Under NSW law, explorers are required to pay the reasonable costs for landholder participation in reaching a land access arrangement. These costs relate to landholder time, legal, and expert costs in reaching a land access arrangement. This requirement to pay costs applies to negotiation, mediation, arbitration, and at Land and Environment Court hearings (if the matter escalates to this stage).
Caps have been set on the reasonable costs payable at negotiation. These are:
- $1,500 (ex GST) for exempt prospecting operations; and
- $2,500 (ex GST) for assessable prospecting operations.
More information on the types of exploration including exempt and assessable prospecting operations can be found under Coal and mineral exploration.
The explorer must pay the GST amount in addition to the landholder’s capped costs.
These caps took effect on 1 December 2016 through publication in the NSW Gazette. They don’t apply to agreed or proposed access arrangements before this date.
Nothing in the legislation prevents an explorer from voluntarily paying landholders amounts beyond these caps for their costs involved in reaching a land access arrangement.
Mediation, arbitration and the LEC
No cap has been set on the reasonable costs payable by an explorer at these stages as these processes can vary substantially depending on the circumstances. The explorer must still cover the landholder’s costs in making the access arrangement during these stages of the process.
Costs payable by the explorer at mediation, arbitration or at the Land and Environment Court are either determined by the arbitrator or by the Court. Landholder conduct can be taken into account when determining the reasonable costs payable by the explorer, and there are requirements under the legislation that both parties must act in good faith. This is to encourage all parties to arrive at a land access arrangement as efficiently and reasonably as possible.
Under the legislation, the payment of costs isn’t required unless evidence has been presented to the explorer showing the incurring of costs.
Cost of an arbitrator
If a member of the Minister’s panel of arbitrators is appointed to a matter, these costs are met by the explorer. The Department acts as an intermediary for payments to panel arbitrators.
Compensation payments are separate to the requirement for explorers to pay the landholder’s reasonable costs in reaching a land access arrangement.
Land access arrangements can set out compensation to be paid to landholders as a consequence of carrying out exploration activities on the land. In addition, explorers are also required to pay landholders compensation for any loss or interference resulting from exploration or production work on their land.
Compensation need not always be monetary in nature. Often what is provided in-kind by the explorer may be worth more than the actual monetary compensation. For example, the explorer might agree to upgrade a farm road, renew a fence or replace a gate with a cattle grid.
For petroleum explorers and producers, access arrangements must specify the compensation that is payable to landholders. IPART’s online tool provides benchmarks which can help landholders in negotiating compensation agreements.