Queensland resource authority holders should adapt their project scheduling to accommodate the changes to timeframes and process.
Queensland resource authority holders may find it tougher to access land, following the introduction of the Mineral, Water and Other Legislation Amendment Bill 2018, which adds complexity to the statutory process for negotiation and dispute resolution for land access and compensation under the Mineral and Energy (Common Provisions) Act 2014 (MERCPA).
There are two proposed avenues for resource authority holders and landholders if they fail to negotiate a conduct and compensation agreement during the statutory negotiation period – binding arbitration (if all parties agree) or Land Court determination. The Bill also introduces longer timeframes and some uncertainty which could lead to delays to land access for resource authority holders.
The Bill is currently on the parliamentary agenda and, with the State Development, Natural Resources and Agricultural Industry Development Committee having now reported back to Parliament, we expect its passing in the near future.
When passed, resource authority holders should adapt their project scheduling to accommodate the changes to timeframes and process.
The proposed statutory negotiation process at a glance
The Bill give the parties two options for resolving compensation disputes:
- binding arbitration (new process); and
- Land Court determination (as is available under the current process).
While arbitration can be sought by a party at any time after the initial 20 business day negotiation period, the arbitration cannot be undertaken and used to gain access to the land unless all relevant parties agree to the arbitration. A party receiving an arbitration notice has 15 business days to decide whether they agree to the arbitration. If a party ultimately decides not to agree to arbitration, the resource authority holder will only be able to access land following ADR and commencement of the Land Court process outlined below, in the absence of any agreed conduct and compensation agreement.
Accordingly, for resource authority holders who want urgent access to land, unless there is agreement by the landowner upfront to arbitration (which is unlikely if the landowner is intent on delaying access), it is unlikely that the arbitration process will be the best option. This is due to the ability of the landowner to withhold its refusal to submit to arbitration until the last day of the prescribed 15 business day period, at which point the resource authority holder will instead be required to commence an ADR process that it could have otherwise commenced 15 business days earlier.
In order to apply to the Land Court for a determination, the parties must first participate in an ADR process. As indicated below, a statutory conference no longer forms part of the formal process to gain access to the land as an alternative to ADR.
Conference election notice
Under the proposed new scheme, a statutory conference is an optional process that may be instigated at any time, including prior to any notice of intention to negotiate a CCA. The conference, conducted by an authorised government officer, is no longer an alternative to ADR as part of the statutory land access process. A conference election notice also cannot be given if a party has issued an ADR election notice or an arbitration election notice. Further, a conference can be pre-emptively terminated by either the landowner or the resource authority holder by issuing an ADR election notice or an arbitration election notice.
As with the current scheme, a resource authority holder may give a negotiation notice indicating an intention to negotiate a CCA or deferral agreement. If the parties reach an agreement during the minimum negotiation period, the resource authority holder will not be able to enter the land to conduct the relevant activities until the minimum negotiation period concludes. The minimum negotiation period will remain unchanged, requiring the parties to negotiate for 20 business days.
ADR election notice
If at the end of the negotiation period there is no CCA, either party can give an ADR election notice requiring the other party to participate in ADR. ADR includes case appraisal, conciliation, mediation or negotiation. It no longer includes arbitration, as this is now a separate standalone pathway to determining compensation with binding effect.
A party given an ADR election notice must accept or refuse the type of ADR or the ADR facilitator within 10 business days. In terms of overall timeframe to access land, this 10 business days does not exist in the current process. If there is a dispute as to the type of ADR or the ADR facilitator, this can be determined by the Land Court or a prescribed ADR institute. No timeframes are specified for resolving these issues, raising the likelihood of an additional time period that does not exist in the current process. Once an ADR facilitator is appointed, parties have 30 business days to use all reasonable endeavours to agree to a CCA. The 30 business days commence from the date of appointment of the ADR facilitator and not the date of the ADR election notice. Under the current process, the parties have 20 business days from the giving of the ADR notice in which to agree to a CCA. Accordingly, there is a minimum of a further 10 business days added to the current process, on top of the 10 (or more) business days referred to above.
Final determination option 1 of 2: Arbitration
If a party has given:
- an ADR election notice; or
- a negotiation notice and the parties have not entered a CCA,
a party may give an arbitration election notice.
A party given an arbitration election notice must accept or refuse arbitration within 15 business days. If the arbitration election notice is accepted, parties have 10 business days to jointly appoint an arbitrator. The arbitrator has authority to decide the dispute by issuing an award which, must be made within 6 months of the arbitrator's appointment. The arbitrator's decision is final and not subject to review or appeal unless affected by jurisdictional error.
Notably, under these amendments a party cannot have legal representation in the arbitration unless both parties agree or the arbitrator consents. The Committee recommended that this be amended so that parties have the right to legal representation during an arbitration.
Final determination option 2 of 2: Land Court
Under the Bill, either party may apply to the Land Court to decide the dispute, provided that:
- the ADR process has been undertaken; and
- an arbitration election notice has not been given or a request for arbitration has not been accepted.
Timeframes for access to land
Under the proposed changes, in circumstances where the landowner wants to delay access, the new regime is likely to involve a minimum of an additional month to land access timeframes. However, it may be possible to access land earlier than under the current regime if all parties agree to arbitration shortly after the initial minimum negotiation period of 20 business days, although such circumstances are considered likely to be rare.
The definition of compensatable effect under section 81 MERCPA has been amended under the Bill to clarify that an eligible claimant can only be compensated for "compensatable effect" caused by a resource authority holder "carrying out authorised activities on the eligible claimant’s land".
Under the current drafting in MERCPA, it was arguable that an eligible claimant could claim compensation relating to activities that were conducted in the area of a resource authority, although not being undertaken on the eligible claimant's land. Some support to this argument could also be garnered from the recent case Nothdurft v QGC Pty Limited & Ors  QLC 41.
The proposed changes to the definition clarify that an eligible claimant can only be compensated for "compensatable effect" caused by a resource authority holder "carrying out authorised activities on the eligible claimant’s land".
Minister Lynham has confirmed this amendment was not a change in policy of Parliament, stating that it was instead clarifying that Parliament's policy was always that "compensation should be payable for any compensatable effect suffered by a landholder on the land on which the resource authorities are being carried out".
Further, the accounting, legal and valuation costs necessarily and reasonably incurred by the landholder in negotiating and preparing a conduct and compensation agreement have been removed from the definition of compensatable effect, so as to be treated as a standalone provision that can be considered by the Land Court separately from a determination of compensation liability. We saw this as being a positive outcome, as it has often been the case that the compensation for the actual effects of the activities have been agreed with the only dispute being in relation to such costs. However, we note that the Committee has recommended against this change, and that such costs should be returned to being part of the definition of compensatable effect.
It should be noted that the Bill also includes the costs of a suitably qualified agronomist as an additional cost to be borne by resource authority holders.
Costs regime for negotiation and arbitration
The costs of arbitration will be apportioned as follows:
- if parties have not participated in ADR, the resource authority holder is liable for the costs of the arbitrator;
- if parties have participated in ADR, the parties are liable for an equal share of the costs of the arbitrator;
- otherwise, each party must bear its own costs.
The new provisions do not apply to circumstances where an election notice for a conference or ADR has been given prior to commencement and that conference or ADR has not been completed. In such circumstances, the previous MERCPA provisions continue to apply to the conference or ADR and any Land Court proceeding, whether started before or after the commencement, that relate to the concerns the subject of the conference or ADR.
If negotiation and preparation costs incurred by an eligible claimant include costs of an agronomist, the resource authority holder is liable to pay the costs of the agronomist only if those costs were incurred after commencement.
Update your project timetables
Resource authority holders required to negotiate a conduct and compensation agreement with private landholders should be aware of the proposed new options available to determine compensation, including the changes to the statutory time periods of each which have flow-on effects on land access. We expect the Bill will be passed in the near future noting that upcoming Parliamentary sitting dates in June and July are to be occupied with budget matters and estimates committee hearings.