Does latest NSW Land and Environment Court decision dampen interest in greenhouse gas emissions for coal projects?

By Nick Thomas, Claire Smith, Brendan Bateman and Emma Whitney
28 Mar 2019
The latest unsuccessful legal challenge to a NSW coal mine project demonstrates that what might be considered "best practice" in greenhouse gas emissions assessment and what the law requires for a valid assessment are not necessarily the same thing.

Since the recent NSW Land and Environment Court decision regarding the Rocky Hill coal mine proposal (Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7) (Rocky Hill case), which refused approval for the mine partly on the basis of the Court's assessment of "downstream" greenhouse gas emissions, there has been a lot of attention on how greenhouse gas emissions should be addressed in coal mining projects.

The Court's latest decision, in Australian Coal Alliance Incorporated v Wyong Coal Pty Ltd [2019] NSWLEC 31 (Wallarah 2 case), upheld the decision by the NSW Planning Assessment Commission (PAC)[1] to approve the Wallarah 2 coal mine proposal, even though the PAC's assessment of greenhouse gas emissions in that case was very different from the Court's assessment for the Rocky Hill mine.

The key difference in the two cases is that the Court in Rocky Hill case had to carry out its own assessment, but in the Wallarah 2 case the Court was not allowed to carry out its own assessment and instead had to rule on whether the IPC's assessment was lawful.

Unlike some recent reports regarding the decision, we do not think that the Wallarah 2 case lessens the impact of the Rocky Hill case.  Downstream greenhouse gas emissions continue to be very important in the assessment of any coal mining project and, for that matter, other emissions-intensive projects too. 

Legal challenge to the PAC's decision

The Wallarah 2 case involved a judicial review challenge by a community action group, Australian Coal Alliance Incorporated (ACA), to the PAC's determination of the State significant development application for the Wallarah 2 coal mining project (Wallarah 2 Project). The Wallarah 2 Project is the construction and operation of an underground coal mine and associated coal operation facilities for a period of 28 years.  It will involve the extraction of 5 million tonnes of thermal coal per year through longwall mining methods. 

ACA challenged the lawfulness of the PAC's grant of development consent on 10 grounds, three of which alleged that the PAC had not properly considered:

  • the potential impact of the Wallarah 2 Project on greenhouse gas emissions, particularly downstream (or "scope 3") emissions;
  • clause 14(2) of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP), which requires consideration of downstream greenhouse gas emissions and consideration of "conditions to ensure that greenhouse gas emissions are minimised to the greatest extent practicable"; and
  • the principles of ecologically sustainable development (ESD) and, specifically, climate change impacts.

ACA was not successful on any of its grounds.

The Court's task

As Justice Moore said at the start of his judgment, the Court's task in the Wallarah 2 case is to examine the PAC's decision and determine whether it involved an error of law in one of the grounds which ACA claimed.

His Honour said that the Court, when conducting a judicial review of an administrative decision such as this, should not adopt a 'fine tooth comb' approach. Citing the High Court in Minister for Immigration & Ethnic Affairs v Wu Shan Lian (1996) 185 CL 259, Justice Moore pointed out that "the reality [is] that the reasons of an administrative decision-maker are meant to inform and not be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed".

Adopting this approach, Justice Moore reviewed the reports which the PAC had prepared and the material which it stated it had reviewed, and held that the PAC had considered the matters in 1, 2 and 3 above sufficiently to comply with its legal obligations to do so. 

His Honour was careful to point out that his decision is not an endorsement of the PAC's conclusions.  This is significant, because it appears that the PAC's findings included (among other things) that if the mine does not go ahead there are other sources of coal for an end user, and so downstream impacts of the use of coal from the mine should be considered at the end use location.  In the Rocky Hill case, Justice Preston disagreed with such an approach when his Honour had to carry out the same assessment as the PAC.  However, Justice Moore concluded that such an approach, "although laconic", did not amount to an error of law.

"Best practice" vs legal compliance

As we noted earlier, the key difference between the Rocky Hill case and the Wallarah 2 case is that the former is a merits appeal case in which the Court stands in the position of the original decision-maker and re-determines a development application, while the latter is a judicial review case in which the Court can only decide whether the original decision maker made an error of law in determining a development application.

A merits appeal was not possible in the Wallarah 2 case because the PAC had conducted a public hearing and, under the Environmental Planning and Assessment Act 1979, this abrogates any third party merit appeal rights.  The only option for ACA was to challenge the decision on legal grounds (ie. judicial review) which limits the challenge to questions of law.

Justice Moore noted this distinction when he said that that the Court must be cautious to ensure that a judicial review challenge does not lapse into a merits appeal.  his Honour referred to the decision in Walsh v Parramatta City Council (2007) 161 LGERA 118 where Justice Preston had said that the "court must avoid the temptation to express the conclusion in terms of a recognised ground of review while in truth making a decision on the merits".

It is currently unclear whether Justice Preston's analysis of greenhouse gas emissions in the Rocky Hill case will be considered as "best practice" approach to greenhouse gas emissions assessment for emissions intensive industries under the Planning Act and, where it applies, the Mining SEPP.  We may see approval authorities (including the Court in any future merits appeals) adopting similar approaches going forward.  It is important to note that the PAC decision in the Wallarah 2 case was made some time before Justice Preston's decision in the Rocky Hill case.  So proponents should consider this possibility if they want a favourable outcome for their applications.

However, the decision in the Wallarah 2 case indicates that if an approval authority does not adopt an approach similar to the Court in the Rocky Hill case, then it is unlikely that the Court will decide its approach is legally invalid.

[1] The PAC is now known as the Independent Planning Commission (or IPC).Back to article

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.