Land Court examines powers in landmark Xstrata case

The Land Court of Queensland delivered a significant decision in March this year in the matter of Xstrata Coal Queensland Pty Ltd & Ors v Friends of the Earth – Brisbane Co-Op Ltd & Ors, and Department of Environment and Resource Management [2012] QLC013.

For the first time, the Land Court examined the scope of its powers, functions and jurisdiction when assessing applications for mining leases under the Mineral Resources Act 1989 (MRA) where objections were lodged, and draft environmental authorities for the mining project under the Environmental Protection Act 1994 (EPA) for a ‘significant project’ declared under the State Development and Public Works Organisation Act 1971 (State Development Act).

The Court found:

• its powers and functions in recommending conditions were restricted to the extent of any inconsistent overlap with conditions imposed under the State Development Act
• its jurisdiction was limited as to those water issues it could consider at this stage of the project, which it suggested was undesirable
• global climate change issues were largely irrelevant to its decision whether to recommend the project proceed.

Background

The case involved mining lease applications for the open-cut coal mine proposed by Xstrata Coal Queensland Pty Ltd and partners, ICRA Wandoan Pty Ltd and Sumisho Coal Australia Pty Ltd, (the applicants) for the area west of Wandoan, about 350 km north-west of Brisbane, in the Surat Basin. The coal mine could potentially be the largest thermal coal mine in the Southern Hemisphere.

The coal was intended to be washed and crushed on-site, transported off-site by rail and then exported overseas to fuel electricity generation. It was estimated the project would produce approximately 30 million tonnes of thermal coal annually and that the combination of the project activities and the use of this coal for electricity generation would create around 1.33 billion tonnes of greenhouse emissions over the mine’s lifetime of 30 years.

The objectors to the project included affected landowners from the areas covered by and adjacent to the mining lease applications who were concerned about the impact of the project on their general amenity and productive use of the land. The other objector was the Friends of the Earth – Brisbane Co-op Ltd (FoE), which was concerned about the global climate change implications from mining coal for electricity generation.

After considering the applications and objections, the Land Court recommended the State Government approve the mining lease applications and environmental authority, subject to conditions concerning groundwater monitoring and the excision of some land.

Significance of this decision

This decision is a landmark case as it was the first time the Land Court examined the inter-relationship of its functions, powers and jurisdiction with those of the Coordinator-General under the State Development Act. The court had to assess applications for mining leases and objections under the MRA, as well as assessing objections to the relevant environmental authorities associated with the proposed mining activities under the EPA, for a project that had been declared a ‘significant project’ under the State Development Act.

In accordance with the State Development Act processes, the Coordinator-General had recommended conditions for the environmental authorities and the project. This required that the Land Court examine the restrictions on its functions and powers arising from the operation of the State Development Act.

The function of the Land Court

Under the MRA, when objections to mining lease applications are lodged, the Land Court has the power to conduct a hearing into the applications for the grant of the mining leases and the objections, and to make recommendations to the Minister about whether to grant the mining leases. If the recommendation is to grant the mining leases, the court must also recommend any relevant conditions that are to apply to the mining leases. The court also has the function of deciding the objections made under the EPA relating to the environmental authority for the project.

As a ‘significant project’ under the State Development Act subject to conditions imposed by the Coordinator-General, the Court was required to consider the extent of these functions where its recommendations related to the same subject matter as the Coordinator-General’s conditions.

The provisions of the State Development Act give the Coordinator-General’s conditions precedence over any other inconsistent condition. The EPA also restricts the power of the Land Court to only recommend conditions to be imposed on the environmental authority that are not inconsistent with the Coordinator-General’s conditions.

The Land Court’s power to recommend conditions for the grant of the mining lease under the MRA is not similarly constrained. However, the Court decided that it could not recommend that a condition be imposed on the mining lease that would be inconsistent with the Coordinator-General’s conditions as this would defeat the intention of both the State Development Act and the EPA.

The Land Court found that the word ‘inconsistent’ in s. 222(2) of the EPA should be given its ordinary meaning. Accordingly, the court was not precluded from recommending conditions that dealt with the same subject matter as the Coordinator-General’s conditions, as long as they did not contradict or lack harmony with the Coordinator-General’s conditions.

Climate change

It was not disputed before the court that the project would contribute to global climate change that could cause environmental harm. However, of the project’s greenhouse gas emissions, approximately 99 per cent were attributable to the ultimate end-user burning the coal to generate electricity. The production of those emissions would be beyond the control of the mining lease applicants.

The FoE attempted to make the applicants responsible for these emissions on the basis that the applicants were mining thermal coal, which they knew would be used for electricity generation. The FoE argued that the public right and interest was prejudiced because of the contribution the mine would make to global climate change and ocean acidification and that, due to its impact on both, the mine was not consistent with the principles of ecologically sustainable development.

Under s. 269(4) of the MRA, the Land Court is obliged to consider any adverse environmental impact caused by ‘those operations’. The court interpreted the words ‘those operations’ as being only the operations to be conducted under the authority of the proposed mining lease; that is, the physical activities associated with winning and extracting the coal. These operations do not extend to the burning of the coal in power stations overseas, as these activities would not be authorised by the proposed mining lease.

Similarly, under the EPA, the Land Court can only consider the activities within the scope of the environmental authority. As the draft environmental authority was for ‘mining activities’, it did not extend to activities occurring outside the mining tenements such as the burning of the coal in power stations.

Considering only the emissions from the authorised mining operations, the adverse environmental impacts were not significant enough to justify refusal of the mining lease applications under the MRA or refusal of the environmental authority under the EPA.

The Land Court agreed that climate change was a matter of general public interest. However, it was required to weigh up a number of matters, including the economic benefits of the project, when considering whether the public interest would be prejudiced. With this project, the court did not consider that, on balance, the climate change issues arising from the activities authorised by the proposed mining lease and environmental authority outweighed the significant economic benefits, so the project should not be refused on public interest grounds.

^{The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.}