Gloucester Resources Limited v. Minister for Planning [2019] NSWLEC 7 (8 February 2019)

Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 (8 February 2019)

Gloucester Resources Limited (GRL) proposed an open cut coal mine (the Rocky Hill Coal Project) to produce 21 million tonnes of coal over a period of 16 years.  The Minister for Planning refused consent, primarily due to incompatibility of the proposed mine with existing, approved, and likely preferred land uses in the vicinity, contrary to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (the Mining SEPP).  Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 (8 February 2019), paras. 57 & 62.  GRL appealed the consent refusal to the New South Wales Land and Environment Court (Land and Environment Court). 

On the appeal, the Land and Environment Court exercises the function of the Minister for Planning as the consent authority to determine the development application for the Rocky Hill Coal Project.  This role requires the Court “to balance the public interest in approving or disapproving the Project, having regard to the competing economic and other benefits and the potential negative impacts the Project would have if approved.”  Para. 686 (internal citation omitted).  The Court concluded that the Rocky Hill Coal Project is contrary to the public interest and that consent to the development application for the Project should be refused because “the negative impacts of the Project, including the planning impacts on the existing, approved and likely preferred land uses, the visual impacts, the amenity impacts of noise and dust that cause social impacts, other social impacts, and climate change impacts, outweigh the economic and other public benefits of the Project.”  Para. 688. 

In support of its conclusion, the Land and Environment Court conducted an extensive review of the amended environmental impact statement (“EIS”) submitted for the Rocky Hill Coal Project, which included a visual impact assessment (see paras. 90-222 & 655), a Social Impact Assessment (see paras. 270-345), an Air Quality and Health Risk Assessment (see paras. 423-489), and an Economic Assessment that included a cost benefit analysis and a local effects analysis in accordance with Economic Assessment Guidelines (see paras. 561-681). 

Visual Impacts

Regarding the visual impact of the mining project, the Land and Environment Court found deficiencies in the methodology used by the mining company’s expert and determined that his assessment that visual impacts would be negligible or low was unreliable. Para. 140. The Court relied on alternative expert opinions to find that the visual impact of the mine would be high and would not be adequately ameliorated by proposed amenity barriers or other mitigation measures, such as revegetation.  Para. 162. The Court concluded that “both by themselves and by reason of the consequential adverse effects on existing, approved and likely future uses of land in the vicinity, and the social impacts that the visual impacts will likely cause, justify refusal of consent for the Project.”  Para. 222.

Social Impacts

The Land and Environment Court closely considered the proposed mine’s impact across nine categories of social and cultural indicators: way of life; community; access to and use of infrastructure; services and facilities; culture; health and wellbeing; surroundings; personal and property rights; decisionmaking systems; and fears and aspirations.  Para. 270.  These categories are set forth in the state’s social impact assessment guideline for large-scale petroleum and extractive industry projects.  The Land and Environment Court observed that the particular impacts of the proposed mining project could affect one or more of these categories, which are interlinked. Para. 271.  The Court also noted that social impacts need not be actual, but can also be perceived.  Para. 274. 

The Land and Environment Court reached the conclusion that the Rocky Hill Coal Project would cause “a variety of negative social impacts,” which could not be mitigated or managed.  Para. 417.  The Court was highly critical of the mining company’s social impact assessment, finding it to be “flawed in methodology, coverage of issues and dependence on other expert evidence that is also flawed.”  Para. 323.  The Court adopted the findings of experts who criticized the mitigation measures in the social impact assessment as “primarily aspirational, rather than actual commitments” and “not demonstratively achievable or enforceable.”  Para. 418 (quoting report of Ministry expert, Dr. Lawrence). 

Among the Court’s specific determinations, it declared that the mining company  failed to adequately assess the social impacts of the project on Aboriginal (i.e., indigenous) people.  There were no efforts to engage in specific consultations with Aboriginal people or organizations.  Para. 342.  The Land and Environment Court found that the proposed mine would adversely affect identified Aboriginal sites and unidentified sites because surveys of the project area were inadequate.  Para. 351.  The Court observed that “the uncertainty as to whether unidentified Aboriginal sites might be impacted itself causes social impact on the Aboriginal community.”  Para. 345.   The Court recognized that Aboriginal people place high value on the existing landscape in the Gloucester Valley and its contribution to their life and culture. Negative social impacts will last long after the mining project concludes and “rehabilitation of the mine will not heal the harm to [Aboriginal] Country and culture.”  Para. 351. 

The Land and Environment Court also addressed impacts to community members’ physical and mental health.   The Rocky Hill Coal Project would cause particulate, noise and light pollution. The Court explained:

 [These impacts] may well comply with the applicable regulatory criteria, but will still be perceptible by local residents. The residents are likely to have a high level of concern about the particulate, noise and light pollution from the Project. This concern is likely to raise stress and anxiety, potentially affecting mental health and physical health. These are social impacts in themselves. They might also lead to other social impacts. People who value living, working and playing in a clean and green environment may leave the Gloucester area, adversely affecting the local community and economy. 

Para. 367.

Regarding locals’ fears and aspirations, the Land and Environment Court found:

[M]ost of the articulated fears and aspirations of people who oppose the Project are reasonable and have justification in the evidence. . . . [T]he Project will have substantial visual impacts, dust and noise impacts that will lead to social impacts on people’s way of life, community, health and wellbeing, and surroundings, other social impacts, impacts on existing, approved and likely preferred future uses of land in the vicinity of the Project, and impacts on the climate. Opponents’ fears are based in specific, concrete, likely effects, of the Project.

Para. 395

On the other hand, the Court doubted that the fears and aspirations of people supporting the coal mining project are likely to transpire:

There is little evidence that refusal of consent to the Project will materially impede the growth and diversification of the economy. Although the mining sector would not grow if the Project were not to be approved, mining is not the only opportunity for growth of the local economy and employment in the Gloucester area. Alternative sectors, such as tourism and agri-tourism, have already grown to take advantage of the clean and green environment and are likely to continue to grow if the Project were not to be approved. People have moved to the Gloucester area for lifestyle reasons and are likely to continue to do so if the Project were not to be approved.

Para. 396.

Distributive Inequity

The Land and Environment Court devoted particular attention to the distributive injustice or inequity of the Rocky Hill Coal Project.  As the Court explained, “[d]istributive justice concerns the just distribution of environmental benefits and environmental burdens of economic activity.”  Para. 398.  In this regard, the Court was mindful of the principles of intra-generational equity and inter-generational equity.  See paras. 398-416.  Regarding the former, the Court explained:

These negative environmental, social and economic impacts (burdens) will be distributed to these people and groups in the community. The economic and social benefits of the Project will, however, be distributed to other people and groups. Economic benefits from the Project will flow to GRL and its shareholders, investors and financiers, its employees and contractors, its suppliers, others who will benefit financially from the Project, and federal, state and local governments that will benefit from taxation and rating revenues. Such people and bodies believe in economic growth and development and the distribution of the economic benefits to them aligns with their moral framework and worldview. The people who benefit are likely to live sufficiently geographically distant from the Project so as not to be affected, or to be less affected, by the physical impacts of the Project.

Para. 413.

Applying the principle of inter-generational equity, the Court concluded:

There is also inequity in the distribution between current and future generations. The economic and social benefits of the Project will last only for the life of the Project (less than two decades), but the environmental, social and economic burdens of the Project will endure not only for the life of the Project but some will continue for long after. The visual impact of the Project, even after mining rehabilitation, will continue. The natural scenery and landscape will be altered forever, replaced by an artificial topography and landscape. The social impacts on culture and community, especially for the Aboriginal people whose Country has been mined, will persist. A sacred cultural land created by the Ancestors of the Aboriginal people cannot be recreated by mine rehabilitation. As discussed below, the Project will emit greenhouse gases and contribute to climate change, the consequences of which will burden future generations.

The benefits of the Project are therefore distributed to the current generation but the burdens are distributed to the current as well as future generations (inter-generational inequity).

Paras. 415-416.

Ultimately, regarding social impacts, the Land and Environment Court concluded that, “although the Project has the potential to generate some positive social benefits, including from the local economy and employment, these benefits will be outweighed by the significant negative social impacts that the Project will cause. The significant net negative social impacts are a justification for refusing consent to the Project.”  Para. 421.

Climate Change

The Land and Environment Court next considered whether the Rocky Hill Coal Project should be refused based on the estimated greenhouse gas (GHG) emissions of the project, which would adversely impact global efforts to limit climate change.

GRL provided a greenhouse gas (GHG) assessment in the amended EIS for the Rocky Hill Coal Project.  It projected Scope 1 (direct) and Scope 2 (upstream indirect) GHG emissions, but provided an incomplete figure for Scope 3 (downstream indirect) GHG emissions.  The Land and Environment Court noted the “Scope 3 emissions figure is an underestimate, as emissions from the shipping of product coal were not included due to the uncertainties in emission estimates, including in future export destinations and limited data on emission factors and/or fuel consumption for ocean going vessels.”  Para. 430. 

GRL argued that Scope 3 emissions should not be considered in determining its application for consent because “a country that is a party to the Climate Change Convention and the Paris Agreement is to account for GHG emissions in its country, but not in other countries.”  Para. 453.  The Land and Environment Court rejected this argument, explaining that Australian law and planning policies require decisionmakers to consider direct and indirect GHG emissions when making consent determinations.  Paras. 488-494.  This includes Scope 3 emissions.    

The Court cited Minister for Environment and Heritage v Queensland Conservation Council (2004) 139 FCR 24; [2004] FCAFC 190 at [53] to reinforce its conclusion that “the impact of an action includes not only the direct but also the indirect influences or effects of the action” whether those impacts are within control of the project proponent or not.  Paras. 495-497.

The Land and Environment Court found further support for considering indirect, downstream GHG emissions (Scope 3 emissions) in legislation that requires a consent authority to consider the public interest, which has been held to include the principles of ecologically sustainable development (ESD).  Para. 498.  The principles of ESD, “particularly the precautionary principle and principle of inter-generational equity, have been held to require consideration of the impact of a development on climate change and the impact of climate change on a development.”  Id.  The Court pointed to several domestic and foreign court decisions reaching the conclusion that “indirect, downstream GHG emissions are a relevant consideration to take into account in determining applications for activities involving fossil fuel extraction or combustion or electricity generated by fossil fuel combustion.”  Paras. 499-512.   These points provided ample support for the Land and Environment Court conclude that “the consideration of the impacts of the Project on the environment and the public interest justify considering not only the Scope 1 and Scope 2 emissions but also the Scope 3 emissions of the Project.”  Para. 513.

The Land and Environment Court also found a causal link between the Rocky Hill Coal Project’s cumulative GHG emissions and climate change.  It rejected claims that the proposed mine would not contribute to climate change because its GHG emissions represent a small fraction of global GHG emissions.  The Court referenced several domestic (i.e., Australian Conservation Foundation v Latrobe City Council and Gray v Minister for Planning) and foreign (Mass. v. EPA and Urgenda) court decisions to debunk the de minimis non curat lex defense and to support the conclusion that “climate change is caused by cumulative emissions from a myriad of individual sources, each proportionally small relative to the global total of GHG emissions, and will be solved by abatement of the GHG emissions from these myriad of individual sources.”  Paras. 516-523. 

Regarding the causal link, the Land and Environment Court concluded:

There is a causal link between the Project’s cumulative GHG emissions and climate change and its consequences. The Project’s cumulative GHG emissions will contribute to the global total of GHG concentrations in the atmosphere. The global total of GHG concentrations will affect the climate system and cause climate change impacts. The Project’s cumulative GHG emissions are therefore likely to contribute to the future changes to the climate system and the impacts of climate change. In this way, the Project is likely to have indirect impacts on the environment, including the climate system, the oceanic and terrestrial environment, and people.

Para. 525.

The Court invoked Australia’s endorsement of the Paris Agreement, noting that approval of the coal mining project, which would represent a new source of GHG emissions, is “likely to run counter to the actions that are required to achieve peaking of global GHG emissions as soon as possible and to undertake rapid reductions thereafter to achieve net zero emissions . . . in the second half of the century.”  Para. 525.  This achievement is an explicit goal of the Paris Agreement.  Para. 525-526.

GRL urged the Land and Environment Court to allow the mine to proceed notwithstanding its potential adverse impacts on the climate.  It cited four reasons: 1) GHG emissions from the project would be balanced out by emissions reductions in other sectors (e.g., transportation, electricity generation); 2) emissions reductions must be achieved at the least possible cost; 3) coal will be mined and exploited by other producers to meet global demand; and 4) there is unique demand for coking coal for steel production that justifies the project’s GHG emissions.  As explained below, the Court rejected all of these arguments.

GRL argued that the GHG emissions associated with the Rocky Hill Coal Project would potentially be offset by reductions achieved through efficiency improvements in other sectors, such as transportation and electricity generation, or increased removal of GHGs by carbon sinks. GRL did not point to any specific emissions reduction actions or projects that it would implement. The Court disagreed with this reasoning, explaining:

There is no evidence before the Court of any specific and certain action to “net out” the GHG emissions of the Project.  A consent authority cannot rationally approve a development that is likely to have some identified environmental impact on the theoretical possibility that the environmental impact will be mitigated or offset by some unspecified and uncertain action at some unspecified and uncertain time in the future. 

Para. 530.  

The Land and Environment Court quickly dispatched GRL’s argument that emissions reductions must be abated through measures that generate the least economic and social harm.  The Court explained that it is not appropriate for local decisionmakers to speculate on how to achieve cost-effective emissions reductions:

If the consent authority considers that the GHG emissions of the development for which consent is sought, and the impacts of those emissions, are unacceptable, and as a consequence determines that the development should be refused in order to avoid the emissions and their impacts, it would not be rational to nevertheless approve the development because greater emissions reductions could be achieved from other sources at lower cost by other persons or bodies.

Paras. 532-33. 

GRL raised the possibility that the same amount of GHG emissions, or potentially more, would occur regardless of whether the Rocky Hill Coal Project was approved or not because of market substitution and carbon leakage.  The Land and Environment Court found these arguments flawed. 

With regard to carbon leakage, which refers to the risk that GHG emissions would increase if coal mining were moved from Australia to countries with less stringent environmental standards and GHG emissions accounting, the Court declared that GRL failed to substantiate this theory.  The Court noted that the Hague Court of Appeals ruled similarly in The State of Netherlands v. Urgenda Foundation.  Paras. 536-37.

The market substitution argument rests on the assumption that new mines will be developed in other countries to fill the demand for coal that would have been produced at Rocky Hill.  The Court found this argument unconvincing, citing the principle of common but differentiated responsibilities and respective capabilities of the United Nations Framework Convention on Climate Change (UNFCCC) and Paris Agreement commitments:  

If approval for the Project in the developed country of Australia were to be refused, on grounds including the adverse effects of the mine’s GHG emissions on climate change, there is no inevitability that developing countries such as India or Indonesia will instead approve a new coking coal mine instead of the Project, rather than following Australia’s lead to refuse a new coal mine. Developed countries such as Australia have a responsibility, including under the Climate Change Convention, the Kyoto Protocol and the Paris Agreement, to take the lead in taking mitigation measures to reduce GHG emissions (see for example, Article 4(4) of the Paris Agreement and also Urgenda Foundation v The State of Netherlands at [4.79]). Developing countries which are parties to the Climate Change Convention and Paris Agreement also have committed to taking ambitious efforts to achieve a balance between anthropogenic emissions by sources and removal by sinks of GHGs in the second half of this century (Article 4.1) of the Paris Agreement and the long term temperature goal of limiting the increase in global average temperature to well below 2ºC above pre-industrial levels (Article 2 of the Paris Agreement). The parties are required to prepare, communicate and maintain successive nationally determined contributions that they intend to achieve and to pursue domestic mitigation measures with the aim of achieving the objectives of such contributions (Article 4.2 of the Paris Agreement). Each party’s successive nationally determined contribution is to reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances (Article 4.3).

Para. 539.

The Court also pointed to evidence that “countries around the world are increasingly taking action to reduce greenhouse gas emissions in their countries, not only to meet their nationally determined contributions but also to reduce air pollution.”  Para. 538.  Finally, the Land and Environment Court employed basic logic to dismiss the market substitution assumption:

If a development will cause an environmental impact that is found to be unacceptable, the environmental impact does not become acceptable because a hypothetical and uncertain alternative development might also cause the same unacceptable environmental impact. The environmental impact remains unacceptable regardless of where it is caused. The potential for a hypothetical but uncertain alternative development to cause the same unacceptable environmental impact is not a reason to approve a definite development that will certainly cause the unacceptable environmental impacts. In this case, the potential that if the Project were not to be approved and therefore not cause the unacceptable GHG emissions and climate change impacts, some other coal mine would do so, is not a reason for approving the Project and its unacceptable GHG emissions and climate change impacts.

Para. 545.

GRL’s final argument to justify the Rocky Hill Coal Project’s GHG emissions was that the mine would produce coking coal, which is necessary to maintain steel production worldwide.  The Land and Environment Court noted that demand could be met by existing Australian mines that produce coking coal.  Para. 549.

Finding GRL’s justifications for the proposed mine to be lacking, the Land and Environment Court concluded that the project’s “GHG emissions . . . and their likely contribution to adverse impacts on the climate system, environment, and people adds a further reason for refusal [of the mine.]”  Para. 556.

Economic and Public Benefits

Lastly, the Land and Environment court considered the public benefits of the proposed coal mine in two important ways: “first, whether the benefits of the Project outweigh its costs to the members of a specified community and, secondly, whether the public benefits of the Project outweigh the public benefits of other land uses.”  Para. 557.  Regarding the first consideration, the Court looked at both the cost benefit analysis (CBA) and the local effects analysis (LEA) submitted by GRL as part of the Economic Assessment, in accordance with assessment guidelines established by the New South Wales Department of Planning, Industry and Environment. 

The CBA, the Land and Environment Court determined, substantially overstated the economic benefits of the mining project and understated the environmental, social and transport related costs.  Paras. 664-665.  The Court highlighted the importance of unquantified impacts:

Some impacts are difficult to quantify objectively. Valuation of some impacts might be at least partly subjective or not possible. Such unquantified impacts are not included in the NPV, but they need to be reported alongside the NPV if they are material. As a consequence, a positive NPV does not necessarily mean that the project is in the public interest. The consent authority may assess unquantified impacts or information about the project to be determinative (Economic Assessment Guidelines, pp. 2-3).

Para. 565. 

In this regard, the Court noted, the CBA adopted a zero cost for the impacts “to biodiversity, traffic and transport costs, water (surface and groundwater), Aboriginal heritage, non-Aboriginal heritage and visual amenity.”  Para. 647.  Thus, the Court concluded:

Environmental, social and transport related costs are likely to be greater than the low values assigned by Mr Brown, but these cannot be quantified on the evidence. There are likely to be indirect costs to other industries, including the agricultural, agri-tourism and tourism industries, but these also cannot be quantified on the evidence. Certainly, the costs will be greater than the zero value assigned by Mr Brown. 

…

Although this much reduced NPV of the Project might still be positive, this does not mean that the Project is in the public interest (Economic Assessment Guidelines, p 3). First, there is still considerable uncertainty as to the magnitude of the net economic benefits of the Project. The direct and indirect benefits might be smaller than Mr Rajaratnam estimated and the indirect costs may be much greater than anyone has estimated. The positive net economic benefit might therefore not be large.

Secondly, the unquantified impacts of the Project, particularly the visual, amenity and social impacts discussed elsewhere in the judgment, are significant and need to be assessed qualitatively and balanced against the quantified net economic benefits: see Bulga Milbrodale Progress Association Inc v Minister for Planning and Infrastructure and Warkworth Mining Limited at [39]-[41]. I find that these unquantified impacts of the Project should be determinative of the application for consent.

Thirdly, issues of distributive equity need to be considered. As explained earlier, there is distributive inequity in the distribution of the benefits of the Project (which are largely economic benefits) and the burdens or costs of the Project (such as the environmental, social and economic costs). This distributional inequity is between members of the present generation (intra-generational equity), such as by affecting different parts of the local community differently and having different impacts on different socio-economic and vulnerable groups. The distributional inequity is also between the present and future generations (inter-generational equity), such as by groups within the current generation receiving economic benefits but future generations experiencing environmental costs (Economic Assessment Guidelines, p 19).

Paras. 665-669.

The Land and Environment Court determined that the LEA suffered from the same deficiencies as the CBA and, thus, was unreliable and unhelpful.  Paras. 676-681. 

As for the consideration of the respective public benefits of the proposed coal mining project and the existing, approved and likely future uses of land in the vicinity, the Court concluded:

There was no other economic assessment of other uses of land in the vicinity of the Project in order to quantify the public benefits of the other land uses. Accordingly, it is not possible on the evidence to evaluate and compare quantitatively the respective public benefits of the Project and the other land uses.

In terms of a qualitative evaluation, I have listed earlier in the judgment the uses of land that are existing uses, approved uses and likely preferred uses. These include residential, tourism, agri-tourism and agricultural uses. These uses undoubtedly yield public benefits, including economic benefits. The Project will impact on these uses. For the reasons I have given earlier, by reason of the Project’s visual, amenity and social impacts, the Project will have a significant impact on the likely preferred uses and will be incompatible with the existing, approved and likely preferred uses. As a consequence, the Project will adversely affect the public benefits of the existing, approved and likely preferred land uses.

Paras. 684-685.

Conclusion

Taking all of its findings into account, the Land and Environment Court dismissed GRL’s appeal and refused consent to GRL’s development application, summarizing its lengthy decision accordingly:

In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time. Wrong place because an open cut coal mine in this scenic and cultural landscape, proximate to many people’s homes and farms, will cause significant planning, amenity, visual and social impacts. Wrong time because the GHG emissions of the coal mine and its coal product will increase global total concentrations of GHGs at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions. These dire consequences should be avoided. The Project should be refused.

Para. 699.

******* Full decision available from the New South Wales Land and Environment Court website: https://www.caselaw.nsw.gov.au/decision/5c59012ce4b02a5a800be47f#