A need for more clarity in environmental impact assessment

By Brendan Bateman and Nick Thomas.

Key Points:
A recent Federal Court decision highlights the broad scope of assessment under the EPBC Act, and a degree of uncertainty in the assessment and approval process. Commonwealth-State bilateral agreements under the EPBC Act can clarify assessment and approval processes but not all jurisdictions have them yet.

In late July 2004 the Full Federal Court delivered its long-awaited judgment in Minister for the Environment and Heritage v Queensland Conservation Council Inc [2004] FCAFC 190. The decision concerned the scope of assessment under Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

The Court confirmed that, when considering whether a proposal to construct a dam was likely to have a significant impact on the Great Barrier Reef World Heritage Area (the reef area) under the EPBC Act, the Commonwealth Minister for the Environment had to consider the effect of possible farming by third parties downstream from the dam because the dam would facilitate that farming.

The decision means that the Minister and proponents must consider a very broad range of possible adverse impacts when carrying out an assessment under the EPBC Act. This article explores some of the difficulties which proponents of major projects may face.

The EPBC Act

Part 3 of the EPBC Act prohibits certain prescribed "actions" (or projects) without the approval of the Minister or an exemption from the approval requirement. The prescribed actions include (among other things) an action which:

• is likely to have a significant impact with respect to a "matter of national environmental significance";
• is likely to have a significant impact on the environment on Commonwealth land; or
• is carried out by a Commonwealth agency or on Commonwealth land, and is likely to have a significant impact on the environment.

Actions which require approval are called "controlled actions". A person proposing to take an action that the person thinks is or may be a controlled action (the proponent) must refer the proposal to the Minister, who decides whether it is in fact a controlled action. The Minister must consider "all adverse impacts (if any) the action has or will have, or is likely to have, on the matter protected by each provision of Part 3".

If the Minister decides that an action is a controlled action, then an assessment and approval process applies, but only in relation to those impacts which the Minister decided caused the action to be a controlled action.

The Nathan Dam proposal, the Minister's decision and the legal challenge

The proposal in this case was the construction of the Nathan Dam on the Dawson River in Queensland, about 500km upstream from the reef area. The proponent referred the proposal to the Minister under the EPBC Act.

The Minister decided that the proposal was likely to have a significant impact upon certain threatened species and ecological communities, but not on the reef area. This meant that the proposal required assessment and approval under the EPBC Act, but not in respect of any impact it may have on the reef area. Public submissions on the proposal expressed concern that the dam would enable irrigation for cotton farming, causing chemicals and soil nutrients to flow downstream into the reef area. However, the Minister said that any impacts from irrigation would arise from other uses of land, and not the construction of the dam. Two conservation groups challenged the Minister's decision.

The Court's decisions

The Court at first instance declared the Minister’s decision invalid. As a starting point, Justice Kiefel adopted statements in NSW case law that it is appropriate to "go beyond the area in which the activity itself is being proposed and look to the whole cumulative and continuing effect of the activity on the environment"[1].

Her Honour viewed the assessment obligation as requiring "the widest possible consideration", which would initially exclude only "possible impacts which lie in the realms of speculation".

The Minister appealed Justice Kiefel's decision, but was unsuccessful. The Full Court also decided that the Minister's view was too narrow. Its key findings were:

• When assessing the "impacts" of an action, direct and indirect impacts of that action should be considered. The concept of "impact" is not confined to direct physical impacts, and includes effects which are sufficiently close to the action to allow it to be said that they are, or would be, the consequences of the action.
• An assessment of all adverse impacts "includes each consequence which can reasonably be imputed as within the contemplation of the proponent of the action, whether those consequences are within the control of the proponent or not".
• The width of the inquiry in each case will depend on its facts and on what may be inferred from the description of the action which the Minister is required to consider.

Consequential impacts

One of the most challenging aspects of the decision is its factual context. No doubt most people would agree that a requirement to assess even fairly remote prospects of significant impact on the Great Barrier Reef is a good outcome for the environment. However, if it is necessary to take into account the effects of other development which may follow the proposal under consideration, even where that other development:

• is not readily defined;
• may be proposed by other persons unrelated to the present proponent; and
• may not be carried out in any identifiable time frame (if at all),

this could place a heavy burden on both the proponent and any relevant approval authority. The resulting difficulty in determining possible consequences of a proposal, and thus in making a complete impact assessment, obviously affects the scale, speed, extent, cost and certainty of the EPBC Act's assessment process.

Furthermore, the Court's emphasis on the facts of each case and apparent reluctance to establish a more defined test mean there is no clear set of rules to guide proponents. Many proponents will no doubt take a more conservative line to minimise the risk of legal challenge, and include an extremely broad range of possible consequences of their proposals in their assessments. Those who do not will now run a greater risk that any Ministerial decisions based on their assessments may be declared invalid.

Other jurisdictions

It is also worth considering what effect this decision may have on the operation of State and Territory environmental impact assessment laws. Justice Kiefel drew on NSW and other case law for her decision, but the Full Federal Court cautioned against "unnecessary" reliance on decisions in other jurisdictions. Nevertheless, the Queensland Conservation Council case will inevitably have some relevance in the interpretation of legislation in other Australian jurisdictions which has objects and provisions which adopt terms similar to those of the EPBC Act.

The reference to "likely significant impact" is similar to one of the tests in Part 5 of the NSW Environmental Planning and Assessment Act 1979, which is often applied to major infrastructure projects. In addition, the Victorian Civil and Administrative Tribunal acknowledged the relevance of the Court's approach in the Queensland Conservation Council case to Victoria's Planning and Environment Act 1987, in the case Australian Conservation Foundation v Minister for Planning [2004] VCAT 2029 (29 October 2004).

Bilateral agreements – a chance for more clarity and certainty

The current regime leads to stakeholder uncertainty in two ways. First, it is highly likely that the EPBC approval requirement will only be triggered when assessment and approval under State or Territory legislation also is required, which creates the potential duplication of assessment and approval processes.

Secondly, under the EPBC Act the Minister is closely involved before assessment, and in effect decides what issues should be assessed, drawing from a list of "controlling provisions" in the EPBC Act. By contrast, most State and Territory assessment regimes demand a more comprehensive assessment, and stakeholders are generally more familiar with this.

Where the Commonwealth and the relevant State or Territory in which the project is proposed have a bilateral agreement, the EPBC exempts that project from its approval requirement.

There are two forms of bilateral agreements:

1. approval bilateral agreements, which effectively accredit a State or Territory assessment and approval process so that neither assessment nor approval under the EPBC Act is required; and
2. assessment bilateral agreements, which accredit a State or Territory assessment process, and therefore allow an approval under the EPBC Act to be given on the basis of that process.

While not a panacea, bilateral agreements could substantially reduce uncertainty that proponents may face in preparing impact assessments. Many proponents would feel much more comfortable knowing they had to undertake one impact assessment process, even where the assessment scope and criteria are broader, if there was a reduced risk of a challenge in connection with the assessment and approval.

At the time of the Queensland Conservation Council case only Western Australia, Tasmania and the Northern Territory had established bilateral agreements with the Commonwealth. Queensland has since signed one since the case. However, it appears that the finalisation of the draft NSW agreement, which was prepared several years ago, is still some way off.

Decisions such as the Queensland Conservation Council case highlight the value in strong bilateral agreements. The sooner that all jurisdictions enter into these agreements the better.

[1] Kivi v Forestry Commission of New South Wales (1982) 47 LGRA 38, Justice Cripps.