18 Sep 2014

Confusion over mining and groundwater impacts in Queensland finally resolved!

by Mark Geritz, Jasmin Singh

A new Bill will remove most (if not all) of the confusion in the interaction between Queensland's mining and water legislation, and further streamline approvals processes.

The confusion over the taking of, interfering with and use of groundwater associated with mining activities including the confusion that has arisen as a result of the Mineral Resources Act 1989 (Qld) not being updated in line with changes to the Water Act 2000 (Qld) and the interpretation of these historically flawed provisions by the Land Court is finally to be resolved.

The Water Reform and Other Legislation Amendment Bill 2014 (Qld) was introduced to Parliament on 11 September 2014. The Bill has been referred to Committee, which is due to report to Parliament by 17 November 2014. It is possible that the Government will endeavour to pass this Bill at the last sittings of Parliament before the end of the year.

The Bill implements an extensive overhaul of the water regime in Queensland. It also contains important changes to the safety regime for overlapping coal and petroleum tenement holders. This article will only focus on key changes in the Bill to the water regime for the mining industry.

Problems with the existing regime for the mining industry

Under the existing regime, there has been considerable confusion as to whether a mining lease authorised the taking of or interference with groundwater, and whether the impact on groundwater was a matter that the Land Court could consider when determining whether to grant a mining lease and related environmental authority (EA).

This confusion came to prominence initially in the Land Court in Xstrata Coal Queensland Pty Ltd v Friends of the Earth – Brisbane Co-Op Ltd, and Department of Environment and Resource Management [2012] QLC 013 and then reached a pinnacle in another Land Court decision, Hancock Coal Pty Ltd v Kelly and Department of Environment and Heritage Protection (No. 4) [2014] QLC 12.

As noted in the Hancock decision, sections 234 and 235 of the Mineral Resources Act 1989 (Qld) (MRA) provide broad rights to the holders of mining leases. However, section 235(3) of the MRA indicates that where water may be diverted or appropriated only under authority granted under another Act (such as the Water Act 2000 (Qld)), the mining leaseholder cannot divert or appropriate the water without holding the authority under that Act.

In Hancock, the Court found that interfering with groundwater (or underground water) did not amount to diverting or appropriating water and therefore a holder of a mining lease did not, by virtue of section 235(3) of the MRA, require an authority under the Water Act (such as a water licence) to interfere with that underground water. Using this line of reasoning, the Court found that this would mean that the mining lease itself could authorise the interference with the underground water pursuant to the broad rights provided to mining lease holders pursuant to sections 234 and 235 of the MRA.

At least partly due to the above reasoning (particularly in Hancock), the Land Court in both Hancock and the Friends of Earth found that it had jurisdiction to impose conditions on the EA associated with the mining lease in relation to the impact on the underground water associated with the mining activities. These conditions included a condition that the holder of the environmental authority had to enter into make good agreements with impacted landowners prior to mining activities commencing.

It appears that the Land Court's attention in the Friends of Earth and Hancock cases was not drawn to section 808 of the Water Act or the historical basis for the use of the language in section 235(3) of the MRA as this may have led to different conclusions in those cases or at the very least different reasoning for reaching the final conclusions. Section 808 of the Water Act makes it clear that water (including underground water) can only be interfered with in accordance with the Water Act ie. it cannot be interfered with in accordance with an authority (such as a mining lease) granted under another Act.

In addition, the words diverted and appropriated in section 235(3) of the MRA have a historical basis, having been used in long since repealed water and mining legislation that in fact preceded both the MRA and the Water Act. Unfortunately, when the Water Act was introduced in 2000, the language in section 235(3) of the MRA was not updated then to refer to the taking of or interference with water (being the language used in the Water Act when it commenced in 2000).

In our view, if the administering authority had followed the Land Court's recommendations referred to above and imposed on the mining lease a condition requiring a make good agreement, the landowners would effectively have a veto right over future mining, as the Land Court proposed no mechanism for resolving any disputes if the landholder and the mining lease holder could not agree. In any event, we understand that the administering authority has not followed the Land Court's recommendation about the make good condition. This is primarily because, despite the Land Court's findings, the administering authority considers that such matters should be exclusively dealt with under the Water Act (as seems to be contemplated by section 808 and other sections of the Water Act) when the regulator under that Act is considering whether or not to grant a water licence to the miner to take or interfere with the underground water.

Other problems for miners with the existing regime include:

  • they could not apply for water licences as an applicant for a mining tenement, meaning that the approval pathway for obtaining water licences could not be undertaken simultaneously with the approval processes for the mining lease and EA; and
  • water licences only attached to specific land, with associated restrictions on the use of the water the subject of the licence on such land.

How the Bill proposes to fix the problems with the existing regime

The Bill (among other matters) proposes to make key changes to the rights and obligations of a mineral development licence and a mining lease holder in respect of the take, interference and use of underground water, and brings those rights and obligations in line with those applicable to petroleum tenement holders. The key matters are:

  • Section 235(3) of the MRA is to be removed;
  • Section 808 of the Water Act is to be amended to make it clear that a take of water can be authorised by another Act (such as the MRA) not just the Water Act. Oddly a similar amendment has not been made in relation to the interference with water and this appears to be an oversight that should be corrected;
  • the holder of a mining lease or mineral development licence may take or interfere with underground water (that water being "associated water") in the area of the mining lease or mineral development licence if the taking or interference happens during the course of, or results from, the carrying out of an authorised activity for the mining lease or MDL (the rights to be known as underground water rights) – the holder need no longer obtain a water licence for these activities;
  • the holder of the mining lease or mineral development licence may use associated water for any purpose and within or outside the area of the licence or lease;
  • the holder of the mining lease or MDL must measure and report on the volume of associated water taken (including an estimate as to water that has evaporated);
  • Chapter 3 of the Water Act, which currently applies to petroleum tenement holders, is to be extended to apply to holders of mineral development licences and mining leases. This will require (among other matters) the holder to conduct baseline assessments and bore assessments of potentially impacted bores and enter into make good agreements with affected bore owners where those bores are likely to be impaired by the activities of the holder;
  • if make good agreements cannot be agreed between the mining lease or mineral development licence holder and the landowner, the Land Court will have specific jurisdiction to determine the dispute;
  • water licences will be able to be applied for by holders of (and importantly applicants for) resource tenures to take water or interfere with the flow of water where such take or interference would fall outside of the underground water rights referred to above. Importantly such water licences will not need to attach to particular land.

We consider that the above changes will remove most (if not all) of the confusion that has arisen in relation to the interaction between the mining and water legislation, and ensure that significant amounts of time are not wasted, both in the conditioning process for mining leases and associated EAs and in the Land Court hearing lengthy matters relating to underground water impacts associated with mining. The changes should also further streamline approvals processes that have already been significantly streamlined through the recent passing of the Mineral and Energy Resources (Common Provisions) Act 2014.

It will also be very important for existing holders of mining leases and water licences to carefully consider the transitional arrangements associated with the proposed amendments in order to understand the impact of the changes on existing projects.

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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.