SANTOS V TIPAKALIPPA: JUDICIAL GUIDANCE ON THE REQUIREMENTS FOR OFFSHORE PETROLEUM EP CONSULTATION

Santos v Tipakalippa: Judicial guidance on the requirements for offshore petroleum EP consultation

Tom Barrett

Special Counsel, Energy & Resources, Johnson Winter Slattery

In the Santos v Tipakalippa decision, the Full Federal Court has given guidance to offshore petroleum titleholders in respect of the consultation obligations that they need to satisfy in order to obtain NOPSEMA’s acceptance of environment plans that they submit for the purposes of conducting their respective petroleum activities. The Full Federal Court’s decision may, however, have wider impacts, including on the consultation that may be required to be undertaken by a project proponent under the Commonwealth Offshore Electricity Infrastructure legislation in order to develop an offshore renewable energy project.

1. Introduction

The Full Court of the Federal Court of Australia handed down its decision in Santos NA Barossa Pty Ltd v Tipakalippa and Another [1] (the Tipakalippa Decision) on 2 December 2022.

The Tipakalippa Decision gives judicial guidance to holders of petroleum and greenhouse gas titles under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (the Act) in respect of the consultation obligations that they need to satisfy in order to obtain the National Offshore Petroleum Safety and Environmental Management Authority’s (NOPSEMA) acceptance of environment plans that they submit for the purposes of conducting their respective petroleum or greenhouse gas activities.[2]

The Tipakalippa Decision, and the first instance decision of Tipakalippa v National Offshore Petroleum Safety and Environmental Management Authority (No 2)[3] (the First Instance Decision), have been handed down in the context of increased public scrutiny of, and concern for, the effects of oil and gas projects in Australia on climate change and Australia’s ability to meet its net-zero emissions target.

2. Background

At the time of the First Instance Decision and the Tipakalippa Decision, Santos NA Barossa Pty Ltd (Santos) and its joint venture partners were, and still are, the holders of petroleum production licence NT/L1 under the Act and proposing to undertake the project known as the “Barossa Project”. That project involves the recovery of natural gas and condensate from the Barossa Field located within the NT/L1 licence area. The Barossa Field is located approximately 300 km north of Darwin and 138 km north of the Tiwi Islands.[4]

In order to recover natural gas and condensate from the Barossa Field, Santos proposed to drill and complete up to 8 production wells within the NT/L1 licence area.[5] As a pre-requisite to undertaking those activities, Santos and its joint venture partners were (and still are) required by the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth) (the Regulations) to have an environment plan for those activities that is in force.[6] Under the Regulations, an environment plan is in force if the plan has been accepted by NOPSEMA, that acceptance has not been withdrawn and the operation of that plan has not ended.[7]

On 6 October 2021, Santos submitted to NOPSEMA, in accordance with the Regulations, an environment plan in respect of the drilling and completion of up to 8 production wells within an area described in the plan as the “Operational Area” (being an area within the NT/L1 licence area).[8] Between 6 October 2021 and 14 February 2022, Santos and NOPSEMA corresponded in relation to NOPSEMA’s acceptance of Santos’s environment plan. That correspondence involved requests by NOPSEMA for additional information and the provision by Santos of revised versions of its environment plan.[9] On 14 February 2022, Santos submitted to NOPSEMA “Revision 3” of its environment plan that was dated 11 February 2022 (Drilling EP) and, on 14 March 2022, NOPSEMA’s delegate accepted the Drilling EP for the purposes of the Regulations.[10]

Mr Dennis Murphy Tipakalippa is an elder, senior law man and traditional owner of the Munupi clan, who lives, and has always lived, on the Tiwi Islands and within Munupi country.[11] The Munupi clan is one of the 8 clans that comprise the traditional owners of the Tiwi Islands.[12] The traditional land of the Munupi clan is the geographically closest land to the Operational Area.[13] 

Mr Tipakalippa sought judicial review of the decision of NOPSEMA’s delegate to accept the Drilling EP pursuant to s 5(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth). That application for judicial review resulted in the First Instance Decision.

The primary claim under Mr Tipakalippa’s judicial review application was that he, the other Munupi clan members and the other Tiwi Islands traditional owners were not consulted by Santos in the course of its preparation of the Drilling EP, contrary to the requirements of the Regulations. Mr Tipakalippa argued that the Regulations required Santos to consult with him, the other Munupi clan members and the other Tiwi Islands traditional owners because they have “sea country” in the Timor Sea, including the parts of the Timor Sea in which the Operational Area was located, which meant that they had “interests” for the purposes of the consultation requirements of the Regulations.

In essence, Mr Tipakalippa argued in his primary claim that such failure by Santos to consult with him, the other the Munupi clan members and the other Tiwi Islands traditional owners meant that NOPSEMA could not have been reasonably satisfied that the Drilling EP demonstrated that the consultation required by the Regulations had been carried out by Santos.

In the First Instance Decision, Bromberg J ultimately accepted Mr Tipakalippa’s primary claim and found that NOPSEMA could not have been reasonably satisfied that the Drilling EP demonstrated that Santos had undertaken the consultation required by the Regulations.[14] Accordingly, Bromberg J set aside the decision of NOPSEMA’s delegate to accept the Drilling EP.

Santos appealed the decision of Bromberg J in the First Instance Decision and NOPSEMA (the second respondent in the Tipakalippa Decision) supported that appeal.

3. The Tipakalippa Decision

As mentioned, the Tipakalippa Decision concerned Santos’s appeal of the decision of Bromberg J at first instance. The primary issue in the Tipakalippa Decision was the meaning of “functions, interests or activities” within reg 11A(1)(d) and whether Mr Tipakalippa and the other Munupi clan members had “interests” within the meaning of that regulation such that Santos was required to consult with them in preparing the Drilling EP.

Kenny and Mortimer JJ gave a joint judgment in the Tipakalippa Decision, with Lee J giving separate reasons. All justices dismissed Santos’s appeal and upheld Bromberg J’s orders in the First Instance Decision.

3.1     Relevant Legislative Provisions

Before discussing the decision of the Full Court in the Tipakalippa Decision, it is pertinent to set out the relevant provisions of the Regulations.

While the Regulations are in force as at the time of writing,[15] the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2023 (Cth) (the 2023 Regulations) have been made and are set to commence and replace the Regulations on and from 10 January 2024. Set out at the end of this article is a table detailing the relevant provisions of the Regulations and the corresponding provisions in the 2023 Regulations. While the drafting of the corresponding provisions of the 2023 Regulations has been amended in certain respects, those provisions have substantially the same effect as the relevant provisions of the Regulations.

Regulation 3 sets out the objects of the Regulations, which include ensuring that any petroleum activity is carried out in a manner consistent with the principles of ecologically sustainable development set out in s 3A of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act). Section 3A of the EPBC Act provides that the principles of ecologically sustainable development include that decision-making processes should effectively integrate both long-term and short-term economic, environmental, social and equitable considerations and the principle of intergenerational equity. 

Regulation 4 defines “environment” to include ecosystems and their constituent parts, including people and communities, the heritage value of places, and social, economic and cultural features.

Regulation 6 provides that a petroleum titleholder commits an offence of strict liability if it undertakes a petroleum activity and there is no environment plan in force for that activity.[16]

At the time of the First Instance Decision and the Tipakalippa Decision, Santos and its joint venture partners were “petroleum titleholders” (being the holders of NT/L1), and the drilling and completion activities the subject of the Drilling EP were “petroleum activities”, in each case within the meaning of the Regulations.

Regulation 9(1) provides that, before a petroleum titleholder commences a petroleum activity, it must submit an environment plan for that activity to NOPSEMA.

Once an environment plan has been submitted by a petroleum titleholder to NOPSEMA, reg 10 requires and entitles NOPSEMA and the petroleum titleholder to undertake certain steps before NOPSEMA is ultimately required to accept (whether in whole or part or subject to limitations or conditions) or reject the environment plan (including as may have been re-submitted by the petroleum titleholder).

Under reg 10, in order for NOPSEMA to accept an environment plan in full and without such acceptance being subject to any limitations or conditions, NOPSEMA must be reasonably satisfied that the environment plan meets the criteria set out in reg 10A.[17] 

The criteria set out in reg 10A(g) are that the environment plan must demonstrate that:

1. the petroleum titleholder has carried out the consultations required by reg 11A; and
2. the measures (if any) that the petroleum titleholder has adopted, or proposes to adopt, because of the consultations are appropriate.

Regulation 11A(1) in effect requires a petroleum titleholder to, in the course of preparing an environment plan, consult each person who is a “relevant person”. Regulation 11A(1)(d) has the effect that a person or organisation whose “functions, interests or activities” may be affected by the activities to be carried out under the relevant environment plan is a “relevant person”.

Regulation 11A also provides that a petroleum titleholder must, in relation to its consultation with a relevant person:

1. give the relevant person sufficient information to allow the relevant person to make an informed assessment of the possible consequences of the applicable petroleum activities on the relevant person’s functions, interests or activities; and
2. allow the relevant person a reasonable period for the consultation.[18]

3.2     The Meaning of “Functions, Interests or Activities”

At the outset of their reasons on the proper meaning of “functions, interests or activities” in reg 11A(1)(d), Kenny and Mortimer JJ stated that, because the Regulations establish a substitute decision-making process for the purposes of the EPBC Act, the Regulations must be construed consistently with the EPBC Act.[19] This finding is important given there is currently a dearth of case law considering the interpretation of the Regulations and it gives some guidance in the event of future issues in respect of the interpretation of the Regulations.

Kenny and Mortimer JJ opined that the phrase “functions, interests or activities” in reg 11A(1)(d) should be construed broadly, as such a construction best promotes the objects of the Regulations, and in so doing rejected Santos’s proposed narrow construction of that phrase.[20] In rejecting Santos’s proposed narrow construction, Kenny and Mortimer JJ noted that the proposed narrow construction would not promote the principles of ecologically sustainable development set out in s 3A of the EPBC Act.

It is apparent from the reasons of Kenny and Mortimer JJ that, in finding that the phrase “functions, interests or activities” should be construed broadly, their Honours placed significant weight on the references to “people and communities”, “the heritage value of places” and “social, economic and cultural features” in reg 4 and to “environmental, social and equitable considerations” and “inter-generational equity” in s 3A of the EPBC Act.

Indeed, in this regard, Kenny and Mortimer JJ stated, “whether and to what extent offshore petroleum…activity is to be permitted depends, amongst other things, on the potential effect of the activity on people and communities, on equitable concerns (including the principle of inter-generational equity) as well as on the natural world.”[21]

Lee J also accepted that the phrase “functions, interests or activities” in reg 11A(1)(d) should be broadly construed.[22]

All Justices opined that, even though “functions, interests or activities” in reg 11A(1)(d) is a composite phrase, each concept has a distinct meaning and each must be given work to do.[23] The Justices made the following findings in respect of each of those concepts:

1. Kenny and Mortimer JJ found that “functions” in reg 11A(1)(d) refers to a power or duty to do something.[24] Similarly, Lee J found that “functions” in reg 11A(1)(d) refers to an existing power or duty pertaining to an office or role;[25]
2. all Justices found that the reference to “activities” in reg 11A(1)(d) is not a reference to an “activity” (and thereby a “petroleum activity” or “greenhouse gas activity”) as defined in reg 4;[26]
3. Lee J found that the reference to “activities” in reg 11A(1)(d) has its ordinary English meaning, being a thing that a person or group does;[27]
4. Kenny and Mortimer JJ found that the reference to “interests” in reg 11A(1)(d) should not be narrowly construed nor confined to legal interests.[28] Instead, Kenny and Mortimer JJ found that the reference to “interests” in reg 11A(1)(d) should conform to the accepted concept of “interest” in other areas of public administrative law.[29] In this regard, Kenny and Mortimer JJ found that the reference to “interests” in reg 11A(1)(d) includes “any interest possessed by an individual whether or not the interest amounts to a legal right or is a proprietary or financial interest or relates to reputation”;[30] and
5. similarly, Lee J found that the reference to “interests” in reg 11A(1)(d) should not be narrowly construed nor confined to legally cognisable interests.[31] Lee J found that a person or organisation will have an “interest” within the meaning of reg 11A(1)(d) if that person or organisation has “an interest (in its usual sense) [that] is readily recognisable to the titleholder as being an existing interest over and above a member of the public at large”.[32]  

3.3     Did Mr Tipakalippa and the Other Munupi Clan Members Have “Interests”?

In their lead judgment, Kenny and Mortimer JJ considered the nature of the interests claimed by Mr Tipakalippa and the other Munupi clan members.

Kenny and Mortimer JJ found that Mr Tipakalippa and the other Munupi clan members had traditional connection to at least part of the sea, and the marine resources, within what the Drilling EP described as the “existing environment that may be affected” (the EMBA).[33] The EMBA was in effect the area of the environment that may have been contacted by hydrocarbons following their release (or spill) from the Operational Area.[34] In coming to this conclusion, Kenny and Mortimer JJ noted that the Drilling EP and its attachments contained material acknowledging:

1. the traditional connection of Tiwi Islanders and other First Nations groups to the sea and marine resources within the EMBA; and
2. the potential adverse effect of the petroleum activities the subject of the Drilling EP on marine resources that were integral to Tiwi Islanders’ traditional culture and custom.[35]

After determining that Mr Tipakalippa and the other Munupi clan members had traditional connection to the sea and marine resources within the EMBA, Kenny and Mortimer JJ considered whether those interests were “interests” within the meaning of reg 11A(1)(d).

Kenny and Mortimer JJ opined that whether the interests of Mr Tipakalippa and the other Munupi clan members were “interests” within the meaning of reg 11A(1)(d) was a “matter of fact and degree”.[36] Their Honours went on to find that the interests of Mr Tipakalippa and the other Munupi clan members were “immediate and direct” and “well known to contemporary Australian law”.[37]

Ultimately, Kenny and Mortimer JJ found that the interests of Mr Tipakalippa and the other Munupi clan members were “interests” within the meaning of reg 11A(1)(d).[38] Their Honours also further found that “interests” within the meaning of reg 11A(1)(d) include “cultural and spiritual interests of the kind described in the sea country material described in the Drilling EP and attachments”. Accordingly, their Honours confirmed more broadly that the connection of traditional owners to sea country is an “interest” within the meaning of reg 11A(1)(d).

This finding is important given that Kenny and Mortimer JJ had, earlier in their reasons, acknowledged that Mr Tipakalippa and the other Munupi clan members did not have any rights in respect of the sea and marine resources within the EMBA by virtue of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) or the Native Title Act 1993 (Cth).

Lee J also found, for similar reasons, that the interests of Mr Tipakalippa and the other Munupi clan members were “interests” within the meaning of reg 11A(1)(d).[39] 

3.4     Workability of the Broad Meaning of “Interests”

After finding that the interests of Mr Tipakalippa and the other Munupi clan members were “interests” within the meaning of reg 11A(1)(d), Kenny and Mortimer JJ went on to consider the arguments raised by Santos and NOPSEMA to the effect that adopting such a construction of “interests” would make reg 11A(1) “unworkable” and such unworkability supported a contrary construction being adopted.

Santos and NOPSEMA had argued that the construction of “interests” in reg 11A(1)(d) must “permit the ready ascertainment of persons who have those interests”.[40] While Kenny and Mortimer JJ accepted that persons with “interests” must be “reasonably capable of ascertainment”, their Honours concluded that such acceptance did not derogate from their preferred construction of “interests”.[41] In this regard, Lee J opined that “interests” within the meaning of reg 11A(1)(d) must be readily ascertainable.[42]

Kenny and Mortimer JJ opined that the case law on s 251B of the Native Title Act 1993 (Cth) demonstrated that there was nothing unworkable about a construction of “interests” in reg 11A(1)(d) which meant that First Nations peoples who have a traditional connection to the sea and marine resources that may be affected by Santos’s activities under the Drilling EP have “interests” within the meaning of reg 11A(1)(d).[43]

While not directly addressing the “unworkability” arguments raised by Santos and NOPSEMA when the statement was made, Lee J noted that if the proper construction of reg 11A(1)(d) “causes what is perceived to be unacceptable expense and delay…the solution is not to distort its construction by adopting an unprincipled and restricted reading of what constitutes ‘interests’, but rather regulatory reform to provide greater specificity as to what is required…” [emphasis added]. [44]  

3.5     Practical Guidance in Respect of Consultation

Throughout their respective reasons, Kenny, Mortimer and Lee JJ made a number of statements that are useful to a petroleum titleholder in understanding its consultation obligations under reg 11A, including:

1. the titleholder will have some decisional choice in determining how to fulfil its consultation obligations;[45]
2. the consultation undertaken by the titleholder must be genuine, and affected authorities, organisations and individuals must be given a reasonable period to identify the effect of the proposed activities on their functions, interests or activities and to respond to the titleholder with concerns;[46]
3. the purpose of the consultation is to ensure that the titleholder has ascertained, understood and addressed all the environmental impacts and risks that might arise from its proposed activities and the titleholder should use the consultation as an opportunity to receive information that it might not otherwise have received from others affected by its proposed activities;[47]
4. the consultation required will vary with the particular circumstances – consultation that is superficial or token will not be sufficient and a titleholder should not assume that sending an email with an information package attached, and following up with one or more further emails, will be sufficient;[48] and
5. where interests are held communally, in accordance with tradition, the method of consultation will need to reasonably reflect the characteristics of the affected interests (and, in this regard, properly notified and conducted meetings by the titleholder may be sufficient).[49]

4. Developments after the Tipakalippa Decision

Following the Tipakalippa Decision, NOPSEMA conducted a stakeholder briefing session in December 2022 that drew over 1,400 participants both in person and online. At that time, NOPSEMA also released an interim guideline on environment plan consultations and requested feedback on that guideline until March 2023.

In May 2023, NOPSEMA released its updated guideline on environment plan consultations.[50] That guideline addresses some of the stakeholder feedback that NOPSEMA received and incorporates the relevant findings of Kenny, Mortimer and Lee JJ in the Tipakalippa Decision.

Shortly after it published its updated guideline in May 2023, NOPSEMA released a report in respect of the stakeholder feedback that it had received.[51] That report sets out how NOPSEMA proposes to address the feedback that it received, including the feedback that was outside of the scope of the updated guideline.

In that report, NOPSEMA indicated that it would communicate to the Commonwealth Department of Industry, Science and Resources the feedback that NOPSEMA received in respect of the request for regulatory reform of reg 11A.

In late May 2023, the Australian Financial Review reported that a spokesman for the Minister for Resources, the Honourable Madeleine King MP, had told the paper that the Commonwealth Government would, later in 2023, be undertaking a review of the Regulations to address the backlog of environment plans awaiting decision by NOPSEMA caused by the Tipakalippa Decision.[52] The Commonwealth Government also indicated in the 2023-24 Federal Budget papers that this review would be undertaken.[53]

At the time of writing, there are some 42 environment plans for petroleum activities under assessment by NOPSEMA. That backlog of environment plans suggests that the Tipakalippa Decision may have resulted in NOPSEMA becoming more sensitive to the risk of being found to have not properly discharged its duties under the Regulations in respect of its acceptance of an environment plan, whilst at the same time making it more difficult for a petroleum titleholder to demonstrate that it has conducted the consultations required by reg 11A. That latter aspect can be seen in petroleum titleholders having resorted to advertising on radio and in newspapers as part of endeavouring to identify all “relevant persons” and satisfy their consultation obligations. 

It is interesting to note that 4 of the 42 environment plans under assessment by NOPSEMA at the time of writing relate to petroleum exploration permits under the Act.[54] It is not clear how the National Offshore Petroleum Titles Administrator will deal with any applications for suspension or suspension and extension of any of the relevant petroleum exploration permits arising because of delays in NOPSEMA’s acceptance of the applicable environment plan (including due to further consultation having to be undertaken for the purposes of the applicable environment plan as a result of the Tipakalippa Decision). This may be a particular issue where the activities to which the applicable environment plan relates are in the primary term of the relevant petroleum exploration permit.

It is understood that, in late June 2023, NOPSEMA convened a National Summit on Consultation on Offshore Petroleum Activities with First Nations Peoples at which First Nations groups and industry were represented with the summit’s purpose to “discuss challenges related to consultation on environmental plans and agree workable solutions that deliver meaningful and appropriate consultation while managing impost and cost to all involved”.

In August 2023, Senator Dorinda Cox introduced into the Parliament of Australia, as a private members’ bill, the Protecting the Spirit of Sea Country Bill 2023 (Cth), which proposes amendments to the Act and the Regulations to legislate the principles of the First Instance Decision and the Tipakalippa Decision. It does not appear that the Bill has the support of the Commonwealth Government.

At the time of writing, the Commonwealth Government has not publicly released any material in relation to the review of the Regulations mentioned above.

5. Potential Implications for the Offshore Electricity Infrastructure Regime

The Offshore Electricity Infrastructure Act 2021 (Cth) (the OEI Act) and the Offshore Electricity Infrastructure Regulations 2022 (Cth) (the OEI Regulations) have come into force to allow for the development of renewable energy projects in Commonwealth offshore waters.

Under the OEI Act, a project proponent is unable to be granted a commercial licence and develop an offshore renewable energy project unless the proponent has had a management plan approved by the Offshore Infrastructure Regulator.[55]

The OEI Act specifically allows the OEI Regulations to include regulations with respect to the consultation that is required to be undertaken before a management plan can be approved and a management plan having to address any consultation requirements and the outcomes of any consultation.[56]

At the time of writing, the Commonwealth Department of Climate Change, Energy, the Environment and Water is developing the regulations to be included in the OEI Regulations that will relate to management plan requirements.

It was, however, envisaged in the Explanatory Memorandum for the Bill that became the OEI Act that consultation requirements will need to be addressed in the development of a management plan to ensure that other users of the area in which the relevant activities are to be undertaken have been appropriately considered and that their concerns have been taken into account by a project proponent.[57]

It will be interesting to see whether the Commonwealth Government adopts a consultation regime for management plans under the OEI Regulations that is similar to the consultation regime for offshore petroleum activities established under regs 10A and 11A.

Given that the OEI Act and OEI Regulations govern activities in Commonwealth offshore waters (including the development of offshore renewable energy projects) much like the Regulations, it would not be a surprise if the Commonwealth Government adopted a consultation regime similar to that under regs 10A and 11A. If that is the case, then the Tipakalippa Decision may be relevant to consultations that are required to be undertaken under the OEI Regulations in order for a project proponent to obtain the Offshore Infrastructure Regulator’s approval of a management plan.

6. Comparison Table

Regulations	2023 Regulations
Regulation 3	Section 4
Regulation 4	Section 5
Regulation 6	Section 17
Regulation 9(1)	Section 26(1)
Regulation 10	Section 33
Regulation 10A(g)	Section 34(g)
Regulation 11A	Section 25
Regulation 11A(1)	Section 25(1)
Regulation 11A(1)(d)	Section 25(1)(d)
Regulation 11A(2)	Section 25(2)
Regulation 11A(3)	Section 25(3)
Regulation 11A(4)	Section 25(4)