Why miners have a right to what’s under your land

Samantha Hepburn Associate Professor, School of Law at Deakin University, 18/11/2011

All over Australia, landowners are fighting to keep mining companies off their property.

From the Darling Downs to the Liverpool Plains, farmers have been locking out coal seam gas extraction companies. In Victoria, exploratory licences have been granted to the Queensland based mining company, Mantle Mining Pty Ltd, to investigate private land situated in and around the rural Victorian areas of Bacchus Marsh, Darley, Myrniong and Ballan.

Landowners are worried about the effects that exploratory drilling may have upon their the land as well as the possibility that an open cut coal mine may be developed.

Who owns the minerals under your land?

This article looks primarily at Victorian legislation covering mining and property rights. However, similar legislation exists in most other states.

Originally, the common law position was that the minerals belonged to the landowner: they were regarded as an inherent product of the land itself. The common law assumed that the person who owned the land owned not only the surface of the earth, but also the space above that surface and the soil below that surface.

Under common law, landowners owned sub-surface minerals and could prevent anyone from excavating them; doing so would constitute a trespass. The only qualification was the right of the Crown to extract gold and silver, characterised by the common law as “royal minerals”.

This common law position was, however, significantly circumscribed when specific legislation vested the ownership of minerals contained within the soil of private landholdings in the Crown.

In Victoria, the Mines Resource (Sustainable Development) Act 1990 (Vic) states that the Crown owns all minerals (with a few small exemptions). Similar provisions exist in other states.

The statutory definition of minerals is very broad, stating that minerals are “any substance which occurs naturally as part of the earth’s crust” including oil shale and coal, hydro-carbons and mineral oils contained in oil shale or coal or extracted from oil shale or coal by chemical or industrial process. Water, stone, peat or petroleum are not “minerals” in this definition.

This statutory vesting means private landowners no longer control the minerals in their sub-surface soil, even though they continue to own the land itself. As owner of the minerals, the Crown is legally entitled to grant exploratory or mining licences to mining companies, allowing companies to explore for or extract sub-surface minerals. The effect of this process upon private landholdings is often devastating.

Is there any protection for landowners or the environment?

The Mines Resource (Sustainable Development) Act 1990 (Vic), which replaced the previous Mines Act 1958 (Vic), attempts to balance the competing rights of private landowners and mining licensees. Licensees have to comply with a range of regulatory requirements when applying for an exploratory or mining licence. The Act also outlines a range of circumstances where land exemptions or excisions can be sought.

The law doesn't favour landholders opposed to mining. 

This legislation provides some protection for landowners and explicitly mandates a range of sustainable development principles to be taken into account. But many of the existing provisions provide very limited protection for landowners and are in desperate need of reform.

Private landowners do have the option to either exempt their land from the application of a licence or to circumscribe the scope of the licence. The minister can also exempt land from the application of an exploratory licence or a mining licence.

In making a determination, the minister should take account of sustainable development principles. In particular, he or she should attempt to properly balance the social and environmental importance of the land with any existing need to promote mineral resource development.

Section 2A(2) defines “sustainable development” to include:

equity between generations, community well-being and welfare enhanced by economic development for the benefit of future generationsprotection of biological diversity and ecological integrity long and short term environmental, social and equity considerations.

Where the minister does make a decision to exempt private land from an exploratory or mining licence, that exemption may subsequently be revoked. The minister can also issue certain applicants a coal licences over land even if there is an exemption.

Agriculture v mining

Landowners can apply to have agricultural land excised from a mining licence (though not from exploratory licence applications). Agricultural land includes private land used primarily for cultivating and selling produce or plants, keeping animals, poultry or bees and commercial fishing.

The minister must excise the agricultural land if a mining licensee consents to it. Alternatively, the minister may excise the land where there is greater economic benefit in retaining the land for agricultural purposes than in mining.

Effectively, an application to excise agricultural land from a mining licence cannot be made before a mining licence has been issued (or ever, if the licence is for exploration). Broader excision provisions would give agricultural landowners greater certainty as well as a greater sense of involvement in the licence process.

Prohibited areas

Exploration or mining is prohibited, if that work is located within 100 metres of a house where someone lives (if the house was there first). It is also prohibited if the work is on land which is protected under the Aboriginal Heritage Act 2006. This prohibition may, however, be overridden where the landowner or occupier has given consent.

These provisions need reform. Currently, if one owner or occupier gives consent, this binds all subsequent owners and occupiers of the land. But the consent does not have to be registered anywhere. This means that a future occupier may purchase the land completely unaware of the existence of a past consent order. They may not know that exploratory or extraction mining can be conducted close to their home.

The application process

When an applicant seeks an exploration or mining licence, they have to publish their name, the licence they’re seeking and the area covered in a Wednesday edition of both a Victorian and a regional newspaper, within two weeks of being notified by the Minister that the application has been given priority. This notification must also set out how to object to the application.

If damage is done during exploration, owners can seek compensation. 

There is no requirement to individually notify affected owners or occupiers of private land covered by the licence, except in very specific circumstances (renewal of existing mining licence or licence sought over exempted land.) Given the effect that exploratory and mining licences may have upon private landholdings, these notification provisions are manifestly unfair and are in need of reform.

Objections must be received within 21 days of the application being advertised. If a landowner misses the advertisement in the Wednesday paper they may find, as was the case with many Victorian residents, that within a few weeks they are unable to make any objection. Even those raising strong issues of sustainable development will miss out, because they are out of time.

Compensating landowners

Compensation is available for landowners. The provisions are broad and flexible but of course, work on the basis of an actual or expected loss, damage or deprivation to the land.

A licensee must reimburse an owner or an occupier of private land for “loss or damage that has or will be sustained” as a “direct, nature and reasonable consequence” of work approved or done under a licence.

Loss that is covered includes deprivation of possession, damage to the surface of land or any improvements (and loss of the opportunity to make improvements), severance of the owner from the land, loss of amenity (and this includes recreational and conservation values) and a reduction in the market value of the land.

Where a landowner must obtain replacement land, incidental costs associated with obtaining that land must be compensated as well as an additional 10% for what is described as “intangible, non-pecuniary” disadvantage.

The provisions of the Mines Resource (Sustainable Development) Act 1990 (Vic) has equivalent provisions in other states. There is the Mineral Resources Development Act 1995 in Tasmania, which applies the same 100 metres rule to exploratory licence works. The Mining Act 1992 (NSW) applies the same notice rules for exploratory licence applications as the Victorian regulations. The Mineral Resources Act 1989 (Qld) applies notification and objection entitlements in accordance with provisions under the Environmental Protection Act (Qld) (1994).

The Victorian legislation has a strong focus on the economic importance of exploratory and mining licences. The lack of consistency in the provisions aimed at protecting private landowners has ultimately resulted in an act that that cannot respond effectively to the legitimate expectations of private landowners.

As recent events have shown, this generates tension and significantly diminishes the capacity of the minister to evaluate issues of sustainable development, relevant to the future development of Australia, in a fair and balanced manner.

This article originally appeared on The Conversation


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