Court declares NT fracking contracts invalid but minister claims vindication

The Federal Court has ruled the Morrison government’s decision to award $21 million in grants to a gas company to conduct fracking in the Northern Territory was invalid, but the minister at the centre of the dispute has also claimed the legal decision as a victory.

Justice John Griffiths’ ruling on Thursday that the contracts Resources and Water Minister Keith Pitt signed means the government must reassess its plans to open up the Beetaloo Sub-basin – a slab of land about 500 kilometres south-east of Darwin and 28,000 square kilometres in size – to shale gas exploration.

The gas mining project in the Beetaloo Sub-basin in the Northern Territory.

The government this year awarded grants to Imperial Oil & Gas for three exploratory drilling wells in the region, and argued the project had the potential to create 6000 jobs and generate billions of dollars of economic activity. The NT government has also approved plans for gas projects in the area.

The Environment Centre NT instigated legal action with the aim of preventing the drilling projects going ahead, based on concerns fracking in the Beetaloo would emit greenhouse gases and undermine Australia’s obligations to comply with the Paris Agreement.

That challenge was vindicated on Thursday when Justice Griffiths ruled Mr Pitt’s decision to award the grants to the gas company was invalid, and declared the contracts void.

In his judgment, Justice Griffiths wrote the contracts signed in September were “legally unreasonable” because the Commonwealth knew environment groups had sought an undertaking from Mr Pitt not to award the grants while court proceedings were under way.

Resources and Water Minister Keith Pitt.Credit:Alex Ellinghausen

Environment Centre NT co-director Kirsty Howey said the finding was “extraordinary” as Justice Griffiths was “scathing of the way Minister Pitt conducted himself” in the grants process. She said the public had an expectation taxpayer funds would not be used to support projects that would “accelerate climate catastrophe”.

“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,” Dr Howey said.

“The Northern Territory is already suffering significantly from the impacts of climate change, and this will only worsen unless we take drastic action.”

But Mr Pitt’s office also claimed Justice Griffiths’ ruling as a vindication of the government’s push for fracking in the Beetaloo, by highlighting the judge’s dismissal of several grounds of the legal challenge.

Mr Pitt said in a statement the way the grants program was written and the approval for funding to Imperial Oil & Gas were both ruled valid by the judge, “and we welcome that decision so that we can move forward with the program”.

“The Beetaloo Basin has enormous potential to deliver the gas Australia needs for the future,” Mr Pitt said.

A spokesman for the minister said the decision to sign contracts with the gas company while court proceedings were under way was “an administrative error”, and that provided future grants were awarded correctly, the government was “absolutely committed” to the Beetaloo project.

While Thursday’s ruling was a win for environment groups, Justice Griffiths dismissed grounds raised by the Environment Centre NT, which included arguments Mr Pitt failed to comply with the Public Governance, Performance and Accountability Act and that he acted on erroneous advice before he approved the contracts.

Justice Griffiths also ruled Mr Pitt did not have to consider the risks of climate change when awarding the grants.

A trial in November was told that reports written by an independent economist and an expert in energy and environmental policy found that fracking in the Beetaloo would increase Australia’s greenhouse gas emissions by 13 per cent on the country’s 2020 levels, and fail to generate any economic benefit.

Dr Howey conceded her organisation would have loved a ruling in its favour on environmental grounds, but said Justice Griffiths “didn’t close the door” to those concerns. She expected the case to return to the courts should the government attempt to award more funding.

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