Court puts brakes on streamlined approval process

By Peter Briggs and Nick Thomas.

Key Points:
Even the new streamlined approvals process under Part 3A will need consideration of the principles of Ecologically Sustainable Development.

Even the streamlined approvals process under Part 3A of the Environmental Planning and Assessment Act 1979 (NSW) will need consideration of the principles of Ecologically Sustainable Development ("ESD"), following the decision in Gray v The Minister for Planning.

When Part 3A was introduced, it was intended to speed up and integrate the assessment process, provide more flexibility, and make it more certain and transparent (we looked at it here). This decision probably won’t mean the Part operates less efficiently, but it will mean that the decision-makers will have to keep these principles in mind - so all proponents of major projects and infrastructure in New South Wales will have to as well.

The facts in Gray are very straightforward. A mining company wanted to build a coal mine and sought approval under Part 3A. Part 3A requires the Director-General to specify the Environmental Assessment Requirements ("EAR") to be addressed by a proponent for a project. Included among the EAR for the proposed coal mine was the requirement for the proponent to assess air quality impacts including a detailed greenhouse gas ("GHG") assessment. The environmental assessment prepared by the proponent assessed direct and indirect GHG emissions from the proposed coal mine itself, but did not assess the potential GHG emissions from the burning of coal by third parties.

Before the environmental assessment for the project could be publicly exhibited, the Director-General was required under Part 3A to "accept" the environmental assessment. The Director-General decided that the company's environmental assessment adequately addressed the EAR. Mr Gray challenged the validity of that decision, saying that the assessment did not comply with the EAR owing to its failure to consider the impacts of GHG emissions from the burning of coal by third parties, and that the Director-General had failed to consider ESD principles in making decisions under Part 3A.

What is an "environmental assessment"? And when is it necessary?

Justice Pain in the Land and Environment Court held that:

• an environmental assessment by the proponent under Part 3A is mandatory, not optional
• the content of an environmental assessment is subject to the discretion of the Director-General in establishing the EAR
• the Director-General must decide whether an environmental assessment adequately addresses the EAR before accepting the assessment for public exhibition
• if the Director-General considers that an environmental assessment does not adequately address the EAR, the Director-General cannot accept it for public exhibition
• the Director-General’s decision that an environmental assessment adequately addresses the EAR can be challenged in court, but on very limited grounds.

On the facts, the Director-General did consider whether the environmental assessment complied with the EAR and concluded that it adequately addressed these. Justice Pain held that the Director-General's decision about the adequacy of an assessment is a subjective one, and is not subject to any specific legal test. Her Honour therefore rejected Mr Gray's claim that the assessment was legally inadequate.

Should ESD principles have been considered by the Director-General?

Previous cases have said that decisions made under various legislation which adopts ESD principles, including decisions under other Parts of the Act, had to consider the principles of ESD (an example is Telstra v Hornsby Shire Council, which we looked at here). But do decision-makers under Part 3A have to consider them as well?

Yes, said Justice Pain. Even though Part 3A does not prescribe the matters to be considered by the Director-General (contrast with section 79C of the Act for determining development applications under Part 4), he still must exercise that broad discretion in accordance with the objects of the Act. Those objects include at section 5 the encouragement of ESD principles such as the precautionary principle and intergenerational equity.

Importantly however she noted that these principles do not override all other considerations, and that the extent to which the Director-General gives weight to the principles is a matter for him.

What "causes" an environmental impact?

Before the Director-General or Minister can consider ESD principles, they must know what possible environmental impacts could be caused by the proposed project. What is the test of that?

Justice Pain cited the test that has been used in previous cases in the Land and Environment Court - is there a "real and sufficient link" between the project and the environmental effects. This can include off-site impacts resulting from actions by unrelated third parties. Under that test, the proposed coal mine in this case would cause the environmental impact of increased greenhouse gas emissions, even though the burning of the coal which produced the emissions would be done by third parties, and not necessarily limited to activities in NSW. Even under the tougher test proposed by the Director-General - that the environmental effects of a proposed project are significant, proximate, and not unlikely to occur - she said that the proposed mine would still cause the environmental impacts of increased greenhouse gas emissions.

Intergenerational equity

Intergenerational equity is one of the ESD principles, but it has not received much attention from the courts. The general elements of intergenerational equity are:

• The conservation of options principle, which requires each generation to conserve the natural and cultural diversity in order to ensure that development options are available to future generations.
• The conservation of quality principle, that each generation must maintain the quality of the earth so that it is passed on in no worse condition than it was received.
• The conservation of access principle, which is that each generation should have a reasonable and equitable right of access to the natural and cultural resources of the earth.

Justice Pain found that the Director-General was required to take this into account but, by failing to consider the important downstream impacts the project would have, notably GHG emissions caused by third parties, he failed to do so.

The precautionary principle

Justice Pain, referring to the decision in Telstra (which we considered here), took the view that the precautionary principle requires a decision-maker to assume that there is, or will be, a serious or irreversible threat of environmental damage and to take this into account, notwithstanding that there is a degree of scientific uncertainty about whether the threat really exists or its extent. In Telstra, Justice Preston held that the obligation on the decision maker to consider this principle is only triggered if two preconditions are satisfied, namely, a threat of serious or irreversible environmental damage and scientific uncertainty as to the nature and scope of that threat.

Because the Director-General’s decision was not the final one to approve the project (that being the decision of the Minister), it was hard to determine to what extent this principle should be applied at this stage. Justice Pain found that it should, however, be considered - the Director-General had "to ensure that there is sufficient information before the Minister to enable his consideration of all relevant matters so that if there is serious or irreversible environmental damage from climate change/global warming and there is scientific uncertainty about the impact he can determine if there are measures he should consider to prevent environmental degradation in relation to this project."

Some implications

Justice Pain's decision is the first to apply ESD directly to the relatively new Part 3A approvals regime. It demonstrates the way in which ESD should infuse decision-making under laws which adopt ESD. In particular, it highlights the need to take into account cumulative and downstream impacts of a proposal under the Act.

However, the decision should be seen in proper perspective. As Justice Pain indicated, and the statutory definition of ESD itself provides, ESD requires the effective integration of economic and environmental considerations in decision-making processes. Each proposal must be assessed on its own merits.

Secondly, although an environmental assessment is an important part of the decision-making process, perfection is not required. Here, the environmental assessment covered a wide range of issues, but was criticised in only one respect, and, as the assessment of of GHG emissions is available publicly, no new exhibition of the assessment was ordered by Justice Pain.

Another interesting aspect of the judgment is that essentially Justice Pain found that a decision taken as a step in the assessment process was a decision susceptible to legal review - in this case the decision of the Director-General to accept the environmental assessment submitted by the proponent prior to it being placed on public exhibition. In circumstances where public exhibition is a mandatory element of the environmental assessment process of a project (see section 75X(5)), and indeed where the proponent in this case was required to respond to public submissions on the environmental assessment and assess the impacts of GHG emissions from the burning of coal by third parties, it is peculiar that a "pre-approval decision" of this kind should be made subject to judicial review.

For further information, please contact Nick Thomas.