The protection of Australia’s best agricultural land has recently become a hot political topic and an issue of major concern for developers of Australian mining and petroleum projects.  The New South Wales and Queensland Governments have both announced new policies to deal with conflicts between the agriculture and resource industries. On 23 May 2011, the New South Wales Government announced a 60 day moratorium on the granting of new coal, coal seam gas and petroleum exploration licences. The Western Australian Government announced last week that it will not allow mining to occur in the wine-growing Margaret River region for similar reasons.

Of the three jurisdictions, Queensland’s policy is the most advanced and while the policy will have an impact on other forms of development in non-urban areas, this briefing considers the implications of the new policy for mining and petroleum project developers in Queensland

Introduction

On 23 August 2010, the Queensland Department of Environment and Resource Management (DERM) issued a paper titled ‘Protecting Queensland’s strategic cropping land: A policy framework’ (SCL Policy). The SCL Policy outlined the government’s approach to protecting Queensland’s best cropping land, which it terms “strategic cropping land” (SCL). Significantly, the SCL Policy foreshadows that resource projects will be assessed to determine their impact on SCL under new legislation to be enacted in late 2011 (Proposed SCL Legislation).  If the project is assessed as having the effect of ‘permanently alienating’ SCL, then it will not be approved, except in very limited ‘exceptional circumstances’. The SCL Policy signifies a rebalancing of power between competing land uses in Queensland.

On 31 May 2011, DERM released further information about the SCL Policy and the Proposed SCL Legislation, including:

  1. a paper titled ‘Protecting Queensland’s strategic cropping land: Regulatory Assessment Statement’ (SCL RAS) for public comment
  2. finalised trigger maps identifying the location of SCL in Queensland (Trigger Maps), and
  3. information about transitional arrangements for resource projects that will be included in the Proposed SCL Legislation.

The announcement complimented the release by DERM on 14 April 2011 of proposed criteria to assist the on ground assessment of SCL. Significantly, last week’s announcement makes some important changes to the SCL framework that was detailed in the SCL Policy released in August 2010

Key points for mining and petroleum developers

Key points for developers to note from this last week’s announcement are:

  1. development that is not eligible for the transitional arrangements and is located on land assessed as SCL and forming part of a Strategic Cropping Protection Area, will not be approved if such development ‘permanently alienates’ the land, except in ‘exceptional circumstances’
  2. development, that is not eligible for the transitional arrangements and is located on land assessed as SCL, which also has a demonstrated history of cropping and forms part of a Strategic Cropping Management Area, will need to be assessed to ensure that it avoids, minimises and mitigates any impact on SCL
  3. SCL (as identified in the Trigger Maps) will be implemented through two separate and distinct areas of SCL in Queensland, Strategic Cropping Protection Areas (of which there are two) and a Strategic Cropping Management Area
  4. from 31 May 2011, transitional arrangements will apply to existing resource projects that have reached certain eligibility milestones in the project approval process, allowing development to proceed on land identified as SCL (and developers are able to seek clarification from DERM to confirm their project’s eligibility)
  5. further information has been provided about key concepts to be included in the SCL Legislation, including what are ‘exceptional circumstances’ and ‘permanent alienation’ (however uncertainty remains and developers should consider engaging with key stakeholders to ensure their views are considered in the development of the Proposed SCL Legislation)
  6. pasture land for grazing is not captured by the SCL Policy, and
  7. proponents will have an opportunity to make submissions in relation to the SCL RAS.

Transitional arrangements

Transitional arrangements will apply to ‘undecided’ coal, mineral, gas and petroleum tenure applications that have met the following eligibility milestones in their assessment:

  1. for resource production projects that require or have voluntarily undertaken an Environmental Impact Statement (EIS):

(a) if a mining lease application—the project had, by 31 May 2011, finalised EIS Terms of Reference (TOR) and there was also a certificate of application under section 252 of the Mineral Resources Act 1989 (Qld) (MRA)

(b) if a petroleum lease application—the project had, by 31 May 2011, finalised EIS TOR and an application had been lodged under the Petroleum Act 1923 (Petroleum Act) or Petroleum and Gas (Production and Safety) Act 2004 (Qld) (PGPSA) and accepted by the relevant administering authority, or

(c) for a future petroleum lease application lodged after 31 May 2011 under the Petroleum Act or PGPSA —the project had, by 31 May 2011, finalised EIS TOR and an existing Authority to Prospect (ATP) where the ATP area was part of the project covered by the finalised EIS TOR.

  1. for resource production projects not requiring an EIS — there is a draft Environmental Authority (EA) under the Environmental Protection Act 1994 (Qld) (EP Act) granted by 31 May 2011, or
  2. for projects that relate to expansion of existing mines under the MRA – the proponent must hold exploration permits or mineral development licences which are contiguous with the existing production tenure as at 23 August 2010 and a certificate of application under section 252 of the MRA is obtained by August 2012.

These transitional arrangements will be reflected in the Proposed SCL Legislation and take effect from 31 May 2011. Projects that meet the eligibility milestones will be allowed to proceed on land identified as SCL (however projects that do not have final environmental approvals will still be required to avoid, minimise and mitigate any impact on SCL). Meanwhile, resource projects that do not meet the criteria of the transitional arrangements will be subject to the full effect of the Proposed SCL Legislation (set out below).  

Strategic Cropping Protection Areas and Strategic Cropping Management Areas

SCL will now be implemented in Queensland through two separate and distinct areas of:

  1. Strategic Cropping Protection Area (SCPA), and
  2. Strategic Cropping Management Area (SCMA).

The location and boundaries of the SCPA and SCMA are indentified in the new Trigger Maps. The Trigger Maps are designed to be used as a starting point for developers in determining whether an area is SCL. The Trigger Maps are not definitive and SCL will ultimately be defined by on-ground assessment in accordance with the proposed criteria for the identifying SCL. Guidelines are expected to be released shortly by DERM which will assist with on-ground assessment.

Importantly, the introduction of SCPA and SCMA means resource development encroaching on SCL is to be assessed differently depending on what area the development falls within.  These differences are explained in further detail below.

(a) Strategic Cropping Protection Areas

SCPAs are large aggregations of best cropping land under intense and imminent development pressure. The Trigger Maps identify the location of two SCPAs in Queensland:

  1. an area near Emerald in Central Queensland (Central Protection Area), and
  2. an area including the Darling Downs, Lockyer Valley, Granite Belt and South Burnett in Southern Queensland (Southern    Protection Area).

Under the Proposed SCL Legislation, development that is not eligible for the transitional arrangements and encroaches on land confirmed as SCL and forming part of the Central Protection Area or Southern Protection Area, will not be allowed to proceed if it ‘permanently alienates’ the land, except in demonstrated ‘exceptional circumstances’.

(b) Strategic Cropping Management Areas

Land identified as SCL within a SCMA must have a demonstrated history of productive cropping.  Broadly this will be satisfied by land that has been cropped at least three times between 1 January 1999 and 31 December 2010 (noting guidelines are currently being developed for this requirement). Under the Proposed SCL Legislation, development that is not eligible for the transitional arrangements, is located on land confirmed as SCL, has a demonstrated history of cropping and forms part of the SCMA, will be assessed to ensure:

  1. that the development avoids encroaching on SCL to the maximum extent possible
  2. where the development is not able to avoid SCL, its impacts must be minimised, and
  3. where the development is not able to avoid SCL, its impacts must be minimised.

The introduction of SCMA represents a stripping back of the intent of the original SCL Policy, which proposed to prohibit permanent alienation on any SCL. DERM has also developed a number of principles to guide how the mitigation requirements will be implemented under the Proposed SCL Legislation.

Further information about key concepts for mining and petroleum developers

DERM has also provided some clarification in relation to a number of key concepts to be included in the Proposed SCL Legislation, as follows.

(a) Permanent alienation

As mentioned above, projects which result in permanent alienation of SCL will not be allowed to proceed, unless exceptional circumstances apply.  Therefore, the key concern for developers is what types of activities will be considered to ’permanently alienate’ SCL.

The Proposed SCL Legislation will set out the types of resource activities that will be deemed to permanently alienate SCL. However, DERM has stated that permanent alienation will occur when a use located on or near SCL will endure for 50 years or more (and prevents cropping occurring at that time or in the future). Examples of permanent alienation, as provided by DERM, include:

(a) where a legal impediment, such as resource extraction activities for longer than 50 years, prevents land from being used for cropping, or

(b) where long lasting impacts caused by resource extraction activities, such as contaminated land, subsidence, major excavation and changes to soil structure, mean the land cannot be restored to SCL.

Based on these examples, it remains to be seen what types of resource activities will be deemed to permanently alienate SCL, particularly considering the majority of resource developments have a project life less than 50 years. It also remains unclear whether activities which do not involve large disturbances to the surface of the land (such as petroleum projects and underground mining) will be assessed as permanently alienating the SCL.

DERM mentions that well-designed CSG operations may be able to be accommodated under Proposed SCL Legislation without permanently alienating the land, because gas wells and pipelines are usually considered to have a temporary impact as the land can be restored back to SCL at the end of the development.  However, DERM has stated that high-impact CSG infrastructure such as water storage ponds and gas compression stations may permanently impact on SCL and a proponent would not be able to undertake these activities in SCPAs, except in limited ‘exceptional circumstances’.

DERM has not provided certainty on the concept of ‘permanent alienation’ and the land rehabilitation standards required to enable the crop productivity of land to be restored. It is therefore possible that developers who are able to demonstrate that they can avoid permanent alienation by fully reinstating land to its previous productive capacity may comply with the Proposed SCL Legislation. Other jurisdictions have successfully dealt with mine rehabilitation to restore crop productivity (for example in the United States), thereby allowing competing agricultural and mining interests to co-exist. Therefore in practice, it may be that the Proposed SCL Legislation will not bar future mining and petroleum development on cropping land but rather place a greater emphasis on the rehabilitation and restoration requirements of a project. The SCL Policy has indicated that conditions for restoration and other environmental matters will continue to be addressed under the EP Act.

While DERM’s most recent announcement provides some clarification, in the absence of the Proposed SCL Legislation, developers will not be in a position to make a definitive determination as to whether their projects proposed activities will be deemed to permanently alienate SCL. This uncertainty means that the development of the concept of permanent alienation by DERM leading up to the introduction of the Proposed SCL Legislation is likely to remain a priority issue for resource developers.

DERM has indicated that it will be responsible for assessing and determining ‘permanent alienation’, as the authority responsible for administering the Proposed SCL Legislation.

(b) Exceptional circumstances

To satisfy the ‘exceptional circumstances’ exemption for projects causing permanent alienation, resource developers will need to demonstrate that:

  1. there is no alternative site and the resource does not exist anywhere else in Queensland which is not on SCL (i.e. a rare mineral only found in certain parts of the State), and
  2. a significant community benefit is provided to the State by the development.

DERM’s most recent announcement suggests that a significant benefit to the State may include a social or community service, or an economic benefit to the State that overrides the need to protect SCL from permanent alienation (although the economic benefit cannot be the sole consideration). Satisfaction of the exemption is however expected to be a ‘rare and uncommon’.

Regulatory assessment statement

The SCL RAS aims to:

  1. evaluate the cost recovery options in terms of the impacts of the implementation of the SCL Policy on business, communities and the government, and
  2. identify the most efficient and fair way to recover those costs.

The closing date for mining and petroleum developers to comment on the RAS is 5 pm, Wednesday 29 June 2011.

Practical considerations

Mining and petroleum developers have no doubt already taken steps to consider whether their project will be subject to the Proposed SCL Legislation by firstly, considering whether part or all of their project’s land is located on areas identified in the Trigger Maps as SCL and, if so, considering whether the project is eligible for the transitional arrangements (and seeking clarification with DERM to confirm the same). Developers and investors of resource projects are also likely to be attempting to evaluate and quantify (where possible) the likely costs and delays that the implementation of the Proposed SCL Legislation may have on their projects.

Mining and petroleum developers should also consider the implications of the SCL Policy in progressing their resource projects. This may include:

  1. reconsidering the nature and location of the activities proposed by their current project (where possible, disturbance of SCL should be avoided)
  2. where the project land includes SCL, applying to have the project land excluded from the Trigger Maps where they can show the land does not satisfy the proposed criteria for on-ground assessment of SCL, and
  3. entering arrangements with landowners that provides access to the project land to undertake necessary on-ground assessment to confirm whether the land is SCL, according to the proposed criteria.  

Next steps

DERM has indicated that it will continue to develop the SCL Policy in consultation with the SCL Stakeholder Advisory Committee and feedback received through public consultation. The next key step for mining and petroleum developers will be the release of the Proposed SCL Legislation (which will follow the release of a Draft State Planning Policy (SPP) for public consultation).

The proposed SCL Legislation will provide greater clarity and certainty for developers, particularly with regards to what types of resource development will be deemed to ‘permanently alienate’ SCL. Developers should consider engaging with stakeholders in the SCL Stakeholder Advisory Committee to ensure their views are considered in the development of the Proposed SCL Legislation.