Unexplained gas funding timeline a ‘very dark day for the Commonwealth’, Federal Court judge says

Lawyers for environmental advocates have questioned whether the federal government expedited an agreement to provide funding to a gas company in a bid to hinder legal action challenging the grant.

Key points:The validity of $21 million in grants for gas exploration is being challenged in the Federal CourtLawyers on Tuesday questioned whether the timeline for formalising the grants stymied their legal actionThey say the effects of climate change were overlooked and the grants are invalid

Resources Minister Keith Pitt and Imperial Oil and Gas are currently before the Federal Court over $21 million in grants awarded to the gas company to subsidise three exploration wells in the Beetaloo Basin.

The Environment Centre NT (ECNT), represented by the Environmental Defenders Office, is challenging the validity of the federal government grants.

One of their arguments on Tuesday related to the timeline of the agreement to provide the funding.

The court has previously heard the Commonwealth told the ECNT a formal agreement with Imperial was still weeks away on September 3 — but entered into the agreement less than a week later, on September 9.

Representing the ECNT, Oliver Jones told the court the contracts were entered into on the same day the ECNT informed the Commonwealth that unless an undertaking was given not to formalise the agreements before the court matter was finalised, interim relief would be sought.

He said his team had been provided with no explanation for the urgency, noting the grant had received approval in June.

"Everything pointed in favour of not entering into the contracts on that date and nothing has been provided by the Commonwealth that would justify entering into them on that date," he said.

The lawyers invited the court to consider whether the Commonwealth formalised the contracts when it did to "stymie the applicant's claims in this litigation".

"There is no evident or intelligible justification for what was done," Mr Jones said.

"For that reason, it was legally unreasonable."

Justice John Griffiths labelled the formalisation of the agreement on September 9 "a very dark day for the Commonwealth, particularly in the absence of any explanation now being provided to the court".

Minister 'failed to consider risks of climate change'

On the first day of the two-day hearing, ECNT representatives argued the grants were invalid because Mr Pitt failed to consider the risks of climate change before awarding them.

The lawyers have argued that such considerations were a necessary part of the reasonable enquiries the minister should have made to determine whether it was a proper use of public money under government spending legislation.

Perry Herzfeld SC, also acting for the ECNT, told the court a committee and a federal department assessed the grant as a proper use of Commonwealth resources, but that climate change considerations were overlooked, despite the government having relevant material at hand.

In support of their case, the lawyers pointed to expert evidence modelling the impacts of climate change and developing the Beetaloo Basin, including one report that concluded it was inconsistent with Australia's climate commitments.

"It was just not reasonable for there to be no inquiry into these matters at all," Mr Herzfeld said.

"There's simply not a word in the material before the minister which suggests that there was any thought given to whether to make enquiries on these matters."

The lawyers have also argued the decision was based on incorrect information, telling the court Mr Pitt was informed the grants would generate about $70 million in additional spending, when in fact that spending would have been spent anyway, and was simply being brought forward.

An aerial view of an exploration well in the Northern Territory's Beetaloo Basin on a patch of cleared land surrounded by bush
The grants were awarded as part of a broader plan to accelerate development in the Beetaloo Basin.(Supplied: Empire Energy)

Tom Howe QC, appearing on behalf of the minister, told the court that the legislation at the centre of the ECNT's argument did not apply to Mr Pitt's decision because it related to financial management and not policy-making.

Mr Howe also said two other key matters were whether the reasonable enquiries the minister should have made was a subjective or an objective measure, and whether failing to make those enquiries would invalidate the decision.

Those arguments will be heard in greater detail when the hearing continues tomorrow.

The grants to Imperial were part of a $50 million exploration program unveiled as part of a $224 million plan to accelerate production in the Beetaloo Basin — a key plank of the federal government's economic recovery from coronavirus.

The ECNT has called the two-day hearing a landmark court case that places unprecedented scrutiny on the public funding of fossil fuel companies in Australia.

Posted 2 Nov 20212 Nov 2021Tue 2 Nov 2021 at 7:44am, updated 2 Nov 20212 Nov 2021Tue 2 Nov 2021 at 12:36pmShareCopy linkFacebookTwitterArticle share optionsShare this onFacebookTwitterLinkedInSend this byEmailMessengerCopy linkWhatsApp


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