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Coal and gas: Who decides if we can dig?

Industry, governments and landowners are at loggerheads over the extraction of coal and coal seam gas. So who has the right to say yes or no? Deakin University business and law professor Samantha Hepburn explains.


THE right of landowners to say no to companies looking for resources beneath our land has been in the news this week, following a debate on the ABC’s Q&A program about coal seam gas.

On the show, rural affairs minister Fiona Nash argued that “farmers should be able to say no and state governments should change whatever needs to be changed so that they can say no”.

The debates over coal seam gas are similar to those around coal mining. Following the recent re-approval of Adani’s Carmichael coal mine, federal environment minister Greg Hunt said that he was bound by the law:

… the law describes and absolutely sets out the terms on which I am entitled and allowed to assess. And any other decision would certainly, in my view, have been invalidated by a court.

So who does decide who gets the resources beneath our feet?


The power of discretion

Roscoe Pound, the renowned American jurist, once stated that it was a pious fiction to assert that law is “a matter purely of observation and logic”.

In every particular case there is a margin of discretion. Discretion is therefore an inherent component of any regulatory framework. This makes the recent comments by the environment minister slightly disingenuous.

Hunt seems to be indicating that he has little choice around approval of projects under our national environmental legislation, the Environment Protection and Biodiversity Conservation (EPBC) Act.

The EPBC Act requires the minister to conduct a comprehensive discretionary evaluation of the impact of projects on the environment. This is a crucial and necessary component of the act given that its primary purpose is to act as an additional safeguard against environmental risks.

There are, in fact, three different stages associated with the discretionary assessment under the EPBC Act:

  • whether a proposal attracts one of the triggers under the EPBC Act (these include “matters of national environmental significance” such as threatened species or water)

  • if the EPBC Act applies, the appropriate level of environmental assessment which usually involves an environmental impact assessment

  • whether the proposed project should be approved.

The minister has significant scope and potential in the exercise of these discretionary powers.

Unfortunately, to date, these powers have not been exercised robustly. This has effectively meant that the direct and indirect environmental impacts of projects considered under the EPBC Act have not received a comprehensive appraisal at the federal level. To a large extent, decisions have been based on evidence provided by the proponent, with little external review and assessment being conducted. The limited nature of the assessment is in spite of rather than because of the structure of the EPBC Act.

One area of particular concern has been the failure, at the federal level, to consider the climate change impacts of projects such as coal mines.

One of the reasons the federal government has consistently failed to take account of the climate change impacts associated with projects coming within the application of the EPBC Act is because climate change is not included as an explicit trigger under the EPBC Act.

Rather, climate change is a “relevant consideration” for the federal minister in the assessment of projects that have already triggered the EPBC Act. In adopting the international principles of ecological sustainability, which include the principle of intergenerational equity, the EPBC Act ensures that the climate change impact of a project becomes a relevant discretionary consideration.

The failure of the federal minister to embrace climate change as a relevant discretionary factor was an explicit concern of the Mackay conservation group when it sought review of the minister’s decision to approve Adani’s Carmichael coal mine.


Can’t stop coal seam gas

Significantly however, the EPBC Act does not deal with underlying issues connected with land ownership and accessing resources under the ground such as coal seam gas. Even if a coal seam gas project has to be assessed under the EPBC Act, because it for instance has an impact on water, this doesn’t include the rights of developers or land owners.

Ownership, whether of the land or the resource, is a core legal entitlement that is fixed and immutable. As I have previously outlined, the state essentially owns minerals and petroleum. This is based on Australia’s underlying constitutional framework which gives the state the capacity to licence out the right to extract those resources to third parties. It also diminishes the rights of landowners.

Once a coal seam gas project is approved under the EPBC Act and a mining licence is conferred, the environment minister has no capacity to issue a right of veto to a landowner. The holder of the mining licence acquires permission, from the state, to access and extract the resource.

The only possible scenario where a right of veto could arise would be if the state decided to divest themselves of ownership of minerals and petroleum and confer ownership of those resources back to private landowners. This is unlikely to occur given the enormous financial benefit the state receives from royalties associated with resource extraction.

In the absence of a fundamental shift in public resource ownership neither the federal environment minister nor state governments will give landowners the right to say no to resource developers.

Samantha Hepburn, Professor, Faculty of Business and Law, Deakin UniversityThis article was originally published on The Conversation. Read the original article.


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