Ensuring effective stakeholder consultation following Santos v Tipakalippa

Appropriate stakeholder consultation is well-known to be a critical part of successfully delivering major projects. The Full Federal Court has recently provided important guidance on the scope of the requirement to consult, including requirements for First Nations consultation for offshore petroleum projects. Its decision could have wide-reaching implications for other resources and energy projects, offshore and onshore.

Court proceedings

Tipakalippa v National Offshore Petroleum Safety and Environmental Management Authority (No 2) [2022] FCA 1121 concerned a challenge to the National Offshore Petroleum Safety and Environmental Management Authority’s (NOPSEMA’s) decision to accept an environment plan (the Drilling Plan), which had been prepared by the proponent of an offshore gas project in the Barossa gas field, approximately 300 km north of Darwin. 

Mr Tipakalippa, an elder, senior lawman and traditional owner belonging to the Munupi clan on the Tiwi Islands, claimed that he, the Manupi clan and other traditional owners, have traditional connections to ‘sea country’ and sea country resources extending beyond the project area. In view of these connections, Mr Tipakalippa contended that he and his clan and other traditional owners were required to have been directly consulted in relation to the Drilling Plan in accordance with the requirements of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) (Offshore Environment Regulations). 

The Court agreed with Mr Tipakalippa’s claim, setting aside NOPSEMA’s decision to accept the Drilling Plan. 

On 2 December 2022, the Full Federal Court, in Santos NA Barossa Pty Ltd v Tipakalippa [2022] FCAFC 193 (Appeal Decision), dismissed a challenge to the first instance decision. In doing so, the Full Federal Court provided further and more authoritative clarification of the requirements for consultation in the Offshore Environment Regulations. 

Regulatory context

The Offshore Environment Regulations impose a duty to consult on the titleholder. 

In particular, one of the criteria for acceptance of an environment plan is that the plan demonstrates that the titleholder has carried out the requisite consultation – including with those whose functions, interests or activities may be affected, and any other person or organisation the titleholder considers relevant – and that the measures adopted or proposed because of the consultations are appropriate. 

If the titleholder does not discharge their duty and demonstrate the measures (if any) it has adopted or proposes to adopt in its environment plan as a result of the consultation NOPSEMA will not accept the environment plan (regulation 10A).

Who must a titleholder consult with?

The Court construed the requirement to consult with “relevant persons” under regulation 11A of the Offshore Environment Regulations as applying to a broader category than required by the ordinary meaning of “person”. 

As defined, a “relevant person” includes a number of Departments, agencies, organisations and persons. In particular, it includes “a person or organisation whose functions, interests or activities may be affected by the activities to be carried out under the environment plan, or the revision of the environment plan”. 

The Court held that “functions, interests or activities” should be broadly construed to promote the objects of the Offshore Environment Regulations, which are to ensure an offshore petroleum project is consistent with the principles of ecologically sustainable development (ESD), and that its environmental impacts and risks are as low as reasonably practicable and will be of an acceptable level.  

Further, “interests” are not confined to legal interests in land or property. They include the traditional connection of Tiwi Islanders to part of the sea and the marine resources in the environment that may be affected, and which are integral to their culture, customs and connections. The findings of the Court were made notwithstanding the project proponents had identified the Tiwi Land Council and the Northern Land Council as “relevant persons” and had consulted with those representative bodies.

What does consultation require?

According to the Court, the titleholder must: 

• give each relevant person “sufficient information to allow [them]… to make an informed assessment of the possible consequences” of the proposed activity on their “functions, interests or activities”;
  
  
• “be genuine”, demonstrated by giving relevant persons a reasonable time to identify the effect of the proposed activity on their functions, interests or activities and to respond to [the titleholder] with their concerns”; and
  
  
• “adopt appropriate measures in response to the concerns conveyed to the titleholder” during consultation.

The Court drew on other legislative regimes to show that the non-legal interests of First Nations Peoples have been protected by other statutes.[1] This demonstrates the willingness of the Court to recognise First Nations Peoples’ cultural connection to sea in the absence of statutory human rights protections or other legally-recognised interests (such as native title) where those interests are capable of being adversely impacted.

While the Court did not expressly refer to international instruments that recognise the cultural and traditional rights of First Nations Peoples, its recognition that cultural connections are an “interest” sufficient to require consultation is consistent with the recognition of the rights contained in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).

The Court rejected submissions that this broad interpretation of “interests” is unworkable. It held that there are many ways of contacting First Nations People including through First Nations organisations. The Court noted that it should not be assumed that sending an email with an information package (even if followed up with another email) constitutes adequate consultation.

NOPSEMA response

On 15 December 2022, NOPSEMA released its Consultation in the course of preparing an Environment Plan guideline (Guideline), in direct response to the Appeal Decision and a critique made by the Court that further policy guidance on consultation requirements may be needed. Drawing extensively on the Appeal Decision, the Guideline aims to provide clarity on the legal requirements for consultation.

Key takeaways from the Guideline, which will apply to all new and revisions to existing environment plans, include:

• There is no ‘one size fits all’ approach. The Guideline does not specify what each consultation process should entail, nor how a titleholder should conduct the consultation process.
  
  
• Consultation processes must be designed in the context of the objects of the Offshore Environment Regulations.
  
  
• Titleholders must engage early with persons and organisations who may be affected, including in the design of the consultation process, and adapt the consultation process to each relevant person and organisation.
  
  
• Before accepting an environment plan, NOPSEMA must be satisfied a titleholder has discharged its duty to carry out consultation in an appropriate manner, including provision of sufficient information, a reasonable period for consultation and informing the relevant person that they may request information not be published.
  
  
• Environment plans must set out how the titleholder has identified relevant persons and the process for consultation.
  
  
• For communally-held interests, consultation should reasonably reflect the characteristics of those interests. Courts have found that there is good reason to adopt a pragmatic and practical approach.
  
  
• First Nations groups such as land councils and prescribed body corporates may be relevant persons with a function that may be affected, but such groups may also provide advice in relation to who and how other First Nations groups or individuals should be consulted.
  
  
• Titleholders will have some “decisional choice” in identifying which natural person(s) are to be approached and how information will be given to them to allow an informed response.  

Implications for proponents

The Appeal Decision concerns only a single offshore gas project. However, it is expected to have wide-reaching implications for significant offshore projects, and potentially even onshore projects where the interests of First Nations people may be affected.

While the Offshore Environment Regulations do not apply to offshore wind and other non-petroleum projects, the Appeal Decision will be closely considered by proponents. For those projects, environmental assessment and approval under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) remains with the Commonwealth Department of Climate Change, Energy, the Environment and Water. However, the Offshore Infrastructure Regulator (which sits within NOPSEMA) has a role in the assessment of management plans required by licence holders under the Offshore Electricity Infrastructure Act 2021 (Cth) (OEI Act), including with respect to environmental management and consultation with other marine users.

In particular, the licensing scheme required under the OEI Act may:

• include consultation requirements for an application for approval of new or revised management plans; and
  
  
• require that a management plan include “requirements to consult with any person that may be affected by activities carried out under the licence” and the outcomes of the consultation (sections 115(2)(e)-(f)). The Minister may also require a holder of a feasibility licence applying for a commercial licence to conduct specified kinds of consultation (section 43).  

Presently, the licensing scheme prescribed by Part 2 of the Offshore Electricity Infrastructure Regulations 2022 does not expressly address the above matters.

However, in the future NOPSEMA may apply a similar approach to offshore electricity infrastructure as it will now take to the assessment of offshore oil and gas environment plans. In this respect, NOPSEMA has announced that it is working to build internal capacity and resources to address the consequences of the Appeal Decision.

The focus on genuine and informed prior consultation is likely to continue for all projects assessed under the EPBC Act, particularly given the Federal Government’s recently announced Nature Positive Plan which proposes a range of environmental regulatory reforms. These include the creation of a Federal Environment Protection Authority and the development of national environmental standards to underpin EPBC Act processes. Some of the first standards to be prepared relate to First Nations Peoples’ engagement and participation in decision-making as well as more general community engagement and consultation.

The Appeal Decision may also have practical implications for onshore project developments, particularly mining and petroleum projects that may have an impact on First Nations interests given the locations of mineral resources across Australia. However, the direct relevance of the Appeal Decision in an onshore context will depend upon the consultation obligations in state and territory environmental approvals legislation. It is likely to have most impact in circumstances where there are similarities between the terms of this legislation and the Offshore Environment Regulations.

There is no doubt, though, that all such consultation obligations should now be considered carefully in light of the Appeal Decision, particularly in circumstances where stakeholders – investors, lenders, insurers and activists – are increasingly expecting project proponents to undertake culturally appropriate consultation with First Nations Peoples to achieve free, prior and informed consent to a standard consistent with UNDRIP (which often exceeds current legislative requirements), before the interests of First Nations Peoples are impacted

All of this suggests a trend for consultation requirements similar to that applied in the Appeal Decision. This will of course depend upon:

• the specific consultation obligations that apply under applicable law; and
  
  
• the detail of proposed reforms, once known.

Key takeaways

There are a number of key takeaways from the Full Federal Court’s decision for project proponents:

Implement a robust consultation process. Proponents of all types of onshore and offshore projects should review their approaches to consultation processes and de-risk their project authorisations by ensuring:

• the right people are identified as consultees, whether individuals, groups or other organisations. This will involve an assessment of interests potentially affected, beyond legal interests (e.g. of native title holders and claimants), as determined by all current and evolving guidance in relation to the breadth of this obligation;
  
  
• the consultation processes reflect the needs of consultees, such as the time required for responding;
  
  
• consultees are fully informed of a project’s potential impacts and can provide an informed response;
  
  
• the consultation process is genuine and allows the proponent and decision-maker to better understand environmental (and social) impacts and risks;
  
  
• consultation starts early and continues throughout the life of a project; and
  
  
• the consultation process has a clear rationale which is set out for the decision-maker.

Future proof your projects. Conducting genuine and rigorous consultation is increasingly important from both a legal risk and social licence perspective. Project proponents should prepare for increasing expectations from regulators and the community by internally building capacity and processes and staying up to date with evolving legal requirements. Being proactive rather than reactive is key.

Engage with the regulator. NOPSEMA is seeking feedback on the Guidelines until 15 March 2023. NOPSEMA will also release changes to other relevant guidelines and policies in due course. Interested participants should take the opportunity to provide input.