Minerals Development Bill 2014: Discussion

The purpose of this morning's meeting is to engage with officials from the Department of Communications, Energy and Natural Resources prior to the publication of the minerals development Bill 2014 in order to gain an appreciation of the complexity, scale and scope of the draft Bill. On behalf of the committee I welcome Mr. Frank Sheridan and Mr. Brian Breslin from the exploration and mining division of the Department of Communications, Energy and Natural Resources and two other colleagues.

I wish to draw the attention to the fact by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if witnesses are directed by the Chairman to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons, or entity by name or in such a way as to make him or her identifiable.

I wish to advise also that any submission or opening statements witnesses have made to the committee will be published on the committee's website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Frank Sheridan to make his opening remarks.

Mr. Frank Sheridan

The minerals development Bill seeks to consolidate and modernise legislation on exploration and extraction of minerals replacing a corpus of legislation from 1940 through to 1999.

On foot of the considerable efforts of the Parliamentary Counsel's office the draft Bill, which is substantial, is now ready for publication, subject to such legal or technical amendments as may be agreed with the Attorney General or suggested by the Ministers when considered by Government. The draft of the Bill was at an advanced stage when, in November 2013, the Government adopted the policy to present the general scheme or draft heads of a Bill to the committee for pre-legislative consideration. While the pre-legislative scrutiny process ordinarily occurs at the early stage of preparation of a Bill, the Chief Whip's office has endorsed the Minister's proposal that this committee be afforded the opportunity to consider the minerals development Bill in advance of its circulation to Departments and submission to Government for approval. This best complies with the spirit of pre-legislative scrutiny arrangements and affords committee members an opportunity to provide input before the Bill is finalised.

The heads of the Bill were approved by Government in 2006. In the meantime other urgent and priority legislative initiatives have impacted progress on the draft statute. In the interim there has been positive activity in the sector whereby the number of active minerals and prospecting licences in place equals that of the highest on record. There are positive indications from ongoing exploration activity and the addition to the forecast life of mine for the Bloiden Tara Mines Limited operation at Navan, arising from licensing of the south-west extension.

The economic assessment of the contribution of the minerals sector to the economy which was published in 2013 indicates that it is an important sector and a vital contributor to the regional economy in the vicinity of operating mines. In 2012, Ireland was Europe's largest producer of zinc metal in concentrate and the tenth largest producer in the world, a ranking that continued into 2014. Output in mining, as measured by sales turnover, amounted to more than €426 million in 2012 and the activities of exploration and mining companies resulted in a total employment figure of 3,306 full-time equivalents, almost all of whom are employed outside Dublin. The low import content in mining activity is important. When indirect and induced economic activity is considered the overall value from the sector amounted to €810 million in 2012, nearly double the direct production value. To that end it is important that there be in place a modern statutory code suitable for the effective stewardship and development of the sector as well as to foster the discovery of new mineral deposits.

The purpose of the Bill is to make better provision for the prospecting for and development, management and control of the mineral resources of the State in the interest of better regulation and to ensure that as many provisions as possible, pertaining to the minerals prospecting and mining, are contained in a minimum of statutes. Most of the provisions of the Minerals Developments Acts 1940 to 1999 will be restated and those Acts will be repealed where appropriate.

The minerals Bill is likely to be one of the larger pieces of legislation that will come before the Oireachtas this year with almost 250 sections. It will modernise and update all minerals legislation since the foundation of the State.

I would hope that the following presentation will convey to the committee a sense of the scope, as the acting Chairman said, scale and complexity of the Bill and that my colleagues, Dr. Eileen Doyle, principal geologist, and Mr. Brian Breslin from the minerals exploration and mining division and I can be of assistance to members' consideration of the draft Bill in advance of publication. I invite my colleague, Mr. Brian Breslin, to guide the committee through the presentation we have prepared.

Mr. Brian Breslin

We had prepared a Powerpoint presentation but, I believe, for technical reasons we cannot use it. We have slides printed and we are making copies available.

Minerals exploration and development is currently regulated through the minerals development Acts 1940 to 1999. This is done through prospecting licences and mining leases and licences with the work being undertaken by the private sector. Mining means extraction of minerals and is referred to in the legislation as working of minerals as opposed to prospecting which is exploration.

The exclusive right to work minerals has been vested in the Minister under the Minerals Development Act 1979 with the exception of a small number of mines which at the time were in operation on a specific date since 1978. Ireland is one of the leading zinc mining countries in the world and continues to attract high levels of exploration expenditure. As explained by Mr. Frank Sheridan output amounted to €426 million in 2012. This is outlined in a study undertaken by Indecon consultants on behalf of the Minister in 2013. Exploration and mining companies contributed a total of €56 million in taxes to the Exchequer in 2012. The State also benefits from payments made by the prospecting and mining companies in the form of royalties, licence fees and other payments which amounted to €9 million in 2012.

It is well recognised that a single national system for regulating mineral exploration as well as clarity on the ownership of mineral rights is essential if private investment is to be attracted.

The proposed Bill will replace the legislation from 1940 which was enacted during the Emergency. The mining industry in Ireland is currently regulated by five statutes which are listed in slide two of the presentation. They are: Minerals Development Act 1940, Petroleum and Other Minerals Development Act 1960, Minerals Development Act 1979, Minerals Development Act 1995, Minerals Development Act 1999 - collectively referred to as the Minerals Development Acts 1940 to 1999. There is also a provision within the Energy (Miscellaneous Provisions) Act 2006 which relates to specific powers for the Minister on the question of rehabilitation of a particular mine. Those Acts include, inter alia, provisions for regulation of minerals prospecting and development, a statutory vesting of the exclusive right to work minerals in the Minister, subject to payment of compensation, compulsory acquisition of other rights necessary for efficient development of minerals, subject to payment of compensation; and the payment to the State of rents and royalties from the extraction of minerals.

The background to the Bill is a Government decision of 2 June 2006 which authorised the drafting of the Bill. It has been in the course of preparation for a number of years and its completion, as Mr. Frank Sheridan has said, has been interrupted on more than one occasion by diversion of drafting resources to other higher priority legislation. The initial motivation to prepare the legislation remains the same today.

The objectives of the Bill are to provide a modern regulatory regime for exploration and development of State minerals.

It will regulate, in accordance with principles of social justice, the exercise of private rights in respect of minerals and ancillary rights and will reconcile their exercise with the exigencies of the common good. It will provide for the continued vesting in the Minister for Communications, Energy and Natural Resources the exclusive right of working, selling or otherwise disposing of private minerals which are not in the course of development, subject to compensation, and it will provide for the preparation and implementation of rehabilitation plans for abandoned mine sites and to provide for consequential amendments.

The Short Title to the Bill is:

An Act to make further and better provision for the development of minerals in the State and for that purpose to repeal the Minerals Development Acts 1940 to 1999 (other than certain provisions of the Minerals Development Act 1979) and the Minerals Company Acts 1941 to 1950, to make consequential amendments to other Acts, and to provide for related matters.

The matters referred to in the Title relate to the procedures for compulsory acquisition in respect of ancillary surface rights; the method for the calculations of rents and royalties; and the basis for payment of compensation in respect of private minerals. The Bill will provide for greater transparency and predetermination of terms, including rents and royalties, which will streamline the permitting process and will bring other aspects of the regulation of the mineral sector in line with best practice, having due regard to the constitutional protection of property.

The Bill does not directly address environmental matters because these are considered more appropriate to the EPA and local authorities. In any event, the legislation which established the EPA specifically precludes the Minister from attaching conditions to mining permits which are designed to limit or control emissions to the environment. That is a matter for IPC Licensing. Nevertheless, our legal advice is that the Bill must take appropriate account of these matters, in particular to address obligations under the Aarhus Convention. This convention, which has been ratified by Ireland, relates to access to information on the environment and public participation in environmental decision making, in addition to access to justice in that context. The implications of the convention for exploration and mining were carefully considered in close consultation with the Attorney General and the provisions of the Bill in that regard have been drafted accordingly.

The Bill is divided into eight parts. Part 1, shown on slide 11, deals with preliminary and general matters. This part of the Bill provides standard provisions such as short title and commencement arrangements, scope and interpretation. It provides that the Bill would apply to all minerals within the State or within designated areas of the continental shelf and that, for the purposes of the Bill, as in previous legislation, "minerals" do not include stone, sand, gravel, clay, turf, peat or petroleum.

Part 2 deals with prospecting and sets out the administrative practice for prospecting licences from application to surrender. Provision is made for public notice and consultation prior to issuing prospecting licences and for the payment of compensation for damage or nuisance arising from prospecting for minerals. Provision is made for a new type of licence known as a "retention licence" where the holder of a prospecting licence has discovered a mineral resource that cannot, for a variety of reasons, be brought into production immediately. It also provides that the Minister, in assessing the public interest of an application, must take into account the economic benefits of the region as well as the environmental impact of the proposed exploration programme.

Provision is made for the Minister to make regulations regarding the setting of conditions to be attached to a prospecting or retention licence. A new requirement is that prior written consent will be required for boreholes, trenching and bulk sampling. While trenching required consent in prior legislation, the other two activities only required prior notice. Although the regulation of airborne geophysical surveying is a matter for the civil aviation authorities, provision is made for the Minister to be notified of such surveys and for the submission of data.

Part 3 deals with working minerals. The 1979 Act vested the exclusive right to work minerals in the Minister, subject to the exception of minerals being worked at the time and registered as such, and provided for the granting of that right by the Minister to third parties under licence subject to the payment of compensation to the mineral owners on extraction of the minerals. This arrangement will be continued under the Bill. It is a long-standing policy that an application for a licence to work minerals will only be accepted from holders of a current valid prospecting licence over the relevant area. This policy is now being given a statutory basis. The main objective is to eliminate the difference between private and State minerals from the developer’s perspective, providing greater predetermination and clarity of terms, both financial and non-financial. Where previously there were leases on licences to extract State or private minerals depending on the ownership of the minerals, there will now be a single instrument to be known as a "mining licence".

Part 4 deals with ancillary rights. In order to carry out extraction of minerals efficiently it is necessary to carry out a variety of other activities which are not strictly mining and these are referred to as "ancillary rights". The existing legislation provides that the holder of a State mining lease or licence is entitled, during the currency of such lease or license, "to enter on the land on or under where such minerals lie and use such land in such manner as may be reasonably necessary for the working of such minerals or for any purpose incidental thereto." This may well have been too broad in scope by today's standards.

Current legislation also provides for compulsory acquisition of land and rights over land necessary for the efficient working of minerals. The Bill will clarify what rights may be necessary for working minerals and will divide these into ancillary underground rights and ancillary surface rights for licences issued henceforth. It will also bring the compulsory acquisition procedures into line with modern best practice. While it is considered necessary to have these compulsory powers in place the truth is that they are rarely, if ever, used.

Part 5 deals with rehabilitation. In the case of current mine sites it is the responsibility of the mine operators to properly close and rehabilitate the sites when activity has ceased. Mine applications in the modern era, as part of the planning applications process, are subject to an environmental impact assessment and require properly drawn-up closure plans to be prepared, with financial sureties in place to provide for the implementation of the closure plan together with its aftercare monitoring and maintenance.

This part of the Bill, which is based on Part 9 of the Energy (Miscellaneous Provisions) Act 2006, provides that in certain circumstances the Minister may, having consulted with the Minister for the Environment, Community and Local Government, designate a mine site or adjacent land as a rehabilitation area. The Minister may make such a designation in respect of a site where a mine has been abandoned or where operations have permanently ceased if it is necessary for the safety of the public or animals or to address major environmental damage. On designation of an area as a rehabilitation area the Minister may develop or adopt a rehabilitation plan for the area and may implement the plan or authorise a local authority or the Environmental Protection Agency to implement one. This does not, however, affect any obligations of the former lessee or licensee, the owner or occupier of the mine site or any other person who may have obligations in respect of the site. The Minister also has the power to recover through the courts any expenditure incurred by implementation of the rehabilitation plan.

The Minister may, with the consent of the Minister for Public Expenditure and Reform, acquire private land either by agreement or compulsorily for the purposes of implementing a rehabilitation plan. The Minister is required to undertake a public consultation process before making such an order and may, if he or she considers it appropriate, appoint a hearing officer to hold an oral hearing to evaluate objections. These provisions relate only to legacy sites as modern mines are well regulated in this respect and closure planning takes place before the mine is opened.

Part 6 provides for the continuation of the Mining Board, which has been in existence since it was established under the Minerals Development Act 1940. The board adjudicates on various issues arising under the Acts, including compensation issues. It consists of a chairperson and two ordinary members who are appointed by the Government on the recommendation of the Minister. The chairperson shall be a practising barrister or solicitor of at least ten years' standing. Each ordinary member shall be a person who is a property arbitrator under the Property Values (Arbitrations and Appeals) Act 1960. The provisions relating to the board are being updated in line with current best practice. New provisions in the area of ethics are provided in line with current legislation regarding other statutory boards.

Part 7 deals with enforcement and miscellaneous provisions. It mainly contains standard provisions which are restated or updated where necessary. Penalties in respect of offences such as unlawful prospecting or working of minerals are brought up to date in line with current practice. Injunctive powers are being provided for in respect of continuing offences and in the case where the Minister might be prevented from undertaking certain works.

Provision is also being made for the appointment of inspectors to enforce the Act; a requirement to notify the Minister of bore holes drilled for reasons other than prospecting or mining, and in relation to data collection in respect of those; divesting of intellectual property rights in the Minister relating to processing of data collected under the Acts on this Bill; the registration of minerals which were exempt from the statutory vesting under the 1979 Act, and other miscellaneous matters. Part 8 deals with transitional provisions, repeals and consequential amendments. It provides for various transitional arrangements including the continuation of any licence or instrument granted under previous acts, on the terms under which they were granted, until renewed under the revised legislation. Applications for prospecting licences or mining leases and licences made before an enactment of the Bill will be deemed to be for licences under this Bill unless the Minister has already given notice of his intention to grant such a licence.

Chapter 2 sets out the Acts which will be repealed by the Bill and Chapter 3 lists amendments to other Acts as a consequence of this Bill. The Act also contains a schedule of a list of substances which, for certainty, are included within the definition of minerals. The list is not exhaustive as the definition of minerals, contained in section 2, describes the term as meaning "all substances including scheduled minerals". It may therefore allow other substances which are not on the list to be defined as minerals. There was a similar schedule to the 1940 Act which has been reviewed with some additions and deletions by our technical staff. Chalk, flint and chert for example have been removed because experience has shown that their inclusion is not particularly helpful. Mineral oils and natural gas were removed because the 1960 Act provided for separate regulation of oil and gas exploration and production. Other substances which were added are certain types of industrial minerals which were not important in 1940 but have since gained significance internationally, such as andalusite, garnite and sepiolite. The schedule also includes definitions of dolomitic limestone and silica sand to help clarify the meaning of those substances. That is the end of the Bill as such. The regulatory impact assessment has been prepared and copies have been circulated to the members.

I thank Mr. Breslin. I will now turn to the members and ask them to note that the Bill is at an advanced stage and it is my understanding that this committee is not to consider it as pre-legislative scrutiny, but to engage and look at the complexities and the scale of the draft Bill.

I welcome the officials. It is a very detailed Bill and I might start at the last part of it. It is a draft Bill at the moment. Can the witness tell the committee when is it likely to be published?

Mr. Brian Breslin

As soon as possible.

Mr. Frank Sheridan

As the committee did not have an opportunity to undertake any pre-legislative scrutiny of the heads of the Bill it meant the committee did not have the opportunity for any input. It is unusual that one would get a Bill drafted to the level of detail done by the Attorney General's office, but given its long gestation period the Minister felt he would give the committee an opportunity to either undertake that pre-legislative consideration or at least provide it with an insight into the format and background to the Bill in advance of publication.

Is it hoped to enact the Bill sooner rather than later?

Mr. Frank Sheridan

Once the committee communicates back to the Minister he will then submit it to Government for approval. Other Ministers will have an opportunity to input and the decision sought of Government would be to go ahead with immediate publication subject to any changes being introduced. That would allow the Bill to go into the Oireachtas calendar in order to be processed.

There is a whole raft of stuff I could go through and try to tease out but I will make only one or two points this morning. The method for the calculation of rent and royalties is mentioned on page seven of the presentation. Could the witness give the committee an outline of what is entailed in that? Did I hear Mr. Breslin say that the key definition of minerals would exclude stones, gravel clay and peat?

Mr. Brian Breslin

Yes.

In view of water issues in the past few months, and wells in rural and urban communities, could the witnesses give the committee more detail on the ancillary rights as mentioned in section 17? Also, what kind of geographical area is covered by this? Is off-shore Ireland and its territorial waters covered by the legislation and how does this impact other EU legislation? If it is OK with the Chair I might try to come back after the witnesses have answered.

Mr. Frank Sheridan

I will ask Dr. Eibhlin Doyle to address the question on the calculation of royalties.

Dr. Eibhlin Doyle

At the moment royalties are negotiated on a case-by-case basis for each particular mining licence or lease issued. The calculation for our base metal deposits is normally based on net smelter return. This is the standard we have adopted and going forward we would probably continue with a net smelter return calculation. However we are now in a position to clearly set out and state what royalty levels we will have. Rather than carrying out negotiations separately with each company, now the companies go into exploration and development knowing the level of royalties to which they will be subjected to. Does this answer the Deputy's question?

Mr. Frank Sheridan

That gives a degree of surety to a potential developer of the range within which they have to allow for royalty payment. The royalties will depend very much on the deposit and the production costs associated with it. This varies considerably from mine to mine. I will ask my colleague Mr. Brian Breslin to answer the Deputy's question on ancillary rights.

Mr. Brian Breslin

The ancillary rights provisions are not greatly different from what was there before. They have rarely, if ever, been used. They certainly have not been used in my lifetime and I have been in that area for over 20 years. It really deals with a situation where a mine of national importance is prevented from going into production because rights cannot be obtained by agreement to construct a roadway to it for instance, or the main portal or a number of different scenarios like that which are not actually extracting minerals. But there is a heavy onus on the developer to use his best endeavours to reach agreement before applying to the Minister to use compulsory powers. The Deputy mentioned water rights. That is a matter which is addressed through the planning regulations. Before a mine goes into production all activities, even those covered by ancillary rights, will be part of the development of the mine as described in the environmental impact statement. That will be examined in thorough detail in the planning process. The conditions relating to making provision for alternative water supplies are all planning conditions.

On page 20 of the presentation it states the powers of the inspectors appointed by the Minister will be enhanced.

There is also reference to clarifying which offences will be prosecuted by the Minister and which by the Mining Board. One of the things we have successfully done in the past 25 years, both in Ireland and Europe, is create more bureaucracy and inspections. I come from a farming community which has been pestered by inspections that are of no significant consequence. We must take a common sense approach to these particular provisions, with no undue bureaucracy included in the legislation which would stifle people looking to engage in mineral extraction for the benefit of themselves or the State. At a meeting I attended the other night to discuss farming issues, a fellow attendee said to me that what the country needs is a Minister for common sense. The words "enhance the powers of inspectors" frighten me because I have seen what that type of thing has led to in other indigenous industries. I appeal to the witnesses to ensure the final version of this section reflects a common sense approach.

Mr. Brian Breslin

Our intention certainly is to take a common sense approach. When we talk about inspectors, we are referring to people such as Dr. Doyle who regularly visit mine sites. We bring in a mining engineer of international standing to inspect the mines every year to ensure they are being operated within the conditions set out under the mining licence. We also need to have powers to enter land to investigate whether unlawful activity is taking place.

I appreciate that.

Mr. Brian Breslin

That is the area to which these provisions are directed; they are not about giving draconian powers to inspectors to do all sorts of things that are not related to these specific types of activities. The inspectors will be operating within a particular sphere. Our concern is that where we go to court to prosecute an offence such as unlawful mining, we must be sure the inspector who identified the crime had lawful authority to so do. We are seeking to ensure the powers of inspectors are crystallised in that respect.

Which offences will be prosecuted by the Minister and which by the Mining Board?

Mr. Brian Breslin

That is a legal or technical issue and will be decided by the lawyers. The offences we are dealing with here are not anything new. We are trying to ensure that where there is regulation of the sector, there are appropriate sanctions for when people break the rules. For legal reasons, some of those offences will be in the Minister's power to prosecute, while some will be a matter for the Mining Board.

I welcome the officials from the Department and thank them for their presentation. However, I must state at the outset that I do not understand the purpose of the presentation. What we are at here today is not pre-legislative scrutiny. We seem to be examining the intentions behind different Parts of the Bill, but we are not actually looking at a draft Bill. As such, I am not sure what is expected from us as a committee in respect of an outcome to the presentation and these discussions.

To clarify, the purpose of the meeting is to give members an opportunity to raise issues or questions they may have regarding the draft Bill, following which we can decide whether we want to bring in relevant stakeholders.

My point is that we do not have the draft Bill and do not, therefore, have enough information to enable us to make a valuable contribution to the discussion. What we are looking at today is the intention behind different Parts of the Bill. I might be wrong and this may turn out to be a very useful discussion, but at this point in time I cannot see what value I, for one, can add to the debate for the benefit of those who are working on the draft legislation.

Having said that, I do not disagree that the current body of legislation in this area needs to be updated and consolidated. Indeed, the same is probably true for a lot of areas of legislation. Generally where one sees a long list of old Bills, there is scope to consolidate and improve.

There may have been a slight mistake in that the Bill was not circulated to members. That will be rectified.

Was it the intention that the draft Bill would be circulated prior to the meeting?

Mr. Frank Sheridan

When the Minister of State, Deputy Joe McHugh, wrote to the Chairman offering the opportunity for the committee to consider these provisions, he provided a copy of the draft Bill. This is the draft as prepared by the Parliamentary Counsel's office and is effectively a full Bill. I would have expected members, if they had concerns, to be saying they actually had too much information given that we have provided the committee with the 250 sections of this lengthy tome of a Bill. What we were trying to do in our presentation was concentrate on the motives behind each of the Parts of the Bill without getting into too much detail. This is an unusual circumstance in that, ordinarily, the committee would only have available to it the heads of the Bill. We could have provided members with the heads in this case but because drafting had advanced to such a stage, the Minister of State decided to make the full Bill available. This was done in agreement with the Whips' office even before the legislation was circulated to Departments or submitted to Government for approval. This meeting affords the committee the opportunity to provide input into the Bill's final shape before it is published. That is not to say members will not have another opportunity on Committee Stage and the other Stages of its passage through the Oireachtas to make a contribution to the legislation. The Minister of State's intention was to give the committee an advance opportunity to examine the provisions.

As far as I am aware, I did not receive the draft Bill.

It may have come in and I did not notice it. I would have had different comments had I been aware the draft Bill was made available.

I have several points in regard to what has been presented today. I note that environmental matters and issues to do with petroleum and so on will be dealt with in separate legislation. That needs to be examined very closely because there are processes involved in minerals development, irrespective of what type of mineral it is, which impact the environment. I am not sure that covering these matters in separate environmental legislation is necessarily the best way to do it. It will have to be very carefully done and the environmental legislation will have to be looked at side by side with this Bill, as will the issue of petroleum licensing.

I am not sure how far the legislation takes into account possible changes in this area at EU and intercontinental level.

I am thinking of the investor safeguards under TTIP which is currently being negotiated. We do not know what the outcome of those negotiations will be, but we can be sure that potentially investors' rights will be subject to some form of panel which might supersede national legislation. That must be taken into account.

My apologies if I got the legislation already, but I certainly did not see it.

Mr. Frank Sheridan

Brian Breslin will address the environmental issue.

Mr. Brian Breslin

On the question of environmental impacts, the EPA was set up with that purpose in mind. Most of the provisions in the Bill relate to property issues and the regulation of the substance. It is a basic requirement that all of the activities must comply with all environmental legislation. However, we are keenly aware of the potential environmental impacts of mining. The Minister has been, and continues to be, a statutory consultee in the environmental impact assessment process. The Minister has every application for a new mine, where an environmental impact statement is submitted along with a planning application, examined in great detail. He brings in outside expertise to examine it and provides comments to the local authority and the EPA, with suggestions for conditions and various other such matters.

The EPA is the competent authority to monitor and regulate environmental emissions, and it does so very diligently. We co-operate with it in all of that. In particular, with regard to closure planning the closure funds are managed by the Minister, the EPA and the relevant local authority. No money is released from those funds without the consent of all three authorities and without proper scrutiny of all the activity that must be undertaken. We do not propose to change or modify the environmental legislation in any way in this Bill because it is considered that that is the appropriate way to deal with the environmental aspects of it.

I briefly mentioned the Aarhus Convention. We went into great detail about that. The environmental decision about whether a mine goes ahead is taken by the local authority, primarily, and it is then licensed under the integrated pollution prevention control, IPPC, licensing process. The decision of the Minister to grant a mining licence is not considered to be a decision within the meaning of Aarhus, but there is a public consultation process built into the existing legislation and that will continue under this legislation. There is a public consultation process in respect of prospecting, which is not an activity that has a significant impact on the environment, and the Minister is required to give notice of any decision he takes and allow time for consultation, objections and so forth.

The Deputy mentioned investors' rights and developments in that area. These are matters of commercial law and are dealt with under separate legislation. It is not within our competence or within the Minister's bailiwick, but we keep an eye on developments. Much of the investment in exploration, initially, and ultimately in mining in Ireland comes from abroad. We have no restrictions on access to the market here. Traditionally, however, the ground-breaking exploration has been undertaken by Irish companies, small junior companies that find encouraging deposits, and when it gets to a point where larger, heavier investment is required, the outside interest becomes involved. Also, we attract investment from major international players in greenfield exploration here. However, we are not attempting to address commercial investment regulations in this legislation. That is a matter for other Ministers.

I have a final question. It is one I asked in the Dáil previously but I did not get an answer to it. Will this legislation cover the rights of landowners and property owners or occupiers in respect of subterranean drilling under their land or properties?

Mr. Brian Breslin

For exploration purposes, drilling is an activity that is licensed under a prospecting licence. Dr. Doyle is probably best qualified to speak about that.

Dr. Eibhlin Doyle

Drilling is an activity which is not very dissimilar from the drilling some farmers might carry out for water for wells, for example, except that in the case of drilling for exploration it is temporary. In all cases where companies are carrying out drilling they will talk to the landowner. To be honest, many of those who are carrying out that activity, primarily geologists, work out in the country and get on with the rural community. Courtesy at all times is important. They do not go onto any land without the formal permission of the landowner. In that regard, the owner of the property has the right of refusal. While the Bill provides for access, to my knowledge companies tend not to push that legislation.

I take it from the reply that the legal rights of landowners, property owners or property occupiers if there is to be horizontal drilling under their land or property are, at best, unclear or probably non-existent.

Dr. Eibhlin Doyle

To be honest, we do not do horizontal drilling. One can do angle drilling. Is the Deputy referring to where, for example, one drills a hole at an angle underneath somebody's land while starting the drilling on another person's land?

Yes, or drilling that can go from one patch of land to another.

Dr. Eibhlin Doyle

Underground.

Yes, subterranean.

Dr. Eibhlin Doyle

Angle holes are drilled and they can end up underground in another property, but it does not affect the landowner in question.

Mr. Frank Sheridan

The drilling undertaken for the exploration of minerals would be of a particular type that involves extraction of a core of material for examination. The exercise is undertaken just for the duration of that drill activity. The hole arising from the extraction of the material is plugged following the temporary activity and the core that is extracted is studied to determine the presence of minerals underground. It is a temporary activity and it is limited to the core of that particular hole. The extent of the material involved would be very limited.

It might not be a temporary activity. When the exploratory part is done they might say: "We like the stones we are getting from here and we want more of them, so we are going to continue to go there and take them out."

Mr. Frank Sheridan

That is mining activity. It would be undertaken in a different way in accordance with the planning permission obtained through the planning authorities and in accordance with the mining licence that would set out the methodology to be employed to mine for the mineral materials.

My initial question still stands. What legal rights or protections do land or property owners or property occupiers have in respect of subterranean drilling under the land or properties they own or occupy? It is very much a grey area. Will that be covered by the legislation?

Mr. Brian Breslin

Ultimately, the legislation gives the right to drill in search of minerals. That is in the 1940 Act and will continue in this legislation under a prospecting licence but it is regulated, controlled and limited. The reason these powers are given is nobody knows where minerals are. They do not just advertise themselves. Drilling is a relatively rare activity. There are more than 500 prospecting licences at any given time, only a small fraction of which drill. Drilling is an expensive activity that is only undertaken where the holder of the licence believes there is sufficient evidence to justify it and to prove whether there is a deposit. Drilling usually takes place from the surface straight down and occasionally at angles. It is not used as a method of extracting minerals. It is only an exploratory and analytical tool to determine what the character and extent of the minerals underlying the land. Government policy over successive years has maintained the view that it is in the national interest that the nation's mineral resources be identified. It is better to know that they are there than not and to do that, we need to allow people to carry out drilling where it is justified.

By its nature, it is an interference with private property rights but it is justified in line with the protection of such rights in the Constitution because it is in the national interest that these minerals be identified. Once identified, a mine is a totally different activity. The extraction of the minerals and their production in commercial quantities is a major operation, which takes years to plan and bring into development. The planning process is where all this activity is analysed in the minutest detail as to how the mine will be operated, where the ground will be broken, where the minerals will be extracted, where they will be processed, where the waste will be stored and so on. That is examined through the environmental impact assessment process and the public, in general, and the landowners, in particular, have rights under the planning process to object to this activity. The Minister does not have the final say on whether planning permission is granted under the Minerals Development Act 1940. That is a matter for the planning authorities. Unless best practice is applied in how the mine is designed, conceived, developed and closed, planning permission will not be granted.

I take it from that that landowners and property occupies have no legal rights.

Mr. Brian Breslin

The legal right the property owners have is the right to object and to have the Minister consider their objections. They also have the right to go to the courts, as any individual has. A prospecting licence gives the holder of the licence the right to drill but, in practice, we have more than 600 prospecting licences at the moment and approximately 10% involve drilling. Many people spend significant money searching for our minerals and much of this money is spent in vain. We do not have that many mines. We had three major lead and zinc mines up to this year. One of them closed and another will close this year. We will be left with one.

I am not arguing about this.

Mr. Brian Breslin

Yes. I am trying to give the Deputy some context.

I am simply trying to establish the legal position.

Mr. Brian Breslin

I think I have answered that question.

I will follow on from Deputy Colreavy's question because it is about the elephant in the room where we are coming from. If the EPA concludes following an EIS that drilling and mining are appropriate to proceed, does the Bill contain a provision that gives the Minister the right to overrule that or must he accept the recommendations of the agency? Is he under a legal obligation?

Mr. Frank Sheridan

The Minister's role is to authorise the mining activity, which cannot take place without having obtained planning permission for the above ground operations and the assessment of the impact of that activity on the environment. If approved and licensed by the EPA, this is one of the criteria that the Minister would take into account in awarding a mining licence. However, having satisfied the planning and environmental authorities that the mine plan is valid and good, then it is his decision, although he is not obliged to provide a mining licence because that will be ultimately be based on his assessment of the viability and feasibility of the mining plan for extraction of the minerals.

Am I correct that most of the mining we are discussing, and about which Mr. Sheridan is experienced, relates to straightforward prospecting? It involves drilling, identifying a mineral underground and then extracting it. Is that not Mr. Sheridan's experience? However, there is the new concept of hydraulic fracturing, which is totally different. It is not just about drilling a hole and extraction using traditional methods; it is about using chemicals, which can affect watercourses. There is no conclusive evidence other than the experience of those who have witnessed the practice at first hand in other countries, particularly America, where there are serious question marks about its impact on watercourses. While there are other concerns, that is our main concern. The EPA is currently carrying out a review of hydraulic fracturing and if all the criteria are adhered to and this practice is safe, the agency will conclude that there is no objection to granting a licence. Where does that leave the Minister under the proposed legislation? Is he legally obliged to accept the EPA's conclusions?

There was a case some years ago under the former Minister of State with responsibility for energy, Mr. Bobby Molloy, which proposed the extraction of gold from Croagh Patrick. He refused the application and said to leave the gold there because there were many other considerations, not just the iconic nature of Croagh Patrick but also the impact it would have on the environment. That is the background and context to my questions. Deputy Colreavy was touching on this as well.

Mr. Frank Sheridan

Dr. Doyle will address the issue of drilling and the techniques used in mining and other activities.

Dr. Eibhlin Doyle

Hydraulic fracking does not take place in respect of mineral exploration and development so it is not an issue in this particular area. Hydraulic fracking is associated with the hydrocarbon sector and this Bill does not seek to legislate for that sector. While drilling is carried out for exploration, it tends to involve shallow holes in comparison to those for hydrocarbons and it does not employ hydraulic fracturing.

The Bill, therefore, does not impact on hydraulic fracturing as a concept.

Does any legislation cover it under mineral development?

Mr. Brian Breslin

Petroleum and hydrocarbons are regulated under a separate suite of Acts and we are not the officials in the Department who deal with it. Our Minister has responsibility for the area but-----

To clarify the points raised by Deputy Colreavy, under this Bill the landowner has no legal rights because, in the national interest, it is policy to identify and, where possible, extract the minerals contributing to the wealth of the nation. Therefore, the normal constitutional rights of property owners are set aside.

Mr. Brian Breslin

They are not set aside but compromised slightly.

Does this apply whether for minerals or fracking?

Mr. Brian Breslin

We cannot speak about fracking because-----

Irrespective of a fiscal invasion of the property-----

Mr. Brian Breslin

I cannot make that generalised statement because we do not deal with fracking.

Let us take fracking out of it and let us talk about rights.

Mr. Brian Breslin

My answer to Deputy Colreavy's question is 'Yes', unequivocally.

Mr. Breslin said the landowner has resort to the courts. Has this happened and what was the outcome?

Mr. Brian Breslin

No, the experience is generally harmonious and the landowners deal with the exploration companies.

Does this apply to offshore?

Mr. Brian Breslin

Yes, if offshore development was feasible.

My final question relates to royalties. Concern has been expressed that, under the terms of the licence given to Shell, when the gas finally starts flowing this year hopefully, the Government will have to pay a premium market price for the gas and has no preferential treatment. Mr. Breslin can correct me if I am incorrect. Is there anything that gives the Government preferential treatment when minerals are extracted and commercially sold to the benefit of the country? Is preferential treatment built into the Bill? There is a view that questions why we should pay the market price for our own asset.

Mr. Brian Breslin

The asset in this case are minerals, which are not-----

Mr. Brian Breslin

We have a small amount of coal but what we are successful at is lead and zinc and it is not something we have strategic requirement for. It is exported and the developer is given the right to extract the minerals, process them on site and sell them to a smelter abroad, who gets the proceeds. The royalty we charge is typically based on revenue the mining company gets from the smelter, not profits. The revenue is quite easy to pin down and the charge is a percentage on revenue. As Dr. Doyle said earlier, the 1940 Act was not helpful in trying to set royalties. Mining companies were making investments in exploration and they can be very substantial investments. They would like to have greater predetermination of what their liabilities will be when a line comes into production. That has been a continuing concern for professional investors and we are trying to address it to a certain extent by giving the Minister power to make regulations that set out a range of royalties. We have not determined the range, which will be done by review in accordance with international practice. The Bill provides for it to be reviewed on an eight yearly interval.

Does the Bill provide for the writing off of development costs prior to royalties being collected?

Mr. Brian Breslin

Not on royalty. That is a matter for tax. We are talking about royalties only. Those concessions are within the tax laws.

When Mr. Breslin says it is on revenue, that means it is the gross figure rather than the net.

Mr. Brian Breslin

It is the net revenue less certain costs. It is not the kind of offset allowed under the tax laws.

To clarify, it does not apply to oil and gas offshore.

Mr. Brian Breslin

We are not talking about oil and gas, only solid minerals.

I thank the witnesses for their presentation. My understanding was that the IDA, Bord na Móna and the councils have CPO powers. Are the witnesses telling me this Bill will give CPO powers to another body?

Mr. Brian Breslin

It does not give CPO powers, it modifies existing CPO powers. They have been there since 1940.

My understanding was that the IDA, Bord na Móna and the councils had CPO powers. Is there a fourth body?

Mr. Brian Breslin

Additional bodies to the bodies listed have such powers. Bord Gáis had CPO powers for a long time. The 1940 Act gave the Minister the power to compulsorily acquire rights over land, ancillary rights as they are described in the Act. In living memory they have not been used but the powers are in the 1940 Act and we propose to bring controls over that in line with modern best practice.

What system is used to identify minerals? Is the LiDAR system used on planes?

Dr. Eibhlin Doyle

Airborne surveys can carry out a variety of geophysical techniques. LiDAR is one, which gives the topography of the land. Other techniques are used including airborne magnetics surveys, airborne electromagnetic surveys, and gravity surveys. A range of geophysical methods can be flown on an airborne platform.

Perhaps committee members can turn off phones as there is still phone interference.

The Department should take note of the fact that October to March could be the best time to carry out these surveys. I have seen these planes flying low and it may be best to do this when there are fewer animals out on farms. Many people are not aware of things going on in these areas and it may be handy to have the postman throw a leaflet in the door. Other substances may also be included, including dolomitic limestone and sands. Why is this left wide open? Using the term 'may' is a funny one because we may have a good summer and we may have a bad summer. We do not know what will happen.

The witnesses' presentation referred to the Minister being informed about boreholes. Must people notify when going less than 5 m or 300 ft on a borehole for a well?

Mr. Brian Breslin

That is a modification of an existing provision in the 1940 Act, where there is a general requirement to notify the Minister of any boreholes sunk. All we are doing is separating the boreholes drilled under prospecting licences from those drilled for other purposes.

Is Mr. Breslin saying that if I want to get a well in my field tomorrow and I bring in someone who drills for boreholes and puts in liners as I have done for the past ten years, that I must notify the Minister before I do so?

Mr. Brian Breslin

As I said, this is not a new provision. It has always been there. It has been there since 1940.

The notification-----

Mr. Brian Breslin

It does not apply to water wells.

It does not apply to water wells. That is fine once that is clarified. Did Mr. Breslin say that peat is not included in it?

Mr. Brian Breslin

No, peat is regulated elsewhere. What was the Deputy's other question? I have forgotten it.

Mr. Frank Sheridan

On the question of substances, the Schedule to the Bill lists the minerals to be covered by the terms of the Bill in the course of prospecting or mining. There is a degree of flexibility provided for as there may well be substances there that we are just not aware of. This is, after all, an exploratory activity. The definition at the start of the Bill is to cover all minerals and the purpose of the Schedule is to itemise as many of those as possible and it is largely to do with the uncertainty as to the occurrence of those minerals in the terrain.

Mr. Brian Breslin

I will add to that that the definition of minerals in the interpretation part of the Bill is very broad in scope. It is better to describe minerals as to what they are not. It is any substance or any agricultural land that is not turf, peat, stone, sand, gravel, or clay. Other than that there is a broad scope of materials that fit within the definition. The definition in the interpretation section is more important.

Does Mr. Breslin think it would be a good idea to include in the definition that water is not included because there will be many people worried about the water side of it if they have boreholes? I think it would be advantageous to make clear that we are not talking about a borehole for water in order to ease the anxiety that may exist in communities around the country. That anxiety would be taken away if it was there in black and white for them.

Mr. Brian Breslin

That is actually addressed in the Bill. I understand that the committee has not had the benefit of seeing it but I will read out the definition that is contained.

Mr. Brian Breslin

Water is specifically excluded from the definition.

That is good. Mr. Breslin makes reference to the Mining Board. If there are areas of conflict, is it the Mining Board that decides things? At the end of the day, a board can meet and decide to give certain rights to a particular farmer but does the Minister have the power to overrule such a decision?

Mr. Brian Breslin

No.

Mr. Brian Breslin

No, the board acts as a quasi-judicial body. The Minister has no power to override what the board has adjudicated on. The Minister is subject to the board as well. The board can adjudicate on the Minister as well.

It is legally binding for both parties.

Mr. Brian Breslin

It is.

Who appoints that board?

Mr. Brian Breslin

The Minister appoints the members to the board. The chairman is a legal person of ten-year standing.

What did Mr. Breslin say?

Mr. Brian Breslin

A barrister or a solicitor with at least ten years' experience. The two professional valuers are the ordinary members.

I had understood that if there is any conflict, if the Minister has appointed someone to a body, it is not classed as wholly independent. I think the ESB found that out to its detriment.

Mr. Brian Breslin

Well, the Government appoints judges.

Mr. Brian Breslin

The chairman of the Mining Board is effectively a judge.

Is Mr. Breslin saying that property rights will be diminished somewhat by this?

Mr. Brian Breslin

They will not be diminished by this Bill. The property rights are the same under this Bill as they were under the previous ones. What we are doing is modifying the controls over it and improving rights of objection. The processes are being brought up to date but the fundamental rights that are conveyed under this Bill are no different in that respect from what has been contained in legislation since 1940.

I will make one suggestion. It needs to be clarified in the first line of any public statements that the Department makes on this legislation that this does not cover oil or gas because it will generate a lot of unnecessary concern otherwise. It should be made very clear every time in the first sentence, even if Mr. Breslin gets bored writing it, that this does not include oil or gas.

Mr. Brian Breslin

I thank the Deputy for that advice and I will take it on board. We have put that exclusion as high up in the Bill as possible. It is in section 2.

I am talking more about statements on television.

Mr. Brian Breslin

Absolutely, we will take that on board.

Are there any further questions? No. On behalf of the committee I thank Dr. Eibhlin Doyle, Mr. Frank Sheridan and Mr. Brian Breslin for coming before us today to explain the background and necessity for the Bill. As has been mentioned, a copy was sent out some time ago but it has not been re-sent in the last number of weeks so we will make sure that it is sent again. While the committee may decide to meet with stakeholders on the Bill it is considered that because the Bill is at such an advanced stage pre-legislative scrutiny is not relevant.

As there is no other business this morning the joint committee will adjourn until 2.30 p.m. on Thursday,16 April. Is that agreed? Agreed.

The joint committee adjourned at 11.25 a.m. until 2.30 p.m. on Thursday 16 April 2015.