With allocation of natural resources being at the centre of major disputes, the entire legal framework governing minerals and even crude oil has come in for a review. Questions are being raised on the very power of the Union government to allot rights for coal and oil despite several years of the Centre exercising these powers.
A government official familiar with the legal framework said the Union government tried to harmonise the provisions of the Coal Mines (Nationalisation) Act with the Mines and Minerals (Development and Regulation) Act. While the first one restricts persons eligible to get coal mines to certain categories and the Centre has the power to notify these categories, Section 10 of MMDR Act says that application for all the three stages of mining--reconnaissance, prospecting, and mining lease will be made to the state government and on receipt of an application under this section, states may, grant or refuse to grant the permit, licence or lease.
He said instead of keeping the discretion of allotting coal mines at the central level through the screening committee, the Centre should have framed rules and guidelines under MMDR Act in respect of coal separately, in sync with the Coal Mines Nationalisation Act. “There is already a provision for safeguarding that requires the Centre to give its prior approval before issue of lease,” he said.
While the Supreme Court had last week questioned the Centre’s power under MMDR Act, 1957, to allocate coal blocks, in the case of oil, Nagaland wants to have its own bidding round. The basis of Nagaland’s claim is that the Constitution gives state government the right over land and its resources and, therefore, it can go ahead and allot oil and gas blocks.
The Union List in the Seventh Schedule of the Constitution, however, rests the power of regulation and development of oilfields and mineral oil resources, mines and mineral with the Centre under entry 53 and 54. Mines and mineral development are part of the State List as well but here they are subject to the powers conferred on the Centre.
There appears to be a similarity in the regulation history as well as the legal framework of coal and oil. Both the natural resources have a history of being nationalized after which Union government entities took over assets. The jurisprudence surrounding the two sectors finds it basis in laws framed by Parliament.
Though both coal and petroleum exploration and production rights are given out by the Centre, it is the state governments which issue the mining leases. The Petroleum and Natural Gas Rules, 1959 drafted by the Centre under sections 5 and 6 of the Oilfields (Regulation and Development) Act, 1948 lays down that licence or lease in respect of any land or mineral underlying the ocean within the territorial waters or continental shelf of India will be granted by the Central Government and any land vested in a State Government, shall be granted by the State Government with the previous approval of the Central Government.
The Rules also specify that the Centre, if it deems fit, may from time to time notify in the official Gazette particulars regarding the basis on which the Central Government may be prepared to consider proposals for prospecting or mining operations in any specified areas.
Though MMDR Act is being overhauled with the new Bill being discussed by the Parliamentary Standing Committee, a simultaneous reform in coal was not possible because the ministry did not want to give up its discretionary power, said the person who did not want to be quoted. “Administration will be easier if coal and other major minerals are dealt the similar way in the Bill.”
