In April this year, the Court of First Instance ("CFI") handed down its decision in a judicial review case against the Director of Environmental Protection (the "Director"), quashing her decision to approve the Environmental Impact Assessment Reports ("EIA Reports") and issue the environmental permits for the Hong Kong Zhuhai Macau Bridge ("HKZMB") projects.

The Court ruled that the absence of 'baseline' environmental reports rendered the EIA Reports not compliant with the Technical Memorandum ("TM") and Study Briefs ("SB"s), which set out the requirements for the EIA Reports. As the EIA Reports did not provide meet the necessary requirements, the Director did not have the power to approve the EIA Reports nor environmental permits, as approved in late 2009. The decision is a further example of the rigorous interpretation of the Environmental Impact Assessment Ordinance ("Ordinance").  

The decision has caused substantial delays to the HKZMB projects and is said to have had a knock-on effect on other major projects. This is because the decision was based on an interpretation of the purpose and requirements of the Ordinance and the TM, which will apply to all designated projects.  

Prior to this decision, the general approach was for EIA Reports to measure the cumulative impact on the environment, and ensure that such impacts fell below the maximum allowable levels. The argument before the Court was that the Director should measure the impact from the baseline position and then decide whether that level of impact is acceptable or not.  

The Director lodged an appeal against the CFI decision, and appeal was heard this week. We are now waiting to see whether the Court of Appeal will uphold the CFI decision to require baseline reports to be included in all future EIA Reports.

What is an EIA Report?

The Ordinance requires all "designated projects" within the meaning of s.4 of the Ordinance to obtain environmental permits before construction commences. In order to obtain the permit, the applicant or project proponent must prepare an EIA Report containing an analysis of the likely environmental impact of the project.

To start the process, the project proponent must submit a project profile that complies with the TM to the Director and advertise the project to the public. The TM is standard to all designated projects and is issued by the Secretary for the Environment pursuant to the Ordinance.  

The Director will inform the Advisory Council on the Environment ("ACE") about the project profile and ACE or any other person may comment on the project profile. The Director may ask the project proponent for further information as required. The Director will then issue to the project proponent an environmental impact assessment study brief (the "SB" referred above), which is particular to that project.  

In accordance with the requirements of the SB and the TM, the project proponent prepares the EIA Report, which is delivered to the Director for approval. The Director then makes a provisional decision whether or not to approve the EIA Report and, if approved, the EIA Report is published for public inspection. Again at this stage, members of the public or ACE may comment on the EIA Report. The Director may call for further information as a result of any comments.  

Once the Director is satisfied with the content of the EIA Report, she must approve, approve with conditions or reject the EIA Report.  

The final stage is the application for the environmental permit, which the Director may issue subject to any conditions she thinks fit, having considered a number of factors including the EIA Report.

A designated project may not be commenced without the necessary environmental permit.  

Why did the CFI find the HKZMB EIA Report deficient?

In the HKZMB case, Chu Yee Wah ("Ms Chu"), a resident of a public housing estate in Tung Chung, brought judicial review proceedings seeking orders to quash the Director's decisions to grant approval for the EIA Reports and environmental permits for the construction of the HKZMB. Broadly speaking, Ms Chu alleged that (i) the EIA Reports did not comply with the requirements of the TM and SBs, and (ii) the decisions of the Director in approving the EIA Reports and environmental permits were irrational or Wednesbury unreasonable.

At trial, Ms Chu sought to challenge the decisions on seven grounds (which we will discuss briefly below) but succeeded on the first ground only. Nevertheless, her success on the first ground of challenge was sufficient for the Director's decisions to be quashed.  

The Requirement for a Baseline Report

Ms Chu's first and successful ground of challenge was that the TM and SBs require the EIA Reports to provide a quantitative 'stand-alone' analysis of the project environmental conditions without the HKZMB project in place, otherwise known as a 'baseline report'.

It was accepted by both sides that the EIA Reports covered only the cumulative environmental impacts (i.e. the conditions with the projects in place) and no baseline report. The question at hand was whether the baseline report was in fact required, there being no explicit requirement for such a report but only broad principles and general wording in the TM.

While the CFI Judge accepted the Director's arguments that there was no explicit requirement for a baseline report, he adopted a purposive approach to interpreting the Ordinance. He referred to the case of Shiu Wing Steel v Director of Environmental Protection 2006 9 HKCFAR 478, where the Court of Final Appeal held that "the purpose of the [Ordinance] as declared in its long title governs its interpretation and also that its purpose of protecting the environment must inform the meaning attributed to the TM and SB, being instruments created under its authority". [Hogan Lovells acted for the intervener in these proceedings.] The CFI decided that, without the baseline report, it would not be possible to assess the environmental impact of the project and consequently not be possible to propose suitable mitigation measures to minimise the pollution, residual and cumulative effects: "it is only by knowing the starting point [...] that one is able to measure that footprint".

For the Director, the following caveats were cited from R (on the application of Blewitt) v Derbyshire CC [2003] Env. LR 29, "... it is an unrealistic counsel of perfection to expect that an applicant's environmental statement will always contain the 'full information' about the environmental impact of a project [...] it would be of no advantage to anyone concerned with the development process [...] if environmental projects were drafted on a purely 'defensive' basis, mentioning every possible scrap of environmental information just in case someone might consider [it] significant at a later stage [...]". While the CFI Judge agreed that it was sensible to apply these caveats, he maintained that this was not a sufficient reason to disregard the need to provide an EIA Report which properly identifies the scale of the environmental changes resultant from a particular project.

Accordingly, the absence of a stand alone analysis in the EIA Reports meant that they did not comply with the TM and SBs and that the Director's decisions to approve them and the environmental permits were quashed.  

What were the Unsuccessful Grounds of Challenge?

As noted above, Ms Chu challenged the Director on seven grounds but was unsuccessful on grounds (ii) - (vii).

Grounds (ii) - (v) also related to the methodologies followed in the EIA Reports. These were challenges to (ii) the analytical model selected to assess air quality (the PATH model) and lack of explanatory data presented in the EIA Reports to verify the results; (iii) the assessment year chosen to represent the worst case scenario; and (iv-v) the lack of assessment of ozone and sulphur dioxide.  

In relation to the choice of the PATH model, the CFI Judge held that the explanatory data were not required for the EIA Reports and if desired, the data could have been requested during the public consultation period. In relation to grounds (iii) - (v), the CFI Judge held that the SBs as drafted allowed the project proponent discretion to decide on these factors, so long as the decision could be reasonably explained. In this case, those decisions were found not to be unreasonable.  

Grounds (vi) - (vii) were that the Director had failed in her duty to consider the impact on public health and the health risk posed by pollutants such as toxic air pollutants and fine suspended particulates (which are currently excluded from the present Air Quality Objectives ("AQO"s) before issuing the environmental permits. As there was no evidence that the projected air quality would breach the AQOs, the Director had acted reasonably in relying on the AQOs to assess the impact on public health - the AQOs being the Government's current policy for acceptable level of air pollutants, taking into account public health.  

What Does this Mean for Future EIA Reports?

The tangible result of the HKZMB case (subject to the outcome of the appeal) is that all EIA Reports must now contain a baseline report, as a starting point to assess the environmental impact of any project.

However, when considering whether an EIA Report needs to mention "every possible scrap of environmental information just in case someone might consider [it] significant at a later stage", project proponents may seek some comfort in the Court's rejection of the other six grounds of challenge, which were dependent on interpretation of and adherence to the requirements of the TM and specific SBs.

At the first stage, when preparing a project profile, project proponents must ensure that the project profile accurately reflects the parameters of the target project. Then, once the SB has been issued, project proponents should carefully review the requirements of the TM and SB when preparing their EIA Reports to ensure that they are fully compliant or risk rejection or a challenge to the granting of a permit.