Commencement of Land Access Arbitration Reforms

WHO SHOULD READ THIS

• Mining, coal seam gas and petroleum operators in NSW.

THINGS YOU NEED TO KNOW

• The Mining and Petroleum Legislation Amendment (Land Access Arbitration) Act 2015 (NSW) (Land Access Arbitration Act) commenced on 1 December 2016, together with associated amendments to the Mining Regulations 2016 (NSW), and is the final component of the NSW Government’s resources regulation reform package introduced during the past 12 months.

WHAT YOU NEED TO DO

• You should be aware of the amendments, which apply in circumstances where access to private land is required to carry out prospecting operations under an exploration licence or assessment lease in NSW.  The NSW Government has committed to undertaking a six month review of these amendments to provide an opportunity for stakeholders to give further feedback on the operation of the amendments.

The Mining and Petroleum Legislation Amendment (Land Access Arbitration) Act 2015 (NSW) (Land Access Arbitration Act) commenced on 1 December 2016, together with associated amendments to the Mining Regulations 2016 (NSW), and is the final component of the NSW Government’s resources regulation reform package introduced during the past 12 months.

The objective of the Land Access Arbitration Act is to amend the Mining Act 1992 (NSW) (Mining Act) and the Petroleum (Onshore) Act 1991 (NSW) (Petroleum Act) to give effect to the recommendations of a review undertaken by Mr Bret Walker SC in June 2014 entitled Examination of the Land Access Arbitration Framework — Mining Act 1992 and Petroleum (Onshore) Act 1991.

The Land Access Arbitration Act focuses on the negotiation, mediation and arbitration process for access arrangements to establish “a fairer, more efficient, consistent and transparent land access arbitration process for all [affected] parties”.¹

The NSW Government has committed to undertaking a six month review of the amendments to provide an opportunity for stakeholders to give further feedback on the operation of the amendments.²

APPLICATION OF THE AMENDMENTS

The amendments apply in circumstances where access to private land is required to carry out prospecting operations under an exploration licence or assessment lease in NSW.

WHAT ARE THE MOST SIGNIFICANT REFORMS?

The Land Access Arbitration Act introduces a number of significant reforms to both the Mining Act and Petroleum Act, including:

• imposing an obligation on the prospecting titleholder to pay the reasonable costs of a landholder in negotiating, mediating and arbitrating access arrangements, except in very limited circumstances
• imposing an obligation on the landholder and prospecting titleholder to conduct negotiations in relation to an access arrangement in good faith
• enabling an “access code” (Code) to be prescribed by Regulation which may contain non-binding guidelines in relation to negotiating and agreeing to access arrangements and may also designate any of the provisions of the Code as mandatory provisions
• providing clarity to the mediation and arbitration process by changing the definition of significant improvement and compensable loss
• amending the provision regarding the general immunity of a landholder in relation to the activities of the titleholder. It makes clear that the landholder is not subject to action, liability, claim or demand arising from a titleholder excising its power under the Mining Act or Petroleum Act in the use and access of the land. This does not however extend to anything done by the landholder with the intention to cause or recklessly cause harm, and
• introducing a number of other significant reforms to the land access arbitration process, including:
  • requiring mediation before arbitration
  • providing a right for both parties to be legally represented during mediation and arbitration
  • requiring the Secretary of the Department of Industry, Skills and Regional Development (Department) to keep and maintain a register of all final access arrangements provided. The register is to be made available for public inspection on the Department’s website, and
  • establishing a rigorous selection process to appoint members of the Arbitration Panel by the Minister. The selection procedure and eligibility criteria will be set out in relevant Regulations.

CHANGES TO DEFINITIONS

The definition of significant improvement has been replaced in the Mining Act and the Petroleum Act. The new definition outlines principle-based, non-prescriptive criteria, which an ‘improvement’ must satisfy, in order to be defined as a significant improvement. The purpose of this change was to provide clearer guidance for the arbitration framework.

Under both the Mining Act and the Petroleum Act the tenement holder is to pay the costs of the owner of the dwelling-house, garden or improvement in any proceedings in the Land and Environment Court, irrespective of the outcome of the proceedings.

The new definition does not affect the protection provisions for dwelling-houses, gardens and agricultural land under the Mining Act and the Petroleum Act. Existing access arrangements will not be impacted by this change.

The definition of compensable loss in section 107A of the Petroleum Act has also been changed to bring it in-line with the definition found in section 262 of the Mining Act. This change makes it clear that on the granting of a petroleum title, each person who has a stake in the land becomes entitled to compensation for any loss, or potential loss, suffered as a result of the exercise of the rights conferred by the title or access arrangement.

CHANGES TO COST STRUCTURE

Under the new Land Access Arbitration Act, the titleholder will pay the landholder’s costs relating to the time, legal and expert services needed in reaching a land access arrangement.

A cap will apply in respect of the reasonable legal costs that can be claimed by a landholder for the negotiation of an access arrangement. The cap will be up to $1,500 (ex GST) in relation to exempt prospecting operations and $2,500 (ex GST) for assessable prospecting operations; however nothing prevents titleholders voluntarily paying landholders more in the course of negotiating a land access arrangement.

The landholder’s reasonable costs for mediation, arbitration and proceedings in the Land Environment Court are also paid by the prospecting titleholder. Due to the unpredictable nature of mediation, arbitration and court proceedings, there is no cap on the landholder’s costs to be paid by the prospecting titleholder, however the costs payable must be reasonable.

There is a requirement for parties to act in good faith and any conduct by the landholder to the contrary will be taken into consideration when determining reasonable costs that may be claimed.

In addition to the above changes in respect of costs, the arbitrator’s remuneration and travel, accommodation, meal and car allowances must be paid by the titleholder.

¹ _{Department of Industry, Land Resource Legislation (14 December 2016) Resource and Energy}

² _Ibid.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.