Currently in Queensland, the laws governing the resources industry are spread across a number of acts, each applying to different resource tenement types. Many concepts are replicated and yet there are inconsistencies. The Newman Government has rightly identified a need to move towards uniformity.
The Mineral and Energy Resources (Common Provisions) Act 2014 (the ‘Act’) will reform the land access framework that governs the relationship between resource authority holders and landholders. The Government says the new laws will support “long term positive relationships” but, in reality, they are not all good news for primary producers.
The changes, expected to commence in early 2015, will implement a consistent but weakened restricted land framework across all resource authority types, restrict the making of objections to mining projects, provide for conduct and compensation agreements to be noted on property titles, allow the Land Court to examine the conduct of parties negotiating conduct and compensation agreements and introduce “opt out” agreements.
New restricted land regime
The new Act establishes a new “restricted land” regime that will apply to all types of resource authorities replacing existing laws designed to protect sensitive areas.
The weakest protection under the existing laws is the requirement for an authority holder to negotiate a conduct and compensation agreement where an activity is proposed within 600 metres of an occupied residence or other prescribed infrastructure, even if such activities would otherwise have only a minimal impact and therefore not require an agreement. However, the protection is weak, particularly because it does not give the landholder a right to say “no” to proposed activities.
The strongest existing “restricted land” regime applies to mining leases under the Mineral Resources Act. A mining lease can only be granted over the surface area of “restricted land”, being land that is 100 metres from particular permanent buildings (such as a residence) or 50 metres from particular infrastructure including stockyards, dams, bores or water storages, if the landowner’s consent is obtained during the mining lease application stage. As a result, miners seeking a mining lease over restricted land have a substantial incentive to reach agreement with the affected landowners to avoid the need to exclude the restricted areas from the mining lease.
The Act will replace the 600-metre rule for conduct and compensation agreements and the Mineral Resources Act “restricted land” provisions with a new “restricted land” regime that will apply only to areas within 200m of residences, areas used for intensive feedlotting, pig keeping or poultry farming and other buildings that cannot co-exist with resources activities or be easily relocated. The regime does not offer across-the-board protection for stockyards, dams, bores or water storages.
The authority holder must obtain the landholder’s consent prior to commencing certain activities on the restricted land or, for mining leases, have entered into a compensation agreement with the landholder before the grant of the mining lease.
The Government admits the reforms will “benefit the resources industry” and says landholders should not be able to exploit the restricted land regime to prevent resource developments where co-existence can occur and appropriate compensation is paid.
The new regime clearly erodes landholders’ rights. If co-existence is the correct theme, it needs to be mutually beneficial, and to achieve it the bargaining power of landholders and authority holders has to be as close as possible to equal. The Government has taken a step backwards from this goal.
Once the new Act takes effect, the only landholders entitled to object to mining leases will be owners and occupiers of land the subject of the mining lease, adjoining land and land necessary for access to the mining lease.
Even then, the grounds of objection will be limited largely to the issue of appropriate “land use”. Purportedly to remove “overlaps” between objections to mining leases and considerations under the Environmental Protection Act, the right to object to a mining lease based on its “adverse environmental impact” has been removed. Also deleted from the list are objections based on the “public interest test”, the past performance of the applicant or “any good reason”.
In some instances, landholders and the wider community will retain a right to object to the environmental authority that a mining company must obtain in conjunction with a mining lease. These rights will be limited to “high-risk” mining projects, except coordinated projects under the State Development and Public Works Organisation Act if the Coordinator-General’s report for the project prohibits such objections. Because of these changes, we are likely to see more mining projects become coordinated projects under the stewardship of the Coordinator-General.
Objections can be expensive, blunt instruments. But they can sometimes encourage solutions to landholder concerns that resources companies might otherwise refuse to consider. With the changes to landholders’ objection rights, the real concern is again the effect on landholders’ bargaining power and the need for further, targeted reforms to improve the balance is clear.
Recording conduct and compensation agreements on title
Certain agreements, including conduct and compensation agreements, reached between authority holders and landowners are binding on successors in title.
However, because there is currently no independent register of these agreements, purchasers can be bound by agreements of which they are unaware. Purchasers are therefore forced to rely on the accuracy of pre-contractual disclosures and warranties given by vendors.
The new laws will require authority holders to give notice to the Registrar of Titles within 28 days of entering into a conduct and compensation agreement or opt-out agreement so that the existence of the agreement can be noted on title. The content of the agreements will not be recorded.
Increased powers for the Land Court
The Land Court will be provided with new express powers to decide how and when the resource authority holder may enter land and how authorised activities must be carried out. In other words, the Land Court will be empowered to impose conduct conditions in conjunction with an assessment of compensation. This is a major improvement.
As a general rule, landholders will continue to have only 20 business days to reach agreement with an authority holder after being given notice of the authority holder’s intention to negotiate before either party can commence dispute resolution processes. However, if those processes fail, the Land Court can order the parties to go back and engage in a further conference or mediation. For the purpose of making such orders, the Land Court is now specifically empowered to take into account the behaviour of the landholder and the resource authority holder in the process that led to the Land Court’s involvement.
Opt out agreements
Since 2010, an authority holder has been permitted to enter land to carry out advanced activities where each owner and occupier has entered into a conduct and compensation agreement, a deferral agreement (deferring the negotiation of a conduct and compensation agreement until after entry) or the matter has, following unsuccessful negotiations, been referred to the Land Court.
The new Act introduces another concept: an “opt out” agreement which negates the need for a conduct and compensation agreement or Land Court proceedings. The Government’s theory is that opt out agreements could suit situations where authority holders and landholders have established working relationships and do not need a new conduct and compensation agreement to cover additional activities.
In our view, “opt out” agreements could be exploited by authority holders and used to deny landholders the benefit of conduct and compensation agreements. We cannot envisage a situation where signing an “opt out” agreement would be a landholder’s best option.
Landholders should always seek legal advice before signing any document presented by a resource company and in almost all instances the resources company will be obliged to pay for that advice. Thynne + Macartney’s Agribusiness team has assisted landholders to reach better agreements with over 200 different resource companies in recent times.
Click here to download a pdf copy of Agribusiness December 2014 Newsletter.
This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.