Wollongong Coal Pty Ltd v Minister for Planning and Environment

[2016] NSWLEC 154

Land and Environment Court

New South Wales

Medium Neutral Citation:	Wollongong Coal Pty Ltd v Minister for Planning and Environment [2016] NSWLEC 154
Hearing dates:	22 and 23 September 2016
Date of orders:	01 December 2016
Decision date:	01 December 2016
Jurisdiction:	Class 4
Before:	Moore J
Decision:	Summons dismissed; Applicant to pay the First Respondent’s costs
Catchwords:	ENVIRONMENT AND PLANNING – judicial review of report of Planning Assessment Commission – Ground 1 – error asserted in Commission’s reasoning – error alleged was that Commission had applied an impermissible test requiring satisfaction of cl 10(1) of State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 – error not established ENVIRONMENT AND PLANNING – judicial review of report of Planning Assessment Commission – Ground 2 – error asserted in Commission’s reasoning – error alleged was that Commission alleged Commission had regard to impermissible matter being future cumulative mining impacts – error not established ENVIRONMENT AND PLANNING – severability – if finding on Ground 2 incorrect, relevant paragraphs of report severable
Legislation Cited:	Environmental Planning and Assessment Act 1979 ss 75J, 123, Pts 3A, 4 State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Significance of Resource) 2015 cl 5 State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 cll 7, 10, 13
Cases Cited:	Botany Bay City Council v Premier Customs Services Pty Ltd (2009) 172 LGERA 338; [2009] NSWCA 226 Brimbella Pty Ltd v Mosman Municipal Council (1985) 79 LGERA 367 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24; [1986] HCA 40 Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 Rivers SOS Inc v Minister for Planning (2009) 178 LGERA 347; [2009] NSWLEC 213 Terrace Tower Holdings Pty Ltd v Sutherland Shire Council (2003) 129 LGERA 195; [2003] NSWCA 289
Category:	Principal judgment
Parties:	Wollongong Coal Pty Ltd (Applicant) Minister for Planning and Environment (First Respondent) Planning Assessment Commission (Second Respondent)
Representation:	Counsel: Mr N Williams SC/Mr D Hume, barrister (Applicant) Mr A Shearer and Ms T Phillips, barristers (First Respondent)   Solicitors: Minter Ellison (Applicant) Department of Planning & Environment (First Respondent)
File Number(s):	197023 of 2016
Publication restriction:	No

TABLE OF CONTENTS

Introduction

The role of the Planning Assessment Commission

The nature of these proceedings

The evidence

The original scope of the current Proposal

Reviewing a PAC report

The first PAC review

The PAC documents relevant to the application for the current Proposal

The conclusion and recommendation of the Second Review Report

Ground 1

Introduction

State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011

Relevant extracts from the Second Review Report and associated documents

Executive Summary

2.3 Project Surrounds

4.1.1 Compatibility with Other Land Uses (Clause 12)

4.2 Water and Subsidence

4.3 Impacts on Upland Swamps

4.4 Socio-Economic Benefits and Impacts

Second Review Report’s Conclusion

The transmission letter

The fact sheet

Wollongong Coal’s position on Ground 1

The Minister’s position on Ground 1

Ground 1 – The first element

Ground 1 – The Second element

Wollongong Coal’s complaint

The Minister’s responses

Minister’s response 1 – the PAC’s consideration of the Drinking Water SEPP was consistent with Wollongong Coal’s invitation

Minister’s response 2 – the PAC’s consideration did not suggest it was a mandatory requirement that the proposal satisfy cl 10(1) of the Drinking Water SEPP

Minister’s response 3 – the PAC’s conclusions in the Second Review Report demonstrate that the Drinking Water SEPP was but one factor considered by the PAC in a proper evaluation process

Conclusion on Ground 1

Ground 2

Introduction

The Second Review Report

The First Review Report

The PAC report on Modification 1 (Preliminary Works Project)

Applicant’s background material

Consideration of Ground 2

Conclusion on Ground 2

Severability

Conclusion

Ground 1

Ground 2

Orders

Judgment

Introduction

1. Wollongong Coal Pty Ltd (Wollongong Coal) owns a coal mine at Russell Vale in the Illawarra. The mine is presently not operating. In 2009, the former owner of the mine, Gujarat NRE Minerals Pty Ltd, lodged a Project Application (the current Proposal) with the Minister for Planning (the Minister) seeking approval for an extension of the scope of the permitted underground workings of the mine. The current Proposal was made pursuant to the now repealed Pt 3A of the Environmental Planning and Assessment Act 1979 (the EP&A Act).

2. During the period after the lodgement of the current Proposal, another application (for works said to be preliminary to the current Proposal) (the Preliminary Project) was made to the Minister and has been approved. The Preliminary Project has also been modified since approval was given to it.

3. Although Pt 3A of the EP&A Act has now been repealed, it continues to apply to the current Proposal, as this application had not been determined as at the date of repeal and the transitional provisions continue the operation of Pt 3A for the purposes of undetermined applications such as this.

The role of the Planning Assessment Commission

4. The role that the Planning Assessment Commission (the PAC) has fulfilled with respect to the current Proposal has been that of undertaking two reviews for the purposes of providing advice to the Minister as the determining authority. In each instance, the product of the PAC’s processes has been a review report, with the Second Review Report being the subject of these proceedings.

5. Relevantly, the reference to the PAC by the Minister (dated 23 October 2015) (that provided the foundation for the Second Review leading to the challenged report) was in the following terms:

(a)   Carry out a review of the Russell Vale Colliery Underground Expansion Project (MP09_0013) by considering:

(i)   The State Environmental Planning Policy (Mining, Petroleum Production And Extractive Industries) Amendment (Significance Of Resource) 2015 as amended on 2 September 2015;

(ii)   The Department of Planning and Environment’s addendum to its original Environmental Assessment Report and recommended conditions for the project;

(iii)   The likely economic, environmental and social impacts of the development in the locality, in the region and for the state,

(iv)   Any submissions made to the Planning Assessment Commission as part of public hearings held in relation to this review; and

(v)   Any submissions made by the applicant to the Planning Assessment Commission on the matters the subject of this review.

(b)   Hold a public hearing on matters arising from or relevant to the review as soon as practicable.

(c)   Complete the review and provide a final report to the Department of Planning and Environment containing any findings and recommendations within five weeks of receiving the Department’s addendum report, unless the Secretary of the Department agrees otherwise.

The nature of these proceedings

6. On 29 June 2016, Wollongong Coal commenced these proceedings pursuant to s 123 of the EP&A Act seeking judicial review of the PAC’s Second Review Report earlier mentioned.

7. There are two bases upon which Wollongong Coal founds its complaints concerning the PAC’s Second Review Report. These two grounds (and the supporting particulars) are set out in Wollongong Coal's Summons (Judicial Review) in the following terms:

Ground 1: The State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 (New South Wales) (Drinking Water SEPP)

4   The Second Respondent made a jurisdictional error of law.

Particulars

The Second Respondent formed an opinion, and acted on the basis that, the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 was applicable to, and binding in respect of, the approval of the Project.

That opinion materially affected the findings and recommendations made by the Second Respondent.

Ground 2: Prohibited considerations

5   The Second Respondent took into account a prohibited consideration.

Particulars

The prohibited consideration was planning approvals outside the scope of the application for the Project, including previous modifications to approved development at the NRE No. 1 Colliery at Russell Vale.

8. The relief sought in the Summons is threefold:

1. An order setting aside the PAC’s Second Review Report;

2. An order directing the PAC, by a differently constituted Commission, to carry out a review of the project in accordance with law;

3. The Minister to pay Wollongong Coal’s costs.

The evidence

9. Wollongong Coal relied on a single lever-arch folder of documentary material as evidence in support of its challenges to the Second Review Report. The Minister tendered a further four folders of material in response. In total, some nearly 4,000 pages of material were contained in these five folders.

10. Also tendered on behalf of the Minister was Annex O (Stream Assessment), being a document that was one of the annexures to the Environmental Assessment of the original Gujarat NRE Project for which the Minister’s approval was originally sought.

11. Initially, Mr Williams SC, for Wollongong Coal, objected to a number of documents from amongst the material sought to be tendered by Mr Shearer, counsel for the Minister. Several of those documents were not pressed and they were returned, playing no part in the proceedings. The remaining documents were initially sought to be the subject of a confining direction as to the basis upon which they would be considered. Ruling on the appropriateness or otherwise of that direction was deferred until later in the proceedings and, prior to the end of the proceedings, Mr Williams indicated that the objections were no longer pressed. As a consequence, the entirety of the documentary material remaining in the folders and Annex O formed the corpus of the evidence in the proceedings.

The original scope of the current Proposal

12. When the current Proposal was lodged by the former owner of the Russell Vale Colliery, it was significantly different in scope from the form requiring consideration by the PAC in its Second Review. As noted in Wollongong Coal’s document entitled “Underground Expansion Project – Preferred Project Report”, a significant number of elements of extension to the mine’s workings that had been incorporated in the original proposal application in 2009 had been removed.

13. The “Preferred Project Report (including response to submissions)” for the underground expansion project formed part of the material tendered on behalf of the Minister. Although the document does not appear to be dated, the index to the Minister’s tendered documents note it as being dated September 2013. On page 14 of this document, there appears a table under the heading “1.1 Comparison of PPR vs Original Proposal”. There are, in the table, details of the three elements deleted from the original proposal.

14. These potentially relevant removed identified elements were described in this document in the following terms:

Wonga West longwalls	• 7 longwalls in two Areas • Area 3 – LW’s 1-5 • Area 4- LW’s 6-7 • Total ROM Coal = 24.6 Million tones	• Removed from this application. To be revised and to be resubmitted as a separate application to DPI at a later date. • Total ROM Coal = 0 Million tonnes
Bulli West-Bulli Seam 1st Workings	• 1st workings to access the Bulli Seam in the western area of the Project Application Area	• Removed from this application and to be reviewed for inclusion in a future application
Balgownie Seam 1st Workings	• 1st workings to access the Balgownie Seam in the western area of the Project Application Area	• Removed from this application and to be reviewed for inclusion in a future application

15. One of them, the potential future Wonga West extension, is mentioned in the Second Review Report and forms part of the basis put on behalf of Wollongong Coal in support of Ground 2 of its objections to the Second Review Report. It will be necessary to return to this matter in my consideration of that ground.

Reviewing a PAC report

16. It is to be observed that, in almost all respects, the role undertaken by a PAC Panel (whether a review process or a determination process being irrelevant for the purposes of these observations in these proceedings) is almost identical to the role performed by of a Commissioner of the Court undertaking a merit review process. In that regard, the approach to take, by analogy, in my view, for my analysis of the PAC’s Second Review Report is that described by Kirby P in Brimbella Pty Ltd v Mosman Municipal Council (1985) 79 LGERA 367 at 368:

Here, the parliament has specifically envisaged a tribunal which included lay assessors. It would be quite wrong, in my opinion, for this Court to examine their decisions as if they were written by a lawyer. I am not, by these comments, suggesting double standards; simply that the Court should take into proper account the composition of the tribunal, as it has been created by the parliament.

17. This broad approach was more recently endorsed by the Court of Appeal in Botany Bay City Council v Premier Customs Services Pty Ltd 172 LGERA 338; [2009] NSWCA 226, where Macfarlan JA (with whom Ipp JA and Hoeben J agreed) said, at [32]:

I appreciate that it is not appropriate to approach reasons of a Commissioner with a “fine-tooth comb”, but the Court must nonetheless attempt to ascertain as best it can what were the essential reasons for a decision.

18. It is not, by analogy, appropriate to undertake a fine-tooth-comb dissection of a PAC merit assessment report such as this. It is necessary, in addressing Wollongong Coal’s two grounds, to undertake the process of ascertaining how the PAC’s reasoning should be understood.

The first PAC review

19. A First Review of the current Proposal was undertaken by the PAC with its report (the First Review Report) being published in April 2015. The PAC Panel which undertook this review was comprised of three members, amongst whom were Mr Woodward and Mr Forward, who have also formed part of the PAC Panel which has undertaken the Second Review of the current Proposal. Mr Woodward has chaired the panel for the purposes of the Second Review, although he did not chair the First Review panel (Mr Forward did so). Mr Stoeckel was added to the two continuing members from the First Review process to constitute the PAC Panel for the Second Review.

20. The panel which undertook the First Review provided its 67-page First Review Report based on the proposal as it was at the time of that review. There are two aspects of the First Review Report that require noting for the purposes of these proceedings. The first is that this report concluded that it did not have sufficient information to reach a definitive recommendation concerning the proposal being examined and, therefore, made a range of what might be regarded as precursor recommendations about further investigation that it considered was necessary to permit an informed conclusion to be drawn concerning the proposal.

21. Relevant to the matters requiring consideration in these proceedings, the specific recommendations included the ones in the First Review Report for further investigation of matters arising concerning potential impacts on water and water quality in the water catchments covered by the protective provisions of State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 (the Drinking Water SEPP) and its predecessor Regional Environmental Plan. Further material prepared in response to those recommendations (including reports based on further investigations) provided a basis for conducting the PAC’s Second Review of the current Proposal.

22. Second, the First Review Report contains material that provides context for the complaint that founds Ground 2 in these proceedings. In that regard, the First Review Report expresses concern about matters of cumulative impact of the making of sequential applications concerning expansion of this colliery. The relevant passage from the First Review Report is in the following terms:

The Commission notes that previous PACs have raised concerns about determining various modification applications, and the unsatisfactory, piecemeal approval being taken to this major mining project. The PAC determining MOD 2 stated:

This Commission is put in a very difficult position. On the one hand, it shares objectors’ concerns in regard to the piecemeal approach to gaining planning approval and agrees that ideally this application should not be considered in isolation in the absence of the expansion plan. On the other hand, this application is said to be essential to maintain the operation of the mine and the employment of existing mineworkers until the expansion plan is determined (Planning Assessment Commission, 2014).

The current proposal has been modified and substantially cut back to reduce the potential adverse impacts of the mine. The consequence of this is that once again it presents the decision-maker with a piecemeal application, considering the proponent’s stated intention to lodge a subsequent application for a larger and long-term mining approval.

23. The above quotation comes from “2.1 background and Historical Context” in “Part 2 Project Description” of the First Review Report.

24. The first paragraph in “7.1 Conclusions” of “Part 7 Conclusions and Recommendations” of the First Review Report is in the following terms:

The incremental nature of this proposal is in keeping with the earlier modification submitted and the Commission shares the view expressed in earlier PAC reports that this is not an acceptable way to undertake planning of a proposal that has the potential for significant environmental and community impacts. Effective consideration of cumulative impacts is particularly challenging.

25. I should observe, at this point, that there is no procedural barrier contained in the EP&A Act or in any State Environmental Planning Policy that would preclude the making of multiple project applications pursuant to Pt 3A of the EP&A Act, nor to the making of applications for modification to proposals that had been approved pursuant to the processes that had been contained in Pt 3A.

26. Indeed, specific provisions had been included in Pt 3A to enable the granting of consent to modifications proposed to projects that had been approved under the Part. In the context of these proceedings, two modifications have been sought to the project approval for the preliminary works at the Russell Vale Colliery.

The PAC documents relevant to the application for the current Proposal

27. There are three documents prepared by the panel of the PAC (that conducted the Second Review of the project) that require consideration with respect to each of the two grounds as, in different places, elements of these documents provide the basis for Wollongong Coal's complaints concerning the review process and its outcome report. These three documents are:

1. The Russell Vale Colliery Underground Expansion Project Second Review Report dated March 2016 (the Second Review Report);

2. A letter from Mr Woodward, the Chair of the panel of the PAC that undertook the Second Review of the current Proposal, transmitting a copy of the PAC’s Second Review Report to the Secretary of the Department of Planning and Environment, together with a fact sheet summarising the PAC’s key findings; and

3. A copy of the fact sheet adverted to in Mr Woodward's letter.

The conclusion and recommendation of the Second Review Report

28. Prior to turning to consider matters of detail in any of these documents, it is appropriate to set out the entirety of the conclusion of the PAC Panel at 5.2 of the Second Review Report and the short recommendation that follows it at 5.3 of this report. Those elements of the report are in the following terms:

5.2 CONCLUSION

Water and subsidence are two of the major issues considered in the Commission’s first review of this project. The Commission engaged E/Prof Galvin and Dr Mackie to assist in its review of the project. They identified various issues that required further consideration and assessment including the setting up of an integrated risk assessment panel (IRAP). The proponent has provided extensive documentation and plans in response to the recommendations in the First Review including the IRAP assessment results.

In January 2016, this Commission again retained E/Prof Galvin and Dr Mackie to review the additional information provided by the proponent for the second review of the project. Dr Mackie identified a number of significant concerns relating to the revised groundwater modelling. The proponent was provided with an opportunity to clarify these issues including the provision of the numeric model to Dr Mackie. Notwithstanding all the additional information, Dr Mackie still has residual concerns, which are shared by E/Prof Galvin and detailed in their advice in Appendix 6.

This leads to the Commission’s doubt and lack of confidence in the proponent’s ability to provide scientifically sounded and properly assessed documentations to support this application. For example, the earlier report predicted that fracturing to surface would be unlikely at the end of mining. The recently provided data appear to confirm cracking to surface has already occurred. Yet, this is not confirmed in the recent report. Thus the risk of water loss remains uncertain.

The magnitude of the potential water loss is also contested, ranging from negligible, 15ML per year to 2.6GL per year. As a result of such uncertainty, the potential impacts on upland swamps and Giant Dragonfly are also uncertainty as the swamps depends on the surface and shallow groundwater while the Giant Dragonfly depends on the swamps.

The proponent has placed substantial emphasis on mitigation strategy to deal with residual impacts. However, it is likely that some damage has already occurred before mitigation measures can be initiated and there is considerable uncertainty about the types of mitigation measures and the effectiveness of the measures to be employed. Long term operation and management costs of these measures after mine closure have not been considered.

The project is located in a highly sensitive area, a drinking water catchment area. The environment is also very fragile because of past multi seam underground mining activities. Subsidence induced fracturing is already occurring. The critical issue is where is the tipping point and what is the cumulative impact of long wall mining?

It should be noted that during the current review, the Commission has received a letter from WaterNSW and advices from the experts engaged by the Commission. These documents have not been forwarded to the proponent for a response before this review is finalised. The reason for not providing these final assessments to the proponent is because the proponent has ample opportunities to provide information to the Commission during the first and second review processes. During this current review, the Commission reviewed the proponent’s submissions, met with the proponent twice, carried out two site inspections and provided written questions to the proponent to seek clarification on the information provided. Importantly, this review is part of the assessment process, and the proponent will have further opportunity to make submissions prior to any final determination.

Advices from WaterNSW and the Commonwealth’s Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development have both identified significant risks with respect to the proponent’s water modelling of the predicted impacts. The Commission’s experts confirmed the risk of water loss remains uncertain. The magnitude of water loss is uncertain with the projected range from the proponent and Water New South Wales varying from minimal to 2.6GL/year. The Commission considers this is a high risk situation. The Commission also has regard to the objectives of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011, particularly “a project will have neutral or beneficial effect on water quality”. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

On the basis of all the information provided, the Commission is of the view that the social and economic benefits of the project as currently proposed are likely outweighed by the magnitude of impacts to the environment. [emphasis added]

Following the release of this review report, the proponent will have the opportunity to respond to this report before the Department finalises the assessment of this project for the consent authority’s determination. The proponent will also have the opportunity to meet the consent authority before a decision is made on the application.

5.3 RECOMMENDATION

The Commission recommends that any further consideration of the proposal should have regard to the issues raised in this Review Report.

Ground 1

Introduction

29. Ground 1, as pleaded, has earlier been set out. In essence, the complaint is that the terms of the Second Review Report have been crafted by the PAC on the basis that the Drinking Water SEPP applied to, and was required to be satisfied for, any approval of the current Proposal.

30. The Director-General's requirements for the current Proposal were provided to a representative of the then owner of the Russell Vale Colliery by letter from the Director-General's delegate on 18 August 2009. The Director-General’s requirements note, on the topic of references, that an attachment contains a list of the Guidelines, Policies, and Plans that may be relevant to the environmental assessment of the project. The attached list notes, in a section entitled “Surface Water”, that one of the documents to which the project applicant's attention was drawn was the Drinking Water Catchments Regional Environmental Plan No 1 (the Regional Environmental Plan), a document that was, as earlier noted, the predecessor to the Drinking Water SEPP.

31. During the course of his oral submissions, Mr Williams acknowledged that it was appropriate for the PAC to have regard to the Drinking Water SEPP in its deliberations but submitted that consideration of the language of the various documents mandated the conclusion that the PAC had gone further and had considered that the relevant mandatory satisfaction test posed by the Drinking Water SEPP, in cl 10, was required to be met by the current application. Mr Williams submitted that, in so doing, the PAC made an error of law in its understanding of the task that had been referred to it by the Minister and that, as a consequence, its review and reporting function had miscarried.

32. Mr Shearer concurred in the basic propositions advanced by Mr Williams (that the PAC could have regard to the Drinking Water SEPP but was not permitted to regard the satisfaction of consent granting prerequisites under the SEPP as being mandatory) but submitted that a proper understanding of the language used by the PAC in the Second Review Report made it clear that it was not treating the Drinking Water SEPP's tests as mandatory preconditions, merely that it had had regard to the objectives of the Drinking Water SEPP as a matter for consideration in its overall deliberations leading to the Second Review Report.

State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011

33. Two versions of the Drinking Water SEPP were provided to me on behalf of Wollongong Coal. The current version is the one to which reference was made during the course of the proceedings. There are three provisions in the Drinking Water SEPP to which it will be necessary to have regard. They are contained in cll 3, 10 and 13. The first of these, cl 3, sets out the aims of the policy. The provision is in the following terms:

3   Aims of Policy

The aims of this Policy are:

(a)   to provide for healthy water catchments that will deliver high quality water while permitting development that is compatible with that goal, and

(b)   to provide that a consent authority must not grant consent to a proposed development unless it is satisfied that the proposed development will have a neutral or beneficial effect on water quality, and

(c)   to support the maintenance or achievement of the water quality objectives for the Sydney drinking water catchment.

34. Clause 10 imposes a mandatory test that must be satisfied before any development under Pt 4 of the EP&A Act can be approved on land to which the SEPP applies, being the land in the Sydney drinking water catchment as defined in cl 7 of the SEPP. The terms of cl 10 are set out below:

10   Development consent cannot be granted unless neutral or beneficial effect on water quality

(1) A consent authority must not grant consent to the carrying out of development under Part 4 of the Act on land in the Sydney drinking water catchment unless it is satisfied that the carrying out of the proposed development would have a neutral or beneficial effect on water quality.

(2)   For the purposes of determining whether the carrying out of the proposed development on land in the Sydney drinking water catchment would have a neutral or beneficial effect on water quality, the consent authority must, if the proposed development is one to which the NorBE Tool applies, undertake an assessment using that Tool.

Note. The NorBE Guideline provides information and guidance for consent authorities in the use of the NorBE Tool.

35. The savings provisions in the Drinking Water SEPP are contained in cl 13 which reads:

13   Savings

A development application that has been made but not finally determined before the commencement of this Policy, or an amendment to this Policy, must be determined as if this Policy or the amendment had not commenced.

36. There are three observations to be made with respect to these provisions. First, with respect to the mandatory prerequisite contained in cl 10, it only applies to development under Pt 4 of the EP&A Act and not to development proposals made under Pt 3A (which, as earlier noted, continues to apply to the current Proposal despite the repeal of Pt 3A in the intervening period).

37. Second, it is clear from the terms of s 75J(3) of the EP&A Act that the Minister (and in this case, the PAC upon reference from the Minister) can take into account the provisions of the Drinking Water SEPP but is not required to be satisfied that any mandated test has been met before recommending granting or granting approval to such a proposal.

38. Finally, it is also appropriate to note that, although there is the transitionary provision earlier set out, the terms of the Regional Environmental Plan applied from 1 July 2009 (prior to the lodgement of the current Proposal) until the coming into effect of the Drinking Water SEPP. The Regional Environmental Plan contained, in cl 26(b), the requirement that development under Pt 4 of the EP&A Act on land within the catchment (“catchment” being defined in cl 5 in terms generally coincidental with the relevant definition in the Drinking Water SEPP) could not be approved unless the consent authority was satisfied that the carrying out of the proposed development would have a neutral or beneficial effect on water quality.

39. As a consequence, the mandated consent test had applied for any Pt 4 application, relevantly, throughout the period since the lodgement of the current Proposal. Although the aims of the Regional Environmental Plan differ from those of the Drinking Water SEPP, nothing arises from that in these proceedings.

Relevant extracts from the Second Review Report and associated documents

Executive Summary

40. In the Executive Summary of the Second Review Report, at [iii], after noting that the Departmental assessment was that the social and economic benefits of the project outweighed the residual costs and it was in the public interest that the project be approved subject to conditions, the Second Review Report continued:

The Commission has considered all the available information including additional information provided by relevant agencies and experts. There is no disagreement about the importance of protecting Sydney’s drinking water catchment, both in terms of the water quality and quantity. The proponent has argued that this can be achieved by the proposed mining layout and mining methods, acknowledging that the mine plan has been substantially modified and reduced compared with the original proposal. The Department’s assessment concluded that the social and economic benefits of the project outweigh the residual costs and it is in the public interest that the project be approved subject to conditions.

Advices from WaterNSW and the Commonwealth’s Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development have both identified significant risks with respect to the proponent’s water modelling of the predicted impacts. The Commission’s experts confirmed the risk of water loss remains uncertain. The magnitude of water loss is uncertain with the projected range from the proponent and Water New South Wales varying from minimal to 2.6GL/year. The Commission considers this is a high risk situation. The Commission also has regard to the objectives of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011, particularly “a project will have neutral or beneficial effect on water quality”. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

On the basis of all the information provided, the Commission is of the view that the social and economic benefits of the project as currently proposed are likely outweighed by the magnitude of impacts to the environment.

In reaching its conclusion, the Commission has had regard to the evidence presented to it by the proponent, the Department, the public submissions and presentations to the public hearing and from the advice provided by the Commission’s independent experts, the IESC, OEH, and WaterNSW and the relevant State Environmental Planning Policy (Mining SEPP and Sydney Drinking Water Catchment SEPP). [emphasis added]

41. Following that commentary, the PAC Panel noted its recommendation that any further consideration of the proposal should have regard to the issues raised in this Review Report.

42. As can be seen from the conclusion to the Second Review Report (earlier reproduced at [28]), this extract also reproduces, at the end of the Executive Summary, the final three paragraphs of 5.2 of the Second Review Report and notes the recommendation in identical terms to that contained in 5.3 of the Second Review Report.

43. In this context, it should be expressly noticed that the final paragraph (in bold above) of the extracted element of the Executive Summary of the Second Review Report differs from that which is set out in the conclusion of this Report.

2.3 Project Surrounds

44. On page 3 of the Second Review Report, as part of the material under the heading “2.3 Project Surrounds”, comes the first mention of the Drinking Water SEPP. The paragraph within which this is contained, and its following paragraph, are in the following terms:

The vast majority of the land that is covered by the underground mining lease is owned and managed by WaterNSW, formerly Sydney Catchment Authority and lies within the Metropolitan Special Area water catchment. As a consequence, the project assessment must consider State Environmental Planning Policy (Sydney’s Drinking Water Catchment) 2011, which states that: “Consent for development on land in the Sydney Drinking Water Catchment cannot be granted unless it has a neutral or beneficial effect on water quality”.

The project site is overlain by the catchment area of the reservoir behind Cataract Dam, which supplies potable water to parts of Sydney. It also includes part of the Mt Ousley Road, a Telstra fibre optic cable, fire trails and various electrical transmission lines. Other key features close to the area of proposed mining include Picton Road, Cataract River, Cataract Creek and Bellambi Creek.

45. Wollongong Coal submits that there are two vices contained in the first of these paragraphs. The first is the use of the word “must” in the first quoted paragraph which, as I understood the submission, was importing a mandatory consideration rather than a discretionary one, whilst the second complaint is that that which is set out as a quotation is not, in fact, a quotation but is a paraphrasing of that which is contained in the Drinking Water SEPP. The purported quotation is discussed later in the broad context of how Ground 1 should be resolved.

4.1.1 Compatibility with Other Land Uses (Clause 12)

46. The second mention of the Drinking Water SEPP is on page 7 of the Second Review Report in “4.1.1 Compatibility with Other Land Uses (Clause 12)”. It is clear from the context within which these comments appear that the cl 12 to which reference is made in the heading is the provisions of cl 12 of State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Significance of Resource) 2015 (the Mining SEPP).

47. As the Second Review Report notes, the provisions of this Mining SEPP amendment do not strictly apply to this project, as the current Proposal is a transitional Pt 3A application but, as the Review Report also notes, the terms in the Minister's request require the PAC to consider the Mining SEPP, as amended. The terms of cl 12 are set out below:

12   Compatibility of proposed mine, petroleum production or extractive industry with other land uses

Before determining an application for consent for development for the purposes of mining, petroleum production or extractive industry, the consent authority must:

(a)   consider:

(i)   the existing uses and approved uses of land in the vicinity of the development, and

(ii)   whether or not the development is likely to have a significant impact on the uses that, in the opinion of the consent authority having regard to land use trends, are likely to be the preferred uses of land in the vicinity of the development, and

(iii)   any ways in which the development may be incompatible with any of those existing, approved or likely preferred uses, and

(b)   evaluate and compare the respective public benefits of the development and the land uses referred to in paragraph (a) (i) and (ii), and

(c)   evaluate any measures proposed by the applicant to avoid or minimise any incompatibility, as referred to in paragraph (a) (iii).

48. It is in this context that the terms of “4.1.1 Compatibility with Other Land Uses (Clause 12)” of the Second Review Report are to be noted. This element of the Second Review Report is in the following terms:

The Department concluded that the project is not likely to result in unacceptable impacts to surrounding land uses in general. Residual impacts could be minimised, mitigated or compensated for to achieve acceptable environmental and amenity outcomes via recommended conditions of approval.

The Commission is yet to be convinced the Department’s conclusion is reasonable and justified. Land use compatibility requires that each land use type should not pose any significant threat or impact to the other use.

As will be discussed in Section 4.5 of this report, the Commission finds potential noise impacts on adjacent residences would not be negligible or beneficial, if reasonable benchmarks for existing noise were used for the assessment instead of using the “modelled maximum noise levels for 1Mtpa”. Similarly, traffic noise impact on residences along Bellambi Lane requires reassessment.

The risk of subsidence induced cracking to surface resulting in water loss remains uncertain. As a result, the potential impacts on water quality and quantity and the upland swamps remain uncertain and the environmental consequences are also uncertain. Even if the risk of water loss is low, if it occurs, how and what mitigation measures could apply to remediate the situation and the likelihood of success has not be clearly demonstrated. Any water loss and the associated impact on water quality and upland swamps could be permanent and irreversible. Sections 4.2 and 4.3 of this report discuss these concerns in detail.

On the evidence, the Commission is not convinced that “the project is not likely to result in unacceptable impacts to surrounding land uses in general”. In reaching this conclusion, the Commission is also mindful of one of the key objectives of the Sydney Drinking Water Catchment SEPP that consent cannot be granted unless the project has a neutral or beneficial effect on water quality. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

49. The particular element of this section of the Second Review Report about which Wollongong Coal complains is that which is set out in the final paragraph of the above extract. This, too, is discussed later.

4.2 Water and Subsidence

50. The next section of the Second Review Report is “4.2 Water and Subsidence”. The relevant finding under this heading does not mention the Drinking Water SEPP but the finding is relevant, in my assessment, to giving context to my overall consideration of these matters. The paragraph is in the following terms:

On the evidence, the Commission finds the uncertainty of potential water impacts to the catchment remains unresolved and it does not have sufficient confidence that the project would have negligible impact. The long-term cost of managing and monitoring, water loss, water quality control and residual impacts after mine closure could be substantial. Hence, the Commission is not in a position to give any conditional support to the project, as it currently stands.

4.3 Impacts on Upland Swamps

51. The next section of the Second Review Report is “4.3 Impacts on Upland Swamps”. This section of the Second Review Report arose out of work undertaken following recommendations made in the First Review Report proposing various follow-up matters needing to be attended to after consideration of that First Review Report. At “4.3.7 Commission’s Consideration and Findings”, the PAC dealt with potential impacts on the upland swamps. Although I was only taken to portion of the paragraphs reproduced below in the Second Review Report, it is appropriate to set out, in my view, the totality of the section of this report under this heading. It is in the following terms:

In considering the potential impacts to upland swamps, the Commission notes the advices from the proponent’s consultant, the Integrated Risk Assessment Panel, the Department of Planning and Environment, the DPI, the OEH and WaterNSW. Of particular concern to the Commission is the OEH view that the risk assessment underestimated the project’s impacts, given the permanent and irreversible nature of bedrock cracking beneath the swamps. The OEH is responsible for the care and protection of the environment. One of its functions is to provide scientific evidence and expert knowledge to underpin environmental decision making. Therefore, the Commission considers significant weigh must be given to its advice.

The OEH’s opinion together with the Commission’s experts’ advices on groundwater and subsidence and their review of the integrated assessment process reinforce the Commission’s concern about the uncertainty of the project’s potential impact to the catchment area in terms of water quantity & quality, upland swamps and biodiversity. The Commission’s consideration has regard to the general principle of the Offset Policy that when an impact is identified, avoidance should be the first consideration, followed by mitigation and finally offsets.

In the circumstances here, there is significant doubt in any mitigation measures that could remediate the impact or be able to reduce the impact to an acceptable level. Any loss of water could be permanent and irreversible resulting in changes to the composition and nature of the swamps with unknown long-term consequences. Any socio-economic benefits arising from the project must be balanced with the risk of water loss and associated impacts in the drinking water catchment area, which is a highly sensitive area.

In response to the Commission’s question regarding options to avoid impacts to CCUS4, the proponent advised that the cost of avoiding 230m section of longwall 6 beneath CCSU6 would be $10 million. No independent verification of the cost has been provided to the Commission. As discussed in the previous section of this report, the Commission’s experts raised significant concerns about the potential cracking to surface at the eastern ends of LW6 and LW7 with a resulting potential loss of 10% of water flow in the Cataract Creek. This leads to the question of whether LW6 should be mined at all.

The proposed offsets may be able to offset the swamps, although the question is raised that the proposed offsets are not similar in characteristic, nature and composition to the damaged ones. A further question that appears to be overlooked is the potential water quality impact from the damaged swamps.

The Commission finds that

1.    The uncertainty in predicting subsidence and the environmental outcomes for upland swamps and the sensitive nature of the area warrants a cautious approach.

2.   There is significant doubt as to what mitigation measures could be applied to remedy the cracking of bedrock beneath the swamps, apart from offset.

3.   If the OEH’s classification of risk is considered, the potential damage of 14 swamps with uncertain environmental consequences in a drinking water catchment area is a significant concern, if offset could not be found within the catchment area.

52. The contribution that this makes to the context of consideration of Ground 1 is also discussed later.

4.4 Socio-Economic Benefits and Impacts

53. After dealing with the above matters, the Second Review Report turns to “4.4 Socio-Economic Benefits and Impacts”. It is unnecessary to quote from this section extensively, but it is appropriate to note the sentence at the conclusion of this portion of the Second Review Report which identifies what the PAC says is the key issue for its consideration. This was identified in the following terms:

The key issue to the Commission is how to balance the short-term immediate economic benefits with the uncertain long-term costs and environmental consequences.

Second Review Report’s Conclusion

54. I have earlier set out the Second Review Report’s conclusion at [28]. It is unnecessary to repeat it at this point for the purposes of my consideration of Ground 1.

The transmission letter

55. For completeness, it is appropriate to note the terms of the final five paragraphs of the letter from the Chair of this PAC Panel to the Secretary of the Department of Planning and Environment providing a copy of the report and of the summary sheet. The paragraphs are in the following terms:

The Commission finds it is not satisfied that the project is consistent with the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2001 that it would have a neutral or beneficial effect on water quality in the catchment area.

Although the project, as proposed, may generate immediate short-term economic and social benefits in terms of jobs, royalties and other direct and indirect flow-on effects, the Department of Trade and Investment’s advice that this is a small project ranked 50 out of 56 producing coal mines in New South Wales if approved. Furthermore, the mine is currently not operating and is in care and maintenance.

On the basis of all the information provided, the Commission is of the view that the social and economic benefits of the project as currently proposed are most likely outweighed by the magnitude of impacts to the environment.

In reaching this conclusion, the Commission has had regard to the evidence presented to it by the proponent, the Department, the public submissions and presentations to the public hearing and from the advice provided by the Commission's independent experts, the IESC, OEH, and WaterNSW and the relevant State Environmental Planning Policy (Mining SEPP and Sydney Drinking Water Catchment SEPP).

The Commission recommends that any further consideration of the proposal should have regard to the issues raised in this review report.

The fact sheet

56. Finally, the summary statement provided to the Department, entitled “Second Review of the Russell Vale Colliery Underground Expansion Project Finds Water and Subsidence Issues Remain Unresolved”, contains the following relevant paragraphs (being the fifth-last to third-last paragraphs - the second-last and last paragraphs being in the same terms as the second-last and last paragraphs of the letter to the Department). The relevant paragraphs read:

Notwithstanding the additional works carried out by the proponent and the detailed assessment provided by the Department, the Commission finds that it is not satisfied that the project is consistent with the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2001 that it would have a neutral or beneficial effect on water quality in the catchment area. The magnitude of water loss is uncertain with the projected range from the proponent and WaterNSW varying from minimal to 2.66 GL/year. The Commission considers this is a high risk situation

On the basis of all the information provided, the Commission is of the view that the social and economic benefits of the project as currently proposed are most likely outweighed by the magnitude of impacts to the environment.

Given the Commission's findings, it has not provided detailed comment on the Department’s recommended conditions of consent for the project.

Wollongong Coal’s position on Ground 1

57. Wollongong Coal’s written outline of submissions sets out the three complaints made concerning the consideration by the PAC of the Drinking Water SEPP, as shown, the company said, by the terms of the Second Review Report. Those were:

1. The Drinking Water SEPP did not apply to the Project Application.

2. The PAC erroneously believed that the Drinking Water SEPP applied to the Project Application.

3. That erroneous view affected the Report.

58. The primary documentary aspects relied upon by Wollongong Coal in its written outline of submissions were in the following terms:

16)   It is clear that the PAC considered that the Drinking Water SEPP was binding in respect of the Project Application, because it said so in terms. It said the following (at page 3) [Court Book 39].

The vast majority of the land that is covered by the underground mining lease is owned and managed by WaterNSW, formerly Sydney Catchment Authority and lies within the Metropolitan Special Area water catchment. As a consequence, the project assessment must consider State Environmental Planning Policy (Sydney’s Drinking Water Catchment) 2011, which states that: “Consent for development on land in the Sydney Drinking Water Catchment cannot be granted unless it has a neutral or beneficial effect on water quality”.

17)   The PAC’s treatment of the Drinking Water SEPP provides the factual substrate for ground 1 of the Summons [Court Book 1-6]. Although the purported quote is not accurate, it is apparently an attempt to refer to the effect of cl 10(1) of the Drinking Water SEPP. As will be seen, that prohibition does not apply to this application.

18)   It is also apparent from the text of the PAC Report that it gave weight to the Drinking Water SEPP as a document that set out requirements that were binding upon the approval of the project. It said:

The Commission also has regard to the objectives of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011, particularly “a project will have neutral or beneficial effect on water quality”. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

(Report at iii) [Court Book 33]

In reaching its conclusion, the Commission has had regard to … the relevant State Environmental Planning Policy (Mining SEPP and Sydney Drinking Water Catchment SEPP).

(Report at iv) [Court Book 34]

On the evidence, the Commission is not convinced that “the project is not likely to result in unacceptable impacts to surrounding land uses in general”. In reaching this conclusion, the Commission is also mindful of one of the key objectives of the Sydney Drinking Water Catchment SEPP that consent cannot be granted unless the project has a neutral or beneficial effect on water quality. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

(Report at 7) [Court Book 43]

The Commission also has regard to the objectives of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011, particularly “a project will have neutral or beneficial effect on water quality”. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

(Report at 45) [Court Book 81]

19) The PAC’s treatment of the Drinking Water SEPP can be contrasted with its treatment of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (the Mining SEPP). The PAC was specifically directed to consider a version of the Mining SEPP by the terms of reference: see paragraph 8. In respect of the Mining SEPP, the PAC observed at 7 [Court Book 43]:

Although the provisions of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Significance of Resource) 2015 (Mining SEPP) do not strictly apply to this project because it is a transitional Part 3A application, the terms of reference in the Minister’s request require to the Commission to consider the Mining SEPP as amended.

20)   The point for present purposes is that the PAC expressly adverted to its view that the Mining SEPP was not applicable to the project, but that it was being considered because the Minister had expressly directed the PAC to do so. The contrast with the terms of its treatment of the Drinking Water SEPP.

21)   The PAC ultimately concluded that “[o]n the basis of all the information provided, [it was] of the view that the social and economic benefits of the project as currently proposed are likely outweighed by the magnitude of impacts to the environment”: Report at iii [Court Book 33]

59. Mr Williams’ oral submissions concerning Ground 1 can best be understood from his own words (Transcript 22 September 2016, page 11 line 36 to page 12 line 14):

Your Honour, taking all of those matters together, in our submission there's no real room for doubt that the PAC regarded itself as bound by the Catchment SEPP. There's no real reason for doubt because the Commission itself said so in the words "must consider", on p 78. The Commission itself used the language of a requirement on several occasions.

The Commission itself did not recognise at any point in the report that this was a discretionary matter. The Commission used the language of relevant SEPP without qualifying that at all to indicate that it had at most a discretionary relevance, and, we say, because in the contemporaneous documents, the booking documents, the Commission expressly applied the language of the SEPP, albeit with misquotation or adjustment with no recognition of the significance of those adjustments, as one of the key reasons for recommending refusal of the project.

Those matters together, your Honour, in the absence of any contrary indication in this report or any of the contemporaneous documents emanating from the PAC, point irrevocably to a conclusion that this PAC regarded itself as bound. We say that the fact that a full year earlier a PAC that had two common members but one different member that was considering a different review under different terms of reference and in a different report did recognise the inapplicability is insufficient to cast any doubt on the strength of the conclusion that emerges from all of those references put together, and the absence of any acknowledgement in this report.

We say those matters together lead irrevocably to the conclusion that the PAC thought it was bound. There was no sensible inference, we say, available that the PAC did not mean what it said, that it must consider these requirements of these relevant state environment planning policies.

60. Mr Williams also took me to several passages in the decision of the Chief Judge in Rivers SOS Inc v Minister for Planning (2009) 178 LGERA 347; [2009] NSWLEC 213 in support of his submission that, relevantly, the Drinking Water SEPP did not apply to the current Proposal. It is unnecessary to turn to the terms of his Honour's decision in any detail as it is clearly the position that the test in cl 10 of the Drinking Water SEPP is not required to be satisfied by the current Proposal, nor is the test in cl 10(1) of the Drinking Water SEPP a matter of mandatory consideration by the PAC in its Second Review process.

The Minister’s position on Ground 1

61. In essence, as I understood him, Mr Shearer advanced three bases why the Minister says the approach taken by the PAC to the Drinking Water SEPP in the Second Review Report was entirely appropriate. They were:

1. First, the project application document lodged by Gujarat NRE Coking Coal Pty Ltd (the originating document for the current Proposal) invited the PAC to have regard to the Drinking Water SEPP and that the PAC had done so in a fashion consistent with that invitation contained in the terms of the Project Application’s Environmental Assessment;

2. Second, on a proper regard of the totality of the Second Review Report, it is clear that the PAC Panel conducting the Second Review had regard to the objectives of the Drinking Water SEPP but did not consider that the current Proposal was required, as a matter of mandatory prerequisite, to satisfy the test in cl 10(1) of the Drinking Water SEPP; and

3. More specifically, the conclusions set out in 5.2 of the Second Review Report (as earlier reproduced), when read fairly, make it clear that the Second Review Panel had taken into account the objectives of the Drinking Water SEPP but had done so as a matter of consideration as one factor amongst a broad range of factors requiring consideration.

Ground 1 – The first element

62. The first complaint made by Wollongong Coal in support of this ground was that:

(1)   The Drinking Water SEPP did not apply to the Project Application.

63. I have earlier noted (at [31] and [32]) the agreed position that the PAC was permitted to have regard to the Drinking Water SEPP. As a consequence, it is also agreed that the Drinking Water SEPP did not apply in the sense that the current proposal was not mandated to satisfy the test in cl 10(1) of the SEPP. It therefore follows that it is necessary to consider how, as the second element of Wollongong Coal’s first complaint, the PAC did consider the Drinking Water SEPP.

Ground 1 – The Second element

Wollongong Coal’s complaint

64. The second stage of Wollongong Coal’s complaint is that:

(2)   The PAC erroneously believed that the Drinking Water SEPP applied to the Project Application.

65. The dispute therefore is as to whether, in addressing the Drinking Water SEPP, the PAC Panel went further and impermissibly regarded itself as being required to recommend against the proposal as a consequence of the PAC’s opinion that the current Proposal failed the mandatory test in cl 10 of the Drinking Water SEPP (as Wollongong Coal says was the case) or that it merely had regard, appropriately, to the objects of the Drinking Water SEPP as a factor in its consideration (as the Minister says was the case).

The Minister’s responses

66. I have concluded that the three bases advanced by Mr Shearer as to why the position adopted by the Minister on the second element pressed by Wollongong Coal are a correct and complete answer to Wollongong Coal’s first complaint. I set out below my reasons why this is the position to which I have come.

Minister’s response 1 – the PAC’s consideration of the Drinking Water SEPP was consistent with Wollongong Coal’s invitation

Introduction

67. Before commencing my consideration of Wollongong Coal’s documents, it is appropriate to note that the Second Review Report sets out, at 3.3.1, a non-exhaustive list of documents accessed by this PAC Panel. The list is as follows:

• the proponent’s Environmental Assessment (February 2013 ERM);

• the proponent’s Preferred Project Report including response to Submissions (undated) and the Residual Matters Report (June 2014 Hansen Bailey);

• the Department of Planning & Environment’s Assessment Report (December 2014);

• Commission’s First Review Report (April 2015);

• the proponent’s Response to the Commission’s First Review Report both Parts 1 and 2 which included the Independent Risk Assessment (July 2015);

• independent economic analysis undertaken by the Centre for International Economics on behalf of the Department of Planning and Environment (October 2015);

• the Department’s Addendum Report (November 2015); and

• submissions from government agencies, special interest groups and the public.

68. To understand my acceptance of the first proposition put by Mr Shearer it is necessary to set out a number of extracts from Wollongong Coal’s own documents.

Project Application’s Environmental Assessment

69. I turn, first, to consider relevant elements contained in Wollongong Coal’s Environmental Assessment document.

70. The Project Application’s Environmental Assessment document discusses the Drinking Water SEPP on pages 71 to 73. There are a number of points to be noted arising from “4.3.5 State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011” on those pages. First, at the commencement of the section, the document acknowledges that the Drinking Water SEPP “applies to land within the hydrological catchments that contribute to Sydney's drinking water supply”. The section then sets out the three aims of the Drinking Water SEPP. It then acknowledges:

A large part of the PAA [Project Application Area] is designated as a Schedule 1 Restricted Access Area (Metropolitan Special Area) under the Sydney Water Catchment Management Act 1998 (refer to s 4.4.3) and is managed by the Sydney Catchment Authority (SCA). Consequently, this SEPP applies.

71. It expressly sets out, relevant to this complaint by Wollongong Coal, the second aim of the policy, that being:

To provide that a consent authority must not grant consent to a proposed development unless they are satisfied that the proposed development will have a neutral or beneficial effect on water quality.

72. The document then notes that, in deciding whether or not to approve the project under Pt 3A, “the Minister may take into account Clause 9 and Clause 10 of the SEPP (Sydney Drinking Water Catchment)”. The document then sets out the terms of those clauses; describes the Neutral or Beneficial Effect tool and then contains a section under the heading “Implications for the Project”. This section reads:

Impacts of the Project on the quality of water within lands to which the Sydney Drinking Water Catchment SEPP applies are assessed in Chapter 20.

The assessment concludes that the Project will not have a significant impact on water quality. As a Part 3A project under the EP&A Act, a development application under Part 4 of the Act does not have to be submitted.

Although not specified in the SEPP, the NorBE guideline may provide a framework to consider major infrastructure and other projects under Part 3A of the EP&A Act. The Minister for Planning and Infrastructure determines these projects and which water quality test will be applied.

73. In the context of Ground 1, it is particularly appropriate to note, from the material set out above, the following that appears on page 72 of the Environmental Assessment:

In deciding whether or not to approve the project under Part 3A, the Minister may take into account Clause 9 and Clause 10 of the SEPP (Sydney Drinking Water Catchment).

74. It is to be observed that this comment appears after the aims of the Drinking Water SEPP had been set out in the document and immediately prior to the setting out of the terms of cll 9 and 10 of the Drinking Water SEPP.

75. Although I was not taken to the detail of the Environmental Assessment, it is appropriate to refer, in some detail, to Ch 20 of that document, as it is referenced, as set out above, as comprising the Environmental Assessment document’s discussion of the impacts on water quality within the catchment. Chapter 20 is entitled “Catchment Area Surface Water”. It commences at page 285 of the document and runs to page 330. Although, at the commencement of this chapter, in the introduction, in 20.1.1, under the heading “Legislation, Guidelines and Policies”, it states:

The assessment has been prepared with reference to a number of guidelines, policies, and legislation, in particular the Water Management Act 2000, as outlined in Chapter 3 of Annex O.

76. However, given the earlier references on pages 71 to 73 of the Environmental Assessment document, it is reasonable to assume that this chapter encompasses matters envisaged as relating to any consideration of the proposed development in the context of the PAC, as the Minister’s delegate, taking into account matters arising from the SEPP despite the fact that a careful reading of the 46 pages in this chapter discloses no specific mention of the SEPP.

77. The chapter is highly technically detailed and it is unnecessary to set out any significant elements of that detail. It is, however, appropriate to note that 20.3 deals with past mining impacts, and 20.4 deals with potential impacts. The discussion of potential impacts commences on page 306, with the question of cumulative impacts being dealt with at 20.4.8, commencing on page 319. Although it is not necessary to deal with it in my consideration of Ground 1, it will be necessary to return to this element of the Environmental Assessment, in my consideration of Ground 2.

Annex O to the Environmental Assessment

78. In Pt 3 Guidelines and Legislation, Annex O to the Environmental Assessment deals, at 3.4, with the Drinking Water SEPP. This portion of Annex O commences by setting out the aims of the Drinking Water SEPP. It then notes the management regime in similar terms to that set out after [70] above. This paragraph in Annex O also expressly states:

Consequently, this SEPP applies.

79. After setting out cll 9 and 10 of the Drinking Water SEPP and having, as in the material extracted from the main body of the Environmental Assessment, noted that:

In deciding whether or not to approve the project under Part 3A, the Minister may take into account Clause 9 and 10 of the SEPP,

Annex O then discusses the Neutral or Beneficial Effect tool (NorBE tool). The relevant portion of Annex O, on this point, reads:

The Neutral or Beneficial Effect tool (NorBE tool) identified in Clause 10 of SEPP (Sydney Drinking Water Catchment) 2011 describes how to assess a Neutral Beneficial Effect (NorBE) on water quality for development applications made to consent authorities for land in the Sydney Drinking Water Catchment, as defined in the SEPP.

The NorBE tool is detailed in Appendix 1 of the Neutral or Beneficial Effect of Water Quality Assessment Guidelines 2011 (NorBE Guidelines).

The NorBE Guidelines supports the implementation of the SEPP by providing clear direction on what a neutral or beneficial effect means, how to demonstrate it, and how to assess an application against the neutral beneficial effect on water quality test using the NorBE tool.

Although not specified in the SEPP, the NorBE Guideline may provide a framework to consider major infrastructure and other projects under Pt 3A of the EP&A Act. The Minister for Planning and Infrastructure determines these projects and which water quality test will be applied.

Monitoring to date indicates that the proposed works will not have significant impact on water quality within lands to which this the Sydney Drinking Water Catchment SEPP applies.

Consideration of Wollongong Coal’s own documents

80. As can be seen from the material extracted above from Wollongong Coal’s own application documents, these not only acknowledged that the broad objectives of the Drinking Water SEPP were matters that were permissible for the PAC to take into consideration in its second review process but, in effect, invited the PAC to do so.

81. Indeed, Wollongong Coal’s own documents not only invited those assessing the application (including the PAC under the delegation given to it by the Minister – but not confined to the PAC), to consider not only the objectives of the Drinking Water SEPP but also the provisions of cll 9 and 10 of the Drinking Water SEPP with cl 10(1) containing the “must not grant consent” test of which Wollongong Coal now complains – a test which was, in its submission, in fact, considered by the PAC.

Conclusion on Minister’s first response

82. Although I explain, in the next section dealing with the Drinking Water SEPP, why it should be regarded that the PAC merely considered the objectives of the SEPP and did not apply the cl 10(1) test, the fact that Wollongong Coal’s own documents expressly invited consideration of this clause as a matter that the Minister (and the PAC on delegation from the Minister) may take into account is, in itself, a sufficient and complete answer to this complaint by Wollongong Coal.

Minister’s response 2 – the PAC’s consideration did not suggest it was a mandatory requirement that the proposal satisfy cl 10(1) of the Drinking Water SEPP

83. It is clear from the summary of public submissions to the PAC, set out in Appendix 3 to the Second Review Report, that potential impacts on the water catchment area were a significant element of the those submissions.

84. The PAC was required, by 1(d) of the Minister’s terms of reference (earlier set out), to have regard to those submissions. In addition, it is clear that the Drinking Water SEPP could also be engaged for consideration by 1(c) of the Minister’s terms of reference, in that the SEPP engaged with potential environmental impacts of the development in the locality and the region.

85. Indeed, although the expression “the public interest” is not set out in terms in the Minister’s request to the PAC to carry out this Second Review of the current Proposal, it is necessarily implicit from the overall terms of the Minister’s request. In considering matters of the public interest, a merit assessment body, such as the PAC, can cast its net widely in seeking to inform itself (Terrace Tower Holdingsv Sutherland Shire Council [2003] 129 LGERA 195; [2003] NSWCA 289 at [81] per Mason P).

86. Although, in Wollongong Coal’s original written submissions, it was said that the PAC should not have regard to the Drinking Water SEPP, it is clear, as set out above at [59], that Mr Williams acknowledged, in his oral submissions, that it was permissible for the PAC to have regard to the aims of the Drinking Water SEPP (set out earlier at [33]). It is also agreed, as I understood the position adopted by the Minister, that this was the position but, it was also agreed, the SEPP did not apply and, as a consequence, the test in cl 10(1) of the SEPP was not called into play with respect to the current proposal. It is, therefore, necessary to consider the various instances where the PAC’s report and the two associated documents make reference to the Drinking Water SEPP and how, having had regard to those references, the nature of those references should be characterised.

87. If the references can correctly be characterised as arising from the PAC having regard to the aims of the Drinking Water SEPP (particularly that which is set out in cl 3(b)), this aspect of Wollongong Coal’s complaint will also fail on this basis.

88. Although I have set out, between [40] and [56], and at [28], the relevant elements of the PAC’s Second Review Report, these have included, where appropriate, surrounding supporting context for the remarks. It is, now, appropriate to set out, more starkly, the specific references to the Drinking Water SEPP contained in the Second Review Report.

Executive Summary

The Commission also has regard to the objectives of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011, particularly a project will have neutral or beneficial effect on water quality.

89. Although the PAC uses the word “objectives”, this is a clear reference to the aim in cl 3(b) of the SEPP. The PAC expressly says that it has had regard to those objectives (aims) and there is nothing in this extract that could lead one to conclude that the PAC has applied some mandatory test, merely that it was of the opinion that the project satisfies neither of those requirements (of a neutral or beneficial effect on water quality).

2.3 Project surrounds

90. The relevant element of this portion of the PAC’s report citing the Drinking Water SEPP is in the following terms:

As a consequence, the project assessment must consider State Environmental Planning Policy (Sydney's Drinking Water Catchment) 2011, which states that: consent for development on land in the Sydney Drinking Water Catchment cannot be granted unless it has a neutral or beneficial effect on water quality.

91. First, it is to be observed that that which has been set out by the PAC as a quotation is neither a direct and accurate quotation of cl 3(b) or cl 10(1) of the Drinking Water SEPP. However, it more closely reflects that which is set out in cl 3(b), Aims of Policy, than that which is contained in the test set out in cl 10(1). This is because cl 10(1) expressly refers to the carrying out of development under Pt 4 of the Act, whilst there is no such reference in the quotation set out by the PAC above. In addition, the PAC makes it clear, by use of the words “must consider” in this element of its report, that it is not mandating satisfaction of the aim of the Drinking Water SEPP, merely that it must be taken into account in any assessment made, although it is true that the use of the word “must” is a term implying compulsion, that which the PAC says is compelled is consideration rather than satisfaction. I have earlier set out, at [16] to [18], what I consider to be the appropriate approach to take in analysing the language used in a document such as a PAC report of this nature. Relevantly, for this quotation, the dominant aspect (consistent with the broad approach taken by the PAC in this document) is that of consideration rather than mandated satisfaction. This element of the PAC’s report cannot be taken to support Wollongong Coal’s complaint.

4.1.1 Compatibility with Other Land Uses (cl 12)

92. The relevant element of the Second Review Report under this heading is in the following terms:

On the evidence, the Commission is not convinced that the project is not likely to result in unacceptable impacts to surrounding land uses in general. In reaching this conclusion, the Commission is also mindful that one of the key objectives of the Sydney Drinking Water Catchment SEPP that consent cannot be granted unless the project is a neutral or beneficial effect on water quality. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

93. It is clear, as earlier set out, that this analysis is undertaken as a consequence of cl 12(a)(1) of the Mining SEPP. This provision expressly mandates that the PAC consider the relevant matters set out in cl 12(a) of the Mining SEPP. It is clear that, in this consideration, the PAC was also mindful of the objective (aim) of cl 3(b) of the Drinking Water SEPP. It has dealt with this as part of its mandated consideration of matters pursuant to the Mining SEPP and has not applied any mandatory Drinking Water SEPP test in reaching this conclusion.

4.3 Impacts on upland swamps.

94. I have earlier set out, at [51], the relevant section of the Second Review Report. This element of the Second Review Report, although not mentioning the Drinking Water SEPP, sets out reasons why the PAC was concerned about the potential impact on this aspect of importance to the Drinking Water Catchment area. It is clear that matters of the NorBE test, as earlier set out and dealt with by the Drinking Water SEPP, provided a significant underpinning to the general consideration of the PAC, sometimes explicitly as discussed in this section of the judgment, but also implicitly as discussed immediately above.

Conclusion of the Second Review Report

95. I have earlier set out the terms of the conclusion and recommendation to the Second Review Report at [28]. The relevant portion that cites the Drinking Water SEPP is in the second part of the third-last paragraph of the conclusion. It is in the following terms:

The Commission also had regard to the objectives of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011, particularly a project will have neutral or beneficial effect on water quality. From the evidence currently presented to it, the Commission is of the opinion that the project satisfies neither of these requirements.

96. Although the words “a project” are included in the quotation, the words that follow, “that will have a neutral or beneficial effect on water quality”, are taken directly from cl 3(b) of the Drinking Water SEPP. Although, as earlier adverted too, Wollongong Coal complains about the accuracy of this quotation, the use of the words “will have” is a direct lead to cl 3(b) of the Drinking Water SEPP, as cl 10(1) uses the words “would have” rather than “will have”.

97. Even if this is not a correct taking of an appropriate and direct inference leading to cl 3(a) rather than cl 10(1) of the Drinking Water SEPP, the statement that the PAC has regard to the objectives makes two things clear. The first is that that which has taken place has been consideration rather than satisfaction of some mandated test, whilst the use of the word “objectives” is clearly a reference to cl 3 of the Drinking Water SEPP and, as the comments continue, particularly to cl 3(b).

The transmission letter

98. The transmission letter, as quoted at [55] above, clearly deals with consistency rather than questions of mandated satisfaction and is, in this context, entirely on “all fours” with the matters generally dealt with above in my analysis of the relevant matters contained in the Second Review Report itself.

The fact sheet

99. Finally, it is to be observed that the fact sheet also deals with consistency rather than mandated satisfaction and it, too, is entirely on “all fours” with the main body of the Second Review Report.

Conclusion on Minister’s second response

100. As a consequence, the second basis advanced by the Minister for rejecting Wollongong Coal’s first complaint is also made out.

Minister’s response 3 – the PAC’s conclusions in the Second Review Report demonstrate that the Drinking Water SEPP was but one factor considered by the PAC in a proper evaluation process

101. The final aspect of the Minister’s response to Wollongong Coal’s first complaint is that the PAC merely had regard to the aims of the Drinking Water SEPP as one of a multitude of factors taken into account.

102. I am satisfied that this is an appropriate conclusion to be drawn from the document itself. First, the conclusion to the Second Review Report sets out the wide range of matters to which the PAC had regard. The objectives of the Drinking Water SEPP were merely one aspect of the matters considered by the PAC in reaching its conclusion. Indeed, the functional outcome paragraph of the Second Review Report’s conclusion is in the following terms:

On the basis of all the information provided, the Commission is of the view that the social and economic benefits of the project as currently proposed are likely outweighed by the magnitude of impacts to the environment.

103. This is a general conclusion rather than something specifically founded on the Drinking Water SEPP in any impermissible fashion. As earlier noted, this paragraph is also reproduced in the Executive Summary to the Second Review Report (as set out at [40] above).

The Commission has carefully considered the options available and the concerns expressed by the various interested parties. The Commission is not prepared to agree to development of all the maingates sought (i.e. 6, 7 and 8). Because of the immediacy of the continuity requirements, the Commission will agree to the development of Maingate 6 in conjunction with extraction of LW5. (On the information available to the Commission, to approve LW5 without Maingate 6 would be a futile exercise.)

The Commission makes no comment about the merits of extraction for LW6. That will have to be considered on the basis of the information supplied at the time approval is sought. The approval of the maingate for LW6 should not be taken as any form of endorsement by this Commission of the possibility of approval for extraction.

122. That PAC Panel resolved to grant partial approval to the modifications sought. Other aspects of mine expansion were, clearly, left to future applications, whether the current Proposal or some further modification application. In its conclusion, this PAC Panel said, inter alia:

The Commission notes the considerable disquiet expressed by community groups, government agencies and Wollongong City Council on a range of matters including, inter alia, the absence of important information, the piecemeal approach to assessment of this mining project, the track record of the proponent in meeting commitments and regulatory requirements and the risk to the catchment.

Applicant’s background material

123. The Preliminary Assessment Report that was the precursor to the original version of the current Proposal notes that the project will include the following activities:

(1)   Continued westward development of the existing Wonga Mains drivage from Russell Vale to access underground working areas;

(2)   Multi-seam (Bulli, Balgownie and Wongawilli seams) coal extraction, ramping up coal production of up to three-million tonnes per annum (Mtpa) with a projected mine life of at least 20 years. This will involve:

(a)   Extraction from the Wongawilli seam by first workings with the continued development of the Wonga Mains drivage;

(b)   Longwall mining of the Wongawilli seam in the Wonga East area, beneath previously mind Balgownie and Bulli seam workings;

(c)   Extraction from the Balgownie seam by first workings beneath the existing mined-out Bulli seam longwalls in the Wonga West area, using the cut-and-flit mining method (anticipated to have no direct subsidence impacts);

(d)   Extraction of Wongawilli seam coal from beneath the previously mined Bulli seam workings in the Wonga West area, by longwall mining;

(e)   Continued development and extraction of the Bulli seam from the V Mains area by first workings and selected pillar extraction; and

(f)   First workings in in the Bulli seam in the Bulli West area (anticipated to have no direct subsidence impacts),

and a range of other matters relating to colliery infrastructure rather than mining activities. The Preliminary Assessment Report is dated August 2009.

124. The Environmental Assessment dated February 2013 describes the current Proposal (as it was envisaged in that document) in the following terms relating to underground mining:

The project will increase coal production up to three-million tonnes per annum (Mtpa) with a projected mine life of 18 years. The project includes:

�   continued westward development of the existing Wonga Mains drivage from Russell Vale for ventilation and to access underground working areas;

�   longwall mining of the Wongawilli seam in the Wonga East area, beneath previously mined Balgownie and Bulli seam workings;

�   longwall mining of the Wongawilli seam in the Wonga West area beneath the previously mined Bulli seam workings;

�   first workings in the Bulli seam in the Bulli West area (anticipated to have no direct subsidence impacts);

�   Balgownie seam mining, limited to first workings only, beneath overlying Bulli seam workings (anticipated to have no direct subsidence impacts),

and further supporting infrastructure works related to this version of the proposal (designated as Stage 2 with the preliminary works project being designated as Stage 1).

125. The Environmental Assessment document contains a section (20.4.8 Cumulative Impacts) that dealt with a range of what were identified by the authors of that document as “geographic areas requiring consideration for potential cumulative impacts on the Sydney water catchment area”. This, in itself, constitutes an invitation to those assessing the current Proposal to have proper and appropriate regard to cumulative impacts (as I am satisfied the PAC has done in its Second Review Report).

126. Relevant to this ground is a section commencing on page 320, under the heading “Cataract Creek, Bellambi Creek and Cataract River”. Under the heading, “Stability and Connectivity”, this section says:

The Bulli, Balgownie and Wongawilli workings, which underlie the Cataract Creek catchment, have been mined in the previous NRE and Cordeaux leases by longwall extraction, with up to 1.4 metres of subsidence. The proposed Wongawilli stream extraction at Wonga East will generate up to a predicted additional 1.2 metres subsidence in the Cataract Creek catchment.

As a worst case scenario, the main channel of Cataract Creek is predicted to undergo up to an additional 0.8 metres of subsidence over Longwall Panel A to LW8 (Seedsman Geotechnics, 2012); however, NRE has committed to an adaptive management strategy whereby monitoring of subsidence will be undertaken and, when subsidence reaches 250 millimetres, the longwall will be discontinued.

The proposed extraction in Wonga East will result in a cumulative subsidence effect, with the subsidence caused through the previous Bulli, Balgownie and Wongawilli workings, however, no site-specific, cumulative effect on the creek bank and stability or pool levels is anticipated due to the additional subsidence.

127. This is followed by a further short portion of technical discussion which it is unnecessary to quote. However, this portion also deals with stream water quality and does so in the following terms:

There are no anticipated cumulative impacts on the water quality within, or discharging from, the proposed NRE mining area.

128. The Environmental Assessment then continues with “20.5 Stream Risk Assessment” and, under its first subheading, deals with Cataract Creek and Cataract River. This says:

Due to the proposed mine plan which incorporates narrow longwalls with wide pillars, the proposed mining at Wonga East is not anticipated to be a significant risk to either Cataract Creek or Cataract River (upstream of Cataract Reservoir) in regard to streamflow, stream pools, water quality or aquatic ecosystems.

129. In “20.7 Summary”, the Environmental Assessment acknowledges that:

All of the creeks, swamps, Cataract River and the Cataract Reservoir are contained within the Sydney Catchment Authority controlled Metropolitan Special Area.

130. It is this “Special Area” to which the SEPP applies.

131. Wollongong Coal’s Preferred Project Report Underground Expansion Project does not appear to be dated, but is noted in the index to the folder of the Court Book containing this document (Exhibit 2) as being dated September 2013. The Preferred Project Report became the subject of the Departmental Secretary’s Environmental Assessment Report dated December 2014 and the reference that same month to the PAC Panel that undertook the First Review of the current Proposal.

132. The Preferred Project Report commences with “1 Overview of Preferred Project”, followed by a comparison of the proposed project report with the original proposal, with this comparison setting out, in a table, a summary of project changes, including a number of originally proposed underground workings’ extensions that were no longer pressed but were described as “potentially to be dealt with in a future application or applications”. The overview of the Preferred Project was in the following terms:

After serious consideration of community and agency submissions, involving predominantly environmental opposition to the original proposal, Gujarat NRE Coking Coal Limited (NRE) has taken the decision to modify the scope of its mine layout for the Underground Expansion Project Part 3A Application. The elements of the surface facilities upgrade will remain the same. An outline of the preferred project follows.

*   The estimated project life has been reduced to a maximum of five years.

*   The Wonga East longwall (LW) layout has been extensively modified to minimise impacts to identified significant features while attempting to maximise the recovery of coal reserves.

*   The Wonga Mains drivage will not be extended northwards under the south arm of the Cataract Reservoir through the known geological feature (in the Bulli seam).

�   The Wonga West longwalls will be removed from this application. The Wonga West longwall layout will be revised and resubmitted as a separate application at a later date.

�   The Western Balgownie and Western Bulli seam first workings will be removed from this application.

�   There is no change proposal to the pit-top upgrade, three-million tonnes per annum (MTPA) extraction rate or peak coal transport rates as presented in the original environmental assessment (EA).

As a result of the changes, the preferred project now effectively represents Stage 2 of the development of the NRE No 1 Colliery rather than the establishment of the colliery's operations for the next 20 years as was presented by NRE in the original EA.

The preferred project, via the revised Wonga East layout, will provide NRE with an ongoing, albeit reduced, income stream to continue to establish environmental baseline data and undertake the necessary additional environmental studies required to demonstrate the practicality of the environmentally responsible extraction of the existing large volumes of economically viable ROM coal in the remaining central and western areas of the lease.

A more detailed summary comparing the original proposal presented in the EA with the current preferred project is presented in Table 1, page 14.

Consideration of Ground 2

133. It is to be observed that the first of the passages about which complaint is made is merely put as a contextual introduction to the PAC’s analysis of the specific matters that the PAC considered needed to be addressed. These are dealt with in the second and subsequent paragraphs on page (ii) and throughout page (iii) of the Executive Summary, leading to the two concluding paragraphs in this summary as being:

On the basis of all the information provided, the Commission is of the view that the social and economic benefits of the project as currently proposed are likely outweighed by the magnitude of impacts to the environment.

In reaching its conclusion, the Commission has had regard to the evidence presented to it by the proponent, the Department, the public submissions and the presentations to the public hearing and from the advice provided by the Commission’s independent experts, the IESC, OEH, and WaterNSW and the relevant State Environmental Planning Policy (Mining SEPP and Sydney Drinking Water Catchment SEPP).

134. There is nothing in those aspects of the PAC’s explanation of how it reached its conclusion that could reasonably infer that the comment concerning cumulative impacts was anything other than merely an introductory observation. There is no indication that it was a matter taken into account in reaching the conclusion as set out at the end of the Executive Summary.

135. I now turn to consideration of the second passage set out above (that found on page 3 of the body of the Report). Properly understood, it can be seen that the PAC acknowledges that Wollongong Coal can reasonably be expected to lodge a further proposal for the Wonga West area. This is clear from the company's own documents, particularly the comments in the second‑last quoted paragraph at [132] above.

136. It is implicit, it seems to me, that the words “cumulative impacts of past and future mining in the area” clearly relate to mining that has already been undertaken and mining which has been approved but which is, as yet, to be undertaken or which might arise from the current Proposal (if approved). I draw this conclusion from the contextual reading of all of the material, not only in the Second Review Report but that which was considered by the PAC as founding the information basis for its preparation of, and reaching the conclusions in, its Second Review Report.

137. It is also to be observed that, in the Conclusion to the Second Review Report, the PAC inferentially deals with the potential cumulative impacts of mining under the catchment in the sixth paragraph. It is appropriate to repeat the terms of the paragraph:

The project is located in a highly sensitive area, a drinking water catchment area. The environment is also very fragile because of past multi-seam underground mining activities. Subsidence-induced fracturing is already occurring. The critical issue is where is the tipping point and what is the cumulative impact of longwall mining?

138. This portion of the Second Review Report had, to provide context to the passage in the sixth paragraph, earlier made the following observation:

This leads to the Commission’s doubt and lack of confidence in the proponent’s ability to provide scientifically sounded and properly assessed documentations to support this application. For example, the earlier report predicted the fracturing to surface would be unlikely at the end of mining. The recently provided data appear to confirm cracking the surface has already occurred. Yet this is not confirmed in the recent report. Thus, the risk of water loss remains uncertain.

139. There is nothing in either of these passages (or anything else set out in the conclusion to the Second Review Report) that indicates that, in any fashion, the conclusion is in any way founded upon speculation about future unapplied-for mining activities. The final sentence in the sixth paragraph quoted above is expressly cast in the present tense, rather than in any future tense. It is clear that the totality of the conclusion is addressed to activities from past approvals and their impacts and such material as has been provided to the PAC Panel about the expected impacts of the current Proposal.

140. Properly viewed, there is nothing in either passage that could lead to the conclusion that they provided any foundation for the conclusion derived by the PAC and were, thus, impermissibly used contra Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24; [1986] HCA 40. Nor did the PAC have regard to or rely on any irrelevant matter in deriving its conclusion contra to Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18.

Conclusion on Ground 2

141. As a consequence, this ground also fails.

Severability

142. Although I have found that Ground 2 fails, against the possibility that I might be wrong at law in reaching this conclusion, I have also turned to consider the question of whether the “offending paragraphs” in the Second Review Report are capable of being severed from the remainder of the Second Review Report in a fashion that would do no violence to a proper understanding of the PAC’s reasoning, nor remove an element that was a necessary part of the foundations for the conclusion reached by the PAC in its discussion at 5.2 of the Second Review Report.

143. This matter can be dealt with comparatively briefly.

144. During the course of the hearing, I asked Mr Shearer what he might wish to say on the issue of severability of the paragraphs forming the basis for Ground 2 if I were to uphold Wollongong Coal’s complaint concerning them. He said (Transcript 22 September 2016, page 57, lines 26 to 32):

Your Honour asked about the question of severability. I've gone through the report in some detail and sought to show your Honour the way in which the impugned aspects feature in the report. In my submission, when one has regard to the way in which they do feature, that kind of approach would be open because when one looks at the ground 2 subject matter, it occurs at the very beginning of the report and doesn't rate a mention anywhere else in the report.

145. Although the first of the extracts from the Second Review Report relied upon by Wollongong Coal as supporting this ground of objection is the opening paragraph on the second page of the Executive Summary of the Second Review Report under the heading “Commission’s Considerations”, that which follows on from that paragraph, if that paragraph were to be treated as not part of the report, does not require the retention of that paragraph, either for purposes of logical coherence in understanding that which follows, nor as supporting material for anything to be drawn from that which is written both before and after that paragraph in the Executive Summary.

146. The second complained of paragraph, set out at [115], simply expresses (as earlier noted) the desirability of taking a cautious approach to the current Proposal in circumstances where:

1. There have been a number of approved elements in the past and where impacts of that which has already been undertaken or approved (but remains to be undertaken) or which might arise from the current Proposal (if approved) are uncertain; and

2. Wollongong Coal has itself foreshadowed further possible applications for this mine.

147. However, a fair reading of the Conclusion to the Second Review Report reveals that the passages founding the Ground 2 complaint were not relied on by the PAC to derive its conclusion. There is nothing in the commentary in 5.2 (leading to the Second Review Report’s conclusion) that touches upon, or by implication follows from, the passages discussed above. It is clear from the language used that that which was said in those passages did not constitute any element taken into account by the PAC in its reasoning process leading to the conclusions set out in 5.2 of the Second Review Report.

148. This conclusion can also be drawn with respect to the comments made by the PAC Panel that approved Modification 1 to the Preliminary Works Approval, where similar sentiments were expressed but which sentiments did not act as a barrier to that PAC Panel approving that modification application.

149. Hence, if I am wrong on Ground 2 as to the paragraphs of which complaint is made, the offending paragraphs are severable without impacting on the remainder of the substance of the Second Review Report, its conclusions or its recommendation.

Conclusion

Ground 1

150. With respect to the approach of the PAC to the Drinking Water SEPP in reaching its conclusions set out in the Second Review Report concerning the current Proposal, I am satisfied that the PAC:

1. did not regard itself as bound to apply the test contained in cl 10 of the Drinking Water SEPP and did not do so;

2. merely had regard to and considered the Drinking Water SEPP’s aims in an entirely permissible fashion in the preparation of the Second Review Report and in the reaching of the conclusions set out in 5.2 and the recommendation in 5.3 of the Second Review Report; and

3. as a consequence, there is no basis founded on Ground 1 advanced by Wollongong Coal to set aside the report.

Ground 2

151. With respect to the concerns expressed by the PAC at the incremental application approach undertaken for approvals at the Russell Vale Colliery and potentiality for cumulative impacts arising from such an incremental approach, I am satisfied that:

1. a proper reading of the Second Review Report does not disclose that the PAC had regard to any impermissible matter or rely on any irrelevant matter in commenting on such potentiality and did not take such potentiality into account in reaching its Conclusion and Recommendation;

2. as a consequence, Ground 2 advanced on behalf of Wollongong Coal fails; however,

3. if I am wrong in reaching that conclusion on Ground 2, I have also considered whether the elements in the Second Review Report said by Wollongong Coal to found Ground 2 are capable of being severed from the report in a fashion that would not impact on the reasoning process contained in the Second Review Report and the Conclusion set out in 5.2 of the report and the Recommendation in 5.3 of the report;

1. I have concluded that the material complained of did not form part of the chain of reasoning leading to the Conclusion and Recommendation and, thus, is severable and that doing so would have no impact on any other aspect of the Second Review Report, including (but not confined to) its Conclusion and Recommendation; and

2. hence, if the complaint with respect to cumulative impacts were to succeed, those elements of the Second Review Report could be deleted from the report, with the amended report otherwise going forward to the Minister pursuant to s 75J(2)(c) of the EP&A Act.

Orders

152. The orders of the Court, therefore, are:

1. The proceedings are dismissed;

2. The Applicant is to pay the Respondent’s costs as agreed or assessed; and

3. The exhibits are returned.

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Decision last updated: 02 December 2016