Australia: Coal mining and gas activities and the landholders right of refusal

Background

Following unsuccessful attempts in recent years, on 4 March 2015, Senator Larissa Waters introduced the Landholders' Right to Refuse (Gas and Coal) Bill 2015 (Bill) to the Senate. If passed, the Bill would allow landholders to refuse access for gas and coal mining activities on their land. It would also ban the practice of 'fracking' (hydraulic fracturing) for unconventional gas, including coal seam gas, shale gas and tight gas.

According to Senator Waters' second reading speech, the Bill aims to protect Australia's little good quality agricultural land from inconsistent uses by allowing "farmers, graziers, residents, local councils and native title holders to say 'no' to gas and coal mining on their land". It will also reduce the risks the unconventional gas industry poses to land, surface and ground water, air and climate by implementing a ban on 'fracking' activities.

The Bill

Landholders' right to refuse

The Bill seeks to establish an offence where a corporation enters, or remains on, land for the purposes of engaging in coal or gas exploration or exploitation activities (Gas or Coal Mining Activities), unless:

• the corporation has an ownership interest in the land; or
• prior written authorisation from each person with an ownership interest in the land is given.

In the Bill:

• the term "land" includes land within the beds and banks of streams, watercourses, inundated land; waters in, upon and above land; and subterranean land;
• a legal or equitable interest or a right to occupy land is an "ownership interest". A mere right to engage in Gas or Coal Mining activities is not an "ownership interest" in the land;
• the prior written authorisation must contain specified information and is invalid if the corporation does not advise the landholders in writing of their right to refuse authorization.

The landholder may bring proceedings at any time within 6 years after the day on which the cause of action accrued. The maximum penalty associated with the offence is $850,000.

The Bill would not apply to a gas or coal mining activity undertaken before the Bill is enacted, even if the activity continues after the commencement.

Ban on 'fracking'

The Bill attempts to outlaw hydraulic fracturing operations for unconventional gas, including coal seam gas, shale gas and tight gas. Fines of up to $8,500,000 would apply to companies found to be in breach of this 'fracking' ban.

Third party rights would apply allowing "interested person" including both Australian individuals and entities whose interests have been, are or would be affected by the 'fracking' activities to bring proceedings seeking to restrain 'fracking' activities. These third party rights also apply to individuals or entities that have been engaged in activities for the protection or conservation of, or research into, the environment in a certain timeframe as provided by the Bill.

Bill's current status

The Bill was referred to the Senate Environment and Communications Legislation Committee on 5 March 2015 where a report is due by 7 August 2015. Public submissions can be made until 29 May 2015.

Productivity Commission report on gas activities

In contrast to the efforts of the Greens to restrain gas activities, the Productivity Commission recently released its research paper "Examining Barriers to More Efficient Gas Markets" which identifies the substantial economic benefits of the industry and supports its growth.

Although the paper recognises that the rapid growth of the gas industry has exposed some sharp conflicts between existing landholders, local communities and the gas industry, the Productivity Commission is of the opinion that such conflicts are decreasing as more gas companies have increased their efforts to obtain a 'social licence to operate' at an early stage of the development.

In addition, the Productivity Commission supports current compensation regimes as the best alternative to deal with land conflicts.

In relation to community concerns about environmental and public health risks of coal seam gas activities that have led to CSG moratoria in Victoria and New South Wales, the Productivity Commission suggests that the risks could be better managed through a well regulatory regime and better monitoring and enforcement, rather than moratoria. In its opinion, the expected benefits of the moratoria must be weighed against their expected costs which include higher gas prices for users and reduced royalty and taxation revenue for governments.

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