3.36
Under the National Partnership Agreement on Coal Seam Gas and Large Coal
Mining Developments signed in March 2012, the Commonwealth and the states and
territories agreed to 'strengthen the regulation of coal seam gas and large
coal mining development by ensuring that future decisions are informed by
substantially improved science and independent expert advice'.[35]
3.37
The Domestic Gas Strategy, released by the Minister for Industry,
Science and Innovation in April 2015, sets out the Commonwealth's role in
relation to unconventional gas mining and the Commonwealth's expectations of
the state and territory governments and industry in facilitating the
responsible development of unconventional gas resources.[36]
Domestic Gas Strategy
3.38
The Australian Government submission to this inquiry states that the
Domestic Gas Strategy reflects the Australian Government's commitment to
balancing competing land uses, as identified in the principles articulated in
the Agricultural Competitiveness White Paper, which include:
-
access to agricultural land should only be done with the farmer's
agreement, and that should they agree, they should be fairly compensated;
-
there must be no long term damage to water resources used for
agriculture and local communities; and
-
prime agricultural land and quality water resources must not be
compromised for future generations.[37]
Commonwealth – the 'water trigger'
3.39
The Commonwealth Environment Protection and Biodiversity Conservation
Act 1999 (EPBC Act) regulates coal seam gas mining only to the extent that
it may have a significant impact on water resources.[38]
The EPBC Act also sets out that the Minister for the Environment must obtain
advice from the IESC if the minister believes that water resources or a matter
of national environmental significance will be adversely affected.[39]
3.40
The EPBC Act was amended in June 2013 to 'provide that water resources
are a matter of national environmental significance, in relation to coal seam
gas and large coal mining development'.[40]
This provision is known as the 'water trigger' and requires any CSG development
that is likely to have a significant impact on a water resource, to be 'comprehensively
assessed at a national level'.[41]
3.41
It also allows the Minister for the Environment to set conditions as
part of the project approval process, to ensure that 'any impacts from these
projects on a water resource are acceptable'. In doing so, the Minister is
required to seek the advice of the IESC.[42]
3.42
The EPBC Act allows the Commonwealth to enter into a 'bilateral
agreement' with a state or territory in relation to environmental assessments.[43]
Under these agreements, the assessment process is accredited and undertaken by
the state or territory government regulator. The responsible Commonwealth
Minister and relevant state or territory delegate then make separate decisions
on the approval of developments.
3.43
The Commonwealth government, in its submission, states that this
approach delivers a 'nationally comprehensive' approach to assessing and
conditioning projects that are likely to have a significant impact on water.[44]
3.44
As at 15 January 2016, a number of coal seam gas developments in New
South Wales and Queensland were, or had been assessed under the EPBC Act with
seven coal seam gas developments having been determined to be a 'controlled
action' under the water trigger of the EPBC Act.[45]
3.45
Of these seven developments, three were approved, three are undergoing
assessment and one was withdrawn. The IESC has provided advice on four of these
developments, and the IESC will advise on the remaining three projects before
decision.[46]
3.46
The Australian Government advised the committee that since the
introduction of the water trigger, the Minister for the Environment has set a
number of water resource related conditions for the approval of CSG
developments. These have included:
-
more extensive baseline monitoring;
-
further research characterising relevant groundwater resources;
-
best practice monitoring and management for both water quality
and quantity;
-
the review and updating of numerical groundwater models;
-
developing and implementing management actions to manage risk in
stages so that changes or modifications can take new information into account;
and
-
the identification of thresholds and limits relevant to the
project's impacts on groundwater and surface water, including requirements to
stop activity where limits have been reached.[47]
3.47
An EPBC Amendment Bill was put before the Australian Parliament in 2014
which sought to expand the scope of 'approval bilateral agreements' to enable
the water trigger to be included. In the face of community opposition, this
section of the amendment was removed in 2015, however proposed provisions to
strengthen the role of the IESC were retained.[48]
3.48
The water trigger is currently being independently reviewed, as is
required under section 25 of the EPBC Amendment Act 2013. Mr Stephen
Hunter was appointed as the independent reviewer, and his report is expected to
be tabled in the Australian Parliament in May 2016.
Industrial Chemicals (Notification
and Assessment) Act 1989
3.49
Chemicals that are used for commercial purposes, including those used
for CSG drilling or hydraulic fracturing are required to be registered with the
National Industrial Chemicals Notification and Assessment Scheme (NICNAS).
3.50
NICNAS was established in July 1990 as part of the Industrial
Chemicals (Notification and Assessment) Act 1989 (ICNA Act) and is
administered by the Department of Health.[49]
3.51
In June 2012, the Australian Government commissioned NICNAS to lead the National
Assessment of Chemicals Associated with Coal Seam Gas Extraction in Australia.
The assessment is informed by advice from the interim IESC, and uses a
whole-of-government approach to bring together the expertise of a number of
Australian Government agencies to 'maximise effort and use existing scientific
analyses'. Project partners are NICNAS, the Department of the Environment, CSIRO
and Geoscience Australia.[50]
3.52
The assessment is due to report in 2016.
States and territories
3.53
As noted above, responsibility for the legislation and regulation
surrounding unconventional gas mining and the issue of relevant licences largely
rests with the state and territory governments.[51]
Similarly, monitoring of environmental impacts is conducted by the relevant
state and territory government. The committee notes feedback from many
submitters that despite regulation surrounding the conduct of unconventional
gas mining, landholders consider compliance activities by governments to be
insufficient.
3.54
The following table sets out the primary legislation which governs the
extraction of coal seam gas in the states and territories. It should be noted,
however, that in addition to the listed legislation, states and territories have
environmental, local planning, land rights, water, heritage, workplace and
public health and safety related legislation, regulations and policy that may
also apply to unconventional gas projects.
State or territory
|
Primary legislation
|
Responsible Minister
|
Victoria1
|
Licensing for exploration
and production of coal seam gas is regulated under the Mineral Resources
Sustainable Development Act 1990 (VIC), while licensing for the
exploration and production of shale and tight gas is regulated under the Petroleum
Act 1998 (VIC).[52]
|
Minister for Energy and
Resources
|
Queensland
|
Environmental Protection
Act 1994 (QLD), the Petroleum
Act 1923 (QLD), the Petroleum and Gas (Production and Safety) Act 2004
(QLD), the Water Act 2000 (QLD) and the Water Supply (Safety and
Reliability) Act 2008 (QLD).[53]
|
Minister for Natural
Resources and Mines
|
New South Wales
|
NSW Gas Plan, Petroleum
(Onshore) Act 1991 (NSW) and the Environmental Planning and Assessment
Act 1979 (NSW)54
|
Minister for Resources and
Energy
|
South Australia
|
All oil and gas exploration
and production activities are regulated through the Petroleum and
Geothermal Energy Act 2000 (PGE Act) (SA)
|
Minister for State
Development
|
Western Australia
|
Petroleum and Geothermal
Energy Resources Act 1967 (WA), Petroleum
Pipelines Act 1969 (WA)
|
Minister for Mines and
Petroleum
|
Tasmania2
|
Mineral Resources
Development Act 1995 (TAS)
|
Minister for State Growth
|
Northern Territory
|
Petroleum Act 1984 (NT)
|
Minister of Mines and
Energy
|
Table 1: Legislation governing
the extraction of coal seam gas in states and territories
- In Victoria there is currently a moratorium on
hydraulic fracturing, exploration drilling and new exploration licences for all
onshore gas. A ban on the addition of BTEX chemicals in hydraulic fracturing
has also been legislated.
- In Tasmania there is currently a moratorium on the
practice of fracking.
3.55
Many submitters highlighted what they felt were significant deficiencies
and inadequacies in the state and territory environmental assessment and
approval processes for current and future unconventional gas mining projects.
The Lock the Gate Alliance summarised a number of issues in their assessment of
state and territory legislation, regulation and policy, noting that:
...the roll out of the unconventional gas industry across
Australia has taken place within a regulatory environment that is grossly
inadequate to the task of managing this geographically dispersed and spatially
intensive industry and the new and often experimental processes and methods it
employs.
Across the country, the current State legislation under which
the [unconventional] gas industry is operating often fails to address a whole
range of factors and governments are playing policy catch up as this industry
is rolled out without proper consideration of the possible or likely impacts.[54]
3.56
The Environmental Defenders Offices of Australia also claimed there were
significant deficiencies in legislation relating to unconventional gas
development in New South Wales, Queensland, Tasmania and the Northern
Territory, largely in relation to environmental assessment processes, consent
for mining developments and land use.[55]
3.57
The Municipal Association of Victoria submitted that:
There is concern that the current regulatory framework may
not be adequate to ensure protection of the natural environment, local communities,
rural industries and private property rights. Regulators may not have the
capacity to properly oversee the operations of industry.[56]
3.58
The Northern Territory Government submitted that in the Northern
Territory, the Energy Directorate currently undertakes compliance monitoring.
However, if industry activity increased in the Northern Territory, the Energy
Directorate would be unable to continue to undertake this work:
In the Territory, the oil and gas industry is still in its
infancy and so for low level activity, the above compliance monitoring tasks,
although very intensive, are manageable. However, Compliance Monitoring by the
Energy Directorate will be unsustainable with the increased levels of activity
that are expected to continue in the NT. The allocation of compliance
monitoring responsibilities will need to be addressed in the Energy
Directorate’s legislation review that will include the future release of new
Petroleum Resource Management Regulations (PRMR).[57]
Waste disposal in Queensland – an
example of complexity
3.59
The complexity associated with regulating unconventional gas mining was
drawn to the attention of the committee via the Queensland Parliament's
estimates process. On 21 August 2015, the Agriculture and Environment Committee
questioned the Department of Environment and Heritage Protection on the issue
of land spraying.[58]
3.60
Mr Stephen Bennett, the Queensland Member for Burnett, drew attention to
the fact that resource companies are able to dispose of waste materials on land
that is owned by them. The Director-General of the Department advised that this
was an activity that was regulated by a beneficial use agreement, and that
resource companies had to have approval to dispose of waste material arising
from unconventional gas mining activities.[59]
3.61
The committee notes that this is yet another example of the high level
of regulation that is required of unconventional gas mining activities. The
committee is also concerned to ensure that high regulatory standards are in
place, and that the states and territories are appropriately resourced to
ensure that waste material is not being inappropriately disposed of, even if it
is on land that is owned by resource companies. The committee also notes
feedback from submitters that self-regulation by resources companies gives rise
to significant opportunities for unreported noncompliance.
Harmonisation
3.62
In 2013 the Standing Council of Energy and Resources (SCER), now known
as the COAG Energy Council, endorsed the National Harmonised Regulatory
Framework for Natural Gas from Coal Seams (the Framework) which:
...delivers on a commitment by Australian governments to put in
place a suite of leading practice principles, provide guidance to regulators in
managing development of CSG and ensure regulatory regimes are robust,
consistent and transparent across all Australian jurisdictions. The Framework
focuses on four key operational areas of CSG, which cover the lifecycle of
development: well integrity, water management and monitoring, hydraulic
fracturing and chemical use.[60]
3.63
Under the Framework, each state and territory is required to report to
the COAG Energy Council on their implementation of the Framework. They are to
provide plans for harmonising legislation related to CSG and other
unconventional gas sources for the forthcoming year and provide updates on
achievements and challenges they have encountered in their efforts to harmonise
regulations in the previous 12 months.[61]
3.64
The Domestic Gas Strategy places a renewed emphasis on utilising the
Framework to remove 'unnecessary regulatory impediments' and streamline 'regulation
across governments' with the gas market.[62]
3.65
A number of submitters to the inquiry emphasised the need for
harmonisation of the legislative and regulatory frameworks for unconventional
gas mining across Australian jurisdictions.
3.66
Doctors for the Environment Australia argued that the inconsistencies
between state and territories needs to be resolved:
...a national approach is essential to reduce the extensive
risks associated with unconventional gas mining. The most (self-)evident reason
for this is that sets of unconventional gas operations may take place in
regions overlying, and therefore threatening, precious aquifers, aquifers that
do not recognise state borders. Here we face the actual, absurd situation in
which two (or more!) states may take different approaches to exploration and
mining licensing, different approaches to aquifer management, different
approaches to the approved use of toxic chemicals, different approaches to
waste-water management and different Air Quality requirements. We emphasise,
this absurd situation almost exists currently: Victoria has an unconventional
gas activity moratorium, South Australia does not, yet SA may come to approve
unconventional gas activity in the South East of SA extracting gas in relation
to the same aquifer that Victoria is protecting.[63]
3.67
Many submitters felt that harmonisation would not only benefit
stakeholders through providing consistency in process and standards but also
enable a degree of flexibility between jurisdictions. The Northern Land Council
(NLC) noted that:
Harmonisation of jurisdictional regulatory frameworks across Australia
would provide the benefit of holding companies and State and Territory
Government to a common standard of practice.[64]
3.68
NTSCorp concurred, noting that they would support:
...the development of a comprehensive policy to establish best
practice and a harmonised framework of federal and state/territory legislation
in relation to unconventional mining and CSG proposals.[65]
3.69
A number of submissions to the inquiry acknowledged the formulation of
the Framework, with the Northern Land Council stating that improving
collaboration between the Commonwealth and the states and territories under the
Framework:
...commits each State and Territory to collaborate on improving
their information resources, and sharing knowledge on scientific, technical and
regulatory issues without surrendering their right to determine how they use
this shared capacity while navigating what is already a complex policy
landscape.[66]
3.70
However the Environmental Defenders Offices of Australia were critical
of the Framework, and submitted the view that it is aspirational in nature and
does not apply to all forms of unconventional gas development.[67]
3.71
The committee notes that not all submitters were in favour of national
regulation, with the Chamber of Minerals and Energy of Western Australia (CME)
advocating that:
Given the regulatory framework already in place in Western
Australia to ensure safe practises around unconventional gas extraction, CME
considers the Select Committee's Inquiry unnecessary and requests the Inquiry,
in developing recommendations, to prevent duplication in the regulatory
requirements across jurisdictions.[68]
3.72
Although the committee acknowledges the efforts of the Commonwealth and
the states and territories to work towards harmonisation through the COAG
Energy Council, the committee considers that the work of the Council is not
well known, and that it needs to take steps to implement the national
harmonisation framework in a more timely manner.
3.73
In addition, the committee is concerned that the goal of reducing what
are described in the Domestic Gas Strategy as 'unnecessary regulatory
impediments',[69]
will expose landholders and the community to reduced standards that do not
adequately protect human and animal health and the environment.
International experience of
regulating unconventional gas mining
3.74
The committee notes that unconventional gas mining in a variety of
forms— shale, tight and coal seam gas extraction—is being carried out in a
number of overseas jurisdictions including Canada, the United States of
America, Russia, the United Kingdom (not including Scotland and Wales), New
Zealand, China, and in some countries within the European Union.
3.75
The committee also notes that there are a number of other countries,
provinces and territories that have put in place moratoria on unconventional oil
and gas mining including Scotland, Wales, a number of provinces and territories
in Canada (New Brunswick, Quebec, Nova Scotia)[70]
and countries in Europe such as France, Germany, Ireland, the Netherlands,
Bulgaria, the Czech Republic and Luxembourg.[71]
In many cases, these moratoria are in place due to one or more of the following
concerns about unconventional gas mining:
-
environmental impacts;
-
public health impacts;
-
level and adequacy of planning guidance; and
-
level and adequacy of ongoing regulation.
3.76
Where unconventional gas mining is in operation overseas, the regulatory
and legislative frameworks operate across federal, state and local
jurisdictions. In countries with a federal system, there have been calls for
harmonisation and consistency in the regulation of unconventional gas.[72]
3.77
The committee notes that as individual overseas countries have differing
parliamentary and legal systems and varying environmental and geological
characteristics, overseas legislative and regulatory frameworks for
unconventional gas exploration and production are not always directly
comparable to the Australian situation. However, the committee has observed
that the regulatory schemes across a variety of international jurisdictions do
have commonalities, including land access, water management, greenhouse and
fugitive emissions and the use of hazardous chemicals.
3.78
A number of submissions made reference to the experiences and practices
of overseas jurisdictions. The Northern Territory Department of Mines and
Energy (DME) submitted that they had assessed the practices of Alberta, Canada,
and Oklahoma, Illinois, Colorado, Texas and North Dakota in the United States
of America. The DME has also assessed the State Review of Oil and Natural Gas
Environmental Regulations and the guidelines developed by the Interstate Oil
and Gas Compact Commission.[73]
3.79
The Australian Government submitted that in developing the recent COAG
Energy Council's Domestic Gas Strategy and the Gas Supply Strategy, knowledge
and experience was drawn from both domestic and international sources,
including the United States of America.[74]
3.80
The Environmental Defenders Offices of Australia drew attention to
leading practices in overseas jurisdictions, stating that their research had
shown that:
Better practices do exist and are currently being implemented
in other jurisdictions. We concluded that adapting a number of these practices
and incorporating them into Australian laws, subject to local need and
conditions, would be appropriate.[75]
3.81
The committee has considered a set of respected international principles
formulated by the International Energy Agency (IEA) in its report, Golden
Rules for a Golden Age of Gas (IEA Golden Rules), published in 2012.
3.82
The IEA Golden Rules can be summarised as follows, and provide a useful
overview of the factors that should be considered in designing regulations for
unconventional gas activities:[76]
-
measure, disclose and engage: establish baselines for key
environmental indicators, measure and disclose operational data, minimise
disruption during operations, and integrate engagement with local communities
into every phase of the development;
-
watch where you drill: choose sites carefully, being mindful of
the local community;
-
isolate wells and prevent leaks: put into place robust rules on
well design, construction, cementing and integrity testing, prevent and contain
any surface spills and leaks, and ensure that waste fluids and solids are
property disposed of;
-
treat water responsibly: reduce freshwater use, reuse or recycle
where possible, store and dispose of water safely, and minimise use of chemical
additives;
-
eliminate venting, minimise flaring and other emissions;
-
be ready to think big: consider the cumulative and regional
effects of multiple drilling, production and delivery activities on the environment;
and
-
ensure a consistently high level of environmental performance.[77]
3.83
The committee notes that these 'Golden Rules' have not been referred to
by any government, mining or regulatory body in evidence to this inquiry,
however the committee considers that these principles offer useful guidance to
legislators, policy-makers, regulators and operators to inform the design and implementation
of legislation, regulations and policy to more adequately address the
environmental and social impacts of unconventional gas mining.
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