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Fracking: The deeper question

"It is not a right of veto for the local community."

The legal debate over coal seam gas ownership and access has seen farmers, environmentalists and radio shock jocks unite across the country, fighting what they see as their common enemy: the oil and gas resources sector.

What has particularly split communities, so to speak, has been concern regarding the practice of hydraulic fracturing – or ‘fracking’ – where rocks and coal seams are broken apart to release gas trapped inside.

One of the most contentious legal questions is this: what happens if landowners don’t want the mining companies to come onto their land to drill for gas?

This was the basis of the ‘Lock the Gate’ campaign – the farmers didn’t wait for the lawyers.

However, while farmers might want to say no, the law may not be on their side. The resources underneath their land belong to the state; the state licences the right to explore and extract those resources; a properly qualified mining company that meets the requirements will be granted a license; that company is then authorised to conduct mining activities which will either explicitly or implicitly include rights to access the resource.

That  view is based solely on the division of ownership rights between the land and the underlying resource, outlines Deakin Law School Professor Samantha Hepburn, an expert on mining, energy and environmental law.

Professor Hepburn also says that a particular source of friction for landowners is that unlike, say, an open-cut coal mine – where the mining company will purchase the land – unconventional gas reservoirs extend below private land but the mining company does not need to purchase all of the land to drill into the reservoir.  Access to the resource is sufficient.

The reason for this is because the drilling process is quite contained – a few bore holes in the right spots, rather than removing large amounts of topsoil – although desite this, the ramifications of these operations for surface owner activities can be quite significant.

Common law not the answer

The statutory resource titles held by mining and petroleum companies are different to the common law rights that govern land ownership. The law relating to land estates has been established by court cases and other accepted practices, going back centuries in some instances.

The statutory rights of resource title holders often do not work effectively with the common law estates of land owners.  Hence, to avoid a perception that landowners’ rights are being given away through back-room deals, governments are encouraging mining companies to gain community acceptance through consultation and broader social licencing protocols.

‘Among the states, Queensland has a better developed process, with a conduct and compensation agreement that requires negotiation for access with landholders by the mining company; and the landholder is compensated for any damage to the land,’ says Prof Hepburn.

These rights are for the landowner's protection, but do not give anyone an automatic right to veto exploration and mining – despite the easy appeal of a campaign slogan like ‘Lock the Gate.’

‘The important thing to remember with consultation is that it's an information exchange; it is not a right of veto for the local community,’ says Prof Hepburn.

She recommends the Metgasco decision in New South Wales as a case study on what can happen if no attempt is made to win over the local community.

Following rules is no excuse

Energy miner Metgasco did what was required of it under the legislation that was in place at the time – which amounted to nothing more than taking steps to inform affected landowners.

‘We know from the Metgasco decision in New South Wales that the courts are going to be fairly strict in terms of what ‘consultation’ means.’

The strict legalistic approach taken by Metgasco, however, generated enormous bad will –local protests led the NSW government to decide Metgasco had not complied with their community engagement requirements and therefore were in breach of their environmental management conditions and suspended the licence.

Metgasco went back to the courts, and the suspension was set aside. ‘Ultimately the court concluded that the authorised rights of the resource title holder should be upheld and that Metgasco had not infringed any community consultation obligations because the legal requirements imposed on it did not require broader stakeholder consultation,’ says Prof Hepburn.

And the case is not over yet: As a footnote, the NSW government had entered into negotiations to compensate Metgasco, but by early September 2015 these had broken down, and it seems it’s back to court again.

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