A recent Court of Appeal decision (Mangoola Coal Operations Pty Ltd v Muswellbrook Shire Council [2021] NSWCA 46) has clarified the approach regarding the categorisation of land surrounding a Hunter Valley coal mine for land ratings (taxes) that are levied by the local council. Conversely, local councils may lose revenue as a result of the decision.
The decision overturns a ruling by the Land and Environment Court that permitted the local council to categorise land used for cattle grazing as "mining" for the purpose of land ratings, despite that land not actually forming part of the mining area.
Why is the decision significant?
The decision concerns the categorisation of two land parcels surrounding the Mangoola Coal Mine that were used for cattle grazing as "mining land" (Assessment Area). It is significant because rates for land categorised as "mining" are significantly higher than for other categories such as "farmland".
What are land ratings?
Mining companies often hold significant parcels of land in reserve for various purposes, such as 'buffer land' for mitigating impacts of mining, biodiversity offsets and environmental monitoring. Local councils are permitted to levy rates on this land.
The categorisation of the land is based on its "dominant use", with the rates varying depending on its categorisation (eg. farmland, residential, business or mining). Where the land is used for multiple purposes, then the "main, chief or paramount use" must be determined.
What happened?
The Court of Appeal upheld has an appeal by the mining operator against a decision of the Land and Environment Court that permitted the local council to categorise the land used for cattle grazing as "mining land". Some of the key findings are summarised below:
- an easement over a small portion of the Assessment Area, which was necessary for electricity and water supply infrastructure for the mine operation, was not determinative that the Assessment Area was "mining land". The easement was a "mining use" but of limited significance in determining the "dominant use";
- the use of the Assessment Area as a biodiversity offset area was not a use "for a coal mine" even where the use of land was in fulfilment of a condition of the project approval;
- Environmental monitoring devices undertaken on the Assessment Area occupied small areas of the Assessment Area, which gave limited interference to the farming activities, and were of limited significance in determining the dominant use of the land;
- Exploration activities are capable of being mining activities, but based on the facts of this particular case, exploration had limited significance in comparison to other uses of the land; and
- A hiatus in the use of a portion of the land for a period such as during a drought did not indicate that the use had ceased in circumstances where the evidence did not suggest that there was any reason other than drought for grazing not occurring.
What does this mean for mining companies and local councils?
The appropriate categorisation of land for land ratings will ultimately depend on the specific circumstances of the particular land. Regardless, mining companies should review the ratings status of their land, and consider whether this may be impacted by the Decision, particularly where land is being used for biodiversity offsets, environmental monitoring or infrastructure associated with mining.