Government clarifies regulatory protections that manage public liability risks for landholders hosting gas development activities

This week the Queensland Government has clarified the strong regulatory protections in place to manage public liability risks for landholders who host onshore gas development activities along with the state’s responsibility for this legacy infrastructure.

When coal seam gas (CSG) activities end, some infrastructure may be left behind. This infrastructure is referred to as ‘legacy infrastructure’ and includes infrastructure that has been decommissioned, abandoned or rehabilitated.

The ability for rural landholders to access public liability insurance for CSG infrastructure on their properties (including legacy infrastructure) has been a serious ongoing concern for the agricultural sector and landholders.

As a result of these concerns, the GasFields Commission (the Commission) has been leading discussions around ‘public liability insurance’, CSG activities and legacy infrastructure, with a view to clarifying what protections are in place for landholders and developing collaborative solutions.

The Commission assembled a ‘Public Liability Insurance Working Group’ (the working group) in May 2020 with key representatives from government and gas, agriculture and insurance industries after the Insurance Council of Australia confirmed that many insurance companies were excluding public liability insurance coverage for gas infrastructure (including legacy infrastructure) in their farm pack insurance for landholders.

From the outset the Commission’s aim was to ensure better alignment of interests between landholders and gas companies and to confirm that public liability cover for landholders would continue to be available from a broad range of insurers.

In March 2021, the Commission released a new ‘Landholder Indemnity Clause’ so that, if required by the insurer and agreed by the landholder and proponent, the clause could be used in Conduct and Compensation Agreements to ensure ongoing farm public liability coverage in Queensland. This new indemnity clause, developed collaboratively with the working group members, provided greater clarity for landholders and gas companies where farming and gas infrastructure coexists.

During discussions around the clause it became apparent that all stakeholders would benefit from greater clarity and certainty around what protections were in place and what the state’s liability is should landholders have any legacy infrastructure on their properties.

The Commission identified that landholders were concerned about exposure to public liability risks resulting from failure of legacy infrastructure and potential implications regarding access to finance.

The Commission then undertook a regulatory review and produced an Issues Paper in close collaboration with the working group. The analysis undertaken as part of this regulatory review identified that the perceived insurance gap and ‘financial exposure’ concerns were addressed under the existing regulatory framework.

As part of the review, the Commission found that there are a number of regulatory frameworks that help manage public liability regarding legacy infrastructure and these frameworks:

• set out the responsibilities of the resource companies and the Queensland Government; and
• protect landholders against liability caused by legacy CSG infrastructure.

However, the most important aspect to the Commission’s findings was that the state, as administrator of the resources legislation, should publicly clarify these protections, and most particularly, clarify the state’s liability in relation to legacy infrastructure.

Consistent with the Commission’s statutory functions and in order to instigate an appropriate level of action, the Chair of the Commission wrote to the Minister for Resources recommending that the government make this clarification as a matter of priority.

As a direct result of this recommendation, the State Government has this week confirmed that under the current regulations:

• landholders are protected from liability for harm caused by, or arising from, the failure of any legacy CSG infrastructure on their properties, unless they have caused or contributed to the harm; and
• the State takes responsibility for legacy infrastructure.

The Commission’s CEO Warwick Squire commented, “The Commission is very pleased to see the government act to provide much needed clarity around the State’s liability in relation to legacy infrastructure and key regulatory protections for landholders.

“The Commission would like to take this opportunity to thank all those involved in this project, without your assistance this landmark coexistence initiative could not have been achieved.”

“This positive outcome represents another great example of the Commission acting as the honest broker of collaborative solutions to complex coexistence issues, across a broad range of stakeholder interests.”

• 📑 The government has now published a webpage detailing what regulatory protections afforded to landholders: https://www.business.qld.gov.au/industries/mining-energy-water/resources/landholders/csg/public-liability-infrastructure.

Who are the GasFields Commission Queensland?

Established as an independent statutory body in 2013, the Commission’s purpose is to manage and improve the sustainable coexistence of landholders, regional communities and the onshore gas industry in Queensland. The Commission manages sustainable coexistence in petroleum and gas producing regions of Queensland, and will continue to do so as the industry expands into new and emerging basins.

Our vision is to achieve thriving communities in areas of gas development that are free from discord and supported by well-informed, respectful and balanced stakeholder relationships.

One way the Commission is endeavouring to realise this vision is by providing transparency and independent assurances that the onshore gas industry is appropriately regulated and held to account when needed. This in turn will help cultivate sustainable coexistence, whilst ensuring community and landholder confidence in the regulators and gas industry increases.

Drawing on its wealth of experience in the development of the gas industry and by collaborating with other relevant entities, the Commission provides a range of support to communities and landholders, primarily through education and engagement. These education and engagement activities occur with individual landholders via Commission facilitated webinars, information sessions, publications (The Gas Guide, Shared Landscapes Reports), face-to-face meetings and public workshops.

It should be noted that the Commission does not engage in individual negotiations between landholders and gas companies, but rather provides communities and landholders with the information and support they need to make informed decisions and achieve good outcomes.