AUSTRALIAN COMPETITION TRIBUNAL

APPLICATION BY ORICA IC ASSETS LTD & ORS RE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM

 

[2004] ACompT 1

 

 

 

 

Administrative Appeals Tribunal Act 1975 (Cth), s 43

Gas Pipelines Access (South Australia) Act 1997, s 38 of Schedule 1

Land and Environment Court Act 1979 (NSW), s 39

Trade Practices Act 1974 (Cth), ss 44K, 44L, 44ZP, 44O 101(2)

Re Duke Eastern Gas Pipeline Pty Ltd [2001] ACompT 2; (2001) 162 FLR 1; (2001) ATPR 41-821

 

 

 

 

 

 

 

 

 

 

 

RE:                   APPLICATION FOR REVIEW OF THE DECISION BY THE MINISTER FOR INDUSTRY, TOURISM AND RESOURCES PUBLISHED ON 19 NOVEMBER 2003 IN RELATION TO THE APPLICATIONS FOR REVOCATION OF COVERAGE OF CERTAIN PORTIONS OF THE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM

 

BY:                   ORICA IC ASSETS LTD (formerly Incitec Ltd) (ABN 410 107 672 63) And ENDEAVOUR COAL PTY LTD (ABN 380 998 304 76) And ENERGY USERS ASSOCIATION OF AUSTRALIA INC (ABN 83 814 086 707) And ENERGY ACTION GROUP INC (A00127896)

 

NO 6 OF 2003

GYLES J (Deputy President), MR RC DAVEY and MS MM STARRS

12 FEBRUARY 2004

SYDNEY

IN THE AUSTRALIAN COMPETITION TRIBUNAL

NO 6 OF 2003

 

RE:	APPLICATION FOR REVIEW OF THE DECISION BY THE MINISTER FOR INDUSTRY, TOURISM AND RESOURCES PUBLISHED ON 19 NOVEMBER 2003 IN RELATION TO THE APPLICATIONS FOR REVOCATION OF COVERAGE OF CERTAIN PORTIONS OF THE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM
BY:	ORICA IC ASSETS LTD (formerly Incitec Ltd) (ABN 410 107 672 63) FIRST APPLICANT   And ENDEAVOUR COAL PTY LTD (ABN 380 998 304 76) SECOND APPLICANT   And ENERGY USERS ASSOCIATION OF AUSTRALIA INC (ABN 83 814 086 707) THIRD APPLICANT   And ENERGY ACTION GROUP INC (A00127896)  FOURTH APPLICANT
THE TRIBUNAL:	GYLES J (Deputy President) MR RC DAVEY MS MM STARRS
DATE:	12 FEBRUARY 2004
PLACE:	SYDNEY

 

 

 

THE TRIBUNAL RULES THAT:

 

1.         The decision of the Minister which is the subject of the review by the Tribunal is as follows:

‘In accordance with section 1.34 of the National Third Party Access Code for Natural Gas Pipeline Systems (National Gas Code), I have decided that coverage of the Moomba to Wilton gas transmission pipeline (the MSP Mainline) is to be:

·        revoked for that part of the MSP Mainline from the exit flange at the Moomba processing facility to immediately upstream of the off-take point of the Central West pipeline at Marsden, New South Wales; and

·        retained for that part of the MSP Mainline from the off-take point of the Central West pipeline at Marsden to the Sydney city gate at Wilton, New South Wales.’

2.         For the purposes of the review of that decision, the Tribunal is bound to apply s 1.36 of the National Third Party Access Code for Natural Gas Pipeline Systems without limitation.

 

 

IN THE AUSTRALIAN COMPETITION TRIBUNAL

NO 6 OF 2003

 

RE:	APPLICATION FOR REVIEW OF THE DECISION BY THE MINISTER FOR INDUSTRY, TOURISM AND RESOURCES PUBLISHED ON 19 NOVEMBER 2003 IN RELATION TO THE APPLICATIONS FOR REVOCATION OF COVERAGE OF CERTAIN PORTIONS OF THE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM
BY:	ORICA IC ASSETS LTD (formerly Incitec Ltd) (ABN 410 107 672 63) FIRST APPLICANT   And ENDEAVOUR COAL PTY LTD (ABN 380 998 304 76) SECOND APPLICANT   And ENERGY USERS ASSOCIATION OF AUSTRALIA INC (ABN 83 814 086 707) THIRD APPLICANT   And ENERGY ACTION GROUP INC (A00127896) FOURTH APPLICANT
THE TRIBUNAL:	GYLES J (Deputy President) MR RC DAVEY MS MM STARRS
DATE:	12 FEBRUARY 2004
PLACE:	SYDNEY

REASONS FOR RULING

 

1                     During the course of the first hearing of this application, questions arose as to the scope of the proceedings which require resolution before any meaningful directions can be given for the disposition of the matter.  Arguments were invited from all potential participants in the proceeding, although formal orders as to participation have not yet been made. 

2                     The Moomba–Sydney Pipeline System (MSP) was listed in Schedule A to the National Third Party Access Code for Natural Gas Pipeline Systems (the National Gas Code) in the following manner:

Pipeline Licence	Location/Route	Operator	Length (km)	Pipe Diameter (mm)	Regulator
	Moomba to Sydney Pipeline System	East Australian Pipeline Ltd			ACCC
SA:PL7	Moomba to Queensland border		111 (incl 10 km loop at Moomba)	864 660
Qld:PPL21	SA border to NSW border		56.2	864
NSW:16	Qld/NSW border to Wilton		1,142	864
NSW:19	Young to Wagga Wagga		131	324/89
NSW:19	Cootamundra Spur		2.7	89
NSW:20	Junee to Griffith/Leeton		180	168/114
NSW:17	Young to Lithgow		212	168
NSW:18	Oberon Spur		31	168
NSW:22	Orange Spur		24	114
NSW:17	Bathurst Spur		2	114
NSW:21	Dalton to ACT border		52	273
	ACT/NSW border to North Watson		6	273

MSP was automatically covered from the commencement of the Code.

3                     At all material times the MSP has been owned and operated by East Australian Pipeline Limited (EAPL).

4                     On 18 June 2001 the National Competition Council (NCC) received a document entitled ‘Application for Revocation of Coverage of Parts of the Moomba–Sydney Pipeline System’ from EAPL.  It described the covered pipeline as follows:

‘(1)      the Moomba to Sydney Pipeline, a natural gas transmission pipeline extending from Moomba in South Australia to Wilton (Sydney) in NSW under pipeline licences SA:PL7, Qld:PPL21 and NSW:16 (“Mainline”);

(2)       a lateral pipeline from Dalton to North Watson (Canberra) in the Australian Capital Territory under pipeline licence NSW:21;

(3)       a lateral pipeline from Young to Cootamundra and Wagga Wagga in NSW under pipeline licence NSW:19;

(4)       lateral pipelines from Young to Bathurst, Orange, Lithgow and Oberon in NSW under pipeline licences NSW:17, NSW:18 and NSW:22; and

(5)       a lateral pipeline from Burnt Creek on the Young to Wagga Wagga lateral to Junee, Griffith, Leeton and Narrandera in NSW under pipeline licence NSW:20.’

5                     The operative part of the application was as follows:

‘EAPL seeks revocation of coverage of that part of the Moomba–Sydney Pipeline System comprising:

·              the Mainline, and

·              the Dalton to Canberra lateral.’

6                     The reason for seeking revocation of coverage was expressed as follows:

‘Pursuant to section 1.36 of the Code, coverage must be revoked if the Minister is not satisfied of any one or more of the matters set out in paragraphs (a) to (d) of section 1.9 of the Code.

Following the decision of the Australian Competition Tribunal regarding coverage of the Eastern Gas Pipeline, EAPL believes that criterion (a) can not be considered to be satisfied in respect of the Mainline and the Dalton to Canberra lateral.  Accordingly, EAPL seeks revocation of these parts of the covered pipeline.’

7                     After a procedure which it is not necessary to trace for present purposes, on 19 November 2003 the Minister for Industry, Tourism and Resources (‘the Minister’) made the following decision:

‘In accordance with section 1.34 of the National Third Party Access Code for Natural Gas Pipeline Systems (National Gas Code), I have decided that coverage of the Moomba to Wilton gas transmission pipeline (the MSP Mainline) is to be:

·        revoked for that part of the MSP Mainline from the exit flange at the Moomba processing facility to immediately upstream of the off-take point of the Central West pipeline at Marsden, New South Wales; and

·        retained for that part of the MSP Mainline from the off-take point of the Central West pipeline at Marsden to the Sydney city gate at Wilton, New South Wales

In accordance with section 1.34 of the National Gas Code, I have decided that coverage of the Dalton to Canberra gas transmission pipeline (the Canberra Lateral) is not revoked.’

8                     The Statement of Reasons was as follows:

‘The reasons for my decisions, which incorporate an assessment of the National Competition Council’s final recommendations, are set out in the attached Statement of Reasons.  The coverage criteria have been assessed in the same order that they were provided to me by the National Competition Council, namely Criterion B, followed by Criterion A, C and D.

Consistent with the coverage criteria as set out in paragraphs (a) to (d) of section 1.9 of the National Gas Code, I am satisfied that the whole MSP Mainline continues to meet Criteria A, C and D, and I am satisfied of Criterion B in respect of the MSP Mainline from Marsden to Wilton.  I am not satisfied of Criterion B for the MSP Mainline from Moomba to Marsden.

Consistent with the coverage criteria as set out in paragraphs (a) to (d) of section 1.9 of the National Gas Code, I am satisfied that the Canberra Lateral continues to satisfy each of Criteria A, B, C and D and therefore that coverage of the Canberra Lateral should be retained.’

9                     On 5 December 2003, an application for review pursuant to s 38 of Schedule 1 to the Gas Pipelines Access (South Australia) Act 1997 and s 1.39 of the National Gas Code was made by the applicants.  The substance of the application was as follows:

‘On 19 November 2003 the Hon. Ian MacFarlane, Minister for Industry, Tourism and Resources, decided under s.1.34 of the Code in accordance with s.1.36 of the Code (“the decision”) that coverage of the Moomba to Wilton gas transmission pipeline (“the pipeline”) was to be revoked for that part of the pipeline from the exit flange at the Moomba processing facility to immediately upstream of the off-take point of the Central West pipeline at Marsden, New South Wales.

Each of the applicants, being a person adversely affected by the decision, applies for a review of the decision.

ORDERS SOUGHT

A.                 Pursuant to s.38(9) of the Access Law, an order that the decision be set aside and that there be substituted therefor a decision that coverage of the entire pipeline be retained.

B.                 Such further or other orders as the Tribunal sees fit.’

            (emphasis added)

It is the scope of that application which is in issue. 

10                  The applicants contend that they have only applied for a review in relation to the revocation of coverage for the limited part of the pipeline from the exit flange at Moomba to the off-take point at Marsden.  They contend that the failure to revoke in relation to the balance of the MSP is not an issue in the review.  Furthermore, it is contended that, as the Minister’s decision that he was not satisfied of Criterion (b) for the MSP mainline from Moomba to Marsden was the basis for his decision to revoke coverage, it is only that issue which falls for decision in this review.

11                  It is contended on behalf of EAPL (with the support of the Minister, the NCC and The Australian Gas Light Company) that the decision of the Minister was in respect of the original application by EAPL and that, no matter how phrased, the Ministerial decision disposed of the whole of that application.  As the Tribunal stands in the shoes of the Minister, it must also dispose of the whole application made by EAPL.  Furthermore, it is contended that, on that footing, the Tribunal must decide for itself the application of each of the statutory criteria and not just Criterion (b).

12                  The relevant parts of s 38 are as follows:

‘Application for review

38.(1)  A person adversely affected by a decision to which this section applies may apply to the relevant appeals body, in accordance with this Part and any applicable law governing the practice and procedure of that body, for a review of the decision.

…

(9)       In proceedings under this section, the relevant appeals body may make an order affirming, or setting aside or varying immediately or as from a specified future date, the decision under review and, for the purposes of the review, may exercise the same powers with respect to the subject matter of the decision as may be exercised with respect to that subject matter by the person who made the decision.

…

(12)     A determination by the relevant appeals body on the review of a decision has the same effect as if it were made by the person who made the decision.’

13                  It is to be noted that s 39 (entitled ‘Limited review of certain decisions of Regulator’) which relates to certain access arrangements, includes:

‘(2)      An application under this section –

(a)       may be made only on the grounds, to be established by the applicant –

            (i)         of an error in the relevant Regulator’s finding of facts; or

(ii)       that the exercise of the relevant Regulator’s discretion was incorrect or was unreasonable having regard to all the circumstances; or

(iii)             that the occasion for exercising the discretion did not arise; and

(b)       in the case of an application under subsection (1), may not raise any matter that was not raised in submissions to the relevant Regulator before the decision was made.

…

(5)       The relevant appeals body, in reviewing a decision under this section must not consider any matter other than -

(a)       the application for review and submissions in support of the application (other than, in the case of an application under subsection (1), any matter not raised in submissions to the relevant Regulator before the decision was made);

(ab)     the relevant access arrangement or proposed access arrangement or revision or proposed revision of an access arrangement, together with any related access arrangement information or proposed access arrangement information;

(ac)      in the case of an application under subsection (1a) – any notice of a proposed variation of Reference Tariff within an Access Arrangement Period given by the service provider to the relevant Regulator under the Code;

(ad)     any written submissions made to the relevant Regulator before the decision was made;

(c)                any reports relied on by the relevant Regulator before the decision was made;

(d)               any draft decision, and submissions on any draft decision made to the relevant Regulator;

(e)        the decision of the relevant Regulator and the written record of it and any written reasons for it;

(f)        the transcript (if any) of any hearing conducted by the relevant Regulator.’

14                  Relevant portions of the National Gas Code are as follows:

‘1.24    Pipelines listed in Schedule A and Pipelines that have become Covered after the commencement of the Code may cease to be Covered where a person applies to the NCC for Coverage of the Covered Pipeline to be revoked and, after receiving a recommendation from the NCC, the Relevant Minister determines that Coverage of the Covered Pipeline should be revoked.

1.25     Any person, including the Relevant Regulator, may make an application to the NCC requesting that Coverage of a particular Covered Pipeline be revoked.  The NCC may publish guidelines concerning the form and content of revocation applications and specifying the amount of any fee to be paid on the making of an application.  If it does so, applications must be made in accordance with those guidelines.

…

1.29     Within 28 days (but not earlier than 14 days) after the day on which its draft recommendation became publicly available, the NCC must submit a recommendation to the Relevant Minister:

(a)               that Coverage of the Covered Pipeline be revoked; or

(b)               that Coverage of the Covered Pipeline not be revoked.

If the NCC recommends that Coverage of the Covered Pipeline be revoked, it may do so to a greater or lesser extent than requested by the applicant if, having regard to the part of the Covered Pipeline that is necessary to provide services that Prospective Users may seek, the NCC considers it appropriate.

…

1.31          Subject to section 1.26(a), the NCC cannot recommend that Coverage of the Covered Pipeline be Revoked, to any extent, if the NCC is satisfied of all of the matters set out in paragraphs (a) to (d) of section 1.9, but the NCC must recommend that Coverage of the Covered Pipeline be revoked (either to the extent described, or to a greater or lesser extent than that described, in the application) if the NCC is not satisfied of one or more of those matters.

…

1.34          Within 21 days after a revocation recommendation is received by the Relevant Minister, the Relevant Minister must make a decision:

            (a)        that Coverage of the Covered Pipeline is revoked; or

            (b)        that Coverage of the Covered Pipeline is not revoked.

If the Relevant Minister decides that Coverage of the Covered Pipeline is revoked, the Relevant Minister may do so to a greater or lesser extent than requested by the applicant if, having regard to the part of the Pipeline that is necessary to provide Services that Prospective Users may seek, the Relevant minister considers it appropriate.

…

1.36     The Relevant Minister must decide not to revoke Coverage of the Covered Pipeline, to any extent, if the Relevant Minister is satisfied of all of the matters set out in paragraphs (a) to (d) of section 1.9, but the Relevant Minister must decide to revoke Coverage of the Covered Pipeline (either to the extent described, or to a greater or lesser extent than that described, in the application) if not satisfied of one or more of those matters.

…

1.39     A decision on revocation is subject to review by the Relevant Appeals Body under the Gas Pipelines Access Law.  Subject to the Gas Pipelines Access Law, the decision on revocation has effect on the date specified by the Relevant Minister, which date must not be earlier than 14 days after the day the decision was made.’

15                  It is pointed out on behalf of the applicants that EAPL only partially succeeded in its application and thus its interests were adversely affected by the Ministerial decision.  This gave it the right to seek review pursuant to s 38, but only within a strictly limited time.  It did not take that course.  In that sense it accepted the adverse decision in relation to that part of the pipeline where coverage was not revoked.  It is suggested that it would be anomalous in those circumstances to now permit it to, in effect, pursue an application for review out of time.  It was further submitted that both the form and the substance of the Ministerial determination was that there was a series of decisions, each relating to a different portion of the pipeline.  For the purposes of s 38, the decision which was enlivened by the application to the Tribunal was only in respect of the separate decision to revoke coverage of part of the pipeline.  These arguments have some attraction, particularly as, if accepted, they would narrow the task necessary to be performed by the Tribunal.  However, there are difficulties in that approach having in mind the nature of the role and function of the Tribunal under the legislation.

16                  Section 38 plainly provides for a de novo rehearing with the Tribunal standing in the shoes of the Minister.  Although some use was sought to be made of a comparison with provisions of the Trade Practices Act 1974 (Cth), such as 44K, 44L, 44ZP and 44O and 101(2), to suggest that s 38 was limited in some way, the effect of it is not to be limited in some fashion which is not spelled out in the section.  It is in a form generally familiar in administrative review where a full de novo decision-making process is provided (cf Administrative Appeals Tribunal Act 1975 (Cth), s 43; Land and Environment Court Act 1979 (NSW), s 39).  This is underlined in the present statute as, where a limited role is intended, such as in s 39, that is spelled out.

17                  This view is reflected in the following passage from Re Duke Eastern Gas Pipeline Pty Ltd [2001] ACompT 2 at [46]; (2001) 162 FLR 1 at 10; (2001) ATPR 41-821 at 43,056:

‘At the end of the day it was common ground that the Tribunal was bound to reach its own conclusion on the application of the statutory criteria to the facts upon the basis of the Tribunal’s assessment of the material which is before it.  The result is that unless the Tribunal is affirmatively satisfied as to each of the matters set forth in pars (a) to (d) of s 1.9 of the Code, the Tribunal must set aside the Minister’s decision.  The Tribunal, like the Minister, has NCC’s coverage recommendation before it (the Tribunal reviews the Minister’s decision, not the coverage recommendation), but the Tribunal is no more bound by that recommendation than was the Minister.’

18                  This analysis makes it clear that the argument advanced on behalf of the applicants that the Tribunal is limited to considering Criterion (b) is misconceived.  As the passage cited from Duke Energy spells out, the Tribunal in making its decision is bound by precisely the same duty to consider the statutory criteria as was the Minister.

19                  It is submitted for the applicants that it is only the Ministerial decision which is reviewed pursuant to s 38 and that this does not, at least in the present case, convert the process into a hearing as to the original EAPL application.  This is correct so far as it goes.  However, the decision to be reviewed is a decision as to a particular application.  It is contended on behalf of EAPL that the nature of the criteria to be considered pursuant to s 1.9 and s 1.36, together with the express terms of s 1.34, indicate that a pipeline cannot be neatly segmented and one part looked at in isolation from the balance of the pipeline.  Indeed, it is submitted for EAPL that the MSP is one pipeline and that pipeline is necessarily the subject of the decision, no matter that the decision is split up in the sense that it relates differently to separate parts of it.

20                  We do not agree that the mere fact that the MSP can be described as one system means that the whole of that system is necessarily involved in an application for revocation of coverage where that application is limited to particular parts of the system.  The description of the MSP in Schedule A clearly distinguishes between parts of the system, as do the various Pipeline Licences.  On the other hand, we are satisfied that here one decision was made by the Minister in relation to the whole of the MSP Mainline, albeit it operated differently upon different parts of that pipeline.  This view is supported by the form of the application and by the Ministerial decision, and also by the unreality of considering the statutory criteria without taking account of all of the MSP Mainline.  It is worth noting that the form of the orders sought by the applicants for review is consistent with this conclusion.

21                  The Canberra Lateral is not part of the MSP Mainline.  In that respect it is in no different position from the New South Wales Laterals which were never included in the application or decision.  The form of application by EAPL clearly distinguished between the MSP Mainline and the Canberra Lateral, as did the form of the Minister’s decision.  EAPL chose not to apply for a review of the Minister’s decision concerning the Canberra Lateral.  In some respects the detail of the reasons of the Minister may be seen as taking the Canberra Lateral into account when considering the statutory criteria.  However, the review is only of the decision of the Minister, not of the reasons for that decision.  It is not unusual that consideration of statutory criteria in relation to a particular subject will involve facts which are not directly applicable to that subject, but are nonetheless relevant to it.  A review of the decision in relation to the MSP Mainline can be conducted on the basis that the Canberra Lateral remains covered, just as it will be conducted on the basis that the New South Wales Lateral remains covered.

22                  It is arguable that s 1.36 of the National Gas Code could result in the Tribunal revoking coverage in relation to the Canberra Lateral without any application.  The same reasoning would apply to the New South Wales Laterals.  Even if correct, that would not enlarge the scope of the decision which gives jurisdiction to the Tribunal.  It would mean that natural justice would have to be afforded to those affected by any such proposed extension.  That would fall for consideration only if and when such an extension became a real possibility.

 

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Tribunal.

Associate:

Dated:              12 February 2004

Counsel for Orica IC Assets Ltd:	AC Archibald QC with M Collins
Solicitor for Orica IC Assets Ltd:	Mallesons Stephen Jaques
Counsel for Endeavour Coal Pty Ltd:	C Scerri SC with CM Caleo
Solicitor for Endeavour Coal Pty Ltd:	Allens Arthur Robinson
Counsel for the ACCC:	J Beach QC with M Painter
Solicitor for the ACCC:	Deacons
Counsel for the NCC:	TF Bathurst QC with PR Whitford
Solicitor for the NCC:	Clayton Utz
Counsel for EAPL:	N Young QC with J Elliott
Solicitor for EAPL:	KPMG Legal
Counsel for AGL:	CA Moore
Solicitor for AGL:	Gilbert + Tobin
Counsel for the Minister:	AI Tonking
Solicitor for the Minister:	Australian Government Solicitor
Date of Hearing:	4 February 2004
Date of Reasons for Ruling:	12 February 2004