Shenhua mine: the federal government could have chosen farming over coal

Federal environment minister Greg Hunt has claimed that he had no choice but to approve Shenhua’s controversial Watermark Coal Mine near Gunnedah in New South Wales.

In a radio interview on Monday, Hunt stated that Commonwealth environmental law is “clear and prescriptive” and that the advice he was given about the mine could not have been clearer. He implied that he could not refuse the mine based on impacts on agricultural land.

Hunt’s approval sparked outrage from federal agriculture minister Barnaby Joyce, who said bluntly (and in breach of cabinet rules): “I think it is ridiculous that you would have a major mine in the midst of Australia’s best agricultural land.”

In the midst of this public dispute between cabinet members, Hunt’s claim that he could not have refused the mine due to the impacts on agricultural land is wrong. Just as considering the economic benefits of the mine is a legitimate consideration when weighing up approval of the mine, the economic costs due to loss of agricultural land is also a legitimate factor to consider.

What power does the federal government have?

Chinese coal giant Shenhua applied for approval of the proposed Watermark Coal Mine from the federal government in 2011. The mine was assessed under both federal and NSW law by an environmental impact statement.

It is true that the federal environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), is primarily concerned with protecting nine “matters of national environmental significance” rather than agricultural land directly. While these matters include the “water trigger”, which can protect an agricultural water resource, impacts on agricultural land is not itself a trigger.

But when deciding whether to approve or refuse a project that has triggered the Act, the minister weighs up the benefits and costs of the project within the statutory framework. This includes a wide discretion to consider “economic and social matters” under section 136 of the Act.

This allows the minister to consider the economic and social benefits of the mine from things like employment. It also allows the minister to consider the economic costs of the mine such as damaging agricultural land.

Yet Hunt said when interviewed about the mine:

We have to deal with the federal matters which are simply confined to matters of national environmental significance.

Under the law there is simply no other decision that a federal minister could have made. That’s because this isn’t a discretion like the New South Wales land planning, which was entirely at their discretion whether or not they opened it up. The federal Act is clear and prescriptive that if the scientific advice, the legal advice and the departmental advice all line up and we put in place the toughest conditions in Australian history, no federal environment minister could have reached a different decision.

He continued later in the interview:

…the federal Act isn’t a discretionary Act … the real discretion here was the NSW Labor decision to open up the land.

Hunt’s claim that only the previous NSW Labor government had a discretion is clearly political buck-passing. He relies on the messy scrambled egg of environmental power in Australia as cover for this claim.

His claim that his decision was prescribed by the Act is contradicted by the wide discretion given to him by the Act to weigh up the economic and social pros and cons of the project in making his decision.

Moreover the Minister did consider some agricultural impacts, as he imposed conditions that the mine would have to stop work if there were any impacts on agricultural water supply.

Are there avenues for legal challenges?

This raises the question - can the approval be challenged, as farmers on the Liverpool Plains affected by the mine are vowing to do?

The only avenue to challenge the federal approval of the mine is through judicial review. This is a very limited procedure that does not allow the merits of the approval to be challenged. The first step in that process is to seek a statement of reasons from the Minister, something that a number of groups are no doubt seeking now.

Judicial review is a bit like trying to fight the mine in a straight-jacket – the farmers want to say, “the mine is a stupid idea and shouldn’t be allowed because of the impacts on agricultural land”, but the judicial review process prevents this issue from being raised. Instead, the farmers will be forced to try to find some legal error in the decision-making process.

Arguably, Hunt’s public claim that his decision was prescribed by the Act suggests that his decision was affected by a legal error (by misunderstanding the width of his discretion in section 136 of the Act).

And that may leave the approval open to challenge.

Chris McGrath has acted as a barrister in litigation against the Federal Environment Minister. He has also provided advice to the Federal Environment Department on the operation of the laws discussed in this article.