Northern Territory judgment gives green light for further gas exploration in the Beetaloo basin

In Central Australian Frack Free Alliance Inc v Minister for Environment & Anor [2024] NTSC 75 (Judgment), the Supreme Court of the Northern Territory rejected Central Australia Frack Free Alliance’s (Plaintiff) application to quash the decision of the Minister of the Environment (Minister) to approve the Environment Management Plan (EMP) for Tamboran Resources’ application to permit 12 additional exploratory wells in the Beetaloo Basin (project). The plaintiff also sought, but failed, to obtain an order to restrain Tamboran Resources from proceeding with any activity in reliance on the EMP or the Minister’s decision.

Background

The Plaintiff, an environmental group, argued that the approval of Tamboran’s exploration permit was invalid because the environmental impacts and environmental risks of the project were not adequately considered.

Central to the Plaintiff’s case, was that, in approving the exploratory works, the Minister ought to have considered long term environmental impacts and climate risks, including the risk of “unsustainable” greenhouse gas emissions, arising out of any future gas production that might eventuate, subsequent to the exploration activities.

The Court rejected the Plaintiff’s application and found for the Minister and Tamboran Resources (the Defendants) on each of the four grounds of review.

The judgment: Grounds of Review

Ground 1

The Plaintiff asserted that, when assessing the EMP, the Minister misconstrued the phrase ‘environmental impacts and environmental risks’ in reg 9(1)(c) and Sch 1, cl 3(1)(a) of the Petroleum (Environment) Regulations 2016 (NT) (Regulations) by failing to consider events and circumstances arising from any future production activities relating to gas resources identified in exploration.

The Court found that the Regulations require an EMP to address the environment impacts and risks associated with the “regulated activity”. The “regulated activity” is defined by reference to the technical works programme at issue, and the significance of environmental impacts or environmental risks to be considered are only those associated with that particular activity.

The Court highlighted that at the time of the EMP assessment at issue, no production activities were authorised under any approval process and the potential for any future production activities was dependant on exploration phase outcomes.

Accordingly, any future production activities would require a production licence and the application for this licence would necessitate a further EMP, containing details of any environmental impacts and risks specific to the proposed production activities, at that later stage.

Ground 2

The Plaintiff argued that the Minister could not lawfully have been satisfied that the EMP included details of all environmental impacts and risks as required by the Regulations, where the EMP did not adequately detail impacts or risks associated with “unsustainable” greenhouse gas emissions.

The EMP had attested that there would “be no significant impact on air quality and no excess greenhouse gas emissions as a result of [the] exploration activities”. In finding for the Defendants on this ground, the Court held that it would be “impossible” to estimate the potential contribution of the regulated activity to any particular impact on global temperatures and “not possible” to identify the required causal relationship between the regulated activity and any increase in extreme weather or global temperatures.

Ground 3

The Plaintiff contended that the Minister erred in law in finding that the EMP contained the matter set out at Sch 1 cl 3(2)(a)(ii) of the Regulations, as it contained an assessment of procedures to be followed in any possible emergency situation, rather than an assessment of the environmental impacts arising directly or indirectly from an emergency situation.

The Court reasoned that determination that the EMP satisfied the statutory requirement “cannot be said to be unavailable on the material or otherwise illogical”, and while the EMP could have taken a more detailed approach to this analysis, it could not be that any EMP that fails to include that level of detail automatically fails to satisfy the Regulations.

Ground 4

The Plaintiff argued that the Minister was precluded from approving the EMP as the regulated activity had the potential to have a significant impact on the environment, where none of the exceptions provided in reg (9)(a)to (c) applied and therefore necessitated referral to the Northern Territory Environment Protection Agency (NT EPA) under s48(a) of the Environment Protection Act 2019 (NT) (Act).

The Court found that, under this provision, if the Minister forms a view that an application should be referred to the NT EPA, the Minister:

1. may refuse to consider the application until the referral is made and determined;
2. must encourage the proponent to refer the action; and
3. may refer the action to the NT EPA herself or himself.

Accordingly, the Court confirmed that the Act “does not cast any obligation” on the Minster to either a) refuse to consider the application until a referral is made, or b) personally refer the proposed action.

In accordance with the Regulations, the Minister may consider an application and grant authorisation, even if the proposed action has the potential to have a significant impact on the environment. The Minister is allowed to grant a valid authorisation even where the proponent is required to refer the proposed action to the NT EPA and has not – this does not invalidate the Minister’s authorisation. It is only in circumstances where a referral has been made and determination remains pending, that the Minister is precluded from granting authorisation.

The judgment also clarified that once a referral has been made to the NT EPA, a statutory decision-maker must not grant authorisation until the NT EPA has determined whether an environmental impact assessment is required and, if so, then not until the approval process is complete. Upon conclusion of this process, the statutory authorisation “springs back into effect”. Here, in the absence of a referral and determination from the NT EPA, the Minister was permitted to approve the EMP.

Relevantly, in circumstances where the proponent does not refer a proposed action where the NT EPA considers there is potential for a significant environmental impact, the NT EPA may issue a notice pursuant to s53(1) of the Act requiring that the proponent refer the action and, where the proponent is obliged to make the referral, a failure to do so attracts criminal sanction.

Further, the Court confirmed, “The NT EPA’s view is determinate of the issue within the confines of the statutory scheme, in the sense that it may compel a proponent to refer a proposed action and, once a proposed action has been referred, that it must determine whether it has the potential to have a significant impact on the environment.”

Commentary

Most significantly for the mining and resources industry, the judgment provides some clarity about both the assessment procedure, and approval requirements, for EMPs relating to exploratory activities. The judgment confirms that the Minister is not legally required to consider potential long term environmental or climate impacts or risks arising from future production-phase activities, when considering exploratory activity EMPs.

Further, in the absence of a referral and a determination that an environmental impact assessment is required for a proposed action from the NT EPA, the Minister is permitted to approve an EMP. The judgment also serves as an important reminder that, in circumstances where the NT EPA issues a notice to refer a proposed action, compliance is paramount to avoid criminal sanction.