Is this the beginning of the end for thermal coal mine approvals in Australia?

Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21

In November 2022, the Queensland Land Court (QLC) recommended that Waratah Coal’s application for a mining lease[1] and an environmental authority[2] in relation to the proposed Galilee Basin thermal coal mining project be refused on 3 grounds: the project’s likely impact on the nearby Bimblebox Nature Refuge, its likely contribution to climate change, and the impact it will have on human rights.

Though the immediate effect of this decision is limited to the Galilee project, it has been heralded as “a new era for climate change cases in Australia”[3] and may influence future governmental and judicial consideration of mining projects.

Implications

• President Kingham in the QLC made clear in her decision that “this case is not about whether any new coal mines should be approved. It is about whether this coal mine should be approved on its merits.”[4]
• However, it is likely that the conclusions drawn by the QLC in relation to the market substitution argument, scope 3 emissions, and the link between climate change and human rights, signify a paradigm shift in approaches taken by judicial and governmental decision-makers regarding climate change.  Miners should therefore be aware that scope 3 emissions may no longer be considered irrelevant considerations in relation to project approvals, and that the substitution defence carries less weight than it previously did due to what the QLC characterised as a declining global demand for thermal coal. The application of the Human Rights Act 2019 (Qld) (HRA) to QLC administrative decisions is also an important step that, while yet to be tested by the Supreme Court, appears to be consistent with the HRA and the Land Court Act 2000 (Qld).
• Factors specific to Waratah Coal that should be kept in mind by miners seeking future approvals include the lack of a credible offset plan, the sheer volume of coal proposed to be mined (40 million tonnes per annum), and the impact of the mine on a nature reserve.
• Another step taken by the QLC in this case was its increased reliance on both expert evidence from climate scientists and ecologists, and on-Country evidence from First Nations people in accordance with traditional protocols. First Nations Australians testified to the loss of cultural rights that would result from climate change, specifically the likely damage to the Great Barrier Reef and other areas which hold cultural significance.
• It is also important to note that, while consistency is desirable in administrative decision-making, the QLC’s decision in this case is not binding precedent, and future cases need not be decided in accordance with it. As Kingham P said, each case is to be decided on its merits, and the more an applicant for a mining lease or environmental authority can do to show that it has taken proactive steps to limit emissions, ecological degradation, and human rights impacts, the more likely it is to avoid an adverse ruling.
• Mining companies should be aware that arguments which previously succeeded have been rejected, so they should be prepared for more intense scrutiny of the environmental and human rights impacts of their proposed projects.

Background

The Galilee project (the Project), consisting of 2 open cut operations and four underground longwall mining operations, proposes to extract up to 40 million tonnes of coal from the Galilee Basin annually over the next 25 years. It is estimated to provide between $2.5 billion to $4 billion in economic benefits, but produce 1.58 billion tonnes of carbon emissions, including “scope 3” emissions: that is, indirect emissions generated as a consequence of the project by, for example, burning of the coal overseas by foreign power stations.

While the Project received Commonwealth approval in 2013[5], it still required a state government mining lease and environmental authority before it could go ahead. In 2020, its applications for a mining lease and environmental authority were advertised, and objections were sought.

Youth Verdict and the Bimblebox Alliance lodged identical objections to these applications under sections 260-261 of the Mineral Resources Act 1989 (Qld) (MRA) and sections 181-193 of the Environmental Protection Act 1994 (Qld) (EPA) (as at 2013).

The objections were made partially on human rights grounds, since the newly introduced Human Rights Act 2019 (Qld) (HRA) requires government decision-makers to consider human rights impacts of administrative decisions.[6] Other grounds of the objections included the contribution that the direct and indirect greenhouse gas emissions caused by the Project would have on climate change, and that this would prevent Australia from fulfilling its obligations under the Paris Agreement.

Under the MRA and EPA, these objections were to be heard by the Queensland Land Court (QLC), who would then make a recommendation under section 265 of the MRA to grant, or not grant, a mining lease, and section 190 of the EPA to grant, or not grant, an environmental authority.

In 2020, Waratah Coal applied unsuccessfully to have the objections struck out. The objections were later heard in the QLC by President Kingham during 2022.

In November 2022, President Kingham handed down a decision in which she recommended the applications for a mining lease and environmental authority be rejected.

The nature of President Kingham’s decision is merely recommendatory.  Under section 269 of the MRA, the Minister for Resources makes the ultimate decision on the granting of a mining lease and is not bound by the QLC’s recommendation.  Under section 194 of the EPA the Department of Environment and Science makes the ultimate decision on the environmental authority.

Though both decision-makers have discretion, they tend to follow the recommendation of the QLC and their decisions may be subject to judicial review if they fail to give adequate weight to the QLC’s recommendation.

President Kingham’s decision

Kingham P’s decision to recommend the rejection of Waratah Coal’s mining lease and environmental authority applications was made on 3 grounds, which are briefly summarised below.

The Project poses an unacceptable risk to the Bimblebox Nature Refuge

The underground mining activities proposed by Waratah Coal was found to cause subsidence across the surface of the land above the mine, resulting in “a ridge and swale landscape and extensive surface cracking” which will impact the ecological values to an uncertain but significant extent.[7] Expert evidence heard by the QLC suggested that the Project’s mining activities would result in the likely loss of the Refuge and possibly irreversible damage to the ecological values of the area.

In forming this conclusion, Kingham P noted that Waratah Coal put forward no credible offset plan. In summary, the uncertain degree of damage imposed upon the Refuge, and the failure of Waratah Coal to plan to appropriately mitigate or offset that damage, meant that the Project posed an unacceptable risk to the area and should be rejected.

The Project significantly contributes to climate change via scope 3 emissions

Kingham P accepted expert evidence on the nature of climate change, including evidence linking greenhouse gas emissions caused by human action to the rise in global temperatures. Her Honour discussed the Paris Agreement, to which Australia has committed. The Paris Agreement strives to keep long-term global temperatures below 2^oC above the pre-industrial level by 2100. Kingham P accepted evidence that the release of 1.58 billion tonnes of carbon dioxide by the combustion of coal mined from the Project “is a meaningful contribution to the remaining carbon budget to meet the long-term temperature goal of the Paris Agreement”.[8]

A major step taken by the QLC in this case was its acceptance of evidence that scope 3 emissions related to the Project could be causatively linked to the Project, and therefore  taken into account when determining whether or not to grant the mining lease and environmental authority applications. Waratah Coal argued, as many miners have successfully argued in the past, that greenhouse gas emissions caused by the combustion of mined Australian coal that has been exported overseas to foreign power stations should not be deemed the responsibility of the Australian miner.  Kingham P departed from the QLC’s previous thinking on this issue, and instead held that granting permission to mine the coal cannot logically be separated from the coal being used to generate electricity.  As a result Kingham P concluded that she can take the emissions from burning the coal in a foreign power station into account in applying the principles of ecologically sustainable development (for the environmental authority application), and in considering whether the applications are in the public interest (for both the mining lease application and the environmental authority application).[9]

The QLC’s decision to link scope 3 emissions to mining activities may have a significant impact on future applications for mining approvals, which will be discussed below.

In considering this ground, the QLC weighed up the ecological harms caused by the Project against its social and economic benefits. However, Kingham P doubted the $2.5 billion estimate of economic benefits argued by Waratah Coal, citing the uncertain future of the thermal coal market, as modern economies shift towards renewable energy sources.  Her Honour also considered the risk that the mine will not be viable throughout its projected life, preventing all its potential economic benefits from being realised.  Therefore, the uncertain economic benefits were found not to outweigh the ecological and social harms caused by the Project.[10]

Another significant step taken by Kingham P was the rejection of the “substitution defence”.[11] That is, Waratah Coal argued that, due to the global demand for coal, were Waratah Coal not to supply it from its Galilee project, some other miner would supply it from another mine. Therefore, it was argued, the net ecological impact of the Project should be considered zero. This defence was accepted in Adani Mining Pty Ltd v Land Services of Coast and Country Inc [2015] QLC 48, where MacDonald P held “if a particular entity does not mine or sell coal, the demand driven nature of the coal industry means that someone else in the world will.”

Kingham P rejected this argument, again citing the uncertain future demand for thermal coal, and the causative link between the Project and the future greenhouse gas emissions. This reflects the change in approach to the substitution defence that Australian and international courts have taken in recent years.[12] Kingham P found that there was a causative link between the Project and climate change.[13]

The Project limits human rights

Following the enactment of the HRA, administrative decision makers (including the QLC in exercising its recommendatory jurisdiction under the MRA and the EPA) are bound to properly consider the human rights that might be impacted by the decision and, if any human rights are likely to be impacted, consider whether that impact can be demonstrably justified.[14]

The objections brought by Youth Verdict and the Bimblebox Alliance argued that approving the Project would unjustifiably impact the following human rights as prescribed in the HRA:

• The right to life: s 16
• The right to property: s 24
• Cultural rights of Aboriginal peoples and Torres Strait Islander peoples: s 28
• The right to privacy: s 25
• The rights of the child: s 26(2)
• The right to freedom from discrimination: s 15(3)

The objectors argued that if the Project’s contribution to climate change can be proved, then climate change would limit each of those rights due to, for example, its health impacts such as frequent and severe weather events, and the specific susceptibility of Queensland’s coastal towns to sea level rise.

Previous judicial consideration of this question had refused to recognise a link between climate change and human rights.  For example, the case of Minister for the Environment v Sharma [2022] FCAFC 35, which overturned a Federal Court decision which found a duty of care was owed by the State to children due to the threat of climate change.  Kingham P distinguished Sharma, finding that “administrative and civil proceedings are fundamentally distinct in purpose, process and effect.[15]

Importantly, Kingham P accepted the argument that climate change and human rights were intrinsically linked, finding that “the evidence presents a clear and pressing threat to the right to life that is now experienced by people in Queensland and will only be exacerbated by increasing emissions, to which the Project would make a material contribution.”[16] This connection has been identified in academic commentary for a number of years,[17] but had not yet been accepted by an Australian court. This recognition aligns Australia with the broader global movement which considers the particular impact that climate change is to have on children, who are disproportionately affected.[18]

While Waratah Coal argued that these risks were outweighed by the economic benefits of the Project (which therefore justify the limits to rights), as was held in Wandoan Mine Case [2012] QLC 13, Kingham P rejected this argument and held that, since causation had been made out, “the importance of preserving the right, given the nature and extent of the limitation, weighs more heavily in the balance than the economic benefits of the mine”.[19]

Next steps

Since the QLC, in exercising its recommendatory jurisdiction under sections 269 of the MRA and 185 of the EPA, is performing an administrative function[20], its recommendation is subject to judicial review under the Judicial Review Act 1991 (Qld).  Additionally, QLC decisions can be appealed to the Land Appeal Court.

Waratah Coal announced in December 2022 that it was seeking judicial review of Kingham P’s decision in the Supreme Court.  However, on 10 February 2023, it was announced that this application was being discontinued.[21]

This means that the final decision makers – the Resources Minister in relation to the mining lease, and the Department of Environment and Science in relation to the environmental authority – were left to hand down their decisions to grant or reject approvals of the Project.

On 3 April 2023, the Department of Environment and Science refused the environmental authority application for the Project, following upon the Land Court’s recommendation.[22]

There are no review or appeal rights under Queensland’s Environmental Protection Act for the Department’s decision, however Waratah Coal may apply to the Supreme Court for judicial review.[23] Possible grounds for review could include the decision-maker’s failure to take into account a relevant consideration, if Waratah Coal wishes to argue that economic benefits of the Project were not adequately considered.[24]  The Resources Minister is still yet to release a decision in relation to the mining lease.

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