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Bennett, Michael --- "Adjusting Collective Limits on the Use of Natural Resources: Approaches in Australian Fisheries and Water Law" [2015] UTasLawRw 4; (2015) 34(1) University of Tasmania Law Review 68

  • I INTRODUCTION

  • Adjusting Collective Limits on the Use of

    Natural Resources: Approaches in

    Australian Fisheries and Water Law

    MICHAEL BENNETT[1]

    Abstract

    There is a tension between the need for natural resource managers to have flexibility to adjust collective limits on the use of a resource and the interests of individual entitlement holders in reliable access to that resource. This article considers how this tension has been addressed in Australian fisheries and water resources legislation. The article focuses on share entitlement regimes, under which resource users are entitled to a share of the resource made available under periodic determinations. It considers two issues that affect how the flexibility-reliability tension plays out: first, how collective limits are adjusted; and second, whether there are any circumstances in which reductions in collective limits may be compensable, either under section 51(xxxi) of the Constitution, or fisheries and water resources legislation. The article argues that the best balance between collective flexibility and reliability of individual entitlements is likely to be achieved through statutory safeguards concerning how collective limits are adjusted, rather than through compensation for reductions in collective limits. Compensation requirements, such as those promoted by the Intergovernmental Agreement on a National Water Initiative, risk tipping the balance too far in favour of individual interests and may undermine the sustainable management of the resource.

    I INTRODUCTION

    Limits on consumption are heretical at the scale of whole economies, but frequently applied in the management of particular natural resources. It is common, for example, for total allowable catches to be set under fisheries legislation and for extraction limits to be set under water resource management legislation. Collective limits on use of other natural resources, including the environment’s capacity to absorb pollution, are sometimes constrained in a similar way.

    Limits of this kind are important, as they have the potential to help solve one of the great challenges in environmental policy: how to manage the cumulative impacts of human activities.[2] The formal identification of collective limits under law is also important because it ensures that these limits are made explicit,[3] exposed to the public and open to judicial review.

    While collective limits on the use of natural resources have considerable benefits, their use as a regulatory technique raises a host of design questions. This article concerns one such question: what should the law say about the adjustment of those limits and the implications for individual entitlement holders?

    This is a challenging issue because there is a tension between two competing needs: on the one hand, the need for flexibility to adjust collective extraction and on the other the need for reliability of individual entitlements. The article explores how that tension has been addressed in and under Australian fisheries and water resources legislation.

    The article is structured in the following way. Part II begins by considering the relationship between collective limits and individual entitlements. It focuses on three different legislative design approaches: fixed entitlement regimes in which adjustment of collective limits does not affect entitlements; traditional licensing regimes in which adjustment of those limits provides the basis to vary licences on a case-by-case basis; and share entitlement regimes in which the quantity of the resource that may be taken under an entitlement varies proportionately in accordance with periodic determinations. The article reviews the literature on the benefits of the share entitlement model, including the benefit of avoiding over-allocation problems that can arise under the other approaches, but also notes the risks for entitlement holders that their access to the resource may be reduced substantially by changes in collective limits.

    Part III then considers the implementation of the share entitlement model in Australian fisheries and water resources law, with a particular focus on how collective limits are adjusted. This leads into Part IV, which considers the role of constitutional and statutory guarantees of compensation as a safeguard against the risk of reductions in collective limits in share entitlement regimes. Part V reflects on these approaches, and in particular on the role of compensation versus statutory safeguards as to how collective limits are adjusted, in trying to find the best balance between collective flexibility and the reliability of individual entitlements.

    One final comment needs to be made on the scope of the article: namely, that it does not deal with legislative design issues related to the initial introduction of collective limits or the associated transition from one set of access entitlements to another. While it is acknowledged that this is an important question in fisheries and water law, and one that has prompted a great deal of litigation, it is outside the scope of this article.[4] The article looks past the initial transition phase to consider the adjustment of collective limits on an ongoing basis.

    II THE RELATIONSHIP BETWEEN COLLECTIVE LIMITS AND INDIVIDUAL ENTITLEMENTS

    There are a number of ways in which the relationship between collective limits and individual entitlements can be defined. At one extreme there might be no relationship at all: that is, entitlements will continue to authorise the same level of access to the resource that they authorised before the collective limits were adjusted. This ‘fixed entitlement’ approach offers a high degree of reliability for individual entitlement holders but little flexibility to adjust collective use of the resource. If a resource is fully allocated the result will be over-allocation: that is, the level of authorised resource use will exceed the desirable level of collective extraction. A government that wishes to reduce use of the resource may then need to wait for entitlements to expire or embark on an expensive buy-back of entitlements.[5]

    New Zealand found itself in the latter situation in the late 1980s. Under amendments made to its fisheries laws in 1986, fishers had been granted perpetual fixed entitlements to catch a specified weight of fish. When catch limits were reduced, the government spent $NZ42.4 million to buy back entitlements in order to address the resulting over-allocation.5 Australian fisheries and water laws do not take the approach of granting long term, fixed entitlements in this way, and indeed New Zealand abandoned this approach in 1990.6

    A second approach, which could be called the ‘traditional licensing approach’, is to have a loose relationship between collective limits and individual entitlements. A change in a collective limit may provide the basis to amend individual entitlements but this will require the exercise of a Ministerial discretion on a case-by-case basis.

    This approach can be seen in older water legislation, such as the Rights in Water and Irrigation Act 1914 (WA), which started out with a simple licensing regime and later had water planning provisions grafted on. Under this Act, the Minister may amend individual licences, including the volume of extraction authorised by a licence, where there is ‘a serious inconsistency’ between a licence and a water resource management plan.7 This discretion could be enlivened, for example, by a plan amendment that reduces a cap on extraction from a particular groundwater management area.

    While the traditional licensing approach is more flexible than the fixed entitlement approach, the need for case-by-case licence amendments and the prospect of multiple merits appeals by licensees8 can discourage resource managers from addressing over-allocation. There is also a risk that different licensees will be treated differently and that, as a result, some will unfairly bear a greater part of the burden of solving the overallocation problem.

    The traditional licensing approach can be contrasted with a ‘share entitlement’ approach under which there is a more direct relationship between collective limits and individual entitlements.9 Under this approach, long term or perpetual entitlements are granted to a share of the resource. The amount of the resource that may be taken under each individual entitlement depends upon periodic assessments of the appropriate level of extraction for the resource as a whole. To take a simple example, a share entitlement regime for a fishery may provide that

    Note also that a smaller amount of quota was compulsorily acquired by the government, with payment of compensation: Ibid and see Fisheries Act 1983 (NZ), as amended by the Fisheries Amendment Act 1986 (NZ) s28D(4).

    6 Fisheries Amendment Act 1990 (NZ) ss 28OD, 28OE; Sissenwine and Mace, above n 5,

    151; Rick O Boyd and Christopher M Dewees, 'Putting Theory Into Practice: Individual Transferable Quotas in New Zealand's Fisheries' (1992) 5(2) Society and Natural Resources 179, 193.

    7 Rights in Water and Irrigation Act 1914 (WA) sch 1, item 24(2)(f)(i).

    8 e.g. Rights in Water and Irrigation Act 1914 (WA) s26GG(1)(e).

    9 The entitlements associated with this approach are sometimes called ‘share entitlements’ in a water context and ‘catch shares’, ‘share quotas’ or ‘proportional quotas’ in a fisheries context.

    if a total allowable catch for a fishing season is reduced by 5 per cent, the amount of the resource that can be taken under each share entitlement will also be reduced by 5 per cent. Merits review would not be available in relation to such a decision. Any challenge to the cap, and associated adjustment to the value of the underlying entitlement, would have to be by way of judicial review of the administrative decision or legislative instrument that alters the cap and could only succeed if there were an error of law or excess of jurisdiction in the decision-making process.

    While a share entitlement approach will not always be appropriate,10 it does have a number of advantages over the fixed entitlement and traditional licensing approaches. Most fundamentally, it provides a simple, fair and effective way to align the level of authorised use of the resource with collective limits. Entitlement holders understand from the outset that their access to the resource will change if those limits change. There is also a substantial consequential benefit: the greater flexibility to adjust collective extraction can give resource managers and governments the confidence to grant longer term or even perpetual entitlements. For example, New South Wales increased the term of fishing entitlements from one to ten years when it introduced fisheries share entitlements11 and the Intergovernmental Agreement on a National Water Initiative (NWI) anticipates that share entitlements to water resources will be perpetual.12 The extended term of share entitlements is good for entitlement holders. There is also evidence that this long term stake in a natural resource provides entitlement holders with an incentive to support sustainable management of the resource.13

    Notwithstanding the greater security entitlement holders are likely to have as to the term of their entitlement in a share entitlement regime, they may have concerns as to the content of that entitlement. Their access to a resource on which their livelihood may depend can vary from year to year, and in extreme case even be reduced to zero,14 by changes to collective limits.

    10

    Michael Bennett and Alex Gardner, 'Groundwater Regulation in a Drying South West' (National Centre for Groundwater Research and Training, Adelaide, 2014) 90-92.

    11

    Fisheries Management Act 1994 (NSW) s73; Michael D Young, 'The Design of FishingRight Systems—the NSW Experience' (1999) 31(2) Ecological Economics 305, 311.

    12

    Council of Australian Governments, Intergovernmental Agreement on a National Water Initiative (2004) [28].

    13

    R Quentin Grafton et al, 'Incentive-Based Approaches to Sustainable Fisheries' (2006) 63(3) Canadian Journal of Fisheries and Aquatic Sciences 699, 702. See also Young, above n 11, 307; Phillip Pagan and Lin Crase, 'Property Right Effects on the Adaptive Management of Australian Water' (2005) 12(2) Australasian Journal of Environmental Management 77, 82.

    14

    For example, the total allowable catch for gemfish in Australia's South East Trawl

    Fishery reduced from 3000 tonnes in 1988 to zero in 1993 following a stock collapse: see

    There are a number of reasons why collective limits may need to be adjusted, which have been summarised by different authors in different ways.15 For present purposes four can be identified. First, there will be variations in the abundance of the resource. For example, ocean currents may affect the productivity of a fishery or rainfall may affect the recharge of an aquifer. Second, there may be changes in the use of the resource. For example, unregulated users such as domestic bore owners may increase their use of a groundwater resource, leaving less to be extracted by regulated entitlement holders.16 Third, there may a change in government policy. This could include, for example, changes to better preserve the resource for future extractive use, to give greater weight to environmental considerations in light of changing community values or to effectively reallocate the resource from one set of users to another (e.g. from commercial to recreational fishers). Finally, there may be new information that affects any of the above three areas.17

    Given these uncertainties and risks, it is not surprising that industry bodies have lobbied for measures, including compensation requirements, which would provide them with greater security of resource access. At the same time, it can be seen why governments may resist these attempts, given that more reliability for entitlement holders will tend to mean less flexibility to adjust collective resource use in the public interest.18 In Part IV the article considers the question of compensation for changes in collective limits. Before doing so, however, Part III will give a brief outline of how Australian fisheries and water resource share entitlement regimes operate, in particular where collective limits are adjusted.

    III ADJUSTING COLLECTIVE LIMITS IN SHARE ENTITLEMENT REGIMES

    A Australian fisheries legislation

    Under Australian fisheries legislation, collective limits often take the form of periodic caps on the quantity of fish that may be taken from a

    R Connor and R Shotton, 'Are ITQs Property Rights? Definition, Discipline and Discourse' (Paper presented at the FishRights99 Conference, Fremantle, Western Australia, 1999).

    15 See Cameron Herbert, 'Risk of Future Reduction in Water Availability from the Consumptive Pool: Current Issues and Approaches in New South Wales' (2005) 22

    Environmental and Planning Law Journal 431, 435-437; Pagan and Crase, above n 13, 77; Young, above n 11; John Quiggin, 'Uncertainty, Risk and Water Management in Australia' in Lin Crase (ed), Water Policy in Australia: The Impact of Change and Uncertainty (Resources for the Future, 2008).

    16 Bennett and Gardner, above n 10, 35 (potential of unlicensed domestic bores in the Perth region to reduce the amount of groundwater available for licensed groundwater users).

    17 Young, above n 11, 307.

    18 Compare Pagan and Crase, above n 13 (arguing that strengthening of water property rights can be consistent with enhanced adaptive capacity).

    specified area. These caps are referred to as the ‘total allowable catch’ or ‘total allowable commercial catch’, the latter being arrived at by determining the total allowable catch and deducting an amount representing any anticipated non-commercial catch.19

    An allowable catch will typically be set annually by the responsible Minister20 or statutory body[6] following some form of consultation.[7] It may be set through a variety of instruments: for example, through a public notice;[8] an administrative determination published in the Government Gazette;[9] a determination published as a legislative instrument;[10] or an amendment to a statutory management plan.[11] Periodic caps may be imposed on fishing effort in a similar way.[12]

    The legal effect of these periodic caps is to determine the level of resource access that is permissible under individual share entitlements. Australian fisheries share entitlements operate under various names, including ‘share’,[13] ‘unit of entitlement’,[14] ‘quota unit’[15] and ‘individual quota unit’.[16] Share entitlements are normally expressed as a number of units[17] that confer a right to a share of the allowable catch or other

    19

    See, eg, Total Allowable Catch Committee (NSW), Report and Determination for 2014/15: Rock Lobster Fishery (Department of Primary Industries (NSW), 2 July 2014).

    20

    See, eg, Fish Resources Management Act 1994 (WA) s 54; ‘West Coast Rock Lobster Managed Fishery Management Plan 2012’, Western Australia, Western Australian Government Gazette, No 187, 17 October 2012, 4983, cl 18, sch 8 item (2); ‘West Coast Rock Lobster Managed Fishery Management Plan Amendment 2013’, Western Australia, Western Australian Government Gazette, No 205, 15 November 2013, 5279.

    periodic cap.[18] For example, if an annual allowable catch in a fishery is set at 100 tonnes and there are 1000 shares, each share will be worth 100kg. A fisher holding two shares will therefore be entitled to take 200kg of fish in the coming year. If the allowable catch for the following year is increased to 120 tonnes then the share entitlement holder may take 240kg of fish that year. It will often be possible for entitlement holders to permanently transfer their share entitlement (the two shares in the above example) or to retain their share entitlement but transfer the annual entitlement (the 240kg of fish in the above example).[19] Thus two markets may operate: one in the longer-term but variable resource access offered by share entitlements and another in the short-term, known quantity of the authorised catch for a particular fishing season.

    Periodic caps such as allowable catches are clearly collective limits. Collective limits are also imposed, less directly, by rules governing the determination of periodic caps. In some cases these rules are contained in the principal legislation. For example, under the Fisheries Act 1994 (NSW) the statutory committee responsible for setting an allowable catch ‘is to give effect’ to the objects of the Act, which include overriding objectives of conserving fish stocks and promoting ecologically sustainable development.[20]

    More specific guidance may be contained in management plans and related policies. For example, under the Bass Strait Central Zone Scallop Fishery Management Plan 2002 (Cth) the allowable catch must be set in accordance with a ‘Harvest Strategy’, a policy document that ‘sets out the management actions necessary to achieve defined biological and economic objectives in the fishery.’[21] The current Harvest Strategy for the Bass Strait Central Zone Scallop Fishery sets detailed guidelines, including tests based on biomass surveys for when the allowable catch may be set at 1000 or 2000 tonnes.[22] Clearly, adjustment of management plans and related policies can affect the level of collective resource use, even where they do not directly amend an allowable catch.

    B Australian Water Resource Management Legislation

    The NWI, a blueprint for water resources law that has been endorsed,[23] and largely implemented,[24] by the Commonwealth, State and Territory governments, provides a good starting point in considering collective limits for water resources. An important concept in the NWI is the ‘consumptive pool’, which is defined as ‘the amount of water resource that can be made available for consumptive use in a given water system under the rules of the relevant water plan’.[25] The amount of water that is in fact made available for consumptive use is determined by ‘water allocations’, which are defined by the NWI as ‘the specific volume of water allocated to water access entitlements in a given season, defined according to rules established in the relevant water plan.’[26]

    In practice, water plans take a variety of approaches to guiding how much water will be made available through water allocations. One technique is to specify a long term average limit on total extraction for a water resource, and to require water allocations to be varied where necessary to keep total extraction, on a long-term basis, within those limits.[27]2 Other plans specify triggers for different water allocations, such as specified groundwater levels43 or the modelled dry season flow of a river.44

    Still others provide a great deal of flexibility to water managers by providing simply listing factors that are to be taken into account in making water allocations. For example, in Queensland’s Bowen Groundwater Management Area, the Chief Executive must, in making a water allocation decision, take into account several factors including long term average sustainable yield, anticipated water use, trends in underground water quality and (for zones near the coast) the risk of saltwater intrusion.[28]

    Water resource management legislation generally includes extensive consultation requirements for the introduction and amendment of statutory water plans.[29] Water allocations, on the other hand, are generally made through relatively simple procedures with few procedural constraints, presumably on the basis that the rules governing those allocations have already been considered at the water planning stage.[30]

    In New South Wales, for example, ‘available water determinations’ are made by the Minister (or delegate) and published on the responsible department’s website.[31] There are no consultation requirements and the determination is not a disallowable instrument.

    However, there are variations on this approach. For example, in Queensland, the Chief Executive may be required to consider the recommendations of local advisory groups before making allocation determinations[32] and in the Australian Capital Territory, such determinations are disallowable instruments.[33]

    Australian States and Territories agreed, through the NWI, that water access entitlements should be ‘described as a perpetual or open-ended share of the consumptive pool of a specified water resource’[34] – a clear expression of intent to create share entitlements. While legislation to implement the substance of this commitment has been enacted in the Australian Capital Territory, New South Wales, Queensland, South Australia, Tasmania and Victoria,[35] a variety of approaches have been adopted to defining share entitlements and associated water allocation determinations, sometimes even within the one jurisdiction.[36]

    Table 1 provides some examples of how entitlements and allocation determinations may be expressed.

    Table 1: Examples of Water Entitlements and Allocations54

    Jurisdiction (water management area)
    Entitlement
    Allocation determination
    Amount credited to water account
    ACT (Cotter)55
    5% of consumptive pool
    Consumptive
    pool is 2050 ML/pa
    102.5 ML
    NSW (Peel Valley)56
    100 units/pa
    1 unit = 0.73
    ML
    73 ML
    Victoria (Katunga)57
    Nominal entitlement of 100ML/yr
    Allocation
    percentage is
    70%
    70 ML

    While the limits imposed by water allocations are not always as clear as an allowable catch in a fisheries context, the result is the same in one fundamental respect: authorised use of the resource may be varied by periodic determinations. As with fisheries entitlements, it also typically the case in a water context that both share entitlements (e.g. 100 unit shares in a specified water resource) and periodic allocations made under those licences (e.g. 73 megalitres of permitted extraction) can be traded.58

    IV COMPENSATION FOR ADJUSTMENTS TO COLLECTIVE LIMITS IN SHARE ENTITLEMENT REGIMES

    A Compensation Under Section 51(xxxi) of the Constitution

    Section 51(xxxi) of the Australian Constitution provides that the Commonwealth Parliament has ‘the power to make laws ... with respect to ... the acquisition of property on just terms’. The section is a qualification on the Commonwealth’s law-making powers. It will apply to Commonwealth laws that acquire property other than on just terms and to Commonwealth-State legislative arrangements under which the Commonwealth provides financial assistance to a State conditional upon the State acquiring property other than on just terms.59

    54

    A version of this table originally appeared in Bennett and Gardner, above n 10, 65.

    55

    Example drawn from Minister for the Environment (ACT), Water Resources (Water Available From Areas) Determination 2007 [No 1], DI2007-91, 31 July 2007.

    56

    Example drawn from Minister for Primary Industries (NSW), Available Water Determination Order for the Peel Valley Regulated, Unregulated, Alluvium and Fractured Rock Water Sources 2013 (1 July 2013).

    57

    Example drawn from Minister for Water (VIC), Groundwater Management Plan for the Katunga Water Supply Protection Area (24 July 2006) and Goulburn Valley Water,

    Katunga Water Supply System: Drought Response Manual (Goulburn Valley Water, 2012).

    58

    e.g. Water Management Act 2000 (NSW) ss 71M, 71T; Water Act 1989 (Vic) ss 33S, 33U; Natural Resource Management Act 2004 (SA) ss 150, 157.

    59

    PJ Magennis Pty Ltd v Commonwealth [1949] HCA 66; (1949) 80 CLR 382; ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140, 165-70 (French CJ, Gummow and Crennan JJ) and 206-7 (Heydon J); Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118; Stephen Lloyd,

    Are there any circumstances in which the reduction of a collective limit in a share entitlement regime would result in an ‘acquisition of property’ for the purposes of section 51(xxxi)? Could, for example, the halving of an allowable commercial catch in order to provide more fish to the recreational sector, or to facilitate the creation of a marine park, enliven section 51(xxxi)? Assuming the necessary connection to a Commonwealth law is present, the answer to this question will turn on two issues: first, whether any ‘property’ has been taken; and second, whether there has been an ‘acquisition’ of that property.

    3 Is a Share Entitlement ‘Property’?

    The High Court has adopted a liberal test of what constitutes ‘property’ for the purposes of section 51(xxxi). As MacIntosh and Cuncliffe have noted, this was driven by early cases in which the Commonwealth sought to ‘indirectly acquire the substance of a proprietary interest’.60 It is clear that a statutory right to access natural resources can be ‘property’ for the purposes of section 51(xxxi).61 Whether it is so characterised will turn upon a consideration of the particular features of the right in question, including its permanence, stability and transferability.62

    There is no precise set of criteria or agreement as to what weight should be given to particular criteria. In ICM Agriculture Pty Ltd v Commonwealth, for example, Hayne, Kiefel and Bell JJ found that the fact that entitlements attaching to bore licences could be traded or used as security ‘amply demonstrat[ed]’ that they were a ‘species of property’.63 However, the other three judges in the majority, French CJ, Gummow and Crennan JJ were more cautious, noting that transferable licences may nevertheless ‘have an insufficient degree of permanence or stability to

    'Compulsory Acquisition and Informal Agreements: Spencer v Commonwealth' [2011] SydLawRw 6; (2011) 33 Sydney Law Review 137, 147; Sean Brennan, 'Section 51(xxxi) and the Acquisition of Property Under Commonwealth-State Arrangements: The Relevance to Native Title Extinguishment on Just Terms' [2011] AUIndigLawRw 21; (2011) 15(2) Australian Indigenous Law Review 74.

    60

    Andrew Macintosh and Jancis Cunliffe, 'The Significance of ICM in the Evolution of s 51(xxxi)' (2012) 29 Environmental and Planning Law Journal 297, 301.

    61

    Newcrest Mining (WA) Ltd v Commonwealth [1997] HCA 38; (1997) 190 CLR 513 (mining lease); Commonwealth v WMC Resources Ltd [1998] HCA 8; (1998) 194 CLR 1, 16 [14], 27 [45]-[46], 36 [79], 68-9 [179], 76-7 [211], 86 [235] (petroleum exploration permit); ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140, 178-9 [74]-[80], 201-2 [147], 218-20 [197]-[204] (groundwater licences). In the latter two cases the High Court found that there had been no acquisition of property, but all justices except McHugh J in WMC Resources proceeded on the basis that a statutory right could constitute ‘property’ protected under section 51(xxxi).

    62

    ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140, 178 [76], 218 [197]; Commonwealth v WMC Resources Ltd [1998] HCA 8; (1998) 194 CLR 1; Michael McKenzie, 'Water Rights in NSW: Properly Property?' [2009] SydLawRw 17; (2009) 31 Sydney Law Review 443.

    63

    [2009] HCA 51; (2009) 240 CLR 140, 201 [147].

    merit classification as proprietary in nature’.[37] They found that it was unnecessary to decide whether the bore licences were property.[38]

    While each case will turn on a characterisation of the legislation in question, the fact that share entitlements to fisheries and water resources are generally tradeable and more secure from cancellation than traditional licences means that they may well be considered ‘property’ for the purposes of section 51(xxxi).[39] Indeed, the Federal Court has held in a section 51(xxxi) case that transferable units of fishing capacity granted under Commonwealth fisheries legislation are property.[40]

    4 Can a Reduction in Collective Limits Result in an ‘Acquisition of Property’?

    While share entitlements may be property, can the requirement for an ‘acquisition’ be met where the share entitlement itself is not cancelled, but the amount of resource access authorised under that entitlement is reduced by a change to collective limits?

    One formidable barrier to establishing an acquisition in such cases is the need to show that a proprietary interest or benefit has been conferred upon the Commonwealth or another person.[41] But I would like to concentrate here on a more fundamental objection. The essence of a share entitlement is a right to a variable share of a resource. Seen in this light, any reduction in access to the resource due to a lawful change in the collective limit is simply part of how a share entitlement operates and cannot be a taking, let alone an acquisition, of property. This is consistent with a line of cases concerning ‘inherently defeasible’ statutory rights.[42] I consider three of the most relevant cases below.

    Minister for Primary Industry and Energy v Davey[43] (‘Davey’) concerned the Northern Prawn Fishery. In 1990, acting under the Fisheries Act 1952 (Cth), the Minister made the Northern Prawn Fishery Plan (‘the Plan’) to govern access to the fishery. Rather than setting an allowable catch, the Plan sought to control fishing effort. It did this by providing that in order to operate a boat in the fishery, a person needed not only a fishing licence but a number of units representing the fishing capacity of that boat, calculated in accordance with a formula that took into account the size of the boat and the power of its engine. The Plan also provided for a collective limit on fishing capacity, set initially at 97,000 units. From the outset, the Plan anticipated that this collective limit would be reduced. It initially provided that the number of units would be reduced to 70,000 and was later amended to reduce this number to 50,000. The Plan initially provided that the reductions would be achieved by a ‘voluntary adjustment scheme’, under which the Minister would purchase units using revenue obtained from a levy on licence holders in the fishery. However, when the voluntary scheme proved inadequate the Minister acted more directly, amending the plan to provide that 30.76% of the units held by each licensee expired. This had the effect of reducing the total number of units in the fishery to 50,000 and meant that owners of prawn trawlers faced two basic choices: to buy additional units from others in the fishery, or to sell their units and exit the industry.

    Three prawn trawler owners challenged the plan amendment in the Federal Court. At first instance they ran two arguments: first, that the amendment was ultra vires; and second, that it was an acquisition of property other than on just terms. O'Loughlin J rejected the first argument but accepted the second, finding that the amendment was inconsistent with section 51(xxxi).[44] On appeal the Full Court found unanimously that there had been no acquisition of property. Importantly, Black CJ and Gummow J found that it was apparent from the terms of the legislation and the function of the units that the number of units could be reduced by plan amendment:

    The units exist in order to regulate prawn trawling within the fishery. They are a convenient measure of fishing capacity. The demands of conservation and economic efficiency ... necessitate continual adjustments in the regulation of the fishery. It is necessary, therefore, for the administering authority to be able to alter the rights of unit holders. And that this was envisaged has been clear on the face of the legislation since

    1985 ... and from [the Plan] itself.[45]

    Having characterised the legislative scheme in this way, Black CJ and

    Gummow J then went on to find that

    [the units] confer only a defeasible interest, subject to valid amendments to [the Plan] under which they are issued. The making of such amendments is not a dealing with the property; it is the exercise of powers inherent at the time of its creation and integral to the property itself... [I]nstead of taking away something the fishermen possessed, it merely alters the statutory creatures in accordance with the statutory scheme creating and sustaining them.[46]

    In Bienke v Minister for Primary Industries and Energy (‘Bienke’)[47], a case decided three years later but also concerning the Plan amendment considered in Davey, a differently constituted Full Federal Court again found that there had been no acquisition of property. In a joint judgment, Black CJ, Davies J and Sackville J made the basic but critical point that the right to fish in the Northern Prawn Fishery was ‘not a common law right, but rather a new species of statutory entitlement, the nature and extent of which depends entirely on the terms of the legislation.’[48] The Court characterised the ‘nature and extent’ of this right the same way as Black CJ and Gummow J in Davey, citing with approval their statement that the units of fishing capacity ‘confer only a defeasible interest, subject to valid amendments to the NPF Plan under which they are issued’.[49]

    The following year the High Court handed down its decision in Commonwealth v WMC Resources Ltd (‘WMC Resources’).[50] That case concerned a petroleum exploration permit granted in 1977 under the Petroleum (Submerged Lands) Act 1967 (Cth). The Act expressly provided that the exploration rights granted by such permits were ‘subject to the Act.’ In 1990, as a consequence of an agreement with Indonesia concerning joint management arrangements in the Timor Gap, the Act was amended to reduce the area accessible under the permit. WMC Resources Ltd, which had an interest in the permit, argued that its property had been acquired other than on just terms.

    The High Court found, by a majority of 4-2, that there had been no acquisition of property. One reason for so holding was that the exploration permit was inherently susceptible to variation.[51] Two of the judges in the majority, Gummow J and McHugh J, drew a parallel between the facts before them and what Gummow J described as ‘the flexible statutory schemes’ in Davey and Bienke.[52] In dissent, Kirby J also referred to Davey and Bienke, but distinguished them as cases in which ‘defeasibility of rights is expressly stated or implied’, which he found not to be the case with petroleum exploration regime in of the Petroleum (Submerged Lands) Act 1967.[53]

    The clear implication of these cases is that a lawful reduction of a collective limit in a share entitlement regime will not result in an acquisition of property. Share entitlements are ‘statutory creatures’, and part of their statutory DNA is to provide variable resource access. This is known by entitlement holders from the outset, to an even greater extent than was the case in Davey and Bienke, and certainly to a greater extent than in WMC Resources.

    It could be argued that notwithstanding the flexible nature of share entitlements, the constitutional guarantee of just terms should operate if the reduction in a collective limit is part of a ‘circuitous device’ to indirectly acquire the substance of a proprietary interest.[54] However, if the collective limit is reduced for a lawful purpose then it is difficult to see how the ‘circuitous device’ authorities could apply.82

    If, on the other hand, the limit has been reduced for an improper purpose then the instrument that has purported to do this will be void and no acquisition issue arises. In short, a disgruntled entitlement holder might challenge the validity of a reduction in a collective limit if it goes beyond the bounds set by the statute, but as long as it has been made within those bounds there will be no breach of section 51(xxxi).

    B Compensation Under Fisheries and Water Resource Management Legislation

    The question of whether section 51(xxxi) applies to share entitlements is, of course, not the end of the matter. Compensation rights can, and sometimes have, been provided under Australian fisheries and water resource management legislation. It is possible to identify four sometimes overlapping approaches to compensation that are relevant to adjustments in collective limits under such legislation. These approaches, and the rationales that have been offered for them, are described below.

    1 No Compensation

    One approach is to not provide compensation for reductions in collective limits. This position has been adopted, for example, by the South Australian government with respect to water resources. A Department of Water policy statement on water licensing and risk assignment makes the point:

    The NRM Act provides that the Minister may reduce the volume of water made available to holders of water licences on an ongoing basis where necessary to protect the sustainability of the resource and/or water dependent ecosystems. Ensuring that the water made available for licensed water use is set at a level that is sustainable in the long term is fundamental to underpinning the integrity and reliability of rights to access the resource, which in turn supports investor confidence. Compensation is not payable by the South Australian Government for permanent reductions to water on water access entitlements.[55]

    Section 64C of the Fisheries Act 1995 (Vic) provides another example of a ‘no compensation’ approach. This section provides that no compensation is payable for any loss or damage that results from a ‘quota order’, the mechanism for setting and adjusting an allowable catch. The rationale for this approach, as stated in the Explanatory Memorandum to the 2003 Bill that introduced the provision, is that ‘the State should not be responsible for financial losses for decisions made as a result of sustainability issues which have an effect on access to fishing resources.’[56]

    2 Compensation for ‘Quasi-Acquisitions’

    A second approach is to provide compensation in what might be called ‘quasi-acquisition’ situations: that is, situations in which access to the resource is reduced and benefits conferred elsewhere, even if the strict constitutional tests for an acquisition would not be satisfied.

    Under the Fisheries Act 1994 (Qld), for example, a commercial fisher will be entitled to compensation from the state government where a management plan or regulation reallocates an entitlement to take fish resources to non-commercial fishers.[57] The terms of the legislation appear broad enough to cover situations in which a total allowable commercial catch is reduced for the benefit of recreational fishers. This compensation provision was inserted in the Act to provide greater certainty with respect to the ‘inherently valuable rights’ of commercial fishers that are ‘akin to a property right’.[58]

    In some jurisdictions the government may also be obliged to pay compensation where an allowable catch has been reduced due to the creation of a protected area. For example, under the Fishing and Related Industries Compensation (Marine Reserves) Act 1997 (WA), a person will be entitled to compensation from the state government if the person holds a commercial fishing licence and the value of that licence is reduced because the person is prevented from fishing in an area by the creation of a marine park.[59]

    3 Comprehensive Allocation of Risks

    A third approach to compensation, championed by the NWI and adopted with some modifications in Commonwealth[60], New South Wales[61] and Queensland[62] water resource management legislation, is to seek to comprehensively allocate the risks of future reductions in collective limits between government and entitlement holders. The NWI ‘risk assignment framework’ is complex, but in essence provides that government is to bear risks associated with new government policy and (from 2014) most of the risks associated with ‘improvements in the knowledge of water systems’ capacity to sustain particular extraction levels’.[63]

    Entitlement holders are to bear the risks associated with seasonal or longterm changes in climate, periodic natural events such as bushfires and drought, and the first 3 per cent of changes due to improvements in knowledge.[64] The NWI risk assignment framework applies to ‘risks arising...under water plans’.[65] This has been taken to mean that compensation should only be available where the introduction or amendment of a water plan is the cause of reduced water allocations – a reduced allocation will not, in itself, provide a basis for compensation.

    Perhaps because of its origins in a negotiated agreement, rather than a more traditional process of policy and legislative development, it is difficult to find a detailed justification for the NWI risk assignment framework. However, it is clear that one general goal is to provide greater certainty to entitlement holders about their level of resource access, and accordingly a greater incentive to invest on the strength of their entitlements.[66] Last year’s review of the Water Act 2007 (Cth) provided another rationale, which will be considered further below: to ensure that share entitlements ‘could not be arbitrarily eroded to any significant extent without compensation’.[67]

    4 Compensation for Premature Plan Amendments

    A fourth approach is to provide some stability concerning cap-setting rules, by providing that compensation is payable to entitlement holders that have suffered loss as a result of premature changes to the management plans containing those rules. Under the Water Act 2000 (Qld), for example, compensation is payable if there is a reduction in the value of a water access entitlement because of a change in water resource plan within ten years from when the plan is approved.[68]

    V COLLECTIVE FLEXIBILITY AND RELIABILITY OF

    ENTITLEMENTS: FINDING THE RIGHT BALANCE

    As stated earlier, there are a range of reasons why collective use of a natural resource may need to be adjusted, including natural variations in the abundance of the resource, changing community values and improved scientific knowledge. Share entitlement regimes allow for the simple and effective adjustment of collective resource use, but also raise the risk of frequent and substantial variations in resource access enjoyed by entitlement holders. Drawing from Parts III and IV of this article, it is possible to identify some design considerations that are relevant to dealing with the resulting tension between collective flexibility and the reliability of individual entitlements.

    One important point is that the rules for periodic resource allocations, contained for example in statutory management plans, can be written in a way that finds the right balance between collective flexibility and the reliability of entitlements, taking into account the nature of the resource and local conditions. Management plans may envisage a high level of reliability in some cases – for example for some confined aquifers a management plan may be able to specify a consumptive pool that is fixed for the life of a plan. In other cases, considerable variability may need to be built into the rules for periodic determinations – for example to accommodate natural variations in fishery stocks or to protect important ecological assets dependent on variable water flows. It is also clear from these examples that while place and resource-specific management plans can find the right balance, there is no ‘one size fits all’ rule that can be imposed by statute.

    Entitlement holders might accept this point, but still be nervous about the potential for the rules governing periodic allocations being changed. They may be concerned by the influence of environmentalists or recreational fishers on the governments responsible for making these rules and agree with Reich’s assertion, in his analysis of revocable government privileges, that ‘[t]here must be sanctuaries or enclaves where no majority can reach’.[69] As we have seen, section 51(xxxi) of the Constitution offers no such sanctuary, but in some cases statutory compensation provisions have, at the urging of resource users,[70] been enacted in an attempt to do so. While the desire of entitlement holders to establish some boundaries on the variability of their resource access is understandable, I will argue that there are reasons to be careful about including compensation provisions, and especially comprehensive risk assignment provisions of the kind promoted by the NWI, in share entitlement regimes.

    The first problem is that, due to the nature of share entitlements, there is a trade-off between individual reliability and collective flexibility: any attempt to increase the former will reduce the latter. For example, the NWI risk assignment framework will tend to increase the reliability of individual entitlements, at least in the short term, because governments will be reluctant to amend water plans in a way that triggers compensation requirements. But the flipside is a loss of collective flexibility because governments will be more reluctant to act in the light of new knowledge, or where it becomes clear that previous government policy was misconceived.[71]

    It is by no means clear that reliability of entitlements should be favoured over collective flexibility in this way. Indeed, it makes no sense at all, as an ongoing principle[72], that governments should be penalised for taking into account the latest scientific information when revising management plans.101 Such an approach clearly has the potential to undermine the sustainable management of the resource.

    A second issue to keep in mind is that collective limits, and therefore resource access under share entitlements, can go up as well as down. Arguments for measures that apply to only one side of that equation deserve sceptical consideration. While not a compensation case, the reasoning of the New Zealand Court of Appeal in New Zealand Fishing Industry Association Inc v Minister of Fisheries[73] illustrates the point. The case concerned judicial review of a decision by the Minister to substantially reduce an allowable catch in a share entitlement regime. In rejecting the challenge, the Court highlighted that resource access under the entitlements were inherently variable and that ‘[t]here is no doctrine of which we are aware which says you can have the benefit of the advantages inherent in a species of property but do not have to accept the disadvantages similarly inherent.’[74]

    A similar point can be made about plan amendments. Consider, again, the NWI risk assignment framework. The government will compensate for some changes to water management plans that reduce the reliability of entitlements. But changes to plans can also have the effect of increasing the reliability of these entitlements: for example, improved scientific knowledge may demonstrate that higher levels of water extraction are sustainable. Unless it is clear that benefits will not flow to existing entitlement holders in this situation (e.g. because ‘new’ water will be auctioned by the government) it will be difficult to justify compensation for reductions. As with land use planning schemes, compensation for detrimental impacts is difficult to justify if the ‘betterment’ from beneficial impacts cannot be captured.[75]

    A third issue with compensation provisions is workability. This is an enormous problem for the NWI risk assignment framework.[76] It is inherently difficult to quantify the impact of a water plan amendment on future water allocations and apportion that impact among multiple causes as vague as ‘new policy’ and ‘new knowledge’. Indeed, the MurrayDarling Basin Authority found it impossible to apply the ‘new knowledge’ criterion to the Murray-Darling Basin Plan.[77] In cases in which changes in collective limits do not involve an explicit re-allocation of resource access from one sector to another, some ‘quasi-acquisition’ provisions may also be difficult to apply, although this will not be the case where there is a clear trigger outside the share entitlement regime, such as an area restriction associated with a new marine park.

    Legislators designing share entitlement regimes might also consider the extent to which other approaches can address concerns that underlie some of the existing compensation provisions. For example, concerns about effective transfers of resource access from commercial to recreational fishers might be ameliorated by adopting stable rules, reviewed at predictable intervals, as to the proportion of the fishery that is notionally allocated to different sectors. To provide even greater certainty, it may even be possible to include recreational fishers within an allowable catch and allocate share entitlements to a representative recreational fishing body.[78]

    To take another example of alternative measures to achieve the stated aims of compensation regimes, consider the rationale for the NWI risk assignment framework in the recent review of the Water Act 2007 (Cth): to ensure that share entitlements ‘could not be arbitrarily eroded to any significant extent without compensation’.[79] In its usual legal sense, an ‘arbitrary’ decision is one arrived at by individual preference rather than rules of general application.[80] Good process requirements, such as requirements to develop comprehensive statutory management plans with the benefit of public consultation, are ideally suited to achieving this objective.[81] Compensation for premature plan amendments could also be considered to add some stability and predictability to the plan amendment process, if the trade-off with reduced flexibility is considered appropriate. Compensation provisions of this kind avoid the other issues raised above, as to workability and privatising gains and socialising losses.

    A final point to note is that legislation and management plans can provide flexibility mechanisms that allow entitlement holders to manage their own risk. Tradeable entitlements and tradeable seasonal allocations may help, as they are a potential means by which entitlement holders can increase their access to the resource when needed.[82] Provision might also be made for different classes of entitlement with different levels of reliability: a common technique in a water resource context. Resource users that need greater security could then apply for, or purchase, these more secure entitlements.

    VI CONCLUSION

    This article has considered a legislative technique common in natural resource management: the setting of collective limits on the use of a resource, and the allocation of access rights under those limits. Drawing on approaches used in Australian water resources and fisheries legislation, it has sought to identify some of the tensions, legal issues and design choices that come with the need to adjust collective limits in such regimes.

    The article has identified a tension between flexibility to adjust collective limits and the reliability of individual access entitlements, which is particularly apparent in share entitlement regimes. It has suggested that in such regimes the best balance between these competing needs is likely to be found through locally-relevant rules that govern periodic determinations of the available resource, combined with statutory requirements that ensure these rules are adjusted in a fair, informed and predictable fashion. It has also argued that some compensation requirements, and particularly those that penalise governments for taking into account new information or revising government policy, reduce flexibility to adjust collective resource use and may undermine sustainable management of the resource.

    While the article has considered individual entitlements and case law concerning acquisition of property, it has sought to frame the discussion around collective limits. Legal and economics scholarship concerned with natural resource management often focuses on property rights in natural resources.[83] This is a valuable perspective, and share entitlements are an interesting creature from a property rights perspective: the concept of a right to a share of a sustainable level of extraction is a shift away from the usual notion of property as ‘instrumentally valuable, and standing in no necessary relationship to wider moral (or environmental) values’.[84]

    For the environmental lawyer interested in the achievement of environmental goals, however, an equally useful focus is on the statutory technique of identifying, and giving effect to, collective limits on the use of natural resources. The emergence of legally-enforceable limits of this kind is both conceptually and practically significant. As this article has sought to demonstrate, some insights can be gained from a study of this technique that considers common issues, and legislative design responses to those issues, in different natural resource management contexts.


    [1] PhD Candidate, Faculty of Law, University of Western Australia. The author thanks Professor Alex Gardner, Professor Sharon Mascher, Nathan Harrison, Dilyara Nigmatullina and Fiona McGaughey for comments on a draft of this article. The author also thanks the two anonymous reviewers for helpful comments which prompted substantial revisions to the article.

    [2] Hans Christian Bugge, 'Twelve Fundamental Challenges in Environmental Law: An Introduction to the Concept of the Rule of Nature' in Christina Voigt (ed), Rule of Law for Nature: New Dimensions and Ideas in Environmental Law (Cambridge University Press, 2013) 15.

    [3] Bruce A Ackerman and Richard B Stewart, 'Reforming Environmental Law: The Democratic Case for Market Incentives' (1987) 13 Columbia Journal of Environmental Law 171, 188-190 (on cap-and-trade schemes more explicitly identifying environmental goals than best available technology standards).

    [4] Reference is made to some cases falling in the ‘transition’ category, but only to the extent that principles discussed in those cases shed light on the legal status of share entitlements:

    e.g. ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140 considered in Part IV below.

    [5] The buy-back problem might be avoided by issuing licences to access the resource for a short period, such as one year, but this leaves entitlement holders in an uncertain position. 5 Michael P Sissenwine and Pamela M Mace, 'ITQs in New Zealand: The Era of Fixed Quota in Perpetuity' (1992) 90(1) Fishery Bulletin 147, 150; Mike Young and Jim McColl, 'Robust Separation: A Search for a Generic Framework to Simplify Registration and Trading of Interests in Natural Resources' (Policy and Economic Research Unit, CSIRO Land and Water, Adelaide, 2002) 33-34.

    [6] See, eg, Fisheries Management Act 1991 (Cth) s 17 (statutory authority); Fisheries Act 1994 (NSW) ss 26-29 (expert statutory committee).

    [7] See, eg, Fisheries Act 1994 (NSW) s 31 (obligation to call for and consider public submissions); Living Marine Resources Management Act 1995 (Tas) s 95 (obligation to consult bodies the Minister considers to be representative of those having an interest in the issue); Fish Resources Management Act 1994 (WA) s 65 (obligation to consult with an advisory committee or other persons identified in a management plan).

    [8] See, eg, Living Marine Resources Management Act 1995 (Tas) s 95(3).

    [9] See, eg, Fisheries Act 1994 (NSW) s 33.

    [10] See, eg, Australian Fisheries Management Authority, Bass Strait Central Zone Scallop Fishery Total Allowable Catch Determination 2013, 5 August 2013 made under Fisheries Management Act 1991 (Cth) s 17(6)(aa) and Australian Fisheries Management Authority, Bass Strait Central Zone Scallop Fishery Management Plan 2002.

    [11] See, eg, Fish Resources Management Act 1994 (WA) s 59(1).

    [12] The Federal Court considered a scheme of this kind in Minister for Primary Industry and Energy v Davey (1993) 47 FCR 51 which is considered in Part IV below.

    [13] Fisheries Act 1994 (NSW) part 3, division 6.

    [14] Western Australia, Western Australian Government Gazette, No 187, 17 October 2012, 4983, s 9(1)(h).

    [15] Living Marine Resources Management Act 1995 (Tas) s 94.

    [16] Fisheries Act 1995 (Vic) s 65A.

    [17] Section 9 of the Fisheries Act 1994 (Qld) provides that fishing entitlements may be specified as ‘a percentage of a quantity of fish’ but this does not appear to have been done in practice.

    [18] See, eg, Fisheries Management Act 1994 (NSW) s78.

    [19] Some legislation provides specifically for trade in the annual allocation: eg, Fisheries Management Act 1994 (NSW) s 79(1). Other legislation allows for short term transfer or lease of all or part of the share entitlement, which has the same effect: eg, Fisheries Management Act 1991 (Cth) 46(4D); Abalone Management Plan 1992 (WA) s14B; Fisheries Management Act 1994 (Qld) s65C.

    [20] Fisheries Management Act 1994 (NSW) ss 3, 30.

    [21] Australian Fisheries Management Authority, Bass Strait Central Zone Scallop Fishery Management Plan 2002 (Cth) s 3.

    [22] Australian Fisheries Management Authority, Harvest Strategy for the Bass Strait Central Zone Scallop Fishery (Commonwealth of Australia, April 2014) 4-5.

    [23] The Commonwealth and New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory and the Northern Territory signed the agreement in 2004; Tasmania signed in 2005; and Western Australia signed in 2006: National Water Commission, Australian Water Reform 2009: Second Biennial Assessment of Progress in Implementation of the National Water Initiative (Commonwealth of Australia, 2009) 2.

    [24] National Water Commission, The National Water Initiative: Securing Australia’s Water Future (Commonwealth of Australia, 2011) 28 (‘The legislation needed to create secure, NWI-consistent water access entitlements has been enacted in Victoria, New South Wales (NSW), Tasmania, South Australia, Queensland and the Australian Capital Territory (ACT), but not in Western Australia or the Northern Territory’).

    [25] Council of Australian Governments, above n 12, schedule B(i).

    [26] Ibid. 42

    See, eg, Water Sharing Plan for the NSW Border Rivers Unregulated and Alluvial Water Sources 2012 (NSW) part 6. ‘Long term average sustainable diversion limits’ are also a central element of the Murray-Darling Basin Plan: see Water Act 2007 (Cth), s 22, item

    [27] (c). 43

    e.g. Loddon Highlands Water Supply Protection Area Consultative Committee, Loddon Highlands Water Supply Protection Area Groundwater Management Plan (21 November 2012), 16. 44

    Department of Natural Resources, Environment, the Arts and Sport, Water Allocation Plan for the Tindall Limestone Aquifer, Katherine 2009 - 2019 (2009) 30.

    [28] Department of Natural Resources and Mines, Bowen Groundwater Management Area Water Sharing Rules: Seasonal Water Assignment Rules, WSS/2013/636, version 4.02, 17 October 2015.

    [29] Alex Gardner, Richard Bartlett and Janice Gray, Water Resources Law (LexisNexis Butterworths, 2009) [15.43] – [15.54], 316-324.

    [30] Ibid 380-384.

    [31] Water Management Act 2000 (NSW) s 59; Water Management (General) Regulation 2011 (NSW) reg 7.

    [32] e.g. Department of Natural Resources and Mines, Bowen Groundwater Management Area Water Sharing Rules: Seasonal Water Assignment Rules, WSS/2013/636, version 4.02, 17 October 2015.

    [33] Water Resources Act 2007 (ACT) s 17(5).

    [34] Council of Australian Governments, above n 12 [28] (italics removed from original).

    [35] National Water Commission, 'Australia's Water Blueprint: National Reform Assessment 2014' (Commonwealth of Australia, 2014) 25.

    [36] See, eg, Water Management Act 2000 (NSW) s 56(1).

    [37] Ibid 178, [76].

    [38] Ibid 179, [80].

    [39] Carl McCamish, 'Fisheries Management Act 1991: Are ITQs Property?' (1993) 22 Federal Law Review 375; Alex Gardner, 'Water Reform and the Federal System' in Paul Kildea, Andrew Lynch and George Williams (eds), Tomorrow's Federation: Reforming Australian Government (Federation Press, 2012) 269, 282-283.

    [40] Fitti v Minister for Primary Industries and Energy (1993) 40 FCR 286, 290-92 (finding by O'Loughlin J at first instance that units of fishing capacity under the Fisheries Act 1952 (Cth) and Northern Prawn Fishery Plan were property). While Fitti was reversed on appeal, O’Loughlin J’s conclusion on the property question was not overturned. Indeed, counsel for the appellants ‘implicitly conceded’ the point before the Full Court: Minister for Primary Industry and Energy v Davey (1993) 47 FCR 151, 160.

    [41] Authorities for this principle include Commonwealth v Tasmania (‘Tasmanian Dams Case’) [1983] HCA 21; (1983) 158 CLR 1, 145 (Mason J); ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140; JT International SA v Commonwealth [2012] HCA 43; (2012) 250 CLR 1; see also Macintosh and Cunliffe, above n 60. Cases applying this principle in a natural resource context include ICM Agriculture Pty Ltd v Commonwealth [50] [2009] HCA 51; (2009) 240 CLR 140, 17980 [81]-[85], 202-3 [150]-[154] (no proprietary interest or benefit conferred on New South Wales by a reduction in authorised groundwater extraction); Alcock v Commonwealth [2013] FCAFC 36; (2013) 210 FCR 454, 470 (no acquisition where ability to take abalone under a fishing licence curtailed by declaration of marine protected areas); Minister for Primary Industry and Energy v Davey (1993) 47 FCR 151 (no acquisition from proportionate reduction in cap on fishing capacity).

    [42] In addition to the cases considered below, see Health Insurance Commission v Peverill [1994] HCA 8; (1994) 179 CLR 226, 237 (no acquisition of property from retrospective reduction of a statutory Medicare benefit); Newcrest Mining (WA) Ltd v Commonwealth [1997] HCA 38; (1997) 190 CLR 513, 634 (Gummow J distinguishing Peverill on the basis that ‘what was in issue were rights derived purely from statute and of their very nature inherently susceptible to the variation or extinguishment which had come to pass’); Margaret Brock, 'When is Property Inherently Defeasible for the Purposes of s 51 (xxxi)?' (2012) 21(2) Australian Property Law Journal 180.

    [43] (1993) 47 FCR 151.

    [44] Fitti v Minister for Primary Industries and Energy (1993) 40 FCR 286.

    [45] (1993) 47 FCR 151, 164.

    [46] Ibid 165. Burchett J concurred but did not address this issue.

    [47] (1996) 63 FCR 567. Special leave to appeal to the High Court was refused: Transcript of Proceedings, Bienke v Minister for Primary Industries and Energy (High Court of Australia, Brennan CJ, Toohey and Dawson JJ, 30 September 1996).

    [48] (1996) 63 FCR 567, 585.

    [49] Ibid.

    [50] [1998] HCA 8; (1998) 194 CLR 1.

    [51] Ibid 38 [86] (Gaudron J); 56-7 [146] (McHugh J); 73 [195] (Gummow J).

    [52] Ibid 39, fn 136 (Gaudron J); 56-7 [146] (McHugh J); 73-4 [198] (Gummow J).

    [53] Ibid 94 [241].

    [54] Bank of New South Wales v Commonwealth [1948] HCA 7; (1948) 76 CLR 1, 348-9; Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480, 509-10. 82 In Bienke, the Court rejected an argument that the Plan amendment was a ‘circuitous device’ to acquire the licence holders’ property without just compensation: (1996) 63 FCR 567, 584.

    [55] Department of Water (SA), Water Licensing: Risk Assignment Policy <https://www.waterconnect.sa.gov.au/Content/Publications/DEWNR/Water Licensing Risk Assignment Policy.pdf>.

    [56] Explanatory Memorandum, Fisheries (Further Amendment) Bill 2003, 5 (clause 36). Note, however, that Part 10 of the Fisheries Act 1995 (Vic) does provide a separate right to compensation in some circumstances for losses caused by the creation of marine parks and sanctuaries.

    [57] Fisheries Act 1994 (Qld) s 42A.

    [58] Queensland, Parliamentary Debates, Legislative Assembly, 24 May 2006, 1920 (Tim Mulherin, Minister for Primary Industries and Fisheries).

    [59] Fishing and Related Industries Compensation (Marine Reserves) Act 1997 (WA) ss 3-5. See also Fisheries Adjustment Schemes Act 1987 (WA), which empowers the use of schemes involving the surrender or cancellation of ‘authorisations, or parts of entitlements’ on payment of compensation: ss 10B(1), 14B(1); and Fisheries Act 1994 (Qld) s 42B(1)(b). For a more complete discussion of compensation arrangements associated with the creation of marine reserves see Sevaly Sen, 'Developing a Framework for Displaced Fishing Effort Programs in Marine Protected Areas' (2010) 34(6) Marine Policy 1171; Warwick Gullett, Fisheries Law in Australia (LexisNexis Butterworths, 2008) 78-82.

    [60] Water Act 2007 (Cth) s 77.

    [61] Water Management Act 2000 (NSW) s 87AA.

    [62] Water Act 2000 (Qld) ch 8, pt 3.

    [63] Council of Australian Governments, above n 12, [49].

    [64] Ibid [48]-[50]. While the NWI provides a formula for sharing ‘new knowledge’ risks between the Commonwealth and State/Territory governments, in the Murray-Darling Basin the Commonwealth takes responsibility for all ‘new knowledge’ risks above the 3% borne by entitlement holders: Council of Australian Governments, Intergovernmental Agreement on Murray-Darling Basin Reform (3 July 2008) cl 10.1.3.

    [65] Council of Australian Governments, above n 12, [49] (emphasis removed).

    [66] For example, the Second Reading speech for the Water Management Amendment Bill 2005 (NSW), which provided for the insertion of the NWI risk assignment provisions, stated that ‘[c]ertainty over future access to water is essential for licence holders and lending institutions to invest in the productive capacity of the State’: New South Wales, Parliamentary Debates, Legislative Council, 1 December 2005, 20440 (Ian MacDonald, Minister for Natural Resources, Primary Industries and Mineral Resources).

    [67] Commonwealth of Australia, Report of the Independent Review of the Water Act 2007 (Commonwealth of Australia, 2014) 38, citing National Water Commission, Australia’s Water Reform Blueprint: National Reform Assessment 2014 (Commonwealth of Australia, 2014) 30.

    [68] Water Act 2000 (Qld) s 986.

    [69] Charles A Reich, 'The New Property' (1964) Yale Law Journal 733, 787. I thank Professor Holly Cullen for bringing this article to my attention.

    [70] Eg, National Water Commission, Australia’s Water Reform Blueprint: National Reform Assessment 2014 (Commonwealth of Australia, 2014) 30 (‘[t]he risk assignment framework was important in gaining the irrigation sector’s support for the NWI in 2004’).

    [71] Quiggin, above n 15 (concerning the risks of trying to fix policy, notwithstanding changed circumstances).

    [72] It does make some sense in the context of the NWI: the obligation to be partly responsible for ‘new knowledge’ risks after 2014 provided an incentive for governments to do the investigations necessary to establish statutory water plans before that date. 101 See Young and McColl, above n 5, 9-10. It is interesting to note that while this report, which appears to have inspired the risk assignment framework, identifies the importance of fully specifying risks to reliability of entitlements it suggests that revised estimates of the capacity of the resource in light of new scientific knowledge should not be compensable:

    Ibid table at 10.

    [73] Unreported, Court of Appeal of New Zealand, Tipping J, 22 July 1997.

    [74] Ibid 16.

    [75] Pamela O'Connor, 'The Changing Paradigm of Property and the Framing of Regulation as a Taking' (2010) 36 Monash Law Review 50, 72-73.

    [76] Cameron Herbert, above n 15, 444; John Bevacqua, 'Uncertainties in the Australian Water Availability Risk Assignment Framework: Implications for Environmental Water Reserve Managers' (2011) 30(2) Economic Papers: A Journal of Applied Economics and Policy 185; Pagan and Crase, above n 13, 87.

    [77] Murray Darling Basin Authority, Guide to the Proposed Basin Plan (Murray-Darling Basin Authority, 2010) vol 1, 156.

    [78] Peter H Pearse, 'Allocation of Catches Among Fishing Sectors: Opportunities for Policy Development' (Paper presented at the Sharing the Fish Conference 06, Perth, 2006) 14-15.

    [79] Above n 95.

    [80] On ‘arbitrariness’ in administrative decision-making see generally Tom Bingham, The Rule of Law (Penguin, 2010) 48-51.

    [81] On the question of statutory requirements that may promote effective consultation, see Cameron Holley and Darren Sinclair, 'Deliberative Participation, Environmental Law and Collaborative Governance: Insights from Surface and Groundwater Studies' (2013) 30 Environmental and Planning Law Journal 32, 53-54.

    [82] Note however the statutory pre-requisites for trade, in combination with local conditions, may limit the usefulness of this mechanism: James H Skurray, Ram Pandit and David J Pannell, 'Institutional Impediments to Groundwater Trading: The Case of The Gnangara Groundwater System of Western Australia' (2013) 56(7) Journal of Environmental Planning and Management 1, 13-15; see also Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11.

    [83] See, eg, Richard Barnes, Property Rights in Natural Resources (Hart Publishing, 2009); David Grinlinton and Prue Taylor (eds), Property Rights and Sustainability: The Evolution of Property Rights to Meet Ecological Challenges (Martinus Nijhoff, 2011); Anthony Scott, The Evolution of Resource Property Rights (Oxford University Press, 2008); Aileen McHarg et al (eds), Property and the Law in Energy and Natural Resources (Oxford University Press, 2010); Rowena Maguire and Angela Phillips, 'The Role of Property Law in Environmental Management' (2011) 28(4) Environmental and Planning Law Journal 215.

    [84] Sean Coyle and Karen Morrow, The Philosophical Foundations of Environmental Law:

    Property Rights and Nature (Hart Publishing, 2004) 9.


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