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.
This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.