By Martin Klapper, Partner and Jonathan Fulcher, Partner
A focus on land access and compensation
On Thursday 19 August 2010, the Queensland Parliament passed the Geothermal Energy Bill 2010. Among other things, the Bill introduces significant amendments to the regimes for land access and compensation under Queensland's resources and energy legislation, including under the:
- Petroleum Act 1923 and Petroleum and Gas
- (Production and Safety) Act 2004
- Minerals Resources Act 1989
- Greenhouse Gas Storage Act 2009
These amendments are to come into effect on a day to be fixed by proclamation. We understand that consultation on the proclamation of the land access and compensation provisions is continuing, and think that landholders and industry should be prepared for those provisions to commence well before the end of the year.
A single regime for access and Compensation
The Bill aims to achieve legislative consistency by introducing similar requirements for land access and compensation across petroleum, mining, greenhouse gas storage and geothermal activities.
Importantly, the amendments introduce a new Land Access Code. This mandatory code will form part of the conditions of all tenements issued under mining, petroleum, greenhouse gas storage and geothermal legislation. A breach of a provision of the Land Access Code may result in a pecuniary penalty, and can also potentially lead to forfeiture of a tenement.
The amendments, on the whole, ensure consistency in definitions of the 'compensatable effects' for which tenement holders must compensate landholders. With the exception of the Mineral Resources Act, they also specifically require compensation to be paid for the landholder's accounting, legal and valuation costs in negotiating compensation, and specify consequential loss as a 'compensatable effect.'
Getting access under the new regime
The amendments replace existing notice and compensation provisions under the petroleum, minerals and greenhouse gas storage legislation, and introduce a common regime across these and the geothermal law.
The process begins with a determination of whether the proposed activity is a 'preliminary activity' or an 'advanced activity'.
A 'preliminary activity' is an authorised activity "that will have no impact, or only a minor impact, on the business or land use activities of any owner or occupier of the land on which the activity is to be carried out".
The definitions give some examples:
- Walking the area
- Driving along an existing road or track
- Taking soil or water samples
- Drilling without constructing earthworks
- Geophysical surveying without site preparation
- Aerial, electrical or environmental surveying
Activities on land that is less than 100 ha or that is used for intensive farming or broadacre agriculture, an activity that is carried out within 600 m of a school or an occupied residence, or that affects the lawful carrying out of an organic or bio-organic farming system, is not an preliminary activity.
All other activities are 'advanced activities', and again, a range of examples are given.
Where do the new arrangements apply?
They do not apply across the board to all exploration and production activities.
They will apply to exploration and production activities under the Petroleum Acts, the Greenhouse Gas Storage Act and the Geothermal Energy Act.
They also will apply to exploration activities under exploration permits and mineral development licences under the Mineral Resources Act.
They will not apply to activities under other tenements under the Mineral Resources Act, including prospecting permits, mining claims and mining leases. In essence, the existing regime for the determination of compensation and access under mining leases is preserved.
So how will it work?
The resources tenement holder should always first ask whether it owns the land, or whether it has a right (apart from under the tenement) to enter the land. If it does, then it can enter the land by exercising its existing rights. There are also limited exceptions where entry is required to preserve life or property, or in an emergency.
Leaving those circumstances aside, the tenement holder must decide whether the activity is a 'preliminary activity' or 'advanced activity'.
The process for preliminary activities
Where an existing conduct and compensation agreement with a waiver of entry notice (or simply a waiver of entry notice) is in place, the tenement holder can enter the land in accordance with that agreement or notice. It must still compensate the landholder, but that can happen later, under an agreement or by determination of the Land Court.
In the absence of a waiver of entry notice, an entry notice must be given to the landholder. For a first entry notice, the landholder is also entitled to a copy of the Land Access Code and other relevant codes, as well as a copy of the tenement holder's tenement and environmental authority. There are also other detailed content requirements for entry notices.
A copy of the entry notice must be given to the relevant department officer immediately and before entry.
Entry can then occur at least 10 business days after the notice is given, or a shorter time if agreed by the landholder.
Entry for advanced activities
There the process is somewhat more complex.
Unlike under existing legislation, it is not possible to begin the process by giving an entry notice. For advanced activities, broad overview compensation must be determined first, and once that has happened, an entry notice may be given.
The process starts, as it should, with this question: are the parties in agreement on the conduct and compensation terms under which the tenement holder may enter the land and undertake its activities?
If the answer is yes, and if they have signed an agreement that satisfies the requirements of the relevant Act for a conduct and compensation agreement, then if that agreement:
- contains a waiver of entry notice: the tenement holder can start its activities.
- does not contain a waiver of entry notice: the tenement holder can start its activities as soon as it has given an entry notice and the notice has ended.
If the answer is no, the tenement holder can give the landholder a negotiation notice. The negotiation notice says that the tenement holder wishes to negotiate a conduct and compensation agreement or a deferral agreement with the 'eligible claimant' - that is, the landowner or occupier. Giving this notice marks the formal start of the process under the legislation, even if the parties started to negotiate earlier.
Timeline: The day on which the negotiation notice is given is day zero
The parties must then negotiate for a conduct and compensation agreement or a deferral agreement for a minimum of 20 business days.
If the parties enter into a conduct and compensation agreement or a deferral agreement within 20 business days, a 'cooling off period' for the balance of that 20 business day period applies, and in that time advanced activities cannot commence. This is the case even if the landholder agrees to the contrary.
If a negotiation notice has been given, no activities can start on the ground for at least 20 business days, whether or not an agreement is reached.
Timeline: 20 business days have now Passed
Assuming an agreement is reached on conduct and compensation or deferral, the tenement holder can then begin to address the entry notice requirements.
If there is a conduct and compensation agreement and that agreement contains a waiver of entry notice, the tenement holder can enter the land and commence activities.
At the earliest, then, advanced activities can begin on the day after 20 business days have elapsed since the negotiation notice was given, assuming the parties have entered into an agreement and the landholder has given a waiver of entry notice or has agreed to reduce the 10 business day requirement under an entry notice.
Timeline: 20 business days plus one day have passed
So what happens if the parties can't agree?
At this point, 20 business days have passed after the tenement holder gave the negotiation notice.
At any time after that point, either party can give a notice to the other electing either to refer the negotiation to an authorised officer appointed under the relevant resources Act for a conference, or to start an independently conducted alternative dispute resolution (ADR) process (eg conciliation, mediation or similar). A party that nominates an independently conducted ADR process must pay the costs of the person conducting the ADR.
The 'authorised officer' is a person appointed in that capacity by the Department of Employment, Economic Development and Innovation (DEEDI) under the relevant Act. It will be interesting to see how this process works in practice, and to what extent DEEDI can make resources available to meet the requirements as they emerge.
The negotiation conference/ADR process must be completed within a further 20 business days. That period can be extended if the parties agree. Assuming no agreement is reached, by the end of the mediation process, at least 40 business days will have passed since the tenement holder gave the negotiation notice.
Timeline: 40 business days have passed
At that point, if no agreement is reached, a party that attended the negotiation conference or ADR can apply to the Land Court for the determination of compensation, and the tenement holder can give an entry notice.
Unless the landholder agrees, the 10 business day minimum period between giving the entry notice and when entry can occur then applies.
Timeline: 50 business days have passed
The rules relating to the negotiation process for conduct and compensation and giving entry notices are detailed, and tenement holders must understand them thoroughly and follow them carefully. For example, a tenement holder that fails to attend the negotiation conference or ADR (whether called by the tenement holder or the landholder) during the second 20 business day period cannot start Land Court proceedings and therefore cannot give an entry notice. The legislation does not say what happens to a party that misses this important step, and it may have to go back to the beginning by giving a new negotiation notice - clearly, a very serious consequence.
For preliminary activities:
- An entry notice must be given, and if the landholder agrees, entry can occur immediately
- Compensation must be determined and paid
For advanced activities:
- In the absence of agreement, a negotiation notice must be given and a minimum of 20 business days must pass between the time when the negotiation notice is given and when entry occurs before advanced activities can commence, even if the landholder agrees to allow entry earlier.
- Assuming the tenement holder complies with all of the necessary steps along the way and that it does not reach agreement with the landholder on a conduct and compensation agreement, deferral agreement or reduction in the entry notice period, entry for an advanced activity can be delayed by 50 business days or more after the tenement holder gives a negotiation notice.
What tenement holders need to do now
It is clear that these changes to land access and compensation under Queensland's resources Acts will commence in 2010, possibly much earlier than December. There are a number of things that you should do to ensure your compliance with the new regime upon its proclamation:
- Review your current documents to ensure compliance with the amendments and the Land Access Code. These include entry notices, waiver of entry notices, compensation agreements (these now also need to address conduct - hence 'conduct and compensation agreements'), deferral agreements and land access protocols as applicable.
- Familiarise yourself with the Land Access Code, as parts of this will be mandatory conditions of your tenement.
- Prepare all of the new documents that you will need under the new legislation, and understand the process for giving notices and negotiating agreements for access and compensation.
If you would like further information and guidance about compliance with the legislation, HopgoodGanim's Resources and Energy team is offering a complimentary 'roadshow' presentation on these legislative amendments. The presentation covers the amendments in detail and explains how you can ensure compliance with the new regime.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.