Make Good Agreements – Amendments to the Water Act Burden Resource Companies

Amendments were passed on 6 December 2016, to the Water Act 2000 (Qld) (“Act”), improving Landholders positions when negotiating Make Good Agreements (“MGAs”).

Explanatory Notes to the Act, provide:

“While resource companies are under additional obligations in regards to make good agreements, this is justified because it ensures the appropriate apportionment of burden. Therefore, insofar as the amendments are regarded to impose liability, the amendments should be regarded to be fair and reasonable.”

This recognition is great news for Landholders who have experienced difficulties and expense in negotiation of MGAs with a resource company in the past.

Of note, the Act has broadened the responsibilities of the resource company during the negotiation of the MGA, the resource company is to:

• pay the Landholder’s reasonable costs in engaging a qualified hydrogeologist for the purposes of negotiating a MGA: section 423(3) of the Act;
• bear the costs of any alternative dispute resolution undertaken in the negotiation process of the MGA: section 426(4), (7) of the Act; and
• use its best endeavours to enter into a MGA within forty (40) business days after the bore assessment is undertaken section 423(2)(a) of the Act.

Further, the Act grants the following to Landholders:

• Extends the type of bores to be the subject of a MGA to include bores affected by “free gas”: section 412(3)(b) of the Act;
• Extends the type of bores to be the subject of a MGA to include bores where a resource activity has likely caused or materially contributed to the decline in water quality or quantity: section 412 of the Act; and
• Provides for a five (5) business day cooling off period which starts on the day the MGA is entered into: section 423A(5) of the Act.

Prior to entering into negotiations with a resource company, Landholders are encouraged to seek independent legal advice to ensure that their interests are adequately protected.

Conclusion

Amendments to the Act do not substantially vary the process by which Landholders and resource companies negotiate and enter into MGAs. However, the amendments:

• Specify particular costs which are to be borne by the resource company;
• Broaden the types of bores which may be subject to a MGA; and
• Provide a cooling-off period for Landholders who have entered into a MGA.

Landholders now have been provided a more transparent regime and are placed in a better position in their negotiations of an MGA.

Emanate Legal have a dedicated and experienced legal team dealing with negotiating and drafting MGAs. We are available to discuss any queries a Landholder may have.