'Conduct and Compensation Agreements: Hazardous Contaminants'

Tuesday October 7, 2014

The below article is by Laura Hogarth, Lawyer, Creevey Russell Lawyers.

When negotiating a conduct and compensation agreement (CCA) with a mining or petroleum (particularly CSG) company, many landholders are concerned about the use of chemicals (hazardous contaminants) on the land.  Common requests for additions to CCA terms include:

  1. a requirement that the company use spill-proof and stock-proof containers and methods for chemicals and hazardous materials;
  2. a requirement that the company build a bund around each wellpad to stop contaminants from washing off wellpads and into pasture, crops or dams; and
  3. a requirement that the company notify the landholder of any chemical spills (including diesel, for example).

It is common for a company to claim that landholders are already adequately protected by the law, and to initially refuse to do anything more than the statutory minimum when it comes to hazardous contaminants. So, what protection do you have under the legislation, and what more might you want to ask for in your CCA?

What are ‘Hazardous Contaminants’?

A CCA will usually define Hazardous Contaminants to include oils, fuels and lubricants to the extent they are captured by definition given in the Environmental Protection Act 1994 (EPA).

The EPA defines Hazardous Contaminants as ‘a contaminant, other than an item of explosive ordnance, that, if improperly treated, stored, disposed of or otherwise managed, is likely to cause serious or material environmental harm because of—

  • its quantity, concentration, acute or chronic toxic effects, carcinogenicity (causing cancer), teratogenicity (causing birth defects), mutagenicity (causing mutation), corrosiveness, explosiveness, radioactivity or flammability; or
  • its physical, chemical or infectious characteristics.’

Environmental Protection Act 1994

In the event of a release of Hazardous Contaminants into the environment, the EPA requires that a company either:

  1. notify the owner; or
  2. notify the occupier; or
  3. publish a notice.

This requirement only applies if an activity causes or threatens serious or material environmental harm, or if a resource activity is reasonably likely to negatively affect the water quality or an aquifer or cause the connection of aquifers.

Environmental Authority

Each authority to prospect, exploration permit, mining lease or petroleum lease (resource authority) is granted subject to compliance with an Environmental Authority (EA), which authorises environmental damage (which would not otherwise be permitted under the EPA) subject to certain conditions.

The conditions vary between EAs and may be amended on the company’s request. You can search for the EA applying to your land through the Department of Environment and Heritage Protection (DEHP) website.

EAs typically provide that the company must notify the DEHP of a release of Hazardous Contaminants. It is not common for the EA to include a requirement that the company notify the landholder.

An EA may also include a requirement for the company to develop and comply with a management plan for overland flow. Any requirements for bunding or contour banks written into a CCA that conflict with the EA will be invalid and unenforceable.

Australian Standards

EAs also typically include a requirement that the company comply with the following Australian Standards:

  • AS 1940-2000 Storage and handling of flammable and combustible liquids.
  • AS 2507-1998 Storage and handling of agricultural and veterinary chemicals.
  • AS 2714 – 2008 Storage and handling of organic peroxides.
  • AS/NZS 4492:1997 Storage and handling of toxic substances.

The toxic substances standard includes requirements such as:

  1. Packages shall be kept securely closed when not in use.
  2. Packages shall be kept in such a manner as to avoid spillage.
  3. Appropriate spillage-retention measures shall be provided at locations where packages are likely to be opened or their contents transferred.
  4. Potential flow of spillage is prevented from reaching any protected place, watercourse or property boundary by such means as the use of natural ground slope, or the provision of a diversion channel, kerb or bund.

Land Access Code

The Land Access Code prepared by the Department of Employment, Economic Development and Innovation (DEEDI) includes mandatory conditions for companies. For example, if they become aware of any potential adverse impact, caused by their activities, on a landholder’s livestock or property (including crops, timber, gravel, etc.), they must immediately notify the landholder of the potential impact.

This may not sufficiently address your concerns regarding notification of releases of hazardous contaminants that may impact the health of humans, for example radiation exposure.

Work Health and Safety Act 2011 (Qld)

Your farm is your workplace. While a company is conducting petroleum or mining activities on the land, it’s their workplace, too.

However, the WHSA only applies to construction work for operating plant under the Petroleum and Gas (Production and Safety) Act 1994 (PAG Act, the legislation authorising petroleum leases) and not the operating plant itself. The WHSA also does not apply to coal mines and certain other mines.

Please contact us if you want to know about the operation of work health and safety laws in your specific circumstances.

Rehabilitation and Financial Assurance

See our article on rehabilitation for more information on a company’s rehabilitation requirements under their EA, whether or not there was a release of hazardous contaminants, and the financial assurance in place in case they fail to rehabilitate.

Negotiating CCA terms in relation to rehabilitation

You need certainty, before signing a CCA, as to whether the compensation you are receiving under the CCA includes or excludes compensation for any losses you may suffer due to contamination of the land or water, including:

  • diminution (devaluing) of the value of the land due to ‘contaminated land’ status under the EPA;
  • diminution of the value of the land due to the (potential) loss of organic status or EU or other accreditation;
  • loss of profit during a period of quarantine if you are found to have signed a National Vendor Declaration (NVD) for contaminated livestock; and
  • (potential) loss of opportunity to obtain organic status, EU or other accreditation.

These ‘fine print’ details need to be settled before briefing your expert valuer, as they will impact on your compensation claim.

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