Australia: Xstrata Wandoan, take two: greenhouse gas emissions, mining, and environmental approvals

Last Updated: 13 April 2012
Article by Darren Fooks and Mark Geritz

Key Points:

Queensland's Land Court has clarified the relevance of greenhouse gas emissions to mining lease and environmental authority applications, but created uncertainty about restricted land.

The recent decision of the Land Court of Queensland regarding objections to the Xstrata Wandoan coal project has clarified the Court's position on the relevance of greenhouse gas emissions to mining lease and environmental authority applications and the interaction of key legislation, however, it has also created uncertainty for future projects in respect of restricted land.

The Court also found that it had power to impose conditions on environmental authorities requiring the miner and the landowner to enter into make-good agreements relating to impacts of mining on the availability and quality of groundwater supply. This latter point will be discussed in a subsequent article on make good agreements generally but most likely means that the parties would have to proceed back to Court if agreement could not be reached.

Greenhouse gas issues

The mining lease and environmental authority was objected to by Friends of the Earth (FoE) based on the potential climate change impact of a project of this scale. The Court was required to consider the contribution of coal mining to climate change and ocean acidification through emissions in the context of its jurisdiction under the Mineral Resources Act 1989 (MRA) and Environmental Protection Act 1994 (EPA).

The basis of the FoE objections were that:

  • emissions resulting from the end-use of the project's coal in electricity production must be considered when assessing its impact under the MRA and EPA;
  • the public right and interest were prejudiced by the contribution the mine would make to climate change and ocean acidification; and
  • the mine was not consistent with the principles of ecologically sustainable development.

In rejecting those objections, the Court considered:

  • it had no jurisdiction to consider the downstream impacts of the project as the MRA confined its consideration to the physical activities associated with winning and extracting coal from the place where it occurs or from its natural state;
  • it similarly had no jurisdiction under the EPA to consider the global environmental impacts as it was restricted to consideration of the environmental impacts of prospecting, exploring and mining;
  • that even if the interpretation on jurisdiction was incorrect, and the impacts of activities such as the transportation and burning of coal could be considered, the greenhouse gas impacts were not sufficient so as to justify refusal of the project;
  • that while there was no doubt that climate change was an issue of general public interest, it is only one of the matters which the Court must weigh up in considering the project and specifically must be balanced against the economic and associated benefits of the project proceeding.

Interplay of legislative frameworks

State Development and Public Works Organisation Act 1971

The objections by FoE required the Land Court to consider whether it held jurisdiction to impose or alter the conditions made by the Coordinator General under the State Development Act. It is relevant to note that there is no ability for objections to be made to the Coordinator General's conditions.

In considering the objections, the Court determined that:

  • insofar as the EPA provides that any recommendations made by the Court cannot be inconsistent with the Coordinator General's Conditions, that should be construed to mean that any recommendations must not contradict or lack harmony with the Coordinator General's Conditions;
  • the question of inconsistency did not prevent objections being raised in respect of the subject matter of the Coordinator General's conditions.

Environment Protection and Biodiversity Conservation Act 1999

Objections were raised by affected landholders that the draft EA was issued, and the objections period had closed, before a determination had been made under the EPBC Act on whether the controlled action would be approved. The Court clarified that there was no legislative requirement for the EPBC Act determination to be received prior to the issue of the draft EA and no prejudice had been suffered by the objectors.

Restricted land

Objections were raised that the applicants had not properly identified all restricted land within the mining lease area, including stock troughs, water storages and network water pipelines providing water supply.

The Court determined that:

  • water troughs (although arguably temporary and relocatable) can fall within the MRA definition of restricted land (category B) so long as they are connected to a water supply;
  • while water pipelines are not artificial water storage for the purposes of category B restricted land, if they were removed and the restricted areas left without water supply, the evident purpose of the MRA would be defeated.

On that basis, the Court recommended that water pipelines providing water supply to the restricted land (troughs) should also be protected by a 50m carve-out (each side) from the ML surface area.

It is unclear whether President MacDonald treated the pipelines themselves as restricted land or decided they should be protected so as to achieve the purposes of the restricted land provisions. In any event, this approach appears to be inconsistent with the view that the aim of the restricted land provisions was to protect certain structures from mining, as opposed to allowing continued access to and use of such structures during mining.

It has been the view of the courts and the Minister to date that the purpose of restricted land is to protect the relevant structures for use again, but only after mining has been completed. That results in small pockets of the mining lease area being protected whilst allowing mining to be conducted virtually unimpeded. It may be that in this case it was possible to allow continued use of the restricted land without impeding substantially on Xstrata's mining operations and it was on this basis that the Land Court allowed pipelines to be protected.

It appears to us that this issue will require further clarification, perhaps by way of legislative amendment.

What it means for project proponents

The decision provides some comfort that only the project-specific environmental impacts are relevant for the purposes of the application process. It also clarifies certain aspects of the interplay with other State and Federal legislation. However the uncertainty that this decision creates in respect of carve-outs for restricted land is one which will need clarification for project proponents and landowners alike.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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