Key trends in land access negotiations

Over the past 12 months, a number of new issues emerged which significantly affected land access negotiations between the mining/coal seam gas (CSG) industry and landholders.  Some of these key issues relate to public liability insurance, local Council rates and vegetation mapping. 

• In response to an insurer's announcement of its intention to no longer provide public liability insurance to landholders who have gas activities occurring on their land, the GasFields Commission Queensland coordinated a working group to develop a new indemnity clause to clarify the liability borne by resource authority holders.   
• An increase in a landholder's local council rates caused by a change of rating category is arguably a cost which a resource authority holder may be liable to pay.  Resource authority holders should take this into account when negotiating new conduct and compensation agreements (CCAs) and interpreting the provisions of existing CCAs (see Land Appeal Court decision in Westerns Downs Regional Council v Geldard [2020] QLAC 1, which held that a rating category of "petroleum" was appropriate for a rural property with 20 gas wells and gathering lines).
• Landholders are not entitled to be compensated for a decrease in property value caused by a resource authority holder identifying protected vegetation on their property (see Land Court decision in Conway & Ors v Australia Pacific LNG CSG Transmissions Pty Ltd & Anor [2020] QLC 26).  

Public liability insurance – new indemnity clause 

In June 2020, Insurance Australia Group (IAG) announced that its subsidiary, WFI, would no longer provide public liability insurance to landholders if there is any petroleum or gas activity (including infrastructure) on their property.  This announcement attracted considerable attention across the industry.  It became a key issue in land access negotiations involving CSG companies as landholders were concerned about their potential inability to gain insurance coverage.

IAG's decision has implications for not only those landholders who currently have CGS infrastructure on their land and who may have difficulty renewing their policies, but also those landholders being approached by CSG companies to negotiate a CCA and whose current policy may be affected. 

In negotiations for CCAs, landholders sought indemnities from CSG companies in relation to insurance coverage, and more broadly sought indemnities from any legal liability, loss, cost or damage caused by, or contributed to by, the resource authority holder and their infrastructure. 

In response, the GasFields Commission Queensland coordinated a working group with representatives from the Insurance Council of Australia, AgForce Queensland, Queensland Farmers Federation, Cotton Australia, the Australian Petroleum Production & Exploration Association and relevant government departments. Together, this working group developed a new indemnity clause intended to provide insurers (and landholders) with clarity regarding the extent of the resource authority holder's liability to the landholders.  A copy of this indemnity clause is available on the GasFields Commission Queensland's website.

Increases in Local Council rates may need to be addressed in a CCA 

The Land Appeal Court's decision in Westerns Downs Regional Council v Geldard [2020] QLAC 1  provides clarity about the impact of CSG infrastructure on a landholder's local Council rates categorisation.  

The decision related to an objection by a landholder to a rates categorisation awarded by the Western Downs Regional Council.  The landholder argued the land should be categorised as "rural" rather than "petroleum", notwithstanding that there were 22 gas wells and associated infrastructure on the property. 

The relevant rates categorisation had a substantial impact on the rates payable by a landholder because under the Western Downs Regional Council "Rating Category Statement", the minimum rates payable for land categorised as Rural is $694, while the minimum rates payable for land categorised as Petroleum (400 ha or greater) is $66,755. 

The landholder was successful at first instance, but the decision was overturned on appeal to the Land Appeal Court.  The Land Appeal Court accepted the Council's argument that the Land Court erred by focusing on what the landowner/rate-payer was using the land for, rather than what the land was used for generally.  

The Land Appeal Court found that the "petroleum" rating was therefore correctly applied.  The Court made it plain that rates are a tax on land, not the owner.  Rating categories are framed around usage of the land. 

An increase in rates caused by a change of rating category is arguably a cost which a resource authority holder may be liable to pay.  Resource authority holders should take this into account when negotiating new CCAs and interpreting the provisions of existing CCAs.

Landholders not entitled to compensation for decrease in property value caused by identification of protected vegetation on the property 

The Land Court decision in Conway & Ors v Australia Pacific LNG CSG Transmissions Pty Ltd & Anor [2020] QLC 26 confirms that a landholder is not entitled to be compensated for a decrease in property value caused by a resource authority holder identifying protected vegetation on the property.  

In this matter, the landholders sought compensation from Australia Pacific LNG (APLNG), arguing that the diminution in the value of their property arose from APLNG identifying protected vegetation on the property and consequent updates to the Flora Survey Trigger Maps.  The Land Court rejected this argument, finding that: 

• while an ecological survey might reveal some pre-existing ecological condition that has adverse impacts for the landowner, "[i]t cannot be the case that a resource authority holder can be responsible for loss occasioned by the revelation of an ecological condition that existed on the land regardless of the resource company's activities"; and 
• the legislative regime "does not permit this Court to compensate parties for hurt feelings, disappointment, or anger at an environmental protection regime."

Key trends in the disputes space

According to the most recent Annual Report published by the Land Access Ombudsman, there has been a growing number of dispute referrals to the Land Access Ombudsman in 2019-2020.  During this period, 23 referrals were received which represents a 35% increase as compared to the 2018-2019 financial year.  The general subject matter trends of the dispute referrals seen by the Ombudsman during the 2019-2020 period are broken down below:

• enquiries regarding resource activities in rural areas without CCAs or "make good" agreements;
• disputes regarding easements and water; and
• complaints regarding access of telecommunications personnel on private property. 

Despite this increase in referrals, only four disputes were determined to be within the jurisdiction of the Ombudsman (an increased number of referrals from the previous year) with the other 19 disputes being redirected to the appropriate bodies (most often to the Department of Natural Resources, Mines and Energy (now the Department of Resources), the number of referrals being on par with the previous year).

Authors: Libby McKillop, Senior Associate; Paul Wilson, Senior Associate and Leanne Mahly, Lawyer