21/12/2021

Gilbert + Tobin attended an information session held by the Western Australian Department of Planning, Lands and Heritage (DPLH) on 15 December 2021 relating to the land tenure reforms to support clean energy projects and the expansion of carbon farming in Western Australia (WA).

As outlined in ‘Renewable energy and reusable reforms:  WA’s land tenure amendments are familiar but exciting’ the reforms will be headlined by a new a form of non-exclusive tenure – the ‘diversification lease’.

On the same day as announcing that three million hectares of unallocated Crown land would be made available for carbon farming in WA, the Hon. Dr Tony Buti (the then Minister for Lands) together with senior officers of the DPLH gave the following updates about the reforms:

Urgent need for reforms recognised, to be completed in 2022

In recognition that the State wants to act quickly to prepare the WA economy to reach net zero emissions by 2050 and to support its climate change and ESG goals:

  • the ‘Land and Public Works Legislation Amendment Bill 2022’ is being drafted for Parliament now, with the aim of introducing the amendment bill to Parliament in the first half of 2022 and having it enacted in the second half of 2022.  We await to see whether the new Minister for Lands starting this week will look to keep to the same timing aspiration; and
  • the reforms will focus on the areas that will provide the greatest benefit – tenure of renewable energy projects, administrative improvements and reducing red-tape, and pastoral amendments (including changes to rent), identified as being at the centre of the reforms.

However, there will be limited time for consultation on the bill prior to it being introduced into Parliament.  DPLH noted the reforms require significant policy development which will dominate the preparation for the new reforms, and invited stakeholders to make contact directly for individual briefings.

No intention to acquire lands under existing pastoral leases for renewable infrastructure projects

  • The McGowan government has no intention, other than in exceptional circumstances, to exercise its compulsory acquisition powers to acquire pastoral leases or other tenure to enable the grant of diversification leases in support of renewable projects or any other purposes. 
  • This means that, as anticipated, pastoral leases will need to be surrendered in order for a diversification lease to be granted over the same land.  There will be no concurrent leases. 
  • With pastoralists retaining an effective veto power over any diversification lease application over their leases:
    • a market-based approach will be preferred with no guidelines or mechanisms to facilitate dispute resolution in the event of an impasse between pastoralists and proponents; and
    • it is expected that due to the greater opportunities created by diversification, together with rental values to be determined according to land use (see further below), there will be appropriate monetisation incentives and cost disincentives to prevent ‘land-banking’ and the ‘highest and best use’ of land will be achieved for potentially competing renewable or carbon sequestration or farming projects.

Bankability of diversification leases

  • With financing requirements in mind, a diversification lease will able to be registered on title and will constitute an ‘interest in land’.

Interaction with the Mining Act and reserved access rights

  • The diversification leases will interact with the Mining Act 1978 (WA) (Mining Act), and preserve rights of access including for Aboriginal people, as the pastoral leases currently do.
  • Acknowledging the intention to use a diversification lease to construct renewable energy infrastructure, areas of ‘substantial infrastructure’ will be identified in a diversification lease and those areas will be exclusive and delineated from the rest of the lease.  Exclusive areas must not be so dominant so as to require an alternative form of tenure (such as a Crown lease under s 79 of the LAA).
  • Section 20 of the Mining Act will be amended accordingly to specifically provide for ‘substantial infrastructure’, triggering the need for consent of the lease holder prior to conducting mining in the same way the Mining Act protects Crown land that is already the subject of certain specified types of Crown land improvements.
  • There will also be a change to the way the requirement for approval from the Minister for Mines under s 16(3) of the Mining Act will apply to diversification leases.  Not only will ‘s 16(3) clearance’ be required at first instance (taking into account the usual factors such as ‘prospectivity’), that approval requirement will be re-enlivened where there is a substantial change to the approved purposes or exclusive areas in the lease. 
  • This means the proponent will need to engage in early discussions with the Department of Mines, Industry Regulation and Safety and affected mining companies around the proposed location of substantial structures/infrastructure, including any changes to the location of such structures/infrastructure during the term of the lease.

Competing land uses and rent calculation

  • It is not intended that diversification leases will replace pastoral leases where the lease is to be granted solely for grazing however grazing may form one of a number of authorised uses.
  • Where existing pastoral lease areas may be used for multiple uses (e.g. pastoral, renewable projects or carbon farming projects), it will be a matter of commercial negotiation between the various proponents to reach agreement in seeking a diversification lease including which party will be the lease holder.  As matters of procedure and policy:
    • the permitted uses of the land under a diversification lease will be set out in the lease as agreed by the parties; and
    • the permitted uses will inform the State’s rent valuation, with a higher rent likely to be applied to the higher value land uses.  In this way, higher rents applying to the renewables infrastructure land areas are expected to disincentive land banking for lower value uses and promote commercial arrangements that facilitate the highest and best use of the land.  Where required, allocation between competing uses will be considered in the context of the State’s broader land allocation policy.
  • DPLH will remain ‘proponent driven’ in assessing applications for land use under a diversification lease (read ‘first come, first served’).  However, where land is in high demand and the subject of competing proposals, the State may seek expressions of interest with Government policy to drive a decision relating to the highest and best use of the land.  Whilst there was no explicit plan to favour renewable projects, that may be the inevitable outcome given an implicit recognition of the potentially greater benefits associated with high value renewable infrastructure development.
  • Competing land uses and rent calculation – 4th bullet point change to “Options to lease will be considered but these will need to be supported by a suitable business case as assessed by DPLH.
  • A diversification lease will not necessarily be the appropriate tenure used for renewables projects, but rather is an additional ‘tool’ for Government – one that may be used in conjunction with other forms of tenure, such as a Crown lease where larger areas of exclusive tenure or intensive land use is required.

Indigenous Land Use Agreement with native title holders most likely needed

  • The grant of a diversification lease will constitute a future act for the purposes of the Native Title Act 1993 (Cth).  Whilst a final view has not yet been reached, the State considers it is most likely an Indigenous Land Use Agreement (ILUA) with native title holders will be needed prior to the grant of a diversification lease. 
  • It was also indicated that the State will also now want to be a party to these deeds and will be advised by the State Solicitor’s Office.  DPLH intends to publish a template agreement for proponents. 
  • For an insight into best practices for negotiating ILUAs with native title holders, read Clean Slate: setting the standard for negotiating renewable energy projects with Native Title holders

Other Land Administration Act changes

  • Changes to the pastoral leases renewal provisions have been deferred as there are number of native title compensation claims currently before the Federal Court, the outcome of which will inform the approach to be taken to the renewal amendments.
  • The Pastoral Lands Board will publish standards and its guidelines to increase transparency, which may vary based on geographic location in the State.

If you are considering the development of a large scale renewables or carbon sequestration or farming project in WA, or require further information about how the reforms may impact your plans, please contact the G+T clean energy and decarbonisation team or subscribe to our newsletter.

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