Court of Appeal dismisses appeal against Alpha coal mine project

Alpha coal mine decision - Coast and Country Association of Queensland Inc v Smith & Ors [2016] QCA 242

The Queensland Court of Appeal has dismissed the challenge brought by Coast and Country Association of Queensland (CCAQ) against Land Court decisions relating to the Alpha coal mine project.[1]

In this Alert, Partner Martin Klapper and Law Graduate Ruby Rayner discuss the arguments on appeal relating to “scope 3 emissions” and climate change, and what the decision means for resource and environmental authorities.

Key points

• The Land Court does not have jurisdiction under s 269(4)(j) of the Mineral Resources Act to consider the impact of activities beyond those carried out under the authority of a mining lease – specifically, the Land Court cannot consider scope 3 emissions.
• Climate change and greenhouse gas emissions may be relevant when considering prejudice to the public interest under s 269(4)(k) of the Mineral Resources Act. However, this is just one factor that must be weighed against other relevant factors.
• When considering objections against an environmental authority under the Environmental Protection Act, the Land Court must have regard to the public interest and broad categories of environmental value and environmental harm. However, scope 3 emissions do not arise out of activities under a mining lease, and are therefore not a relevant consideration.
• In this case, the Land Court determined that contribution of the Alpha coal mine project to global greenhouse gas emissions would be negligible. This finding of fact was ultimately determinative of the case, and could not be disturbed by the Court of Appeal.

Background

This case involved a challenge against Hancock Coal’s proposed Alpha coal mine in the Galilee Basin by environmental advocacy group CCAQ.

CCAQ brought an appeal in the Court of Appeal, seeking the following orders under the Judicial Review Act:

• Overturn a decision of the Land Court that recommended refusal of the applications for the mining lease and environmental authority for the Alpha coal mine, but which also included alternative recommendations that both applications be granted subject to conditions.
• Overturn the subsequent decision of the Minister for Environment and Heritage Protection to grant an environmental authority for the Alpha coal mine under the Environmental Protection Act.  

CCAQ contended that the removal, transport and burning of coal from the Alpha coal mine in overseas power stations would result in environmentally harmful emissions that would, together with emissions from other sources, contribute to an increase in the global amount of greenhouse gases in the atmosphere and have a negative effect on climate change (these are known as “scope 3 emissions”).   

CCAQ argued that the Land Court had erred in law by not taking the environmentally harmful effects of scope 3 emissions created from the export and burning of Alpha coal in overseas power stations into account when considering Hancock Coal’s applications.

The Minister’s decision was challenged on the basis that it was made in reliance on the Land Court’s decision, which the CCAQ argued had been affected by legal error.

Land Court decision and subsequent decision by the Minister

The Land Court accepted that scope 3 emissions are a major contributor to a global total of emissions which are “real and of concern” and which cannot be “dismissed as negligible”.

However, the Land Court found that it did not have jurisdiction to consider scope 3 emissions in making a recommendation to the Minister that a mining lease for coal be refused or granted. The court was required under the Mineral Resources Act to consider the environmental impact of “operations” under a mining lease. The law also required consideration of the public interest.

The Land Court relied on the Xstrata Coal[2] case, which decided that the transport of coal to an export port, the export of that coal to Asia, the impacts of burning thermal coal in power stations outside Australia, and the generation of scope 3 emissions, are not matters that can be taken into account by the Land Court in considering “operations” under a mining lease.

Secondly, the Land Court considered the public interest argument. The Land Court held, again in accordance with the Xstrata Coal decision, that greenhouse gas emissions and climate change are matters of the general public interest that may be considered by the Land Court under the Mineral Resources Act and the Environmental Protection Act.  

The Land Court found that the contribution of scope 3 emissions to global emissions resulting from the transport and burning of the coal in overseas power stations were not consequences arising from a “mining activity”. Therefore these impacts were not relevant considerations under the Environmental Protection Act.

Importantly, the Land Court held that the emissions directly attributable to the Alpha coal mine would be “infinitesimal”. Further, the Court accepted expert evidence to the effect that even if the Alpha coal mine did not produce any coal, there would be no reduction in global scope 3 emissions. This is because thermal coal is readily and inexpensively available and power stations would burn the same amount of thermal coal and produce the same amount of emissions without the supply of coal from Alpha.

Ultimately, the Land Court recommended that the applications be refused on grounds unrelated to the scope 3 emissions issue. As an alternative, the Land Court recommended that the applications be granted on conditions which addressed those grounds. 

Court of Appeal dismisses appeal

The issues in the appeal for judicial review to the Court of Appeal in the Supreme Court were much narrower than the issues and evidence considered by the Land Court.

In relation to the public interest, the Court of Appeal told us that:

• under the Mineral Resources Act - climate change and greenhouse gasses are clearly relevant to the general public interest, however they are only one factor that must be weighed against all of the matters prescribed under the Mineral Resources Act;
• under the Environmental Protection Act - climate change and greenhouse gasses are relevant considerations only insofar as they result from a mining activity authorised under a mining lease to take place on land to which the lease relates. Therefore, scope 3 emissions were not a relevant consideration. This point was decided by a majority of 2-1.

It is important to note that the President of the Court of Appeal, Justice McMurdo, disagreed with a narrow interpretation and was of the view that the Land Court must take into account scope 3 emissions when considering objections to an environmental authority, and that this enquiry should not be limited to mining activities. However, Justice McMurdo agreed that the outcome of the case did not depend on the construction of the legislation.

Finally, the Court of Appeal found that it was open on the evidence for the Land Court to conclude that the emissions impact of the Alpha coalmine would be negligible, and the Land Court’s decision to take into account the availability of coal was not an irrelevant consideration.

The Court of Appeal dismissed the CCAQ’s appeal and ordered it to pay the Minister’s and Hancock Coal’s costs. 

For further information or discussion, please contact HopgoodGanim Lawyers' Resources & Energy team.