Test case for legal unreasonableness decision fails in climate-based Court challenge

Nick Thomas, Claire Smith and Alice Brennan
27 Jul 2023
Time to read: 4 minutes

In the first domestic climate mitigation judicial decision of 2023, the NSW Land and Environment Court has held that sustainability and climate change considerations do not make it legally unreasonable to approve a coal mine extension.

While the principles of ecologically sustainable development (ESD) and several State and national policies on climate change were relevant factors, the Court held that they did not dictate an outcome for such development applications. Although the argument of legal unreasonableness was unsuccessful in this case, the number of climate litigation cases continues to increase in Australia and overseas. Companies should continue to assess their exposure to climate-related legal risk, including potential judicial review challenges.

The Court dismisses a legal unreasonableness challenge

On 5 July 2023, the NSW Land and Environment Court dismissed a judicial review challenge to the NSW Independent Planning Commission (IPC) approval of the Narrabri Underground Coal Mine Stage 3 Extension Project (Extension Project).

The Court found that it was not legally unreasonable for the IPC to exercise its discretion to approve the Extension Project after the IPC had weighed the relevant considerations. These considerations included the principles of ESD and several State and national policies on climate change, which the Court held did not dictate an outcome for such development applications.

The proposed extension to the Narrabri Underground Coal Mine

The Narrabri Underground Coal Mine is an underground coal mine in northwest NSW that predominantly produces thermal coal.

On 1 April 2022, the IPC granted development consent for the Extension Project subject to conditions under the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act), publishing a 54-page statement of reasons for that decision.

The Extension Project involved extending the length of several major longwalls and extracting up to 11 million tonnes of run-of-mine coal each calendar year until 2034. The Extension Project included the continuation of mining within the Stage 2 underground area and was estimated to produce a total of 489.6 Mt CO2-e of greenhouse gas (GHG) emissions, of which 455.62 Mt CO2-e were Scope 3 emissions.

Bushfire Survivors for Climate Action's fundamental argument

On 1 July 2022, Bushfire Survivors for Climate Action Inc (BSCA) commenced judicial review proceedings challenging the IPC's grant of development consent for the Extension Project.

BSCA's fundamental argument was that it was legally unreasonable, irrational and illogical and not in the public interest for the IPC to approve the Extension Project "in light of the evidence of harm caused by climate change and the acceptance by the IPC that the Scope 3 Emissions which would be produced by the burning of the coal extracted as a consequence of the Extension Project would contribute to anthropogenic climate change".

BSCA's assertion of legal unreasonableness concerned both the process of making of the decision and the decision itself. It relied primarily on the Statement of Reasons.

BSCA had previously been successful in a 2021 landmark ruling in which the Court ordered the NSW Environment Protection Authority (NSW EPA) to develop objectives, guidelines and policies to ensure environment protection from climate change. Earlier this year, the NSW EPA published an Australian-first Climate Change Policy and Action Plan.

The Court's findings on the IPC's requirements and discretion

Justice Duggan found that:

  • there was no express or implied requirement for the IPC to make the purported "Interim Findings" on climate change which BSCA claimed the IPC should have reasonably made;
  • it was within the IPC's discretion to find that the Extension Project was in the public interest in weighing the relevant considerations, including the principles of ESD; and;
  • it was within the IPC's discretion to ultimately approve the Extension Project, as the State and national policies on climate change considered by the IPC did not dictate an outcome for such development applications.
"Interim Findings" ground

BSCA argued that it was legally unreasonable for the IPC not to make certain Interim Findings, comprising unchallenged evidence submitted by former Australian Chief Scientist to the IPC about the gravity of climate change impacts, global average temperature rise under the Paris Agreement, catastrophic climate scenarios, and the current emissions trajectory.

Justice Duggan found that there was no express or implied statutory requirement that all facts considered or accepted by the IPC should be detailed in the Statement of Reasons. This meant that "the mere failure to make the Interim Findings of itself would not be legally unreasonable". Further, there was no factual dispute about the climate science, the current or likely future extent of global warming or the gravity of climate change, so that it was unnecessary for the IPC to expressly make the Interim Findings.

As to BSCA's contention that the Interim Findings were "necessary building blocks" in the determination of the Extension Project, Justice Duggan examined the Statement of Reasons and found that "the overwhelming inference to be drawn is that the substance of the Interim Findings was before the IPC and relevantly considered by it as part of its evaluation pursuant to the power conferred".

Public interest and ultimate decision grounds

BSCA argued that it was legally unreasonable for the IPC to find that the Extension Project was in the public interest because "[n]o reasonable decision-maker, faced with the cogent and unchallenged evidence before the IPC, could have reached [that conclusion]".

Justice Duggan held that such a contention would require that "the climate change evidence be given weight of a kind or nature that would overwhelm any other legally available consideration". This is not supported by the EP&A Act, which requires a wide range of considerations to be addressed in determining a development application. The weight to be given to those considerations was a matter for the IPC.

As to BSCA's contention that "the only reasonable conclusion was that the Extension Project was inconsistent with the principles of ESD", Justice Duggan found that that would require climate impacts to be the only consideration in assessing ESD, and that was contrary to the statutory definition of ESD in the Protection of the Environment Administration Act 1991 (NSW), which requires "the effective integration of social, economic and environmental considerations in decision-making".

Justice Duggan also looked at the IPC's consideration of State and national policies, as required by State Environmental Planning Policy (Resources and Energy) 2021 (Resources SEPP). The policies which the IPC considered included the NSW Climate Change Policy Framework, NSW Net Zero Plan, 2020 Strategic Statement on Coal Exploration and Mining in NSW, Paris Agreement and Commonwealth Emissions Reduction Plan. Her Honour held that as these policies "did not dictate an outcome, it was for the IPC to determine the weight to be given to the relevant considerations in the assessment undertaken by it".

Implications and takeaways

The Court's decision confirms that the principles of ESD and certain State and national policies on climate change do not dictate any particular outcome for a development application for coal-related or other projects in NSW. It is a matter for the relevant consent authority to take into account all relevant considerations and, in doing so, to give weight to the relevant considerations which it thinks is appropriate (having regard to those principles and policies and the applicable legislation).

The Court's decision is similar to its decision in Mullaley Gas and Pipeline Accord Inc v Santos NSW (Eastern) Pty Ltd [2021] NSWLEC 110, which held that the IPC's decision not to condition Scope 3 emissions was not legally unreasonable.

However, the BSCA case was a challenge to the lawfulness of the IPC's decision, not an appeal on the merits of its decision, so the Court was not considering the merits of the Expansion Project. It is important to keep in mind that the principles of ESD have been used successfully by community groups to persuade Courts to determine applications in favour of climate mitigation on the merits in several landmark cases, such as the Rocky Hill case and the Galilee Coal Project case.

It is possible that the NSW Government would make policy changes in future which would cause a shift in the policy factors which consent authorities are required to consider. Whether that would have led to a different outcome in this case is difficult to say, especially given the Court's focus on the discretion available in the definition of ESD and the requirements of the EP&A Act.

New waves of climate litigation continue to raise novel public law (eg. human rights) and private law (eg. greenwashing, directors' duties) challenges, and companies should continue to assess their exposure to climate-related legal risk. While legal unreasonableness has again proven to be a high bar for activist litigants to clear, other judicial review grounds may yet prove fertile for new climate-related disputes.

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