16 Jun 2011

Geothermal Energy Act 2010: Queensland's new regime for land access for resource tenements - Part 2

by Prue Harvey, Mark Geritz

Strict time-frames and obligations have been established for negotiating a conduct and compensation agreement or obtaining a resolution of compensation issues through a conference (or alternative dispute resolution process) or a Land Court determination.

A new land access policy framework (Land Access Regime) has been introduced in Queensland which applies to all resource tenements (Resource Authorities) with the exception of mining leases under the Mineral Resources Act.

At the time we published the first part of this article, the application of the Land Access Regime had only commenced for petroleum, geothermal and greenhouse gas storage tenements. The regime now also applies to mining exploration permits and mineral development licences.

We previously explained the difference between "preliminary" and "advanced" activities (PDF 19.2KB), with "advanced" activities requiring either a conduct and compensation agreement or a deferral agreement to be entered into between the Resource Authority holder and all owners and occupiers of the relevant land (landholder).

In this second part, we set out the negotiation process for conduct and compensation agreements (including statutory timeframes) and the content of those agreements.

Negotiation process and timeframes

The first formal step towards the negotiation of a conduct and compensation agreement is for a Resource Authority holder to issue a notice of intent to negotiate to the landholder.

For 20 business days from the date the notice of intent to negotiate is received by the landholder, the parties must use reasonable endeavours to negotiate the conduct and compensation agreement.

Any agreement entered into during those 20 business days can be terminated by either party (as the balance of the 20 business days acts as a cooling-off period) and accordingly, in those 20 business days, the Resource Authority holder cannot commence "advanced activities" on the land.

If a conduct and compensation agreement has not been agreed within those 20 business days, then either party may call for a conference (to be conducted by a relevant officer from the Department of Employment, Economic Development and Innovation) or an alternative dispute resolution (ADR) process by giving the other party an election notice.

For 20 business days from the date an election notice is given, each party must engage in the conference or ADR process if that party wants to have the right to later proceed to the Land Court in the absence of agreement. The ADR proceedings can take any form as nominated by the party giving the election notice. However, the party giving the election notice must fund the ADR proceedings.

If the conference or ADR process is unsuccessful in those 20 business days, either party may refer the matter to the Land Court for a determination of compensation. In any determination, the Land Court may recommend compensation in either monetary or non-monetary form.

The parties may agree longer periods for negotiation or ADR but cannot agree to shorter periods.

Once the matter has been referred to the Land Court, the Resource Authority holder may enter the land provided that they have given the landholder a notice of entry (for which 10 business days' notice must be given).

A Resource Authority holder may negotiate a conduct and compensation agreement with the landholder without needing to go through the process described above. However, if this course was adopted and an agreement could not be reached, then there is no ability to refer the matter to the Land Court until the above processes have been completed.

Content of any conduct and compensation agreement

While DEEDI has developed terms for a standard conduct and compensation agreement, both Resource Authority holders and landholders should carefully consider their commercial goals when negotiating these agreements and seek advice to ensure appropriate drafting.

Any conduct and compensation agreement will need to satisfy the minimum requirements under the relevant legislation. In addition to these minimum requirements, general issues which Resource Authority holders and landholders should consider in negotiating these agreements include:

  • whether any vague or unworkable objectives could create problems in contractual interpretation later and might unwittingly limit the scope of the agreement;
  • how long the agreement is to be effective;
  • whether a waiver of entry notice is to be included;
  • the description of the activities proposed to be carried out by the Resource Authority holder and ensuring that sufficient flexibility is permitted to allow repositioning of activities to accommodate the concerns of the landholder;
  • the description of the landholder's current use of the land;
  • the amount of compensation (monetary or otherwise) and whether this is to be full and final satisfaction of the present and future compensation liability;
  • whether there are other matters which should be addressed in such an agreement, for example, safety, rehabilitation, cultural heritage and an allocation of responsibility as to who is responsible for these obligations.

Conclusion

As the regime has now commenced for all described Resource Authorities, both Resource Authority holders and landholders need to operate expeditiously within the framework and follow the procedures as set out in the new Land Access Regime.

When conducting "advanced" activities this includes complying with the timeframes associated with the negotiation of a conduct and compensation agreement (or alternative means of resolution if no agreement is possible). If the cost, expense and uncertainty of Land Court proceedings are to be avoided, all parties will need to be prepared to be flexible and potentially make compromises in order to reach agreement on the terms of a mutually beneficial conduct and compensation agreement.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.