Landholders should welcome the recent changes to the "make
good" regime for compensation for damage to water bores caused
by mining or gas development.
The "make good" regime has been incrementally improved
by successive State Governments as the need for robust compensation
agreements has grown with the development of the resource
industries in Queensland.
Changes to the Water Act 2000, which were passed by the
State Government on 10 November, address concerns raised by
landholders during the submission period to extend the regime to
cover water bores which are affected by "free gas"
generated by coal seam gas extraction. Previously, these bores
would only be caught by the regime if the bore also experienced a
reduction in the flow of water which could be attributed to coal
seam gas extraction.
The trigger threshold for the regime to apply has also been
lowered. Previously, there needed to be an "unreasonable level
of certainty" that a bore would become affected by resource
activity, whereas a bore will now qualify where there is a
likelihood that the resource activity is the cause of the damage or
a material contributing factor to it. This change will lessen the
burden on landholders proving that their bores will be affected by
mining or gas activity.
The new laws also expand landholders' rights when
negotiating "make good agreements". Resource companies
are now obliged to pay the landholder's reasonable costs in
engaging a hydrogeologist to assist in these negotiations. While
resource companies have previously been required to pay a
landholder's reasonable legal, valuation and accounting costs,
expert hydrogeological advice is often needed to assist the
landholder to make sense of the technical data and modelling
provided by the resource company, the costs of which have
previously been met by the landholder.
Resource companies are also obliged to pay for any alternative
dispute resolution process (such as a mediation) as part of the
negotiations. Previously these costs were payable by the party who
called for the process. Also, landholders now have a "cooling
off period", of 40 business days from the date on which the
bore assessment is undertaken, in which the landholder can
terminate the make good agreement.
The amendments are expected to commence in early December.
Thynne + Macartney has significant experience in assisting
landholders to negotiate "make good" agreements.
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.
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A lessee will need to demonstrate that the genuine interests of the lessor will be protected if relief is granted.
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