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Environment and Communications Legislation Committee - 27/07/2015 - Landholders’ Right to Refuse (Gas and Coal) Bill 2013

CAMERON, Mr Neil Alexander Robin, Committee Member, Basin Sustainability Alliance

NICHOLSON, Miss Lynette, Chairperson, Basin Sustainability Alliance

CHAIR: The committee will now resume. I welcome the witnesses. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. Would you like to state anything about the capacity in which you appear?

Mr Cameron : I am a tax consultant to a large rural accounting firm in south-east Queensland and I also happen to be a farmer and grazier in the Millmerran district of south-east Queensland.

Miss Nicholson : I have a farm just north of Dalby in the Bell-Jimbour area and I have been a committee member on BSA for quite some years.

CHAIR: We have received a submission, which has been circulated to committee members but is yet to be published, from your organisation. Is there anything that you would like to add or would you like to make an opening statement before we go to questions?

Mr Cameron : Yes, I would like to make an opening statement. The Basin Sustainability Alliance is a group of landholders and community members concerned that coal seam, tight and shale gas either have been impacting or will continue to impact on vital land and water supplies in Queensland. On behalf of our members, we thank you for the opportunity to appear before this committee today. Members of BSA do not see themselves as political activists. We are a not-for-profit group consisting mainly of farmers and graziers who volunteer their time trying to get governments to see what impact their decision making is having on the livelihood, health and wellbeing of rural Queenslanders and to focus debate on the sustainability of the Greater Artesian Basin and its continuing ability to provide clean water for agriculture production and the sustenance of our rural communities. We have, on numerous occasions, pointed to the seriousness of the failure of successive Queensland governments to properly administer and regulate the coal seam gas industry and have pleaded the case for a federal judicial commission of inquiry in an effort to have the issues independently addressed to force a proper debate on these issues, rather than continually seeing the debate descend into a political farce.

Our full submission contains genuine issues for your consideration. Today, we will highlight a few main points. The conflict of interest of the state as a regulator and also the beneficiary of royalties, as referred to in the first two paragraphs of our submission, has been well traversed in previous submissions. An example of the complete lack of transparency of the industry and lack of oversight by government is apparent in the right to information application BSA made in 2013, which I will now elaborate on.

It is basically a background and time line of the difficulties that we had in getting this right to information. Basically on 18 May 2013 BSA was advised by a landholder that within days four wells would be fracked over a month in a particular gas tenure south of Dalby but the tenure holder would provide no other information. On 23 May 2013, to understand the fracking operations proposed for the tenure area, BSA approached QGC for a stimulation risk assessment, or SRA, for the fracks. This risk assessment is a document the tenure holder must prepare prior to undertaking well stimulation activities to ensure that the stimulation activities are managed to prevent environmental harm. On 24 May, concerned that they would not get the information until the fracks were completed, BSA lodged an RTI application for the document. On 6 June QGC advised BSA that the risk assessment contained confidential information of commercial importance to QGC and therefore QGC would not be providing it.

On 11 June BSA lodged a formal complaint with DEHP, the Department of Environment and Heritage Protection, concerned that QGC may have been in breach of their EA with their frack operations, based on documented past QGC fracking practices where they fracked intentionally in an aquifer. On 20 June BSA was advised in writing by Right to Information Services that its request for the risk assessment had failed because the government did not have the report and so could not provide it. So, whilst condition B24 compelled a tenure holder to prepare the report, they were not required to lodge it with government. This means that, in the event of an issue with fracking, the very document that is required in an investigation and that potentially provides a defence to the CSG company is not with government.

On 1 July 2013, knowing that the complaint lodged with DEHP in mid-June would have ensured that the government captured the relevant information from QGC, BSA lodged a second right-to-information application for the SRA. On 12 August BSA was advised that QGC had objected to the provision of information under the RTI application. This began a long process of internal and external reviews by QGC to block access to the document and by BSA to gain access. On 4 November BSA applied to DEHP under section 542 of the EPA for QGC's SRA for the frack operations. This application failed, because DEHP said that they were unable to provide QGC's SRA for the frack operations under the EPA because the SRA is not required to be submitted with the plan of operations—it is not a document that is required to be kept on the public register. Much further down the track, in mid-2014—

CHAIR: Mr Cameron, given the time frame, how much longer will you take? I know that senators will be very keen to ask you questions. Would you like to table it?

Mr Cameron : If this can be tabled, yes. I am conscious of the time. As you can see, those are the difficulties we have in getting—

CHAIR: If you are happy to table it, that would be great.

Mr Cameron : Sure.

CHAIR: Is there anything else you would like to state?

Mr Cameron : I would just like to speak briefly on my experience as a tax accountant in a regional accounting firm. I have reviewed a number of conduct and compensation agreements that have come across my desk and have had an opportunity to see first hand the impact of CSG on growing and grazing properties. I have actually gone out and inspected properties. One main thing that I have found is evidence of large variation in the amount of compensation that various landholders are receiving. I have seen some instances of landholders who are only receiving about $250 per production well, with a very small initial up-front payment to go with it. In addition to that, when you read through the conduct provisions you see that they are very light on—probably no more than in just a standard agreement. On the other hand I have seen other CCAs where the amount of compensation has been reasonable and much larger, with good large up-front payments and reasonable annual payments thereafter.

It appears to me that some landholders have not been able to negotiate as effectively as others, and possibly have not sought legal advice despite the fact that reasonable legal expenses are supposed to be paid for by CSG companies. Maybe they have not got the most appropriate legal advice. Unfortunately, it appears that some landholders were understandably not prepared at all for a mining company suddenly turning up their homestead and telling them that they had no legal choice in whether the company gained access to their property and were told, 'Here's a document to sign', that offered compensation. Initially CCAs actually contained confidentiality agreements, so you could not really go and talk to your neighbour about what deal they were getting or to compare notes at all. I have seen some landholders who were just overwhelmed at the time. We have even had clients come to us and say, 'What do we do?' In our position, as business advisors, we had to say: 'You'll have to go seek the best legal advice that you can get. We're not lawyers; we accountants.'

There has also been the recent practice of providing upfront incentive payments, so it is an incentive payment to sign an agreement by a certain date, which to me just runs the risk of hasty decisions being made. Obviously, when you make a hasty decision, there are potentially some very negative consequences that come out of that and you may not get the protections in your CCA that you thought you had or that you wanted.

I have spoken to various landholders and they have said that even though they have received reasonable compensation, they no longer feel that their land is their own. They cannot sit on the veranda at the end of the day and enjoy the quiet of their property like they used to; they have strangers traipsing all over their property and there is usually a ute driving by with flashing light a few hundred metres down the paddock. Their property really is not their own anymore, even though they are getting some off-farm income. Basically, the right to say no would put landholders in a much improved position to negotiate with the very well-resourced mining companies and go some way to redressing the imbalance of power. That is basically all I have to say.

CHAIR: Would you like to add anything?

Miss Nicholson : Yes, thank you. I will refer, firstly, to the issue of the imbalance of power between the resource industry and landholders referred to in dot paragraph 3, which is a very real problem when landholders are trying to negotiate with resource companies. During negotiations, CSG companies are represented by legally trained employees to negotiate with the farmer; they present the company's conduct and compensation agreement to landholders as a fait accompli—very often accompanied by a threat to take the landholder to court if they do not sign the document without delay. In addition, agreements have no penalty clauses in them or 'three breaches and you are out' type clauses. They have no teeth and the farmer is left to head to the Supreme Court to try to get commitments by the gas industry fulfilled.

In this regard, I refer to the first document that I have handed up, which is the document on the GasFields Commission website by Richard Golden, who has been a grazier for a considerable amount of time and is well established. In particular, in that article he said:


being the gas company—

delay tactic included threatening to take us to the Land Court if we didn’t sign straightaway.

He added:

You need to start—


as if you expect to end up in court - so our team of experts included a valuer, lawyer, land development specialist, animal behaviour specialist, agronomist, and even a specialist driller, and a noise, dust and light expert.

      …      …      …

I understand not every landholder might have the desire or the capacity to pull together such a team … and not everyone will have the stomach for it …

Golden then goes on to explain that agreeing on the CCA is just the start, and he discusses the problems he had in making the companies comply with the agreement.

Personally, I am aware of somebody who has taken a company four times to the Supreme Court in trying to get compliance with the CCA. As you would all be aware, solicitor and own client costs are not recoverable from the other side. What the gas companies did on nearly every occasion was to take him to the door of court either the morning of court or the night before and offer them exactly what they wanted. So they strung it out in the hope that he would fold. With his solicitor and own client costs, you would not get any change out of $200,000 in the Supreme Court. And, I am afraid, that sort of financial impost would be way out of the financial league of most landholders, including myself. So it is very rare that somebody has the resources to take somebody to court time and time again.

In dot paragraphs 4 and 5, we address the claims by industry and government that the 4,500 to 5,000 CCAs already signed by landholders and the fact that very few landholders have utilised courts were somehow evidence that landholders were happily coexisting with the resource companies. Nothing could be further from the truth. Landholders are compelled to sign the CCA. There is nothing voluntary about the process. Coexistence is a significant issue from landholders. Unfortunately, it is invariably treated as a party political issue running along party political lines rather than being seen as a genuine social debate. The meaning of coexistence denotes a mutually beneficial arrangement where parties are able to exist on equal terms. What we have currently in Queensland is more akin to enforced occupation. That is what our members prefer to call it, instead of coexistence. That came out of the meeting we had with landholders and members in Chinchilla.

Using the frequency of the courts as an indicator of landholder satisfaction with the CSG industry is absurd, especially given the position of the recent LNP government in Queensland. It was prepared to amend laws so as to remove community and almost all landholder rights of objection to resource projects. In addition, the LNP sought to remove the right of landholders to have a representative when negotiating CCAs. You had a situation where a lawyer from the resource company was facing a little old farmer in a room. The power—

Senator WATERS: Can you say that again for me. The companies sought to remove the right of landholders to have a representative with them in the negotiations?

Miss Nicholson : Yes. I attended a meeting in Toowoomba. The meeting was supposed to be about an act, with the politician describing what was in the act. He started off by telling us that it was absurd and insulting to farmers that they needed someone to talk on their behalf, and that his experience was that they were quite able to speak for themselves. Within about a month—and this happened over the Christmas-New Year break—there was a press release and, in small writing somewhere, I noticed they had amended the regulations so as to provide that you could not be represented at negotiations. With the Labor government coming in, whether they overturned that I am not sure. That was the sequence of events over December-January.

Senator WATERS: Thank you. I will follow that up.

Miss Nicholson : In dot paragraph 6, we address the argument advanced by government and resource companies that farmers have coexisted with mining for decades. The fact is: until recently, all CSG, and the majority of coalmining, was undertaken for Australia's domestic supply and was not comparable to the tsunami being rolled out across the country now to feed an export market. In fact, I do not even know—and I have been on the land for 40 or 50 years—where those original CSG wells were. I was a lawyer some time ago, and we never looked at the resource industry act. I do not even know where those CSG wells were. There were no problems because there were so few—similarly with coalmining.

In paragraph 7 of the dot points I refer to the final supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program—it is a real mouthful!—handed down by the New York State Department of Environmental Conservation. This was a study done over seven years. It included a host of government departments. The environmental department has a mission which is laid out to conserve, improve and protect the natural resources and environment, to prevent, abate and control land and air pollution in order to enhance health and the social welfare of people. We obviously do not have departments that have that sort of concern.

This report relates to high-volume hydraulic fracturing, which is more associated with shale and tight gas. It involves pumping huge amounts of water. In this report they talk about 2.4 to 7.8 million gallons down each well. Unlike CSG where they dewater the area to get the gas up, this involves shooting water and more potent chemicals, because you are going into hard rock, down to frack the rock. This submission looked at a host of environmental impacts relating to water withdrawals, stormwater run-off, flood plains, wetlands, accidental spills et cetera. There are a multitude of them. The department, in the end, recognised:

… that there is insufficient information, or too much uncertainty as to the effectiveness of the mitigation, to determine if the impacts could be adequately mitigated at all.

That leads on to something which has occurred in the last four to five days. There has been a massive release of gas from the Origin pipeline into Gladstone where a faulty pressure release valve had to be removed from the line for repair. There was only one pressure release valve in the gas pipeline, which seems to me to be a bit crazy. I have two taps on every tank I have so that I do not lose water if one fails. To remove the faulty gas valve, they had to vent all of the gas in a 100-kilometre pipeline into the air. The landholders within a five-kilometre radius were the only people told. A person I know who is eight kilometres from the pipeline said he felt like there were F111s coming into his bedroom. I had an F111 go over my place when I had weaners in the yard. The next morning I had to just about pull them off the yard rails. They had gone around and around. We are talking here about the farmer's business. If he has feedlots than they are going to be a week or two behind. It is the same in the paddocks. We are looking at the health of the farmers and at the problem with livestock with gas emissions and CO2 being released. I am happy to take any questions.

Senator URQUHART: Thank you for your submission but also for your opening statement. That was helpful. I want to drill down a little bit more on some of the things you said. I just had a look at your website and you have a really comprehensive page on there that addresses landholders. It steps through for landholders what they should do, the process they should follow and some advice. I want to ask you a little bit more about your organisation. How broad are you? How many members do you have? How far is your reach to get this information out to landholders?

Miss Nicholson : We have approximately 100 members. When I say '100 members' that very often includes a pastoral company which includes a family which may have half a dozen members involved. So it is certainly a lot larger than 100 people. We have members up north—for instance, John Erbacher up in the Wandoan area. Dale Stiller was a committee member for a time. So we have a fair reach.

Senator URQUHART: I am Tasmanian, so when you say 'up north' I am not sure what you mean. Up north is Queensland for me, or Victoria or whatever. Can you just give us an idea about your organisation's coverage?

Miss Nicholson : Wandoan: if you followed where the gas started, which is Dalby, and you go north and then east into Gladstone—at the moment there are gas developments all along that. That is the major area. We also have people like John Erbacher, who was involved in a court action against one of the mines up there, the huge Carmichael mine. We have a reasonable smattering.

Farmers have never faced something like this before. Farmers have been able to stay behind their front gate and address their marketing problems and look after their cattle. They just do not know about the outside world, to a large degree. There are some of us that have been in the outside world and had jobs outside, but we are the exception by a long shot.

Senator URQUHART: You talked about things like compensation amounts, conduct provisions, negotiations, legal advice, legal costs, confidentiality agreements, incentive payments—all of those sorts of issues. From our point of view, what would you like to see if you were given an opportunity to say what sorts of things landowners and farmers should have when approached by a particular mining company to access their land? In a perfect world, how would you see that operating?

Miss Nicholson : I guess the ultimate would be to have the right to say no. That way you can say: 'You prove to me that I can work with you. You do not know my business. You never inquire and you just simply say that you are coming on.' If that is not possible then I guess that the next best thing would be, instead of having the situation where they come on and you have got so many days to negotiate and if you do not negotiate they commence Land Court proceedings—the Land Court only hears you on the amount of compensation and not all these other clauses that you need in to protect you against weeds and all that sort of thing—

Mr Cameron : The Land Court does not have the power to stop them from coming onto your property; all that they can do is debate about the amount of compensation that is being paid.

Miss Nicholson : As soon as they have set it down for Land Court—which may hear it yonks down the track—they can then come on and start doing what they like. That is not fair negotiation. If they had a situation where the company could not come on until this thing was negotiated then at least the landholder can say: 'Look, that does not suit. I cannot have those wells in that cultivation. I cannot go around and around all of your signs.' I mean, with some of them it is like watching a slalom race down the alpine area. They have got signs dotted all through the cultivation: 'Do not smoke here' and, you know, it is unbelievable—let alone the gas wells themselves.

When this whole tsunami started in 2010 nobody, nobody, not even the lawyers, had any experience in what was going to happen and what the impacts were. Yet we are supposed to work out this agreement right at the start before we know what the impacts are. The lawyers are starting to catch-up with things now because we are starting to see the impacts. But Joe Bloggs on his farm is not seeing it and it has been a real problem.

Senator LAZARUS: How effective have the state government's regulations of the CSG industry been?

Miss Nicholson : Totally ineffective; in fact, I do not know that they have had any. In that RTI, at one stage, we were told that the department was going to put in a submission against our being able to get the document. The reason was that they did not want to compromise the fact that companies were giving honest frack risk agreements. Excuse me, but they are supposed to be there to regulate these things! They should have had the document in there. If they do not have the document, when something does go wrong how do we know it is the same document as before that incident occurred? Obviously if it is in their frack risk assessment they are covered liability wise.

Mr Cameron : I am going to quote from what DEP had actually said. They said: 'There is a possibility that the quality and transparency of future stimulation risk assessments submitted to DEP may be impacted.' They are wanting to block the information from being released.

Senator WATERS: That is outrageous.

Senator LAZARUS: The states have responsibility for mining regulation and land access issues. Do you consider that the state should be allowed to deal with this, or do you think the Commonwealth should intervene?

Miss Nicholson : I think the Commonwealth should intervene. That is my personal opinion. It has been made patently clear to us, even when it comes down to getting decent health reports done on areas, that any excuse not to look into these things will do. It is a matter of 'We don't want the evidence in our departments because we don't want to be liable'. At page 4 of this report they talk about the mission of the department of conservation in New York state, which actually takes control and is responsible for the decision that has to be made. On page 7 there is a list of the departments that are involved, and it is almost every department in the state legislature. Here, there was never anything done about what risks and impacts there were and whether it was in fact going to cost the state more. In this they refer to agriculture and tourism as being sacrosanct—because they are sustainable and will be there for ever and a day whereas mining will not—so any impact on those two things they really did not want to see at all. They looked at the cost of roads and everything—and this was before the oil price tumbled—and decided that the socioeconomic benefits just were not there unless there were absolute signs on the table that everything was totally safe.

Senator LAZARUS: Has BSA looked at Senator Waters' bill?

Miss Nicholson : Yes.

Senator LAZARUS: Does BSA support both aspects of the bill?

Miss Nicholson : Yes.

Mr Cameron : The banning of the fracking and the right to say no?

Senator LAZARUS: Yes. You do?

Miss Nicholson : Yes.

Senator LAZARUS: In your opinion, can CSG production and agriculture coexist?

Mr Cameron : In some cases it is very difficult, especially when it is intensive agriculture. Even at the grazing level, where you have got cell grazing it is just impossible because of the access tracks and the disruption that comes from so many wells being spotted across your property. In large areas, in broadacre grazing country, it is probably easier, but it is still not ideal.

Senator LAZARUS: Has BSA, through its members, heard of or experienced cases where workers from these mining companies do not respect the land that they are on, and is that a concern for your organisation?

Miss Nicholson : Yes. Indeed, that comes through to us all the time. You can have a look at this. It is there for you to see—and it is not just me talking about what I have been told second-hand. He said that stupid errors frustrated landholders:

For example, their surveyors welcomed my involvement highlighting things about our property to improve the placement of gas wells—

obviously for himself—

they listened and adjusted things—but they sent it to Brisbane and of course Brisbane just changed it.

And they went back to putting the wells where they wanted to put them again. So there is a huge divide, and it comes back to, I believe, the lack of power that you have in trying to handle these people.

Mr Cameron : The other thing on the workers is that—I think Richard Golden actually mentioned it—not only were gates that had been closed sometimes left open, you also had the other dangerous situation where a gate that had been deliberately left open so stock could access water for their survival was shut.

Senator LAZARUS: How accessible have the representatives of the mining companies been to BSA to voice your concerns?

Mr Cameron : We have had them at various stages at our meetings.

Senator LAZARUS: So you have had access to them.

Mr Cameron : We have had access, yes.

Miss Nicholson : Yes, I have been to quite a few meetings. I am on a meeting at Arrow just to listen in and I have attended there, which is where I heard that they just had their EIA changed to allow them to put drilling mud all over the site where they are drilling. That is another issue: the government says that they have got extremely good conditions around all these companies, and then you find out that Arrow has had them changed, and the others are in the process of having them changed, so that, instead of taking their drilling mud et cetera to a waste disposal place, they can now just spread it on the ground. It is all smoke and mirrors.

Mr Cameron : I think we would have a much better situation if the mining companies went to the various government departments, like DEHP, and said, 'We're going to do this, this, this and this,' and then the independent government department actually did its own environmental impact study. In that way, you avoid that situation where the mining company is actually doing the environmental impact study first and then presenting it and the study then is not getting the due consideration and due diligence that it should. Unfortunately it is possible that there have been rushed decisions in approving the EIAs.

Miss Nicholson : We think those departments should be here to oversight, not to sit back and watch the train roll out. They should be there doing a job and they are not. When you look at the difference between this and what they did to satisfy themselves whether or not something was okay, that took 260,000 submissions and seven years. Our department just let it roll in under some stupid adaptive management practice which has no teeth and has no ability to stop anything in case something goes wrong. That is the situation we find ourselves in.

Senator LAZARUS: Thank you.

Senator WATERS: Thank you, folks. In the two minutes that we unfortunately have left, I want to firstly thank you for coming here today and for sharing your views. It is certainly not the first time we have heard what an imbalance of power there is and how landholders are being ridden roughshod over. I hope that the more times we hear this the more chance there is that we might get some change in the regulatory system. So thank you for once again pointing out the multiple inefficiencies and inadequacies in the regulatory system. I agree with everything you have said and thank you for your support for the bill. I think ultimately we will succeed, but it might be a few years yet. Thank you for bearing up in the meantime. One question is all I have got time for. When you have got other jurisdictions—like you pointed out in New York—that have gone to great lengths to study this industry, to listen to what the communities want and that have then taken a strong decision to say, 'No, we don't want fracking,' why have we not done the same in Australia?

Miss Nicholson : I think it is like everything: it comes from the top. You have policy makers up the top that tell the departments what to do, which you must have to a degree. But these departments say that their job is to carry out the policies of the government. Fine. It seems to me that there is no independence at all of those departments, if you know what I mean. I am not a political being, so I do not know how you give the departments the sort of responsible attitude that obviously these departments have in New York State, but somehow there have to be departments that, while they carry out the policy of the government in power at the time, do not prostitute themselves—they have a job to do and they get on and do it and they do it honestly.

CHAIR: Thank you very much, Miss Nicholson and Mr Cameron, for making the time to be here today and also for your submission and additional document.