Australia: NSW Independent Planning Commission refuses development consent for Bylong Valley coal mine

A recent decision by the NSW Independent Planning Commission (IPC), in which it refused development consent for the Bylong Valley Coal Mine (Project), highlights the challenges involved with having new mines approved in areas of particular scenic, cultural and heritage significance.

The refusal came on 18 September 2019, despite the NSW Department of Planning, Industry and Environment (DPIE) recommending approval and the proponent having revised its mine plan to address concerns raised in a Review Report prepared by the IPC's predecessor, the Planning Assessment Commission (PAC).

The IPC cited long-lasting environmental, agricultural and heritage impacts as the main reasons for refusal. In a statement that referred extensively to the Land and Environment Court's judgment in Gloucester Resources Ltd v Minister for Planning [2019] NSWLEC 7 (Rocky Hill), the IPC stated that the proponent had not done enough to minimise greenhouse gas (GHG) emissions associated with the Project.

The Project

The Korea Electric Power Corporation (KEPCO) sought approval for an open cut and underground coal mine producing 124 million tonnes of run-of-mine coal over 25 years for the thermal coal export market.

The mine was to be located at a greenfield site in the Bylong Valley, approximately 55 km north east of Mudgee, New South Wales. There were no other coal mines within 20 km of the proposal site, and the Valley has a long history of agricultural land use. The Project site included land mapped as Biophysical Strategic Agricultural Land (BSAL) and equine Critical Industry Cluster (CIC) land under the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP).

Estimates of employment were up to 645 people during peak construction and up to 450 during peak operation. The Project was expected to generate $290 million in royalties for New South Wales.

Background of the case

KEPCO submitted its request for Director-General's Requirements in October 2014, with a detailed Environmental Impact Statement (EIS) submitted in September 2015.

Following public exhibition of the EIS, the PAC was requested by the Minister for Planning to undertake a Project review. The PAC published its Review Report in July 2017. Both the PAC Review Report and a subsequent letter from the DPIE in May 2018 raised a number of concerns with the Project – they considered that revisions were required, particularly with respect to impacts to the heritage values of the Tarwyn Park property.

In response, KEPCO submitted a Revised Mine Plan to the DPIE in 2018. This reduced the surface disturbance area by approximately 100 ha, including by reducing impacts on Tarwyn Park. It also proposed reducing both direct disturbance on 113 ha of native vegetation, and direct disturbance on 22.7 ha of BSAL and 112.8 ha of equine CIC.

In October 2018, the DPIE recommended approval of the Project subject to 'stringent conditions', in line with the Revised Mine Plan. The DPIE's final assessment report concluded:

"Based on its assessment, the Department believes its revised recommended conditions of consent provide a comprehensive, strict and precautionary approach to ensuring the project can comply with relevant performance measures and standards, and that the predicted residual impacts can be effectively minimised, mitigated and / or compensated. Consequently the Department considers that the benefits of the project outweigh the costs, and that the project is approvable subject to stringent conditions."

Reasons for refusal

The IPC refused development consent for the Project for a number of reasons, including:

  • incompatibility with land use objectives;
  • unacceptable groundwater impacts;
  • impacts to BSAL;
  • long-term impacts on aesthetic, scenic, heritage and natural values of the current landscape;
  • unacceptable indirect impacts on the heritage values of the Tarwyn Park property and the broader landscape values of the Bylong Valley;
  • a lack of evidence regarding Aboriginal heritage impacts;
  • a failure to minimise scope 1, 2 and 3 GHG emissions to the 'greatest extent practicable', having regard to clause 14(1)(c) of the Mining SEPP;
  • a failure to propose any measures to offset the impacts of GHG emissions;
  • the fact that, when considered cumulatively along with the climate change impacts due to GHG emissions, the environmental, social and economic impacts of the Project justified refusal;
  • the fact that the Project would result in the inequitable distribution of costs and benefits over time (in that the economic benefits would accrue to current generations, and the environmental, agricultural and heritage costs would be borne by future generations);
  • a 'reasonable level of uncertainty' in the proponent's estimation of economic benefits; and
  • inconsistency with Environmental Planning and Assessment Act 1979 objectives relating to social and economic welfare of the community, ecologically sustainable development (ESD) and heritage management.

The IPC concluded that the Project would not be in the public interest as it was contrary to the principles of ESD, particularly the principle of intergenerational equity.1

Influence of Rocky Hill

It appears that the IPC's assessment of the impacts of GHG emissions was heavily influenced by the reasoning of Preston CJ in Rocky Hill, as the judgment was quoted extensively throughout the IPC's statement of reasons.

Although the IPC did not make a quantitative comparison between the Project's proposed emissions and those of the Rocky Hill Mine, it is interesting to note that the Project's estimated cumulative Scope 1, 2 and 3 emissions (200,808,700 tonnes of CO2-e over the life of the mine), were approximately 5.3 times that of Rocky Hill (estimated at 38,091,747 tonnes of CO2-e).

In its statement of reasons, the IPC acknowledged that the Project's contribution to Australian and global GHG emissions would be 'very small' and have 'limited impact'. It was also acknowledged that there was no:

  • agreed mechanism for reaching the Paris Agreement and NSW Climate Change Policy Framework targets; and
  • statutory or other prohibition on new mines.

However, the IPC disagreed with statements made by DPIE, to the effect that the NSW Climate Change Policy Framework applied only to government projects. The IPC also noted that NSW is currently in a transition away from the use of fossil fuels as an energy source.

Applying the reasoning of Preston CJ in Rocky Hill, the IPC considered the cumulative environmental impacts of the Project were to be considered in weighting the acceptability of GHG emissions associated with the mine, with preference to be given to projects of lower social, environmental and economic impacts.

Mitigation measures were proposed to reduce Scope 1 and 2 emissions but not Scope 3 emissions. The IPC considered this was not conducive to the imposition of conditions ensuring that GHG emissions were minimised to the 'greatest extent practicable', as required under clause 14(1)(c) of the Mining SEPP.

As no GHG offset measures were proposed as part of the Project, the IPC did not have regard to offsets generally, in line with Preston CJ's approach in Rocky Hill.

The IPC expressly rejected the DPIE's statements regarding market substitution, favouring Preston CJ's reasoning. Concluding that it could not be satisfied that market substitution would occur if the Project was not approved, the IPC said it did not have any evidence of this. The fact that other projects might be approved if the Project was refused did not, in any event, justify approval on its own.

Finally, the IPC concluded that although small, there was a contribution to global GHG emissions that would need to be factored into the overall environmental assessment. This was cited as one of the reasons for refusal of the Project.

Implications

Like Rocky Hill (as a merit appeal in Class 1 of the Land and Environment Court's jurisdiction), the IPC's decision will not set a precedent for other projects – at least not in a strict legal sense.

The Project is the second in which GHG emissions have been cited as a factor in the rejection by the IPC of a proposed coal mining project in NSW. The IPC appears to have whole-heartedly adopted the approach taken by Preston CJ in Rocky Hill. In particular, the IPC has asserted its independence in not just imposing additional conditions,2 but in this case, by refusing consent for the Project, contrary to the DPIE's recommendation.

Absent reform of major project decision-making (and both the Deputy Premier John Barilaro MP and the Minister for Planning and Public Spaces Rob Stokes MP have hinted at this), the IPC is likely to continue down this track. This brings with it further uncertainty for proponents of new energy and resources projects.

To reiterate suggestions made in earlier articles, it is important that proponents fulsomely address Scope 3 emissions in their environmental assessments, including by proposing measures for Scope 3 emissions to be mitigated and/or offset. The IPC's decision also suggests proponents relying on the market substitution argument need to provide compelling evidence of this proposition.

This is especially the case where the proposed project has other adverse environmental, social and economic impacts. Both the Rocky Hill decision and the IPC's refusal of the Project highlight the challenges involved with having new mines approved in areas of particular scenic, cultural and heritage significance.

It remains to be seen whether KEPCO will appeal the IPC's decision.

Footnotes

1 The principle that "the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations" as defined in the Protection of the Environment Administration Act 1991.

2 On 28 August 2019, the IPC approved the United Wambo Open Cut Coal Mine subject to conditions requiring the applicant to use all reasonable and feasible measures to ensure that extracted coal is only exported to countries that are parties to the Paris Agreement or have equivalent policies for reducing GHG emissions. These 'novel' conditions were imposed notwithstanding a submission made by the Planning Secretary in which the Planning Secretary stated (amongst other things) that "it is not this State Government's policy that greenhouse gas policies, or planning conditions, should seek to regulate, directly or indirectly, matters of international trade."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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