Media release: Federal court rules Federal Resources Minister’s grant to fracking company invalid
The Federal Court has found that Federal Resources Minister Keith Pitt’s decision to grant $21 million of public money to private company Imperial Oil & Gas to pursue fracking in the Beetaloo Basin was invalid.
Federal Court Justice Griffiths found it was “legally unreasonable” for the Minister to enter into contracts over the grants while they were the subject of court proceedings, an action which breached model litigation obligations.
However, the court found that in this particular case, Federal Resources Minister Keith Pitt did not need to consider the risks of climate change when deciding to grant the public money to private company Imperial Oil & Gas to pursue limited exploration in the Beetaloo Basin.
It was found that the greenhouse gas emissions from the seven wells for which the grant was awarded were not significant, due to being solely for exploration for fracking.
“This doesn’t close the door on the scrutiny of fossil fuel grants,” says Kirsty Howey, Co-Director of the Environment Centre NT.
“Fossil fuel subsidies are not a reasonable use of public money. Under Australia’s commitment to the global Glasgow Climate Pact, we need to phase out funding of new oil, gas and coal projects.
“The Northern Territory is already suffering significantly from the impacts of climate change, and this will only worsen unless we take drastic action. Our own Environment Minister recently said that the Northern Territory may become uninhabitable for humans due to climate change. The public has an expectation that taxpayer money will not be used to accelerate climate catastrophe by funding projects that will release vast amounts of emissions, without due consideration of these risks.”
“Unfortunately, we're being left behind in the global renewables transition by our government, which insists on propping up polluting fossil fuel projects with taxpayers’ funds.”
Elaine Johnson, Director of Legal Strategy at EDO says that:
“This case was critically important and put fossil fuel subsidies in the spotlight.
“The findings reinforced that Federal Ministers have a legal obligation to make reasonable enquiries about the proper use of public money when making funding decisions of this nature,"In this case, the court found those reasonable enquiries didn’t extend to climate risk given the project does not involve extensive gas extraction and production.
“Importantly, the door has been left open for climate risks to be considered in other decisions around the use of public funds for fossil fuel projects.”
“Fracking in the Beetaloo Basin would see a significant increase in global emissions, so it is critically important that government is held accountable for any decisions to use public funds for new gas in the Beetaloo.
“This decision underscored the primacy of the rule of law, highlighting the need for the Federal Government to act appropriately and respectfully when litigation is on foot.”
In July 2021, Minister Keith Pitt announced that the first grants from the $50 million Beetaloo Cooperative Drilling Program would go to Imperial Oil and Gas to support three new exploration wells “to help accelerate development of gas projects in the Northern Territory.” Imperial Oil and Gas is a wholly owned subsidiary of the publicly listed Empire Energy.
On 29 July 2021, the Environment Centre NT (ECNT), represented by the Environmental Defenders Office (EDO), commenced judicial review proceedings in the Federal Court challenging the lawfulness of the Beetaloo Cooperative Drilling Program and the grants to Imperial.
The Court heard in November that fracking the Beetaloo Basin could lead to a 13% increase in Australia’s annual greenhouse gas emissions on 2020 levels, and fail to generate any economic benefit.
EDO argued on behalf of ECNT that the Minister was required to make reasonable inquiries into a range of matters before giving Imperial a large amount of taxpayer money, including how exploitation of the Beetaloo sub-basin would impact climate change and Australia’s ability to meet its Paris Agreement obligations.
Grants under this program are subject to the Public Governance, Performance and Accountability Act 2013 (Cth) which requires that the Minister not approve the expenditure unless he is reasonably satisfied that it is an efficient, effective, economical, and ethical use of public money.
For further comment, contact Kirsty Howey, 0488 928 811