Author:	Michael Hunt Solicitor, Hunt & Humphry, Project Lawyers
Subjects:	Aborigines - land tenure (Other articles) Native Title Act 1993 Australia (Other articles) Petroleum industry and trade - - Political aspects - - Australia Petroleum Law and Legislation - Australia
Issue:	Volume 8, Number 3 (September 2001)
Category:	Current Developments

Contents:

• Introduction
• Relevant NTA Provisions
• Future acts, the freehold test and the right to negotiate
• Indigenous land use agreements
• Renewal and extension of titles
• Procedure for infrastructure titles
• Expedited procedure
• Reserve land
• Water Resources
• Low impact future act
• An approved exploration etc. act
• Validation of past and intermediate period acts
• Alternative State Provisions
• State implementation of the "right to negotiate" procedure
• Procedures for grants on pastoral and reserve land
• State and Territory Legislation
• Western Australia
• South Australia
• New South Wales
• Queensland
• Northern Territory
• Victoria
• The Miriuwung Gajerrong Case
• First instance decision
• Appeal to the Full Federal Court
• Appeal to the High Court
• The Croker Island Case
• First instance decision
• Appeal to the Full Federal Court
• Appeal to the High Court
• Existence of the claim is the issue - not proof
• NTA's Offshore Impact
• Aboriginal Heritage
• Aboriginal heritage and native title
• Aboriginal heritage legislation
• Site surveys
• Native Title Agreements
• The "right to negotiate" encourages agreements
• Content of agreements
• Conjunctive agreements
• Compensation under agreements
• Section 31 agreements
• Negotiating a native title agreement
• NTA is unworkable but encourages agreements
• Consider priorities
• Search tenure and native title claims
• Commence NTA processes
• Consider compensation
• Conduct of negotiations
• Negotiation protocol
• Concluding Comments
• Notes

Introduction

1. This paper examines the key provisions of the Native Title Act 1993 (NTA) which are relevant to petroleum explorers and producers, principally the subject of tenure to ground. It considers the validity of already granted titles and examines the process of application for new titles.

2. The situation in each State and Territory is outlined because titles, and the government processes dealing with native title issues, differ in each jurisdiction. The paper mentions the Federal Court decisions in the Miriuwung Gajerrong and Croker Island native title claims and contemplates the High Court's options when deciding the recent appeals.

3. The paper focuses on how to cope with the "right to negotiate" provision of the NTA but also considers some categories of "future acts" in respect of which the "right to negotiate" does not apply (examples of these include procedures for infrastructure titles, renewals and extensions of titles, the "expedited procedure", indigenous land use agreements, reserve land, and approved exploration).

4. The "right to negotiate" under the NTA applies to onshore petroleum explorers and producers however it can still impact on offshore operators if their area of interest includes an island within State or Territory jurisdictions or if their treatment facilities are located onshore. Aboriginal heritage laws and practices are also as potentially disruptive to production facility construction and expeditious exploration programs as native title claims. For these reasons offshore petroleum exploration and production as well as Aboriginal heritage laws are also considered.

5. It is concluded that a negotiated agreement is the only way to cope with native title issues.

   Relevant NTA Provisions

   Future acts, the freehold test and the right to negotiate

6. The NTA regulates all actions which could affect native title[1] (referred to as "future acts"). An act affecting native title (such as the grant of a petroleum production title) may be carried out if it could also be carried out on freehold land (the "freehold test").[2] A person carrying out a "future act" must follow the same procedures as if the native title holders held freehold title over the land that is the subject of the intended grant.[3]

7. If the "future act" involves the grant of a "right to mine"[4] (such as the Minister granting an exploration permit or production licence under the petroleum legislation), or the compulsory acquisition of land for non-government purposes (such as the grant of an easement for a gas pipeline or the grant of a lease for a treatment plant under the land legislation)[5] that act will be valid if it falls within one of a number of categories specified in the NTA but only if there is compliance with applicable procedural requirements. These procedural requirements vary.

8. At one end of the spectrum, the "right to negotiate"[6] applies in relation to the grant of some petroleum titles (principally production licences). This requires the notification of native title claimants and the advertisement of the proposed grant, followed by compulsory negotiation between the State or Territory government, the proposed grantee of the licence and the registered native title claimants for at least six months after notification. In the absence of agreement the National Native Title Tribunal (NNTT) determines if the "future act" is allowed.

9. But there are categories under which "future acts" (including the grant of some petroleum exploration titles and some ancillary titles) can validly be carried out as exceptions to the "right to negotiate" process under procedures which are less onerous. Those that are potentially relevant to oil and gas explorers and pipeline operators include:

   • titles granted under indigenous land use agreements (ILUAs)[7]
   • the renewal or extension of valid permits and licences granted before 23 December 1996[8]
   • the grant of a "right to mine" or the compulsory acquisition of native title rights to land for purpose of an infrastructure facility such as a pipeline[9]
   • the "expedited procedure" which permits the grant of a title where the grant would not interfere directly with the community or social activities of the native title claimants nor any areas or sites of particular significance and would not be likely to involve any major land disturbance[10]
   • activities and dealings in relation to valid reserves, made prior to 23 December 1996, which are consistent with the purpose of the reserve[11]
   • the management of water resources[12]
     
   • a "low impact future act"[13]
     
   • an "approved exploration etc. act"[14]
     
   • activities in offshore areas[15]

10. A title which does not fall into one of these categories will nevertheless be valid if it satisfies the "freehold test" and there is compliance with specified procedural requirements.[16] As a general rule, however, I must emphasise that in the case of the grant of titles such as exploration permits, production licences and retention leases, it is generally necessary to comply with the "right to negotiate" procedure.[17]

    Indigenous land use agreements

11. A "future act" such as the grant of a land title under the land legislation, or the grant of a production licence under the petroleum legislation, will be valid if carried out under an ILUA, irrespective of whether there is compliance with the "freehold test" or the "right to negotiate".

12. The main advantage of an ILUA is that it provides contractual certainty. An ILUA, once registered, is a binding agreement in respect of all "future acts", effectively permitting the parties to contract out of the "future act" and "right to negotiate" provisions. It overcomes the common law principle that a contract is only binding on the parties who sign it (personally or through their agent) and will bind all holders of native title in the area even though they may not be parties to it. The NTA provides for various categories of ILUAs and the most suitable form for use in relation to oil and gas projects is known as an "area agreement."[18]

13. There are some problems with ILUAs. First, the requirements of a valid ILUA are reasonably prescriptive and will take time to complete, particularly where there is more than one registered claim. There could be considerable delay. After signing of the ILUA, a period of three months is allowed for objection to the registration of the ILUA. If an objection is made, obviously time must be allowed for the Registrar to determine that objection.

14. Secondly, some form of involvement with the representative Aboriginal/Torres Strait Islander body will be required. Whilst that body is not required to be involved in the negotiation of the agreement, it must be consulted in relation to the registration of the agreement as an ILUA. If this body has been omitted from negotiations (as sometimes occurs because of a company's desire to negotiate direct with claimants and their advisers), it may oppose registration.

15. Thirdly, all registered claimants must sign the same ILUA document. This may be difficult in circumstances of two or more claimant groups opposed to each other's claim (as has commonly occurred, for example, it has occurred at the Burrup Peninsula). It may be possible to get around this problem by confining the ILUA to formal matters and leaving issues such as compensation, employment, training and heritage to be dealt with in separate agreements. Conceptually, this is not free from doubt because it is the "agreement" that is required to be registered. However there is no specific requirement as to the actual content of an ILUA provided that it concerns one or more of a list of specified matters, such as the doing of particular "future acts". There are no general limits on what must or must not be included in an ILUA.

16. Fourthly, an ILUA must be deregistered (and thus loses its force) if an approved determination of native title is made in relation to any of the area covered by the ILUA and the persons determined to hold native title are not the same as those who had previously been determined to hold it or who had authorised the making of the ILUA.[19]

17. Finally, I note that the NTA does not provide a deadlock breaking mechanism in the event that parties cannot reach agreement or additional claims are registered within the notification period. I believe that ILUAs have some potential. However, it is still early days and I suggest that, at least in the short term, the majority of successful negotiations will result in a section 31 agreement (discussed below under the heading "native title agreements"). In the longer term, registration of an agreement as an ILUA will be desirable because it does provide for certainty for the grant of titles in the future. However, registration can only occur with the co-operation of all claimants and representative bodies and that may not always be achievable.

    Renewal and extension of titles

18. The provisions of the NTA in relation to renewals and extensions are not easy to interpret but, in summary, the position is that the "right to negotiate" does not apply to the renewal or extension of a title:
    • as a result of the exercise of a legally enforceable right to renew created before 23 December 1996[20] or
    • that was originally granted before 23 December 1996 provided that the area is not extended, the term is no longer than the original term and no additional rights are created[21] or
    • that was granted after December 1996 provided that: the grant was not invalid by reason of section 28 (in practical terms, this means that the previous grant complied with the "right to negotiate" procedures); the area is not extended; the term is no longer than the original term; and no additional rights are created.[22]

    Procedure for infrastructure titles

19. An infrastructure facility is defined in the NTA to include any of the following:
    • a road, railway, bridge or other transport facility;
    • a jetty or port;
      
    • an airport or landing strip;
      
    • an electricity generation, transmission or distribution facility;
    • a storage, distribution or gathering or other transmission facility for oil or gas; or derivates of oil or gas;
    • a storage or transportation facility for coal, any other mineral or any mineral concentrate;
    • a dam, pipeline, channel or other water management, distribution or reticulation facility;
    • a cable, antenna, tower or other communication facility;
    • any other thing that is similar to any or all of the things already mentioned and that the Commonwealth Minister determines in writing to be an infrastructure facility for those purposes.[23]

20. The grant of a "right to mine" or the compulsory acquisition of native title rights to land for the purpose of an infrastructure facility will not be subject to the "right to negotiate" procedure. However, the grant or acquisition must satisfy the "freehold test" and native title holders and claimants are to be given the same procedural rights as if they held freehold title. Furthermore the NTA provides that:
    • native title claimants must be notified of the proposed grant and they have a right to object within two months;
    • the State (in the case of a compulsory acquisition) or the petroleum company (in the case of the grant of a "right to mine") must consult the native title claimants;
    • any objections must be determined by an independent person or body; and
    • the State Minister may overrule the determination in the interests of the State.[24]

21. State legislation is not required to implement these provisions but some States have enacted legislation to establish their own infrastructure procedures.[25] Since 1998 Western Australia has been implementing the infrastructure provisions by submitting applications for titles for infrastructure to the section 24MD (6B) process.[26] It is not yet clear whether the change of government in February 2001 will result in this process being abandoned but I doubt it. However, I am not aware of any instance where the procedure has been used for an oil and gas project.

    Expedited procedure

22. The "expedited procedure" permits the grant of a title where the grant would not interfere directly with the community or social activities of the native title claimants nor any areas or sites of particular significance and would not be likely to involve any major land disturbance.[27] The "expedited procedure" is intended to facilitate the grant of exploration titles. It has yet to be demonstrated that it achieves this aim.

23. The failure of the "expedited procedure" was demonstrated in an April 1996 inquiry[28] by the NNTT into objections by the Nyungah native title claimants[29] to the "expedited procedure" applying to three petroleum exploration permit applications in the south west of Western Australia. The NNTT ruled that the activities which could be undertaken pursuant to an exploration permit, including clearing seismic lines, would involve major land disturbance and so ruled that the "expedited procedure" did not apply. The consequence was that the "right to negotiate" applied.

24. The State appealed against this decision. The Federal Court dismissed the appeal.[30] The court, following its earlier decision in Ward,[31] ruled that it is the quality of the acts permitted under the permit which should be considered not the intentions of the particular applicant.

25. In another decision, Dann,[32] the Federal Court held that interference with community life of the native title claimants did not require a physical interference and disruption of a spiritual connection with the land was sufficient to prevent the application of the "expedited procedure". As a result, a subsequent NNTT decision confirmed that the "expedited procedure" will not apply to an exploration permit application if there are any sites within the permit area because the NNTT must interpret the procedure on a "worst case scenario" assuming that if an activity is permitted under a permit then it is possible that it will be carried out.[33]

26. As I have said elsewhere[34] there is little point in pursuing an application under the "expedited procedure" where an objection has been lodged. The fundamental reason is the effect of the decision in Ward that interference with community life may be spiritual interference not necessarily physical interference.

27. However, recently it seems that the NNTT has become more prepared to critically examine assertions that the "expedited procedure" does not apply.[35] In 1999 the Western Australian Department of Minerals & Energy decided to resume processing applications but is still not attempting to process applications (for Petroleum Act 1967 exploration permits) under the "expedited procedure" because of the decisions (mentioned earlier) that seismic operations involve major disturbance to land. I believe the Department has recently been considering this possibility in light of the more balanced view adopted by the NNTT towards the "expedited procedure".

    Reserve land

28. Under the NTA, titles may be granted on valid pre Wik[36] (pre 23 December 1996) reserves without undergoing the "right to negotiate" procedure, provided the purpose of the title is consistent with the purpose of the reserve or has no greater impact on native title rights.[37] This may enable the State to grant titles to petroleum companies to, for example, construct power transmission facilities and pipelines on a road or railway reserve or create a bore field on a water reserve without undertaking the "right to negotiate". I understand this procedure is currently being used in Victoria for pipelines.

    Water Resources

29. Provided that registered native title claimants and representative Aboriginal bodies are notified and given the right to comment, rights to water resources can be granted without compliance with the "right to negotiate" process.[38] This will apply to an application for a licence under the State or Territory legislation which authorises grant of licences for water resources.[39] Although this provision should avoid any dispute about rights to water, it does not overcome the essential practical problem of obtaining access to the land in order to access the water.

    Low impact future act

30. A "low impact future act" does not require compliance with the "right to negotiate" process.[40] However since "mining" is excluded from the definition of a "low impact future act" I don't think this provision would enable the grant of even access authorities or special prospecting authorities.

    An approved exploration etc. act

31. The Commonwealth may approve State procedures for granting exploration titles called "approved exploration, etc. acts" without complying with the "right to negotiate" provided certain conditions are satisfied, these include:
    • the act is a right to explore;
      
    • the act is unlikely to have a significant impact on the particular land or waters concerned (drilling does not necessarily offend this condition);
    • representative Aboriginal/Torres Strait Islander bodies have been notified of the Minister's proposal and their submissions have been considered;
    • the procedure for the grant of any such approved exploration title includes notification to native title claimants and representative Aboriginal/Torres Strait Islander bodies, the opportunity for them to object and have that objection determined by an independent person; and
    • the obligation of the applicant to consult registered bodies corporate and claimants for the purpose of minimising the impact of the exploration title, especially in relation to the protection of areas or sites of particular significance to the native title.[41]

32. It is possible that exploration licences, access authorities and special prospecting authorities could be brought within these provisions. The former Western Australian government decided not to ask the Commonwealth Minister to approve any mineral or petroleum title as an "approved exploration etc. act". However, the new government is currently considering this issue.

33. Both New South Wales and Queensland have made provision for "approved exploration etc. acts" under petroleum legislation. Victoria is currently considering the issue. I believe any title granted under this procedure will be of limited utility in that it won't allow seismic operations because they necessarily involve land clearing.

    Validation of past and intermediate period acts

34. The NTA permitted the validation of "past acts", that is, titles granted prior to 1 January 1994. The Wik decision created doubt about the validity of titles granted over pastoral leases in the period following commencement of the NTA (on 1 January 1994). I understand several States and the Northern Territory issued petroleum titles during that period without compliance with the NTA.

35. The 1996 amendments to the NTA provided that the States and Territories may validate "future acts" (including the grant of titles) undertaken between 1 January 1994 (when the NTA commenced) and 23 December 1996 (when the Wik decision was delivered) if those acts may have been invalid because of native title ("intermediate period acts"). Such legislation may also confirm that some freehold and leasehold grants of a type described in Schedule 1 of the 1996 amendments to the NTA ("previous exclusive possession acts") have extinguished native title.

36. The validation by the States and Territories of "intermediate period acts[42] has validated those titles granted (or renewed) during the period 1 January 1994 to 23 December 1996 wholly or partly on current or former leasehold (including pastoral leasehold) land.

    Alternative State Provisions

    State implementation of the "right to negotiate" procedure

37. Under the 1996 amendments to the NTA, the States and Territories are permitted to establish their own "right to negotiate" regimes (subject to obtaining the Commonwealth's approval).[43] I doubt that the ability of a State to establish its own "right to negotiate" procedure will help make the NTA more workable. I don't think the substitution of a State or Territory arbitral body will make any substantive difference. I believe that the practical difficulties with the operation of the "right to negotiate" procedure are likely to continue whether under Commonwealth or State or Territory jurisdiction.

    Procedures for grants on pastoral and reserve land

38. Instead of the "right to negotiate" procedures, alternative State provisions (once approved by the Commonwealth Minister) may operate in relation to pastoral land and reserves.[44] These provisions must satisfy certain requirements, including that:
    • registered native title claimants, bodies corporate and representative Aboriginal/Torres Strait Islander bodies must be notified of proposed "future acts";
    • native title holders and claimants must be given the right to object;
    • native title holders and claimants must be consulted by the State or by the title applicant;
    • any objection must be heard by an independent body and any determination in favour of the "future act" must be subject to judicial review;
    • the Minister for Aboriginal Affairs may, in the interests of the State, overrule a determination refusing the "future act" or imposing conditions;
    • in the case of compulsory acquisition of native title rights for non-government purposes, the native title claimants will have the same procedural rights as if they hold freehold title;
    • the alternative State provisions must provide for compensation and for any dispute about compensation to be determined by an independent body; and
    • the State laws must provide for the protection of Aboriginal heritage.

39. I don't believe these State procedures for grant of petroleum titles on pastoral or reserve land will help make the NTA more workable. I have considerable doubt that these procedures will be any less cumbersome in practice than the "right to negotiate". Time frames may be reduced but the obligation to consult, the right to object and the right to an independent determination will, in practice, be similar to the "right to negotiate". So, I am sceptical that there will be any practical difference. Commonly, an application for a title may include both unallocated Crown land and pastoral land. If so, it must be processed under both the alternative State provisions and the "right to negotiate". So this is another source of potential delay and confusion.

    State and Territory Legislation

40. As previously mentioned States and Territories are permitted to establish their own "right to negotiate" procedures. They may also create an alternative regime to the "right to negotiate" to apply in "alternative provision areas" (areas where native title can co-exist with other rights such as pastoral leases and reserves).[45] All States and Territories (except Tasmania and ACT) prepared some form of draft legislation to implement the 1998 amendments to the NTA. The content of the legislation is different in each jurisdiction.

    Western Australia

41. The following three Bills were introduced into the Western Australian Parliament in November 1998:
    • Native Title (State Provisions) Bill
      
    • Titles (Validation) and Native Title (Effect of "past acts") Amendment Bill
    • Acts Amendment (Land Administration, Mining and Petroleum) Bill

42. The Acts Amendment(Land Administration, Mining and Petroleum) Act 1998 amends the land, mining and petroleum legislation to pass to the applicant for the land, mining or petroleum title all liability for compensation payable in respect of native title.

43. The Titles (Validation) and Native Title (Effect of "past acts") Amendment Act 1999 validates "intermediate period acts" and confirms extinguishment of native title by "exclusive possession acts". However the (then opposition) Labor Party forced amendments to the Titles (Validation) and Native Title (Effect of "past acts") Amendment Bill and certain categories of leases were deleted from it.

44. The Western Australian Parliament in December 1999 enacted the Native Title (State Provisions) Act 1999. This Act proposes to establish a "future act" regime to replace the NTA procedures. It is limited to the creation of State-based "future act" processes. The NNTT would continue to deal with the registration of native title claims and associated administration and mediation processes.

45. The Native Title (State Provisions) Act was not in force at the time of writing this paper. The Commonwealth Minister made a determination that the Act complied with the requirements of s 43A. However, the Senate refused to approve it. Those parts of the Act which deal with the infrastructure provisions[46] could be proclaimed but, at the time of writing this paper, had not been proclaimed. In view of the change of State Government on 10 February 2001, I believe it is most unlikely that this Act will be proclaimed.

    South Australia

46. South Australia has had its own detailed State legislation on native title for some years. After passage of the 1998 amendments to the NTA, legislation was enacted in the South Australian Parliament to give effect to the new NTA provisions. These include provisions for validation and confirmation of immediate period acts, confirmation of extinguishment of native title, amendments relating to registration of claims, and amendments to the alternative procedures under that legislation to conform it to s43 of the NTA. The Environment, Resources and Development Court is the arbitral body and its functions extend to hearing matters under the alternative procedures.

    New South Wales

47. New South Wales enacted the Native Title (New South Wales) Amendment Act 1998 most of which came into force on 30 September 1998. It is validation and confirmation legislation and does not contain any alternative "right to negotiate" provisions. As such, it provides for the validation of "intermediate period acts" and the confirmation of extinguishment of previous exclusive and non-exclusive possession acts done by NSW. It also provides procedures under which the Administrative Decisions Tribunal can hear and determine an objection made under the infrastructure provisions.[47] New South Wales has also amended the Petroleum (Onshore) 1991 to allow low impact exploration licences.[48]

48. New South Wales has adopted the same system for native title land (the access agreement) as it has for private land and the Petroleum (Onshore) Act has been amended accordingly. Formerly, New South Wales adopted a "Swiss cheese" approach to exploration licences, granting them with "holes" being areas of potential native title land. Now it has an "exclusion case" process in the eastern parts of the State where most of the land is not claimable as native title. An exploration licence will be granted over the entire area of land, both non-native title land and potential native title land but there is a right to explore only on the non-native title land. If the company wishes to explore on the potential native title land, it must observe the NTA process.

49. However, in the western parts of the State where most of the land is claimable as native title, the "exclusion case" is not necessarily used and an explorer can choose either the "exclusion case" or the NTA process.

    Queensland

50. Queensland has enacted validation and confirmation legislation, the Native Title (Queensland) State Provisions Act 1998. It has also enacted the Native Title (Queensland) State Provisions Amendment Act (No. 2) which amends the Mineral Resources Act 1989. This provides for a low impact exploration procedure for minerals.[49] I am not aware of any similar amendment in relation to the Petroleum Act 1923.

51. For minerals there are alternative state provisions.[50] They replace the "right to negotiate" process of the NTA. There are no such provisions for petroleum. I understand there is considerable frustration amongst the petroleum industry at the difficulty of obtaining access to land in Queensland.

    Northern Territory

52. The Northern Territory enacted several separate pieces of legislation in August 1998, but only the Validation of Titles and Actions Amendment Act 1998 (NT) has commenced operation. This validates "intermediate period acts" and confirms extinguishment. The remaining legislation failed to obtain the necessary Commonwealth Senate approval.

    Victoria

53. The Land Titles Validation (Amendment) Act 1998 was enacted by the Victorian Parliament as validation and confirmation legislation. The Act also clarifies the distinction between the grant of a pipeline licence and the compulsory acquisition of native title for the purpose of obtaining an interest in the land subject to the pipeline licence, thus amending the Pipelines Act 1967. The compulsory acquisition will proceed under the infrastructure provisions.[51] It has not yet been determined who will hear objections under that procedure.

54. I understand Victoria is contemplating a low impact exploration procedure for petroleum. Otherwise Victoria is now fully observing the NTA process. For an exploration permit, native title land is excised from the grant unless the "right to negotiate" has been followed or an ILUA has been signed. Offshore section 24N is used, conferring procedural rights on claimants. Sometimes section 24J has been used for pipelines if the type of reserve is appropriate. For example a water reserve is acceptable for a pipeline but a recreation reserve is not. Formerly, Victoria was using section 24K (facilities for services to the public) but this is now (correctly in my opinion) no longer regarded as appropriate.

    The Miriuwung Gajerrong Case

    First instance decision

55. On 24 November 1998 Justice Lee in the Federal Court handed down his decision in the Miriuwung Gajerrong #1 Land Claim,[52] affecting approximately 7,900 square kilometres of land and water in the East Kimberley of Western Australia and the Northern Territory. It was the first decision in relation to a contested native title claim on mainland Australia. Justice Lee held that native title exists over most of the land and waters claimed by the applicants. Native title was held to be extinguished within the Miriuwung Gajerrong claim area only in relation to areas the subject of freehold titles, dedicated roads and some permanent public works. Special leases, pastoral leases, mining leases, reserves and less permanent public works were held not to have extinguished native title. The creation of Lake Argyle did not extinguish native title.

56. Justice Lee's decision recognised a native title right to resources, to control access to resources and to receive a portion of resources taken by third parties. Unfortunately, Justice Lee did not define what he meant by resources. A critical question for the oil and gas industry is whether Justice Lee's finding that native title includes resources extends to petroleum. Resources such as petroleum have been appropriated to the Crown under State legislation.[53] Justice Lee's unqualified reference to resources is ambiguous. It is capable of being interpreted to include a native title right to petroleum, including a right to control access to petroleum and to receive a portion of petroleum taken by third parties. It has been relied upon by some native title claimants to claim a royalty on minerals and it may be relied on by claimants to argue for a royalty on petroleum.

57. I understand that the only evidence of any right to receive a portion of resources related to the right to a portion of a kangaroo which was killed in the claim area by someone without a right to kill that animal. I suggest that it is inappropriate to apply that principle to mineral and petroleum resources (in respect of which, incidentally, no evidence was given of any traditional use other than of "ochre") and, in any event, it seems clear that the mining and petroleum legislation[54] vested practically all mineral and petroleum resources in the Crown, thus extinguishing rights relating to mineral and petroleum interests.

58. It is difficult to reconcile Justice Lee's views on non-extinguishment of native title by a lease with the decision one month later by another Federal Court judge, Justice Olney, in the Yorta Yorta native title claim.[55] In that case, Olney J said "a lease granting exclusive possession of land will extinguish any native title rights".[56]

    Appeal to the Full Federal Court

59. Justice Lee's decision was the subject of appeals to the Full Federal Court.[57] On appeal, the Full Court reversed Justice Lee's decision, ruling that native title has been extinguished:
    • by the grant of a pastoral lease if the land was fenced and improved in the case of a lease granted up to 1933 or after 1934;
    • by the grant of a mining lease before 1994;
    • by the extensive public works of the Ord Irrigation Scheme; and
    • by the large-scale works of the Argyle diamond project.

60. The Full Court also said that there is no native title right or interest in minerals within Western Australia. The Court held a number of things in relation to minerals. First, "resources" in the context used by Lee J would not include minerals other than those won in a customary or traditional manner. Secondly, the Crown had in any event vested the minerals defined in the Mining Act in itself, extinguishing any native title rights that might otherwise have applied to them. Thirdly, a right to "ochre" (but no other mineral) was established on the evidence and that right was not extinguished by the vesting of minerals because "ochre" was not a mineral. The Full Court said that the same conclusion applies to petroleum.

    Appeal to the High Court

61. At the time of writing, the High Court had heard an appeal against the Full Federal Court's decision. The position will not be clear until the High Court delivers a decision on the appeal (which will probably not happen until late this year). I think it is most unlikely that the High Court will rule that native title rights include ownership of minerals and petroleum. I should also add that the Yorta Yorta decision is the subject of an application for special leave to appeal to the High Court by the native title claimants. As at the date of writing, the application had not been heard and so no hearing date has yet been set (if there is to be a hearing at all).

    The Croker Island Case

    First instance decision

62. On 6 July 1998 Justice Olney in the Federal Court handed down his decision in the Croker Island Land and Sea Claim,[58] affecting Northern Territory's offshore land and sea. Justice Olney relevantly held that:
    • the claimants' evidence demonstrated a use of the claimed waters for hunting, fishing and gathering to provide for their sustenance;
    • there was no sufficient evidence to show any rights to possess, occupy or use the claim area to the exclusion of others;
    • as a matter of law, no such exclusive rights could be recognised as they conflicted with common law rights of access, rights to fish and international conventions to which Australia is a party;
    • the evidence did not establish any right to the resources of the seabed and sub-soil; and
    • in any event, title to such resources was vested in the Crown under the relevant legislation.

63. That is, Justice Olney held that any native title right to minerals (and presumably petroleum) that might have existed was extinguished by the various legislation that applied to the claim area.

    Appeal to the Full Federal Court

64. Justice Olney's decision was the subject of appeal to the Full Federal Court.[59] On appeal, it was ruled by the majority that the judgment and reasoning of the trial judge was correct. Notably the Court dismissed an appeal by the Commonwealth which sought to argue that native title rights cannot be recognised seaward of the low water mark.

    Appeal to the High Court

65. The High Court has recently delivered its decision on the appeal from the Full Federal Court's decision.[60] In essence, the High Court upheld the decisions of the Trial Judge and the Full Federal Court. The High Court agreed that native title could exist and be recognised seaward of the low water mark and that this is so regardless of whether the common law can extend seaward of the low water mark. The basis of such existence is that the touchstone for recognition of native title rights is merely consistency with common law. The High Court also agreed that recognition of exclusive native title rights in sea areas would be inconsistent with the public right to fish and the public right to freedom of navigation. That is, recognition of such rights failed the "consistency with the common law" requirement that the majority ruled is a requirement for the existence of native title.

66. It is worth emphasising that the evidence in the Croker case established that the claimants had exercised rights to use of the sea. The writer's view is that if there is no evidence establishing rights to the area seaward of the low water mark, then the principles will not apply. Croker does not establish that non-exclusive rights to the sea do exist - it merely establishes that they can exist.

    Existence of the claim is the issue - not proof

67. It is important to note that it is not necessary for native title claimants to prove the existence of native title in order to participate in the NTA processes. If the land proposed for the grant of a licence or lease to a petroleum explorer or producer is subject to a registered native title claim, it is necessary to comply with the NTA processes, whether or not native title is ultimately found to exist.[61] The only exception to this is where it can be shown that native title has been unequivocally extinguished (such as the historical grant of a valid freehold title).[62] More than 80% of Western Australia is now the subject of registered native title claims. So the probability is that nearly all applications for onshore petroleum exploration permits, onshore gas pipelines and onshore infrastructure facility proposals will be within claimed areas and so will be subject to the NTA processes.

    NTA's Offshore Impact

68. The issues raised by the NTA are not confined to onshore oil and gas activities although onshore is where nearly all of these issues have arisen because prima facie the "right to negotiate" process of the NTA does not apply offshore.

69. However, an offshore oil and gas explorer could encounter NTA issues when seeking exploration title where the offshore area includes land. An example is Sandy Island within Scott Reef off the Kimberley coast of Western Australia. Sandy Island would be onshore for purpose of the NTA and Woodside's exploration permit was granted under the onshore legislation, Petroleum Act 1967. There are many such islands (such as Adele Island, Koolan Island and the islands in the Bonaparte Gulf) which are located off the coast of Western Australia but are onshore for the purpose of the NTA.

70. An offshore oil and gas producer could also encounter NTA issues in converting its exploration permit to a production licence where the offshore area includes land. For example, Thevenard Island (off north west Australia) is considered onshore for purpose of the NTA and WAPET's[63] production licence application over the island is being processed through the "right to negotiate" procedure. An agreement with native title claimants has not been reached and the matter is before the NNTT on a "future act" determination application.

71. The biggest NTA issue for offshore oil and gas producers arises in respect of the land required for the facilities to treat the petroleum brought ashore. The "right to negotiate" procedure was required to be followed by the North West Shelf Joint Venturers for the additional land which may be required to develop further LNG trains at Burrup. Chevron will be required to follow the "right to negotiate" procedures for any land needed to develop the Gorgon Project.

72. Another issue for offshore oil and gas producers is the suggestion, which arises as a result of the Federal Court decision at first instance in the Miriuwung Gajerrong case, that native title claimants have a right to control access to resources including petroleum and a right to receive a royalty.

73. A further issue arises in cases where exclusive rights to control access to offshore areas are claimed as in the Croker Island case although there has not to date been a finding that any offshore native title rights are of an exclusive nature. On the contrary, the Croker Island case indicates that such rights cannot be established as a matter of law.

74. So, although the "right to negotiate" process of the NTA is not applicable offshore and the main impact of the NTA for oil and gas explorers and producers has been in respect of onshore oil and gas activities, it may still be necessary for offshore petroleum explorers and producers to consider the NTA.

    Aboriginal Heritage

    Aboriginal heritage and native title

75. Native title and Aboriginal heritage issues are closely interrelated, although the cultural significance of sites will continue even if native title has been legally extinguished. The reality is that Aboriginal sites will not be affected unless the land is disturbed but claimants' lawyers regularly put a contrary position forward. Native title claimants often assert that the grant of a petroleum licence or lease will affect native title rights and interests, irrespective of whether any development activity is carried out.

    Aboriginal heritage legislation

76. Although the protection of Aboriginal sites will be important in any NTA procedure, sites are also specifically protected under the Western Australian Aboriginal Heritage Act 1972. The Northern Territory has similar legislation. Aboriginal heritage legislation in other States differs markedly. The Commonwealth also has legislation, the Aboriginal and Torres Strait Islander Heritage Protection Act 1984, designed to protect Aboriginal sites.

    Site surveys

77. Broadly speaking, there are two types of Aboriginal sites: archaeological sites and anthropological or ethnographic sites. Non-Aboriginal archaeologists can readily identify archaeological sites. However, only the Aboriginal traditional custodians generally know the location of ethnographic sites.

78. The practice of undertaking Aboriginal heritage surveys with local Aboriginal communities before the commencement of land disturbing activities has developed in order to avoid unintentional disturbance of sites. In Western Australia this is an informal process because neither the NTA nor the Aboriginal heritage legislation actually prescribes a mechanism for identifying Aboriginal sites.

79. It is possible for a petroleum title applicant to proceed immediately with native title processes in relation to pending title applications because the grant of a title should not raise Aboriginal heritage (as distinct from native title) issues. However, the conduct of a heritage survey is often a constructive way to establish a relationship with native title claimants before native title issues are negotiated. Until a survey is carried out, heritage issues will remain nebulous and elusive and may cloud native title negotiations. So the first process in any important native title negotiations is often the signing of a negotiation protocol (which will generally incorporate a site survey process) or Aboriginal heritage protocol.

    Native Title Agreements

    The "right to negotiate" encourages agreements

80. The principal objective of the "right to negotiate" procedure is to encourage licence/lease applicants and native title claimants to enter into agreements concerning proposed exploration or production projects. Many such agreements have already been negotiated with native title claimants.

81. Both parties have commercial reasons to reach agreement because any deadlock will be resolved by the NNTT. The risk for the petroleum company is delay and also the possibility that the NNTT may refuse the proposal (although to date no petroleum title application has been refused by the NNTT). The risk for the native title claimants is that any compensation ordered by the NNTT may be paid into trust, rather than to the claimants. The risk for both parties is that they will lose control of the compensation issue which will be determined initially by the NNTT and ultimately by the Federal Court.

82. There is a potential risk involved in making a compensation agreement before native title has been determined. Developers have no means of knowing whether the registered claimants will ultimately prove that they are the native title holders. If third parties subsequently establish native title, they could make a compensation claim against the developer even though compensation has already been paid to the registered claimants. This risk may be reduced, but not necessarily eliminated, by registering the agreement as an ILUA.[64]

    Content of agreements

83. Such agreements usually provide for the payment of compensation to the claimants together with other matters such as:
    • Aboriginal heritage procedures;
      
    • employment and economic opportunities;
    • training opportunities; and
      
    • ongoing consultation.

    Conjunctive agreements

84. Consideration must also be given as to whether the agreement is to be "conjunctive", that is, to extend beyond the exploration stage to cover the grant of a production licence. There are many conjunctive agreements in the minerals industry and a similar practice is emerging in the oil and gas industry.

85. I understand that the agreements signed by Amity Oil in WA are conjunctive. Also I believe the Cooper Basin agreements under negotiation are to be conjunctive. Section 26D(2) of the NTA gives statutory force to what previously was a contractual situation.

    Compensation under agreements

86. The amount of compensation paid under an agreement will, of course, be a matter for negotiation between the parties. There has not yet been any court decision quantifying the value of native title rights and interests.

87. I suggest that the issue of compensation should be approached on the basis of feasibility rather than valuation. Petroleum companies applying for titles will need to decide the range of compensation they are prepared to pay to obtain the consent of the claimants in order to facilitate the grant of the petroleum titles. The position becomes complicated when agreements must be negotiated with more than one claimant group, such as at the Burrup Peninsula. In relation to oil and gas titles and projects, the agreed compensation will usually be influenced by the nature and value of the proposed development, rather than any value attributed to the land in question. In reality, the developer is paying for the consent of the claimants, rather than for the land.

88. Ultimately, the issue will be determined commercially on the basis of "willing buyer - willing seller". The company must determine how much it is prepared to pay to obtain the native title claimants' consent for the proposal and the claimants must decide how much they require to be paid to give that consent. It simply becomes a matter of bargaining and, although a lawyer with experience in the area can often suggest a "ball park figure" for the level of compensation which will be required, no real precedents been established.

89. The NTA specifically contemplates that native title negotiations may relate to payments based on production or profitability.[65] Although royalties are not yet common in native title agreements, they are often raised in negotiations and often lump sum compensation payments are calculated on the basis of the value of periodic or production based payments.

    Section 31 agreements

90. To qualify as a section 31(1)(b) agreement (often called a "State Deed" or a "Tripartite Agreement") and thus become registered as a successful conclusion to the "right to negotiate" it is necessary for the State to be a party to the agreement.

91. Early on, the Western Australian government decided that it did not wish to become a party to a commercial agreement between oil and gas companies and native title claimants. Yet the NTA's "right to negotiate" procedure requires that if the parties are able to negotiate an agreement, it must be registered under section 31(1)(b) of the NTA so as to authorise the grant of the petroleum titles which are the subject of the "right to negotiate" procedure.

92. The procedure adopted by the Western Australian government is to permit two separate agreements. The first, being the commercial agreement (often called a "native title agreement" or a "land use agreement") is referred to by the Department of Minerals and Energy as an "ancillary agreement", an odd term since it contains the "real deal". The State does not sign (nor even see) this agreement. The second is the s 31(1)(b) agreement (often called a "State Deed"). All three parties sign this: the State, the petroleum company and the native title claimants. It is then registered at the NNTT. This deed is in a standard form as published by the State.

93. Two standard forms have been developed so far. The first (used by the Department of Minerals and Energy) is where the relevant "future act" is the grant of a petroleum title under the Petroleum Act 1967 or a mining tenement under the Mining Act 1978, in which the State is represented by the Minister for Mines (who signs the Deed or who delegates the power to sign to an officer of the Department). The other form (used by the Department of Land Administration) is for use where the relevant "future act" is the compulsory acquisition of land including native title rights and interests so as to permit the grant of tenure under the Land Administration Act 1997.

94. I understand that in the current negotiations over the Cooper Basin between the "CO 98" petroleum companies and the native title claimants a similar structure has been adopted. That is, a bipartite agreement between the companies and the claimants which contains the commercial deal and a tripartite agreement involving the State which is the formal document to be registered under s31(1)(b) of the NTA.

    Negotiating a native title agreement

    NTA is unworkable but encourages agreements

95. I believe that the NTA is unworkable but I also believe that its very unworkability encourages agreements. The "right to negotiate" procedure is unworkable if it is relied upon to obtain the grant of a title. However, if used in conjunction with commercial negotiations, the "right to negotiate" procedure has benefit in a negative sense because, in my experience, neither the native title claimants nor the petroleum company really want to follow the whole tortuous process right through to the final conclusion of a determination in the NNTT.

96. The presence of the "right to negotiate" procedure provides considerable impetus for encouraging both sides to negotiate. The proponent of a petroleum project wishing to develop the project in any commercially acceptable time frame will have to negotiate a commercial agreement with native title claimants.

    Consider priorities

97. A company should identify and then prioritise any titles required in the area of its project. It could negotiate some in isolation or it could attempt to negotiate a package for all titles including any titles to be applied for in the future. Attempting to secure agreement to future applications may complicate the negotiations, particularly as sometimes more than one claimant group is involved. The sequential negotiation of titles is likely to increase the overall cost. On the other hand, if there is any urgency concerning a particular title, it could be dealt with individually or separately from other tenure.

    Search tenure and native title claims

98. In considering the impact of native title on petroleum licence/lease applications, it is essential to obtain correct and up to date information concerning the tenure of the subject land (eg freehold, reserve, pastoral leasehold or unallocated Crown land) and also the location of native title claims.

    Commence NTA processes

99. When the relevant titles, tenure and claim groups are identified, steps should be taken to initiate the NTA procedures (through the Department of Minerals and Energy). This will establish a timeframe for negotiations and consultation.

100. Under the NTA, the State must participate in the negotiation process (to the extent of conducting negotiations in good faith). It must be established early on with the native title claimants whether they require the State to be involved in the actual commercial negotiations. In the writer's experience, neither the oil and gas company nor the claimants want the State present during negotiations. However, unless the claimants waive the presence of the State, I suggest that the State must attend negotiations. Delays may occur as the Department has limited resources.

101. The claimants will usually request that the NTA procedures should not be commenced while negotiations are being conducted. My view is that such requests should be declined. It is conducive to efficacious negotiations to have the "clock ticking" under the formal "right to negotiate" process while commercial negotiations are being conducted.

     Consider compensation

102. The petroleum company should give early consideration to a compensation package. The claimants are likely to approach the matter on the basis of the value of the project and the amount of compensation that they consider the project can carry, rather than an amount related to land value or disturbance. The claimants may request either a lump sum or a royalty or some other form of staged payment linked to production.

     Conduct of negotiations

103. The negotiation process with the claimant groups is likely to move slowly. The rate of progress will be influenced by the level of the claimants' administrative support and whether they are represented by a land council or by lawyers. It is recommended that the mining company make contact with the relevant claimant groups in order to develop a relationship before commencing the formal negotiations.

     Negotiation protocol

104. I recommend consideration be given to negotiating and signing a short agreement (a negotiating protocol) which sets out the procedures and timetable to be followed during the course of the negotiations.

     Concluding Comments

105. In my opinion, the NTA does not provide a workable framework for the inter-action between petroleum exploration and native title. The "right to negotiate" procedure is unworkable if it is relied upon to obtain the grant of a title. However, if used in conjunction with commercial negotiations, the "right to negotiate" procedure has some benefit in a negative sense because, in my experience, neither the native title claimants nor the grantee party really wanted to follow the whole tortuous process right through. So, the presence of the "right to negotiate" procedure does provide some impetus for encouraging both sides to negotiate.

106. The proponent of an oil and gas project wishing to develop the project in any commercially acceptable time frame will have to negotiate agreements with native title claimants. The experiences of Empire Oil Company (WA) Limited demonstrate my point. Empire Oil applied for two onshore exploration permits in March 1995 and accepted the State's offer in October 1995. After the "expedited procedure" hearing and the Federal Court appeal (both mentioned above) the applications were submitted to the "right to negotiate" procedure. I understand Empire Oil was not prepared to accept some of the claimants' demands for payment and so the applications were referred to the NNTT under section 35 of the NTA for a "future act" determination. I believe that after more than two years in that process, Empire Oil reached the view that a commercial agreement is the only way to obtain the grant of the permits within an acceptable time frame. I understand that an agreement was signed in 1999.

107. Amity Oil NL gave another illustration of my point. Its application for an exploration permit met with native title claimants objecting to the "expedited procedure". After the objection was upheld in the NNTT and then the Federal Court, Amity negotiated a commercial agreement with the claimants to authorise the grant of the permit. Although the terms of the agreement are confidential, the claimants did announce they had received a cash payment.

108. Another company to be frustrated by the process was Premier Oil Australia Pty Ltd which applied for an exploration permit and the native title claimants objected to the "expedited procedure". Rather than go through the process, Premier Oil negotiated an agreement with the claimants.

109. I understand that in Western Australia alone, there have been around a dozen section 31 agreements signed for oil and gas projects. The North West Shelf agreements have been well publicised. However, smaller companies (such as Amity Oil NL and New Standard Exploration Pty Ltd) have also signed section 31 agreements.

110. In South Australia, it is rumoured that the Cooper Basin "CO98" companies are very close to signing section 31 agreements. The process there is instructive. The successful bidders for the acreage (called "CO 98") agreed to co-operate in native title negotiations. The former six or more claimant groups amalgamated their claims into three non-overlapping claims. Then about a year ago serious negotiations commenced. From what I hear there has been considerable goodwill generated and the commercial deal is realistic with the claimants being very reasonable in their demands at the exploration phase in the expectation of sharing in the success if the production ensues. As a result, a conjunctive agreement has been negotiated.

111. I think the end result chosen by these various companies is correct. A negotiated agreement is the only way to cope with native title issues.