Cougar Energy's unprecedented move to sue Queensland bureaucrats who shut down its $550 million underground coal gasification project is a bullying tactic, treasurer Andrew Fraser says.
The government closed the Kingaroy project in the state's southeast after the cancer-causing chemical benzene was found last year in a groundwater monitoring bore on the site.
Cougar allegedly failed to notify authorities of the find for two weeks.
Cougar on Monday launched a claim in the Supreme Court in Brisbane against former Department of Environment and Resource Management chief executives John Bradley and Terry Wall, and current head James Reeves, as well as the state.
The company is alleging negligence and breach of statutory duties in their administration of the state's Environmental Protection Act and is seeking compensation of $34 million.
This was believed to be the first time in Queensland's history that a company was suing bureaucrats, the company said.
STATE WILL FIGHT
Treasurer Andrew Fraser said the government would "vigorously" fight the claim and would protect state workers.
"We are not going to be in a position here where a company decides to personally target individual officers of the government for multi-million-dollar damages to try and make officers cower," he told reporters in Brisbane.
"I know that these offices discharged their duties honourably in pursuit of the public interest."
He said the operation was shut down because Cougar couldn't guarantee that the breaches wouldn't occur again.
"The government's decision stacks up here," he said.
Cougar chairman Malcolm McAully said the plant's closure was unreasonable and extreme.
"At no time did Cougar Energy cause harm to the environment and at no time did we endanger drinking water for either human or livestock consumption," he told reporters in Brisbane.
He said benzene was found in two of 530 samples taken and those were isolated and transitory readings.
'ACTING UNREASONABLY'
"The facts show that the government and DERM [Department of Environment and Resource Management] officials acted unreasonably in relying on what was known at the time to be a falsely reported test result," he said.
Mr McAully said Cougar would also argue that DERM had incorrectly applied quality guidelines for the contamination of drinking water, instead of non-potable water guidelines as set out in their permit.
The bores at the Kingaroy plant were not accessible for drinking, and should have therefore been bound by a much higher contamination threshold level - 950 parts per billion (ppb) - instead of 1 ppb for drinking water.
He said the bureaucrats were being targeted because they were the ones wielding power.
"It is the actions of the Bligh government, these office holders and their unreasonable decisions that have inflicted a significant loss on the company," Mr McAully said.
The company is seeking the compensation for redundancies paid to staff, capital that had been invested and the closing of Cougar's Brisbane office.
Mr McAully said the shutdown was "politically motivated" and the case highlighted concern over sovereign risk in Queensland.
"We believe that the people in positions of authority have succumbed to misinformation and pressures from local farmers and politicians," he said.
Cougar tried to resolve the forced closure for 15 months in good faith, but the department had continued to refuse it, despite a wealth of scientific evidence that its operations posed no threat to the environment, Mr McAully said.
"All of our proposals have been rejected. The company is left with no option but to seek court intervention," he said.
Underground coal gasification is a new technology approved for limited trial in Queensland that involves underground combustion and the production of a synthetic gas.
