Anvil Hill Decision – Implications For Major Projects

Yesterday, a landmark decision was made that will impact future applications for major infrastructure and other developments. Pain J of the Land and Environment Court found that under Part 3A of the Environmental Planning & Assessment Act 1979 (the Act) an environmental assessment prepared on behalf of proponents for the Anvil Hill coal mine located in Hunter Valley was inadequate as it failed to contain a detailed analysis of 'scope 3 emissions', greenhouse emissions generated from the burning of coal by third parties outside the control of the proponent.

This decision has implications specifically for applications to develop or expand coal mines but also has wider implications for medium to large-scale developments under Part 3A generally, including power plants, toll roads or other infrastructure projects. This decision may also have implications for other States and Territories in Australia. In particular, the decision confirms that:

• before an environmental assessment can be accepted and placed on public exhibition, the Director-General has an obligation to decide that the assessment adequately addresses the Environmental Assessment Requirements prepared by the Director-General; and
• environmentally sustainable development principles, including the precautionary principle and intergenerational equity, are relevant to the assessment of developments assessed under Part 3A and failure to consider these principles could leave decisions open to challenge.

In this case, given the inadequacy of the environmental assessment relating to the Anvil Hill coal mine and the Director-General's failure to consider environmentally sustainable development principles, the Director-General's decision to place the environmental assessment on public exhibition was declared void and of no effect.

This decision is significant because it is the first decision which expressly finds that there is a real link between the mining of a:

"very substantial reserve of thermal coal in NSW, the only purpose of which is for use as a fuel in power stations, and the emissions of greenhouse gas, which contribute to climate change/global warming".

Even though there are many contributors to greenhouse gases globally, Pain J commented that it does not mean that a contribution from a single large source, such as the Anvil Hill Project in the context of NSW, should be ignored in the environmental assessment process.

The context of this decision is important because it concerned what the Court
described as a:

"potential major single contributor to greenhouse gas emissions deriving from NSW (given the size of the mine)"

and not a small-scale operation.

Given the ramifications of this decision, it is likely that it will be appealed by the State Government. However, while the decision stands, proponents of Part 3A applications seeking to develop or expand coal mines that are medium to large in scale, must address the impact of 'scope 3 emissions' in their environmental assessments, whether they are expressly required to be addressed by the Director-General or not. These impacts, in turn, will be considered by the public when placed on exhibition and must also be considered by the Minister when determining whether to grant approval or not.

In a wider context, the confirmation in the decision that the planning department must consider environmentally sustainable development principles in the assessment process represents increasing pressure for companies to improve their environmental and social performance within the general trend towards the promotion of corporate social responsibility concepts. This applies not only to the mining industry but also the business and wider community.

In terms of the funding of projects (including mining projects, power plants, toll roads or other infrastructure projects), delays in or failure to obtain approval may have an impact on share price, as well as a potential breach of existing covenants in financing arrangements for the expansion of existing projects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.