Federal court hears climate change overlooked in $ 21 million fracking grant deal as lawyers question timeline

Advocates for environmental advocates have questioned whether the federal government accelerated an agreement to provide financing to a gas company in an attempt to prevent lawsuits that challenged the grant.

Resource Secretary Keith Pitt and Imperial Oil and Gas are currently before the federal court over $ 21 million in grants awarded to the gas company to subsidize three exploration wells in the Beetaloo Basin.

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

One of their arguments on Tuesday concerned the timeline of the deal to raise the funding.

The court has previously heard the Commonwealth told the ECNT that 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.

As a representative of the ECNT, Oliver Jones told the court that the contracts were concluded on the same day as the ECNT informed the Commonwealth that unless pledged not to formalize the agreements before the trial was over, interim remedies would be sought.

He said his team had not received any explanation for the urgency, noting that the grant had been approved in June.

The lawyers urged the court to consider whether the Commonwealth formalized the contracts, as it did so to “mitigate the applicant’s claims in this lawsuit”.

“There is no obvious or understandable justification for what was done,” Mr Jones said.

“For that reason, it was legally unreasonable.”

Judge John Griffiths described the formalization of the September 9 agreement as “a very dark day for the Commonwealth, especially in the absence of any explanation now being given to the court”.

Minister ‘failed to consider risks of climate change’

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

The lawyers have argued that such considerations were a necessary part of the reasonable inquiries the Minister should have made to determine whether there was a proper use of public funds under state expenditure law.

Perry Herzfeld SC, who also works for the ECNT, told the court that 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 that modeled the effects of climate change and the development of the Beetaloo Basin, including a report concluding that it was in breach of Australia’s climate commitments.

“It was just not fair that there was no investigation into these matters at all,” Mr Herzfeld said.

“There is simply not a word in the material for the minister to suggest that consideration had been given to making inquiries about these matters.”

Lawyers have also claimed that the decision was based on incorrect information, telling the court that Mr Pitt was informed that the grants would generate about $ 70 million in additional expenses, when in fact they would have been used anyway, and were simply performed.

An aerial photo of an exploration well in the northern territory's Beetaloo basin on a spot of cleared land surrounded by shrubs
The grants were awarded as part of a broader plan to accelerate development in the Beetaloo Basin.(Delivered: Empire Energy)

Tom Howe QC, acting on behalf of the Minister, told the court that the legislation at the heart of the ECNT’s argument did not apply to Mr Pitt’s decision because it concerned financial management and not policy making.

Mr Howe also said that two other key issues were whether the reasonable inquiries the Minister should have made were a subjective or objective measure and whether failure to carry out those inquiries would invalidate the decision.

These arguments will be heard in more detail when the hearing continues tomorrow.

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

The ECNT has called the two-day hearing a landmark trial that sets out an unprecedented inquiry into the public funding of fossil fuel companies in Australia.

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