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02 Feb 2012

Critical infrastructure declarations - can they be challenged?

by Andrew Poulos

The decision in NSW to declare something to be critical infrastructure can be challenged without Ministerial permission. Neither ecologically sustainable development or anthropogenic climate change are mandatory considerations when deciding applications for concept plans.

Once the NSW Government declares a proposed project to be critical infrastructure, that's the end of it. That has been the assumption, but a decision of the Land & Environment Court has exploded it.

The Court in Haughton v Minister for Planning and Macquarie Generation [2011] NSWLEC 217 made two key findings:

  • first, the decision to declare something to be critical infrastructure can be challenged without Ministerial permission, contrary to the previous understanding of how section 75T of the Environmental Planning and Assessment Act 1979 (EPA Act) operated; and
  • neither ecologically sustainable development (ESD) or anthropogenic climate change are mandatory considerations when deciding applications for concept plans – and there is no one right way to consider ESD either.

Although Part 3A of the EPA Act has been removed, we are still in a transitional regime and declarations under Part 3A are still alive and kicking – and thus open to challenge. Furthermore, in relation to new provisions of the EPA Act relating to critical State significant infrastructure, section115ZK is in similar terms to section75T and is likely to be interpreted in the same way as section75T.

The declaration of power stations as critical infrastructure

The respondent companies are electricity generators who wanted to build new power stations. The Minister made a critical infrastructure declaration under Part 3A for both proposed projects, which triggered other provisions of Part 3A. One of these was section 75T, which says you cannot begin proceedings to remedy or restrain a breach of Part 3A in respect of a critical infrastructure project without the Minister's prior approval.

The applicant in this case sought, but was denied that permission. He then argued that:

  • the grounds upon which he wanted to challenge the Minister's decision were that he had exceeded his powers under the Act;
  • Parliament cannot (via the EPA Act) deprive the courts of the power to review decisions infected by jurisdictional error (Kirk v Industrial Court of New South Wales [2010] HCA 1). Jurisdiction may be exceeded if, for example, the decision-maker failed to consider a matter mandated by statute;
  • therefore he does not need the Minister's permission to begin proceedings, whatever the EPA Act might say.

The Land and Environment Court agreed. As a result, if a decision is challenged on the basis of jurisdictional error, the Minister's permission is not required before launching proceedings.

Ecologically sustainable development, climate change and the public interest – what must the Minister consider?

When considering a concept plan application, the Minister is required to consider the "public interest" – but what is the public interest? The applicant argued that the principles of ESD and anthropogenic climate change are both mandatory considerations, and that the Minister failed to consider them.

ESD principles certainly are a relevant consideration, but that doesn't mean that they are mandatory, as the Court in Walker and here both held. Similarly, anthropogenic climate change, although relevant, is not mandatory. At the most, a failure to consider either of these matters can give rise to an inference that the Minister did not consider the public interest or did not make the decision in good faith. But his consideration does not require a recitation of ESD principles, and those principles operate at a high level of generality so there is not necessarily one right way to show they have been applied.

Furthermore, in this case the Court found that the Minister did consider ESD principles although he did not recite them – he:

  • considered the need for each project and assessed consequences of the project not being undertaken;
  • quantified the greenhouse gas emissions as a means of assessing the relative contribution each project would make to climate change;
  • considered whether the need would be satisfied by other means predicted to produce lower greenhouse gas emissions;
  • considered whether further design development or efficiency would produce lower greenhouse gas emissions if the project proceeded; and
  • considered whether greenhouse gas emissions would be factored into valuation, pricing and incentives associated with the project.

Implications for critical infrastructure

This is not the first or last time that interested members of the public will challenge planning decisions affecting greenhouse gas-emitting infrastructure projects. How does this decision affect their right to do so, and chances of success?

The decision has made it much easier to challenge decision concerning critical infrastructure projects, as the roadblock of Ministerial permission has been removed in respect of a challenge to a decision based on a jurisdictional error.

Furthermore, the new planning regimes that replaced Part 3A, namely, State significant development and State significant infrastructure, require an environmental impact statement (EIS) to accompany applications for approval. The Environmental Planning and Assessment Regulation 2000 provides that an EIS is to include reasons justifying the project, having regard to the principles of ESD, unless that requirement is waived in limited circumstances. Consequently, ESD will generally be a mandatory consideration in the environmental impact assessment process.

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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.