Rehabilitation Bonds – Ministerial Powers & Limitations

Prepared by the CMPA SECRETARIAT with input from Andrew Lumb of Nevitt Ford Melbourne Pty Ltd.
– Under the Mineral Resources (Sustainable Development) (MRSD) Act there are clear Ministerial powers and limitations in relation to rehabilitation bonds, and this article discusses these and their impact upon the rehabilitation bond system.
This article follows on from “Rehabilitation Bonds – Still Broken” in Sand & Stone Issue 70.
With the Regulator holding over $105 million in bank guarantees our Members remain very interested in this topic.

THE fundamental problem the rehabilitation bond system is designed to address is the perceived risk to Government (the Minister) of having to fund rehabilitation of an un-rehabilitated quarry where for one reason or another use of the work authority has ceased and rehabilitation works have not been carried out. Essentially the bond system is in the nature of an insurance policy for the Minister. But what are the legal obligations of the Minister to take action to intervene in the event a quarry is left un-rehabilitated?

LEGAL OBLIGATIONS UNDER THE MRSD ACT

Section 78 requires a Work Authority holder must rehabilitate land in accordance with the rehabilitation plan approved by the Department Head. Th e applicant for a Work Authority must consult with the landowner in the preparation of a rehabilitation plan.

Section 79A allows the Minister to require the Work Authority holder to undertake an assessment of the holder’s rehabilitation liability for the purpose of determining the amount of a rehabilitation bond or reviewing the amount of a rehabilitation bond, and also may require this to be certified by an auditor.

Section 80 of the MRSD Act requires a Work Authority holder to enter into a rehabilitation bond for an amount determined by the Minister. The Minister must consult with the landowner in determining the bond. Under the MRSD Act the Minister has no obligation to rehabilitate any land, whatever the circumstances, but does have power.

Section 83(i) states ‘the Minister may take any necessary action to
rehabilitate land if he or she-

• Is not satisfied that the land has been rehabilitated as required by section 78 or 78A (Section 78A applies to extractive industry); or
• Is satisfied that further rehabilitation of the land is necessary; or
• Is requested to do so by the owner of the land.’

The triggers for the exercise of the Ministers power in Section 83(i) are not at all clear. Paragraph (a) of Section 83(i) requires non-compliance with the rehabilitation plan by the Work Authority holder. Leaving aside progressive rehabilitation requirements, many Work Authority rehabilitation plans just assume an end situation without articulating what constitutes this. Th e obligation of the Work Authority holder under Section 81 is to complete rehabilitation before, or as soon as possible after, cessation of the Work Authority. Does this mean that the Ministers power under paragraph (a) is triggered only by cancellation of the Work Authority?

With respect to paragraph (b), it would always be the case during the life of a Work Authority that further rehabilitation would be necessary. With respect to paragraph (c) can the landowner request the Minister at any stage during the life of the Work Authority to rehabilitate the land, and thus trigger possible action by the Minister? Note that paragraphs (b) and (c) each stand alone as alternatives to paragraph (a), and are not expressed as consequences of a failure by the Work Authority holder to comply with the rehabilitation plan.

The Minister may only take action if the Work Authority holder (or former Work Authority holder) has failed to rehabilitate the land after the Minister has asked the holder to do so. Even when requested by the landowner to rehabilitate the land the Minister is not obliged to take action, but under section 83(2) the Minister must inform the landowner of the reasons for refusing to act.

Most importantly, section 83(4) allows the Minister to recover as a debt any amount by which the cost incurred exceeds the amount of the bonds.

It therefore appears that the Minister has no obligation to take action. The Minister does, however, have a discretion to take action in certain circumstances, and has full power to recover costs.

MINISTER’S RIGHTS OF ENTRY ON PRIVATE LAND

If you take the words of section 83 literally and in isolation, the power to take any necessary action to rehabilitate the land is conferred without limitation and appears to take no account of whether or not the land is private land, or whether or not the landowner consents to the Minister and his contractors coming onto the land and carrying out what may be extensive works.

The fact that the land may be private land is adverted to in what might be call a fairly incidental, if not tokenistic manner, in a few places in the sections relating to rehabilitation in Part 7. Under section 80 if the land is private land the Minister must consult with the council before determining the amount of the bond, curiously not also with the landowner as is the case with respect to a mining licence (this diff erence seems perverse and lacking in any discernible logic). Under section 82 the Minister must not, in the case of private land, return the bond until aft er consulting with the council and the owner of the land (note that the obligation is only to consult and consents of the council and the owner are not required). Possibly the Councils participation in the processes under Sections 80 and 82 are hangovers from the 1966 Act under which council gave notice to the Work Authority holder of the reclamation workers required.

It is extremely difficult to entertain the proposition that the few words in section 83, that the Minister “may take any necessary action to rehabilitate land” allow the Minister by his contractors to enter upon private land with machinery etc. and to carry out what may be major earthworks, without the consent of the owner of the land, even against the will of the owner of the land, particularly if regard is had to other provisions in the MRSD Act which directly address the issue of the interface between activities under the Act and land which is privately owned. Under section 8AA it is an offence to search for stone on private land without the consent of the owner, except that the Minister can authorise any person to enter upon private land in the course of the Department carrying out surveying or searching for stone. Part 9 of the Act contains detailed provisions relating to the powers of inspectors to enter upon property and to do a number of specified things, including inspecting documents and other things, seizing things and taking samples. A procedure is prescribed for entry requiring notification to the occupant and afterwards providing a report detailing a number of specified items of information about the entry. There are further provisions relating to applications by inspectors to magistrates for search warrants.

Given the recognition in these provisions of the sensitivity of entry and exercise of powers on private property it is inconceivable that section 83 of the MRSD Act confers unlimited power for the Minister by his contractors to enter upon private land without the authority of the owner and to do whatever he considers appropriate, without any accountability and without any prescribed process of any sort, even giving of notice. In addition, bear in mind the Ministers power is not confined to just completing what is in the rehabilitation plan, which the owner of the land might be expected to know about, section 83 extends to any further rehabilitation the Minister considers necessary, which creates the possibility of the Minister via his contractors turning up to carry out works having the possibility of unexpected ramifications for the owner.

Section 78A to section 83 of the MRSD Act seem essentially to be about the obligations of the Work Authority holder to the Minister with respect to rehabilitation, and the powers of the Minister with respect to the Work Authority holder. In essence the Work Authority holder must carry out rehabilitation works in accordance with the approved plan and must provide the Minister with a bond to ensure his performance of these obligations. If he does not carry out his obligations in this respect, the Minister can cash in the bond and do the works. These sections seem to be about the relationship between the Minister and the Work Authority holder.

However these provisions are seriously flawed in that they do not address how this is to happen if the land is privately owned, which is a crucial issue even if owned by the Work Authority holder, and even more so if a third party is the owner. Perhaps the Ministers power under section 83 has to be read down in the case of private land to a power he may exercise if he is acting at the instigation of the owner of the land or otherwise with the specific consent of the owner of the land, but it is difficult to find anything which would justify such reading down.

The consequence of this of course is that the rationale for the obligation to provide bonds becomes questionable (particularly at levels which are in some cases unsustainable) if, as appears to be the case, it is problematic in many cases whether the Minister could compel the carrying out of the rehabilitation works, which is what triggers the Ministers ability to resort to the bond. True it is that if a Work Authority holder fails to rehabilitate, and the Minister is unable to obtain access to do the work, the Minister has no obligation to return the bond until he is satisfied that the land has been rehabilitated, but this hardly seems a satisfactory basis for the bond system.

It is to be borne in mind that a Work Authority holder who fails to rehabilitate the land as required under section 78A will be in breach of the Act and will be liable to penalties under the Act for breach.

Unless Section 83 can be considered as conferring power on the Minister, the land owner may have the right to legal redress if the Minister forcibly enters private land to carry out rehabilitation works, particularly if the rehabilitation works undertaken jeopardise or reduce the optimum end use.

WHEN SHOULD THE MINISTER INTERVENE?

Having determined that the Minister has limited obligation to intervene, only a power in certain circumstances, at what point should the Minister feel compelled to take action? The argument most commonly advanced is that this situation arises where a site has been left un-rehabilitated and the Work Authority holder (who may also be the landowner) is insolvent and is unable to fund the required rehabilitation. Th at is, funding of the rehabilitation is the key issue, the key risk for the Minister.

Section 79 of the MRSD Act requires a rehabilitation plan to take into account the need to stabilise the land, but also several other matters, including the surrounding environment and the desirability or otherwise of returning agricultural land to a state that is as close as is reasonably possible to its state before the Work Authority was granted. Although under Section 79 the Work Authority holder is to consult with the land owner in preparing the plan, the legislation does not address the basic problem referred to above, that where the land is private land, the land owner has rights in relation to what is done to his land, and his aspirations may be inconsistent with the rehabilitation plan. When the issue of intervention by the Minister arises, the land owner may be a different landowner to the landowner originally consulted by the Work Authority holder, perhaps many years before, and the current landowner may have quite different views in relation to the future utilisation of the land.

Arguably, the core reason for rehabilitation of an extractive site is to ensure the site is left and remains in a ‘safe and stable’ condition. Therefore, on this basis, intervention is only necessary where the quarry is considered unsafe and unstable and the Minister should have clear power to do so, whether on public or private land.

Under the MRSD Act it is required that extractive operations are subject to ongoing rehabilitation, and Work Authority holders are required to seek approval for a Work Plan that establishes how ongoing rehabilitation will be achieved. Routine inspections and audits by the regulatory authority are undertaken to ensure compliance with the Work Plan and actions are required by the regulatory authority where specific actions set out in the Work Plan have not been accomplished. Significant penalties can be applied by the regulatory authority on Work Authority holders where a condition of a Work Authority has been breached.

This active administration and enforcement of the Work Plan by the regulatory authority inspectorate ensures sites are kept in an orderly operating environment.

Th rough both the efforts of the Work Authority holders and the regulatory authority the industry is responsible for undertaking operations so that to the extent physically and economically possible, at all times quarries are managed in a safe and stable manner.

Against this substantial regulatory background it can be expected that there will be only very few occasions where the Minister will need to intervene – intervention will indicate that both the Work Authority holder and the regulatory authority have failed in their respective duties. Intervention will therefore be a measure of last resort.

Public safety issues are one thing, but otherwise, for the reasons explained above the Ministers powers with respect to rehabilitation of privately owned land raise multiple issues, which by extension raise further issues, with respect to the rationale for provision of bonds in many cases.

Intervention will indicate that both the Work Authority holder and the Regulator has failed in their respective duties. Intervention will therefore be a measure of last resort.

The next article in this series will look at the differences in risk between the construction material industry and the mining industry and why these should be differentiated in legislation. The Secretariat will continue to develop possible solutions for the DSDBI to consider in any review of the legislation. Th e CMPA will continue to work with the government on this issue, and we always welcome our Members’ contributions. So next time your rehabilitation bond is reviewed contact the CMPA Secretariat.

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