Queensland Land Court Considers Scope 3 Emissions and Human Rights Impacts

Dec 2022 | Energy & Resources Planning & Environment

Figure 1 Image taken from Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, page 48, [172], Figure 3.1, depicting, ‘Bimblebox Reserve on right; cleared grazing land on left’.

Figure 1 Image taken from Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, page 48, [172], Figure 3.1, depicting, ‘Bimblebox Reserve on right; cleared grazing land on left’.
 

The recent Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21 objections hearing decision, handed down at the end of last month, has captivated environmental organisations and lawyers, mining companies and members of the general public, with many grappling to understand and prepare for the implications and consequences of this decision. This case is of particular interest because, in coming to its recommendation, the Land Court considered climate change and human rights grounds.

Waratah Coal Pty Ltd (Waratah) applied for a mining lease (ML) under the Mineral Resource Act 1989 (Qld) (MRA) and an environmental authority (EA) under the Environmental Protection Act 1994 (Qld) (EP Act) in relation to a proposed thermal coal mine in the Galilee Basin. After the public notification, the ML and EA applications were referred to the Land Court for consideration.1 The Land Court’s recommendation is not final and it is now up to the Minister under the MRA and the Chief Executive under the EP Act to make a final decision on the applications. The role of the Land Court during a referral is to make a recommendation about whether each application should be: approved; refused in whole or in part; or approved subject to conditions considered appropriate by the Court.2  In the words of President Kingham: ‘[t]his 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.’3

In summary, the landmark decision:

  1. Considered scope 3 emissions on the basis that granting the right to mine could not be ‘logically separated'4 from burning the coal to make electricity.
  2. Considered human rights and held the mine limited human rights to an extent that was not justifiable.
  3. Held that the economic justification raised by Waratah (benefits of $2.5 billion) did not stand up against the costs of climate change and in any case, were overestimated and uncertain.
  4. Found the impacts on the Bimblebox Nature Refuge (Bimblebox) were significant in light of the above considerations and the fact it had a very high ecological condition. 

In this article, we present not only the major findings of the case, but also provide an assessment of the areas likely to be impacted and how we expect further implications to materialise moving forward.

For a case summary, see Carter Newell’s 12 Cases of Christmas 2022, and refer to the second day of Christmas.

Climate change

As part of its decision, the Land Court decided  it could consider the emissions caused by the combustion of thermal coal which would be mined from the coal mine (scope 3 emissions).

EA application and the consideration of scope 3 emissions

President Kingham found that, although scope 1, 2 or 3 emissions are not explicitly recognised in the EP Act (or the MRA), the interpretation of section 223(c) of the EP Act should be guided by the object of the Act which does not prevent the Court from considering scope 3 emissions when making a recommendation regarding the EA application.5 This would appear to be antecedent to other Queensland precedent, however, President Kingham considered  the Land Court’s reasoning in Xstrata Coal Queensland v Friends of Earth & Ors6 (and adopted in Hancock Coal v Kelly (No 4)7) was flawed (given the reasoning could also apply to scope 2 emissions which were considered) and the recommendation was judicially reviewed in the Supreme Court and appealed to the Court of Appeal in Coast and Country Association of Queensland v Smith & Ors.8 President Kingham rejected Waratah’s argument that the Court of Appeal definitively decided this point.9

ML application and rejection of the market substitution argument

For the ML application, Waratah accepted  scope 3 emissions were a relevant public interest consideration, but considered  these emissions lacked relevance, because, among other reasons, whether the mine proceeds will not make a material difference to climate change. This argument is called the market substitution argument, aptly phrased by President Kingham as ‘perfect substitution’. President Kingham considered that whether there will be perfect substitution must be assessed on evidence. In this case, President Kingham held there was not enough evidence to allow a finding on whether perfect substitution would occur, ‘except that perfect substitution is not likely but some substitution is possible’.10 However, President Kingham stated , ‘[i]f the Project coal’s competition is high rank coal, it appears likely that any substitution would be by coal of similar quality’.11

When considering whether to consider scope 3 emissions for the ML application, President Kingham concluded that, when looking at current federal and Queensland policy, there is an ongoing role for Australia as an exporter of thermal coal and that policy supports a consideration of scope 3 emissions.

Human rights

The assessment of human rights was considered part of the process of determining, ‘where the public interest lies in relation to the applications’.12 The conclusions reached in relation to human rights contributed to the balancing exercise in deciding whether to recommend the applications be approved or refused, adding another dimension without changing the nature of the decision.

President Kingham found that the following human rights were unjustifiably limited:

  1. In relation to the owners of the Bimblebox:
    1. The right to property;13
    2. The right to privacy and home;14 and
  2. In relation to First Nations people in Queensland:
    1. Cultural rights;15 and
  3. In relation to children in Queensland:
    1. The right to property;16 and
    2. The right to privacy and home.17

What about Sharma?

This decision appears to be at odds with the recent decision of the Federal Court in Minister for the Environment (Commonwealth) v Anjali Sharma & Ors (by their litigation representative Sister Marie Brigid Arthur18 (Sharma) (see our article on this case here). President Kingham distinguished the approach to assessing human rights limitations in Sharma because it was a civil proceeding and, ‘administrative and civil proceedings are fundamentally distinct in purpose, process and effect’.19 President Kingham reasoned that the Court (in Waratah) was required to make a recommendation about future consequences rather than attributing fault after the fact. In other words, the court had to consider the human rights implications of its decision and not whether the decision was in breach of the Human Rights Act 2019 (Qld).

Causation

Waratah argued that the limit to human rights and the relationship between approving the mine and climate change was too remote, indirect and not specific to this mine. To demonstrate this, Waratah used the chains in a link metaphor to explain how  the act and the consequence were too remote. President Kingham acknowledged the frequency with which this metaphor is used, however found it unhelpful in this case, preferring a metaphor of a ‘net’20 where ‘the radiation from each point extends infinitely’.21

Ultimately, President Kingham accepted  there was a logical and rational connection between the approval of the ML and EA applications which was sufficient to constitute a limit to human rights and, critically, that this limit was not ‘demonstrably justified’.22

Judicial review

There has been no word about whether Waratah will appeal to have the decision judicially reviewed or appealed to the Queensland Land Court of Appeal. The timeframe for judicial review is 28 days after the decision is made23 and the timeframe for appeal to the Land Appeal Court is 42 days after the orders were made.24 As recognised by President Kingham herself in the judgment, if her decision about human rights is judicially reviewed, the Supreme Court of Queensland will be required to decide if the recommendations are unlawful because either: she did not properly consider human rights; or they are not compatible with human rights.25

What does this mean for other ‘in the public interest’ considerations?

The focus on assessing a broad range of considerations when determining if a project is, ‘in the public interest’ indicates that other legislation may also be impacted by this finding.

President Kingham identified that when ‘in the public interest’ is used in statute, the meaning of these words can be supported, and the context derived from the subject, scope and purpose of the legislation within which the requirement sits. For the EP Act, that context is ecologically sustainable development. For the MRA, the principal objectives include encouraging: exploration and prospecting; environmental responsibility when exploring, mining and prospecting; and responsible land care management when exploring, mining and prospecting.

President Kingham considered that human rights were relevant for both applications.

Other legislation in Queensland that requires consideration of matters ‘in the public interest’ include:

  1. Planning Regulation 2017 (Qld) when a referral agency is making a decision on whether there is an overriding need, in the public interest for the development to be carried out;26
  2. Water Act 2000 (Qld) when deciding to refuse or grant a water licence application or a water permit application;27
  3. Mineral and Energy Resources (Common Provisions) Regulation 2016 (Qld) when deciding an application for registration of prescribed dealing that is an assessable transfer;28
  4. Petroleum and Gas (Production and Safety) Act 2004 (Qld) when among other things: deciding whether to approve a proposed development;29 deciding to approve a proposed coordination arrangement;30 deciding a petroleum lease application;31 deciding a dispute after a Land Court recommendation;32 making a resource management decision;33 and deciding to grant a pipeline licence;34
  5. Geothermal Energy Act 2010 (Qld) which requires the Minister to consider the public interest in making a decision under the Act about an application or approval by the Minister;35
  6. Economic Development Act 2012 (Qld) when deciding if the notification requirements apply to a proposed instrument for planning instrument change;36 and
  7. Local Government Act 2009 (Qld) where, ‘transparent and effective processes, and decision-making the public interest’ is a local government principle underpinning the Act37 and the wording is used throughout the legislation.

The importance of tangible offsets

Offsets are used if the impacts of a project cannot be avoided or minimised to an appropriate level. As President Kingham identified, an effective offset does not just achieve no net loss; it delivers a benefit. The offsets proposed by Waratah were criticised by the experts as lacking, ‘robust and reliable information and inappropriately and incorrectly estimat[ing] the benefits’.38 Waratah did not invoke evidence to qualify this joint opinion and President Kingham felt that Waratah’s offsets proposal was ‘little more than a theoretical possibility’.

President Kingham was left, ‘in a state of considerable uncertainty about the impacts of the mine on Bimblebox’39 and the lack of a credible offsets plan did little to curb this concern. Although President Kingham questioned whether an appropriate offset could be established in the circumstances, this decision still highlights that offsets are a valuable mechanism to address impacts associated with a project. However, where offsets are necessary, they need to be clearly articulated and presented to be useful.40

Conclusion

The key takeaways from President Kingham’s recommendatory decision are:

  1. Scope 3 emissions were considered and contributed to the carbon budget of Waratah’s mine.
  2. Human rights were considered when assessing the ML and EA applications as matters ‘in the public interest’.
  3. The economic benefits did not outweigh the detrimental impacts (especially climate change) and the economic benefits were considered in light of the current political environment. 
  4. ‘Perfect market substitution’ arguments must be backed by clear evidence.
  5. Offsets must be tangible and clearly presented.

If you have any questions in relation to the implications of this decision, please contact our Planning and Environment or Energy & Resources teams.

 

1. Because there were objections to the ML and the EA being granted: Mineral Resources Act 1989 (Qld) s 265; Environmental Protection Act 1994 s 185 (‘EP Act’). The section in the EP Act referred to is the section in the current EP Act, and not the version of the EP Act referred to in the case. 

2. Mineral Resources Act 1989 (Qld) s 269.

3. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [1].

4. Ibid [25]. President Kingham preferred the reasoning of McMurdo P in Coast and Country Association of Queensland Inc v Smith [2016] QCA 242, [11]-[12].

5. See the reasoning of President Kingham at [697]-[718].

6. (2012) 33 QLCR 79.

7. (2014) 35 QLCR 56.

8. [2016] QCA 242.

9. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [702]-[705]. President Kingham agreed with the obiter of Bowskill J in New Acland Coal v Smith (2018) 230 LGERA 88.

10. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [1005]. See generally [973]-[1005] regarding market substitution.

11. Ibid [1006].

12. Ibid [1290].  

13. Human Rights Act 2019 (Qld) s 24.

14. Ibid s 25.

15. Ibid s 28.

16. Ibid s 24.

17. Ibid s 25.

18. [2022] FCAFC 65 (‘Sharma’)

19. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [1327].  

20. As highlighted by President Kingham at [1338], this metaphor was used by Lord Shaw in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350, 369.

21. Ibid.  

22. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [1654].   

23. 23 December 2022.

24. 6 January 2023.

25. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [1292].   

26. Planning Regulation 2017 (Qld) s 41B.

27. Water Act 2000 (Qld) ss 113 and 138.

28. Mineral and Energy Resources (Common Provisions) Regulation 2016 (Qld) s 10.

29. Petroleum and Gas (Production and Safety) Act 2004 (Qld) s 141.

30. Ibid s 236.

31. Ibid s 305.

32. Ibid s 363J.

33. Ibid s 392AJ.

34. Ibid s 415.

35. Geothermal Energy Act 2010 (Qld) s 374.

36. Economic Development Act 2012 (Qld) s 42C.

37. Local Government Act 2009 (Qld) s 4.

38. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [475].

39. Ibid [562].   

40. Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21, [516].

 

This article may provide CPD/CLE/CIP points through your relevant industry organisation.

The material contained in this publication is in the nature of general comment only, and neither purports nor is intended to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without considering, and if necessary, taking appropriate professional advice upon their own particular circumstances.

 

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