Queensland Audit Office Report on managing CSG activities focuses on managing

Key Insights

• On 18 February 2020, the Queensland Audit Office (QAO) tabled its audit report on managing coal seam gas (CSG) activities.  While the report is focussed on CSG, some recommendations will affect other resource and infrastructure proponents.
• The QAO found that while the regulators' frameworks for regulating CSG activities were generally effective in their portfolio areas, refinement would support better coordination between departments and improve data collection and sharing, and help to manage the ongoing challenges in delivering successful co-existence between landholders, communities and the CSG industry.  
• As a result of the findings of this audit report, the GasFields Commission Queensland is currently undertaking a review of the Regional Planning Interests Act 2014 (Qld) (RPI Act). 
• Concerns regarding compensation available to neighbouring landholders for offsite impacts were raised during the audit process.  The regulators confirmed there has been a clear policy direction from government in relation to offsite impacts and compensation liability.  However, they agreed to "review their existing communications to ensure that landholders neighbouring CSG activities are aware of the regulatory framework and its application to them".  

QAO audit report: Managing CSG activities

One of the objectives of the QAO's audit was to review the effectiveness of the two regulators in regulating the CSG industry: the Department of Natural Resources, Mines and Energy (DNRME) (now the Department of Resources) and the Department of Environment and Science (DES).  

The audit also considered the role of the GasFields Commission Queensland.  While the Commission is not a regulator, it has a legislated oversight role to the regulatory framework, facilitates co-existence and provides advice to government, industry and stakeholders.

Recommendations 

The QAO made nine recommendations in its audit report.  The key recommendations related to the performance of the regulators, the effectiveness of the current legislative regime dealing with co-existence of the CSG industry with other land uses, compensation for offsite impacts for neighbouring landholders, and the role of the GasFields Commission Queensland. 

Regulators performance 

The QAO found that while the regulators' frameworks for regulating CSG activities were generally effective in their portfolio areas, refinement would support better coordination between departments and improve data collection and sharing, and help to manage the ongoing challenges in delivering successful co-existence between landholders, communities and the CSG industry.  In particular, it is likely that government departments, agencies and the industry will continue to find ways to improve engagement and facilitate information sharing across all commodities with relevant stakeholders.

Prime agricultural land & the RPI Act

A key issue in land access negotiations is managing co-existing activities, particularly in relation to renewable projects (eg solar and wind) and agricultural activities with resource authorities.  
An area of importance for co-existence is effectively assessing the potential impact of resource activities (including CSG) and development activities on highly productive agricultural land.  The current legislative framework is intended to manage the impact of resource activities and other regulated activities on areas of regional interest by adding additional conditions into approvals to protect these areas.  

The QAO noted stakeholders' concerns about the framework, in particular, the need for greater consistency of land classifications across the RPI Act and the need to improve the identification of priority agricultural interests and protect them from non-agricultural development.  Although not within the scope of the audit, the QAO noted that stakeholders also raised concerns that the current framework has not kept pace with new activities (eg use of priority agricultural land for solar farms is not subject to this framework). 

As a result, the QAO recommended that the GasFields Commission Queensland review the assessment process under the RPI Act to determine whether it adequately manages CSG activities in areas of regional interest and to ensure that it continues to meet the intent of the Government's co-existence policy.

The GasFields Commission Queensland has now commenced the RPI Act review process.  The scope of this review is to review the: 

• assessment process and assessment criteria used to manage the impacts of CSG activities in priority agricultural areas and strategic cropping areas;
• effectiveness of the implementation of the assessment framework;
• definitions and classification of agricultural land in Queensland; and
• exemptions to the assessment process.

A report summarising the outcomes of this review is due to be released shortly.

Offsite impacts

The QAO found that "landholders and their representatives continue to express concern that they have struggled to obtain remedy or compensation for offsite impacts".  As a result, the audit recommended that the regulators and the GasFields Commission Queensland evaluate the adequacy of alternative arrangements to remedy offsite impacts. 

This recommendation relates to the ongoing issue around landholders wishing to be compensated when offsite CSG activities cause impacts to air quality, dust and noise.  

The issue of neighbouring compensation liability was addressed in the 2018 amendments to the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) (MERCP Act) introduced by the Mineral, Water and Other Legislation Amendment Act 2018 (Qld).  In particular, amendments were made to section 81 of the MERCP Act to clarify that compensation is only available to landholders who have the relevant activities occurring on their land.  In addition, in his second reading speech to the respective Bill, the Minister clarified the effectiveness of current arrangements in addressing compensation for neighbouring landholders (ie alternative arrangements required by environmental authority conditions, and "make good" provisions under the Water Act 2000 (Qld)).  

In response to the QAO's recommendation, both regulators confirmed that there has been a clear policy direction from government in relation to offsite impacts and compensation liability.  However, they both agreed to "review their existing communications to ensure that landholders neighbouring CSG activities are aware of the regulatory framework and its application to them".  

The GasFields Commission Queensland also committed to "work with the regulators and key stakeholders on this point, and they will brief the Minister on the outcome of this investigation".  

Engaging with stakeholders

The QAO reported that there was confusion among some stakeholders about the rights, entitlements, and obligations of industry and stakeholders, and some expressed concerns about access to information when landholders are negotiating with industry.

As a result, the QAO recommended that the regulators and the GasFields Commission Queensland evaluate their current collaborative engagement approach to ensure the needs and concerns of all stakeholder groups are met and investigate ways to improve information exchange in situations where landholders have not been provided information to make an informed decision.  

In response to these recommendations, the regulators and the Commission are working to significantly improve access to, and exchange of, information for stakeholders who engage with these agencies.  Additionally, the regulators and the Commission are reviewing existing, and developing new, engagement programs in response to stakeholder feedback.  

Regulatory Framework

The audit found that the GasFields Commission Queensland is not fulfilling all of its legislative functions and does not currently provide oversight of the regulatory framework.  As a result, the QAO recommended that the Department of State Development, Manufacturing, Infrastructure and Planning, of which the GasFields Commission Queensland is an independent statutory authority, determines the scope, future function and role of the Commission, taking into account industry maturity and stakeholder consultation.
The QAO also found that the GasFields Commission Queensland could improve its effectiveness by:

• evaluating its current collaborative engagement approach to ensure the needs and concerns of all stakeholder groups are met;
• providing input into the process of land release for gas exploration;
• extending its advice on CSG issues and processes; and
• identifying further opportunities for advising government and stakeholders.

Authors: Libby McKillop, Senior Associate and Roxane Read, Lawyer.