Hunter Environment Lobby Inc v Minister for Planning
[2011] NSWLEC 221
•24 November 2011
Land and Environment Court
New South Wales
Medium Neutral Citation: Hunter Environment Lobby Inc v Minister for Planning [2011] NSWLEC 221 Hearing dates: 6 - 24 June 2011 Decision date: 24 November 2011 Jurisdiction: Class 1 Before: Pain J Decision: Approval should in principle be granted to the project identified in MP 08_0184 subject to conditions. The terms of several conditions require further consideration by the parties before these are finalised. The parties also need to consider appropriate timeframes for compliance as referred to in a number of the conditions. A timeframe to enable finalisation of conditions will be discussed with the parties.
Catchwords: APPEAL - objector appeal against Minister's decision to approve extension of open-cut and underground coal mine - ecologically sustainable development principles under Pt 3A of the Environmental Planning and Assessment Act 1979 - should offset of scope 1 and 2 greenhouse gas emissions be required - whether long term impact on groundwater justified refusal - conditions to offset baseflow losses - whether remediation of groundwater possible - impact on biodiversity required greater connectivity of offset areas - approval should be granted subject to amended conditions Legislation Cited: Energy and Utilities Administration Act 1987 Pt 6A
Environment Protection and Biodiversity Conservation Act 1999 (Cth)
Environmental Planning and Assessment Act 1979 s 5, Pt 3A s 75F, s 75H, s 75I, s 75J, s 75L, s 75R, Pt 4 s 79C
Environmental Planning and Assessment Amendment (Part 3A Repeal) Act 2011 Sch 6A cl 2(1)(a), cl 3(1)
Environmental Planning and Assessment Regulation 2000 Sch 3
Land and Environment Court 1979 s 17(d), s 39
Local Government Act 1919
Merriwa Local Environmental Plan 1992 cl 9, cl 10(1)
Mid-Western Regional Interim Local Environmental Plan 2008
National Greenhouse and Energy Reporting Act 2007
Protection of the Environment Administration Act 1991 s 6(2)
Protection of the Environment Operations Act 1997
State Environmental Planning Policy (Major Projects) 2005 Sch 1, cl 5(1), cl 6(1)
State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 cl 2, cl 12, cl 14
Threatened Species Conservation Act 1995 Pt 7A s 127S, Sch 1 Pt 1 Sch 2 Pt 1Cases Cited: Aldous v Greater Taree City Council [2009] NSWLEC 17; 167 LGERA 13
Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council [1970] HCA 42; (1970) 123 CLR 490
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223; [1947] 2 All ER 680
Botany Bay City Council v Saab Corporation Pty Ltd [2011] NSWCA 308
Dogild Pty Ltd v Warringah Council [2008] NSWLEC 53; (2008) 158 LGERA 429
Gales Holdings Pty Ltd v Tweed Shire Council [2008] NSWLEC 209
Gerroa Environment Protection Society Inc v Minister for Planning [2008] NSWLEC 173
Gray v Minister for Planning [2006] NSWLEC 720; (2006) 152 LGERA 258
Ironstone Community Action Group Inc v NSW Minister for Planning [2011] NSWLEC 195
Lake Macquarie City Council v Hammersmith Management Pty Ltd [2003] NSWCA 313; 132 LGERA 225
Macquarie International Health Clinic Pty Limited v Sydney South West Area Health Service [2010] NSWCA 268
Minister for Planning v Walker [2008] NSWCA 224; (2008) 161 LGERA 423
Newbury District Council v Secretary of State for Environment [1981] AC 578; [1980] 1 All ER 731
Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554
Ulan Coal Mines Ltd v Minister for Planning [2008] NSWLEC 185; (2008) 160 LGERA 20
Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30
Westfield Management Ltd v Perpetual Trustee Company Ltd [2006] NSWCA 245Category: Principal judgment Parties: Hunter Environment Lobby Inc (Applicant)
Minister for Planning (First Respondent)
Ulan Coal Mines Ltd (Second Respondent)Representation: Mr P Clay (Applicant)
Ms A Mitchelmore (First Respondent)
Mr A Galasso SC with Mr R Beasley (Second Respondent)
Environmental Defender's Office Ltd (Applicant)
Department of Planning, Legal Services (First Respondent)
McCullough Robertson Lawyers (Second Respondent)
File Number(s): 10998 of 2010
Judgment
This is an objector appeal under s 75L of the Environmental Planning and Assessment Act 1979 (the EPA Act) against the approval by the Minister for Planning (the Minister) of the consolidation and expansion of the Second Respondent's (Ulan) existing coal mine project (the project) on 15 November 2010 subject to numerous conditions. I thank Commissioner Pearson for her assistance. The Applicant, the Hunter Environment Lobby Inc (HEL) originally sought an order that major project application number MP 08_0184 of Ulan, to consolidate existing development consents into a single planning approval and to expand its existing mining operations by way of longwall and open cut mining, be refused on several merit grounds. Alternatively that it be modified with the imposition of additional or amended conditions.
The Court went on a view of the mine site and the surrounding area. It heard evidence at Mid-Western Regional Council Chambers on 10 June 2011 from seven objectors. Another two objectors gave evidence during the hearing about why mining in the Ulan area should not be expanded.
The project site is at Ulan about 40km north east of Mudgee. The project is located in the headwaters of the Goulburn River catchment (draining to the east) and the Talbragar River catchment (draining to the west). The neighbouring mines are Moolarben and Wilpinjong Coal Mines. The three mines are surrounded by a combination of large rural properties and bushland, including areas of significant conservation such as the Goulburn River National Park, Curryall State Conservation Area, Durridgere State Conservation Area and Munghorn Gap Nature Reserve. The project site is 17,959ha, of which at least 75 per cent of land area is directly or indirectly affected by existing or proposed mining operations. There is an existing underground coal mine in operation. Surface mining has been undertaken previously. The closest settlement to the project site is Ulan Village, located 1.5km south of the mine.
The mine currently has 27 existing developments consents. The project approved by the Minister includes:
(i) consolidating its existing development consents into a single planning approval for a further 20 years;
(ii) expanding its existing underground mining operations;
(iii) recommencing and expanding its open cut mining operations;
(iv) increasing its production rate from up to 10 million tonnes of coal a year (Mtpa), as currently permitted, to 20 Mtpa,
The project was considered under Pt 3A as it came within cl 5(1)(a) of Sch 1 of the State Environmental Planning Policy (Major Projects) 2005 at the time the application was made (confirmed by the Director-General (DG) as delegate of the Minister in a Record of the Minister's opinion for the purposes of cl 6(1) of the State Environmental Planning Policy (Major Projects) 2005 dated 4 September 2009). Part 3A was repealed by the Environmental Planning and Assessment Amendment (Part 3A Repeal) Act 2011, the relevant parts of which commenced on 1 October 2011. As an approved project it is within the definition of "transitional Part 3A projects" in cl 2(1)(a) of Sch 6A Transitional arrangements - repeal of Part 3A of the EPA Act. Part 3A continues to apply to this project under cl 3(1) of Sch 6A.
The appeal is under Pt 3A Div 2 s 75L (since repealed). Section 75L provided:
75L Appeals by an objector
(1) This section applies to a project if:
(a) it is not a critical infrastructure project, and
(b) there has been no approval of a concept plan for the project under Division 3, and
(c) the project has not been the subject of a review by the Planning Assessment Commission, and
(d) but for this Part, the project would be designated development to which the provisions of Part 4 would apply.
(2) For the purposes of this section, an objector is a person who has made a submission under section 75H by way of objection to an application for approval under this Division to carry out a project.
(3) An objector who is dissatisfied with the determination of the Minister under this Division to give approval to carry out a project may appeal to the Court within 28 days after the date on which notice of the determination was given in accordance with the regulations.
(4) If such an appeal is made, the proponent and the Minister are to be given notice of the appeal, in accordance with rules of court, and are entitled to be heard at the hearing of the appeal as parties to the appeal.
The entitlement to appeal under s 75L arises where a project would have been designated development if not coming within Pt 3A, is not a critical infrastructure project, there has not been approval of a concept plan for the project under Div 3, and the project has not been the subject of Planning Assessment Commission review. Schedule 3 of the Environmental Planning and Assessment Regulation 2000 (the EPA Regulation) provides that open cut coal mines processing more than 500 tonnes of coal per day or that disturb more than 4ha of land are designated development. The proposal satisfies these criteria, has not been declared critical infrastructure and does not involve a concept plan or Planning Assessment Commission review. There is no challenge to the Applicant's right to bring these proceedings.
The Department of Planning wrote to Ulan on 22 October 2008 advising it of the DG's Environmental Assessment Requirements (DGEARs) (exhibit 1 vol 1 tab 5). As required by the assessment process in Pt 3A, Ulan submitted to the DG of the Department of Planning an Environmental Assessment (EA) dated October 2009 (exhibit 9A) addressing those matters set out in the DGEARs (s 75F(2), (3)). The DG requested that the proponent respond to the issues raised in submissions received during the public exhibition of the EA. Umwelt prepared a response to submissions on behalf of Ulan. The DG's Environmental Assessment Report, Major Project Assessment: Ulan Continued Operations Project dated November 2010 (DG's report) (exhibit 1 vol 1 tab 33) was prepared.
Section 75J (now repealed) identifies the Minister's powers of approval. It provided:
(1) If:
(a) the proponent makes an application for the approval of the Minister under this Part to carry out a project, and
(b) the Director-General has given his or her report on the project to the Minister,
the Minister may approve or disapprove of the carrying out of the project.
(2) The Minister, when deciding whether or not to approve the carrying out of a project, is to consider:
(a) the Director-General's report on the project and the reports, advice and recommendations (and the statement relating to compliance with environmental assessment requirements) contained in the report, and
(b) if the proponent is a public authority-any advice provided by the Minister having portfolio responsibility for the proponent, and
(c) any findings or recommendations of the Planning Assessment Commission following a review in respect of the project. [not relevant]
(3) In deciding whether or not to approve the carrying out of a project, the Minister may (but is not required to) take into account the provisions of any environmental planning instrument that would not (because of section 75R) apply to the project if approved. However, the regulations may preclude approval for the carrying out of a class of project (other than a critical infrastructure project) that such an instrument would otherwise prohibit.
(4) A project may be approved under this Part with such modifications of the project or on such conditions as the Minister may determine.
...
There is no regulation for which s 75J(3) provides.
Section 75R relevantly provided:
(1) Part 4 and Part 5 do not, except as provided by this Part, apply to or in respect of an approved project (including the declaration of the project as a project to which this Part applies and any approval or other requirement under this Part for the project).
(2) Part 3 and State environmental planning policies apply to:
(a) the declaration of a project as a project to which this Part applies or as a critical infrastructure project, and
(b) the carrying out of a project, but (in the case of a critical infrastructure project) only to the extent that the provisions of such a policy expressly provide that they apply to and in respect of the particular project.
(3) Environmental planning instruments (other than State environmental planning policies) do not apply to or in respect of an approved project...
Court's jurisdiction
The Court has power to determine the appeal under s 75L pursuant to s 17(d) of the Land and Environment Court 1979 (the Court Act). Under s 39 of the Court Act the Court has all the functions and discretions which the Minister had in relation to the matter. Accordingly, the Court has the power to modify, refuse or approve the project unaltered pursuant to s 75J(4). Section 39(4) states the Court is required to have regard to the EPA Act or any other relevant Act and instruments made under any such Act , the circumstances of the case and the public interest . This is a de novo hearing (confirmed in Gerroa Environment Protection Society Inc v Minister for Planning [2008] NSWLEC 173).
Non-binding instruments which can be considered
The State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP) is not a mandatory consideration but may be taken into account in determining this application; Ironstone Community Action Group Inc v NSW Minister for Planning [2011] NSWLEC 195 at [25]. No reliance was placed on s 75R(2) by the Applicant. While the Applicant does not rely on any SEPP in this case the aims of the Mining SEPP in cl 2, cl 12 and cl 14 were set out in its submissions. Clause 12 specifies matters a consent authority should take into account when considering a development application for mining. Clause 14 provides:
(1) Before granting consent for development for the purposes of mining, petroleum production or extractive industry, the consent authority must consider whether or not the consent should be issued subject to conditions aimed at ensuring that the development is undertaken in an environmentally responsible manner, including conditions to ensure the following:
(a) that impacts on significant water resources, including surface and groundwater resources, are avoided, or are minimised to the greatest extent practicable,
(b) that impacts on threatened species and biodiversity, are avoided, or are minimised to the greatest extent practicable,
(c) that greenhouse gas emissions are minimised to the greatest extent practicable.
(2) Without limiting subclause (1), in determining a development application for development for the purposes of mining, petroleum production or extractive industry, the consent authority must consider an assessment of the greenhouse gas emissions (including downstream emissions) of the development, and must do so having regard to any applicable State or national policies, programs or guidelines concerning greenhouse gas emissions.
Environmental planning instruments (EPIs) other than State environmental planning policies may be taken into account (under s 75J(3)) but are not binding under s 75R(3). Consequently, the Mid-Western Regional Interim Local Environmental Plan 2008 ( Mid-Western Regional LEP ) and the Merriwa Local Environmental Plan 1992 (Merriwa LEP) can be taken into account.
The project site is zoned 1(a) General Rural and 1(f) Rural Forest under the Merriwa LEP. Mining is permissible in both these zones with development consent. The majority of the project site is zoned 1(a) General Rural under the Merriwa LEP. The objectives of the 1(a) General Rural Zone are set out in clause 9 of the Merriwa LEP as follows:
a) to encourage the productive and efficient use of land for agricultural purposes,
b) to prevent inappropriate development of prime crop and pasture land for the purposes other than agriculture,
c) to protect, conserve and enhance the natural and scenic resources of the Shire,
d) to control subdivision of land having regard to the efficient use of land for the purposes of agriculture, and
e) to ensure that the type and intensity of development is appropriate, having regard to the characteristics of the land, the rural environment and the cost of providing services and amenities.
Clause 10(1) of the Merriwa LEP also provides that:
the Council shall not consent to an application to carry out development on land within Zone No 1(a), 1(c) or 1(d) unless it has made an assessment of that development in relation to the following general principles:
a) the development should be generally compatible with the suitability and capability of the land on which it is to be carried out, as indicated on maps prepared by the Department of Agriculture, and the Soil Conservation Service of the New South Wales, which are deposited in an office of the Council;
b) the development should not materially reduce the agricultural production of the land on which it is to be carried out, or of the adjoining land;
c) the development should be of a type compatible with the maintenance and enhancement, as far as practicable, of the existing rural and scenic character of the Shire;
d) the development should not adversely affect the future recovery of known or prospective areas of valuable deposits of minerals, coal, petroleum, sand, gravel or other extractive materials;
e) the development should not have the possible effect of creating demands for unreasonable or uneconomic provision or extension of services by the Council.
The project site is zoned Agriculture and Conservation under the Mid-Western LEP. Mining is permissible in these zones with development consent. The objectives of the Agriculture Zoning under the Mid-Western LEP are, amongst other things, to protect and maintain land for agriculture and other rural purposes. The objectives of the Conservation Zoning under the Mid-Western LEP include the conservation of areas of environmental significance, biological diversity and native vegetation corridors, the prevention of development that could destroy or damage areas of environmental, social or cultural significance, to ensure that development within this zone adjoining land within the Natural Areas Zone is compatible with the management objectives for that land, to ensure that development allowed in the zone will not adversely affect the environmental sensitivity of land in the zone and to prevent development which might adversely affect such historical and archaeological significance of the areas identified.
The approval granted by the Minister (exhibit 16A) is subject to a number of conditions ordered in different schedules. Schedule 2 refers to administrative conditions. Schedule 3, environmental performance obligations, includes conditions 1 to 56 concerning noise, blasting, air quality and greenhouse gas (GHG), meteorological monitoring, subsidence, soil and water, biodiversity, heritage, transport, waste and rehabilitation (a number of these conditions are the focus of the Applicant's appeal). Schedule 4 identifies additional procedures. Schedule 5 deals with environmental management, reporting and auditing. Various plans are annexed to the approval. Consolidated draft conditions of approval were filed identifying agreed and disputed proposed conditions after the hearing.
Application of Ecologically Sustainable Development (ESD) principles in Pt 3A
The Applicant submits that the principles of ESD must be applied, particularly the principles of inter-generational equity and conservation of biological diversity and ecological integrity. The Respondents deny that the project is inconsistent with the principles of ESD. The Minister also denies that the principles of ESD are mandatory considerations.
I have broad discretion to consider the project under Pt 3A within the scope and purpose of the EPA Act. ESD principles are part of the objectives of the EPA Act in s 5. The principles of ESD identified in s 6(2) of the Protection of the Environment Administration Act 1991 are that:
... Ecologically sustainable development can be achieved through the implementation of the following principles and programs:
(a) the precautionary principle-namely, that if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. In the application of the precautionary principle, public and private decisions should be guided by:
(i) careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment, and
(ii) an assessment of the risk-weighted consequences of various options,
(b) inter-generational equity-namely, that the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations,
(c) conservation of biological diversity and ecological integrity-namely, that conservation of biological diversity and ecological integrity should be a fundamental consideration,
(d) improved valuation, pricing and incentive mechanisms-namely, that environmental factors should be included in the valuation of assets and services, such as:
(i) polluter pays-that is, those who generate pollution and waste should bear the cost of containment, avoidance or abatement,
(ii) the users of goods and services should pay prices based on the full life cycle of costs of providing goods and services, including the use of natural resources and assets and the ultimate disposal of any waste,
(iii) environmental goals, having been established, should be pursued in the most cost effective way, by establishing incentive structures, including market mechanisms, that enable those best placed to maximise benefits or minimise costs to develop their own solutions and responses to environmental problems.
Section 39(4) of the Court Act imposes a general requirement to take into account the public interest in dealing with an objector appeal under s 75L of the EPA Act. As ESD principles are an aspect of the public interest, they can be a relevant consideration in my decision. Strictly speaking, I do not need to determine if these are a mandatory relevant consideration in order to determine the merits of this case. In Minister for Planning v Walker [2008] NSWCA 224; (2008) 161 LGERA 423 in the context of judicial review proceedings of the Minister's determination of a concept plan approval under Pt 3A, Hodgson JA stated at [39] - [44] that it was mandatory for the Minister to consider the public interest, however this did not mean that it was mandatory to have regard to any particular aspect of the public interest, such as one or more of the principles of ESD. In that case it was found at [62] that as the Minister did not consider principles of ESD at the concept plan approval stage, the Minister was required to consider these if a project approval was sought. By analogy his Honour stated at [42] - [43] that a similar obligation to consider the public interest when making a decision under s 79C of the EPA Act, that the public interest embraces ESD principles. See also Aldous v Greater Taree City Council [2009] NSWLEC 17; 167 LGERA 13 where Biscoe J stated at [40] that it was mandatory for the consent authority to take into account ESD principles under s 79C. Walker at [62] in particular supports the conclusion that ESD principles are a mandatory relevant consideration for project approvals under Pt 3A.
Ulan's submissions on economic benefits and importance of mining
Before considering the environmental issues raised by the Applicant other matters raised by Ulan should be identified as these are relevant to an assessment which considers ESD principles, which requires the balancing of environmental, economic and social factors. Little time was spent at the hearing on the economic benefits of the project as the evidence summarised below is largely uncontested. Ulan submitted that m ining is directed to undoubtedly valuable resources which are immovable. There are specific legislative indicators that recognise the importance of the location of a resource when it comes to making decisions. For example, the Mining Act 1992 establishes that if there is a mining lease granted in relation to land, subject to certain exemptions, the mine will go ahead. It is also recognised in Pt 7A of the Threatened Species Conservation Act 1995 (the TSC Act) which sets up the biobanking regime and prohibits any intervention on land that is reserved for biobanking except where there is a mining or a petroleum lease granted, per s 127S .
Mr Brown (economic benefits)
Ulan read the affidavit of Mr Brown, a partner with Deloitte Touche Tomatsu and Director of Deloitte Access Economics, filed 18 May 2011 attaching his expert report dated May 2011. Mr Brown estimates that the direct increase in economic activity as a result of the project will be $11,965 million for the life of the mine. The total estimated direct economic contribution of the mine (including current operations worth $2,516 million) is $14,481 million. The total estimated increase in economic activity including indirect effects is $29,718 million. Approximately $2,962 million of the estimated economic activity (25 per cent of the total benefit) resulting from the mine accrues to Mudgee and benefits also accrue to Gulgong and other parts of the Mid West region. The project will generate an additional 296 full time equivalent jobs per annum, on average, over the life of the mine, directly, and an additional 885 jobs indirectly, totalling 1,181 jobs. The total increase in taxes to the NSW and Commonwealth governments attributable to the project is estimated to be $1,849.9 million.
Mr Simes (coal market analysis)
Ulan read the affidavit of Mr Simes, Senior Associate at Wood Mackenzie Pty Ltd, filed 24 May 2011 attaching his expert report. Based on the Wood Mackenzie supply demand analysis it is reasonable to expect coal supplied by one or more of a range of coal supply regions worldwide will replace any coal not produced by Ulan. In response to par 6.2(a) of Professor Jones' report (earth sciences expert called by the Applicant) (which states that there is no evidence this project replaces other more polluting sources) Mr Simes stated that Ulan coal produces less carbon dioxide emissions per unit of energy than other coals. Alternate coals would produce a similar or a higher level of carbon dioxide emissions.
JER Jones and Simes (coal market analysis)
In their joint expert report filed on 2 June 2011 (exhibit 5), Professor Jones and Mr Simes agreed that the projected demand for coal is robust in the current economic environment and that if coal from Ulan was not supplied alternative sources of similar quality coal could be supplied.
Ulan submitted that in part the project was driven by the "clear need for the development of new coal deposits, for at least the foreseeable future, to meet society's basic energy needs": DG's report, exhibit 1 vol 1 tab 33 p 702. There will be a significant boost to the economies of the towns of Mudgee and Gulgong: DG's report, exhibit 1 vol 1 tab 33 p 668; Mr Brown's report exhibit 8A, annual report of Xstrata exhibit 24A p 67. Further, a payment of $3.475 million will be made to the Mid-Western Regional Council for community infrastructure, and a further $50,000 per year for 21 years for the maintenance of Cope Road (see O'Brien's affidavit below at par 29).
Ulan's submissions/evidence on benefits of single modern consent
Mr O'Brien (consents, commitments)
Ulan read the affidavit of Mr O'Brien filed on 3 May 2011 (exhibit 7A). Mr O'Brien has been employed as Group Environment and Community Manager at Xstrata Coal New South Wales since October 2005. Ulan is a joint venture between Xstrata Coal Pty Limited and Mitsubishi Development. Ulan currently operates under five major development consents granted under Pt 4. In all there are at least 27 development consents and modifications. Underground mine number 1 began production in 1941 and underground mine number 2 was developed in 1957. In 1981 the first major mine expansion, stage 1, was approved pursuant to Pt 4 of the EPA Act which enabled the first open cut operations to commence. In October 1985 stage 2 development for new underground mines (numbers 3 and 4) were approved under Pt 4. This included a western expansion to the existing open cut mine which was approved in 1981. In 1993 stage 3 development, involving the extension of underground mining to the north and west, including mining in the area now known as Ulan West, was approved under Pt 4. In 1999 stage 4 development, involving the extension of underground mine number 3, additional mine workings in Ulan West and construction of associated surface facilities in support of mining lease application 80, was also approved under Pt 4. In 2005 approval was granted under Pt 4 for additional works to maximise the efficiency of coal recovery and handling associated with the existing open cut and underground operations. Attached to Mr O'Brien's affidavit was a table of development consents. On 15 November 2010 approval was granted under Pt 3A for, inter alia, streamlining of the approved framework for the total Ulan operations, approval to continue mining in underground mine number 3 and Ulan West under a modified mine plan for 21 years (to 2031), increase the coal production limit of 10Mtpa to 20Mtpa, and continue mining operations 24 hours a day, 7 days a week.
Discussions have taken place since 2004 between the Department of Planning and Ulan about the mutual benefits of having a single consolidated consent. Ulan will be operating under the current statutory regime which is far more rigorous than under development consents granted shortly after 1980. Stringent obligations are imposed in relation to managing, monitoring, mitigating, reporting and auditing the environmental performance of all operations. In relation to GHG emissions, Ulan is required to implement all reasonable and feasible measures to minimise the release of these emissions from the site (condition 18) and prepare and implement an air quality and GHG management plan (condition 22). This Plan has been submitted to the DG for approval. Ulan must do the following in relation to water resources: offset more than negligible loss of baseflow caused by the project to surrounding watercourses (condition 29); provide compensatory water supply to any owner of privately owned land whose water entitlements have been adversely impacted as a result of the project (condition 30); remediate the Goulburn River diversion; and create and implement a water management plan (conditions 34 to 40). The project approval will also be beneficial in terms of biodiversity.
Operating under the project approval Ulan entered into a planning agreement with the Mid-Western Regional Council to provide $4.525 million over the life of the project comprising of $3.475 million to a community infrastructure fund (of which an initial payment of $2.050 million has been made) and $1.05 million toward the maintenance of Cope Road (in 21 payments of $50,000 per year).
Ulan has already taken action in accordance with and in reliance upon the project approval including mobilising a project team, commencing preparatory work, drafting management plans and executing contracts with suppliers, contractors and consultants. By entering into these contracts Ulan has committed to a capital expenditure in excess of $420 million. As at 31 March 2011 Ulan had spent in excess of $40 million in fulfilment of contractual obligations.
Ulan's counsel submitted that the homogenous approval replaces the current patchwork quilt of consents . It brings more stringent environmental conditions than those that apply to the existing consents in relation to, inter alia, noise, air quality, GHG emissions, water management, and ecology; see the affidavit of Mr O'Brien at par 34 to 87. Another benefit of consolidation, which was identified by Ulan and the Department as a reason for consolidation of the consents, is improved reporting and environmental performance: exhibit 9A vol 1 section 2.1. I accept that there are benefits in having a single approval granted under Pt 3A with more stringent environmental conditions but note that greater impacts will also occur with the mine expansion if approved.
Applicant's issues
The Applicant's case changed in the course of the hearing. In opening its counsel submitted that the application should be refused due to the environmental impacts of the project on ground and surface water, loss of biodiversity and the level of GHG emissions produced. There was less strident opposition in closing and the focus of the Applicant's case was largely on proposed conditions the Applicant argued should be imposed to ameliorate biodiversity and GHG emissions impacts, not all of which are agreed by the Respondents. In closing the Applicant continued to contend that the project should be refused because of the very long-term impact on groundwater unless conditions were imposed requiring replenishment of groundwater and greater offsetting of baseflow losses. As some of the conditions the Applicant seeks to impose are novel, particularly in relation to measures to offset GHG emissions, it is necessary to consider the Court's powers to impose conditions if development consent is granted.
Anthropogenic climate change/GHG emissions
In opening the Applicant submitted that the project will exacerbate global anthropogenic climate change and increase Australia's contributions to GHG concentrations in the atmosphere, contrary to the principle of inter-generational equity and the conservation of biological diversity and ecological integrity. The particulars in the statement of facts and contentions are that:
(a) The Project as approved permits the mining of up to 20 million tonnes of coal per year;
(b) All of the coal extracted from the Project site will be burnt in thermal combustion to produce electricity in coal fired power stations;
(c) The burning of coal produces carbon dioxide;
(d) Carbon dioxide, once emitted, is dispersed throughout the global atmosphere and it remains in the atmosphere for, on average, approximately 100 years;
(e) Carbon dioxide is a greenhouse gas and currently makes the largest contribution to anthropogenic climate change of all greenhouse gases;
(f) Anthropogenic climate change is having, and will continue to have, environmental, economic and social impacts of a serious and irreversible kind across NSW and throughout Australia and globally,
(g) The Project will emit scope 1, 2 and 3 greenhouse gas emissions totalling 28.7 million tonnes of carbon dioxide equivalents (TCO2-e) each year;
(h) Over the 20 year lifetime of the Project, the Project will emit scope 1, 2 and 3 greenhouse gas emissions totalling 575 million tonnes of carbon dioxide equivalents (TCO2-e);
(i) Scope 1 GHG emissions are direct emissions;
(j) Scope 2 GHG emissions are indirect emissions from the consumption of purchased electricity;
(k) Scope 3 GHG emissions are other indirect emissions and includes emissions generated from the burning of coal; [note: domestically and internationally]
(l) The emissions from the burning of coal from the Project are scope 3 emissions for the Project and are also scope 1 and 2 emissions for the organisation or country that burns the coal;
(m) Approximately 81% of the coal extracted by the Project will be burnt in overseas countries. The greenhouse gas emissions from that coal is reported as the Project's scope 3 emissions, but will also be reported internationally as that country's scope 1 and 2 emissions;
(n) Approximately 19% of the coal extracted by the Project will be burnt in Australia. The greenhouse gas emissions from that coal is reported as the Project's scope 3 emissions, but will also be reported nationally as Australia's scope 1 and 2 emissions;
(o) Approximately 6% of the coal extracted by the Project will be burnt in NSW. The greenhouse gas emissions from that coal is reported as the Project's scope 3 emissions, but will also be reported at a State level as NSW's scope 1 and 2 emissions;
(p) Domestic use of coal from the Project will generate 5.2 million tonnes of carbon dioxide equivalents (TCO2-e) each year. The Project's scope 3 emissions, reported nationally as Australia's scope 1 and 2 emissions, will increase Australia's contribution to global greenhouse gas emissions by 1.3% per annum;
(q) Combustion of coal from the Project in NSW will generate 1.4 million tonnes of carbon dioxide equivalents (TCO2-e) per annum. The Project's scope 3 emissions, reported at a State level as NSW's scope 1 and 2 emissions [where coal burned for domestic use], will increase NSW's contribution to global greenhouse gases by 0.8% per annum;
(r) Ulan has failed to quantify the Project's GHG emissions in the context of Australia's international commitments to reduce GHG emissions, in particular, the agreement of the parties to the Copenhagen Accord that to avoid dangerous anthropogenic climate change deep cuts in global emissions are required to limit the increase in global temperature to 2 degrees celsius;
(s) Ulan has not addressed measures that would be implemented to avoid, minimise, mitigate and or offset the scope 3 impacts of the Project;
(t) The DGRs required the proponent to provide a detailed assessment of the key issues specified, which included a quantitative assessment of the potential scope 1, 2, and 3 GHG emissions and qualitative assessment of the potential impacts of those emissions on the environment, and a description of the measures that would be implemented to avoid, minimise, mitigate and or offset the potential impacts of the Project.
In closing submissions the Applicant no longer sought refusal of the project because of the extent of scope 1 (direct), 2 (indirect) and 3 (byproduct of coal burning) emissions (identified in contentions (i), (j), (k), (l), (m), (n), (o) (p), (q)). It sought conditions requiring an offset for scope 1 and 2 emissions as the appropriate means of mitigating these impacts. No condition requiring offsetting measures for scope 3 emissions was sought. This was a substantial change in the focus of its case as much of the evidence and submissions focussed on scope 3 emissions which are by far the largest component of GHG emissions attributable to the project.
Existing and proposed draft conditions for GHG emissions
Existing condition 18 is as follows:
Greenhouse Gas Emissions
The Proponent shall implement all reasonable and feasible measures to minimise the release of greenhouse gas emissions from the site to the satisfaction of the Director-General.
Existing condition 22 provides:
Air Quality & Greenhouse Gas Management Plan
The Proponent shall prepare and implement a detailed Air Quality & Greenhouse Gas Management Plan for the project to the satisfaction of the Director-General. This plan must:
(a) be prepared in consultation with OEH and Council, and submitted to the Director-General for approval within 3 months of the date of determination by the Land and Environment court in proceedings no 10998 of 2010;
(b) describe the measures that would be implemented to ensure compliance with conditions 17-21 of this schedule, including a real-time air quality management system that employs reactive and proactive mitigation measures; and
(c) include an air quality monitoring program, that uses a combination of real-time monitors, high volume samplers and dust deposition gauges the evaluate the performance of the project, and includes a protocol for determining exceedances with the relevant conditions of this approval.
Note: The effectiveness of the Air Quality & Greenhouse Gas Management Plan is to be reviewed and audited in accordance with the requirements in Schedule 5. Following these reviews and audits, the plan is to be revised to ensure it remains up to date (see Condition 4 of Schedule 5).
The Applicant proposed the following alternative conditions which the Respondents entirely oppose:
18A. While the project is in operation, the Proponent must submit for approval, by 31 August each year, a report to the Director-General on the Scope 1, 2 greenhouse gas emissions associated with the project over the preceding financial year, including an assessment of the efficacy of the minimisation and mitigation actions described in the Air Quality and Greenhouse Gas Management Plan. Prior to approving the report, the Director-General must be satisfied that the emissions are within 5% of the scope of the original emissions budget projection, and can instruct the report to be amended and the Proponent must comply with any such instruction.
18B. If the report at condition 18A indicates that the total emissions budget, as estimated for the Environmental Assessment for the project, will be exceeded, the proponent shall be required to mitigate or offset the additional emissions.
18C. The Proponent must purchase and surrender Gold Standard Certified Emission Reductions (GS-CERs), or Australian Carbon Credit Units (ACCUs), to offset the Scope 1, 2 greenhouse gas emissions associated with the project that are identified in a report approved by the Director-General under condition 18A. The Proponent must acquire the offsets within one month of the approval of the report under condition 18A.
18D. The Proponent must provide documentation, to the satisfaction of the Director-General, to demonstrate compliance with condition 18B. This documentation must be provided within two months of the approval of the report under condition 18A.
18E. The Director-General can waive compliance with the requirement to report on, and offset, the Scope 1, 2 greenhouse gas emissions of the project under conditions 18A, B, C and D if he/she is satisfied that:
(i) a financial or regulatory liability has been imposed under another law (of any jurisdiction) in relation to the relevant emissions; and
(ii) the liability is appropriate having regard to ecologically sustainable development and the risks posed by climate change.
Amended condition 22(b) would require the proponent to prepare and implement a detailed air quality and GHG management plan for the project to the satisfaction of the DG. This plan must:
(b) describe the measures that would be implemented to minimise and mitigate the greenhouse gas emissions associated with the project.
Evidence
Expert evidence as to the GHG emissions of the project, and impacts of those emissions, was given on behalf of the Applicant by Professor Roger Jones and Mr Andrew Macintosh, and on behalf of Ulan by Dr Hugh Saddler and Mr David Blyth. Much of this evidence was directed to the Applicant's contentions that the volume of scope 1, 2 and particularly 3 emissions justified refusal or at least required substantial offset provisions. Evidence of the NSW government's approach to the assessment and regulation of GHG emissions of coal mines in NSW was given by Mr David Kitto, Director of the Mining and Industry Assessment Branch of the Department of Planning and Infrastructure.
Mr Blyth
Mr Blyth is Principal, SEE Sustainability Consulting, and has qualifications in environmental studies and economics. Mr Blyth prepared the Energy and Greenhouse Gas Assessment that was Appendix 14 in the Environment Assessment provided by Ulan as part of its application for the project approval. Mr Blyth's Statement of Evidence (exhibit 4A) provides a quantitative assessment of potential scope 1, 2 and 3 GHG emissions of the project. Mr Blyth's evidence was that the combined scope 1 and 2 emissions are estimated at 235,986 TCO2-e per annum, including estimated emissions from explosives and spontaneous combustion and slow oxidation of coal. The scope 3 emissions from coal transport were estimated at an annual average of approximately 902,553 TCO2-e per annum. The scope 3 emissions from the transport and combustion of the coal produced by the project have been estimated at an annual average of approximately 28,450,418 TCO2-e per annum. The scope 1 and 2 emissions from the project represent approximately 0.043 per cent of Australia's total GHG emissions of around 550 million TCO2-e per annum (2008), and the scope 3 emissions from the transport and combustion of the coal produced by the project are equivalent to 0.067 per cent of annual global GHG emissions.
Mr Blyth provided an energy and GHG assessment for the previously approved mining operations, which he based on the assumptions that the mine life was 11 years (2011-2021) with no open cut mining and no Ulan West, and calculated at an average underground production of 6.221 Mtpa, an average yield of 93 per cent, and average run of mine, that is the coal mixture extracted from the ground, of 6.679 Mtpa (exhibit 23A). The comparison of GHG emissions between the previously approved mining operations, and the approved project, is as follows:
Existing approvals
Project approval
Scope 1 : Methane emissions
Annual average=24,149 TCO2-e
Total 11 year mine lifetime= 265,643 TCO2-e
Annual average=88,243 TCO2-e
Total 20 year mine lifetime=1,746,866 TCO2-e
Scope 1 including emissions from methane, diesel, explosives (open cut) and slow oxidation & spontaneous combustion (open cut)
Annual average=27,591 TCO2-e
Total 11 year mine lifetime= 303,503 TCO2-e
Annual average=104,833 TCO2-e
Total 20 year mine lifetime=2,096,663 TCO2-e
Scope 2 : emissions from electricity consumption
Annual average=79,646 TCO2-e
Total 11 year mine lifetime= 876,107 TCO2-e
Annual average= 131,153 TCO2-e
Total 20 year mine lifetime=2,623,053 TCO2-e
Scope 3 : emissions associated with on site activities
Annual average=16,369 TCO2-e
Total 11 year mine lifetime= 180,061 TCO2-e
Annual average=27,582 TCO2-e
Total 20 year mine lifetime=551,650 TCO2-e
Scope 3 : emissions from new infrastructure
96,321 TCO2-e
Scope 3 : emissions from transport of coal including export
Annual average=613,058 TCO2-e
Total 11 year mine lifetime= 6,743,634 TCO2-e
Annual average=902,553 TCO2-e
Total 20 year mine lifetime=18,051,068 TCO2-e
Scope 3 : emissions from burning the product coal
Annual average=18,732,211 TCO2-e
Total 11 year mine lifetime= 206,054,317 TCO2-e
Annual average=27,577,865 TCO2-e
Total 20 year mine lifetime=551,557,310 TCO2-e
Mr Blyth's evidence was that the project's predicted energy and GHG indices for on site activities are significantly lower than the Australian coal mining averages, so that if the demand is filled from an alternative supply the GHG impacts are likely to be greater (exhibit 4A, 3.2(d)). In oral evidence, Mr Blyth commented that in modelling the impacts for scope 1, 2 and 3 emissions, Professor Jones had overstated the potential impacts associated with scope 1 or scope 1 and 2 combined. The current national programs for reporting GHG emissions require reporting of scope 1 and scope 2 emissions, and the proposed Carbon Pollution Reduction Scheme (CPRS) brought that back to scope 1 emissions: every party has responsibility to pay for the emissions for which they are directly responsible and control and manage. While there is no direct carbon price at the moment, Ulan is a member of the Commonwealth Government's Energy Efficiency Opportunities Program which requires organisations to look at how they use energy and what are the opportunities for using energy more efficiently. Ulan is also a participant in the NSW Government's Energy Savings Action Plan Program (ESAP) which is looking at the energy use of the facility.
Professor Jones
Professor Jones is a Professorial Research Fellow at the Centre for Strategic Studies, Victoria University, and has qualifications in earth science and environmental engineering. He has worked as a research scientist in the Climate Risk and Integrated Assessment, Climate Impact Group of the CSIRO, and more recently as principal research scientist in the Risk, Adaptation and Policy Team of the Climate Change Research Group, Centre for Australian Weather & Climate Research. Professor Jones addressed the marginal impacts of the estimated GHG emissions from the project. In his Statement of Evidence (exhibit E) Professor Jones separated the projected emissions into three categories: emissions directly under control of the mining operation, those incorporated into Australia's national emissions, and international emissions that would fall under the various countries that import and consume the coal, including bunker fuels used in shipping (exhibit E, p3) (essentially scope 1, 2 and 3). Professor Jones used three emission scenarios to explore the changes to the global climate system of emissions from the project:
(1) a high emission scenario (Garnaut reference), being a "business as usual" scenario that factors in high emissions growth to 2100 based on recent global trajectories;
(2) a medium emissions scenario (MEP2030) that factors the Copenhagen Accord emission reduction pledges into current growth but contains no further policy interventions until 2030 when a minimum emissions path is followed through to 2100;
(3) a low emissions scenario (MEP2010) where undertakings additional to Copenhagen Accord pledges are implemented to 2020 followed by strong climate policy thereafter.
In oral evidence Professor Jones explained that those scenarios were used as input into a simple climate model that had been used in the temperature projections by the Intergovernmental Panel on Climate Change (IPCC). These gave an estimate of the change in temperature for the additional scope 1, 2 and 3 emissions projected for the project by putting emissions from a number of GHG into a simple carbon cycle model to estimate what the concentrations are into the atmosphere. This is converted into radiative forcing in the atmosphere and then converted into temperature. That model also provided estimates of sea level rise. He used a 3 degrees climate sensitivity, being the median estimated by the IPCC, and on that basis the high emissions scenario reached a mid range estimate of about 5 degrees by 2100. One of the targets for international treaties is to avoid exceeding 2 degrees from pre-industrial levels, and so he included a scenario initially designed to do that. This would require entering into very stringent emissions policy from 2010 in order to achieve that. To cope with the uncertainties of estimating global temperatures, he had also used 6 degrees climate sensitivity and 1.5 degrees climate sensitivity in the modelling.
Professor Jones used three ways of measuring the marginal impacts of action affecting emissions, being:
1. aggregated economic impacts: impacts aggregated at the global scale and measured economically, the impacts ranging from market impacts to total economic value;
2. social cost of carbon: marginal impacts measured as the social cost of carbon defined as the net present value of the incremental damage due to a small increase in carbon dioxide emissions;
3. key vulnerabilities and tipping points: changes in the likelihood of exceeding critical thresholds, including loss of large ecosystems, loss of ice sheets such as the Greenland and West Antarctic Ice Sheets, climate-driven loss of security in a significant region or harm to a key economic region such as a coastal megacity.
In oral evidence Professor Jones explained that aggregated economic impact can be determined either by collecting impact studies and adding the numbers up. Alternatively by matching temperature and rainfall with current yields for that around the globe and calculating that if the average temperature in this region is 12 degrees and the income from that activity is X, and the average temperature in another location is 14 degrees and the average income is Y, that moving from 12 to 14 degrees will move income from X to Y. Professor Jones acknowledged that both methods have a lot of assumptions and tend to be very general, and there have been a limited number of models that have used those techniques.
The social cost of carbon is used to model changes from the proposed development by making a marginal change in a scenario and estimating the changes from that, which provides an estimate per tonne of carbon dioxide or CO2-e. The social cost of carbon can use the aggregated economic impact figures, or, as was done in the Stern review, to estimate the changes in welfare according to a number of different metrics that included direct market costs, then look at indirect costs, the risk of catastrophe. On that analysis Stern determined that there was a potential for a loss of up to 20 per cent of global welfare, starting between up to approximately 5 per cent for direct costs. That approach, and the discount rates used in his modelling, were contentious. However, social costs of carbon are being used in a number of jurisdictions, most notably in the UK where they are applying the social cost of carbon to a number of different projects. At 2.18 of his Statement of Evidence Professor Jones referred to studies that have contributed to 223 estimates of the social costs of carbon, which vary widely because of the range of underlying emission scenarios driving the damages, rates of economic growth, assumptions as to welfare distribution and pure and applied rates of time preference. The median estimates from the entire population converted into ranged from US$6-US$27 per tonne of carbon dioxide (in 2010 dollars), and the mean ranged from US$33-US$47 per tonne of carbon dioxide (in 2010 dollars). In oral evidence Professor Jones explained that a lot of the studies on which those estimates are based were based on costs around 1995-2000, and that the social cost of carbon increases as more GHG are emitted, so that the social costs of GHG to be emitted between 2010 and 2030 would be higher than equivalent estimates in 1995-2000.
Key vulnerabilities and tipping points could be used to measure the marginal impacts of action affecting emissions on the basis that something like the loss of the Greenland ice sheet or the West Antarctic ice sheet could take place over a very long time, and that it would be very difficult to cost economically what the human and environmental cost of those would be. The approach is a precautionary one so that if critical points are likely to be exceeded it is preferable to avoid exceeding those without necessarily trying to get the direct economic cost. That approach has probably contributed most to the construction of the 2 degree limiting policy which originally came from work done by the German Government.
Professor Jones analysed the marginal impacts of the projected scope 1, 2 and 3 emissions from the project, being 574,976,019 tonnes of carbon dioxide with 1 per cent comprising the direct emissions from the project, 19 per cent being emitted within Australia's national jurisdiction, and 80 per cent being emitted internationally, mainly from burning of the coal. Professor Jones concluded that while the total emissions from the project as a proportion of national and global emissions respectively would be small in percentage terms, the marginal impacts are significant and contribute to the large externalities projected under climate change (at par 2.31-2.33):
- Using a simple climate model and three emissions scenarios temperature increase at median climate sensitivity peak between 0.0013-0.0015 degrees C around 2040, declining to 0.0009-0.0013 degrees C by 2100 as a result of the project;
- Sea level rise, restricted to ocean warming and glacial melt, showed a rise of 0.020-0.025cm in 2100 for the median climate sensitivity and 0.010-035cm for the full range as a result of the project;
- The marginal cost per tonne of CO2-e emissions due to this warming was estimated (in 2010 dollars) as being $38-$105 per tonne CO2 for the median climate sensitivity and medium emissions scenario and $19-$313 per tonne CO2 for the full range;
- Using two critical thresholds for ecological impacts, the thermal bleaching of coal and risk of species extinction, the area of the Great Barrier Reef affected ranged from at least 5sq km on all scenarios to 18sq km, while Australian vertebrates would face a marginal change in risk ranging from <1 to 5 species across the various scenarios as a result of the project and assuming a similar risk profile for Australian insects and plants those results would scale up by factors of 12 and 3 respectively.
In oral evidence Professor Jones commented that when considering scope 1 emissions alone, the social cost of carbon as estimated for scope 1, 2 and 3 would still hold because that is a marginal cost that has been divided back per tonne CO2-e. Professor Jones was asked to comment on the difference between the presently approved extraction under the existing consents and the proposed extraction over the proposed mine life of 21 years on which he had based his calculations. His opinion was that in terms of carbon emissions from either the existing or the future mine it was unsustainable regardless of the other parts of the project and the benefits that might be derived from it, because every tonne of CO2-e that is emitted past and present is going to cause damage into the future. There is an external cost to the benefits that are derived and to be sustainable those external costs have to be managed in some way.
Professor Jones' analysis of marginal costs in exhibit E was based on information relating to project emissions broken down into direct project emissions, domestic emissions (including direct project emissions) and international emissions, including yearly variations in emissions over the life of the proposed project (Table 1, exhibit E)). In response to a request from the Court Professor Jones provided a Supplementary Report (exhibit L) which addressed domestic scope 1, 2 and 3 emissions, comprising 19 per cent of the total emissions from the project. In preparing this document Professor Jones repeated the procedure he had used for the full range of emissions, using the three emission scenarios described at par 42 above. The revised temperatures averaged 19 per cent of the original warming across all scenarios, with marginal increases in temperature for the three scenarios ranging between 0.0002-0.0003 degrees C between 2030 and 2100. Professor Jones noted that the results were "noisier", "as the model is reaching the limits of its ability to simulate changes of that magnitude (model precision is 0.0001 degrees C)". The impacts measured as an absolute change reduced by a similar proportion, with areas of the Great Barrier Reef exposed to bleaching ranging between 0 and 3sq km, with the risk at lower temperatures being higher due to the high sensitivity of corals to temperature rises. Species at risk ranged from 0 to 1, with the greater risk associated with higher temperatures due to the greater range of sensitivities across vertebrate species. Taking the domestic proportion of total emissions reduced absolute impacts by approximately the proportion of total emissions applied, however marginal changes per tonne of CO2-e emitted were broadly the same. Professor Jones described the results of considering the domestic proportion of total emissions in the following terms (exhibit L par 1.5):
Absolute impacts are reduced by approximately the proportion of total emissions applied. However, marginal changes per tonne of CO2-e emitted are broadly the same. This principle will apply for any single project or part of a project when assessing marginal impacts. Higher emissions will register a loss over time, and lower emissions a benefit due to avoided damages.
Professor Jones also provided estimates based on Mr Blyth's calculation of scope 1, 2 and operational (transport) emissions for the new development. The total emissions were 15,315,450 TCO2-e, which comprised 2.66 per cent of the total estimated emissions for the project (1.6 exhibit L). That volume was below the precision of the simple climate model previously used to measure impacts, however the results showed that both warming and absolute impacts scaled proportionally as expected. On that basis, the impacts of the scope 1, 2 and operation specific scope 3 emissions ranged between 0.00001 and 0.00006 degrees C increase in global mean air temperature; an increased area of the Great Barrier Reef at risk of coral bleaching ranged between 0 to 50ha; and species at risk ranged from <1 per cent to just over 12 per cent of a single species being put at risk by having its bioclimatic envelope of habitat dislocated from its current location.
Mr Blyth commented on Professor Jones' Supplementary Report (exhibit L) by letter dated 17June 2011 (exhibit 26A), in which he noted that while it only modelled the domestic scope 1, 2 and 3 emissions it still included scope 3 emissions which are outside the control of Ulan. The National Greenhouse and Energy Reporting System only requires organisations to report on scope 1 and 2 emissions and the CPRS only required organisations to pay for scope 1 emissions. In Mr Blyth's opinion, if only scope 1 and 2 emissions were modelled then the impacts from those emissions would be significantly lower than those predicted.
Dr Saddler
Dr Saddler is a consultant engaged in issues related to energy policy and environmental impacts of energy supply and use, including measurement and mitigation of GHG emissions. Dr Saddler's assessment of the relative significance of the GHG emissions impacts of the proposed development was based on information relating to Australia's total national GHG emissions in 2008-2009 excluding emissions relating to land use, land use change and forestry. Dr Saddler noted, based on the figures provided by Mr Blyth, that there would be variations in annual emissions over the life of the project, peaking in year 5 in which maximum coal production was expected. Dr Saddler considered that the assessment prepared by SEE Consulting provided a comprehensive and accurate estimation of emissions, with the exception of the assumptions used about scope 2 emission factors. In Dr Saddler's opinion the emissions intensity of electricity from power stations supplying the grid would decline steadily until 2020 because of the increase in zero emission renewable electricity resulting from the Large Renewable Energy Target program and an increase in low emission electricity generation from recently commissioned gas fired capacity and further new gas fired generation likely to be built over the next few years. Dr Saddler estimated that reduction was likely to be at least 10 per cent and possibly more if an emissions pricing policy comes into force. Dr Saddler considered that while there is bilateral support for reducing emissions by 5 per cent relative to a 2000 inventory baseline, that in no way implies an obligation on an individual emitter to make a proportionate reduction in its emissions. In oral evidence Dr Saddler's position was that there is a need for a strong policy response that is coherent.
Mr Macintosh
Mr Macintosh, Associate Director of the Australian National University's Centre for Climate Law and Policy, provided a report dated 15 April 2011 on international obligations relating to the reduction of GHG emissions and offsetting. He describes the United Nations Framework Convention on Climate Change , opened for signature 4 June 1992, 1771 UNTS 107 (entered into force 21 March 1994) (UNFCCC), Kyoto Protocol to the Framework Convention on Climate Change , opened for signature 16 March 1998, 2303 UNTS 148 (entered into force 16 February 2005) , Copenhagen Accord and Cancun Agreements in great detail and explains Australia's general obligations and specific commitments, at the national level under these international agreements. In order to promote the objectives of ecologically sustainable development (as opposed to also promoting sustainable development in developing countries) he recommended the use of Gold Standard Certified Emission Reductions (GS CERs) or Australian Carbon Credit Units (ACCUs), other than reforestation ACCUs, and stated that Ulan should be required to cancel the units to prevent their resale. ACCUs are issued to projects that are approved under the national carbon farming initiative, a statutory-based offset accreditation system targeted at abatement in agriculture; land use, land-use change and forestry; and waste sectors. Mr Macintosh reported that the carbon farming initiative legislation was before the Commonwealth Parliament at the time of the hearing, and that it was expected that the carbon farming initiative would be operational by mid-2011.
In the context of the parties' obligations for emissions and removals under the UNFCCC, Mr Macintosh in his expert report (exhibit at p 6 - 7) compared the production approach and consumption approach. The first, which was adopted under Article 4 of that convention, involves countries being responsible for emissions that occur within their territories whereas the second involves countries being responsible for emissions that were produced in the creation of goods and services consumed within their territories. As a consequence of the adoption of the production approach, exporting countries are not liable for emissions produced from their goods and services in importing countries and conversely, importing countries are not responsible for the emissions created in the production of the goods and services in the exporting countries. It also means no party has liability for international transport emissions and these are not included in national totals. In his expert report Mr Saddler agreed with the statements made by Mr Macintosh in relation to these approaches. He considered that given the focus of current policy proposals and the approach under the UNFCCC, the consumption approach is unlikely to be adopted in Australia despite the prominence in the policy debate for such an approach to pricing emissions.
Joint Report
Dr Saddler, Mr Blyth, Professor Jones and Mr Macintosh provided a joint report (exhibit 4) in which Professor Jones and Mr Macintosh disagreed with Mr Blyth's opinion that the project's scope 1 and 2 emissions represent an insignificant contribution to Australia's GHG emissions. In their opinion, the fact that the projected scope 1 and 2 emissions pass the threshold for reporting under the National Greenhouse and Energy Reporting Act 2007 (agreed fact) and the former proposed threshold for the CPRS means that the projected emissions are significant.
In oral evidence the expert witnesses addressed the issue of offsetting GHG emissions. It was common ground that scope 1 emissions are the emissions that a project theoretically has control over (direct emissions). In Dr Saddler's view the reason for having the scope 2 category is that while a project can reduce some of its emissions by, for example, reducing its use of electricity by using it more efficiently, these are not fully under the control of the project. The project cannot determine whether, for example, the power station providing the electricity improves its efficiency in the way in which it burns coal. Mr Macintosh accepted that imposing a requirement to offset scope 1 emissions is arguably not the most efficient way to reduce emissions because it is not necessarily targeting the cheapest ways of reducing emissions. Mr Macintosh accepted that in the context where there are two other mines in the locality, Moolarben and Wilpinjong, and the price for coal is fixed, that imposing an offsetting requirement would result in a smaller return from the operation. Mr Blyth was of the opinion that a carbon price, whether it be by way of a tax or allowed to float as an emissions trading system, would have the objective of limiting emissions to a 5 per cent increase on 2000 levels; it is an entirely different matter to attempt to replace that by a 100 per cent offset of scope 1 emissions. In his opinion, market based mechanisms such as a carbon tax or emissions trading system are generally considered to be the most effective and efficient outcome of delivering an emissions reduction. Mr Blyth estimated the cost of offsetting scope 1 emissions, at around $22 per tonne, would be in the order of $2.2 million.
It was common ground that the project's coal seams are relatively low in methane and so coal sourced from another mine would typically have higher scope 1 fugitive methane emissions per tonne of coal extracted.
Mr Kitto, Department of Planning
Mr Kitto, Director of Mining and Industry Assessment Branch, Department of Planning and Infrastructure affirmed an affidavit on 14 June 2011. He has held that position since 2005 and for the last 12 years has worked exclusively on environmental assessment of major mining and industry projects. Mr Kitto oversaw the preparation of the DG's report required under s 75I of the EPA Act and drafting recommended conditions of approval. The Applicant's proposed conditions, Mr Kitto stated, would be "inconsistent with the government's policy of not using the development assessment process in the EPA Act to impose obligations on proponents to offset the GHG emissions of their projects; and contrary to the Department's practice of at least 5 years of applying this policy to the assessment and regulation of all major projects in NSW." There is no formal document setting out the government's position on the treatment of scope 1, 2 and 3 GHG emissions and the risks of climate change in the development assessment process under the EPA Act. It was first detailed in the DG's environmental assessment report on the project application for the Anvil Hill case ( Gray v Minister for Planning [2006] NSWLEC 720; (2006) 152 LGERA 258) and then refined in subsequent reports. Since then, as was the case for this project, only a brief summary of the Government's position was included in the reports as it was assumed that the Government's position on the matter was clear.
Mr Kitto summarises the Department's position as being that development approval conditions are unsuitable for implementing a regulatory regime to require proponents to offset some or all of the GHG emissions of their projects. The government decided against such a regime for the following reasons. Firstly, such a regime would be inefficient, ineffective and inequitable because conditions could only be imposed on new projects, not existing ones. There are over 50 operating coal mines in NSW and it is likely to take at least 30 years for all of these mines to exhaust their current approvals and either close or obtain new approvals for extensions to existing operations. None of these mines are currently required to offset their GHG emissions. Imposing a regulatory regime through conditions would make the coal supply from a few mines more expensive and would not drive change across the industry. Furthermore, in the absence of a national or international scheme for offsetting GHG emissions, the regulatory regime imposed by conditions would need to rely on a collection of largely voluntary schemes to achieve offsets. Further, the regime would be inflexible as consents could only be modified at the request of the proponent. Finally, the regime would be complex to administer as it would not be uniform for all proponents.
Mr Kitto's oral evidence is that there is no NSW Government policy which operates as a constraint on the Court's consideration of offsets for GHG. Mr Kitto agreed that in principle there is no difference between applying current environmental standards and requiring an offset for GHG emissions for a new coal mine where an old coal mine is not subject to such a requirement, and requiring an offset for impacts on an endangered ecological community or vegetation. Mr Kitto commented that while the principle of equity was correct, there were some differences between a biodiversity offset and a GHG offset, namely that while under the EPA Act there is an express obligation to consider biodiversity impacts and link them to decisions on development through provisions such as s 5(a) and the biobanking scheme, there is no express link to GHG emissions.
Chevron Australia Pty Ltd Wheatstone Development (exhibit 25A)
During his oral evidence Mr Kitto referred to a gas project in Western Australia which he said was required to offset scope 1 emissions. The Minister later clarified that this was a reference to Chevron Australia Pty Ltd's development proposal for a 25 Mtpa liquefied natural gas plant, a domestic gas plant and marine facilities. When the facility extracts methane from the gas reservoir, carbon dioxide gas will be released into the atmosphere. GHG emissions from the proposal would be approximately 10 million T CO2-e per annum. Ulan tendered the Western Australian Environmental Protection Agency's (WA EPA) Report 1404: Wheatstone Development - Gas Processing, Export Facilities and Infrastructure dated June 2011 (exhibit 25A) in which it recommended to the WA Minister for Environment that the project be granted conditional approval. One of the recommended conditions was to require the proponent to offset the carbon dioxide gas released from the reservoir during the life of the project (at p 93), consistent with conditions applying to two other liquefied nitrogen gas projects (including Chevron Australia's Gorgon project). The Minister granted environmental approval in August 2011 subject to a condition that the applicant implement an offset package: see Government of Western Australia, Bill Marmion, Minister for Environment; Water, " Final State environmental approval given for Wheatstone project" (Ministerial Media Release, 30 August 2011).
Whether proposed condition 18A - 18E should be imposed
Applicant's submissions
The Applicant contends that if the project is approved, the approval should be subject to conditions 18A-18E requiring the offsetting of scope 1 and 2 emissions. The Applicant submits the power to impose a condition is to be determined by reference to the scope, purpose and object of the legislation. The requirement that a condition be for a "planning purpose" is a gloss on the power, which was relevant in the context of Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council [1970] HCA 42; (1970) 123 CLR 490 where the council was subject to the applicable EPI under Pt 4 of the EPA Act. In Pt 3A, the power being exercised under s75J is not constrained by an EPI, and is constrained only by the scope, purpose and object of the Act. There is no constraint in the words of s75J(4) itself, and the relevant question is whether the condition falls within the scope of the statutory power properly understood. In any event, the question of power to impose conditions requiring offsets does not strictly arise because the conditions are addressing the direct impacts of the development.
Minister's submissions
The Minister's extensive written submissions addressed (appropriately) the original case of the Applicant which sought offset measures for scope 3 emissions as well as scope 1 and 2. It is difficult to separate entirely the criticisms of measures for scope 3 emissions from scope 1 and 2 emissions as these overlap. I have endeavoured to summarise as far as possible the criticisms relevant to scope 1 and 2.
Legality of offset condition
The proposed conditions of the Applicant are opposed. The power to impose conditions under s 75J(4) is wide but must be within the objects and purposes of the EPA Act. That Act is not directed to worldwide environmental problems such as climate change, because the scale on which the Act operates is a local planning scale, and the regime pursuant to which it operates is on an application by application basis. Newbury District Council v Secretary of State for Environment [1981] AC 578; [1980] 1 All ER 731 identifies that there are limits on an unlimited statutory power to impose planning conditions including that it must have a planning purpose, which was described by McHugh J in Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63; (2004) 221 CLR 30 as requiring that it implements a planning policy whose scope is ascertained by reference to the legislation that confers planning functions; it must fairly and reasonably relate to the permitted development to which it is annexed; and must not be so unreasonable no planning authority could have imposed it. While cases challenging Pt 3A decisions have not expressly raised the Newbury principles, there is no reason as a matter of principle why they would not apply with respect to conditions imposed pursuant to project approvals under that Part.
The principles referred to by Lord Fraser in Newbury , to test the validity of a condition are:
(i) It must have a planning purpose. In Temwood at [57], McHugh J described a "planning purpose" as one that implements a planning policy whose scope is ascertained by reference to the legislation that confers planning functions on the authority, not by reference to some preconceived notion of what constitutes planning.
(ii) It must fairly and reasonably relate to the permitted development to which it is annexed. Lord Fraser referred in this context in Newbury to the following statement of Lord Denning in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554 (at 572):
(iii) A planning authority is not at liberty to use its powers for an ulterior object, however desirable that object may seem to be in the public interest.
(iv) It must not be so unreasonable that no reasonable planning authority could have imposed it.
Merits
As required by the DGEARs the report by SEE Consulting (Appendix 14 of the EA) provides the quantitative assessment of the scope 1, 2 and 3 emissions emitted from the project, a qualitative assessment of the potential impact of these on the environment, and a description of measures that would be implemented on site to minimise the GHG emissions of the project. Mr Blyth's subsequent report identifies the volume of these emissions produced by the mine under existing consents and what is proposed.
A number of measures to minimise GHG emissions of the project are identified in the EA. Ulan is required under Pt 6A of the Energy and Utilities Administration Act 1987 to prepare and maintain an ESAP every four years. A number of projects have been implemented pursuant to the ESAP which have resulted in estimated savings of 29,390 GJ per annum which corresponds to scope 1 and 2 emissions reductions of 3,064 TCO2-e per annum. In relation to scope 3 emissions management, Ulan's parent company Xstrata Coal participates in a number of initiatives aimed at reducing emissions from the combustion of coal in power stations.
Current condition 18 requires Ulan to take reasonable and feasible measures to minimise the release of GHG emissions from the site to the satisfaction of the DG. Reasonable is defined in the approval, and incorporates notions of costs and benefits, with a value judgment ultimately being made as to where the balance should be struck in a particular case. The term feasible focuses on the more fundamental practicalities of the mitigation measures, and is defined as relating to engineering considerations and what is practical to build or carry out. According to Mr Kitto the requirement in condition 18 translates broadly into being energy and fuel efficient and, for coal mines, minimising the fugitive emissions associated with mining. Condition 22 provides a mechanism for monitoring Ulan's implementation of condition 18 and requires a detailed air quality and GHG management plan for the project to the DG's satisfaction. An amendment to that condition proposed by the Minister and Ulan clarifies that the purpose of the plan is to ensure compliance with conditions 17 to 21 which deal with air quality and GHG emissions.
Condition 22 needs to be read with Sch 5 of the approval which provides a detailed regime for the environmental management, reporting and auditing of the site and is required to be updated regularly. Condition 2 of Sch 5 requires such a plan to include baseline data, performance indicators and any relevant statutory requirements. Condition 3 of Sch 5 requires Ulan to conduct a review of environmental performance of the project to the DG's satisfaction on an annual basis. The contents of the annual review are specified in detail. Condition 4 requires the review of the plans, if necessary, to the satisfaction of the DG within three months of submitting an annual review. Condition 8 Sch 5 requires Ulan to commission and fund an independent environmental audit of the project by the end of December 2011 and at the end of every three year period thereafter. The audit must be conducted by a suitably qualified, experienced and independent team of experts. The assessment of minimisation and mitigation actions described in the air quality and GHG management plan is required to be conducted pursuant to condition 3 Sch 5.
...both DECCW and the Department are satisfied that establishment of the Bobadeen Vegetation Offset would provide well defined additional improvements to those required under the existing salinity offset requirements, particularly in relation to:
- active regeneration, enhancement and management; and
- the protection of the land in perpetuity.
Further, the EPL ought not be construed necessarily as an approval under other legislation within the meaning of that principle; it is a licence. Whether the intention of principle 2 was to catch anything that may be required under other legislation is not clear.
Importantly, the Bobadeen salinity offset program does not require Ulan to establish or restore the EEC or Acacia ausfeldii . It was created under the EPL in relation to its mining activities at Ulan and imposed in order to offset the salt load within the catchment, due to the implementation of the Bobadeen Irrigation Scheme. The Bobadeen salinity offset program comprises an area of about 4,460ha that has been identified for an altered land use and management in order to compensate for increased salt loadings. Ulan has volunteered the ambiguity in what was required and the type of management required as part of the salinity offset as early as in the EA in 2009: see exhibit 9A vol 3 p 10.15. On p 10.16 the salinity offset area is singled out including its large size of 4460ha. It states:
Development of the salinity offset program is ongoing. Specific land use changes and management activities within the salinity offset area have included control rotational grazing, establishment, maintenance of stable vegetative cover, 6000 trees planted along the pivot fence lines...
The last bullet point, "Natural regeneration of the vegetation cover" is important as it emphasises the bi odiversity management measures being supplementary to the salinity offset area. The changes to land use flowing from the salinity offset scheme "involve better management of the pasture areas to reduce the percentage of bare ground, some regeneration of woody vegetation and some lucerne pasture establishment": exhibit 17A p 15. During the assessment phase Umwelt made it abundantly clear what the nature of the salinity offset required in a letter dated 23 March 2010 (exhibit 1 tab 21 p 510 - 517) which dealt with the Bobadeen offset area/salinity offset area, and a letter dated 13 April 2010 : exhibit 1 tab 23 . Therefore, despite the Applicant's contentions to the contrary, there was no doubt what the salinity offset required insofar as Ulan, the Department and DECCW were concerned.
What is required under the Bobadeen offset area is the targeted revegetation and regeneration of EEC and targeted plantings to enhance specific habitat features for targeted threatened species: Dr Robertson's report, exhibit 3 p 3.8; Mr Peake's report, exhibit 3A par 82 to 89.
In response to the Applicant's submission that the concept of additionality was undertaken without independent analysis, the letter from DECCW dated 4 May 2010 indicates that there was independent analysis from DECCW, which imposed the salinity offset in the EPL and administers the licence. DECCW noted that the additional 102ha of land in the Bobadeen offset area "adequately improves connectivity of the existing blocks within the offset area". Moreover for the purposes of the assessment of the project application, Dr Robertson, who did his PhD on this EEC and is therefore someone with appropriate expertise, was retained by the DG to undertake a peer review of the additional information provided by Ulan: exhibit 1 tab 27 p 611. In section 1.4 Dr Robertson concludes that he was satisfied with what Ulan promulgated. Dr Robertson noted in a letter to the Department dated 11 May 2010 (exhibit 1 tab 27 p 611): "The additional land/vegetation for the offsets has been strategically designed to form linkages in the landscape to improve fauna movement long term." It is unclear if Dr Robertson had the benefit of the DECCW letter at the time. T he DG's report also supports this view: exhibit 1 tab 33 p 694.
T here is no foundation for the assertion that the salinity offset will be required for many years after the irrigation scheme ceases, in fact the evidence suggests to the contrary. One of the relevant matters that both the Department and the DECCW took into account in additionality was the Bobadeen offset area being locked away in perpetuity as an element of distinction between the offset and the salinity offset.
Mr Peake's evidence concerning any requirements of the salinity offset scheme is not "wrong" as alleged by the Applicant. He identifies what is critical additional in the biodiversity offset proposed in his report at par 89, particularly (b) and (d), that is, the targeted revegetation and regeneration of EEC and targeted plantings of threatened species.
Regeneration
Despite being listed as endangered, the EEC is widespread in NSW: Dr Robertson's report (exhibit 3 p 3.1). The Applicant relies on Dr Bekessy's concerns regarding regeneration of the EEC. That concern is not shared by Dr Robertson, who has particular knowledge of this species, having undertaken his PhD on it. He set out his view in part at TS358.43 - 359.24, and the Court will note his reference to the fact that "the resilience of the grassy vegetation in box gum woodland increases as you go further north." In the joint expert report (exhibit 6) Dr Robertson stated that in his view "Box Gum Woodland can be restored and greatly improved in quality by removing or strictly controlling livestock, controlling weeds and feral animals, and where necessary by replanting selective native plants. I believe that it is highly likely that the offset work proposed will be successful." The Court as decision-maker must ask whether there is any basis for not accepting his opinion (and that of two government departments and other experts) on this issue, or on the adequacy of the offset areas proposed generally in relation to this EEC. There is no such basis.
The Court from its own observation, assisted by Dr Robertson, can have confidence in the likely regeneration of the EEC in the proposed offset areas. The Court was shown on the view a rehabilitation area of a part of a former open cut mine. Dr Robertson stated in his oral evidence that "...rehabilitation at the Ulan site has been of quite a high quality and it has involved regeneration of trees, shrubs, herbs, grasses and other plants": TS357.20-27. Also EA, exhibit 9A vol 3 p 5.21 - 5.22.
Applicant's condition 41A
The Applicant's condition 41A is a practical impossibility and should not be allowed. The mine has already commenced. That condition requires the mine to shut down until some future date when all the trigger levels are arrived at.
Applicant's condition 45
The matters proposed by the Applicant are already covered by condition 45 as proposed by the Minister and Ulan.
Applicant's condition 57 (condition 56)
What is proposed by the Applicant is already covered by condition 56(e) as proposed by the Minister and Ulan.
Consideration of biodiversity offset
The imposition of conditions requiring offsetting of areas for biodiversity conservation where a project can only proceed through the clearing of vegetation including of EEC is allowed at State and Commonwealth levels and has been allowed by this Court. In Gerroa at [67] Preston J identified that offsetting is appropriate to compensate for the removal of EEC. As Ulan identified EPIs while not binding are relevant to the Court's consideration. The Mid-Western Regional LEP and Merriwa LEP permit mining in this area as would the Mining SEPP. The draft BROMP is summarised above and the extent of offset area proposed by Ulan and accepted by the Minister in four distinct areas identified in table 15 in condition 41. Condition 41 will also need to be amended to incorporate the current proposals for an area along Highett Road dedicated to Acacia ausfeldii . The Bobadeen East offset area was added recently, it being a requirement of the Commonwealth approval process under the EPBC Act.
The Applicant proposes changes to the existing conditions. No issue arises as to whether these can be imposed as a matter of law. Whether these changes should be made must be assessed on their merits.
The parties agree that the offset principles should be applied to the determination of offsets but disagreed on whether these were complied with in this case. The first principle identifies that impacts should be avoided, with offsets used to address remaining impacts. As identified by Ulan part of the vegetation cleared is above the mine surface area. The 69ha of EEC to be cleared is along infrastructure corridors. This clearing is unavoidable if the mine is to proceed. Mr Peake's explanation for the current area location and size of the Bobadeen offset area was that this contained suitable EEC of the same character as that being cleared, was near the area of impact and is located in a gap between large vegetated patches and will connect with vegetation on and off the project site. The shape of the Bobadeen offset area also reflects the location of pivot irrigators and surface infrastructure corridors in the middle. His evidence identified that the boundaries of the agricultural lease with Ardrob Pty Ltd also had a role to play in defining boundaries according to operational requirements. Principle 1 states the offsets must be located appropriately, meaning areas with similar ecological characteristics. That is achieved by the proposed offset areas. Principle 5 requires that offsets must be underpinned by sound ecological principles, as specified therein. Under principle 6 offsets should result in a net improvement in biodiversity over time. The need for active management of offset areas is recognised. Principle 7 requires that offsets be enduring which is required by the conditions with the mechanism is yet to be determined.
Principles that received the most attention were the principle that all regulatory requirements must be met and must not be used to satisfy approvals or assessments under other legislation (principle 2). A related principle is principle 12 which requires that the offsets must be supplementary and beyond existing requirements. The need for offset areas to enhance connectivity recognised in principle 6 was also raised by the Applicant. The Applicant's expert also suggested that a "like for like" offset was not being provided as required by principle 10.
The focus of argument was the adequacy of the Bobadeen and Bobadeen East offset areas. As emphasised in Ulan's submissions the 69ha of EEC proposed to be cleared along infrastructure corridors will be revegetated in the Bobadeen and Bobadeen East offset areas which total 408ha. The 69ha area of EEC to be cleared is 3.1 per cent of the total of 2201ha of EEC on the project area.
Regeneration feasible
There is conflicting expert evidence of how risky the re-establishment and/or regeneration of EEC is likely to be. Dr Bekessy describes the process as very risky in contrast to Dr Robertson who is aware of numerous examples where White Box woodland EEC has been successfully rehabilitated and considered the risk of failure was much less. His evidence was informed by his own PhD research and the Draft National Recovery Plan for White Box woodland EEC prepared by the Commonwealth. That contemplates the regeneration of the EEC in areas used for grazing suggesting that is considered feasible. Ulan pointed to the existing rehabilitation seen on the site visit which attests to the success Ulan has had. I consider that regeneration of vegetation in the manner referred to in Mr Peake's evidence is practical and feasible, albeit not foolproof. This suggests that with appropriate areas of offset there will be net improvement of EEC over time. There will however be loss of biodiversity in the short to medium term while it is regenerating as Dr Bekessy identifies, with consequent loss of habitat also, including for threatened species, for that period.
In relation to Acacia ausfeldii , Ulan's submissions at par 241 identify the evidence of Mr Peake and Dr Robertson which establishes that success in the regeneration of this species is likely to be achieved with proper management.
The proposal is also "like for like" given the identified variants of EEC referred to by Mr Peake which are represented in the offset areas. Given these conclusions Dr Bekessy's evidence that there will be net loss of EEC is not accepted.
Double dipping
The Applicant submitted that principle 2 prevented "double dipping" which occurred with the inclusion of the salinity offset area required under the EPL in the Bobadeen offset area. Given these guidelines are not statutory instruments they should be read in a commonsense, non-technical and practical way. That also applies to the documents in the EPL which set out the requirements for the salinity offset area. The Applicant's counsel spent some time attempting to demonstrate that what Mr Peake considered was required for the salinity offset area was incorrect. The Applicant cross-examined Mr Peake about his understanding of what management of the salinity offset area required, essentially because it wished to demonstrate that his understanding of the limited management for biodiversity conservation purposes was wrong. It is fair to say that based on the four documents referred to in the EPL the requirements of the salinity offset area are not crystal clear. The Applicant sought to emphasise that land use management under the scheme required the establishment of forests. Mr Peake's understanding that the salinity scheme required a reduction in the percentage of bare ground and regenerating woody vegetation is not inconsistent with the documents. That is how the salinity offset area has been managed by Ulan. As Ulan submitted the view of DECCW which issued the offset principles is apparently that it does not consider there is double dipping as it signed off, through the Pt 3A assessment process, the proposed Bobadeen offset area. DECCW expressly identified the need to analyse the difference between the management of the salinity offset area and the proposed Bobadeen offset area in its letter dated 4 May 2010 so that it was clearly alive to that issue, as Ulan submitted.
The Applicant's counsel sought to apply a strict legal interpretive approach to the construction of the principles which is simply not relevant in this context and given their status as a policy document not a legal instrument. Whether additional biodiversity benefits apply in the Bobadeen offset area compared to the salinity offset area is a practical question. This is determined by reviewing what has occurred to date under that scheme with what is proposed as a biodiversity offset area. According to Mr Peake the salinity area has been managed to reduce bare ground through the cultivation of woody vegetation, a less than ideal choice from a biodiversity perspective. The salinity offset area is not managed for biodiversity conservation purposes such as the proposed biodiversity offset area is intended to be to regenerate EEC. The salinity offset use does not continue indefinitely, ceasing when the Bobadeen Irrigation Scheme is no longer required. Whether this coincides with the end of mining or is earlier or later, there is no doubt it is not permanent, unlike the Bobadeen offset area which must be established permanently for that purpose. I accept the evidence of Mr Peake and Dr Robertson confirmed by the views of DECCW that the inclusion of the salinity offset area is not double dipping and not contrary to principle 2 as there are additional biodiversity benefits given the requirement to establish and restore the EEC in perpetuity.
The same conclusion does not apply to the Bobadeen East offset area which clearly comes within the prohibition in principle 2. It was created directly in response to another statutory scheme with similar objectives. The Bobadeen East proposal was not part of the offset considered by DECCW or Dr Robertson for the Department of Planning as it resulted from the later EPBC Act approval process.
Size of area/connectivity
The Applicant presses for a further large area to be set aside as part of the offset required for this proposal, identified in hatching on a plan prepared by its counsel (exhibit M). If required this greatly increases the area of offset required and connects the Bobadeen offset area with the Durridgere State Conservation Area and the Bobadeen East offset area, a desirable outcome in the view of Dr Bekessy.
Mr Peake identifies the ratios he applied in identifying the Bobadeen offset area of variously 2.5:1, 3:1 and 4:1 for EEC grassland, modified and mature variants. As result of the EPBC approval process requiring the Bobadeen East offset area 5.9:1 is achieved. The Bobadeen East offset area was not part of the offset considered by DECCW or Dr Robertson on behalf of the Department of Planning as it resulted from the later EPBC Act approval process. As t he ratio of 5.9:1 includes the Bobadeen East offset area, if that area is not included in the ratio calculation the ratio is substantially reduced. These ratios are criticised by Dr Bekessy as not consistent with best practice of 10:1 applied by the Commonwealth in recent projects. In this case DSEWPC (Cth) has approved a lesser ratio than 10:1 with the Bobadeen East offset area suggesting that each case will yield a different result and that therefore a particular ratio is not necessarily indicative of best practice.
I agree with Dr Robertson, and as the Applicant submitted, the achievement of a particular ratio is not the best way to approach offsetting but rather the most feasible measures to achieve biodiversity objectives should be identified and achieved where possible and practical on the site. There is no doubt that ratios are used to provide an indication of what has been provided. As Dr Bekessy identifies, there is no long term (or short term) guarantee that areas outside the offset area will remain vegetated or be managed to enhance native vegetation. While Mr Peake and Dr Robertson considered there was vegetation outside the offset areas including the EEC which would be connected over time with the restored EEC in the offset areas, in the absence of any management or other requirement in relation to these areas there is no guarantee this will occur.
There is a clear opportunity to link the Bobadeen offset area and the Bobadeen East offset areas, to a lesser extent than is proposed in exhibit M. The lease to Ardrob Pty Ltd is not a legal or practical impediment to that outcome based on the provisions of the lease which allow for termination of the lease on terms as identified in the Applicant's submissions. Doing so does not give rise to a major financial commitment for Ulan. Alternatively according to the evidence of Dr Bekessy and Dr Robertson an area used for grazing can be managed for EEC conservation while grazing occurs.
It is unfortunate that the proposed offset boundaries in exhibit M were not able to be identified by Dr Bekessy who did not visit the site or surrounds at any stage. No criticism of Dr Bekessy is intended in that one attempt to visit the site was prevented by airline disruption but the fact remains her evidence in Court and in her report was uninformed by a site inspection, an inherently limiting aspect of her evidence. The rough sketch of the area in exhibit M is in marked contrast to the extensive process explained in the evidence of Mr Peake as to how the boundaries of the Bobadeen and Bobadeen East offset areas were defined in terms of the identification of variations of the White Box woodland EEC. Mr Peake identified an area of White Box EEC variant which lies outside either of the offset areas close to the Bobadeen offset area. This should be incorporated as part of a corridor between the two offset areas. The area appears as a green triangle of vegetation on figure 5 in Mr Peake's evidence (revised Bobadeen offset area). The boundaries of the offset area indicated generally in exhibit M are too large and an offset of that size is not warranted. The corridor required will need to be defined by the parties' experts to achieve the linkage required at par 275 for final approval by the Court.
Condition 41A
The Applicant seeks an amendment of condition 41A (which is otherwise agreed) to require that it be complied with prior to the commencement of the project. As submitted by the Respondents the project is on-going given that mining operations are continuing under the existing consents. The condition should be reworded to make clear that this is part of the environmental management and reporting framework in Sch 5.
Biodiversity Management Plan (condition 44)
In the consolidated draft conditions of approval, the Respondents agreed amendments to condition 44 and disagreed with the Applicant's proposed amendment as the amendments they proposed were designed to achieve the outcome sought by the Applicant and the expert ecologists (exhibit 11). In the consolidated draft conditions of approval, the Minister states that the Applicant's proposal for a management plan to be submitted at least two years prior to the cessation of the approval is unnecessary as:
- All management plans in the approval have a maximum life of three years, after which they must be independently audited (Sch 5 condition 8) and reviewed and revised by the proponent to the satisfaction of the DG (Sch 5 condition 4).
- It is also a term of approval that the proponent implement the reasonable requirements of the DG arising from the Department's assessment of management plans (See Sch 2 condition 4).
- The management plan required by condition 44 in Sch 3, which will address inter alia the matters listed (weeds and feral pests, grazing and agriculture, bushfire management), will continued to be updated every three years until the offset strategy has been completed to the satisfaction of the DG, and the conservation bond has been handed back (see note to condition 5 of Sch 2, the offset strategy is the primary "undertaking" referred to in the note).
- In other words, the obligations under the approval or the preparation, review/audit, and implementation of a management plan which addresses the matters listed by the Applicant above will continue all the way through the mining operations and afterwards until the offset strategy has been successfully implemented.
Given the extensive environmental management and reporting framework in Sch 5 it is desirable that any condition adopt that process. I therefore accept the Respondents' submissions and condition 44 should be in the terms proposed by the Respondents.
Condition 45
The Applicant has proposed changes to the requirement for the payment of the conservation bond as identified above, essentially specifying in more detail that the DG must monitor compliance with the short, medium and long term requirements of the biodiversity management plan prepared under condition 44 rather than the offset strategy as a whole. The change sought is not necessary to achieve the effective operation of the condition.
Condition 56(57)
The Applicant wishes to include a requirement for consultation with experts in subsection (b) which the Respondents oppose. The necessity for this requirement is not made out given the other provisions in the clause.
Further objector evidence
Ms Davis, Mr Campbell, Mr Batey, Mr Pavich, Ms Smiles, Mr Mjadwesch and Mr McAdam gave evidence on 10 June 2011 at Mid-Western Regional Council Chambers objecting to the expansion of mining in the Ulan area. Mr and Mrs Imrie gave evidence during the hearing. They were worried about the following issues:
(a) drawdown of the groundwater system and drop in water levels of bores
(b) less water seepage in the Drip
(c) the impact of the shrinking membership of local fire brigades as a result of mining, in the event of fires
(d) impact of the visibility of mining and miners on tourism
(e) lower water levels and deteriorating quality of the Goulburn River
(f) salinity of discharged water
(g) increased GHG and their contribution to changes in weather such in rainfall which affects food production
(h) depreciation of land value
(i) degradation of road surfaces due to heavier traffic movements
(j) impact on community culture and lifestyle
(k) subsidence and the likelihood of 20 per cent of cliffs collapsing
(l) noise levels exceeding WHO guidelines for preventing sleep deprivation as the mine operates 24 hours a day
(m) health impacts from increased dust emissions
(n) heavy metal pollution of water tanks leading to acidic water
(o) the impact of rapid increase population on cost of living including rental prices and pressure on health care, education and other services
(p) loss of the EEC and habitats
(q) cumulative impacts of mining since 1975 owing to the prevalence of mining in the region such as on the EEC; impact on the Goulburn River system including the diversion which was permitted under an earlier approval and on water levels; salinity levels of discharged water; loss of local villagers and the concomitant loss of local knowledge
Submissions received during the exhibition of the EA from 9 government agencies, 9 special interest groups and 28 individuals were tendered (exhibit 1 vol 2). Some of the special interest groups included the Applicant, Mudgee District Environment Group, Ulan Public School, Goulburn River Stone Cottages (which is run by Mr and Ms Imrie) and National Parks Association of NSW (written by Ms Smiles).
In relation to the adjacent and neighbouring coal mines, the DG's Environmental Assessment Report for the Moorlabern Coal Project dated September 2007 and project approval dated 2007 and the DG's Report for the Proposed Wilpinjong Coal Project and project approval dated February 2006 were tendered (exhibit 1 vol 3 tabs 91 - 92).
The Applicant did not identify any of the matters raised by the objectors as an issue in its case. The objectors' valid concerns are not sufficient to justify refusal of the application. Nor is there any condition of approval which I can identify to change in response to these submissions.
Conclusion
I consider that approval should in principle be granted to the project identified in MP 08_0184 subject to conditions. The terms of several conditions require further consideration by the parties before these are finalised. The parties also need to consider appropriate timeframes for compliance as referred to in a number of the conditions. A timeframe to enable finalisation of conditions will be discussed with the parties.
Decision last updated: 28 November 2011
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