Note: This article was written in 2016 to address the social and economic impacts of different mineral ownership frameworks as part of an Energy and Resources Law subject within my law degree. Hence, the article is more academic in nature than other articles on this site. I hope this article is of interest to anyone researching or investing in the resources sector in the future. Copyright 2016.

INTRODUCTION

Mineral ownership in Queensland has a unique history. This article will trace the development of ownership rights over natural resources in Queensland, Australia from being vested in the landowner to being vested in the State. It will then compare the United States framework of ownership rights to Queensland’s framework in the context of discussing the social and economic advantages and disadvantages of the rights framework of each jurisdiction.

1770 – 1859 MINERAL OWNERSHIP BY BRITAIN AND NEW SOUTH WALES

Queensland received property law in 1770, when Britain asserted sovereignty over New South Wales and claimed possession of Australia’s east coast.[1] Australia was deemed terra nullius, and thus could be subject to settlement rather than conquest.[2] This meant that the local laws in force in NSW did not apply and instead English law applied ‘as is applicable to [the] situation and condition of any infant colony’.[3] NSW included Queensland at that time and therefore NSW’s laws also applied in Queensland.

In 1842 imperial legislation was enacted giving colonial legislatures management of their lands.[4] All Australian land, until the enactment of Australia’s first mining laws in 1851, belonged to the British Government according to the doctrine of tenure.[5] This position was altered in Mabo v Queensland (No 2) (‘Mabo’).[6]

At common law, the surface owner owns all minerals beneath and on the surface of the land.[7] This is embodied in the maxim cuis est solum eius est usque ad coelom et ad infernos.[8] Before 1851, all lands were granted according to the common law and therefore a grantee owned minerals beneath their land unless such rights were expressly reserved by the Crown.[9] The exception is the royal metals, which always belonged to the Crown.[10] Royal metals are gold and silver and the Crown can ‘enter, dig and remove those precious metals’.[11] This prerogative was incorporated into the law of NSW from at least 1828.[12]

The first mining laws of Australia were enacted in a Proclamation by Governor Fitzroy in 1851 proclaiming the Crowns right to all gold in NSW, which was reinforced with a temporary Act.[13] The Goldfields’ Management Act 1857 (NSW) (‘NSW Goldfields’ Act’) and the Gold Duty Act 1857 (NSW) were later introduced.[14] The NSW Goldfields’ Act contained miners rights, allowing miners to prospect, set up residence and own their claim (except as against the Crown).[15] In 1855 the Constitution of New South Wales vested control of all crown lands in the Colony of NSW.[16] In 1859 Queensland separated from NSW and inherited NSW’s mineral ownership laws.[17]

QUEENSLAND MINERAL OWNERSHIP 1859-1908

In 1859 all land granted in Queensland was granted under the laws Queensland inherited from New South Wales. Therefore, when granting any land the Government only maintained ownership of Royal Metals, and other mineral resources which were expressly reserved.

From 1860-1875, when granting land, the government was not required to reserve mineral rights even when disposing of land for mining purposes.[18] From 1862, due to the introduction of the Real Property Act 1861 (Qld) freehold grants that did not reserve mineral rights transferred mineral ownership to the grantee.[19] Many grants still did not contain mineral reservations and ownership of the minerals passed to the grantee.[20] In the Constitution Act of 1867 (Qld) Queensland enshrined its control over Crown lands.[21]

From 1876-1899, the alienation of Crown land was largely governed by three statutes.[22] The latter two, the Crown Lands Act 1884 (Qld) and the Land Act 1897 (Qld) each required reservation of gold and reservation of gold and silver respectively.[23] From 1882 land could no longer be granted in fee simple for mining purposes but had to be leased.[24] The Crown’s mineral ownership rights were retained when granting leases.[25]  In 1892 the government allowed land in gold fields to be leased or sold if they were in a mining district.[26] The government still reserved gold and silver.[27]

In 1898 the Mining Act 1898 (Qld) was enacted which reserved gold over any Crown land subject to mining leases or licences.[28]

QUEENSLAND MINERAL OWNERSHIP 1909-PRESENT

In 1909 the Mining on Private Land Act 1909 (Qld) (‘1909 Act’) was enacted. The 1909 Act stated that all silver, gold and coal, on or below the land’s surface, whether alienated from the Crown or not, is property of the Crown.[29] The 1909 Act also stated that other minerals are property of the Crown subject to conditions such as when the mineral was alienated.[30]

The 1909 Act also established that all future Crown grants and leases reserve all gold and minerals on and below the surface of the land.[31] From this point on, a private entity could not purchase minerals from the Crown. This is a regalian system of ownership, where the State owns the resources, and leases or gives rights to private companies to extract the resource.[32] The 1909 Act was succeeded by many statutes, all of which maintained the general ownership principles of the 1909 Act.

In 1992 native title was established in Mabo. Mabo removed the effects of terra nullius and held that the Crown did not receive full ownership of the land upon sovereignty but instead had a ‘radical title’.[33] In 2002, it was held that native title does not extend to minerals (other than ochre) because native title rights to minerals were extinguished by the Crown.[34]

At present, the only minerals not owned by the Crown are minerals ‘alienated in fee simple pursuant to the Alienation of Crown Lands Act 1860 s 22 and the Crown Lands Alienation Act 1868 s 32 and the Mineral Lands Act 1872 s 21’[35] as well as coal alienated by the Crown in fee simple before 1 March 1910.[36] All petroleum is the property of Queensland.[37]

CONLUSION

The path from private ownership of minerals to state ownership was defined by what resources where considered valuable. Gold and silver in colonial times were valuable and therefore were subject to the Royal Prerogative or reserved by Government.[38] Shortly after federation resources such as copper, opal and particularly coal became just as valuable as gold and silver so were designated as owned by the Crown. The 1909 Act forever changed Queensland’s mineral ownership framework.

QUEENSLAND VERSUS UNITED STATES OWNERSHIP FRAMEWORK

The following section will outline the U.S ownership framework and discuss the economic and social advantages and disadvantages of each framework.

UNITED STATES MINERAL RIGHTS FRAMEWORK

A Private Lands

Similar to Queensland, the U.S common law holds that the owner of a full fee in land is also the owner of the land beneath it and thus can mine the minerals beneath his/her land.[39] Unlike in Queensland, statute has not abrogated the common law position and therefore private entities can own resources.[40] The common law position is an accession system of ownership.[41] This system holds that a newly discovered resource becomes the property of the owner of property that has the most prominent connection with the discovered resource, for underground resources this is the surface owner.[42]

Mineral ownership in the U.S is part of the real estate.[43] Mineral and petroleum ownership can be separated from surface ownership, creating distinct titles.[44] In Segars v Goodwin,[45] the Court said that ‘minerals in land … are part of the land until severed, and subject to ownership, separate from the ownership of the surface, and the mineral rights may be the subject of separate sale’.[46] The owner of the land can also lease their mineral interest.[47]

B Public Lands

The U.S Constitution grants Congress the power to makes rules about, and to dispose of, public lands.[48] The General Mining Act of 1872 provides that minerals in land belonging to the U.S can be bought and explored subject to statute and mining customs.[49]

Historically, the U.S had legal title to large areas of land in 31 states, which was disposed of under various statutes.[50] Under most statutes, the U.S retained title to minerals.[51] In 2014, the Bureau of Land Management administered 700 million acres of federal subsurface mineral estate, primarily in western states.[52] Additionally, resources such as coal, phosphate, oil, gas and potassium must generally be leased from the federal government.[53]

Therefore, although there is significant amounts of private resource ownership in the U.S, much of the mineral resources of the United States is owned by the U.S Government.

ECONOMIC AND SOCIAL ADVANTAGES AND DISADVANATGES OF UNITED STATES RIGHTS FRAMEWORK VERSUS QUEENSLAND RIGHTS FRAMEWORK

The mineral ownership framework applicable in a jurisdiction has important economic and social effects.

A Access to Land

One context in which the economic and social advantages and disadvantages of a framework are evident in is access to land.

In Queensland, land owners do not have a right to veto a licence holder from accessing their land.[54] This is a social disadvantage of the Queensland framework, as individuals generally believe they have a right to determine what happens on their land.[55] Social disapproval may result in legislative action which reflect these views creating negative economic effects if mines are restricted from mining on private land. A social advantage of the U.S framework is that private landowners have greater say over what happens on their land because many landowners also own the mineral rights. Consequently, there is less social conflict.

B Royalties, Community Benefit From Resource Extraction and Economic Concerns

In Australia there is a general view that mineral resources belong to the community and the community should receive benefits from their extraction.[56] Royalties are one way of ensuring the community benefits from mining.

In Queensland royalties are dealt with under legislation.[57] In 2014-15, royalties accounted for 16% of the Queensland Office of State Revenue’s administered revenue.[58] In the U.S, royalties are generally only paid when the resources are government owned.[59] Government’s revenue is lost when the minerals are privately owned and corporate income tax does not always provide revenue when commodity prices are low.[60]

Historically, the purpose of many Queensland mineral statutes were to allocate minerals to competing interests and encourage efficient development.[61] Likewise, the primary reason why the U.S General Mining Act of 1872 allowed citizens to explore and purchase minerals was because of the economic benefits that doing so would create.[62] The ability of governments to allocate resources is a consequence of the ownership framework, the difference being that Queensland still owns the resources it allocates whereas the U.S may not.

Government ownership of resources has resulted in some mines in the U.S and Australia having economic problems.[63] Some commentators have noted that the costs incurred in running mining departments is often greater than the mining royalties received.[64] Private mineral ownership may also encourage more efficient use of resources since any loss in value is a personal loss.[65] At a broader-level though, Queensland’s ability to control most mining gives it greater control over the market reducing the likelihood of too many resources being on the market at once.

The U.S framework concentrates the benefit of resource extraction in private resource owners. A social disadvantage is that the benefits of the mining do not go to the public or local residents near the mine but to private companies whose profits may go overseas or to cities away from the mine.

Therefore, there are social and economic advantages and disadvantages to both ownership frameworks.

C Environmental Concerns

There are obvious community concerns over mining’s environmental impacts. The ownership framework influences this.

Crown mineral ownership in Queensland enables the government to effectively control production and use of minerals to promote sustainable use by deny or limiting access to resources.[66] This has social advantages, since it gives government greater flexibility to respond to community environmental concerns.

Since the U.S does not own all its mineral resources, it limits the Government’s ability to control the production and use of minerals to promote sustainable use. This has social disadvantages as it reduces social acceptance of mining due to its environmental effects.

CONCLUSION

Both ownership frameworks have economic and social advantages and disadvantages. Neither framework is superior to the other. A framework’s superiority can only be assessed on an individual case-by-case basis.

 

[1] Anne Wallace, Michael Weir and Les McCrimmon, Real Property Law in Queensland (Lawbook, 4th ed, 2015) 1.

[2] Ibid.

[3] Ibid; William Blackstone, Commentaries on the Laws of England (15th ed, 1809), Vol 1, 106.

[4] Sale of Waste Lands Act 1842 (Imp) cited in Adrian Bradbook, The Law of Energy Underground: Understanding New Developments in Subsurface Production, Transmission and Storage (Oxford University Press, 1st ed, 2014) 421.

[5] Wallace, Weir and McCrimmon, above n 1; Michael Hunt, Mining Law in Western Australia (Federation Press, 4th ed, 2009) 1.

[6] (1992) 175 CLR 1.

[7] See Commonwealth v New South Wales (1923) 33 CLR 1, 23; Wade v New South Wales Rutile Mining Co Pty Ltd (1969) 121 CLR 177.

[8] Tina Hunter and John Chandler, Petroleum Law in Australia (LexisNexis Butterworths, 1st ed, 2013) 72.

[9] Hunt, above n 5; Barry Ryan, ‘The Law Surrounding Miners Right: Origin of the Mining Law of Queensland’ (1974) 9 Journal of the Royal Historical Society of Queensland 101, 108; Sharon Christensen et al, ‘Early Land Grants and Reservations: Any Lessons from the Queensland Experience for the Sustainability Challenge to Land Ownership’ (2008) 15 James Cook University Law Review 42, 49-52.

[10] Woolley v Attorney-General of Victoria (1877) 2 App Cas 163.

[11] Payne v Dwyer (2013) 46 WAR 128, 131 [5]; See also Case of Mines (1568) 1 Plow 310.

[12] Cadia Holdings v New South Wales (2010) 242 CLR 195, 200 [3]; See Australian Courts Act 1828 (Imp) s 24.

[13] LexisNexis Butterworths, Halsbury’s Laws of Australia, (at 20 July 2016) 170 Energy and Resources, ‘1 Introduction – Minerals’ [170-1]; Ryan, above n 8, 111-112.

[14] Ryan, above n 9, 108.

[15] Goldfields’ Management Act 1857 (NSW) s 4.

[16] Hunt, above n 5.

[17] Mabo (1992) 175 CLR 1, 38.

[18] Christensen et al, above n 9, 60; Crown Lands Alienation Act 1860 (Qld); Crown Lands Alienation Act 1868 (Qld); Mineral Lands Act 1872 (Qld).

[19] Christenson et al, above n 9, 57-60.

[20] Ibid.

[21] Constitution Act of 1867 (Qld) ss 30, 40.

[22] Crown Lands Alienation Act 1876 (Qld); Crown Lands Act 1884 (Qld); Land Act 1897 (Qld).

[23] Crown Lands Act 1884 (Qld) s 110; Land Act 1897 (Qld) s 13; Christensen et al, above n 9, 62.

[24] Mineral Lands Act 1882 (Qld).

[25] Land Act 1897 (Qld) s 14.

[26] Christensen et al, above n 9, 63.

[27] Mineral Lands (Sales) Act 1892 (Qld).

[28] Mining Act 1898 (Qld) ss 17-23, 30, 34 cited in Christensen et al, above n 8, 63.

[29] Mining on Private Land Act 1909 (Qld) s 6 (1)(i)(ii)(iv).

[30] Ibid s 6(1)(iii)(v).

[31] Ibid s 6(2).

[32] Industry Commission, Mining and Processing in Australia Volume 1: Report (25 February 1991) Australian Government, 10 <http://www.pc.gov.au/inquiries/completed/mining>; Nicholas J Campbell, ‘Principles of Mineral Ownership in the Civil Law and Common Law Systems’ (1957) 31 Tulane Law Review 303, 306-307.

[33] Wallace, Weir and McCrimmon, above n 1, 4.

[34] Western Australia v Ward (2002) 213 CLR 1, 185-186 [382]-[384], 243-244 [572].

[35] Mineral Resources Act 1989 (Qld) s 8(3).

[36] Ibid s 8(2).

[37] Petroleum and Gas (Production and Safety) Act 2004 (Qld) s 26.

[38] Ryan, above n 9, 108.

[39] Adams v Henderson, 168 U.S 573, 582 (1897).

[40] Campbell, above n 33, 304.

[41] Ibid 305; John Sathalan, Mining Law and Policy (Federation Press, 1st ed, 2012) 41-42.

[42] Thomas W Merrill, ‘Accession and Original Ownership’ (2009) 1 Journal of Legal Analysis 459, 462; Thomas W Merrill and Henry E Smith, The Oxford Introductions to U.S Law: Property (Oxford University Press, 1st ed, 2010) 30.

[43] West, Corpus Juris Secondum (at September 2016) 58 Mines and Minerals, ‘Title, Rights, Conveyances, and Contracts’ [§ 174]; Federal Bank of Wichita v Board of County Commissioners of Kiowa County, 368 U.S 146 (1961); U.S. v Shoshone Tribe of Indians of Wind River Reservation in Wyoming, 304 U.S 111 (1938).

[44] Bodcaw Lumber Co v Goode, 254 SW 345, 348 (Ark, 1923); McCormick v Union Pacific Resources, 14 P 3d 346, 349 (Colo, 2000).

[45] Segars v Goodwin, 117 SW 2d 43 (Ark, 1938).

[46] Ibid 44.

[47] Quality Excelsior Coal v Reeves, 177 SW 2d 728 (Ark, 1944).

[48] United States Constitution art IV § 3 cl 2, cited in West Group, American Jurisprudence Second Edition, (at 5 September 2016) 53 Mines and Minerals, 1 Sources of Governing Law, ‘A. Sources of Governing Law’ [§ 1].

[49] Ibid; General Mining Act of 1872, 30 USC § 22 (2016).

[50] McCormick v Union Pacific Resources, 14 P 3d 346, 352 (Colo, 2000). See eg. Stock Raising Homestead Act of 1916 43 USC §§ 291-302 (2015).

[51] Ibid.

[52] Carol Hard Vincent, Laura A Hanson and Jerome P Bjelopera, Federal Land Ownership: Overview and Data (29 December 2014) Congressional Research Service, 2, 12 < https://www.fas.org/sgp/crs/misc/R42346.pdf>.

[53] Mineral Leasing Act of 1920 30 USC § 181 (2016); West Group, American Jurisprudence Second Edition, (at 5 September 2016) 53 Mines and Minerals, II Minerals Located On, In Or Under Public Lands, ‘A. Rights in Public Mineral Lands, In General’ [§ 21].

[54] Lachlan Fahey, ‘“Lock the Gate”: Accessing Private Land for Energy’ (2015) 34 Australian Resources and Energy Journal 226, 227.

[55] Committee for Economic Development of Australia, Australia’s Unconventional Energy Options (September 2012), 43-44 <http://adminpanel.ceda.com.au/folders/Service/Files/Documents/15347~cedaunconventionalenergyfinal.pdf>.

[56] Industry Commission, above n 32, 11; Pietro Guj, Mineral royalties and other mining-specific taxes (2012) International Mining for Development Centre, 3 < http://im4dc.org/wp-content/uploads/2012/01/UWA_1698_Paper-01_-Mineral-royalties-other-mining-specific-taxes.pdf>.

[57] Mineral Resources Regulation 2013 (Qld) ch 3 and sch 3; Petroleum and Gas (Production and Safety) Act 2004 (Qld) ch 6.

[58] Queensland Treasury, Queensland Treasury Annual Report 2014-2015 (15 September 2015) Queensland Government, 30 < https://www.treasury.qld.gov.au/publications-resources/annual-reports/2014-15/pdf/docs/complete-treasury-annual-report-2014-15.pdf>.

[59] James Otto et al, Mining Royalties a Global Study of Their Impact on Investors, Government, and Civil Society (2016) The World Bank <http://documents.worldbank.org/curated/en/103171468161636902/Mining-royalties-a-global-study-of-their-impact-on-investors-government-and-civil-society>.

[60] Ibid.

[61] Brian J Preston, ‘Environmental law 1927 – 2007: Retrospect and prospect’ (2007) 81 Australian Law Journal 616, 620.

[62] Brubaker v Board of County Commissioners, 652 P 2d 1050, 1056 (Colo, 1982); General Mining Act of 1872, 30 USC § 22 (2016).

[63] Industry Commission, above n 32, 12.

[64] Ibid.

[65] Industry Commission, above n 32.

[66] Christensen et al, above n 9, 44.

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