LEGAL UPDATES: Living Wonders in the Full Federal Court

17 July 2024

On 16 May 2024, the Full Court of the Federal Court of Australia dismissed the appeals in the Living Wonders cases, following the hearing in February. You can read more about the Full Court’s decision and the background to the case here.

Today, the Full Court delivered its judgment on the costs of the appeal proceedings and made no order as to costs. The effect of this decision is that each party bears its own costs, despite Environmental Justice Australia’s client, the Environment Council of Central Queensland (ECoCeQ), being unsuccessful in its appeals.

The judgement stated that the appeal proceedings brought by ECoCeQ concerned matters of high public importance, and the legal matters raised gave the case special significance.

ECoCeQ’s litigation is ongoing, as it awaits the outcome of its application for special leave to appeal the Full Court’s substantive decision to the High Court.

More detail: The costs judgment handed down by the Full Court

In its costs decision of 17 July 2024, all three members of the Full Court agreed, and formally ordered, that there should be no order as to the costs of the appeal proceedings. In making this order, the Court noted that a previous costs order made by Justice McElwaine in the context of first instance proceedings would remain in effect. You can read more about the first instance Federal Court proceedings here.

In summary, Chief Justice Mortimer found that based on the public interest in the outcome of the Living Wonders litigation, the interests of justice favoured the view that that there be no order as to costs in the appeal proceedings. Justice Colvin and Justice Horan agreed that the appropriate order in relation to the costs of the appeal proceedings was that each party should bear their own costs of the appeals.

Chief Justice Mortimer’s judgment

In summary, the parties’ arguments in relation to the costs of the appeal were as follows:

1. ECoCeQ submitted that each party should bear its own costs of the appeals;
2. The First Respondent, the Minister, submitted that ECoCeQ should pay 50% of the Minister’s costs of the appeals; and
3. The Second Respondents, Narrabri Coal Operations Pty Ltd and MACH Energy Australia Pty Ltd, submitted that ECoCeQ should pay their costs of the appeals.
   Chief Justice Mortimer determined that the appropriate costs order was that the parties should bear their own costs of the appeals.

In making that determination, Chief Justice Mortimer made the following observations:

• The Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) was designed to protect Australia’s environment through the protection of matters of national environmental significance. In reflecting on this, Chief Justice Mortimer noted that “the environment cannot speak for itself; someone must speak for it” and stated that community organisations like ECoCeQ, played an important role in advancing legal arguments which could clarify the operation of EPBC Act provisions that aim to protect the environment.
• In relation to the question of whether the Minister should be compensated for the expenses associated with the appeal proceedings, Chief Justice Mortimer noted that the Minister, as an officer of the Commonwealth exercising public power, did not have a private or personal interest in the outcome of the litigation – the Minister’s only interest was in the proper construction and operation of the relevant legislation scheme. Chief Justice Mortimer then went on to say that the litigation that had been brought by ECoCeQ, although unsuccessful, was of benefit to the Minister by affording the Minister some clarity about the nature and content of her statutory powers under the EPBC Act.
• Chief Justice Mortimer also noted that the costs of litigation under the EPBC Act can often be considerable but that the determination of these costs needed to be weighed against the advancement of public interest. Chief Justice Mortimer considered that making a costs order against an organisation like ECoCeQ, which operates as a not-for-profit environmental charity, had the potential to create a “chilling effect” for future environmental litigation, and went on to state that this was an important consideration for the Court to take into account when making a determination about costs in this type of litigation. Chief Justice Mortimer concluded that community organisations like ECoCeQ play a legitimate public interest role in ensuring that government bodies are held accountable in the exercise of their significant public powers and, in those circumstances, the interests of justice favoured an order that there be no order as to costs in relation to the appeal.

Justice Colvin and Justice Horan’s judgment

In their separate judgment, Justice Colvin and Justice Horan agreed with the Chief Justice and determined that the parties should each bear their own costs of the appeal. In reaching that conclusion, they stated that the appeal proceedings brought by ECoCeQ concerned matters of high public importance and the legal matters raised gave the case special significance.

15 February 2024

The Living Wonders cases are a ‘judicial review’ – which means they involve a judge (or multiple judges) reviewing whether the Minister’s made a decision properly, in accordance with the law (rather than whether it was the right decision). This means the litigation can often focus on specific, technical parts of a decision, and highly nuanced legal argument.

First ground: Market substitution approach

In their first ground, ECoCeQ argued the Environment Minister’s use of market substitution reasoning to refuse to reassess two huge new coal mines for their climate harm was unlawful.

Market substitution reasoning – also called the ‘drug dealer’s defence’ – in its most basic form, argues that if these two companies don’t go ahead and dig up this coal, other companies will dig up other coal – and the same amount of greenhouse gas emissions will occur anyway.

Fossil fuel companies often use this argument to deflect responsibility for the harm that coal and gas is doing to our environment.

ECoCeQ argues that using ‘market substitution reasoning’ is not a legally permissible way for the Environment Minister to approach that task.

Second ground: ‘Likely’ harm

In their second ground, ECoCeQ argued the Minister asked herself the wrong question when she considered the impacts of the coal mines.

They argued the Minister, because of how the current law is written, needed to consider whether it was ‘likely’ the mines would cause climate harm. Instead, she asked whether climate harm ‘will’ be caused by the emissions from these mines.

ECoCeQ argues this distinction between ‘will’ and ‘likely’ is critical in light of the evidence in this case. While climate harms are already being felt across Australia, the global scientific community is clear the decisions our governments are yet to make will determine the severity of future climate harm on our living wonders.

With all that is at stake, ECoCeQ argued ignoring the risk of ‘likely’ harm in favour of certain harm is inappropriate.

Third ground: Legal irrationality

For their third ground, ECoCeQ argued the Minister’s decision was legally irrational when she found there would be no ‘net increase’ in emissions from the mines because, following the market substitution argument, other coal would be dug up elsewhere if not here.

In climate science, there are many different versions of the future that could feasibly happen – but it’s impossible to know exactly what will happen in the future.

Therefore, according to ECoCeQ, the Minister’s finding was irrational because she simply cannot assume with certainty the same amount of coal and emissions would be created elsewhere if not through these two projects.

Fourth ground: Expert report

ECoCeQ’s fourth ground was about an expert report that was ruled irrelevant to their arguments by the first Federal Court judge last year.

The report was about climate science and modelling future scenarios. ECoCeQ argued it is relevant to their third ground, because it sets out why it is impossible to know which possible future emissions and climate scenarios are more likely than others.

Fifth ground: ‘Substantial’ harm

In their fifth and final ground, ECoCeQ argued the Minister applied the law incorrectly when she decided the climate harm from the proposed mines would not cause ‘substantial’ harm to protected animals, plants and places.

The Minister compared the emissions that would be produced by each mine to total global emissions at a single point in the past, and in this context concluded the emissions from the mines would be ‘very small.’

ECoCeQ argues this approach was irrational because it does not consider future scenarios where global emissions are reduced significantly. Were the emissions of these mines compared to total global emissions at a point in the future, in a context where emissions have significantly lowered, these two mines would then make a significant contribution to the climates harm impacting protected species and places.

12 February 2024

The appeals for the Living Wonders climate cases began today in the Full Court of the Federal Court of Australia, before their Honours Chief Justice Mortimer and Justices Colvin and Horan.

The appeals are against Justice McElwaine’s decisions in Environment Council of Central Queensland v Minister for the Environment (No 2) [2023] FCA 1208.

These cases are about whether the environmental risk assessment for two large coal projects, the Mount Pleasant Optimisation and the Narrabri Underground Stage 3 Extension, made under Australia’s national environmental law should have included scrutiny of the impacts of fossil fuel-driven climate change on the nationally protected species, ecosystems and places protected.

For a full recap of the initial hearings in September last year, read more here.

In court today

Today in court, ECoCeQ’s barrister Emrys Nekvapil SC set out the grounds of ECoCeQ’s appeals against Justice McElwaine’s decisions.

Ground 1: the Minister’s task under the national environmental law is to consider the likely consequences of the actual action that is being proposed, and not what might happen in another, hypothetical world.

When the Minister refused ECoCeQ’s reconsideration requests for the Mount Pleasant and Narrabri coal projects last year, she reasoned that if the two coal projects do not go ahead, other companies will dig up other coal and the same amount of greenhouse gas emissions will occur anyway. It follows that approving these two coal mines would not cause a ‘net’ increase in global emissions and would not, therefore, have an ‘impact’ on protected species and places. This is known as ‘market substitution reasoning’.

ECoCeQ argues that using ‘market substitution reasoning’ is not a legally permissible way for the Minister to approach that task.

Mr Nekvapil gave the Court a hypothetical example about chemicals factories around a lake to explain why the approach the Minister took can’t be in line with what the law requires.

According to the example, two competing companies, A and B, propose building a factory that will release cyanide into a nearby lake. There are already several factories releasing cyanide pollution into the lake, and the accumulation of cyanide in the lake is harming a threatened fish species. If the Minister’s approach was correct, then neither company A nor company B’s factory would have any ‘impact’ on the threatened fish because if company A didn’t build its factory, company B would, and vice versa – either way, additional cyanide would be released into the lake. The problem with this, ECoCeQ argues, is that harm from cyanide poisoning would, in fact, occur to the fish if either of the factories was actually built. Therefore, this ‘market substitution’ approach can’t be allowed under a law designed to protect the environment.

Ground 2: the Minister asked herself the wrong question when she considered the impacts of the coal mines.

The Minister asked whether effects of climate change on threatened species and protected places ‘will’ be caused by emissions from the mines. Instead, because of how the law is written, she was also supposed to ask herself whether it was ‘likely’ that the mines would cause these climate harms – which, ECoCeQ says, the evidence demonstrates is the case.

Ground 3: the Minister’s finding that there would be no ‘net increase’ in emissions from the mines was legally irrational.

According to climate science, although there are many different future scenarios that are feasibly possible, it is impossible to know with certainty what will happen in the future. ECoCeQ argues it was therefore irrational for the Minister to assume with certainty that if the relevant coal project didn’t go ahead, equivalent quantities of coal and emissions would be produced anyway – in the process ruling out the many better possible futures where there is no long-running global market for thermal coal.

Ground 4: Justice McElwaine was incorrect to find an expert report about climate science and the modelling of future scenarios was not relevant to ECoCeQ’s arguments and therefore not admissible. ECoCeQ argues that the report is relevant because it sets out why it is impossible to know which possible future emissions and climate scenarios are more likely than others.

Ground 5: the Minister applied the law incorrectly when she concluded that any contribution made by the coal mines to global climate change would not be a ‘substantial’ cause of climate harms to protected species and places.

In her reasons, the Minister compared the volume of emissions resulting from each mine to total global emissions at a single point in the past , and concluded the emissions from the mines were ‘very small’ in that context.

But, in future scenarios where the world succeeds in reducing emissions, total global emissions will drop sharply and, in those better future scenarios, the emissions from the mines would actually make a significant contribution to the seriousness of the impacts of climate change on protected species and places. ECoCeQ argues it was irrational for the Minister to assume global emissions would stay the same in future decades, and to conclude that the emissions from these coal mines are therefore not a ‘substantial’ cause of climate harms to protected species and places.

The hearing will recommence tomorrow, with arguments on behalf of the coal companies in the morning, followed by arguments from the Minister’s representatives.

ECoCeQ is challenging the Minister’s risk assessment decisions in relation to the Narrabri and Mount Pleasant proposals, marking the first court challenges to a coal or gas decision made by Australia’s current Environment Minister.

Currently, five coal and gas projects subject to the Living Wonders intervention have been either withdrawn by proponents or effectively shelved, and 11 reconsideration requests remain before the Minister awaiting her decision:

• North West Shelf Extension – Woodside Energy – Pilbara, WA
• Alpha North Coal Mine Project – Waratah Coal – Galilee Basin, western Qld
• Gas Supply Security Project, Australia Pacific LNG – Surat and Bowen Basins, central and south-west Qld
• Baralaba South Coal Project – Mount Ramsay Coal Company – Bowen Basin, central Qld
• Moorlands open cut coal mining project – Cuesta Coal – Bowen Basin, central Qld
• Saraji East coal mining project – BHP Billiton Mitsubishi BM Alliance – central Qld
• Winchester South coal mine project – Whitehaven – central Qld
• Lake Vermont Meadowbrook Coal Mine Project – Bowen Basin Coal – central Qld
• Boggabri coal mine expansion – Idemitsu – northern NSW
• Meandu Mine King 2 East Project – TEC Coal (Stanwell) – south east Qld
• Caval Ridge Mine Horse Pit Extension – BHP Mitsubishi Alliance – Bowen Basin, central Qld

As they prepare for their upcoming appeal hearing, ECoCeQ has received written assurance from the Minister that neither the Minister nor her delegate will make any decision to approve either Narrabri, Mount Pleasant or these other 11 pending coal and gas proposals currently before the Minister for reconsideration, until the appeals have been heard and determined.

Some of the proposals subject to the reconsideration requests have recently cleared further hurdles towards approval: Caval Ridge Mine Horse Pit Extension (Qld), Boggabri Coal Mine (NSW) and Winchester South Coal Mine (Qld) and have recently received approval by State Governments.

However none of these proposals can go ahead without the Federal Environment Minister’s final approval.

Further, in line with published departmental policy, the Minister must deal with ECoCeQ’s reconsideration requests before moving to approve any of these proposed projects.