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Client Update: Climate change challenge against Adani's Carmichael Coal Mine dismissed

30 August 2016

In brief: Yesterday, the Federal Court of Australia dismissed a green group's challenge on climate change grounds against the Federal Environment Minister's approval of Adani's Carmichael Coal Mine project in the Galilee Basin. Partner Bill McCredie (view CV), Senior Associate and Co-head of Allens' Climate Change Group Emily Gerrard and Associate David Thorpe consider the decision of the Federal Court and its significance on the approval processes of proposed large-scale resources projects. 

Background

This decision of the Federal Court1 is the latest in a long line of legal challenges involving large-scale resource projects within the Galilee Basin, and has been preceded by challenges brought on similar climate change grounds against other projects such as the Wandoan Coal Project2 and the Alpha Coal Mine3.

On 14 October 2015, the former Federal Environment Minister (the Minister) approved, subject to conditions, the Carmichael Coal Mine project under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act).

Grounds of challenge

The Australian Conservation Foundation (ACF) sought to challenge the Minister's decision to approve the project on a number of grounds, including:

  • Precautionary principle – the Minister did not consider or apply the precautionary principle to his conclusion regarding the difficulty in identifying the necessary relationship between the taking of the action and possible impacts on matters of national environmental significance (MNES);
  • World Heritage Convention – the Minister did not comply with the requirement under section 137 of the EPBC Act not to act inconsistently with Australia's obligations under the World Heritage Convention (the Convention) and World Heritage Management Principles, in his consideration of the effect of emissions from transport and combustion of coal overseas on the Great Barrier Reef World Heritage Area; and
  • Relevant impacts – the Minister erred in characterising transport and combustion emissions as 'not a direct consequence' of the proposed action, without applying the 'impact' test in s527E of the EPBC Act.

Precautionary principle

The ACF contended that the Minister should not have approved the project because the Minister acknowledged in his statement of reasons that 'it is difficult to identify the necessary relationship between the taking of the action and any possible impacts on relevant matters of national environmental significance'4. The ACF argued that the Minister therefore made an error of law by failing to consider or apply the precautionary principle to that conclusion.

In dismissing the ACF's application, the court held that it was not possible for the Minister 'to draw firm conclusions as to the likely contribution of Adani's action to a specific increase in global temperature.'5 Accordingly, the court was not able to accept that there was a demonstration of the necessary relationship between the taking of the action by Adani and impacts on relevant environmental matters, including the Great Barrier Reef. The Federal Court and the Land Court of Queensland have reached similar conclusions in past decisions in respect of legal challenges raised on climate change grounds.6

Further, the court held that any eventual combustion emissions overseas are 'indirect consequences' of the project rather than a 'substantial cause', and it was reasonable for the Minister to conclude that any emissions would be managed and integrated through national and international emissions control frameworks.7

World Heritage Convention

In addition to addressing climate change arguments, this case also explored the parameters and requirements of the prohibition on the Minister acting inconsistently with Australia’s obligations under the Convention. Under s137 of the EPBC Act, the Minister must not act inconsistently with Australia's obligations under the Convention and World Heritage Management Principles when deciding whether or not to approve the taking of an action.

This ground was dismissed largely on the basis of the nature of obligations under the Convention and that its provisions may be '…more aptly described as goals to be achieved rather than rules to be obeyed.'8 Justice Griffiths also noted that the ACF overstated the nature of the obligations imposed upon Australia under the Convention, and it was left to each State party to determine the extent of the obligations and the mode of their performance.9

Further, the court accepted the Minister's submission that relevant Articles under the Convention provide considerable latitude to State parties in relation to the precise actions they may take to implement their obligations. The court held that Articles 4 and 5 of the Convention qualify the obligations of a State party to take appropriate measures to protect its cultural and natural heritage, by providing that '…each State Party to this Convention shall endeavour, in so far as possible, and as appropriate for each country…' to do the matters specified. The Minister was found to have been mindful of the prohibition imposed by s137 of the EPBC Act when he made his decision and, noting the limitations of judicial review proceedings, the court determined that the ACF failed to establish any breach of the prohibition imposed by s137 in this case. Proceedings such as these are confined to a review of the legality of a Minister's decision and the court will not 'step into the shoes of the Minister' and seek to review the merits of such a decision.

Relevant impacts

The ACF submitted that scope 3 emissions were 'impacts' with the meaning of s527E of the EPBC Act. It contended that the consequences for the Great Barrier Reef of climate change resulting from the emissions were impacts of the action of the same species as the 'downstream', or indirect, consequences, as was argued in the Nathan Dam cases10.

In dismissing the ACF's arguments, the court held that for an event or circumstance to be an indirect consequence of an action, it must be demonstrated that the action is a 'substantial cause' of that event or circumstance and, as noted above, the Minister was unable to draw firm conclusions as to the likely contribution of the project to a specific increase in global temperatures.

What does this mean?

The decision adds a valuable precedent to evolving jurisprudence regarding the operation of key requirements under the EPBC Act and to climate change litigation in Australia. It also highlights the use of strategic litigation by interest groups and the delay this can cause to large-scale resources projects. In practice, project proponents should ensure that they factor in the prospect of protracted legal challenges to their project schedule. As noted above, while legal challenges on climate change grounds against large-scale resources projects have been brought in the Federal Court and the Land Court of Queensland before, this decision is a further step in the Federal Court's consideration of these issues and offers further clarity to proponents and regulators in relation to accounting for the impacts of scope 1, 2 and 3 greenhouse gas emissions.

This decision also confirms the inherent latitude, derived from the Convention, that applies when assessing whether the Minister has acted inconsistently with Australia's obligations under the Convention and World Heritage Management Principles.

The way forward

The ACF have 21 days to appeal the Federal Court's decision. Allens will continue to monitor and report on any significant developments with respect to this matter.

The court has invited the parties in these proceedings to come back before it in respect of costs. If an award of costs against the ACF is significant, it will likely have a discouraging impact upon the appetite for green groups to launch judicial review proceedings in a similar vein.

At a legislative level, prior to the July Federal election, the Federal Government considered potential amendments to s487 of the EPBC Act, which defines the scope for interest groups to have standing to bring similar legal proceedings. It remains an open question whether the current Federal Parliament will be asked to re-visit this proposal.

Footnotes
  1. Australian Conservation Foundation Incorporated v Minister for the Environment [2016] FCA 1042.
  2. Xstrata Coal Queensland Pty Ltd & Ors v. Friends of the Earth – Brisbane Co-Op Ltd & Ors, and Department of Environment and Resource Management [2012] QLC 013.
  3. Hancock Coal Pty Ltd v Kelly & Ors and Department of Environment and Heritage Protection (No. 4) [2014] QLC 12.
  4. Australian Conservation Foundation Incorporated v Minister for the Environment [2016] FCA 1042 at [64].
  5. Ibid. at [161].
  6. Wildlife Preservation Society of Queensland Proserpine/Whitsunday Branch Inc v Minister for the Environment& Heritage & Ors [2006] FCA 736; Anvil Hill Project Watch Association Inc v Minister for the Environment and Water Resources [2007] FCA 1480; Hancock Coal Pty Ltd v Kelly & Ors and Department of Environment and Heritage Protection (No. 4) [2014] QLC 12.
  7. Australian Conservation Foundation Incorporated v Minister for the Environment [2016] FCA 1042 at [156] to [159].
  8. Ibid. at [188] to [191].
  9. Ibid. at [188] to [190].
  10. Queensland Conservation Council Inc v Minister for the Environment and Heritage [2003] FCA 1463; Minister for the Environment and Heritage v Queensland Conservation Council Inc [2004] FCAFC 190.

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