Local Planning in a Global Environment: NSW Government proposes to limit conditions of consent regulating overseas impacts

Amendments have been proposed to the Environmental Planning and Assessment Act 1979 (EP&A Act) and the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP) that will impact on how greenhouse gas (GHG) emissions are considered in assessing mining projects and the conditions of consent that may be imposed.

The Environmental Planning and Assessment Amendment (Territorial Limits) Bill 2019 proposes to:

  1. prohibit the imposition of conditions to development consent under Part 4 of the EP&A Act that relate to impacts occurring outside of Australia; and
  2. remove the requirement in the Mining SEPP to consider the “downstream emissions” of a development.

These amendments will be of great interest to the mining industry, which has been calling for certainty in the assessment of mining projects. However, the amendments to the EP&A Act will also apply more broadly to the imposition of conditions relating to any impacts of a development that will occur outside of Australia.

Background

The Bill seeks to provide certainty on the treatment of the extraterritorial impacts of a development in the planning approval process, following the determination by the Independent Planning Commission (IPC) in August of the United Wambo Open Cut Coal Mine Project (Wambo).

Consent to the expansion of the existing Wambo Coal Mine and development of a new open cut mine at the United Coal Mine was granted by the IPC subject to a condition that the applicant prepare and implement an Export Management Plan approved by the Planning Secretary setting out protocols requiring the applicant to:

use all reasonable and feasible measures to ensure that any coal extracted from the development that is to be exported from Australia, is only exported to countries that are:

(a) parties to the Paris Agreement within the United Nations Framework Convention on Climate Change; or

(b) countries that the Planning Secretary considers have policies for reducing greenhouse gas emissions that would otherwise be similar to policies that would be required of that country if it were a party to the Agreement at (a) above…”

The logistics in how such a condition would operate demonstrates the difficulties in attempting to regulate climate change within a local planning framework. In particular, it raises a number of issues concerning the appropriateness of the NSW planning system to regulate matters of international trade and how conditions purporting to regulate matters outside of NSW would be enforced.

Concerns have also been raised by the mining industry of uncertainty surrounding development applications determined by the IPC following the landmark decision of Justice Preston, Chief Judge of the NSW Land and Environment Court, in February in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 (Rocky Hill), which refused an application for an open cut coal mine due to the impacts the mine would have on climate change, as well as the local community (see our earlier blog on this decision).

The IPC determination in Wambo came only weeks after a determination by the IPC to partially refuse the Dartbrook Coal Mine extension for reasons that included that GHG emissions had not been adequately assessed.

It was then followed shortly after by the September determination of the Bylong Coal Project, in which the IPC refused consent for a new open cut and underground coal mine (Bylong). The IPC’s reasons for its decision stated that scope 1, 2 and 3 GHG emissions had not been minimised to the greatest extent practicable (as required under cl14(1)(c) of the Mining SEPP) and, relying upon Rocky Hill, that these emissions must be weighted up against the environmental impacts of the proposed development.


Scope 1, 2 and 3 emissions 

      • Scope 1 – These are emissions released as a direct result of an activity. For example, in the context of a coal mine, this would include fugitive emissions from the mining operations.
      • Scope 2 – These are indirect emissions, released as a result of energy consumption. For example, the scope 1 emissions from burning coal to produce electricity will be scope 2 emissions for the coal mine using that electricity.
      • Scope 3 – These are indirect emissions that are not scope 2 emissions. For example, ‘downstream’ emissions caused by the transportation and use by third parties of the coal that has been mined.

The measures proposed to minimise GHG emissions from the project did not relate to scope 3 emissions, the applicant submitting that the scope 3 emissions would occur in South Korea, which is a party to the Paris Agreement. The IPC did not express a view on whether scope 3 emissions beyond NSW could be taken into consideration, as it considered that all emissions would adversely impact on the NSW environment.

A further decision by the IPC in October, granting consent to the Rix Creek Continuation of Mining Project, then accepted as adequate the applicant’s plans to minimise scope 1 and 2 emissions within Australia which were within the applicant’s control. The IPC noted that coal produced from the mine not sold domestically would be exported to countries signatory to the Paris Agreement or that had otherwise developed GHG reduction targets, which should lead to minimised scope 3 emissions to the greatest extent practicable.

On 22 October 2019, the NSW Government announced a package of measures that would prevent the regulation of overseas scope 3 GHG emissions and, on one view of it, restore NSW laws (or at least practice) to that which existed prior to Rocky Hill. In addition to the amendments proposed in the Bill, the package includes:

  • developing a NSW Government policy and guidelines on GHG emissions; and
  • continuing the review of the IPC by the Productivity Commissioner (announced in October and due to be completed by mid-December 2019).

Amendments proposed to the EP&A Act

The Bill proposes to insert the following new section into the EP&A Act:

4.17A             Prohibited conditions

(1)           A condition of a development consent described in this section has no effect despite anything to the contrary in this Act.

(2)    A condition imposed for the purpose of achieving outcomes or objectives

relating to—

(a) the impacts occurring outside Australia or an external Territory as a

result of the development, or

(b) the impacts occurring in the State as a result of any development carried out outside Australia or an external Territory.

Subsection 4.17A(2)(a) aims to prohibit the imposition of conditions of consent for the purpose of achieving outcomes relating to impacts of a development that will occur outside of Australia. This seeks to have the result that conditions such as the one imposed in Wambo, being for the purpose of managing and minimising scope 3 emissions from the development occurring outside of Australia, will have no effect.

The second reading speech for the Bill refers to such conditions as:

“highlight[ing] a technical and jurisdictional issue with the Environmental Planning and Assessment Act 1979, which does not deal expressly with the extraterritorial impacts of development—that is, impacts of development outside the territorial limits of Australia and therefore outside the territorial capacity of the New South Wales planning system to effectively be involved with the enforcement of such conditions.”

It is unclear whether s4.17A(2)(b) was intended to address the comments made by the IPC in Bylong, that it was unnecessary to consider whether scope 3 emissions beyond NSW could be taken into consideration, as the emissions would adversely impact on the NSW environment. However, this refers to impacts occurring within NSW as a result of “any development carried out outside” of Australia. It is conceivable that not all scope 3 emissions from a NSW development that are occurring outside of Australia would result from a ‘development’ (as defined in s1.5 of the EP&A Act) that is carried out outside of Australia, for example, scope 3 emissions generated in the transportation of coal.

The amendment also uses the words “for the purpose of”. These words raise a possible debate about whether the purpose needs to be the sole purpose, dominant purpose, substantial purpose or merely a purpose. We expect that the court would take the view that the purpose must be a substantial one, in the sense that but for the purpose the condition would not have been imposed.

Amendments proposed to the Mining SEPP

The Bill proposes to amend cl14(2) of the Mining SEPP to omit the words ‘(including downstream emissions)’ as follows:

“(2)  Without limiting subclause (1), in determining a development application for development for the purposes of mining, petroleum production or extractive industry, the consent authority must consider an assessment of the greenhouse gas emissions (including downstream emissions) of the development, and must do so having regard to any applicable State or national policies, programs or guidelines concerning greenhouse gas emissions.”

The effect of this amendment is to remove the express requirement for a consent authority to consider an assessment of the downstream GHG emissions in determining a development application. However, the amended cl14(2) would still require a consent authority to consider an assessment of the GHG emissions of the development. As ‘greenhouse gas emissions’ is not defined in the Act, it is open to interpretation whether this could still include scope 1, 2 and 3 emissions (either released locally or overseas). The development of the NSW Government policy and guidelines on GHG emissions may provide further guidance on this.

Clause 14(1) of the Mining SEPP remains unchanged by the amendments. This requires the consent authority to consider whether consent should be granted for mining subject to conditions aimed at ensuring that GHG emissions (which could include scope 3 emissions) are minimised to the greatest extent possible. However, the conditions that may be imposed will be limited by the new s4.17A of the EP&A Act to only those conditions addressing the domestic impacts of the development.

Implications for future development applications

The Bill aims to provide certainty about how extraterritorial impacts can be dealt with in NSW planning approvals. The new s4.17A in the EP&A Act achieves this in clearly providing that conditions of consent regulating the overseas impact of a development, such as the condition imposed in Wambo, will be of no effect. However, there is some uncertainty in the application of s4.17(2)(b) to conditions regulating local impacts caused by overseas scope 3 emissions that may not amount to ‘development’.

The proposed s4.17A is not limited in its application to downstream GHG emissions. Potential broader applications of this section could include the prohibition of conditions relating to the management of the waste stream of a development which involves the exportation of waste overseas or the disposal of waste products into the ocean in circumstances where it could drift beyond Australia’s territorial waters.

In relation to mining, while there will no longer be any express requirement for a consent authority to consider the downstream emissions of a development under cl14(2) of the Mining SEPP, it is possible that scope 3 emissions (either released locally or overseas) may still be taken into consideration as part of the broader consideration of ‘greenhouse gas emissions’. In addition, the amendments do the disturb the findings in Rocky Hill that consideration of the environmental impacts of the development and the public interest (which includes the principles of ecologically sustainable development) involve the consideration of scope 1, 2 and 3 emissions (at [513]).

The proposed amendments are not retrospective. If passed, the amendments will only apply to future determinations under Part 4 of the EP&A Act.

The Bill is currently awaiting debate in the NSW Legislative Assembly.

This article is by Maddocks associate Samantha Murphy

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s