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Government clarifies regulatory protections for landholders

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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.”