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The Coalbed Gas Act and the rush to coalbed methane development

Brad and June Hope

Brad and June Hope, landowners and coal owners in Princeton, British Columbia, only realized there was an issue of title to the coalbed methane in their property after a mine surveyor/developer came calling at their farm, indicating an intention to explore for coalbed methane on their farm property.

The prospect of coalbed methane development worried the Hopes, since they had heard about the dense land development and negative water impacts entailed by coalbed methane development in other jurisdictions such as the Powder River Basin in Wyoming.

Upon investigation, the Hopes learned that the government had sold the rights to the coalbed methane gas underlying their land to a consortium of resource companies in November 2002, following a government auction. The Hopes further learned that the government had passed the Coalbed Gas Act in April 2003, “confirming” the government’s policy position that coal owners did not own the coalbed gas. Finally, they learned that the government had entered into agreements with four large coal owners in the province, granting these large coal owners the exclusive right to apply for the coalbed gas rights associated with their coal tenures. The Hopes, who own coal rights associated with their farm, were never given the same opportunity.

Environmental Concerns of Coalbed Methane

Environmental concerns associated with coalbed methane development include:

• A heavily industrialized landscape – a high density of wells, roads, pipelines and powerlines
• Huge volumes of produced water and waste water, threatening surface and groundwater sources as well as fish habitat and other habitat
• Depletion of regional aquifers and contamination of aquifers

Coalbed methane development is not listed for environmental assessment under British Columbia’s Environmental Assessment Act.

The Legal Situation Pre-2003

The source title document to the Hopes’ property – a 1903 Crown grant – gave them a good claim to the natural gas. In that document, the government never explicitly reserved the rights to the natural gas underlying the property. Looking at the legislative history, it appears that the government never reserved natural gas rights to Crown titles until 1913, and when it explicitly did so, it did not do so retroactively. This state of affairs continued undisturbed until 1987, when the Hopes took title, and beyond, until the passage of the Coalbed Gas Act in 2003. Prior to that legislation, in order to establish that the Crown had reserved title to natural gas in the 1903 grant, one would have had to advance the argument that the Crown’s reservation of “minerals” included a reservation of natural gas;[1] however, a review of the legislative context reveals that historically (and even in current legislation[2]) this was not the meaning the Crown or others in the land and mining business would have attributed to the word “minerals.” “Minerals” were seen to be distinct from coal, petroleum and natural gas; correspondingly, in land title documents, the latter were addressed through separate and distinct Crown reservations.

What this all means is that when the BC government sold the natural gas rights associated with the Hopes’ property to a consortium of resource companies in November 2002, a very good argument existed to say that the rights were not the government’s to sell at all – and were sold right out from under the Hopes, without any actual notice or compensation to them.

2003 – The Coalbed Gas Act

It appears that if the government was not aware of the Hopes’ claim at the time, it likely realized it shortly thereafter when, on April 10, 2003, it quickly passed the Coalbed Gas Act (after introducing the Bill just 16 days earlier on March 25). The Act did several things:

1. Declare that “coalbed gas must be considered to be and to have always been a natural gas” and that “natural gas must be considered to be and to have always been a mineral”; and
2. Declare that “no expropriation or injurious affection occurs as a result of this Act.”

By making these retroactive declarations, the Act ensures that land granted in the late 1800s/early 1900s does not include coalbed methane and that owners who would have previously had a title claim to coalbed methane can now neither stop development nor receive compensation for potential expropriation of title.

The government’s actions and passage of this legislation raise a number of troubling issues:

1. Small landowners were never informed that there was even an issue with their title, or that they were actually losing anything as a result of the passage of the Act.
2. The Hopes and potentially hundreds of other landowners have effectively lost the ability to claim ownership of coalbed methane.
3. The government has offered “deals” to large companies that it has not equally offered to small landowners in similar positions. Landowners who might have been willing to buy the gas rights associated with their property to block coalbed methane development from occurring on their land, have not been given an equal opportunity to do so. Instead, large companies are buying up the gas rights, with no notice to local landowners.

The pattern is consistent with other mining battles recently witnessed by British Columbians in their communities, where for example, small landowners are losing their farms to make way for “priority” uses of their land, such as kitty litter clay mines, and are being awarded minimal compensation for their loss. The government’s emphasis in this case on resource development, partnered with a heavy-handed approach towards small landowners and communities is unfortunately becoming a familiar pattern.