Ord River irrigators’ water dispute upheld

Ord River irrigators’

water dispute upheld

By Jeremy Fisher, Kingfisher Law

After five years’ litigation, the State Administrative Tribunal of Western Australia has renewed Ord Irrigation Co-operative’s (OIC’s) water licence at the historic annual level of 335 gigalitres, without reduction.

The case has wide implications for water licensing in Western Australia, including for: • procedure in the Tribunal’s review jurisdiction; application of statutory provisions for renewal of licenses under the Rights in Water and Irrigation Act 1914 (WA) (RiWI Act); calculation of water entitlements attached to licences; and the application of water management plans and recoupment policies.

The water licence decision

On 26 June 2020, the Tribunal delivered its decision in Ord Irrigation Co-operative v Department of Water and Environmental Regulation [2020] WASAT 68. Under WA legislation, an affected person has the right to seek a Tribunal review of many government decisions including, in OIC’s case, water licence renewal. In such proceedings, the Tribunal is required to review the government decision and make a fresh ‘correct and preferable’ decision on the merits of the case. This approach was not followed by the Tribunal when it first heard OIC’s

case in 2016 and the Court of Appeal ordered the matter be heard again.

In the case now decided, after hearing evidence from witnesses for OIC and the Department of Water and Environmental Regulation (the Department) the Tribunal has concluded that OIC is entitled to more than 335 gigalitres per year. However, taking into account OIC’s submissions that farmers do not wish to increase, but only to maintain the amount of the licence, the Tribunal has ordered that the correct and preferable decision is to set the licence amount at 335 gigalitres for the next 10 years, effective from the date of the decision.

Background to the decision

OIC is a Water Services Provider (WSP) for Stage 1 of the Ord River Irrigation Area (ORIA) under the Water Services Act 2012 (WA) (WSA) and is licensed to provide irrigation water to farmers. In WA, a person diverting water from a water source, including a WSP, must hold a separate licence under the Rights in Water and Irrigation Act 1914 (WA) (RiWI). OIC has held a RiWI licence for 335 gigalitres since 2004 and the licence was last renewed in 2010.

In 2015, the Department again renewed OIC’s licence, but sought to impose a reduction of 110 gigalitres per year. Consistent with its view that the Department did not well understand irrigation in the ORIA, OIC applied for review in the Tribunal and obtained a stay of the Department’s decision, legally maintaining OIC’s RiWI licence at 335 gigalitres per year pending finalisation of the Tribunal review.

OIC’s case before the Tribunal, unchanged throughout all the proceedings, was that viable irrigated agriculture in Stage 1 of the ORIA depends on certainty of availability of 335 gigalitres of water per year. Within that allocation, OIC also claimed the right to retain water representing gains in efficiency achieved through investment of approximately $4.05 million of farmers’ funds in improvements to the channel system, commissioned in 2008. These improvements included conversion from the 1960s original, manually operated total-loss system to a partially automated closed system.

However, the Department asserted that it was entitled to ‘recoup’ water from OIC’s license in circumstances where OIC had not diverted from storage all of its licensed allocation of 335 gigalitres.

The case was first heard in November 2016 over 4 days in Perth, after the Tribunal refused OIC’s application to have the matter heard in Kununurra. The Tribunal reserved its decision and extended delivery of its decision several times before issuing a decision in mid-2017 reducing OIC’s

licence to the figure proposed by the Department, on the basis that OIC had failed to discharge a legal onus of proof to persuade the Tribunal that the reduced licence limit asserted by the Department should not stand.

OIC applied to the Court of Appeal for leave to appeal the Tribunal’s decision, arguing that the Tribunal had not conducted the case in the manner required for review of water licences under WA law. The Court of Appeal granted leave and heard the appeal case in May 2018.

The Department contested the appeal case. However, the Court of Appeal found in favour of OIC and remitted the matter for re-hearing in a ‘differently constituted’ Tribunal, before different judges.

The Tribunal’s review jurisdiction

In examining the questions of law raised by OIC, the Court of Appeal concluded that the Tribunal had conducted the initial case incorrectly and that:

The Tribunal’s misunderstanding as to onus involved a failure to exercise the jurisdiction entrusted to it by Parliament. (Ord Irrigation Cooperative Ltd v Department of Water [2018] WASCA 83 at [127]).

The Court found that the Tribunal’s mistake had the effect of denying OIC

the review OIC was legally entitled to when it first applied for review of the Department’s decision in 2015 [at 127]. The proper approach, which was not followed in the first Tribunal hearing, was for the Tribunal to consider the material before it and form its own view as to an appropriate annual water entitlement to be included in the licence, having regard to the considerations identified in cl 7(2) of Schedule 1 of the RiWI Act [at 124].

Licence renewal and entitlement reduction

Following the Court of Appeal decision, it is clear that in WA a licence to take water may be reduced at the time of licence renewal. If a licence is to be renewed, the Minister or delegate, or the Tribunal reviewing such a decision, has the power under cl 15(1) Sch 1 RiWI Act to determine what terms, conditions and restrictions are to be included in the licence – such as a limit on the amount of water a licensee may take in any year. It is at the decision maker’s discretion what the decision maker considers and takes into account, however, the decision maker must have regard to the mandatory

relevant considerations referred to in cl 7(2) Sch 1.

Calculation of water licences

In making its new decision, the Tribunal has approached the matter consistently with the Court of Appeal ruling. As one of the mandatory relevant considerations in cl 7(2), the policy document known as the Ord Surface Water Allocation Plan (OSWAP) has been taken into consideration. OSWAP refers to water entitlements matching ‘justified crop needs and efficient water use for the area under irrigation’.

Accordingly, the Tribunal heard evidence from OIC and the Department concerning likely crop mix and crop water requirements looking ahead to 2029. By ascertaining crop types, areas to be irrigated, crop water requirements and irrigation efficiency, the Tribunal held that it is possible to derive a figure for annual water entitlement under OIC’s RiWI licence. Both parties agreed with this method, but differed on the relevant numbers in each category of variable. After intensive examination of witnesses, the Tribunal preferred the evidence of OIC’s experts. Further, in its reasons for decision, the Tribunal adopted the 10-year crop projection prepared by OIC, which takes into account market factors and emerging trends in crop mix, rejecting the tabulation advocated by the Department, which restricted crop mix by reference to past planting figures.

The approach taken by the Tribunal to identifying justified water needs sets a precedent for the determination of water entitlement in future OIC licences. Significantly, the approach is also a precedent for other water licensing decisions in WA, demonstrating clearly that the licence decision maker may take into account the future of a development project dependent on a water licence, as well as the past performance of a licence holder.

Having determined the method and outcome of calculating justified crop needs and efficient water use for the area under irrigation, the Tribunal considered the mandatory matters in cl 7(2). Those matters include impact

on other water users. On the evidence presented by the Department and OIC, the Tribunal concluded that there is:

not likely to be any alternative or competing user for any part of this annual water entitlement over the 10 year term of the licence and there is sufficient water within the 750 GL per year allocation limit for the Main Ord subarea to enable such development in the Ord East Kimberley Expansion Project as is likely to occur over the next 10 years [at 313].

Management plans and recoupment policies

Also central to the Department’s argument for reducing OIC’s water entitlement was the OSWAP policy enabling recoupment of ‘unused’ water from a licensee. This policy states that the Department will recoup (take away) water from a licence at the time of licence renewal, if the licensee has never used the water, or has not used all of its entitlement in two years consecutive years. In OIC’s case, the Tribunal found that the historical amount of water diverted by OIC in certain periods was less than the full licenced entitlement.

However, the Tribunal held that there were three cogent reasons for departing from the recoupment policy. Firstly, having established that the appropriate amount of water for OIC’s licence was more than 335 gigalitres per year looking ahead to 2029, applying the recoupment policy and taking away a volume of water representing past underutilisation would conflict with the overarching policy objective of the OSWAP to ‘match justified crop needs and efficient water use for the area under irrigation’.

Secondly, crop mix in the ORIA is volatile and ‘historical water use over the last 10 years is an extremely poor measure of future water needs’. The ORIA continues to be in transition and future water utilisation is not constrained by past farming crop choices.

Thirdly, the efficiency savings achieved by OIC through its investment of $4.05 million in upgrading the irrigation system predate the introduction of the OSWAP recoupment provisions. The relevant applicable policy at the time of the efficiency upgrade was Statewide Policy 11 (SP 11), which states that the Department will not recoup water saved through measures to improve efficiency. Furthermore, OIC’s demonstrated intention to use water saved for new irrigation development in the ORIA East Bank meets the expectation in SP 11 that ‘the water saved will be utilised, either through trading or expansion of the existing operation’.

The Tribunal’s orders

Taking into account the matters summarised above, the Tribunal has ordered that:

1. The application for review is allowed.

2. Pursuant to s 29(3)(b) of the State

Administrative Tribunal Act 2004 (WA), the decision made by the respondent on 14 August 2015 is varied by:

(a) extending the duration of Surface

Water Licence SWL156287(3) to 10 years from the date of this order;

(b) specifying the annual water entitlement in Surface Water Licence

SWL156287(3) as 335 GL; and

(c) specifying, with effect from the date of this order, pursuant to s 29(5) (b) of the State Administrative

Tribunal Act 2004 (WA), that the 'Annexure to Licence to Take Water

SWL156287(3)' referred to in term, condition or restriction 3 of Surface

Water Licence SWL156287(3) is the document which appears in the respondent's section 24 bundle dated 10 May 2019 (volume 2) (Exhibit 3.1) at pages 1746-1756

Jeremy Fisher, Kingfisher Law Instructing Solicitor for Ord Irrigation Co-operative Ltd jeremyfisher@kingfisherlaw.com.au