Who must be consulted? The Full Federal Court on environment plans for offshore petroleum projects

Santos NA Barossa Pty Ltd v Tipakalippa [2022] FCAFC 193

Summary

The Full Court of the Federal Court of Australia has upheld a judgment setting aside a decision of the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) to approve an environment plan (EP) for an offshore gas drilling project in the Timor Sea, which had been submitted by Santos under the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) (Regulations).

The Court held that traditional owners of the Tiwi Islands had “functions, interests or activities” which may be affected by the project, and that, as they had not been consulted in the course of preparing the EP, NOPSEMA was not “reasonably satisfied” that the consultations required by the Regulations had been carried out.

The decision has consequences for the consultations that petroleum titleholders are required to carry out in the course of preparing EPs for offshore petroleum projects.

Background

The traditional owners of the Tiwi Islands include the Munupi clan. The Munupi have traditional lands on the northern-most beaches of the Tiwi Islands, and “sea country” in the Timor Sea, to which they have longstanding spiritual and cultural connections: [5].

The Barossa Field is an offshore gas-condensate field in the Timor Sea, approximately 138 kilometres north of the Tiwi Islands. Santos holds a petroleum production licence for the Barossa Field granted under Part 2.4 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth). Santos intends to drill eight production wells in the Barossa Field, and establish a floating production facility and export pipeline to provide a new source of natural gas for its existing onshore LNG facility in Darwin: [8].

The worst-case scenario for a such project is a “loss of well control event”, in which condensate escapes directly from a well. The prospect of such an event occurring is considered remote, but has major consequences, with a spill potentially extending hundreds of kilometres from the drilling site: Tipakalippa v NOPSEMA (No 2) [2022] FCA 1121 (trial decision), [98].

The regulations

Before commencing activities in an offshore area, a petroleum titleholder (such as Santos) must submit an EP for the Activity to NOPSEMA: reg 9(1). It is an offence to undertake activities without an approved EP: reg 6(1).

NOPSEMA may only accept an EP if it is reasonably satisfied that the EP meets specified criteria, including that the EP demonstrates that the titleholder has carried out the consultations required: regs 10(1)(a), 10A(g).

A titleholder must consult “relevant persons”, a term which includes any “person or organisation whose functions, interests or activities may be affected by the activities to be carried out under the” EP: reg 11A(1)(d).

The decision

In mid-2021, Santos consulted with relevant persons it had identified, conducting meetings and distributing a stakeholder consultation package: trial decision, [102]-[104]. The Munupi were not consulted.

In October 2021, Santos submitted an EP to NOPSEMA. The final version of the EP was accepted by NOPSEMA in March 2022: [17].

The proceedings

In June 2022 Mr Tipakalippa, a representative of the Munupi clan, commenced proceedings challenging NOPSEMA’s decision to accept the EP.

In August 2022, an urgent trial was held, with evidence taken “on country” on the Tiwi Islands and in Darwin: trial decision, [18]. In September 2022, Bromberg J set aside NOPSEMA’s decision to accept the EP.

In November 2022, an urgent appeal was heard in Melbourne, before Kenny, Mortimer and Lee JJ. In December 2022, the Full Court unanimously dismissed the appeal.

The decision

The key issues on appeal were:

1. the meaning of “functions, interests or activities”;
2. whether, on the material before the decision-maker, the Munupi’s connection to “sea country” fell within that expression; and
3. whether, on the materials before it, NOPSEMA was “reasonably satisfied” (to the standard in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332) that the Munupi were not required to be consulted.

Kenny and Mortimer JJ considered that “functions, interests or activities” should be “broadly construed” to promote the object of the Regulations: [51], and that Santos’s narrower construction would “undermine the achievement” of the objects of the regulations: [52]. Such a broad construction served “more than one purpose”, allowing affected persons to make an informed assessment of the possible consequences, and ensuring titleholders adopt appropriate measures to address concerns: [56]-[57].

The material before the decision-maker contained “ample acknowledgement of the traditional connections of Tiwi Islanders […] to the sea and marine resources” within the environment that may be affected: [38]. Kenny and Mortimer JJ considered that the material showed that the Munupi had an “immediate and direct” interest arising from their “traditional connection” to their sea country: [67]-[68]. Accordingly, Santos was required by the regulations to consult with the Munupi: [78].

Lee J, concurring, considered that the concept of interest “must be sufficiently broad to obtain available input into the possible risks and environmental impacts and the possible means of reducing and managing those risks and impacts”: [151].  Lee J agreed the “cultural or spiritual interests” of the kind described met that standard: [158].

Postscript

Santos and NOPSEMA had argued that a broad construction would be “unworkable”. Kenny and Mortimer JJ rejected this, noting the “myriad of ways of contacting groups of First Nations peoples”: [92], observing:

The first (but not the last) port of call might well be regional or local First Nations organisations. Many First Nations groups now have their own organisations or corporations. All First Nations groups have some kind of intramural structure, generally based around elders and family groups.

Lee J accepted that there may be need for “regulatory reform” if the proper interpretation “causes what is perceived to be unacceptable expense and delay”: [164].

No changes to the Regulations have been announced, although the federal Minister for Resources has announced that she would ask the NOPSEMA advisory board to advise the government on any further steps that the government could take to clarify consultation expectations.

In December 2022, NOPSEMA held a stakeholder briefing, which was attended by over 1400 participants in person and online. It also published interim guidelines, and has invited feedback on those guidelines by March 2023.

In February 2023, NOPSEMA informed a Senate estimates committee that, of the 43 environment plans under assessment following the Full Court’s decision, only one has been subsequently approved.

Nicholas appeared as junior counsel for Mr Tipakalippa both at trial and on appeal. He was led at trial by Claire Harris KC and Robert White, and on appeal by Claire Harris KC and Colette Mintz.