Waratah Coal v Youth Verdict (Galilee Coal Project)

This is a landmark case in which the Land Court of Queensland recommended applications for a proposed major new coal mine be rejected on grounds that included human rights and climate change.

While many factors were important in the decision to recommend rejection of the mine, including the value of the Bimblebox Nature Refuge, new human rights laws in Queensland and First Nations witnesses powerful cultural evidence, the rejection of the Drug Dealers Defence really lies at the beating heart of the decision.

The Drug Dealers Defence (politely called the “Perfect Substitution” argument) is the argument by coal miners that “if we didn’t supply the coal, another mine would, so approving this mine will have no impact on climate change”.

The Drug Dealers Defence has been a mainstay of the Australian coal industry and State and Federal Government’s approval of coal mines for a decade. Its rejection is a first for Queensland and dramatically changes the previous approach taken by the Land Court.

The decision has immense significance for human rights and environmental law in Queensland and Australia. Given the scale of the mine and the Australian coal sector, this decision is hugely important on a global scale.

The mine

The mine was part of the “Galilee Coal Project (Northern Export Facility)”, which consisted of two open cut operations and four underground longwall mining operations, coal handling preparation plants, a rail transportation network to Abbot Point and a proposed port facility at Abbot Point.

The mine was proposed by Waratah Coal Pty Ltd (Waratah Coal), a wholly-owned subsidiary of Mineralogy Pty Ltd, which is the parent company of Clive Palmer’s corporate group.

If the mine were approved, Waratah Coal intended to:

• mine 56 million tonnes per annum (Mtpa) of run-of-mine (ROM) coal, which will be later processed to produce 40 Mtpa of product coal;
• initially commence operations with a 10 Mtpa open cut mine, eventually ramping up to 56 Mtpa several years later; and
• mine up to 1.4 billion tonnes of thermal coal over 25 years.

The original mine layout comprised underground mines to the west and two open cut mines to the east; however, in 2021 Waratah Coal revised the mine plan to abandon parts of the open-cut pits that would have destroyed the Bimblebox Nature Refuge. The new mine plan proposed 2 open cut pits (outside of the nature refuge) and 4 underground longwall mines.

The revised mine plan proposed to extract 761,828 million tonnes (Mt) of saleable coal, which would result in combustion emissions of 1.58 gigatonnes (i.e. billion tonnes) of carbon dioxide equivalents (Gt CO2-e).

Approvals & EIS process

In Queensland, the major approvals required for large mines under State and Federal legislation are:

• a mining lease under the Mineral Resources Act 1989 (Qld) (MRA);
• an environmental authority under the Environmental Protection Act 1994 (Qld) (EPA); and
• approval under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

The Queensland Coordinator-General declared the mine and rail project a “coordinated project” in 2010 under the State Development and Public Works Organisation Act 1971 (Qld).  This legislation provides an environmental impact statement (EIS) process for large projects but does not actually approve the projects occurring. An EIS under it is fed-back into other approval processes.

An EIS was prepared for the mine and rail project in 2010-2014 and the Coordinator-General issued a report in 2014 recommending the mine be approved.

Concurrently with the Queensland assessment of the mine, it was assessed under the EPBC Act using a bilateral agreement and subsequently approved by the Commonwealth Environment Minister in 2015.

Following the Coordinator-General’s report, the mine was publicly advertised for objections under the MRA and EPA in 2020, shortly after new human rights laws had come into effect in Queensland after the enactment of the Human Rights Act 2019 (Qld).

Objections to the mine

Youth Verdict Ltd and The Bimblebox Alliance Inc (TBA), both represented by the Environmental Defenders Office (EDO), lodged identical objections to the mining lease under the MRA and objections to the environmental authority under the EPA.

The grounds of the objections included the contribution the direct and indirect greenhouse gas emissions from the mine will make to climate change and the impacts on human rights. The grounds of objection were based on the criteria for assessment of applications in the EPA and MRA, supplemented by the rights recognised in the Human Rights Act 2019 (Qld).

These objections formed the basis for a new test case on climate change impacts.

What led to a new test case?

Some history provides important context here both to understand why this case occurred and its immense significance.

Prior to this case, the Land Court had recommended (and the Queensland and Australian governments had approved) large coal mines proceed despite extensive, undisputed evidence of climate change impacts. These cases included:

• the Wandoan Coal Mine case, heard by President Carmel MacDonald in 2012;
• the Alpha Coal Mine case, heard by Member Paul Smith in 2013-2014, which survived subsequent judicial review and appeal; and
• the Carmichael Coal (“Adani”) Mine Case, heard by President MacDonald in 2015.

The Wandoan Coal Mine case in 2012 set the Land Court’s approach to climate change for a decade prior to the new (Waratah Coal) test case.  In that case, President MacDonald adopted the miner’s argument that if we didn’t supply the coal, another mine would, so approving this mine will have no impact on climate change (the “Drug Dealers Defence“). This argument is a logical fallacy and contradicts the basic economics (the Law of Supply & Demand) but subsequently became a staple of the Australian coal industry and was (and still is) adopted repeatedly by the Queensland, NSW and Australian governments to avoid responsibility for approving new coal mines despite the clear impacts from their contribution to climate change.

Whatever evidence was presented to the Land Court, its members seemed to have settled into  accepting the Drug Dealers Defence, or what is more politely called the “Market Substitution” or “Perfect Substitution” argument.

Given this, apparently settled approach whatever evidence was presented, there seemed little use in challenging new coal mines in Queensland based on climate change impacts. Objections are difficult, costly and time-consuming to run and there is typically very limited resources available for such cases in comparison to the effectively unlimited resources of large mining companies to fight objections to their mines.

Of several factors that changed this, two were crucial.

First, in 2016 a new President was appointed to the Land Court, President Fleur Kingham. She had an impeccable record as a judge and was (and is) very smart and inquiring. In 2018 she gave a public speech on Climate Change Litigation in which she indicated (quite rightly) that acceptance of the Drug Dealers Defence was not set in stone but a factual question to be resolved based on the evidence in each case. Her Honour pointed out in her speech that the expert evidence on coal markets and economics was “critical” to the approach the Land Court had taken in the past in considering emissions from burning coal (Scope 3 emissions) and that a future Land Court may take a different view based on different evidence. Her Honour described her approach to considering expert evidence:

“I think about an expert’s opinion as an iceberg. The ultimate opinion presents as a conclusion, at the tip of the iceberg. So in the cases I have referred to [the Wandoan and Alpha coal mine cases], the tip of the iceberg is the conclusion that refusing the mine will not result in a reduction in the level of global GHG emissions. But the strength of the iceberg lies beneath the surface.”

This public speech did not suggest any bias in favour of any particular outcome but indicated a willingness to be open to listening to new evidence and taking a different approach to past cases.

Following President Kingham’s 2018 speech, in 2019 Chief Judge Brian Preston of the NSW Land and Environment Court eviscerated the Drug Dealers’ Defence in Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7. That groundbreaking decision is the subject of a separate case study – the Gloucester Resources case.

The Gloucester Resources case was truly groundbreaking for Australia but in addition to the result, the importance of this case lay in who wrote it and how well it was written.

Preston CJ  was (and is) undoubtedly Australia’s leading environmental jurist (and has been for over a decade). Preston CJ’s reputation and how well the judgment was written meant the decision would be influential for other Australian courts, including a smart and capable judge like President Kingham.

The second factor that was instrumental in the new test case was that the Environmental Defenders Office (EDO), led by a managing lawyer for its climate program, Sean Ryan, was willing to devote resources to run the new case despite past failures that seemed to be set in stone.

While different objectors had run the Wandoan, Alpha and Adani coal mine cases, the solicitor for each of them was the EDO led by Sean Ryan. A good solicitor is an essential component of running any complex, difficult litigation, particularly where a client has little money and the opponent is a large mining company with, effectively, unlimited resources.

Sean wrote of the lessons from the past cases in an article co-authored by (now) Associate Professor Bell-James:

• Bell-James, Justine and Ryan, Sean (2016) “Climate change litigation in Queensland: a case study in incrementalism” Environmental and Planning Law Journal, 33 (6), 515–537.

Sean’s leadership led to a new, very smart solicitor joining the EDO, Briana Collins. Bri had done research in her final year as an undergraduate law student at the University of Queensland under A/Prof Bell-James on climate change and Queensland’s then draft Human Rights Bill. Their research collaboration led to several published papers, including:

• Bell-James, Justine and Briana Collins (2020) “If we don’t mine coal, someone else will: debunking the market substitution assumption in Queensland climate change litigation” Environmental and Planning Law Journal, 37, 167–185.

Bri’s ideas were a key genesis of the new test case following the passage of new human rights laws in Queensland, the Human Rights Act 2019 (Qld), which give impetus to new ideas to break through the stone set around the Land Court’s acceptance of the Drug Dealers Defence to find new coal mines would cause “no impact” to climate change.

The EDO team, led by Sean, with solicitors Alison Rose, Briana Collins and Anna Reynolds, assembled a team of top barristers to argue the case:

• Saul Holt KC, arguably Australia’s best criminal defence lawyer and an amazing advocate who had acted in the Adani Mine Case.
• Emrys Nekvapil SC, one of Australia’s leading human rights lawyers and another brilliant legal mind at the Victorian Bar.
• Kasey McAuliffe-Lake, a very talented Queensland junior barrister.
• Katherine (Kat) Brown, a rising star of the Victorian Bar and very talented human rights lawyer.

This amazing team of lawyers led the challenge the Drug Dealers Defence in the context of new human rights laws in Queensland.

Land Court hearing

The objections were heard by President Kingham in the Land Court from April-July 2022.

In a legal first for mining objections, the hearing began with First Nations people in Gimuy/Cairns and the Torres Strait Islands of Erub and Poruma giving evidence to the Land Court on Country and in accordance with First Nations protocols.  The draft First Nations Protocol is available at this link.

Youth Verdict and TBA’s Closing Written Submissions are available at this link. These submissions are 364 pages long and contain rich analysis of human rights law relevant to assessing climate change impacts. They are a valuable document for anyone interested in this topic.

On 25 November 2022, President Kingham recommended the applications for the mine be rejected.

The central issue that won the case

Many factors contributed to President’s Kingham’s decision to recommend rejecting the mine, including the value of the Bimblebox Nature Refuge, new human rights laws in Queensland and powerful cultural evidence of First Nations.

As her Honour said at [1338] of her reasons in the context of discussing causation, quoting Lord Shaw in Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350, 369:

“The chain of causation is a handy expression, but the figure is inadequate. Causation is not a chain but a net. At each point influences, forces, events, precedent and [the] simultaneous, meet; and the radiation from each point extends infinitely.”

While President Kingham’s reasoning was not a linear “chain” of reasoning but, rather, a “net” of reasoning balancing many factors that led to the ultimate conclusion, one factor was central to it: the rejection of the Drug Dealers Defence (which Her Honour called “the Perfect Substitution” argument).

Her Honour summarised her rejection of this argument in the Executive Summary:

“[31] Waratah says approving the mine will make no difference to total emissions, because it will displace other lower quality coal with higher GHG emissions. I reject that submission, as well as its submissions that there will be a beneficial climate outcome if the Project is approved and an adverse climate outcome if it is not. Although the Project coal might displace other supply in its market, that is most likely to be other high rank coal, with similar GHG emissions.”

This summary reflected findings in the body of the reasons rejecting the miner’s Perfect Substitution argument:

“[1026] The evidence about the perfect substitution proposition does not satisfy me the mine would have no bearing on GHG emissions. I cannot find that the same amount of coal will be combusted regardless of whether the mine proceeds. …

[1027] … The evidence does not satisfy me that there will be no net impact or a beneficial impact if the mine does proceed. Nor does it satisfy me that there will be an adverse impact if the mine does not proceed. …

[1393] I have explained my conclusions regarding substitution. In summary, I have rejected Waratah’s argument there will be perfect substitution, therefore no net impact. The evidence does not allow me to make a finding about how much the Project coal might displace other coal (or be substituted by it if the mine does not proceed). In any case, because the competition for the Project coal is from other high rank coal, it is unlikely there would be a material difference in GHG emissions because of displacement/substitution. Therefore, there could be no material beneficial outcome if the mine proceeds or an adverse outcome if it does not.”

President Kingham’s rejection of the Perfect Substitution / Drug Dealers Defence laid the basis for her subsequent findings that approving the mine would make a material contribution to climate change, including the following:

“[1409] Approving the Project does not commit the world to [a scenario of stabilising at a 3°C mean global temperature rise], but it makes a material contribution to it, by making available coal for combustion that would generate 1.58 Gt of CO2 emissions. It is material because the remaining carbon budget to achieve the Paris Agreement temperature goal will be exhausted in somewhere between 8 to 15.5 years from now at the current rate of emissions, excluding the emissions from combusting the Project coal. This makes it more difficult to achieve [a scenario of temperature stabilising well below 2°C above the pre-industrial level], narrowing the options for achieving the Paris Agreement goals. …

[1505] The evidence presents a clear and pressing threat to the right to life that is now experienced by people in Queensland and will only be exacerbated by increasing emissions, to which the Project would make a material contribution. …

[1937] The contribution of the combustion of the Project coal to the remaining carbon budget to meet the Paris Agreement goal is material (1.58 Gt to a remaining carbon budget of between 320 Gt and 620 Gt). Approving the Project would narrow the options for achieving that goal.”

President Kingham’s rejection of the Perfect Substitution / Drug Dealers Defence was central to her reasoning as it laid the basis for other key findings, such as Her Honour’s finding that approving the project would contravene human rights such as the right to life and not be in the public interest. For instance, Her Honour reasoned in relation to whether limitations on the right to life were reasonable at [1486]:

“[1486] The Project’s material contribution to the life-threatening conditions of climate change (and associated economic and social costs) is not proportionate to the economic benefit and the supply of thermal coal to Southeast Asia. Assessing the economic benefits and environmental and social costs consistently, the limit is unreasonable in the sense of being disproportionate because it extends beyond what is reasonably necessary to achieve the purpose of the Project.”

The rejection of the Drug Dealers Defence was a legal first for Queensland and a very substantial departure from previous decisions of the Land Court in similar cases.

While other factors were important in the decision, including the value of the Bimblebox Nature Refuge and uncertainty of offsets, the rejection of the Drug Dealers Defence really lies at the heart of the decision in many ways and was central to the ultimate decision to recommend rejecting the mine.

Seen in the context of decisions to approve coal mines over the past decade, this decision is immensely significant for environmental and human rights law in Queensland and Australia.

Miner abandons judicial review

On 22 December 2022, Waratah Coal applied to the Supreme Court of Queensland for judicial review of President Kingham’s decision.

Clive Palmer told Guardian Australia the decision had sent shock waves through the coalmining sector and threatened the state’s future prosperity.

“A lot of people in the coalmining industry are concerned that this will be a precedent for future operations that will be detrimental to international investment in the coal industry in Queensland and create a lot of unemployment,” he said.

Waratah Coal was reported to be claiming in a 41-page judicial review application:

• President Kingham’s decision-making is littered with errors of law, went well beyond the jurisdiction of the Land Court and was an improper exercise of power.
• President Kingham “acted unreasonably in taking into account the impacts of climate change in a hypothetical future world”.
• President Kingham had “no evidence” that net greenhouse gas emissions would increase if the mine was approved, nor that they would decrease should it be rejected.
• Coal from other sources would “continue to supply the market as long as it exists” and that emissions were the responsibility of the countries in which fossil fuels were burned.
• Waratah also challenges President Kingham decisions regarding intergenerational equity, her concern that the company’s forecast economic contribution of the mine was optimistic and may result in tax benefits being retained overseas, as well as those regarding a raft of on the ground impacts such as noise, air pollution and subsidence.
• President Kingham did not have jurisdiction to inquire into how the proposed mine would affect the legal status of the Bimblebox Nature Refuge as “there is no prohibition on mining on a nature refuge”.

However, on 10 February 2023, Waratah Coal abandoned its judicial review application.

Final MRA and EPA decisions

President Kingham’s recommendations were required to be considered by the Minister administering the MRA and the administering authority of the EPA, the Department of Environment & Science (DES).

On 3 April 2023, DES refused the EA application.

Implications for other Queensland coal mines

If the same reasoning had been applied to the Wandoan, Alpha, Adani, coal mines, each of those mines would also have been rejected. However, neither the Wandoan or Alpha coal mines proceeded due to the poor market outlook for coal making them uneconomic. The Adani Coal Mine did proceed and shipped its first coal in 2021.

The fact that applying the same reasoning to the Adani mine would lead to it being rejected points to the fundamental weakness of the original approvals and its shaky future outlook. It can only defy gravity for so long.

President Kingham’s reasoning also poses a major obstacle for new coal mines in Queensland, particularly for thermal coal (although most of Queensland’s coal is metallurgical coal used in steel making, which is more economically valuable), even though the Queensland and Australian governments have shown wilful blindness to the harm caused by coal and gas in past approvals due to the money and politics involved, and are likely to continue this wilful blindness in the future.

New mines in Queensland are going to have to dance around the reasoning and hope they do not face an objection hearing in the Land Court so that they can rely on the wilful blindness of the Queensland government protecting them.

But what are the implications of the decision for existing coal mines? How does this decision affect their potential future liability for the harm caused by the coal they produce contributing to climate change?

While President Kingham’s decision was not about attributing liability for climate climate, it certainly has implications for this issue.

Her Honour found, at [1304], that “the following facts [were] either agreed or established by the evidence:

1. If the mine proceeds, the thermal coal in the ML area will be extracted, exported and burned, emitting GHGs into the atmosphere (agreed fact).

2. No tonne of CO2 is immaterial (joint expert opinion).

Her Honour made numerous findings that the 1.58 Gt CO2-e emissions from burning the coal from the mine would make a “material contribution” to harm and infringe human rights, for instance, at [1505]:

“[1505] The evidence presents a clear and pressing threat to the right to life that is now experienced by people in Queensland and will only be exacerbated by increasing emissions, to which the Project would make a material contribution. …”

These findings are the sleeper issues in the decision. They are based on uncontested or established facts. They are landmines buried and set to explode. Wilful blindness is rarely a good defence strategy for avoiding legal liability.

While tests for legal causation vary, across the differences in jurisdictions and statutes, a common principle is that where two or more causes combine to bring about harm, an act is legally causative if it “materially contributes” to the harm. As McHugh J said in Henville v Walker (2001) 206 CLR 459, 493 [106]; [2001] HCA 52 (footnotes omitted):

“If the defendant’s breach has ‘materially contributed’ to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage.”

This is not to say emitting a single tonne of CO2 by burning coal attracts legal liability for climate change, but large coal mines cause millions or even billions of tonnes of emissions (the Waratah Mine’s projected scope 3 emissions were 1.58 GtCO2). They are far above a single tonne.

In this context, President Kingham’s reasoning that “No tonne of CO2 is immaterial” and 1.58 Gt of emissions is a “material contribution” to harm certainly flashes a warning sign of legal liability being imposed on existing coal mines for their contributions to climate change in the future, not only in Australia but also overseas.