On 19 December 2022, the National Native Title Tribunal (NNTT) handed down its decision on a Future Act Determination Application (FADA) made by Santos NSW Pty Ltd and Santos NSW (Narrabri Gas) Pty Ltd (together, Santos) in relation to the grant of 4 petroleum leases pertaining to the Narrabri gas project in New South Wales. The “native title party” for the whole of the Project area is the Gomeroi Applicant.
But that's not the end of it. The FADA, which came about as a result of over 8 years of negotiations between the parties, will live to see another year of deliberation (if not more!), as a result of the Gomeroi People lodging a Notice of Appeal of the NNTT's decision to the Federal Court on 13 January 2023.
Under section 169 of the Native Title Act 1993 (NTA), a party to an inquiry relating to a right to negotiate application before the NNTT may (within 28 days of the determination) appeal to the Federal Court, on a question of law, from any decision or determination of the NNTT in that proceeding.
By an order of Justice Rangiah dated 24 February 2023, it seems that the State of New South Wales has agreed not to act upon the determination of the NNTT until the appeal has been decided, unless it gives 14 days' notice to the Gomeroi People of its intention to do so.
What is a FADA?
In simple terms, a proposed mineral or petroleum exploration or production tenement can only be validly granted over areas where native title has not been extinguished if an appropriate native title procedure is first followed. Unless an appropriate Indigenous land use agreement has been registered, the procedures in question include the “right to negotiate” (RTN) procedure under section 31(1) of the NTA. Compliance with the RTN requires the State and the relevant mining or petroleum project proponent to negotiate in good faith with the applicable native title parties with a view to obtaining their agreement to the grant of the tenement.
If, after at least six months of negotiations, no “section 31 agreement” has been reached, a FADA can be made to the NNTT, seeking a determination that the tenement can be granted despite the failure to conclude a section 31 agreement. The NNTT will not have power to make such a determination, however, if it is satisfied that the State or the grantee party did not negotiate in good faith. The good faith argument is frequently raised by Native Title parties in responding to a FADA. If a good faith argument is successful, the parties will have to go back to negotiate until the good faith requirement is ultimately met.
Once the question of good faith is resolved, the NNTT, in deciding whether a FADA can be granted, must take into account the criteria set out in section 39 of the NTA. The section 39 criteria include, for example:
- the effect of the act (ie. the grant of the petroleum lease) on the Native Title party, their registered native title rights and interests, their freedom of access to the land and waters concerned and their way of life, culture and traditions;
- the economic or other significance of the Act to Australia or the State; and
- any public interest in doing the Act.
Under this legislative framework, and as a threshold issue, the Gomeroi Applicant asserted before the NNTT that Santos had failed to negotiate in good faith. Because the NNTT was not satisfied by the Gomeroi Applicant that Santos had failed to negotiate in good faith, the NNTT had power (and was obliged) to decide whether the proposed grants for the Project should be made, in light of the section 39 criteria.
In response to the FADA, the Gomeroi Applicant advanced five propositions which, it submitted, lead to the inference that Santos did not negotiate in good faith. In making this argument, the Gomeroi Applicant relied on the evidence of two “Experts”. In summary, the five propositions were that:
- Santos’ offer of compensation was below market value;
- Santos did not engage with an expert;
- Santos adopted a fixed position on compensation;
- Santos failed to provide important information; (by declining the Gomeroi Applicant’s request for information and further expert advice); and
- Santos’ use of the FADA “lever” comprised an attempt by Santos to take advantage of its stronger bargaining position.
Santos submitted that it had negotiated with the aim of reaching an agreement for the grant of the tenements and that it could not respond to the serious and unparticularised allegations made by the Gomeroi Applicant. Santos argued that any “market value” was irrelevant for the present purposes. It also rejected the Gomeroi Applicant’s assertions that offers made were significantly below “market value”.
The NNTT ultimately found that the “fragmented, discursive and extensive” evidence of the Experts did not substantiate the Gomeroi Applicant’s allegation of the absence of good faith made against Santos. In fact, the NNTT found that the Experts contributed to the ongoing disagreement between the parties.
The findings of the NNTT are summarised as follows.
- Offer below market value
Section 31(1) of the NTA requires that parties negotiate in good faith with a view to reaching agreement as to the proposed grants and does not involve concepts such as “fair value” or a “free market”. Any financial considerations are to instead to be directed at compensation for the impairment of the Gomeroi People’s native title rights and interests that might be caused by the proposed grants. The Experts made little attempt to identify the impact upon native title rights and interests for which compensation may be payable. Instead, their evidence focused on the financial inconsistencies with the asserted “comparable” projects and agreements.
- Engagement with Experts
Santos did not fail to engage with the views of the Experts, which seemed to be strategic and only considered justice from the Gomeroi Applicant's point of view (rather than being on "just terms" as was suggested by the Gomeroi Applicant).
- Fixed Position on compensation
Disagreement by Santos to depart from its pre-existing landholder compensation policy did not demonstrate a rigid, non-negotiable position, as it provided an explanation for its refusal and it was prepared to improve other aspects of its offer. There is not necessarily an obligation to make a “reasonable offer”, as section 31 does not require conduct which is objectively reasonable. It requires only negotiation in good faith.
- Failure to provide important information
Broadly speaking, Santos asserted that it responded appropriately to requests for further information from the Gomeroi Applicant and the NNTT found there to be no evidence to suggest it acted otherwise, or in the absence of good faith. The NNTT also found that Santos was under no obligation to provide funding to the Gomeroi Applicant for experts, particularly on an open ended basis.
- The FADA "lever"
Santos lodging the FADA, particularly given the existing delay, did not demonstrate an absence of good faith. Further, the NNTT found that Santos had not failed to act negotiate in good faith by lodging the FADA when it did, and refusing to withdraw it, where a native title claim group meeting was not possible. The NNTT found that it was not for Santos to agree or disagree to a claim group meeting, nor was Santos obliged to defer its application pending a meeting, “the calling and timing of which was beyond its control”.
Section 39 criteria
The Gomeroi Applicant also failed to convince the NNTT that the proposed grants would result in, broadly, grave and irreversible consequences for the Gomeroi People’s culture, lands and waters and would contribute to climate change, and therefore, should not be made.
Despite the Gomeroi Applicant providing extensive evidence regarding use of the Pilliga by the Gomeroi people, the NNTT found that there was very little evidence concerning the Project or the effect upon the relevant section 39(1)(a) criteria within the area of the Project.
In respect of the Gomeroi Applicant’s concerns relating to climate change, the NNTT found that, as a consequence of amendments made to the section 39 criteria by the Native Title Amendment Act 1998 (Cth) (1998 Amendment), it only needed to take into consideration environmental concerns that have a “particular effect” on native title.
The NNTT determined that the environmental concerns the subject of the Gomeroi Applicant’s contentions did not have a “particular effect” on native title. Accordingly, the NNTT held that the climate change argument was a concern for the State and its agencies (as was intended by the 1998 Amendment).
In light of the remaining section 39 considerations, the NNTT found that there is a demand for the gas that will produced by the Project and such demand will be of economic significance to Australia. The NNTT made reference to the “considerable worth”, identified by Santos, of the Project to the Narrabri area, the State and the Commonwealth. While the NNTT took the Gomeroi Applicant’s concerns into consideration, it ultimately found that those concerns were outweighed by the public interest.
The NNTT decision serves as a reminder to all project proponents and native title parties currently in the trenches of an RTN process that:
- Any financial considerations are to be directed at compensation for the impairment of the native title rights and interests that might be caused by the proposed grants. The Court saw little value engaging experts to demonstrate a "fair market value" based on other projects and agreements and that are not focused on the compensation for the impairment of the native title rights and interests that might be caused by the proposed grants.
- Taking a fixed position on compensation won't necessarily amount to an absence of "good faith" where the proponent's justification for maintaining such a position is communicated to the Native Title party.
- In order for a Native Title party to successfully run a climate change argument in response to the s 39 criteria, sufficient nexus between the act and its "particular effect" on native title must be established. Otherwise, environmental considerations will be handled by the State and the Commonwealth.
We will now wait and see whether the Federal Court takes a different view on any of these matters.