The allegations made … that coal seam gas mining presents a threat of serious or irreversible damage to groundwater or other water, are not only unsupported by any evidence, they are, moreover, formulated at such a high level of generality that they cannot found an assessment of the risks associated with the project. - Pepper J: NSW Land and Environment Court.

Overview

The coal seam gas (CSG) industry is playing an increasingly vital role in Australia’s energy market. Australia has significant reserves of CSG, which are currently estimated to be around 223,454 petajoules.1 Predicted domestic gas shortfalls, particularly for NSW, point to an increased reliance on new CSG production projects to meet domestic demand.

However, there has been recent widespread community concern about the environmental impacts of CSG production, particularly on groundwater.

On 27 August 2012, Justice Pepper of the NSW Land and Environment Court handed down her decision in Barrington - Gloucester - Stroud Preservation Alliance Inc v Minister for Planning and Infrastructure.2 Justice Pepper upheld the validity of the NSW planning approvals granted for the Gloucester Gas Project.

This important decision is the first judgment given in relation to a challenge made to the validity of a NSW CSG project approval and represents a significant milestone in upholding the manner in which CSG projects are assessed and conditioned in NSW. The decisions validation of the adaptive management approach to groundwater and interpretation of the precautionary principle is of application well beyond the borders of NSW.

Background

CSG production inevitably involves the extraction of water contained within the coal seam so as to depressurise the seam and allow the naturally occurring CSG to be extracted. The extracted water, called produced water, is typically saline and requires treatment before it is suitable for any beneficial use.

In addition, some CSG production wells are subjected to a process known as hydraulic fracturing (or fraccing), whereby water, sand and a small amount of additives are forced down into the coal seam to fracture the coal bed, creating preferential flow paths for CSG to flow down.

There is concern that CSG production may potentially drain or result in saline cross contamination of the shallow beneficial aquifers which are used as water sources for agriculture.

The industry and government have taken steps to address these concerns by commissioning a number of scientific investigations on the water impacts of CSG.3 Certain sectors of the community remain unconvinced.

AGL’s Gloucester Gas Project in particular, has attracted significant community concern, including protestor action by community organisations such as the Barrington-Gloucester-Stroud Preservation Alliance Inc (the Alliance) and the Lock the Gate Alliance Inc.

CSG production projects in NSW, including the Gloucester Gas Project, are regulated primarily through the EP&A Act which requires that planning approval be obtained for any CSG production project.

The Planning and Assessment Commission (PAC) granted a concept plan approval for the Gloucester Gas Project and project approval for Stage 1 of the Gloucester Gas Project under the (now repealed) Part 3A of the EP&A Act.

The project approval was granted subject to numerous conditions. The groundwater suite of conditions required an adaptive management approach, including requiring the carrying out of further detailed hydrogeological modelling and the development of a phased gas field development plan to avoid and minimise adverse impacts to beneficial aquifers.

The Decision

The Basis of the Challenge

The Alliance challenged the validity of the concept plan approval and project approval granted for the Gloucester Gas Project in judicial review proceedings commenced in the NSW Land and Environment Court.

The Alliance argued that:

  • the concept plan approval and project approval were invalidly granted as the PAC had failed to correctly formulate and properly consider the precautionary principle, and
  • certain conditions imposed on the project approval in relation to groundwater impacts and the produced wastewater left open the possibility of a significantly different development from that for which approval was sought and are, therefore, uncertain and invalid.

Dismissal of the Alliance’s Claims

Justice Pepper dismissed the claims made by the Alliance and upheld the validity of the concept plan approval and project approval granted for the Gloucester Gas Project.

Application of the Precautionary Principle

The reasons given by Justice Pepper make it clear that the principles of ecological sustainable development (including the precautionary principle) are relevant mandatory considerations that the PAC was obliged to take into account in granting approvals under Part 3A. However this does not mandate any particular method of analysis nor the outcome that should result from any such consideration.

Justice Pepper held that ‘a brief survey of the background as to the assessment of groundwater reveals that adequate consideration of the precautionary principle in respect of groundwater occurred.’

Justice Pepper thought that the level of consideration given by the PAC to the principles of ecological sustainable development was adequate as the PAC, after identifying the issues which could produce serious environmental damage and an absence of scientific certainty, accepted that these risks could be minimised by imposing conditions on the project approval requiring an adaptive management regime. In particular, she found that:

The conditions imposed involve monitoring of impacts, licensing, phasing, the provision of hold points based on indicators, periodic evaluation and a compliance system in relation to groundwater directed towards adaptive management. They are intended to deal with risks from expected and unexpected events, in accordance with the precautionary principle, and collectively amount to an adequate consideration of scientific uncertainty as to the impacts of the project and the possibility of irreversible environmental damage.

Accordingly, Justice Pepper held that:

… it cannot therefore be said that the PAC failed to consider ESD principles, and in particular the precautionary principle, in relation to groundwater. Nor can it be said, in my view, that the PAC had insufficient information before it to make an informed decision in this regard. The material before the PAC contained an extensive analysis of the issues concerning groundwater, which resulted in the imposition of conditions aimed at ensuring that appropriate measures were adopted and implemented having regard to the precautionary principle.

Validity of the Water Conditions

In relation to the arguments made by the Alliance to the effect that the water conditions of the Part 3A approval were invalid, Justice Pepper made it clear that there is a very high degree of flexibility allowed in conditioning projects under Part 3A. Justice Pepper held that:

  • ‘it cannot be contested that the Gloucester project is complex and extensive. In development such as this it is recognised that the power to impose conditions permits a degree of practical flexibility’, and
  • there is no requirement under Part 3A for conditions to be imposed by reference to detailed objective numerical criteria in order to ensure their validity.

Accordingly, Justice Pepper upheld the validity of the adaptive management approach adopted in the project approval conditions and found that:

Thus the conditions of the project approval concerning groundwater … ensure practical flexibility, leaving matters of detail for later determination together with the delegation of supervisory aspects of the development, all of which are within the ambit of the statutory scheme contained in [Part 3A].

Indeed, Justice Pepper held that it would have been open to the PAC to ‘as a matter of law … impose no conditions’ relating to the impacts of the project on groundwaters and surface waters.

Implications

The appeal centred on the Alliance’s argument that:

  • the PAC had failed to give proper consideration to the precautionary principle, as an element of ecologically sustainable development, and
  • the adaptive management approach to groundwater impacts required by the conditions of the project approval was invalid.

In particular, the decision highlights the flexibility granted by the now repealed Part 3A of the Environmental Planning and Assessment Act 1979 (EP&A Act). The adaptive management approach to groundwater imposed by the conditions of the Part 3A project approval and upheld in the judgment represents a workable but rigorous regime which is likely to be applied to future CSG projects. Future NSW CSG projects will be assessed under the new State Significant Development (SSD) regime and the scope of the conditioning power for SSD projects is yet to be tested in the Courts. There is a good argument that the liberal approach to conditioning supported by the decision will extend to any conditions imposed on SSD projects. Given that this is still untested, care should be taken in framing, assessing and conditioning CSG projects under the new SSD regime.

Ecologically sustainable development, including the precautionary principle, are mandatory considerations under a wide range of environmental and planning legislation across Australia, including the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (Cth). Accordingly, the findings made in the judgment in relation to the manner in which ecologically sustainable development is to be considered and applied in the context of CSG projects have a much wider application.

On a broader level, Justice Pepper stated at the beginning of her judgment that:

It is a matter of common knowledge that the exploration for, and use of, coal seam gas is contentious. This judgment will, however, do little to quell the current anxiety surrounding the coal seam gas mining debate. In this regard it must be understood that the merits, or otherwise, of the use of this resource are irrelevant to the issues raised for determination by these judicial review proceedings, concerning, as they do, only the lawfulness of the approval under challenge.

This statement is undoubtedly legally correct. However, Justice Pepper’s comment, reproduced at the beginning of this note, suggests the merit of the complaint played a role in her decision.

Accordingly, the decision casts some judicial doubt as to whether the extent of community concerns about the potential water impacts of CSG production is justified, at least having regard to the evidence before Justice Pepper in relation to the Gloucester Gas Project.