Posted on October 21, 2021 by Adriana Kleiss and Lindsay Taylor
Clinging to Coal: KEPCO Bylong appeals to High Court after Third Project Refusal
KEPCO Bylong Australia Pty Ltd (KEPCO) will seek special leave to appeal to the High Court following the third refusal of the Bylong Coal Project by the NSW Court of Appeal last month.
In this blog, we look at the Court of Appeal decision in KEPCO Bylong Australia Pty Ltd v Bylong Valley Protection Alliance Inc  NSWCA 216 and consider the key legal arguments that may come before the High Court if special leave is granted to appeal.
Background to the Case
KEPCO applied for development consent to construct and operate a new coal mine in the Bylong Valley (Project). The Project was state significant development (SSD). The consent authority, the Independent Planning Commission (IPC), refused the Project.
A key reason for the IPC’s refusal was its finding that the Project failed to minimise greenhouse gas (GHG) emissions to the greatest extent practicable.
KEPCO brought judicial review proceedings in the Land and Environment Court (LEC) challenging the IPC’s decision to refuse consent. The Bylong Valley Protection Alliance Inc (BVPA), was joined as a party to the proceedings. The primary judge, Pain J, dismissed the challenge in KEPCO Bylong Australia Pty Ltd v Independent Planning Commission (No 2)  NSWLEC 179. KEPCO then appealed to the NSW Court of Appeal.
KEPCO’s main argument in both appeals was that the IPC had misconstrued cl14 of State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP) in various respects.
Clause 14 of the Mining SEPP
Clause 14 of the Mining SEPP provides that:
- before granting consent for development for the purposes of mining, the consent authority must consider whether consent should be issued subject to conditions aimed at ensuring that greenhouse gas emissions are minimised to the greatest extent practicable (cl14(1)(c)), and
- in determining a development application, the consent authority must consider an assessment of greenhouse gas emissions of the development and must do so having regard to any applicable State or national policies, programs or guidelines concerning greenhouse gas emissions (cl14(2)).
Requirement to consider whether conditions should be imposed
KEPCO argued that the IPC misconstrued the requirement in clause 14(1)(c) by asking whether the Project, including any draft conditions, would minimise GHG emissions to the greatest extent practicable, rather than asking whether it (the IPC) could impose a condition which had that effect.
In the LEC, Pain J found that:
- clause 14(1) does not require the consent authority to propose suitable conditions to address the GHG emissions of a project (at  – ),
- proposed conditions of consent are not mandatory considerations for the consent authority where the consent authority determines to refuse consent (at ), and
- the obligation in clause 14(1)(c) to consider whether conditions should be imposed to minimise GHG emissions did not arise before the IPC because the IPC decided to refuse consent (at , ).
KEPCO challenged these findings in the Court of Appeal, submitting that Pain J’s reasoning suggested that cl14 involved an ‘impermissible two-step process’ in which a consent authority first decides whether to grant or refuse consent, and then secondly decides whether or not to impose conditions.
The Court of Appeal held:
- that KEPCO was correct to say that cl14 does not give rise to a two-step process; the determination of a development application involves the weighing of conflicting considerations and results in a choice along a spectrum of permissible modifications and conditions. Refusal of consent is one outcome, but the grant of consent is not a singular alternative (at ),
- the function of determining a development application by granting consent or refusing consent to the application is a single, indivisible function; there is not one power to grant consent and a separate power to refuse it (at  per Preston CJ of the LEC),
- the consideration of whether or not the consent should be granted with any modification of the development or on conditions is an integral part of the determination of the development application by granting consent (at  per Preston CJ of the LEC),
- the task set by cl14(1) to consider whether conditions should be imposed to minimise GHG emissions is comparable to the requirement in clause 4.15(1) to consider all matters relevant to the development, and
- consideration of the matters under s4.15(1) may require consideration of whether or not conditions of consent should be imposed directed to addressing the relevant matters, such as mitigating the likely impacts of the development (at  per Preston CJ of the LEC).
Ultimately, the Court found that the IPC had considered the proposed conditions put forward by KEPCO, but that there was no proposed condition which would, if implemented, minimise GHG emissions. The IPC’s reasons showed that the IPC had found that if the development were undertaken in accordance with the proposed conditions of consent, it would not ensure that impacts of GHG emissions were avoided or minimised to the greatest extent practicable.
The Court did not expressly overrule Pain J’s finding that proposed conditions of consent are not mandatory considerations where a consent authority has refused to grant consent. However, the Court’s reasoning appears consistent with a finding that, in determining a development application, the consent authority will be required to consider whether any proposed conditions are capable of mitigating the likely impacts of the development, which may have otherwise resulted in the application being refused.
While it would be useful to have the High Court clarify this point, it seems unlikely that the High Court would be required to address this issue, given that the Court of Appeal clearly held that, in any case, the IPC did consider whether proposed conditions would address the GHG emissions of the Project.
Applicable policies concerning GHG emissions
In relation to the requirement under cl14(2) of the Mining SEPP, KEPCO argued that the IPC had erred in having regard to the NSW Climate Change Policy Framework, which contains policy statements concerning meeting Australia’s commitments under the Paris Agreement and the ambition to achieve net-zero emissions by 2050.
KEPCO contended that this Policy did not fall within the description in cl 14(2) of any ‘applicable’ State or national policies, programs or guidelines concerning GHG emissions, and therefore was not a relevant matter that the IPC was bound to have regard to under cl 14(2) in considering an assessment of the GHG emissions of the development.
KEPCO argued that the subject to which a policy, program or guideline is to be ‘applicable’ is not the topic of GHG emissions per se, but rather the task of considering an assessment of the GHG emissions of the development. KEPCO contended that the IPC misconstrued cl14(2) of the Mining SEPP, erroneously believing that it was compelled to consider the NSW Climate Change Policy Framework.
In the LEC Pain J held that:
- in the absence of any definitions in the Mining SEPP or elsewhere, applying the plain and ordinary meaning of the words ‘policies, programs or guidelines’ in their context could potentially apply to a broad range of documents, and
- having regard to the statutory context, and the functions of the IPC as consent authority under s4.15 of the EPA Act, the discretion of the IPC to determine what it considers appropriate is wide (at ).
The Court of Appeal confirmed Pain J’s finding on this point and added that:
- the word ‘applicable’ in cl14(2) does not operate to constrain the class of documents to which a consent authority may have regard under cl14(2) as narrowly as KEPCO contends (at  –  per Preston CJ of the LEC), and
- even if the IPC was not required to have regard to the Policy, this does not mean that it was precluded from doing so (at ;  per Preston CJ of the LEC).
The Court found that in order to establish that the IPC had made a legal error, KEPCO needed to show that not only was the Policy outside the scope of cl14(2), but also that it was a prohibited consideration, which KEPCO had not argued.
Alternative sources of coal
The IPC found that there was no evidence before it to determine whether, if the Project was refused, the Applicant would instead secure an alternative source of coal, which would be of an inferior quality and result in poorer environmental outcomes.
KEPCO argued that in so finding, the IPC had made a finding of fact that failed to take into account cogent evidence or was legally unreasonable, in that there was only one finding available on the evidence.
KEPCO contended that, contrary to the finding of the IPC, there was evidence before it on this issue: two letters had been submitted with the development application, one from KEPCOs CEO and another from its planning consultant to the effect that if the Project was not approved, KEPCO would seek alternative sources of coal which would likely be of a poorer quality.
The Court held that the IPC did take into account the letters. However, due to the uncertainty and imprecision of the evidence before it, it was reasonably open to the IPC to find that determinative evidence was not available to it.
The Court found that the submissions made by KEPCO on this point were based on a dissatisfaction with the factual findings of the IPC and did not establish any error of law.
The Court of Appeal decision can be read in full here.
Next Steps in High Court Appeal
The Environmental Defenders Office has confirmed they will represent the BVPA in the High Court. It is not yet known on what grounds KEPCO will seek special leave to appeal.
The BVPA has 21 days to respond to the special leave application from the date of service.
The special leave application will be determined by any two Justices of the High Court, and this may be done on the papers, or by a hearing of the application.
If you wish to discuss the above please contact Lindsay Taylor on 8235 9701 or Adriana Kleiss on 8235 9718.