Australia: Gasfields commission’s register of conduct and compensation agreements: Good idea or not?

Queensland's new Gasfields Commission intends to create a public register of conduct and compensation agreements. Taken at face value, it sounds like a good idea – landholders could use the information in the register to ensure they are fully informed when negotiating with resource companies. Potential purchasers could also find out whether any conduct and compensation agreements are in place for a particular property.

But creating the register will be no easy feat especially as conduct and compensation agreements vary significantly in both form and content. Further, public disclosure of conduct and compensation agreements may give the perception that a particular landowner negotiated a much better deal with a resources company than another landowner, for similar levels of access and activity.

The Gasfields Commission is the latest effort by the Queensland Government to improve relationships between rural landholders, regional communities and the coal seam gas industry in Queensland.

It has been granted broad powers to achieve its objectives, including the authority to compel landholders and resource companies to provide documents or information that the Commission 'reasonably requires'.

A corporation that fails to comply with a mandatory request for information can be penalised up to $55,000 for each act of non compliance. Similar penalties apply for providing false or misleading information.

The Commission intends to use the information extracted from resources companies as well as landholders to create the conduct and compensation agreement register. A de-identified list of arrangements between landholders and resource companies will then be made publicly available.

The register has clear benefits for landholders. The intention is that they will be able to access the register and obtain information to assist them in their negotiations with resource companies. They can view the de-identified agreements and potentially find arrangements comparative to their own circumstances.

Understanding the contents of other agreements thus puts them in a more informed position when negotiating a conduct and compensation agreement with a resources company.

The register may also enable potential purchasers to find out whether any conduct and compensation agreements are in place for a particular property (rather than the contents of any such agreements) but this will depend on the information that is publicly disclosed.

It has not yet been made clear what information will be made publicly available by the Commission and how this information will be presented. Without the inclusion of any background information relevant to the specific land, the operations on it or the particular circumstances of the parties at the time the conduct and compensation agreement was negotiated, there is a risk that information disclosed in the register may not paint a truly accurate picture.

EXEMPTIONS TO THE POWER

There are some exceptions that will exempt a party from having to hand over documents or information to the Commission:

• the requested information is in another person's control and the party has been unable to obtain it;
• complying with the request would result in contravention of a law;
• the information relates to the confidential information of another person who has refused to consent to its disclosure;
• complying with the request would incriminate a party; or
• the relevant material is confidential to the party or its provision would be to the detriment of the party's commercial interests.

Confidential information includes any information that:

• could identify an individual;
• relates to a persons current financial position or financial background; or
• would be likely to damage the commercial activities of a person to whom the financial information relates.

It is conceivable that a landholder, a resource company or another interested party may refuse to consent to the disclosure of information on the basis of the above exemptions. For example, the confidentiality provisions of a conduct and compensation agreement may prevent parties from disclosing their agreements.

Furthermore, parties may not consider it in their best commercial interests to disclose their agreements because each conduct and compensation agreement is entered into based on a specific set of circumstances involving a number of variables.

Such variables may include the proposed activities to be performed by the resource company, the use of the property by the landholder, the nature of the business operating on the property, the type of terrain of the property, the proposed future use of the property by the landholder, the proposed future use of the property by the resource company and the urgency of the parties in reaching agreement.

OTHER CHALLENGES

Along with the confidentiality issues outlined above, there are also other practical limitations that may make it difficult for the register to become a viable resource.

Conduct and compensation agreements are not uniform either in form or content. They can take any number of forms including as a deed, letter, agreement or easement.

Further, agreements between resource companies and landholders may consist of a number of conduct and compensation agreements that only take their final shape as the resource companies finalise their plans for infrastructure.

The Commission may thus find it challenging to extract relevant and consistent information from the conduct and compensation agreements and collate it in a meaningful manner.

CONCLUSIONS

By creating a register of conduct and compensation agreements and making publicly available a de-identified list of these agreements between landholders and resource companies, the Commission is attempting to give landholders a better understanding of their entitlement to compensation.

However, there are many questions around what information the Commission will request and compile, and make publicly available via the register.

In particular, the success of this initiative will depend on the Commission being able to find some way through the maze of existing conduct and compensation agreements to collect consistent and relevant information that can be disclosed in a meaningful way.

See also Gas Fields Commission Bill 2012 for a detailed analysis of the Bill.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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