Tapping coal seam gas reserves has been among the most challenging political issues around the world. Perhaps because the mineral extracted is new, those ranged against such activities can mobilise opposition, invent new dangers from a novel form of mining. It builds on the general opposition to fossil fuels that the motley crew comprising “a clutch of scientists, a theologian and a rugby player are among them”. These have provided a handy target for Malcolm Turnbull to slap down and anoint himself as the noble pragmatist ion contrast to his ideologically motivated predecessor.
Politicians are seeking ways of allowing fracking to achieve wider support. They are faced with a pincer attack from the Alan Jones spearheaded farmers – especially the affluent second home hobby farmers – seeking to avoid incursions into their tranquility and the usual environmental anti-producers. In the US, even the EPA under a green stranglehold has been unable to find any risk from fracking
The tragic suicide of a Queensland farmer, apparently as a result of his failure to prevent fracking has led to a new push. Warren Truss is arguing that farmers should have the right to veto exploration and exploitation of gas on their property.
This is a thorny issue regarding property rights. The English and the American common law parted company over ownership of the sub surface minerals on land about 200 years ago. While the US stuck with the notion cuius est solum, eius est usque ad coelum et ad infernos (whoever’s is the soil, it is theirs all the way to Heaven and all the way to the depths below) at least regarding the undersoil, English common law took away the mineral rights. Australian law has followed this.
Although giving the landowner title to the land provides a common interest between the miner and the farmer and thereby avoids ownership conflict, there are serious disadvantages. Chief among these is that the existence of minerals is very rare and their discovery requires considerable skill. Once discovered they are often extremely valuable.
But the discovery normally owes nothing to the surface landowner, who would, in the case of a successful find obtain a windfall. So if the owner had the mineral rights, and was able to extract, say, 50 per cent of the value, that would mean that the cost of exploration doubles. Obviously there would be a lot less of it.
The Australian mining regime vests ownership in the state but does so only until a discovery is made, in which case its ownership is transferred to the finder. Of course, the state will take a share of the value as royalty, and gradually that share has increased as governments have become increasingly rapacious. The system of “finders’ keepers” has also become less certain with heritage, aboriginal land rights, increasing environmental restraints and so on. But, at least until recently, it led Australia to be punching massively above its weight in terms of global exploration activity.
Having had the governments take the mineral rights, it is impossible to contemplate them being returned to the landowner – that would give the landowner an unconscionable windfall at the expense of the nation as a whole. This is recognised by Warren Truss, who says,
Access to prime agricultural land should only be allowed with the farmer’s agreement – the farmer should have the right to say yes or no to coal seam gas exploration and extraction on their property.
A moment’s consideration reveals this to be a restoration of the mineral rights to the farmer who can hold-out to prevent exploitation of the resource except by demanding a major share. That might solve the clash of rights issue but it would mean a serious erosion of the productivity of exploration capital and a depletion of exploration activity.