Litigation claims caused by fracking
The 2012 English Supreme Court decision involving Mohammed Al Fayed and his damages claim for a percentage of the profits generated by the extraction of oil from under his Surrey estate without his knowledge or permission established that any claim by a landowner for the payment of a share of production profits by an exploration & production company will be nominal, based only on the loss to the landowner of the so called "amenity value" of his land. Calculation of that (small) amount of money is based on the principle (as was the case with Mr Al Fayed where oil was extracted from under his land by diagonal drilling) that no permission has been obtained from the landowner resulting in a civil damages claim for trespass because an owner of land owns not only the surface, but also all the rights to extract minerals beneath underneath it.
So what else may be done to recover damages, or attempt to prevent any exploration for shale gas at all? Simon Moore takes a look.
The greater amount of fracking in the USA and its perceived litigation culture has already generated many class action and other lawsuits for compensation, but that is unlikely to be experienced here. There have been cases where actual damage has been caused and compensation paid, but this is as a result of a particular fracking operation causing that damage, not because the process itself was found to be inherently unsafe or environmentally damaging. So until evidence of an inherently unsafe or damaging process emerges, then unless actual damage is caused by a particular fracking operation the only claim for damages a landowner has is if relevant licences and consents have not been obtained to drill under their land, and even then any damages awarded will be small. Claims for damages under the Human Rights Act for interference with private life or possessions are unlikely to succeed.
Instead, apart from the "normal" litigation caused by any particular exploration or drilling project, most fracking litigation risk will arise at the time licences are granted, and when the compulsory purchase process is used to acquire access rights, both above and below the surface. If the correct permissions are not obtained, there is a risk of a landowner being successful in an injunction application to prevent the works being carried out at all. Getting the correct permissions involves (among other things) getting planning permission and Department of Energy & Climate Change (DECC) consent which can each be challenged as unlawful or irrational by opponents by way of judicial review. But in the absence of an opponent being able to show likely actual damage being caused, once planning permission and DECC consent have been obtained, a landowner's remaining claim (if any) will be for the (small) loss of enjoyment value of their land. Some commentators talk about opponents to fracking buying up "ransom strips" and then refusing to give drillers the right to run pipes underneath that land. These concerns are misplaced. The Court has adequate powers to grant that right itself if it is in the national interest where a "ransom strip" landowner "...unreasonably refuses to grant [the right] or demands terms which, having regard to the circumstances, are unreasonable."