Overview 

On 28 March 2013 Justice Pepper of the NSW Land and Environment Court (LEC) handed down her decision in Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd (No 2) [2013] NSWLEC 38 (Fullerton Cove Decision). 

The Fullerton Cove Decision has important implications for:

  • Government agencies carrying out assessments under Part 5 of the EP&A Act; and
  • entities seeking to rely on approvals granted by Government agencies following an assessment under Part 5 of the EP&A Act (including companies carrying out mineral or petroleum exploration activities in NSW). 

Details 

Background to the Proceedings 

Dart Energy Ltd (the Proponent) holds petroleum exploration licence number 458 issued under the Petroleum (Onshore) Act 1991 (NSW).

The New South Wales Department of Trade and Investment, Regional Infrastructure and Services(Department)is responsible for administering petroleum exploration licences.

It is a standard condition imposed on all petroleum exploration licences (and all exploration licences granted under the Mining Act 1992 (NSW)) that certain exploration activities, called “Category 3” activities, cannot be carried out without written approval from the Department. 

The Proponent proposed to carry out a pilot coal seam gas exploration project in Fullerton Cove (Pilot Project).  

The Pilot Project was a Category 3 activity which required approval from the Department under the standard petroleum exploration licence conditions.  

Accordingly:

  • the Pilot Project was development for the purposes of petroleum exploration, and could be carried out without development consent under cl 6 of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007; but
  • the Department was required to assess the Pilot Project under Part 5 of the EP&A Act prior to determining whether or not to grant approval to the Pilot Project under the standard condition imposed on the petroleum exploration licence. 

Section 111 of the EP&A Act relevantly requires a determining authority (in this case the Department) to “examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of” an activity (in this case the Pilot Project). Assessment under section 111 is typically carried out via a review of environmental factors (REF). However, section 112 provides that an environmental impact statement (EIS) is required if a project “is likely to significantly affect the environment (including critical habitat) or threatened species, populations or ecological communities, or their habitats”. 

The Proponent provided the Department with a REF prepared in relation to the Pilot Project. The Department then assessed the Pilot Project using the REF (and not an EIS), and approved the Pilot Project under the standard condition imposed on the petroleum exploration licence. 

The Proceedings 

The Fullerton Cove Residents Action Group Incorporated (Action Group) commenced proceedings in the LEC against the Proponent and the Department in relation to the Department’s assessment of the Pilot Project under Part 5 of the EP&A Act. 

The Action Group:

  • alleged that the Department had breached sections 111 and 112 of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act) in assessing the Pilot Project; and
  • sought orders restraining the Proponent from carrying out the Pilot Project. 

The Judgment

Justice Pepper ultimately found in favour of the Proponent and the Department and held that no breach of sections 111 or 112 of the EP&A Act had been established by the Action Group. 

However, in reaching this conclusion, Justice Pepper held that whether or not a project is “is likely to significantly affect the environment (including critical habitat) or threatened species, populations or ecological communities, or their habitats” such that  an EIS is required under section 112 of the EP&A Act is a jurisdictional fact. This means that, rather than relying on the decision made by the relevant determining authority (in this case, the Department), the LEC must determine this issue for itself, having regard to all of the available evidence, including any new expert evidence tendered by the parties. 

Implications

A wide range of projects are assessed under Part 5 of the EP&A Act. These include:

  • CSG, mineral and coal exploration projects;
  • projects carried out by Government agencies, such as road projects; and
  • infrastructure projects, such as electricity transmission lines. 

The reasoning adopted by Justice Pepper in the Fullerton Cove Decision opens the door for any person who opposes a project assessed under Part 5:

  • to commence judicial review proceedings in relation to assessments carried out under Part 5 of the EP&A Act via the usual REF instead of an EIS; and
  • to adduce new expert evidence (which proponents and Government agencies will be required to refute) as to the likely impacts of a project and the significance of these impacts. 

This may result in greater uncertainty, costs and delays for:

  • government agencies conducting Part 5 assessments; and
  • entities (including CSG and mineral explorers) seeking to rely on approvals granted by Government agencies following an assessment under Part 5 of the EP&A Act. 

To minimise the risk of appeals, proponents should ensure that their REFs are legally and technically robust and clearly explain why the project is not “likely to significantly affect the environment” and therefore does not require an EIS.

It is not yet known whether or not the Fullerton Cove Decision will be appealed to the NSW Court of Appeal.