Let’s fix the Petroleum (Onshore) Amendment Bill 2013

Let’s fix the Petroleum (Onshore) Amendment Bill 2013

The Government’s Petroleum (Onshore) Amendment Bill 2013 introduced back in May has been delayed until March 2014. This gives stakeholders the opportunity to comment on the Bill and the Land Access Code, with a view to strengthening landholders’ rights and protection of the environment.

NSW Farmers said the code would be a positive outcome and and feel that the improvements are a “step forward”.

Alan Jones and Lock the Gate have expressed strong concerns about the permit provisions, because they can operate as a backdoor to coal seam gas expansion. The Shooters and Fishers party are also opposed to the permit provisions, and want landholders to have the right to say no.

Currently, both the Bill and Land Access Code fail in significant ways. The passing of the Bill will be used by the gas industry and the government to justify the roll out of the industry, despite lacking a social licence.

The Government was clear that the bill would only proceed when a broad consensus was reached, so it is important to let key members know that significant improvements are needed to fix the Bill.


Protect & strengthen landholders’ rights

  1. Give landholders the right to say no to coal and gas companies. Remove arbitration provisions that allow mining company being able to force their way on to a property through arbitration. This means mining companies and landholders must come to a voluntary access agreement. This levels the playing fields between miner and landholders, and reflects the sentiment of political leaders such as Tony Abbott, Ian Macfarlane and Barnaby Joyce.
  2. Oppose provisions relating to access permits for ‘environmental assessment’ and ‘surveys and sampling’. These provisions are dangerous, because they bypass any need for an access arrangement between the titleholder and landholder. Such provisions do not even require the permit holder to hold an exploration licence, which means a much wider class of persons can potentially access their land. Activities permitted by ‘surveys and sampling’ are so broad in scope that such permits could potentially act as pseudo exploration. [The government’s proposal to add a ‘note’ to these provisions doesn’t limit the scope sufficiently to prevent these provisions from being used as a loophole to petroleum production.]
    • Require 28 days’ notice and consultation for entry permits – to ensure that there is some degree of notice and consultation with landholders who are affected by entry permits. This is the bare minimum that should be done in order to make these invasive provisions less disruptive to landholders. [Government’s proposed amendment to s 104W partially does this]
    • Increase penalty for breach of permit condition –to act as an adequate deterrent to breaches. Considering the already invasive nature of permits, and the absence of any legislatively enshrined protections for landholders regarding the manner in which they are exercised, it is absurd that such a minimal penalty is proposed. [Government’s amendment now does this]
    • Extend landholder immunity from liability to circumstances where unauthorised 3rd parties enter their property – such as in situations where, for example, NOW, EPA, fire service enters a landholder’s property to deal with a gas emergency. Landholders should not face the risk of being sued in relation to petroleum related activities on their property.
  3. Maintain the provision for companies to get consent from neighbouring landholders for seismic surveys on public roads – so that existing protections are not done away with. [Government’s ‘paper roads’ amendment addresses one aspect of this, but would still allow seismic testing on public roads which is against the wishes of many councils and those residents living within 200 m of public roads.]
  4. Extend exclusion zones for exploration and production from 200 metres to 2000 metres to all homes in NSW, including rural dwellings – to enshrine in legislation the protections given to most (but not all) residential areas in the state by virtue of the 2 km coal seam gas exclusion zone Mining SEPP. Critically, the 2 km exclusion zone SEPP still allows pipelines to be constructed within the 2 km exclusion zone.
  5. Replace definition of ‘cultivated land’ in Petroleum Act with ‘agricultural land’ from Mining Act – so that agricultural land (particularly grazing land which has no protections) has stronger legislated protection than that currently provided by the ‘cultivated land’ definition.
  6. Retain power of Minister/DG to suspend operations for breach of access agreement – in order to protect landholders from coercive or intimidating mining companies. Landholders may not always be in a position to assert their rights, and it is a perverse proposition for the Government to give away this power over recalcitrant mining companies.
  7. Reduce time limit to bring proceedings against landholders who ‘lock the gate’ to 3 months – as landholders should not have to live with the fear of prosecution for simply refusing access.
  8. Mandatory to make the access code by regulation – so that this isn’t left to the discretion of the Minister. As the access code is meant to be the backbone of a land access agreement in order to protect landholders’ interests and the environment, it is essential that the Minister prescribes the code at the earliest opportunity.


Fix arbitration provisions

  1. Introduce ‘no worse off’ principle into negotiating access agreements – so that access agreements are made with an overriding principle that the landholder is in no worse a position financially or the land environmentally as a consequence of the miner exercising its rights to obtain access. Currently it is the landholder who bears all the risk for mining exploration, and given that they have no right to say no, landholders should not be forced to effectively subsidise mining exploration.
  2. Introduce principle that land access negotiations must be undertaken in good faith – which means parties engaged in land access negotiations must demonstrate to the Director General that they have negotiated in good faith before seeking appointment of an arbitrator. This will prevent situations where the miner skips straight to forced arbitration, demonstrated by KEPCO against Craig Shaw in Bylong, and Yancoal against Julia and Colin Imrie in the Upper Hunter.
  3. Extend the negotiation period before forced arbitration. The current negotiation period before forced arbitration is a total of 56 days. This should be extended to at least 180 in order to allow landholders to obtain the requisite legal and expert advice to assist their land access negotiations. [The government’s amendment of 14 days’ notice for the appointment of an arbitrator does not address this, as this does not fix the inadequate time frame for negotiating an access agreement before the forced appointment of an arbitrator.
  4. Introduce qualification requirements for arbitrators – by requiring that they be legal practitioners of Senior Counsel status, or former judges of the Supreme or Land and Environment Court. This should ensure that arbitrators are sufficiently skilled to deal with complex issues and ensure procedural fairness to parties involved in arbitration.
  5. Allow arbitrators to be replaced – so that the Minister or Director-General may, on application of a party to arbitration proceedings, revoke the appointment of an arbitrator or appoint an alternative arbitrator. To ensure accountability and transparency, the application to revoke an arbitrator or appoint an alternative arbitrator must set out reasons for the request.
  6. Provide for the reimbursement of all legal costs of the landholder, including legal costs relating to arbitration. Legal costs are likely to amount in the tens of thousands, so it would be a significant financial burden for landholders to cover even a portion of this cost, particularly if a landholder does not want to grant access. Without mining companies being forced to pay the legal costs during arbitration, miners will be more inclined to skip straight to arbitration where landholders are severely disadvantaged with the burden of punitive legal costs.
  7. Ensure landholders have the right to legal representation during arbitration. There is currently no right for landholders to have legal representation during arbitration. This puts landholders at a severe disadvantage when it comes to negotiating access agreements. Landholders or their agents are therefore pitched against mining representatives who are better skilled, qualified and resourced than landholders. In an attempt to level the playing field, landholders should have the right to be represented by a lawyer in arbitration proceedings. [Government’s amendments fixes this]
  8. Procedures used in arbitration should be defined in the regulations. Such procedures are necessary to fix the broken arbitration process and should accord with principles of procedural fairness, natural justice, accountability and transparency. This includes the requirement that a fair and accurate record of the proceedings are recorded and transcribed.


Increase transparency and accountability

  1. Publication of environmental information must be broadened & non-discretionary – so as to require the mandatory release of environmental information relating to the monitoring, recording or assessing of the environmental impacts of petroleum prospecting. Remove the objection relating to ‘commercial disadvantage’.
  2. Remove ‘protected documents’ (voluntary audit) provisions – which otherwise, could potentially allow non-compliant companies to conduct a voluntary audit immediately after an incident in an attempt to cover up wrongdoing. It seems awfully perverse that the Bill provides for mandatory audits, yet potentially allows a company to escape investigation by conducting its own voluntary audit, and thereby avoid scrutiny or prosecution.
  3. Make audits mandatory & extend audits to include the performance of the Department – to ensure that company performance audits are mandatory and to extend them to include the performance of DTIRIS, the department primary responsible for coal seam gas.
  4. Power to suspend licence conditions relating to ‘working of the land’ should not be extended indefinitely – Conditions relating to the “working of the land” is not defined in the Act, and could potentially include conditions relating to the protection of the environment. Such conditions must not be suspended. The premise of a work program is “use it or lose it” and it could potentially allow companies to ‘sit on’ exploration licences. There’s also the issue of transparency – requests for suspension should be included in the definition of ‘environmental information’ so that such suspensions, and conditions attached to them, are publicly available.
  5.  ‘Beneficial interest’ offence should be broadened – [Government’s amendments substantially address this, although penalty still needs increasing] to include the immediate family of the person holding office in an official capacity, and increases the penalty to 5 years imprisonment and 10,000 penalty units.


Miscellaneous amendments in order to ensure clarity etc

  1. Provide a definition for ‘rehabilitation’ – which is currently not defined in the Act. It is important that this term be properly defined in order to ensure that there is a clear and defined standard by which the rehabilitation of coal seam gas operations can be measured.
  2. Require commercial interest rates to be payable for late payment of royalties – removes the discretion for the Minister to impose interest on late payments, by making payment of interest at a commercial rate mandatory.
  3. Prevent compensation for indirect/consequential damage in relation to an inspector’s power of entry – clarifies operation of the proposed s 104E to ensure that compensation excludes the Crown from liability for consequential/indirect damage caused by an inspectors’ exercising their power to enter premises.


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