Court hammers Anvil Hill challenge

By Nick Thomas and Rachel Daniel.

Key Points:
A 0.04% contribution to the annual global greenhouse gas emissions is not likely to cause a significant impact on matters of national environmental significance. Challenges to the Minister's decision are limited.

The Federal Court has dealt another blow to those challenging the Anvil Hill mining project in the NSW Hunter Valley. In Anvil Hill Project Watch Association Inc v Minister for the Environment and Water Resources [2007] FCA 1480, the Court dismissed a legal challenge to the determination by the Commonwealth Minister for the Environment and Water Resources that the project did not require approval under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

In so doing, the Court decided that a key element of the determination as to whether a proposed project requires approval is not a "jurisdictional fact". This will make it more difficult to mount successful legal challenges to determinations as to whether a project requires approval. The Court’s decision therefore offers some comfort for those involved in development projects which would trigger the operation of the EPBC Act.

The Court also made some important comments on the climate change analysis which has been applied to various projects in legal challenges in recent years, which will also make EPBC Act challenges on this basis more difficult.

The proposal

The upper Hunter Valley in New South Wales is rich with coal deposits, and therefore is currently a prime source of electricity generation both in Australia and overseas. However, coal-fired power is the target of considerable debate today, on the basis that the burning coal causes climate change. That issue has driven a number of efforts to stop new coal mines, particularly through legal challenges under environmental legislation such as the EPBC Act.

The Anvil Hill mine was the subject of a much publicised legal challenge under the Environmental Planning and Assessment Act 1979 (NSW) in 2006. On that occasion, the Court held the impacts of burning coal from the proposed mine should be considered in assessing the environmental impacts of that project. Following an assessment of such impacts, the NSW Minister for Planning approved the project in June 2007. Opponents had, by then, turned their focus to a challenge to the Commonwealth Minister’s determination that the project did not require approval under the EPBC Act.

Controlled actions and their impacts

The Federal Government can become involved in regulating the environmental impacts of a project (or an "action", as the EPBC Act calls it) if it is a "controlled action". The regime works like this:

• Under the EPBC Act, a person cannot take an action that will, or is likely to have, a significant impact with respect to certain listed matters of "national environmental significance" (such as nationally threatened species and World Heritage areas) without the consent of the Minister. An "impact" may be direct or indirect. Recent amendments to the EPBC Act define an indirect impact as "a substantial cause of that event or circumstance" (section 527E).
• An action that would have such an impact is called a "controlled action". Controlled actions are prohibited under Part 3 of the Act, unless they are approved or are exempt from the need for approval.

Accordingly, if the action is a controlled action, then generally the Federal legislation (in addition to State legislation) is triggered, and the likely result is that the action will require approval at both State and Commonwealth levels.

The decision and the challenge

The proposed action - the coal mine - was referred to the Minister. The Minister's Delegate held that it was not a controlled action, and hence did not require approval under the Act.

The applicant's main grounds of challenge were that:

• the future emissions caused by the mine would contribute to climate change, that contribution is likely to have a significant impact on matters protected by the EPBC Act, and, since the Delegate did not take this into account, her decision was flawed (the Causation Argument); and
• the Delegate could only make a decision that something is a controlled action if she first made a correct decision about the likelihood of a significant impact, and, since she got that wrong, she could not validly decide that the proposed mine was not a controlled action (the Jurisdictional Fact Argument).

The Causation Argument - would the coal mine lead to climate change?

The applicant’s evidence suggested that carbon dioxide emissions coming from the mine's products would be 12 million tonnes annually, which is 0.04% of the world's total annual emissions.

The Delegate found that the emissions from burning the coal from the mine are a small proportion of the total possible emissions from all other sources, on a global scale, over a long period of time. While there is a relationship between the amount of carbon dioxide in the atmosphere and global warming, the climate is complex. There was unlikely to be an identifiable link between the additional greenhouse gases in the atmosphere caused by the burning of the coal from the mine and a measurable increase in the global atmospheric temperature. Consequently, the Delegate decided that a significant impact on matters of national environmental significance was not likely.

Justice Stone held that the Delegate was entitled to take this approach. The EPBC Act does not require the Minister or his Delegate to apply a test of causation, by taking what the applicant called a "commonsense" approach. Rather, the EPBC Act requires an investigation of the link between future conduct and a significant impact. This the Delegate did, when she found that the emissions from the mine would not be a substantial cause of climate change affecting matters of national environmental significance.

The applicant also submitted that the impact of actions should be assessed in the context of the impact of other potential actions; although this mine might only contribute 0.04% of the world's total annual emissions, it all adds up.

That might be so, but as Justice Stone pointed out, the EPBC Act does not require the Minister or a Delegate to look at the potential impacts in the context of other hypothetical or potential actions. They only have to look at the proposed action and determine whether the impact is likely to be significant.

The Jurisdictional Fact Argument - could the Delegate make the decision?

The Delegate’s decision that the mine is not a controlled action was based on her factual finding that the proposed mine will not have, and is not likely to have, a significant impact on a "matter of national environmental significance" identified in the EPBC Act. This factual finding, said the applicant, was a precondition to making a decision about whether the mine was a controlled action, and should therefore be considered to be a "jurisdictional fact". The consequence of this would be that, if that factual finding was incorrect, then the Delegate did not have power to make the decision that the mine is not a controlled action, and on this basis the Court could be asked to decide the "significant impact" question itself.

In judicial review proceedings such as these, a court cannot review the merits of the decision itself, only the manner in which a decision is made. If however a factual finding is a pre-condition to making a valid decision (ie. a "jurisdictional fact"), then the court can review the finding of fact and make its own decision on whether that factual finding was correct.

Here, if the decision of whether or not the mine is a controlled action were a jurisdictional fact, then the Delegate's decision would not be final, and the Court would have had power to review the Delegate's finding (that the mine will not have, and is not likely to have, a significant impact on a matter of national environmental significance) with the benefit of evidence that was not necessarily before the Delegate at the time that she made her decision.

The question of whether a particular finding of fact is a jurisdictional fact depends on the construction of the relevant statute. While admitting that there was much to be said in support of both arguments, Justice Stone found that construction of the EPBC Act weighed against the jurisdictional fact thesis and therefore dismissed this head of appeal as well.

For example, section 75 of the Act, which obliges the Minister to decide whether an action is a controlled action, uses the words "opinion", "belief" and "satisfaction", which words "almost invariably indicate that the determination of fact is not jurisdictional…". Further, the Minister's decision is referred to as the trigger for the operation of other sections of the Act, rather than the existence or absence of a significant impact.

So what?

In recognising that the test of significant impact allows an assessment of the impact that the emission of greenhouse gases may have on the global climate, rather than the impact those emissions may have in a local context, the Court has set a high bar when determining whether greenhouse gas emissions are likely to have a significant impact on matters of national environmental significance, and hence trigger the EPBC Act.

Further, this judgment has made it more difficult to challenge a decision of the Minister that an action is not a controlled action, and hence requires approval under the EPBC Act, in addition to State approvals. As the factual finding of whether or not an action is a controlled action is not a jurisdictional fact, the Court cannot stand in the Minister's shoes and determine for itself whether or not an action is a controlled action. The Minister's decision can only be challenged on other administrative law grounds, such as if the Minister made a procedural error, or took into account irrelevant considerations, in making the decision.

For further information, please contact Nick Thomas and Rachel Daniel.