Australia: Alpha Coal decision brings water issues to the forefront

HG Resources and Energy Alert: 16 April 2014
Last Updated: 22 April 2014
Article by Sarah Macoun and Martin Klapper

The recent decision in Hancock Coal Pty Ltd v Kelly & Ors and Department of Environment and Heritage Protection (No. 4) [2014] QLC 12 is a positive step for future coal mining in the Galilee Basin. It is one of the first projects in the Galilee Basin to be brought before the Land Court for recommendation and, should it be approved by the Minister, has the potential to unlock the region for future coal mining.

In a decision handed down by the Land Court on 8 April 2014, Member Smith recommended that the proposed Alpha Coal Project either be rejected, or approved subject to conditions. Recommending "rejection" in the alternative was an unusual move by Member Smith and has led to some confusion as to whether the Land Court has, in fact, favoured rejection over approval.

In effect, the Land Court has recommended approval, but only if certain conditions of grant are implemented. They largely pertain to groundwater impacts, including the imposition of water monitoring obligations and make-good compensation arrangements with affected landowners. These recommendations are not binding on the Minister.

It is now up to the State Government to consider whether it will approve the Alpha Coal Project and implement the recommended conditions.

In this Alert, Partner Sarah Macoun and Associate Andre Dauwalder provide an examination of the key issues regarding groundwater in the decision.

Key points

Some key points to come out of the decision are:

  • The Land Court has jurisdiction to consider certain issues relating to water use or interference under the Water Act 2000 (Water Act) when hearing objections under the Mineral Resources Act 1989 (Qld) (MR Act) and Environment Protection Act 1994 (Qld) (EP Act).
  • The Land Court recommended that the Alpha Coal Project be approved if certain conditions around groundwater are imposed. The Minister is required to consider the recommendations, but is not bound to implement them.
  • Member Smith applied the precautionary principle with respect to the groundwater evidence. He recommended that the proponent obtain relevant water licences, following the full processes under the Water Act, prior to grant.
  • The Court addressed concerns around groundwater by imposing additional water monitoring conditions and make-good agreements with affected landowners.

Background

This decision concerned the Alpha Coal Project, a $3.4 billion thermal coal project proposed by Hancock Coal in the Galilee Basin. The project lies approximately 130km south-west of Clermont and 50km north of Alpha, within the area of the Barcaldine Regional Council. Currently, the predominant use of land in this area is pastoral, specifically the grazing of cattle.

The proposed mine would have a life of 30 years, with 40 years total allowing for construction, decommission and rehabilitation. It is part of a broader project that involves a 495 km rail line and expanded port facilities at Abbot Point, north of Bowen.

At its peak, the Alpha Coal Project will produce 30 million tonnes per annum of thermal coal, primarily for export to the Asian market.

The project was declared a "significant project" under section 26(1)(a) of the State Development and Public Works Organisation Act 1971 (Qld) (SDPWO Act) by the Coordinator-General on 24 October 2008. This meant that the project was subject to the environmental impact assessment processed under the SDPWO Act. In addition, the project was deemed a "controlled action" under section 75 of the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

As a result, the project was subject to Commonwealth assessment in relation to matters of national environmental significance, and Commonwealth approval was given for the project under the EPBC Act on 23 August 2012.

The application was brought before the Land Court in September 2013, with a decision handed down on 8 April 2014.

Objections

Several objections were lodged during the objections period by landowners, the Coast and Country Association of Queensland and the Mackay Conservation Group.

Their objections can be grouped into six broad categories – groundwater, climate change, economics, ecology, surface water and miscellaneous objections. The majority of the Land Court's reasons, including consideration of expert evidence, were focused on groundwater issues. The Land Court's recommendations were based solely on addressing the Court's concerns around groundwater.

The objectors

The objectors argued that there was too much uncertainty regarding groundwater diversion or use by the Alpha Coal Project, and the impact this would have upon surrounding areas. The objectors argued that the hydrogeological modelling performed by Hancock Coal was fundamentally flawed and insufficient, and that Hancock Coal had done nothing to remedy this. The matters raised by the objectors included:

  • Hancock Coal's groundwater modelling is fundamentally flawed and does not reliably predict the likely impacts of the Alpha Coal Project on groundwater supplies. As a result, there remained significant uncertainties surrounding the groundwater modelling for the project.
  • Hancock Coal had not provided sufficient information to demonstrate that it will not have an unacceptable impact on groundwater.
  • There was a failure to account for or model the cumulative impacts of the Alpha Coal Project and other proposed projects in the area. The Terms of Reference of the EIS stated that a cumulative model of all proposed mines in the area should be done, but Hancock Coal refused to undertake this modelling.
  • Insufficient field data had been obtained to determine the impacts of the project on the Great Artisan Basin. This included a failure to perform drilling and testing outside the mining lease area to determine if drilling deeper would provide a reliable alternative supply for affected landholders.
  • The project will have a permanent and irreversible impact on the quality and quantity of groundwater available to landholders. While there are conditions to make good affected bores, there is no requirement to remediate the affected aquifers.

The Land Court decision

The Land Court is authorised to hear objections under the MR Act and the EP Act. It was therefore necessary for Member Smith to analyse the interaction between the MR Act, EP Act and the Water Act to determine whether it was suitable for issues relating to water use or diversion under the Water Act to be considered in this hearing. His Honour acknowledged the interaction between the legislation, despite the differing objectives of each piece of legislation.

Hancock Coal argued that the legal authorisations under the MR Act and the EP Act do not of themselves impact on water – this could only occur pursuant to authorisations under the Water Act, and if Hancock Coal does not hold those authorisations, it cannot undertake the bulk of its mining operations. Such authorisation includes a water licence to take or interfere with water, granted pursuant to section 206(1) of the Water Act.

It was clear to the Court that the mining operations of Hancock Coal would require dewatering to occur during the operational phase of the mine, followed by movement of groundwater into the final void in perpetuity following the conclusion of mining. This would require Hancock Coal to obtain a water licence under the Water Act. The question before the Court became whether all water considerations fell solely under the Water Act, or whether it was possible for the Land Court to consider these matters under the provisions of the MR Act and the EP Act.

Member Smith commented that even after a mine has ceased operations, and relevant water licences have expired, the environmental impacts on water will continue. In particular, he considered whether it was permissible to consider water issues pursuant to section 269(4) of the MR Act (the matters which the Land Court may take into account when making recommendations) and the EP Act.

After a detailed consideration of the interaction between the relevant pieces of legislation, Member Smith held that it was not necessarily the legislation's intention that proponents or objectors should be forced to litigate the same issues in both MR Act and EP Act objections hearings, as well as Water Act appeals, in separate proceedings. If there were appeals to the Land Court under the Water Act, as well as objections to be heard under the MR Act and EP Act, there would be nothing preventing the Court from ordering that the appeals and objections be heard together.

Consequently, the Court held that it was appropriate to consider the impact that the authorised mining activities would have on the interference with groundwater.

Member Smith concluded that:

  • the more time that passes, and the more research that is undertaken, the better the groundwater evidence becomes;
  • the groundwater research undertaken by Hancock Coal was of a high quality, based on much data, and likely to be correct;
  • the data and level of knowledge of the groundwater impacts outside the mining lease area, based on Hancock Coal's modelling, was insufficient. The impacts may occur to the disadvantage of landholders, including the objectors;
  • it is highly unlikely that Hancock Coal's mining operations, involving open-cut mining, will impact on the Great Artesian Basin. However, if it were to undertake underground long-wall mining, there would then be a real possibility of impact on the Great Artesian Basin; and
  • the proposed digging of six deep pits will cause an interference with groundwater in perpetuity over a land area that exceeds the boundaries of the proposed mining lease area.

The Land Court's recommendations

Member Smith admitted lacking confidence (from a precautionary principle perspective) in the groundwater evidence and the knock-on effect to ecology should Hancock Coal's modelling not be correct.

He recommended that the Alpha Coal Project either be rejected, or approved subject to the following conditions:

  • that Hancock Coal obtain, prior to grant, water licences to take, use and interfere with water under section 206(1)(a) and (b) of the Water Act;
  • that the draft environmental authority be required to have three additional water monitoring points, to be located on each of the landowner objectors' properties; and
  • that there be a condition in the draft environmental authority for Hancock Coal to enter into make-good agreements with the landowner objectors, either within 12 months of grant, or before commencement of mining activities (whichever is sooner).

© HopgoodGanim Lawyers

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