Factual and legislative background
15 A statement of agreed facts for the purposes of the separate question was tendered pursuant to s 191 of the Evidence Act 1995 (Cth). Some of those agreed facts are also relevant to the judicial review application. In the judicial review application there were no controversial issues of fact.
16 The CFI Act establishes a scheme providing incentives for the conduct of activities that will have the effect of reducing atmospheric carbon and other greenhouse gases. This is apparent from the objects of the CFI Act, set out in s 3:
(1) This section sets out the objects of this Act.
Climate Change Convention and Kyoto Protocol etc.
(2) The first object of this Act is to remove greenhouse gases from the atmosphere, and avoid emissions of greenhouse gases, in order to meet Australia's obligations under any or all of the following:
(a) the Climate Change Convention;
(b) the Kyoto Protocol;
(c) an international agreement (if any) that is the successor (whether immediate or otherwise) to the Kyoto Protocol.
Incentives
(3) The second object of this Act is to create incentives for people to carry on certain offsets projects.
Carbon abatement
(4) The third object of this Act is to increase carbon abatement in a manner that:
(a) is consistent with the protection of Australia's natural environment; and
(b) improves resilience to the effects of climate change.
Purchase of carbon abatement by the Commonwealth
(5) The fourth object of this Act is to authorise the purchase by the Commonwealth of units that represent carbon abatement.
17 As AEA submitted, the incentive under the CFI Act takes the form of the issuing of Australian Carbon Credit Units for "eligible offsets projects" and providing for the purchase of those ACCUs that are "eligible carbon credit units" by the Commonwealth Government under "carbon abatement contracts". As the simplified outline in s 4 of the CFI Act states, an ACCU is personal property and is generally transferable.
18 Critical to the applicant's arguments on the judicial review application is the fact that the scheme recognises two different kinds of offsets projects, referable to the kinds of activities to be conducted as part of the projects: sequestration offsets projects and emissions avoidance offsets projects. Div 12 of Pt 3 of the CFI Act deals with these two kinds of eligible offsets projects. Emissions avoidance offsets projects are assigned several categories. Broadly, sequestration offsets projects are designed to remove carbon dioxide from the atmosphere, and emissions avoidance offsets projects are designed to avoid the emission of greenhouse gases into the atmosphere. It is worthwhile setting out ss 53, 53A and 54:
53 Emissions avoidance offsets projects
(1) For the purposes of this Act, a project is an emissions avoidance offsets project if it is:
(a) an agricultural emissions avoidance project; or
(b) a landfill legacy emissions avoidance project; or
(c) any other project to avoid emissions of greenhouse gases.
(2) Paragraphs (1)(a) and (b) do not limit paragraph (1)(c).
(3) For the purposes of this Act, a project is not an emissions avoidance offsets project if the project is a sequestration offsets project.
53A Area‑based emissions avoidance projects
(1) For the purposes of this Act, an emissions avoidance offsets project is an area‑based emissions avoidance project if it is a project of a kind specified in the legislative rules.
(2) Subsection (1) does not, by implication, affect the application of subsection 13(3) of the Legislation Act 2003 to another instrument under this Act.
54 Sequestration offsets projects
For the purposes of this Act, a project is a sequestration offsets project if it is a project:
(a) to remove carbon dioxide from the atmosphere by sequestering carbon in one or more of the following:
(i) living biomass;
(ii) dead organic matter;
(iii) soil; or
(b) to remove carbon dioxide from the atmosphere by sequestering carbon in, and to avoid emissions of greenhouses gases from, one or more of the following:
(i) living biomass;
(ii) dead organic matter;
(iii) soil.
19 Relevantly to the activities proposed by the applicant, by the definition in s 5, one kind of "agricultural emissions project" is (see (d) of the definition) a project to avoid the emission of methane or nitrous oxide from the burning of savannas or grasslands. The applicant's projects propose to do this by undertaking controlled burning of such savannas or grasslands.
20 Section 53(3) should also be noted: the two kinds of offsets projects are mutually exclusive.
21 It is important also to note another statutory concept in the scheme, descriptive of the nature of the offsets projects to be undertaken: that is the concept of an "area-based offsets project". This concept is defined in s 5 to mean an offsets project that is:
(a) a sequestration offsets project; or
(b) an area-based emissions avoidance project.
22 In other words, all sequestration offsets projects are area-based, in the sense of being activities conducted on or by reference to a particular area of land (or waters) - that being an inherent characteristic of this kind of project. Some emissions avoidance projects may also be area-based. Hence subsection (b) in the definition. The definition of what is, and is not, an area-based emissions avoidance project is left by the legislative scheme to prescription by the executive: see s 53A which I have set out above. Relevantly to the proposed activities of the applicant in issue in this proceeding, s 50 of the Carbon Credits (Carbon Farming Initiative) Rule 2015 (Cth) specifies one kind of area-based emissions avoidance project as a project to avoid emissions of greenhouse gases from the burning of savannas.
23 The applicant proposed to carry out two area-based emissions avoidance projects, within the meaning of the CFI Act, on land situated on the Cape York Peninsula in Queensland. Both involved savanna burning. Both projects were to be carried out on land which is the subject of a pastoral lease, and can be referred to as the Harkness Station project and the Balurga Station project. The two pastoral lessees have entered into a contract with the applicant in relation to the carrying out of the projects. The evidence is not entirely clear whether the savanna burning itself has already been undertaken, and the issue is whether the applicant can claim the commercial benefit for which the CFI Act provides: whether the burning has yet to be undertaken does not appear to matter for the purposes of the judicial review application. There were no submissions on whether the actual conduct of the burning was relevant to the cross-claim and the separate question. Certainly no interlocutory relief was pressed.
24 Both projects have been separately declared by a delegate of the Regulator, in mid-2015, to be eligible offsets projects under s 27(2) of the CFI Act.
25 Section 27 of the CFI Act provides:
27 Declaration of eligible offsets project
Scope
(1) This section applies if an application under section 22 has been made for a declaration of an offsets project as an eligible offsets project.
Declaration
(2) After considering the application, the Regulator may, by writing, declare that the offsets project is an eligible offsets project for the purposes of this Act.
(3) A declaration under subsection (2) must:
(a) identify the name of the project; and
(b) if the project is an area‑based offsets project - identify, in accordance with the regulations or the legislative rules, the project area or project areas; and
(c) identify the project proponent for the project; and
(ca) identify the applicable methodology determination for the project; and
(cb) identify the crediting period or periods for the project; and
(d) identify such attributes of the project as are specified in the regulations or the legislative rules; and
(e) if:
(i) the project is a sequestration offsets project; and
(ii) the application included a request that the project be treated as a 100‑year permanence period project;
declare that the project is a 100‑year permanence period project; and
(f) if:
(i) the project is a sequestration offsets project; and
(ii) the application included a request that the project be treated as a 25‑year permanence period project;
declare that the project is a 25‑year permanence period project.
Criteria for declaration
(4) The Regulator must not declare that the offsets project is an eligible offsets project unless the Regulator is satisfied that:
(a) the project is, or is to be, carried on in Australia; and
(b) the project is covered by a methodology determination; and
(c) the project meets such requirements as are set out in the methodology determination in accordance with paragraph 106(1)(b); and
(d) the project meets the additionality requirements set out in subsection (4A) of this section; and
(e) the applicant is the project proponent for the project; and
(f) the applicant passes the fit and proper person test; and
(g) if the project is a sequestration offsets project - the project area, or each project area, meets the requirements set out in subsection (5) of this section; and
(l) the project meets the eligibility requirements (if any) specified in the regulations or the legislative rules; and
(m) the project is not an excluded offsets project.
Note 1: Methodology determinations are made under section 106.
Note 2: For the fit and proper person test, see section 60.
Note 3: For excluded offsets project, see section 56.
(4A) The additionality requirements mentioned in paragraph (4)(d) are:
(a) either:
(i) the requirement (the newness requirement) that the project has not begun to be implemented; or
(ii) if the methodology determination that covers the project specifies, for the purposes of this subparagraph, one or more requirements that are expressed to be in lieu of the newness requirement - those requirements; and
(b) either:
(i) the requirement (the regulatory additionality requirement) that the project is not required to be carried out by or under a law of the Commonwealth, a State or a Territory (other than the National Greenhouse and Energy Reporting Act 2007); or
(ii) if the methodology determination that covers the project specifies, for the purposes of this subparagraph, one or more requirements that are expressed to be in lieu of the regulatory additionality requirement - those requirements; and
(c) either:
(i) the requirement (the government program requirement) that the project would be unlikely to be carried out under another Commonwealth, State or Territory government program or scheme in the absence of a declaration of the project as an eligible offsets project; or
(ii) if the legislative rules specify, for the purposes of this subparagraph, one or more requirements that are expressed to be in lieu of the government program requirement - those requirements.
(4B) For the purposes of subparagraph (4A)(a)(i), in determining whether the project has begun to be implemented, disregard any of the following activities that have been, or are being, undertaken in relation to the project:
(a) conducting a feasibility study for the project;
(b) planning or designing the project;
(c) obtaining regulatory approvals for the project;
(d) obtaining consents relating to the project;
(e) obtaining advice relating to the project;
(f) conducting negotiations relating to the project;
(g) sampling to establish a baseline for the project;
(h) an activity specified in the legislative rules;
(i) an activity that is ancillary or incidental to any of the above activities.
(4C) For the purposes of subparagraph (4A)(a)(i), the following are examples of when a project has begun to be implemented:
(a) making a final investment decision in relation to the project;
(b) acquiring or leasing a tangible asset (other than land) that is for use wholly or mainly for the purposes of the project;
(c) commencing construction work for the purposes of the project;
(d) in the case of a sequestration offsets project - preparing soil for seeding or planting that is for the purposes of the project;
(e) in the case of a sequestration offsets project - seeding, planting or fertilising plants that are for the purposes of the project;
(f) in the case of a sequestration offsets project - installing an irrigation or drainage system for the purposes of the project.
(4D) For the purposes of paragraph (4C)(a), final investment decision has the meaning generally accepted within the corporate finance community.
(4E) For the purposes of paragraph (4C)(b), disregard an asset that is a minor asset.
(5) The requirements mentioned in paragraph (4)(g) are:
(a) the project area is Torrens system land or Crown land; and
(b) the project area is not specified in the regulations or the legislative rules.
Note: For specification by class, see subsection 13(3) of the Legislation Act 2003.
(10) The Regulator must not make a declaration under subsection (2) if:
(a) the project is an area‑based offsets project; and
(b) the project area is, or any of the project areas are, to any extent subject to a carbon maintenance obligation.
(11) The Regulator must not make a declaration under subsection (2) in relation to a project (the new project) if:
(a) a notice was given under section 88, 89, 90 or 91 in relation to a project (the prior project) that is or was:
(i) an eligible offsets project; and
(ii) a sequestration offsets project; and
(aa) the new project is an area‑based offsets project; and
(b) the project area, or any of the project areas, for the new project was or were identified in the relevant section 27 declaration as the project area or project areas for the prior project; and
(c) the notice required a person to relinquish a particular number of Australian carbon credit units; and
(d) the person did not comply with the requirement within 90 days after the notice was given; and
(e) the penalty payable under section 179 in respect of the non‑compliance with the requirement (including any late payment penalty payable under section 180 in relation to the section 179 penalty) has not been paid in full.
Timing
(14) The Regulator must take all reasonable steps to ensure that a decision is made on the application:
(a) if the Regulator requires the applicant to give further information under subsection 24(1) in relation to the application - within 90 days after the applicant gave the Regulator the information; or
(c) otherwise - within 90 days after the application was made.
When a declaration takes effect
(15) A declaration under subsection (2) takes effect when it is made.
Notification of declaration
(17) As soon as practicable after making a declaration under subsection (2), the Regulator must give a copy of the declaration to:
(a) the applicant; and
(b) if the declaration relates to a sequestration offsets project - the relevant land registration official.
Refusal
(18) If the Regulator decides to refuse to declare the offsets project as an eligible offsets project, the Regulator must give written notice of the decision to the applicant.
Declaration is not legislative instrument
(20) A declaration made under subsection (2) is not a legislative instrument.
26 A declaration made under s 27(2) must identify the "project proponent" for the offsets project: see s 27(3)(c). The Regulator must not make a declaration unless it is satisfied, amongst other matters, that "the applicant is the project proponent for the project": see s 27(4)(e). The term "project proponent" is defined in s 5:
project proponent, in relation to an offsets project, means the person who:
(a) is responsible for carrying out the project; and
(b) has the legal right to carry out the project.
Note 1: See also section 46 (registered native title bodies corporate).
Note 2: See also section 135 (multiple project proponents).
27 AEA contends by the separate question that s 27(4)(e), read with the definition in s 5, involves a jurisdictional fact. If that is the case AEA will contend at trial that the Court should decide, as a jurisdictional fact, that the applicant had no legal right to carry out either of the offsets projects. That is because, as I understand AEA's argument, a project proponent for a savanna burning project must establish they have the legal right to control the fire regime of the area concerned, and it is the native title holders, represented by AEA, which have that right or which have rights that are inconsistent with any rights of the pastoral lessees or the applicant to control the fire regime of the area, as part of the native title rights determined on 5 December 2012. This appears from the affidavit of Mr Graham O'Dell, filed in support of the cross-claim and to which no objection was taken, where Mr O'Dell disposes on information and belief that:
(a) Kowanyama People are particularly concerned to conduct traditional burning on their country;
(b) traditional burning requires that particular vegetation be burned a specific times of year, so as to encourage vegetation and animals of concern to Kowanyama People to flourish;
(c) traditional law and custom requires that if persons other than Kowanyama People conduct burning, those persons should seek the permission of Kowanyama People first.
28 However, the separate question only relates to the proper construction of s 27(4)(e) (and I infer, the similar requirement in s 15(2)(b) of the CFI Act) and the consequent characterisation of the Court's task on judicial review.
29 At the time the declarations were first made by the Regulator in 2015, two conditions were attached to each declaration. The power to impose conditions is found in s 28A of the CFI Act which provides:
28A Declaration may be subject to condition about obtaining consents from eligible interest holders
Scope
(1) This section applies if:
(a) an application under section 22 has been made for a declaration of an offsets project as an eligible offsets project; and
(b) the Regulator makes a declaration under section 27 in relation to the project; and
(c) the Regulator is satisfied that there are one or more persons (the relevant interest‑holders) who:
(i) hold an eligible interest in the project area, or any of the project areas, for the project; and
(ii) have not consented, in writing, to the making of the application.
Condition
(2) The Regulator must specify in the declaration that the declaration is subject to the condition that the written consent of each relevant interest‑holder to the existence of the declaration must be obtained before the end of the first reporting period for the project.
Consents
(3) A consent mentioned in subparagraph (1)(c)(ii) or subsection (2) must be in a form approved, in writing, by the Regulator.
(4) A consent mentioned in subparagraph (1)(c)(ii) or subsection (2) may be set out in a registered indigenous land use agreement.
(5) Subsection (3) does not apply to a consent mentioned in subparagraph (1)(c)(ii) or subsection (2) if the consent is set out in a registered indigenous land use agreement.
Registered indigenous land use agreements
(6) If:
(a) the declaration is in force; and
(b) a consent mentioned in subparagraph (1)(c)(ii) or subsection (2) of this section was set out in a registered indigenous land use agreement;
details of the agreement must not be removed from the Register of Indigenous Land Use Agreements under subparagraph 199C(1)(c)(ii) of the Native Title Act 1993 without the written consent of the Regulator.
30 One condition, which is uncontentious in this proceeding, concerned the need to obtain required regulatory approvals (fire permits) and provide them to the regulator. The second condition, and the proper construction of s 28A(1) and (2), is at the heart of the judicial review application. The second condition required that the applicant obtain:
…the written consent of each relevant interest-holder to the existence of the declaration must be obtained before the end of the first reporting period for the project.
31 The phrase "eligible interest holders" is not itself a defined statutory term in the CFI Act. However, s 5 defines the term "eligible interest" in the following way:
eligible interest, in relation to an area of land, has the meaning given by section 43, 44, 45 or 45A.
32 Sections 43, 44 and 45 are lengthy and need not be set out here. They describe a range of proprietary interests which are eligible interests. Section 43 deals with land on which it is proposed to carry out a sequestration offsets project, and with who holds an "applicable carbon sequestration right" in relation to that land (including the circumstances in which a registered body corporate for native title holders may hold an applicable carbon sequestration right). Section 44 deals with proprietary interest in Torrens system land and what kinds of interests will be eligible interests, including when this will be the case for a mortgagee of Torrens system land, and the Minister of the State or Territory if the land is Crown land. Section 45 deals in similar terms with Crown land that is not Torrens system land. Section 45A deals with "native title land", and should be set out, because this is the interest which AEA is acknowledged to hold:
45A Eligible interest in an area of land - native title land
Scope
(1) This section applies to an area of land if:
(a) the area of land is native title land; and
(b) there is a registered native title body corporate for the area of land.
Eligible interest
(2) For the purposes of this Act, the registered native title body corporate holds an eligible interest in the area of land.
33 There was no real dispute by the applicant in its submissions that any person or entity who falls within, relevantly, s 45A is an eligible interest holder for at least some of the purposes of the CFI Act. Nor does the applicant dispute that AEA falls within s 45A. Rather, as I set out below, the applicant disputes the Regulator's power (under s 28A) to impose a condition that an eligible interest holder such as AEA must consent to an emissions avoidance offsets project or area-based emissions avoidance project.
34 In early April 2016, the applicant applied to the Regulator to remove the s 28A condition in respect of each project. That application was granted, and on 6 May 2016 and 17 June 2016 respectively, an officer of the Regulator made amended declarations removing the s 28A condition in respect of the Harkness and Balurga projects. If that position had remained, the subsequent legal steps taken by the applicant would not have occurred.
35 The consent condition having been removed, the applicant then applied in July and August 2016 for the actual permission to claim carbon credits for the offsets projects, called in the legislative scheme a "certificate of entitlement", and dealt with principally in s 15 of the CFI Act. Section 15(2) sets out a number of matters about which the Regulator must be satisfied, before a certificate of entitlement can be issued. These are properly characterised as preconditions to the power to issue such a certificate. In s 15(2)(ea) there is a requirement that the Regulator be satisfied that if the relevant s 27 declaration was subject to a condition mentioned in subsection 28A(2), that condition has been met. At the time the applicant applied for the certificates of entitlement, the s 28A condition had been removed from each s 27 declaration, so s 15(2)(ea) was not applicable.
36 However, and critically, before those applications were determined, an officer of the Regulator decided (on 27 October 2016) to "reinstate" the s 28A condition.
37 The Regulator explained the reinstatement in evidence and submissions in the following way by reference to a late discovery of the fact that AEA had not provided its written consent to the making of the application under s 22 of the CFI Act, or subsequently, to the existence of the declaration. The Regulator maintained during the proceeding, as it had in its previous decisions, that AEA's consent was required and the imposition of the condition under s 28A was within power.
38 Although the originating application seeks relief in relation to the 2015 and 2016 decisions, the applicant did not appear to dispute the Regulator's submission that the 27 October 2016 decisions were the operative decisions imposing the s 28A condition. Indeed, on internal review of the Regulator's decision under s 15 to refuse to issue a certificate of entitlement, it was those decisions which formed the basis for the Regulator's decision.
39 Given the reinstatement of the s 28A condition, unsurprisingly, the Regulator issued a notice of intention to make a decision refusing the application for certificates of entitlement in respect of both projects. It issued that notice on 4 January 2017. It was at this point, in its response to the notice, that the applicant raised its argument that s 28A did not authorise the Regulator to impose such a condition on anything but a sequestration offsets project. The Regulator rejected this argument. A final decision refusing the certificates of entitlement was made on 28 March 2017. An internal review process was undertaken, on the applicant's application, which was unsuccessful and on 24 August 2017 the original decision was affirmed. On 19 September 2017 the applicant then sought review in the Administrative Appeals Tribunal, as it was entitled to do. That review is continuing. The judicial review application was issued as, on the applicant's submission, a more efficient way of having the real issue between the parties determined.
40 Subject to the observations I make below, I accept that course was not inappropriate in the circumstances of this case. Unless the applicant's argument about the scope of s 28A is correct, it accepts that the Administrative Appeals Tribunal review must fail, and that the certificates of entitlement were correctly rejected. As I understand the circumstances, at least at the time of the proceeding, AEA did not intend to consent to either of the projects, as it contends it is the native title holders who are entitled to conduct burning on the land in question, or who, at a minimum, have rights to conduct burning that are potentially inconsistent with the burning that is required for the applicant's project.
41 The Regulator in its submissions noted that what is impugned in the judicial review application before this Court are the original decisions to impose the s 28A condition in mid-2015, and the "reinstatement" of the condition on 27 October 2016. There is no challenge to the internal review decision refusing to grant the applicant its certificates of entitlement, despite the fact, the Regulator contends, that the internal review officer gave independent reasons for that refusal: namely, that the officer was not satisfied that the applicant met the "fit and proper person" requirement in s 15(2)(a) of the CFI Act. The applicant answers this issue by submitting this is why it seeks declaratory relief and relief in relation to the s 27 decisions only, and the Court should not quash the Regulator's decision to refuse to issue certificates of entitlement to the applicant under s 15. Those latter decisions are the subject of applications for review to the Administrative Appeals Tribunal, and in that review the Tribunal will consider, amongst other matters, whether it is satisfied that all of the relevant conditions to the issue of certificates of entitlement are met, including whether the applicant is a "fit and proper person" for the purposes of s 15(2)(a) of the CFI Act.
42 If I had otherwise been persuaded of the correctness of the applicant's arguments about s 28A, the appropriateness of the relief sought by the applicant would have required further analysis. Given I am not so persuaded, I do not consider this matter further.