A wide range of legal trends will keep impacting mine operators
Last year saw a range of developments relevant to NSW mining projects, including new standard rehabilitation conditions for mining leases, continued climate activism and litigation, a growing focus on water impacts and cultural heritage in planning decisions, and industry consultation on a number of proposed amendments to the Mining Act 1992 (NSW).
NSW mine operators should closely monitor the trends emerging from planning and court decisions – particularly operators with upcoming projects or expansions that will require new or modified approvals. It is also important for mine operators to be across the numerous pending legal reforms that will come into effect in 2022 and ensure they are complying with the new requirements.
New standard rehabilitation conditions on mining leases
Key takeaway - Operators of large mines in NSW should ensure they are familiar with the new rehabilitation conditions and are ready to comply with them from 2 July 2022. Those currently undertaking exploration activities under a mining operations plan should also ensure they have alternative approvals in place to authorise ongoing exploration activities post-July 2022.
From 2 July 2022, operators of existing large mines (ie any mines operated subject to environment protection licences) will have to comply with the new standard rehabilitation conditions that were introduced by amendments to the Mining Regulation 2016 (NSW) last year. Operators of small mines will have a further 12 months, until 2 July 2023, before having to comply with the new conditions.
The new conditions impose additional rehabilitation obligations, including a requirement to:
- rehabilitate land and water 'as soon as reasonably practicable' after disturbance; and
- undertake a rehabilitation risk assessment and implement measures to eliminate, minimise or mitigate risks to achieving the final land use.
The new conditions also impose significant new reporting and documentation requirements, including a requirement to prepare a rehabilitation management plan, which will replace existing mining operations plans. Any operators who currently undertake exploration activities under a mining operations plan will need to obtain separate approval for those activities before 2 July 2022, in order to be able to continue with them, unless those activities are already covered by an existing development consent.
Mine operators will also have to prepare and submit rehabilitation objectives, rehabilitation completion criteria, an annual rehabilitation report and a forward program, which must include a schedule of mining and rehabilitation activities for the next three years and demonstrate how rehabilitation will occur as soon as reasonably practicable after disturbance (see our previous Insight for further details). The Resources Regulator has indicated that it will be in contact with mine operators to discuss aligning the reporting dates for the new annual rehabilitation report and forward program with existing reporting dates under development consents.
The Resources Regulator has also released a number of:
- 'form and way' documents, which set out mandatory requirements for the structure, format and content of the new rehabilitation management plan, rehabilitation objectives and completion criteria, annual rehabilitation report and forward program; and
- guidelines and fact sheets, to assist leaseholders to understand and comply with the new requirements.
With less than five months until the new conditions will start to apply to all large mines in NSW, mine operators should be getting ready to transition to the new requirements and ensure they are in a position to comply, including by commencing preparation of their rehabilitation management plan, objectives and forward plan.
Climate change litigation
Key takeaway - Mine operators with upcoming expansions or new projects should be monitoring the types of climate-related arguments being raised in the courts and closely watching the outcome of the Sharma appeal, with a view to ensuring that their applications (to the extent possible) head off potential issues and criticisms that could be fodder for an appeal. All mine operators should also expect greater attention to, and potential regulation of greenhouse gas (GHG) emissions by the NSW EPA going forward, following a court finding that the EPA has a duty to adopt 'action forcing' policies to protect against climate change.
Last year saw continued efforts by climate change advocacy groups to challenge approvals for mining developments, with coal projects being particular targets. We are seeing increasingly novel arguments being raised in these cases, with some success, and increasingly novel approaches being taken to seek to limit the emission of GHGs.
Three key decisions to be aware of are:
Sharma v Minister for the Environment
The Federal Court found that the Federal Minister for the Environment had a duty to take reasonable care, when deciding whether to approve the Vickery Coal Project under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act), to avoid causing harm arising from emissions of CO2 into the Earth's atmosphere1 . As a result of this decision, decision-makers may now be more alive to climate change-related issues and place greater weight on those risks when making decisions (see our previous Insight for further details). The Minister has appealed the decision to the Full Federal Court and judgment is pending. However, the duty of care has already been cited in EPBC Act decisions and decisions of the Independent Planning Commission (IPC).
This case was a challenge by an objector group to the decision of the IPC to grant development consent for the Narrabri Gas Project2. Three of the four grounds of challenge related to the IPC's assessment of GHG emissions. In dismissing the challenge, the Land and Environment Court held that:
- the IPC did not err in considering the emissions advantage of coal seam gas compared to coal-fired electricity generation, in assessing the acceptability of the GHG impacts of the project; and
- it was open to the IPC to not impose a condition of consent regulating Scope 3 emissions on the basis that those emissions are outside the proponent's direct control, and that decision was not legally unreasonable.
In these proceedings the Court was not considering the merits of the project, but was only concerned with whether the IPC's decision-making process was affected by legal error.
Bushfire Survivors for Climate Action Incorporated v EPA
Instead of challenging a particular project, the applicants in this case took the novel approach of seeking an order from the Land and Environment Court requiring the EPA to perform its statutory duty to develop environmental quality objectives, guidelines and policies to ensure the protection of the environment from climate change3 . The Court accepted that the EPA has such a duty, that the requisite policies must be 'action forcing' and not just 'hortatory and aspirational', and that the EPA's current policies did not fulfil the applicable duty. It is yet to be seen what action the EPA will take in response to the Court's finding in this case but mine operators should expect greater attention to, and potential regulation of, GHG emissions by the EPA going forward. The EPA has the power to regulate GHG emissions, as a form of air pollution, under environment protection licences should it elect to do so. However, as environment protection licences typically regulate premises-based emissions, such regulation would likely be limited to the regulation of Scope 1 emissions only.
Trends in planning decisions
Key takeaway - Applicants seeking development consent for mining projects and expansions should ensure their applications include detailed GHG assessments and should expect to be conditioned to minimise and offset Scope 1 and 2 emissions, and potentially investigate and implement further abatement measures over time. Applicants should also be aware of the heightened sensitivity around impacts to cultural heritage and water resources, and ensure these impacts are properly assessed and mitigated to the greatest extent possible.
After some notable refusals of coal mine projects by the IPC and the Court in 2019, we saw a more pragmatic approach to climate issues emerging in IPC decisions handed down in 2020 and 2021. When approving the Mangoola Coal Mine Extension in April 2021, the IPC expressed the view that Scope 3 emissions are 'more appropriately regulated and accounted for through broader national policies and international agreements (such as the Paris Agreement).'
However, the IPC appears to be imposing increasingly stringent conditions of consent relating to GHG emissions. An emerging trend, as seen in the conditions imposed on the Tahmoor South Mine Extension and the Narrabri Gas Project, is for the IPC to require the Scope 1 and 2 emissions of a development not to exceed the levels predicted in the development application and for the applicant to 100% offset any exceedances of those levels. In its approval of the Tahmoor South Extension, the IPC also conditioned the applicant to commission a study within two years to determine whether there are any reasonable and feasible measures that can be implemented to further reduce Scope 1 and 2 GHG emissions and implement those measures identified (if any).
In its recent Assessment Report for the yet-to-be approved Narrabri Coal Mine Extension, the Department of Planning and Environment (the Department) has gone one step further in recommending the imposition of conditions requiring:
- preparation and implementation of a Fugitive Emissions Minimisation Plan (to be updated and reviewed every three years), in consultation with the Mining Panel and key NSW government agencies, to ensure that GHG emission abatement technology continues to be comprehensively investigated and adopted; and
- setting performance measures for Scope 1 fugitive emissions intensity based on peak five year rolling average and project life targets, with offsetting requirements where the performance targets are not met, and ongoing review of the performance targets based on implementation of best practice as determined through the Fugitive Emissions Minimisation Plan.
The Department has indicated that the intention of these conditions would be to provide a mechanism for GHG emissions to be 'ratcheted down' over time, rather than setting fixed emissions limits. Whether the IPC accepts the Department's recommendations is yet to be seen. The IPC, which has now commenced its assessment, has also recently requested the Department to consider whether an independent economic assessment of the carbon costs of the Narrabri Coal Mine Extension is warranted, noting that a similar assessment was undertaken for the Mangoola Coal Mine Extension.
While a number of mining proposals and expansions received approval in 2021, including a number of fossil fuel projects, there were two notable refusals of development consent by the IPC – for the Dendrobium Extension Project and Hume Coal Project. While the IPC found that the impacts of GHG emissions from the Dendrobium Extension could be adequately addressed with conditions or offset requirements, its concerns regarding the potential impacts of the project on the Greater Sydney and Illawarra's drinking water catchment led it to refuse consent. Unacceptable impacts on a number of Aboriginal cultural heritage sites were also cited by the IPC as a reason for refusal.
Similarly, in refusing consent for the Hume Coal Mine, a greenfield mine proposed in the NSW Southern Highlands, the IPC focused on the risks posed to both groundwater catchments and to the Sydney drinking water catchment. While the IPC considered that impacts on Aboriginal heritage items could be managed via mitigation and management measures, the IPC found that those impacts contributed to the overall unacceptable impacts of the project on the cultural landscape.
Proposed mining legislation amendments
Key takeaway - Mine operators should closely monitor the progress of the current proposed changes to the Mining Act 1992 (NSW) and ensure they review and engage with the proposed amended regulations when they are released later this year, noting that the key details of a number of the proposed changes will be contained in the regulations.
The extent of red tape and regulatory complexity that has to be overcome in order to proceed with a mining project in NSW has attracted significant criticism from industry over many years. In an effort to address some of these concerns, the Department of Regional NSW – Mining, Exploration and Geoscience (MEG) is proposing amendments to the Mining Act 1992 (NSW) and Petroleum (Onshore) Act 1991 (NSW), which are intended to streamline processes and facilitate more efficient decision-making.
The Mining and Petroleum Amendment Bill 2021 (the Bill) was released for comment from November 2021 to January 2022. The Bill, if passed, will lay the groundwork for a number of procedural improvements. However, for the most part, the key details of these changes will be contained in amendments to the Mining Regulation 2016 (NSW) (the Regulation), which have not yet been released. The Bill shifts a number of the existing operative provisions of the Act to the Regulation. While MEG says this is intended to provide for more flexibility, until the proposed amendments to the Regulation are provided for public comment, it is uncertain whether some of the proposed changes will be positive for industry.
Further, while the Bill proposes a large number of changes, the majority of these are relatively minor in nature and, in the view of many industry participants, do not go far enough to address the current inefficiencies in the regulatory process.
The Bill includes a range of other proposed changes, such as changes to facilitate electronic lodgement of various documents, expanded powers for MEG to issue waivers, removal of the requirement to lodge statutory declarations and the requirement for the Minister's written consent to exercise rights under an authority on land within an exempted area. There will also be a new requirement to obtain Ministerial consent to apply for a coal exploration licence under the Operational Allocation pathway, and new fees for participation in the Operational Allocation and Competitive Allocation pathways.
MEG has confirmed its intention to consult on the proposed amendments to the Regulation, which are expected to be released in early 2022. It will be critical for mine operators in NSW to review and engage with the proposed amendments to the Regulation once released, to ensure that industry perspectives are taken on board. The guidance material released by MEG also indicates that MEG is pursuing other reforms. These should be monitored closely by industry.
Footnotes
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[2021] FCA 560.
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[2021] NSWLEC 110.
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[2021] NSWLEC 92.
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[2021] NSWCA 216.