2. Developments in Administrative Law in Response to Climate Change

2.1.   Judicial Review

In this section, we invite you to evaluate climate litigation cases across the three broad categories of judicial review grounds: illegality, irrationality and procedural impropriety.^[1]

2.1.1.   Illegality

For a lawful decision, the ‘decision-maker must understand correctly the law that regulates [the] decision-making power and must give effect to it’.^[2] In contrast, illegality can include a failure to consider or comply with statutory requirements in the exercise of government power in administrative decision-making.^[3] An example of an administrative law case in this category is Australian Conservation Foundation v Minister for the Environment.^[4] This case involved a judicial review challenge of the environment Minister’s decision to approve the Carmichael coalmine in central Queensland. One of the grounds of review the Australian Conservation Foundation (ACF) raised was that the Minister had not correctly applied s 137 of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act), which requires the Minister not to act inconsistently with Australia’s obligations under the World Heritage Convention (WHC).

The ACF claimed that the Minister made an error of law in failing to apply the statutory prohibition in s 137 of the EPBC Act. Namely, approval of the mine was claimed to be inconsistent with Australia’s obligations under the WHC, as the effect of the mine’s combustion emissions overseas posed a risk to the World Heritage listed Great Barrier Reef.^[5] While the Federal Court of Australia accepted that a challenge on this basis was justiciable, it nevertheless held that the ACF failed to establish that the Minister had breached the statutory prohibition imposed by s 137, as he had sufficient regard to his obligation not to act inconsistently with the WHC in making the decision to approve the mine.^[6]

2.1.2.   Irrationality

The category of irrationality includes grounds of review such as a failure to take into account relevant considerations expressly required or implied by a statute, which is the most common way of framing judicial review challenges involving climate change.^[7] It also encompasses legal irrationality, illogicality and unreasonableness. In this subsection, we first consider cases where climate change is a mandatory consideration, before examining cases where consideration of climate change is implied by a statute. We conclude by examining the limits of irrationality arguments in the context of climate-related administrative law cases.

a)   Mandatory Requirements

An example of an administrative law challenge in which consideration of climate change impacts was mandatory is KEPCO Bylong Australia Pty Ltd v Independent Planning Commission & Anor (‘KEPCO Case’).^[8] In September 2019, the NSW Independent Planning Commission (IPC) rejected an application from KEPCO Bylong Australia to construct an open-cut and underground coalmine in NSW due to, inter alia, inadequate plans for minimising downstream scope 3 greenhouse gas (GHG) emissions.^[9] KEPCO initiated an unsuccessful judicial review challenge in the NSW Land and Environment Court^[10] and a further unsuccessful challenge in the NSW Court of Appeal.^[11] A key issue in both judicial review proceedings was whether the IPC had taken non-applicable considerations into account, including by considering the NSW Climate Change Policy Framework, which contains a net zero emissions objective, in its decision. Relevantly, under cl 14(2) of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (the Mining SEPP), the consent authority — in this case, the IPC — must consider an assessment of potential GHG emissions from a proposed mining development, including downstream emissions, and must do so having regard to any applicable state or national policies, programs or guidelines.^[12] In dismissing the appeal, the NSW Court of Appeal held that the IPC is entitled to consider the NSW Climate Change Policy Framework for the purposes of ‘applicable … policies, programs or guidelines’ under the Mining SEPP.^[13]

The KEPCO Case thus confirms that the IPC can exercise its discretion in applying and constructing the mandatory consideration in cl 14(2) of the Mining SEPP. Specifically, it has broad discretion in determining what constitutes an ‘applicable’ policy or guideline for assessing potential GHG emissions from a proposed project. We consider that the court requiring the IPC to take into account the considerations specified in cl 14(2) of the Mining SEPP is not necessarily disruptive; this is a straightforward application of the requirement to consider relevant mandatory considerations in administrative law. However, the NSW Court of Appeal’s construction of cl 14(2) was broad, reinforcing the wide discretion of planning authorities in assessing climate change impacts.

b)   Implied Requirements

More commonly, there is no express legislative requirement to consider climate change or GHG emissions, raising the question of whether a statute impliedly requires consideration of these matters. This requires consideration of a statute’s subject matter, scope and purpose.^[14] For example, Australia’s principal federal environmental statute, the EPBC Act, notably does not mention climate change once in its more than 500 provisions, let alone require its inclusion as a mandatory consideration in administrative decision-making processes. There have been various calls for legislative change to include an express legislative requirement or a ‘climate trigger’, including a proposed ‘duty of care’ Bill.^[15] The Climate Change Amendment (Duty of Care and Intergenerational Climate Equity) Bill 2023 (Cth) requires authorised officers making decisions that facilitate the financing and development of projects that may significantly increase GHG emissions to be (a) required to consider the impact of significant decisions on the health and wellbeing of current and future Australian children;^[16] and (b) prevented from making significant decisions involving the exploration or extraction of coal, oil or gas that could harm the health and wellbeing of current and future Australian children.^[17]

Despite the general lack of legislative requirements to consider climate change, the courts’ interpretation of environmental principles of ‘ecologically sustainable development’ (ESD) commonly referred to in environmental statutes, including the ‘precautionary principle’ and ‘intergenerational equity’, does allow for consideration of climate change.^[18] As part of the principles of ESD, which encourage integration of short- and long-term environmental, economic and social factors in decision-making, the precautionary principle seeks to ensure that scientific uncertainty does not prevent a prudent approach to minimising the risk of serious and irreversible impacts, and the principle of intergenerational equity aims to take into account the welfare of future as well as present generations.^[19] By their very nature, these principles require weighing of competing considerations, and they are not prescriptive. Thus, if a decision-maker appropriately considers climate change in applying these principles, they will not have failed to take into account a relevant consideration if they ultimately prioritise other considerations.

An example of an administrative law case in which consideration of climate change was impliedly required is Gray v Minister for Planning.^[20] The matter concerned a proposal to build the Anvil Hill coalmine, an open-cut mine in the NSW Hunter Valley. In this case, the NSW Land and Environment Court held that the Director-General was to have regard to the principles of ESD, particularly the precautionary principle and the principle of intergenerational equity, in determining the adequacy of environmental assessment required under pt 3A of the Environmental Planning and Assessment Act 1979 (NSW).^[21] The expansive interpretation of relevant considerations in this case evidences doctrinal evolution. Moreover, this case subsequently prompted the introduction of the Mining SEPP discussed above, which expressly requires downstream scope 3 GHG emissions to be assessed for all coal projects.^[22] Thus, although the case did not ultimately prevent the mine from going ahead, it had a disruptive effect by generating pressure for development in associated doctrinal and policy frameworks. This is significant, as it illustrates the potential for climate litigation in administrative law to disrupt regulations and government policy.

c)   Flawed Reasoning Processes

Another potential ground of review for challenging administrative decisions on climate grounds is legal unreasonableness, including serious irrationality or illogicality. Reasonableness in administrative law is ‘inherently sensitive to context’ and ‘cannot be reduced to a formulary’.^[23] Unreasonableness has been variously described as decisions or conduct that are arbitrary, capricious, illogical, irrational, unjust^[24] or that lack ‘an evident and intelligible justification’.^[25] These words and phrases should not be viewed as different categories of unreasonableness,^[26] but rather as useful markers.

Despite an expansion of the scope of unreasonableness review in the last decade,^[27] unreasonableness is difficult to establish and often remains a ground of ‘last resort’.^[28] There is also a significant risk that unreasonableness review will descend into merits review. Indeed, ‘of all the jurisdictional error grounds, none is more fraught with the possibility of impermissible transgression by the judicial branch into the constitutional remit of the executive branch than unreasonableness’.^[29]

Although unreasonableness is often a ground of last resort, in the case of Bushfire Survivors for Climate Action v Narrabri Coal Operations,^[30] the sole basis of the applicant’s judicial review challenge against the IPC’s grant of development consent for the Narrabri coalmine expansion was that the decision was legally unreasonable. The judicial review challenge was ultimately unsuccessful, with the NSW Land and Environment Court ruling that the IPC’s approval of the coalmine expansion was legally reasonable even though the project will emit the equivalent of Australia’s total annual carbon dioxide emissions.^[31] The court considered that a finding of legal unreasonableness in this instance would involve engaging in a ‘substitution of the Court’s determination of the merits of the Application — such is not open in proceedings such as these’.^[32]

The Federal Court case of Environment Council of Central Queensland Inc v Minister for the Environment and Water (No 2)^[33] further exemplifies these limits in the context of climate litigation. The case involved challenges to the federal environment Minister’s findings that decisions on new or expanded coalmines can legally exclude assessment of their climate impacts under the EPBC Act. The applicant argued that the Minister’s reasoning was flawed in multiple respects, including that it was legally irrational.^[34] The Federal Court rejected all the applicant’s appeal grounds, and emphasised the limited role of courts in judicial review in assessing the Minister’s reasoning. As McElwaine J observed:

[T]his Court is not concerned with the merits of the Minister’s decision. The judicial function is a limited one. The question is not whether the Minister made the correct or preferable decision on the merits or whether this Court disagrees with the outcome. To succeed, the applicant must demonstrate that the Minister erred in her understanding of the nature or the limits of the statutory power or, as contended in the proceedings, made legally irrational findings. … It was legally open to the Minister to weigh and assess the applicant’s material and submissions cognisant of the potentially catastrophic effects of climate change on MNES. The Minister in discharging what is clearly a heavy responsibility was not obliged to reason in the manner contended by the applicant. Ultimately, the applicant’s arguments, anchored by the extensive scientific material relied on, raise matters for Parliament to consider whether the Minister’s powers must be exercised to explicitly consider the anthropogenic effects of climate change in the manner the applicant submits they must.^[35]

We consider that the court’s strict adherence to the legality/merits divide in this case foreclosed opportunities for either legal disruption or development. As noted above, the EPBC Act does not explicitly require consideration of climate impacts in assessing projects, raising the question of whether legislative reform is needed to address this gap.

2.1.3.   Procedural Impropriety

Finally, the category of procedural impropriety encompasses a failure by a decision-maker to comply with a procedure required by statute. There is a legal error if procedures a statute specifies need to be observed in the making of a decision were not observed. Not all breaches of procedures required by statute will invalidate a decision; rather, the key question is: do the subject matter, scope and purpose of the Act indicate that it was a purpose of the legislation that an act done in breach of the relevant procedural provision should render the decision invalid?^[36] For decisions regarding development applications, a statutory requirement for the preparation of an environmental impact assessment (EIA) is likely to be construed as a necessary precondition to a valid decision to approve a development.

For example, in Gray v Minister for Planning, discussed above, the EIA for the proposed Anvil Hill coalmine was held to be inadequate, as it failed to assess the impact of downstream GHG emissions caused by the burning of the coal. Accordingly, it did not adequately satisfy the EIA requirements prescribed by the Director-General under pt 3A of the Environmental Planning and Assessment Act 1979 (NSW). However, the procedural nature of EIA mechanisms do not prescribe particular outcomes. This means that if procedural EIA requirements have been met, or are subsequently rectified after judicial review, a project may proceed even if the EIA process shows that the project will have adverse climate change impacts. The ultimate outcome of a successful judicial review application may thus be an extension of the initial environmental assessment undertaken, or reconsideration by the original decision-maker, even if the final outcome is substantively similar or unchanged.^[37]

Administrative law challenges on climate-related grounds most commonly pertain to decisions under environmental and planning laws, but they do on occasion relate to decisions made under other types of legislation. For example, in The Environment Centre NT Inc v Minister for Resources and Water (No 2),^[38] an environmental group sought judicial review of decisions of the Minister for Resources and Water providing for grants to an oil and gas company for exploratory drilling under the Public Governance, Performance and Accountability Act 2013 (Cth) (the PGPA Act). There were two relevant grounds raised relating to climate change. The first was that the minister failed to make reasonable inquiries in respect of climate change and climate change impacts and as a result failed to comply with s 71(1) of the PGPA Act. This section prohibits expenditure of relevant money unless the Minister is satisfied, after making reasonable inquiries, that the expenditure would be of proper use.^[39] The second was that by failing to have adequate regard to climate change and climate change risks, the Minister’s decisions were legally unreasonable, illogical or irrational.^[40] The first ground is an example of procedural impropriety as it pertains to failing to follow procedural rules set out in legislation. The second ground is an example of the irrationality category, discussed above.

Although the court upheld a challenge to one of the impugned decisions on other grounds, neither of the applicant’s grounds relating to climate change was successful. The court found that the requirement in s 71(1) of the PGPA Act for ‘reasonable inquiries’ to be made before determining whether expenditure of public money would be a proper use of that money involved the subjective, self-directed assessment of the Minister as to what inquiries were reasonable.^[41] Moreover, the court rejected the applicant’s claim that the Minister failed to consider climate change risks when deciding whether the project expenditure was a proper use of money, as the Minister was only required to be satisfied that granting funds to the project was a proper use of money in the context of the program.^[42] Similarly, in relation to the second ground, the court was not convinced that the making of the statutory instrument or the approval decision were legally unreasonable due to the Minister’s alleged failure to consider climate change and its associated risks.^[43]

In relation to both unsuccessful grounds of review, the court was mindful of the legality/merits divide and the importance of not encroaching on merits review. Regarding the first ground, Griffiths J in the Federal Court noted that ‘there is considerable force in the Commonwealth’s submission that the applicant’s position threatens to draw the Court into a form of merits-based assessment of Ministerial expenditure decisions across the full gamut of Commonwealth policy areas’.^[44] Similarly, in relation to the legal unreasonableness claim, Griffiths J opined that the argument that climate change risks were significant and directly relevant to the minister’s decision ‘reveals disagreement with the merits of the Approval Decision, not legal unreasonableness’.^[45] Thus, despite the novel interpretation of the legislative provisions presented by the applicant, there was limited scope for legal disruption due to the court’s adherence to the constitutionally entrenched separation of judicial power.

2.2.   Merits Review

In contrast, merits review has a wider scope than judicial review, which may allow climate change to have a more disruptive impact on existing doctrines.^[46] While judicial review focuses on the lawfulness of an administrative decision, merits review involves the reconsideration of the facts, law and policy aspects to determine the correct and preferable decision.^[47] In merits review, the tribunal or court conducting the review re-exercises the same power as the original decision-maker. The merits review avenue is frequently provided for in statutes, but notably there is no provision for merits review under the EPBC Act. However, merits review is provided for in some state-based environmental legislation, and it has on occasion facilitated successful challenges of administrative decisions on climate change grounds.

For instance, in the case of Gloucester Resources v Minister for Planning (‘Gloucester Case’),^[48] Preston CJ of the NSW Land and Environment Court undertook a merits review of a government decision to refuse an application for the ‘Rocky Hill Mine Project’.^[49] This was an important case in which an Australian court rejected a coalmine application, in part due to climate change impacts. The case took the form of a merits review under div 8.3 of the Environmental Planning and Assessment Act 1979 (NSW), which provides that the court can exercise all the functions and directions available to the original decision-maker when reviewing development approval decisions.

Preston CJ ultimately dismissed the appeal on the basis that the negative impacts of the project, including the climate change impacts, outweighed the other public benefits of the project.^[50] In his judgment, Preston CJ stated:

In short, an open cut coal mine in this part of the Gloucester valley would be in the wrong place at the wrong time. Wrong place because an open cut coal mine in this scenic and cultural landscape, proximate to many people’s homes and farms, will cause significant planning, amenity, visual and social impacts. Wrong time because the GHG emissions of the coal mine and its coal product will increase global total concentrations of GHGs at a time when what is now urgently needed, in order to meet generally agreed climate targets, is a rapid and deep decrease in GHG emissions. These dire consequences should be avoided. The Project should be refused.^[51]

Although the principal reason for refusing the mine on the basis of significant and unacceptable planning, visual and social impacts is not in itself disruptive, Preston CJ’s reasoning on the ‘market substitution’ argument arguably is. This argument is based on the premise that refusing coalmine projects due to their GHG emissions may not achieve overall emissions reductions, as the avoided emissions will be generated or substituted elsewhere.^[52] In Gloucester, Preston CJ considered and rejected this market substitution argument.^[53] He noted that ‘[t]he potential for a hypothetical but uncertain alternative development to cause some unacceptable environmental impact is not a reason to approve a definite development that will certainly cause the unacceptable environmental impacts’.^[54] This reasoning has influenced subsequent decisions; for example, the NSW IPC’s rejection of the Bylong Coal Project in September 2019, discussed above, was based on similar reasoning to Preston CJ in Gloucester, including rejection of the market substitution argument.^[55]

Administrative challenges before decisions about mining lease approvals are made can also facilitate closer scrutiny of claims made in EIAs. For example, the Land Court of Queensland has a role in hearing objections to mining leases and other approvals before a decision is made by the ultimate decision-maker. In an objections hearing in Adani Mining v Land Services of Coast and Country,^[56] the Land Services of Coast and Country challenged the granting of mining leases and environmental authorities in respect of the Carmichael coalmine. The court concluded that certain evidence about the financial and economic benefit of the mine in the environmental impact statement (EIS) was overstated. Specifically, while the EIS estimated the number of Queensland jobs generated by the mine alone to be over 10,000 full-time equivalent (FTE) jobs per annum by 2024, the correct figures, based on expert evidence before the court, were that the mine project would increase average annual employment by 1,206 FTE jobs in Queensland and 1,464 FTE jobs in Australia.^[57] The court drew this information to the attention of the Minister who was the ultimate decision-maker for the mining lease and environmental authority decisions.^[58]

In sum, the wider scope of merits review provides the reviewing body with broader review powers. As a result, climate change may have a more disruptive impact on the development of legal reasoning, as seen in the Gloucester Case. This is supported by international climate litigation trends identified by Setzer and Higham; namely, that 54 per cent of relevant procedural decisions made on merits had successful outcomes favourable to climate change action.^[59]