Modifying planning approvals beware: Centennial Coal discovers existing operations may not be reapproved

A NSW Court of Appeal decision has demonstrated that seeking further or modified planning approvals for existing operations can be a risky business (4nature Incorporated v Centennial Springvale Pty Ltd [2017] NSWCA 191). The proceedings were brought by an environmental group, 4nature, against Centennial Coal in relation to a State Significant Development (SSD) application to continue and expand operations at its Springvale Coal Mine near Lithgow in NSW.

It is important that operators and owners consider all the strategic options available before applying for further or modified planning and environmental approvals.

State Significant Development application

At the time it sought development consent, Centennial held an existing development consent for the Mine which was due to lapse on 30 September 2015.

The Mine does not have its own waste water treatment plant, and following the closure of the nearby Wallerawang power station (where it had previously sent its waste water), the Mine had discharged its untreated waste water (containing high levels of saline and other contaminants) directly into the Upper Coxs River. The Coxs River is the second largest source of water for the Warragamba Dam, which supplies most of Sydney's drinking water. Centennial proposed to continue this practice under the new SSD consent for its expanded operation.

The Planning Assessment Commission (PAC) was delegated the authority to determine the SSD application on behalf of the Minister. The PAC held two public hearings before granting development consent, subject to conditions.

Issues in the proceedings

4Nature challenged the validity of the consent, first in the NSW Land and Environment Court (LEC), and subsequently in the Court of Appeal, on the basis that it conflicted with State Environment Planning Policy (Sydney Drinking Water Catchment) 2011 (NSW) which required the consent authority to satisfy itself that "the carrying out of the proposed development would have a neutral or beneficial effect on water quality" within the catchment area.

Consent was upheld by the LEC at first instance but subsequently overturned by the Court of Appeal.

When the PAC considered the effect the proposed development would have on the water quality of the Upper Cox River as part of determining the SSD application, it did so on the basis of the current permissible level of discharge from the Mine. It determined that the proposed level of discharge would have a neutral or positive impact compared with the existing discharge. 4nature submitted, both at first instance and on appeal that this was the wrong test.

Land and Environment Court findings

4nautre challenged the consent on three grounds in the LEC, which, in substance, were that:

• the PAC did not reach a state of satisfaction that the carrying out of the proposed development would have a neutral or beneficial effect on water quality as required by the Catchment SEPP prior to granting consent;
• the PAC misdirected itself as to the law to be applied to the consideration and determination of the SSD application, namely that it was only required to take into account the Catchment SEPP rather than directing itself to be satisfied of the effect the proposed development would have on the water quality; and
• the PAC failed to take into account a mandatory relevant consideration, namely whether it was satisfied of the effect the proposed development would have on the water quality.

Judge Pepper in the LEC concluded that the PAC was aware that it could not approve the project absent satisfaction that the proposed development would have a neutral or beneficial effect on the water quality. The PAC stated that the project could be approved subject to conditions and it proceeded to adopt the conditions recommended by the Department of Planning and Environment, agreed to and accepted by the Environment Protection Authority and WaterNSW, as to discharge limits for salinity.

Judge Pepper held that the PAC, "after appropriate active intellectual engagement, did not apply the wrong test, but reached an independent state of satisfaction that the carrying out of the project would have a neutral or beneficial effect on water quality and that it proceeded to grant consent on this basis".

Court of Appeal findings

On appeal, 4nature again challenged the test the PAC used to reach its decision. The Court of Appeal ultimately agreed with 4nature.

The Court held that when determining the new SSD application, the PAC should not have used the current permissible level of discharge as the baseline for the comparison. It should have instead looked at all the circumstances of the proposed discharge afresh, taking into account that the existing discharge would cease on expiration of the existing consent in 2015.

The Court held that it was essential to establish an appropriate base case so that the water quality could be compared with and without the proposed development. The PAC's approach was deemed by the Court to be erroneous and, as a result, the power to grant consent was not engaged and the grant of consent was invalid.

Lessons for operators and owners

The Centennial Coal case illustrates the risks associated with seeking further or modified planning approvals for continuing or expanding existing operations. Doing so could expose existing activities to scrutiny and may provide an opportunity for, or even require, the consent authority to impose more restrictive conditions going forward. This is especially important where aspects of operations may have been approved some time ago under less strict environmental regulations and may be considered poor practice, unsafe or otherwise not in compliance with current environmental law.

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