The Federal Court of Australia has extended an injunction stopping Santos undertaking works in relation to the construction of a gas export pipeline in the Timor Sea whilst limiting the extent of the injunction to areas with stronger cultural heritage claims.

Partner Damian Roe from HopgoodGanim's Resources and Energy practice and Vacation Clerk Siobhan Lyons report.

Background

Santos is the operator of the Barossa Gas Project (Barossa Project) in the Timor Sea. The Barossa Project is an offshore gas and condensate project that will rely on a 263 km pipeline connecting the offshore Barossa gas field to an existing pipeline. The approval of the Barossa Project has been the subject of a number of recent court decisions arising from applications brought by the traditional owners of the Tiwi Islands to stop the development of the project (see our recent alerts, 'Tiwi Islands traditional owners win legal case against Santos' Barossa offshore project' and 'Federal Court rejects Santos appeal, upholding Tiwi Islands traditional owners' landmark legal win against Barossa offshore gas project' for details).

Mr Munkara is an Aboriginal man from the Tiwi Islands and a traditional owner of the land in and around Cape Fourcroy, on the east of the Tiwi Islands.

Mr Munkara originally applied, and obtained, an interim injunction restraining Santos from undertaking any work until Santos submits, and National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) accepts, a revised Environmental Plan. Mr Munkara argues that a new plan is necessary under the relevant regulations because a new or increased environmental risk, namely the existence of tangible and intangible cultural heritage in and around the pipeline route, has been identified.

Reasoning behind the decision

On 15 November 2023, the Federal Court of Australia handed down its decision in Munkara v Santos NA Barossa Pty Ltd (No 2) [2023] FCA 1421. The Court was asked to determine whether a temporary injunction, granted two weeks prior in the decision in Munkara v Santos NA Barossa Pty Ltd [2023] FCA 1348 (Munkara No. 1), should be extended until the dispute over the alleged requirement for a revised environmental plan was determined.

There were two key issues for the Court’s consideration. Firstly, Santos argued the Court should revisit the question of standing, after the previous finding that Mr Munkara had standing to sue in Munkara No. 1. Secondly, the Court had to consider the criteria for granting an interlocutory injunction and the likely success of Mr Munkara’s application for final relief.

Standing

While it was previously found in Munkara No. 1 that Mr Munkara had standing, Santos raised an additional argument that creating a duty under the applicable regulations to submit a revised environmental plan, enforceable at the suit of any person other than NOPSEMA, would be exceeding the scope of the regulation-making powers in the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (the Act). The effect of the submission was that the general law as to standing must be displaced in the proceedings.

The Court found there were no provisions in the Act to support the conclusion that Parliament intended to alter or abrogate the principles of general law relating to standing. Additionally, the Court found that Mr Munkara relied upon a special interest in the subject-matter of the proceeding rather than a private right as the basis for his standing.

Criteria for an injunction

The Court outlined the two related and overlapping criteria that must be considered when deciding whether to grant an interim injunction, namely:

  1. whether there is a serious question to be tried in the proceedings; and
  2. where the balance of convenience lies with reference to the evidence before the Court.

In relation to the first criteria, the relevant question of law arising in the proceedings is the construction of regulation 17(6) of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) (the Regulations). The issues to be decided at trial include:

  1. whether and when an “occurrence” of an increased harm or risk took place; and
  2. the meaning of “in force” and the identification of the “in force plan”.

The Court found that, based on the parties’ submissions, the issues of construction involved serious questions of law and fact that were questions for the trial and could not be determined at this preliminary stage.

The second criteria is the assessment of the balance of convenience by considering the prejudice to both parties. The Court was satisfied of the existence of a risk of irreparable harm to cultural heritage if an injunction were not granted. The Court, however, noted that the legislative scheme does not require an environmental risk be eliminated. As such the relevant consideration turns to the risk of unlawful and irreparable damage to cultural heritage, not damage generally.

The Court found, based on the evidence submitted, that Mr Munkara’s case was stronger for places closer to the Tiwi Islands. The risk of unlawful and irreparable damage to cultural heritage was considered to diminish in the northern extent of the Barossa export pipeline route.

The prejudice faced by Santos was that of cost of delay and impact to reputation that any delay may cause. One of Santos’ contractors has a right to terminate the contract if works are suspended for more than 60 days. It was also submitted that the holding costs of maintaining a workforce and the associated infrastructure during the suspension would exceed $1 million per day. The Court found a significant proportion of the losses Santos may incur could be avoided if works were permitted in the northern extent of the Barossa export pipeline route. This was all viewed in the context that Mr Munkara was unable to provide an undertaking as to damages if he was unsuccessful.

Conclusion

After analysis of the evidence submitted by Mr Munkara and Santos, the Court found that Santos should not be restrained from operating in the northern extent of the Barossa export pipeline route despite some of Mr Munkara’s claims relating to intangible cultural heritage in that area, and the potential for irreparable harm to the claimed sites. This conclusion was based on the generalized evidence regarding the connection to the sea in places beyond the waters directly surrounding the Tiwi Islands, balanced against the significant costs that Santos would incur. As such, considering the likelihood of success and balance of convenience, the original injunction was revoked and replaced with another that restrained Santos’ activity in the area proximate to the Tiwi Islands.

The substantive hearing of this matter is likely to occur in mid-December and is one to watch as there is currently limited case law relating to offshore cultural heritage, especially in relation to intangible cultural heritage. Additionally, the findings on the construction of regulation 17(6) and whether it allows titleholders to modify environmental plans other than in accordance with Division 2.4 of the Regulations will be significant for other developments regulated by the Act. If Mr Munkara is correct that titleholders cannot adopt alternative procedures to avoid the requirements of Division 2.4 of the Regulations, this may mean proponents of offshore oil and gas projects will be required to repeatedly amend their environmental plan whenever new information relating to the environmental impacts of a project are identified.