Posted on December 1, 2011 by

Conditions proposed by objector requiring carbon offsets in Part 3A coal mine expansion upheld

In Hunter Environment Lobby Inc v Minister for Planning & Anor [2011] NSWLEC 221, Pain J in the Land & Environment Court determined an appeal on the merits broughtby an environmental lobby group against an approval granted by the Minister under Part 3A of the Environmental Planning and Assessment Act 1979 (EPA Act) for a coal mine expansion. Environmental issues raised by greenhouse gas (GHG) emissions impacts of the coal mine, including the ability to impose conditions requiring carbon offsets to mitigate the effects of climate change, were considered. An approval for a coal mine expansion was granted by the Minister subject to conditions prior to the repeal of  Part 3A effective 1 October 2011. The Hunter Environment Lobby Inc (HELI) was able to appeal the merits of the Minister’s determination by virtue of s75L, under which an objector, in specified limited circumstances, has such a right of appeal within 28 days of the determination if they made a submission objecting to the project under s75H.

HELI sought the imposition of conditions to mitigate the project’s contribution to global anthropogenic climate change, including requiring carbon offsets for Scope 1 (direct) and Scope 2 (indirect) GHG emissions in excess of annual total emissions budgets (conditions). Offsets for Scope 3 GHG emissions (byproduct of coal burning, including the burning of coal domestically and overseas) were not ultimately pressed. Offsets were in the nature of the purchase and surrender of Gold Standard Certified Emissions Reductions (under the Clean Development Mechanism in the Kyoto Protocol 1997) or Australian Carbon Credit Units.

HELI argued that, having regard to the wording of s75J of the EPA Act, the power to impose the conditions was constrained only by the scope, purpose and object of the legislation. They argued that the principles of ecologically sustainable development (ESD), in particular, intergenerational equity and conservation of biological diversity and ecological integrity, ought be applied to the project. HELI further argued that the question of power to impose conditions did not strictly arise, as the conditions addressed the direct impacts of the development.

The Minister and Ulan Coal Mines (Ulan), argued that the conditions were invalid having regard to the tripartite test for determining the validity of consent conditions set down in Newbury District Council v Secretary of State for the Environment [1980] 1 All ER 731 (Newbury).

The Minister argued that the EPA Act was not directed to worldwide environmental problems such as climate change and that the proposed conditions were an attempt to implement broad climate change objectives.

Ulan argued that the conditions were discriminatory, and that ESD and the precautionary principle require that any amelioration of environmental risk be practical and proportionate to the level of threat and certainty.

Pain J held that it was not necessary to determine whether ESD was a mandatory consideration in order to determine the merits of the case, but noted that Minister for Planning v Walker [2008] NSWCA 224 supported the conclusion that ESD principles are mandatory relevant considerations for project approvals under Part 3A.

Her Honour discussed the Newbury test in light of McHugh J’s judgment in Western Australian Planning Commission v Temwood Holdings Pty Ltd (2004) 221 CLR 30 and the NSW Court of Appeal’s decision in Botany Bay Council v Saab Corporation Pty Ltd [2011] NSWCA 308 (Saab).

After determining that the power to impose conditions under s75J(4) was broad but not unlimited, Pain J held at [87]that, in accordance with Saab, ‘the starting point for consideration of a condition sought to be imposed on an approval is that it must be assessed by reference to the scope and purpose of the statutory power under which it is imposed.’ Her Honour stated at [92] that ‘As the purpose of the EPA Act includes the protection of the environment, the imposition of conditions to address GHG  which are attributable to the project under Part 3A are arguably within power.’

Her Honour determined that Scope 1 emissions were related to the purpose of assessing and approving the coal mine expansion, and that as a direct consequence of the project fairly and reasonably related to the development as per the first and second Newbury principles.  When considering whether the carbon offsets for Scope 1 emissions in light of the third limb of the Newburytest, Pain J concluded that the conditions, whilst being the first of that kind imposed on any coal mine in New South Wales, were not discriminatory and could be reasonably implemented. However, Her Honour did not impose conditions requiring offsets for Scope 2 emissions, as these were not entirely within the control and management of Ulan, and therefore did not fairly relate to the development at hand.

Pain J upheld the proposed conditions requiring carbon offsets relating to Scope 1 emissions only, subject to rewording by the parties.

Climate change and the application of ESD principles, and, in particular the precautionary principle, have been previously examined in several judicial review cases in the Court. Those cases include Gray v The Minister for Planning andOrs [2006] NSWLEC 720 (challenge to a coal mine approval in which Pain J considered that the mine’s GHG emissions required environmental assessment), Walker v Minister for Planning [2007] NSWLEC 741 (challenge to a concept plan approval for a retirement village in which Biscoe J held that the Minister had failed to consider ESD principles and the impact of the proposal development upon the environment, including flooding impacts compounded by climate change) and Drake-Brockman v Minister for Planning & Anor[2007] NSWLEC 490 (challenge to a concept plan approval for a large residential and commercial development, where Jagot J held that a quantitative analysis of GHG emissions was not required).

It is possible that the Minister and/or Ulan may seek to appeal the decision, given the potential implications for further coal mine projects and expansions.