Mullaley Gas and Pipeline Accord Inc v Santos NSW

Land and Environment Court (NSW)|2021-09-01|Before: Preston CJ

alley Speleological Society Inc v Upper Hunter Shire Council and Stoneco Pty Limited (2010) 210 LGERA 126; [2010] NSWLEC 48 Reference re Greenhouse Gas Pollution Pricing Act [2021] SCC 11 Taralga Landscape Guardians v Minister for Planning (2007) 161 LGERA 1; [2007] NSWLEC 59 Category: Principal judgment Parties: Mullaley Gas and Pipeline Accord Inc (Applicant) Santos NSW (Eastern) Pty Ltd (First Respondent) Independent Planning Commissioner (Second Respondent) Representation: Counsel: Ms S Pritchard SC with Mr B Kaplan (Applicant) Mr R Lancaster SC with Ms C Trahanas (First Respondent) Submitting appearance (Second Respondent)

Development consent for a CSG project is challenged

A community action group, Mullaley Gas and Pipeline Accord Inc (MGPA), has brought judicial review proceedings challenging the decision of the Independent Planning Commission (IPC) to grant development consent to the Narrabri Gas Project (the Project). The Project proposes the development of a new coal seam gas (CSG) field and associated infrastructure over 95,000ha in Narrabri in north-western New South Wales (the site). The Project will include the construction of up to 850 gas wells on up to 425 well pads over the life of the Project (approximately 25 years) and gas processing and water treatment facilities. Santos NSW (Eastern) Pty Ltd (Santos) is the proponent of the Project.
The Project is declared to be State significant development under s 4.36 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) as it is development for the purposes of petroleum production, which is listed under cl 6 of Sch 1 of the State Environmental Planning Policy (State and Regional Development) 2011. Santos lodged the development application seeking consent for the Project with the Department of Planning, Industry and Environment (the Department) on 2 February 2017. The development application was accompanied by an Environmental Impact Statement (EIS) dated 31 January 2017. The development application and EIS were publicly exhibited between 20 February and 22 May 2017. MGPA made a submission during the period of public exhibition objecting to the Project. MGPA's submission was one of 22,871 submissions made.
On 3 March 2020, the Minister for Planning and Public Spaces (the Minister) made a request under s 2.9(1)(d) of the EPA Act that the IPC conduct a hearing into the Project prior to determining the development application and determine the application within 12 weeks of receiving an Assessment Report from the Department.
On 11 June 2020, the Department provided to the IPC the Narrabri Gas Project (SSD 6367) Assessment Report (Assessment Report).
On 29 June 2020, the IPC asked Santos questions on notice. Santos responded to the IPC's questions on 17 July 2020.
On 29 June 2020 and 28 July 2020, the IPC asked the Department for a response to questions on different aspects of the Project and its impacts.
The IPC held the requested public hearing from 20 to 25 July and on 1 August 2020. MGPA presented at the public hearing on 21 July 2020 and made a written submission on 10 August 2020 objecting to the Project. Also on 10 August 2020, Santos provided a submission to the IPC responding to the submissions made at the public hearing, entitled "Narrabri Gas Project SSD 6456 submission to IPC following public hearing".
On 14 August 2020, the Department responded to the IPC's questions in its letters of 28 June and 28 July 2020.
On 30 September 2020, the IPC determined Santos' development application SSD 6456 by granting development consent subject to conditions, pursuant to s 4.38(1) of the EPA Act (the Consent). The IPC published a Statement of Reasons for its decision to grant consent on 30 September 2020. The Consent permits petroleum mining operations to be conducted on the site until 31 December 2045 (Condition A12).
MGPA contended that the IPC's decision to grant the consent is invalid on four grounds: 1. The IPC misconstrued s 4.15(1)(b) of the EPA Act by failing to consider the environmental impacts of the greenhouse gas (GHG) emissions of the Project and to balance them against the benefits of the Project (ground 1: consideration of impacts of GHG emissions ground); 2. The IPC misunderstood or misconstrued s 4.15(1)(a)(i) and (b) of the EPA Act and cl 14(1) of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP) by failing to impose a condition of consent to regulate downstream or Scope 3 GHG emissions because they were outside of the direct control of Santos (ground 3: downstream emissions condition ground); 3. The IPC's failure to impose a condition of development consent to regulate downstream or Scope 3 GHG emissions was legally unreasonable (ground 4: legally unreasonable decision ground); 4. The IPC failed to consider a relevant matter under s 4.15(1)(b) of the EPA Act of the environmental impacts of the construction of the proposed transmission pipeline conveying gas from the Project to domestic (East Coast) markets (ground 5: pipeline impacts ground).
The IPC entered a submitting appearance. Santos defended MGPA's claims.

A synopsis of the legal framework

The Project is development of a class or description declared to be State significant development under s 4.36 of the EPA Act. The consent authority for this State significant development is the IPC: see s 4.5(a) of the EPA Act and cl 8A of the State Environmental Planning Policy (State and Regional Development) 2011. The IPC's power to determine a development application for State significant development is in s 4.38(1) of the EPA Act, rather than the general power under s 4.16(1) of the EPA Act. Section 4.38(1) simply states: "The consent authority is to determine a development application in respect of State significant development by - (a) granting consent to the application with such modifications of the proposed development or on such conditions as the consent authority may determine, or (b) refusing consent to the application."
The evaluation of a development application for State significant development is the same as for development applications for other development under s 4.15: see s 4.40 of the EPA Act. In determining a development application, a consent authority is to take into consideration such of the matters in s 4.15(1) as are of relevance to the development the subject of the development application. Of relevance to the development of the Project are the provisions of any environmental planning instrument (s 4.15(1)(a)(i)), which includes the Mining SEPP; the likely impacts of the Project, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality (s 4.15(1)(b)); any submissions made in accordance with the EPA Act or the regulations (s 4.15(1)(d); and the public interest (s 4.15(1)(e)).
The provisions of the Mining SEPP include cl 14. Clause 14(1) and (2) are relevant to MGPA's challenge to the IPC's determination of the development application for the Project: "(1) Before granting consent for development for the purposes of mining, petroleum production or extractive industry, the consent authority must consider whether or not the consent should be issued subject to conditions aimed at ensuring that the development is undertaken in an environmentally responsible manner, including conditions to ensure the following - (a) that impacts on significant water resources, including surface and groundwater resources, are avoided, or are minimised to the greatest extent practicable, (b) that impacts on threatened species and biodiversity, are avoided, or are minimised to the greatest extent practicable, (c) that greenhouse gas emissions are minimised to the greatest extent practicable. (2) Without limiting subclause (1), in determining a development application for development for the purposes of mining, petroleum production or extractive industry, the consent authority must consider an assessment of the greenhouse gas emissions (including downstream emissions) of the development, and must do so having regard to any applicable State or national policies, programs or guidelines concerning greenhouse gas emissions."
A consent authority may determine a development application for State significant development by granting or refusing consent to the application. If the consent authority grants consent, it can grant consent "with such modifications of the proposed development or on such conditions as the consent authority may determine": s 4.38(1)(a) of the EPA Act.
MGPA contended that this power to grant consent subject to conditions is qualified by s 4.17(1) of the EPA Act. Amongst other limitations, s 4.17(1)(a) provides that: "A condition of development consent may be imposed if: (a) it relates to any matter referred to in section 4.15(1) of relevance to the development the subject of the consent".
Santos contested the applicability of s 4.17(1) to the grant of consent to an application for State significant development. Santos contended that the power to determine a development application for State significant development is conferred by s 4.38 and any limitations on the exercise of that power are only those imposed by Division 4.7. That Division does incorporate, by express reference in s 4.40, the requirement in s 4.15 for evaluation of a development application for State significant development, but the limitation in s 4.17 on the imposition of conditions of consent is not expressly incorporated.
I agree with Santos that s 4.17(1) does not apply to regulate the imposition of conditions on the grant of consent for State significant development. The power to grant consent on conditions to a development application in respect of State significant development is conferred by s 4.38(1)(a) of the EPA Act.

The IPC's consideration of the Project's GHG emissions

Three of MGPA's four grounds of challenge to the IPC's decision to grant development consent to the Project concern the IPC's consideration of the GHG emissions of the Project. Central to MGPA's argument that the IPC's consideration miscarried in various ways are the reasons given by the IPC for its decision on two topics: first, the expected GHG emissions advantage of CSG compared to coal and second, the downstream or Scope 3 GHG emissions are outside the direct control of Santos and therefore not able to be reasonably conditioned.
As to the first topic, Santos had argued, and the Department had agreed, that a strategic justification for the Project was the GHG emissions advantage of CSG over coal, as the combustion of CSG produces lower levels of GHG emissions than the combustion of coal for electricity generation. The IPC accepted this argument.
Santos had claimed, in section 24.3.5 of the EIS, that: "In the transition to a low-carbon economy, natural gas offers an opportunity for Australia by providing a low-carbon alternative to existing fossil fuel energy sources. Fuel switching to natural gas for electricity generation can deliver an improvement in emissions intensity of the electricity grid. This has occurred in the United States of America, where it is reported that fuel switching to natural gas from the shale gas boom has resulted in an emissions reduction of 200 Mt CO2-e per year (IEA 2014a). In comparison on a lifecycle basis, where both upstream and downstream emissions are taken into account, energy (such as heat or electricity) produced by the combustion of natural gas has significantly lower greenhouse gas emissions than the emissions intensity of the NSW electricity grid (refer to Figure 24-1). Note that: - upstream emissions for fossil fuel supplies are those emitted in the extraction, processing and transportation of their fuel product (ie coal or gas). - the downstream emissions are those emitted from the combustion of the fuel by the end-user." (p 24-5).
In the Greenhouse Gas Assessment attached to the EIS (Appendix R), Santos noted in the Executive Summary: "Lower-carbon energy sources such as natural gas can help to meet growing global energy demand while reducing relative global greenhouse gas emissions. For example, lifecycle emissions for electricity produced from the natural gas delivered by the Project will be nearly 50 per cent less than for the electricity that is currently supplied to the NSW grid (refer Figure 5-1)." (p i).
The Department, in its Assessment Report, stated: "Using gas to generate dispatchable energy is also likely to help reduce total greenhouse gas emissions in NSW as coal use is phased out. Recent research undertaken by the CSIRO indicates that fugitive emissions from coal seam gas projects in Australia are lower than previously thought, and that on a life cycle basis, domestic coal seam gas-fired electricity would produce up to 50% less carbon emissions compared to coal-fired production." (p xvi and see also p 104).
Later in the Summary of section 6.6 Greenhouse Gas Emissions and Climate Change, the Department added this comment: "In this regard, CSIRO's research indicates that the project has the potential to assist in reducing NSW's greenhouse [gas] emissions intensity, and be a key component of NSW's future energy supply mix." (p 104).
The Department elaborated on CSIRO's lifecycle analysis of the GHG emissions from CSG electricity production compared to those from coal-fired electricity production: "CSIRO has also recently undertaken a life cycle analysis of coal seam gas electricity production compared to coal-fired electricity production. The study indicates that if Queensland Surat Basin gas was used to displace domestic coal fired electricity generation, the GHG emission reduction relative to coal-fired electricity generation would be up to 50%. CSIRO's research indicates that coal seam gas has the potential to significantly reduce NSW's and domestic total GHG emissions intensity, if it displaces local coal-fired electricity generation. If the gas were to be exported as liquefied natural gas (LNG), emissions intensity savings would be less, due to the liquefaction, shipping and regasification processes required for export." (at [532]-[533]).
The IPC, in its Statement of Reasons, found in the Executive Summary: "The Commission acknowledges the lower greenhouse gas emissions of coal seam gas compared to coal. In response to concerns that the emissions advantage of coal seam gas may be jeopardised by an underestimation of fugitive emissions, the Commission has imposed a condition to require exceedances of the Applicant's predicted Scope 1 and 2 greenhouse gas emissions to be fully offset." (p 6).
The IPC referred to Santos' argument in the EIS of the emissions advantage of CSG compared to coal: "The Applicant considers that gas is a transition fuel that supports renewables by providing firming power generation and having lower greenhouse gas emissions than coal: "…on a lifecycle basis, where both upstream and downstream emissions are taken into account, energy (such as heat or electricity) produced by the combustion of natural gas has significantly lower greenhouse gas emissions than the emissions intensity of the NSW electricity grid' (p 24-25 EIS)" (at [159]).
The IPC referred to the Department's assessment of the greenhouse gas emissions of the Project in the Assessment Report and noted: "In relation to Scope 3 emissions, the Department cited the lower emissions intensity of CSG relative to coal and referenced CSIRO research that showed up to 50% emissions reduction from the combustion of CSG for electricity generation compared to coal (ARP 532-533)." (at [166]).
In its findings on the GHG emissions of the Project, the IPC found: "The Commission has considered public submissions stating that the Scope 1 CO2 and CH4 emissions in the EIS have been underestimated (paragraphs 155 -156). The Commission agrees that substantial exceedance of these predicted emissions would jeopardise the expected greenhouse gas emissions advantages of CSG over coal, which is a strategic justification for the Project presented by the Department (paragraph 165) and the Applicant (paragraph 159). In consideration of this justification and the environmental impacts of greenhouse gases, the Commission has determined that the Project should not be permitted to exceed its predicted Scope 1 and 2 emissions." (at [171]).
The IPC further noted: "With regards to the Australian Government's international commitment to reduce greenhouse gas emissions, the Commission noted the expected emissions advantage of CSG compared to coal for electricity generation and the Government's intent through the Commonwealth's endorsement of the Paris Agreement and the NSW Gas Plan and NSW Energy Pack MOU (Section 5.3) to increase the supply of gas in NSW. The Commission notes that petroleum production is a permitted use of the land and agrees with the Department (paragraph 168) that existing government policy relevant to the greenhouse gas emissions of fossil fuel and other mining operations is contained in the Mining SEPP." (at [174]).
In its conclusion, the IPC summarised these points as: "Scope 1 and 2 emissions can be minimised through conditions that require any exceedance of the predicted emissions to be fully offset so that the Project delivers its expected emissions advantage from using CSG for electricity generation as compared to coal." (at [440]).
As to the second topic, Santos' EIS included a Greenhouse Gas Assessment (Appendix R) which calculated the direct and indirect GHG emissions associated with the Project. These included Scope 1 emissions (direct GHG emissions from sources that are owned or controlled by Santos), Scope 2 emissions (indirect emissions from the generation of electricity purchased and consumed by Santos in the carrying out of the Project), and Scope 3 emissions (other indirect emissions that are a consequence of the Project but which arise from sources that are not owned or controlled by Santos, such as those associated with the downstream combustion of product gas by end users): see the definitions of Scope 1, 2 and 3 emissions at p 16 of the Greenhouse Gas Assessment.
The Greenhouse Gas Assessment showed that the bulk of emissions associated with the Project are indirect emissions associated with the downstream burning of the product gas (Scope 3 emissions), which account for 75-80% of the total direct and indirect greenhouse gas emissions generated by the Project. The Greenhouse Gas Assessment estimated, over the 25 year assessment period, the direct (Scope 1) GHG emissions to be 15.5 Mt CO2-e, indirect (Scope 2) GHG emissions to be 18 Mt CO2-e and downstream (Scope 3) GHG emissions to be 94.25 Mt CO2-e (3.77 x 25). The downstream emissions were described as follows: "Product use emissions due to downstream combustion of gas by consumers although beyond the operational control of Santos, have been estimated. Based on an assumption that the Project will deliver 200 TJ of gas per day for the 25-year assessment period, annual product use emissions from combustion of the gas by end-users would be in the order of 3.77 Mt CO2-e. Downstream emissions are a result of consumer demand for energy." (section 5.3, p 19 of Greenhouse Gas Assessment).
Santos proposed mitigation and management measures but only in relation to Scope 1 and 2 GHG emissions, not Scope 3 GHG emissions (section 6, pp 22-23 of Greenhouse Gas Assessment).
The Department summarised the GHG emissions associated with the Project, which had been calculated by Santos, in Table 16 of the Assessment Report. This showed total GHG emissions for Scope 1, 2 and 3 emissions as being 15.5, 18 and 94.3 Mt CO2-e respectively. The Department noted that the bulk of GHG emissions associated with the Project are downstream Scope 3 emissions, accounting for 75% to 80% of total direct and indirect GHG emissions generated by the Project (at [524]). The Department noted that the direct (Scope 1) GHG emissions represent up to 0.22% of Australia's energy sector emissions and up to 0.18% of total Australian emissions (at [526]). The Department estimated total Project-related GHG emissions (Scopes 1, 2 and 3) also as low relative to Australian emissions, being approximately 0.9% of Australia's total emissions. On a global scale, the Project-related emissions (Scopes 1, 2 and 3) represent 0.009% of current global GHG emissions (ie 53.5 GT CO2-e) (at [527] and Table 17).
The Department recommended that consent be granted subject to conditions, which it proposed. In relation to the greenhouse gas emissions of the Project, the Department stated: "Consistent with the requirements in the Mining SEPP, the Department has recommended conditions requiring Santos to minimise the greenhouse gas emissions of the project" (p xvii). The Department recommended conditions requiring Santos to: "- minimise point source and fugitive GHG emissions to the greatest extent practicable; - ensure that the project does not result in any material change to background methane and carbon dioxide levels at sensitive receiver locations in the project area; - implement a comprehensive leak detection and repair program; and - implement all reasonable and feasible measures to improve energy use efficiency and reduce GHG emissions." (at [540]).
The Department recommended that conditions of consent regulate only Scope 1 and 2 GHG emissions for the Project but not Scope 3 GHG emissions. The Department, in its response dated 14 August 2020 to questions from the IPC in its letters dated 29 June and 28 July 2020, explained its reasons for not recommending conditions of consent to regulate Scope 3 emissions: "Under Clause 14 of the Mining SEPP, a consent authority must consider an assessment of the greenhouse gas emissions (including any downstream emissions) of a project and consider whether conditions are required to ensure that greenhouse gas emissions are minimised to the greatest extent practicable. The Department has done this in its detailed assessment of the project. This assessment concluded that the direct emissions of the project (around 17% of the total emissions) are likely to be low, and could be reduced by prohibiting the use of flares for pilot wells (given the gas could be used in the nearby Wilga Park power station) and targeting the more prospective gas resources within the project with lower CO2 levels. Under the recommended conditions, this would be achieved through the assessment and approval of the Air Quality and Greenhouse Gas Management Plan. The remaining emissions (or indirect or downstream emissions) are associated with the ongoing use of gas in NSW over the next 20-25 years by heavy industry, business and over 1.4 million households. As the Department pointed out in its assessment report, these emissions are likely to occur whether the Narrabri Gas Project is approved or not. Essentially, these emissions form part of the "background" emissions in NSW and would be more than offset by the substantial reduction in greenhouse emissions that is likely to occur as a result of NSW's coal-fired power stations and as a result of the implementation of a range of other State and Commonwealth policy initiatives aimed at ensuring there is an orderly transition to a lower emissions economy in NSW. Certainly, there are no express policy initiatives at present that would lend any support to calls to phase out gas use in NSW over the next 20-30 years. On the contrary, gas is seen as being an important part of the energy mix in NSW during this period. Given the current policy setting in NSW, the Department does not consider it to be necessary or reasonable to impose conditions on Santos requiring it to reduce the greenhouse gas emissions of its customers. These emissions are the direct emissions (scope 1 and 2 emissions) of their customers, and it should be up to these customers to determine the best way to reduce their emissions. This is consistent with the approach taken to greenhouse gas emissions in all national and international agreements and the associated arrangements for accounting and reporting on these emissions. Again, there is no policy support at either the State or Commonwealth level that would support the imposition of conditions on an applicant to minimise the scope 3 emissions (i.e. the downstream emissions of third parties) of its development proposal. Consequently, the Department has not recommended any conditions requiring Santos to reduce the scope 3 emissions of the Narrabri Gas Project. This is consistent with the valuation principle of ESD where environmental goals - such as reducing greenhouse gas emissions - should be pursued in the most cost effective way." (pp 7-8).
The IPC, in its Statement of Reasons, said in its Executive Summary: "The Commission has granted a phased approval that is subject to stringent conditions…The Commission has accepted the Recommended Conditions of consent from the Department and imposed additional conditions…" (p 5).
In relation to GHG emissions, the IPC continued in the Executive Summary: "The Commission acknowledges the lower greenhouse gas emissions of coal seam gas compared to coal. In response to concerns that the emissions advantage of coal seam gas may be jeopardised by an underestimation of fugitive emissions, the Commission has imposed a condition to require exceedances of the Applicant's predicted Scope 1 and 2 greenhouse gas emissions to be fully offset. The Applicant will also be required to consult with an expert advisory group in measuring, minimising and reporting these emissions. The Commission is satisfied that the Project is consistent with the NSW Gas Plan and NSW Energy Package Memorandum of Understanding (31 January 2020), and notes that the task before the Commission is to determine whether to approve or refuse this specific Project, not to speculate about whether gas extraction in general should be permitted or other means by which the State's energy needs could be met." (p 6).
The IPC noted that: "Public submissions raised concerns about the environmental impacts of Scope 1, 2 and 3 greenhouse gas emissions from the Project in contributing to global climate change" (at [154]).
The IPC noted public comments about the Scope 3 GHG emissions of the Project: "In reference to Scope 3 emissions from the combustion of CSG within NSW, public submissions presented evidence that the Project would exceed the carbon budget required for Australia to meet its Paris Agreement commitments to reduce emissions. Concern was raised that once the additional emissions referenced about in paragraphs 155-156 were taken into account [which concerned underestimation of Scope 1 emissions], the greenhouse benefit from the reduction in emissions expected from the combustion of CSG as compared to coal for electricity generation could be negated." (at [157]-[158]).
The IPC referred to the Department's assessment of the GHG emissions of the Project in the Assessment Report and response to the IPC's questions, some of which have been quoted earlier (at [164]-[169]). The IPC then made the following findings on the expected greenhouse gas emissions of the Project, some of which have been quoted earlier but are repeated to place them in context of the overall findings: "The Commission accepts that the expected greenhouse gas emissions from the Project are as predicted in Appendix R of the EIS and summarised in paragraph 161, noting that these have been based on established National Greenhouse Accounts Factors and industry standards. The Commission has considered public submissions stating that the Scope 1 CO2 and CH4 emissions in the EIS have been underestimated (paragraphs 155-156). The Commission agrees that substantial exceedance of these predicted emissions would jeopardise the expected greenhouse gas emissions advantages of CSG over coal, which is a strategic justification for the Project presented by the Department (paragraph 165) and the Applicant (paragraph 159). In consideration of this justification and the environmental impacts of greenhouse gases, the Commission has determined that the Project should not be permitted to exceed its predicted Scope 1 and 2 emissions. The Commission has therefore imposed conditions 820 and 821 to require any exceedance of the predicted Scope 1 and 2 greenhouse gas emissions of the Project to be fully offset in accordance with a national government program concerning the offsetting of greenhouse gas emissions. Scope 3 emissions are not included in these conditions because the Commission's view is that these emissions are outside the direct control of the Applicant and therefore not able to be reasonably conditioned. The Commission has had regard to all the likely indirect and direct greenhouse gas emissions associated with the Project in its determination. In addition to the imposed conditions requiring any exceedance of the Applicant's predicted Scope 1 and 2 greenhouse gas emissions to be fully offset, the Commission has imposed a further condition 819 requiring the Applicant to establish a Greenhouse Gas Emissions Advisory Group to inform the proper management and reporting of the Project's greenhouse gas emissions. With regards to the Australian Government's international commitment to reduce greenhouse gas emissions, the Commission noted the expected emissions advantage of CSG compared to coal for electricity generation and the Government's intent through the Commonwealth's endorsement of the Paris Agreement and the NSW Gas Plan and NSW Energy Pack MOU (Section 5.3) to increase the supply of gas in NSW. The Commission notes that petroleum production is a permitted use of the land and agrees with the Department (paragraph 168) that existing government policy relevant to the greenhouse gas emissions of fossil fuel and other mining operations is contained in the Mining SEPP. The Commission has had regard to the likely extend of the emissions resulting from the Project, and the matters raised by the Department in its assessment referred to in paragraphs 165 to 169 above. The Commission considers that these emissions are justified because of the strategic alignment of the Project with the NSW Gas Plan and the NSW Energy Package MOU." (at [170]-[175]).
The IPC summarised its findings as including: "Scope 1 and 2 emissions can be minimised through conditions that require any exceedance of the predicted emissions to be fully offset so that the Project delivers its expected emissions advantage from using CSG for electricity generation as compared to coal." (at [440]).

The consideration of impacts of GHG emissions ground

MGPA's first ground of challenge is that the IPC's consideration of the environmental impacts of the GHG emissions of the Project miscarried. This resulted in the IPC failing to consider the likely impacts of the Project on the natural and built environments, as required by s 4.15(1)(b) of the EPA Act. MGPA contended that the IPC's consideration miscarried because the IPC asked itself the wrong question. The IPC compared the potential GHG emissions of the Project with the potential GHG emissions of hypothetical coal projects. Having done so, the IPC concluded that the adverse impacts of the Project were not such as to outweigh its benefits.
MGPA submitted that this approach was erroneous because the IPC could not "rationally approve" the Project on the "theoretical possibility" that its adverse effects on climate change "will be mitigated or offset by some unspecified and uncertain action and at some unspecified and uncertain time in the future" (citing Gloucester Resources Ltd v Minister for Planning (2019) 234 LGERA 257; [2019] NSWLEC 7 (Gloucester Resources) at [530]), being the use of gas from the Project to displace GHG emissions from coal in energy production. By focusing on the relative comparison of the GHG emissions from CSG with those of coal, the IPC disabled itself from having regard to the likely impacts of the Project.
MGPA submitted that the IPC's consideration of the likely extent of the GHG emissions of the Project, being the total Scope 1, 2 and 3 emissions calculated in the Greenhouse Gas Assessment in the EIS, and checked by the Department in the Assessment Report, is not an evaluation of the likely impacts of those GHG emissions. Equally, any consideration of the reduction in GHG emissions that might flow by CSG from the Project replacing coal-fired electricity generation is not an evaluation of the likely impacts of the GHG emissions of the Project. The central error in the IPC's reasoning was in thinking that, because the GHG emissions of the Project would be lower than those of hypothetical coal projects, it followed that those emissions would have an acceptable or justifiable impact on the environment. MGPA submitted that this conclusion did not ineluctably follow. There needed still to be an evaluation of the likely impacts of whatever would be the GHG emissions of the Project. By failing to consider the impacts of the GHG emissions from the Project, MGPA submitted, the IPC failed properly to take into account the mandatory matter specified in s 4.15(1)(b) of the EPA Act.
MGPA submitted that this error was material. It is plain from the IPC's reasons, including [171], that the IPC considered that the GHG emissions of the Project were acceptable at least in part because of the expected GHG emissions advantage of CSG over coal. Indeed, it was to ensure that this GHG emissions advantage would be achieved that the IPC imposed conditions B20 and B21 in order to require any exceedance of the predicted Scope 1 and 2 GHG emissions of the Project to be fully offset. The IPC agreed with the public submissions that if the predicted Scope 1 and 2 GHG emissions were exceeded, this would jeopardise the expected GHG emissions advantage of CSG over coal (see at [171] and [172]).
The IPC's acceptance of the GHG emissions advantage of CSG over coal also influenced its assessment of the public interest. The IPC considered that "all threats or risks to the environment" are capable of being mitigated by the conditions of consent. The conditions included conditions B20 and B21 (see at [428] of the IPC's Statement of Reasons).
MGPA submitted that had the IPC approached its evaluative task under s 4.15 correctly, it could realistically have reached different conclusions on the mandatory relevant matters in s 4.15(1) and made a different determination of the development application by either refusing consent or granting consent on further or different conditions.
Santos contested that the IPC failed properly to consider the relevant matters under s 4.15(1) of the EPA Act of the likely impacts of the Project on the environment or asked itself the wrong question in considering these matters. Santos submitted that MGPA's submissions misread the IPC's reasons. MGPA has focused only on the IPC's reference to the expected GHG emissions advantage of using gas derived from the Project for electricity generation as compared to coal, but has ignored section 7.3 and elsewhere in the Statement of Reasons where the IPC gave consideration to the extent and likely impacts of the GHG emissions associated with the Project. Such broader consideration of the impacts of the Project's GHG emissions evidences that the IPC did not disable itself from considering the likely environmental impacts of the Project because of the perceived GHG emissions advantage of CSG over coal.
As the Statement of Reasons revealed, the IPC took into consideration Santos' EIS and Greenhouse Gas Assessment, the Department's Assessment Report and response to the IPC's questions, and the public submissions made to the IPC. Based on the IPC's consideration of this material, the IPC made findings of the extent of Scope 1 (15.5 Mt CO2-e), Scope 2 (18 Mt CO2-e) and Scope 3 (94.3 Mt CO2-e) emissions over the life of the Project (as predicted by Santos in [161] and accepted by IPC in [170]). The IPC noted in its reasons "the environmental impacts of greenhouse gases" (at [171]), being "the contribution of greenhouse gases from the Project to climate change" (at [153]). The IPC agreed with the concern expressed in public submissions that the Scope 1 and 2 GHG emissions of that Project should not be permitted to exceed the predicted emissions in the EIS and Greenhouse Gas Assessment (at [171]). To address this concern, the IPC determined to impose conditions B20 and B21 to require any exceedance of the predicted Scope 1 and 2 GHG emissions to be fully offset (at [172]).
The IPC evaluated the acceptability of the likely extent of emissions resulting from the Project having regard to the NSW Gas Plan and NSW Energy Package MOU that encourage increasing the supply of gas in NSW (at [174]). The IPC considered that the likely extent of emissions resulting from the Project is justified because of the strategic alignment of the Project with the NSW Gas Plan and NSW Energy Package MOU (at [175]).
Santos submitted that this broader consideration reveals an evaluation of the likely impacts of the GHG emissions of the Project, as required by s 4.15(1)(b) of the EPA Act. The IPC's consideration of the emissions advantage of CSG compared to coal was but part of this broader evaluation.
Santos submitted that the IPC's acknowledgement of the lower GHG emissions of CSG compared to coal was made in the context of material provided by Santos and the Department, and the underlying policy context in NSW that is evident in those materials. Santos submitted that this involved a shift away from coal-fired electricity generation towards renewable energy, and during the transition, which will take some time, gas supplies will remain important, both as a direct energy resource for households and industrial facilities and to provide peaking gas-fired power to supplement renewable energy. Santos submitted that the IPC did not err in law in considering these materials provided by Santos and the Department or the underlying policy context in the materials.
I find that MGPA has not established that the IPC erred in law by considering the expected emissions advantage of CSG compared to coal. The IPC's consideration of this factor was part of its evaluation of the acceptability of the impacts of the GHG emissions of the Project. This evaluation of the GHG emissions involved three steps: first, identifying the extent of the GHG emissions; second, assessing the impacts of those emissions; and third, evaluating the acceptability of these impacts.
As to the first, the IPC identified the extent of the GHG emissions of the Project, both the direct (Scope 1) and the indirect (Scopes 2 and 3) emissions. The IPC accepted (at [170] of the Statement of Reasons) Santos' assessment of the GHG emissions of the Project in the Greenhouse Gas Assessment appended to the EIS (summarised in [161] of the Statement of Reasons), which had been accepted by the Department in its Assessment Report (noted in [164] of the Statement of Reasons). The IPC found the extent of the GHG emissions over the Project's life to be 15.5 Mt CO2-e (Scope 1), 18 Mt CO2-e (Scope 2) and 94.3 Mt CO2-e (Scope 3).
As to the second, the IPC assessed the environmental impacts of the total GHG emissions of the Project (Scopes 1, 2 and 3) to be their contribution to global climate change (at [153], [154] and [171]).
As to the third, the IPC evaluated the acceptability of the environmental impacts of the GHG emissions of the Project. The IPC found that the environmental impacts of the GHG emissions were acceptable for four reasons, only one of which concerned the emissions advantage of CSG over coal. As a matter of fact, therefore, the IPC's consideration of this emissions advantage did not displace the IPC's consideration of the extent and impacts of the GHG emissions of the Project.
First, the IPC found that the total GHG emissions over the Project's life would be relatively small, both in amount and as a percentage of Australia's and global GHG emissions.
The Department assessed the main direct (Scope 1) GHG emissions sources associated with the Project to be GHGs venting from producing gas processing operations (at [523] of the Assessment Report). The Department assessed the extent of the direct GHG emissions to be low, in relative terms. The IPC quoted (at [165] of the Statement of Reasons) the Department's assessment that: "In relative terms, the emissions of the project are expected to be low: background levels of methane and carbon-dioxide are low in the area; the target coal seams are very deep and generally sealed off from the surface by several aquitards; and the leakage from gas wells is expected to be very low given they would be drilled in accordance with the Well Integrity Code and fitted with leak detection systems." (pp xvi-xvii of the Assessment Report).
The Department found that the direct (Scope 1) GHG emissions from the Project represent up to 0.22% of Australia's energy sector emissions and up to 0.18% of total Australian emissions (at [526] of the Assessment Report).
The Department found that the Project's direct and indirect GHG emissions, including emissions from the downstream burning of the gas, would be minor, at less than 1% of Australia's total emissions (p xvii of the Assessment Report). The Department elaborated in section 6.6 of the Assessment Report that the total Project-related GHG emissions (Scopes 1, 2 and 3) are also low relative to Australian emissions, at approximately 0.9% of Australia's total emissions, and current global GHG emissions, at 0.009% (at [527]) of the Assessment Report.
The IPC considered the Department's Assessment Report and stated that it was satisfied with the Department's assessment in the Assessment Report (at [56] of the Statement of Reasons). This included the Department's assessment of the relative extent of the GHG emissions of the Project.
Minds may differ as to the significance of this factor of the relative extent of a project's GHG emissions, compared to the GHG emissions of other comparable projects, the country or the world. This factor can be a good servant but is a bad master.
An evaluation of the acceptability of a project's GHG emissions can be assisted by placing the project's GHG emissions in context and measuring them against the yardsticks of the GHG emissions of other comparable projects, the country in which the project is to be carried out, and the world. This assists in understanding the scale of the contribution of the projects' GHG emissions to climate change. The larger the project's GHG emissions, the greater the contribution to climate change. If the project's GHG emissions are relatively large, refusal of the project may be justified in order to reduce the contribution to climate change: Gloucester Resources at [554]. In this regard, assessing the relative extent of the GHG emissions of a project can be a good servant.
It can, however, be a bad master. Climate change is caused by a myriad of individual sources of GHG emissions, each source's contribution being individually small but cumulatively large when aggregated with other sources, so that mitigating climate change involves reducing or eliminating these individual sources of GHG emissions: Gloucester Resources at [515], [516]. The argument that because each project's GHG emissions are relatively small compared to the country's or the world's total GHG emissions, they cause no measurable harm or contribution to climate change, has been rejected by many courts: see Gloucester Resources at [514]-[524] and Reference re Greenhouse Gas Pollution Pricing Act [2021] SCC 11 at [189] and cases cited therein. Hence, whilst the relative extent of a project's GHG emissions can assist in understanding the scale of a project's contribution to climate change, it is not dispositive and can in fact, if blindly applied, lead to a misunderstanding of the project's contribution to climate change.
Nevertheless, the relative extent of the Project's GHG emissions was not an irrelevant factor to be considered in evaluating the acceptability of the environmental impacts of the GHG emissions of the Project. The IPC's consideration of this factor was one way that the IPC sought to evaluate the acceptability of the environmental impacts of the Project's GHG emissions.
Second, although the IPC found that it was satisfied with the assessment of the extent and impacts of the GHG emissions of the Project, it said it wanted to ensure that the emissions would not exceed the extent of emissions predicted in the Greenhouse Gas Assessment accompanying the EIS. This had been a concern raised in public submissions. To address this concern, the IPC decided to impose conditions B20 and B21 to require that any exceedance of the predicted Scope 1 and 2 GHG emissions of the Project be fully offset (at [171] and [172] of the Statement of Reasons). By this measure, the IPC sought to ensure that the extent and impacts of the Scope 1 and 2 GHG emissions of the Project would not be greater than those predicted by Santos in the Greenhouse Gas Assessment and assessed by the Department and the IPC as being acceptable. Although this measure addressed only the Scope 1 and 2 GHG emissions and not the Scope 3 GHG emissions, it still reveals consideration by the IPC of the extent and impacts of the GHG emissions of the Project, as required by s 4.15(1)(b) of the EPA Act and cl 14(1)(c) and (2) of the Mining SEPP.
Third, the IPC found that the extent and impacts of the GHG emissions of the Project were justified because of the strategic alignment of the Project with the NSW Gas Plan and NSW Energy Package MOU (at [175] of the Statement of Reasons). This finding was based on the Department's assessment and conclusion to this effect. The Department had noted that "the NSW Gas Plan seeks to create a sustainable gas industry in NSW that addresses community concerns and provides vital gas supplies to NSW, including industry, businesses and the over one million households who rely on gas across NSW" (p xvii of the Assessment Report).
Santos had committed to supply all gas generated by the Project to the domestic (East Coast) market (at [534] of the Assessment Report). The Department considered this to be a key commitment as it would assist significantly in shoring up NSW gas supplies, boosting NSW energy security and "driving down NSW GHG emissions and working towards a low carbon future by providing a flexible, local, scalable dispatchable energy source that can work with renewables to reduce energy-sector GHG emissions." (at [534] of the Assessment Report).
The Department considered "that there is a demonstrable need for the gas generated by the Project, and that the Project is consistent with NSW's and Australia's commitments to a low carbon future" (at [539] of the Assessment Report).
The Department, in its response to the IPC's questions, reiterated: "So, in the Department's view the Narrabri Gas Project is consistent with all government policy on climate change and the aim of ensuring an orderly transition to a lower emissions economy, just as it is consistent with the policy of the NSW government to facilitate the development of a safe and sustainable gas industry in NSW." (p 7).
This statement was quoted by the IPC (at [169] of the Statement of Reasons). The IPC's finding that the GHG emissions of the Project are justified because of this strategic alignment of the Project with government policy was relevant to the IPC's consideration of the acceptability of the extent and impacts of the GHG emissions of the Project.
Fourth, the IPC noted the expected emissions advantage of CSG compared to coal for electricity generation (at [171] and [174], amongst other references in the Statement of Reasons). This, of course, is the matter that founds MGPA's first ground of challenge to the IPC's decision. I reject MGPA's argument that the IPC erred in considering this factor or that its consideration of this factor displaced consideration of the relevant matter of the environmental impacts of the Project's GHG emissions.
The IPC considered this factor only in the context of evaluating the acceptability of the extent and impacts of the Scope 3 GHG emissions of the Project. These are the emissions associated with the downstream combustion of gas derived from the Project by end users. This emissions advantage of CSG compared to coal only referred to the GHG emissions produced by electricity generation, a particular end user.
Both Santos and the Department had argued that there would be a GHG emissions advantage if gas from the Project were to be used for electricity generation to replace coal-fired electricity generation, which might be up to 50% GHG emissions reduction (Santos' Greenhouse Gas Assessment at pp i, 20 and the Department's Assessment Report at [533]). The emissions advantage was promoted as a benefit of carrying out the Project. Displacement of NSW coal-fired electricity generation by gas-fired electricity generation has the potential to reduce NSW's total GHG emissions intensity (at [533] of the Assessment Report).
Consideration of this factor did not involve comparison of the GHG emissions of the Project with the GHG emissions of hypothetical coal projects, as MGPA contended. That suggested comparison would be between different fossil fuel extraction projects, comparing the Project, which involved a new coal seam gas field and associated infrastructure, with hypothetical coal mine projects. Santos, the Department and the IPC were not making this general comparison, nor were they making a particular comparison between the indirect (Scope 3) emissions of the Project by the combustion of gas produced by the Project for electricity generation with the indirect (Scope 3) emissions by the combustion of coal from other sources for electricity generation.
Instead, the comparison that Santos, the Department and the IPC were making was simply between the GHG emissions from gas-fired electricity generation with those of coal-fired electricity generation, without attribution of the scope of the emissions to the Project or other coal projects. The GHG emissions from either gas-fired electricity generation or coal-fired electricity generation are direct (Scope 1) emissions of the electricity generator concerned. The GHG emissions of the gas-fired electricity generator would also be indirect (Scope 3) emissions of the Project, insofar as the gas combusted is derived from the Project. But that was not the point of the comparison, as this would involve comparison of indirect (Scope 3) emissions of the Project with direct (Scope 1) emissions of coal-fired electricity generation. Rather, the point of the comparison was to assess whether the carrying out of the Project might lead to a reduction in total GHG emissions in the energy sector and for NSW as a whole. If gas produced by the Project were to facilitate gas-fired electricity generation displacing coal-fired electricity generation, a reduction in GHG emissions intensity in the energy sector and for NSW could potentially occur.
Viewed this way, contrary to MGPA's contention, the IPC did not compare the adverse impacts of GHG emissions of the Project with those of hypothetical coal projects, or thereby disable itself from having regard to the likely impacts of the Project. Rather, this was one way in which the IPC sought to evaluate the acceptability of the likely impacts of the GHG emissions of the Project under s 4.15(1)(b) of the EPA Act.
Equally, the IPC did not ask itself the wrong question in its consideration of the likely impacts of the Project, including the environmental impacts of the GHG emissions associated with the Project. The consideration of the emissions advantage of CSG compared to coal for electricity generation was relevant in assessing the potential benefits of carrying out the Project, the particular benefit being any reduction in total GHG emissions intensity in the energy sector and for NSW generally.
Such consideration of the emissions advantage of CSG compared to coal is similar to the consideration of the emissions advantage of renewable energy, such as is generated by wind or solar farms, over fossil fuel energies. The potential for renewable energy to displace fossil fuel electricity generation is a relevant factor to be taken into account in determining the acceptability of a renewable energy project for which development consent is sought, such as a wind farm: see Taralga Landscape Guardians v Minister for Planning (2007) 161 LGERA 1; [2007] NSWLEC 59 at [75]-[79].
For these reasons, MGPA has not established that the IPC asked itself the wrong question or failed to consider the relevant matter in s 4.15(1)(b) of the likely impacts of the GHG emissions of the Project. I reject ground 1.

The downstream emissions condition ground

The second basis on which MGPA challenged the IPC's decision to grant development consent to the Project was its failure to impose conditions in relation to the Scope 3 GHG emissions of the Project. The reason the IPC gave for not imposing conditions regulating the Scope 3 emissions was that "these emissions are outside the direct control of the Applicant and therefore not able to be reasonably conditioned" (at [172] of the Statement of Reasons).
MGPA contended that this reason revealed that the IPC misunderstood or misconstrued s 4.15(1)(a)(i) and (b) of the EPA Act and cl 14(1) of the Mining SEPP. Section 4.15(1)(a)(i) required the IPC as consent authority to consider the provisions of relevant environmental planning instruments, which included cl 14 of the Mining SEPP. Clause 14(1) of the Mining SEPP required the IPC to consider whether or not any consent for the Project should be issued subject to conditions to ensure "that greenhouse gas emissions are minimised to the greatest extent practicable" (cl 14(1)(c)).
MGPA submitted that the "greenhouse gas emissions" referred to in cl 14(1)(c) are not confined to Scope 1 and 2 emissions, but extend to downstream (Scope 3) emissions of the development. This is confirmed by cl 14(2) which requires the consent authority to consider "an assessment of the greenhouse gas emissions (including downstream emissions) of the development". MGPA submitted that just as the consent authority is required by cl 14(2) to consider an assessment of the GHG emissions (including downstream emissions) of the development, it is also required by cl 14(1) to consider whether or not the consent for the development should be issued subject to conditions to ensure that GHG emissions (including downstream emissions) of the development are minimised to the greatest extent practicable.
MGPA submitted that such consideration by the IPC of the downstream emissions of the Project under cl 14(1) and (2) could not be avoided by reason of the fact that downstream emissions are "outside the direct control" of Santos as proponent of the development. By definition, Scope 3 or downstream emissions are outside the direct control of the proponent of the development; they are the emissions associated with the downstream combustion of the product fossil fuel, such as coal or gas, by the end user. Nevertheless, by cl 14(2) the consent authority is required to consider an assessment of the GHG emissions, including the downstream or Scope 3 emissions. If that can be done, so too can the consent authority consider whether any consent for the development should be issued subject to conditions to ensure the greenhouse gas emissions, including the downstream or Scope 3 emissions, are minimised to the greatest extent practicable. MGPA submitted that it would be an odd result if the consent authority was required to consider the extent and impacts of downstream GHG emissions of the Project, yet not be able to impose conditions of consent to minimise to the greatest extent practicable the downstream GHG emissions that it has considered.
MGPA submitted that the IPC neglected to turn its mind to how downstream or Scope 3 emissions could be conditioned because it misunderstood or misconstrued its task under cl 14(1) of the Mining SEPP. In doing so, the IPC misdirected itself in the exercise of its discretion to issue the consent subject to conditions under s 4.38(1)(a) of the EPA Act.
Santos disputed MGPA's argument on this ground for two reasons. First, cl 14(1)(c) does not require the IPC to consider whether or not the consent should be issued subject to conditions to ensure that downstream (Scope 3) emissions are minimised to the greatest extent practicable. Second, even if the IPC was under a duty to consider whether to impose conditions to ensure that Scope 3 emissions are minimised to the greatest extent practicable, the IPC discharged this duty and did not misunderstand or misconstrue its task to do so.
As to the first, Santos submitted that the inclusion of "downstream emissions" within the broader category of "greenhouse gas emissions" in cl 14(2), but not in cl 14(1), should be inferred to be intentional. The consequence, Santos submitted, is that the consent authority is required by cl 14(2) to consider an assessment of all of the greenhouse gas emissions of the development, including the downstream or Scope 3 emissions, and is required by cl 14(1) to consider whether or not the consent should be issued subject to conditions to ensure that greenhouse gas emissions, other than downstream or Scope 3 emissions, are minimised to the greatest extent practicable.
Santos submitted that this construction of cl 14(1) is consistent with the context of the subclauses. The consideration required by cl 14(2) is "in determining a development application" and can properly include consideration of both direct and indirect GHG emissions (Scopes 1, 2 and 3 of the development). The consideration required by cl 14(1) is "before granting consent" and is focused on the conditions that should be imposed on any consent granted to the development. Conditions of consent regulate the carrying out of development authorised by the consent. This can include direct emissions from sources controlled by the proponent (Scope 1) and indirect emissions associated with the purchase and use of electricity in carrying out the development (Scope 2), but cannot include indirect emissions associated with the downstream combustion of fossil fuels provided by the development by end users (Scope 3). A condition with respect to direct (Scope 1) emissions and indirect (Scope 2) emissions can fairly and reasonably relate to the development the subject of the consent, but a condition with respect to indirect (Scope 3) emissions might not, as the relationship may be too "distant, remote or indirect" to be within the limits of the power to impose the condition: Botany Bay City Council v Saab Corp Pty Ltd (2011) 82 NSWLR 171; [2011] NSWCA 308 at [9]-[10].
As to the second, Santos submitted that, in any event, the IPC did consider whether or not the consent should be issued subject to a condition regulating Scope 3 GHG emissions, but decided not to do so for the simple reason that the downstream emissions were "outside the direct control" of Santos and not able to be "reasonably conditioned". This was an evaluative decision open to the IPC.
Santos submitted that the IPC did not misunderstand or misconstrue its task to consider issuing the consent subject to conditions to ensure that greenhouse gas emissions are minimised to the greatest extent practicable. The IPC understood and undertook this task. To this end, the IPC decided to impose two conditions, conditions B20 and B21, to minimise the Scope 1 and 2 GHG emissions of the Project. Condition B20 provides that Santos "must ensure that all reasonable and feasible avoidance and mitigation measures are employed so that greenhouse gas emissions generated by the development do not cause exceedances of the criteria listed in Table 6." The GHG emissions criteria for Scope 1 and 2 emissions in Table 6 accorded with Santos' predicted emissions in the Greenhouse Gas Assessment and the EIS. Condition B21 provides that Santos must develop cumulative maximum forecasts for the Scope 1 and 2 emissions of the Project, monitor and publicly report on the actual emissions against the cumulative forecasts, and fully (100%) offset Scope 1 and 2 emissions that exceed the forecasts.
The IPC decided not to impose any conditions requiring Santos to minimise downstream or Scope 3 GHG emissions because such emissions are outside the direct control of Santos. This is what the IPC was referring to when it said Scope 3 emissions are not able to be "reasonably conditioned". It would not be reasonable to impose a condition requiring Santos to minimise downstream emissions that are outside the direct control of Santos. Santos cannot control the gas consumption patterns of consumers. Accordingly, it would not be reasonable to include Scope 3 emissions in conditions B20 and B21 that require Santos to ensure "all reasonable and feasible avoidance and mitigation measures are employed", so that Scope 3 emissions do not exceed the GHG emissions predicted by Santos. Santos submitted that in deciding that Scope 3 emissions are not able to be reasonably conditioned, the IPC was not deciding that conditions can never be imposed in relation to downstream or Scope 3 emissions, just that it was not reasonable in this case.
I find that MGPA has not established that the IPC misunderstood or misconstrued cl 14(1) of the Mining SEPP or the task of deciding whether the consent should be issued subject to conditions to ensure that GHG emissions of the Project are minimised to the greatest extent practicable.
The IPC was required, in determining Santos' development application for the Project and before granting development consent for the Project, to consider both of the matters specified in cl 14(1) and (2) of the Mining SEPP. The consideration required by cl 14 does not involve the differential operation of subclause (1) on the one hand, and subclauses (2) and (3) on the other. All three subclauses have the same temporal operation. What happens "before granting consent" must happen in the process of "determining a development application": KEPCO Bylong Australia Pty Ltd v Bylong Valley Protection Alliance Inc [2021] NSWCA 216 at [32], [92]-[94] (KEPCO). All three subclauses also refer to the single function of the consent authority of determining whether to refuse consent or grant consent, with or without conditions, to a development application: KEPCO at [27], [96], [97].
Consideration of the relevant matter in cl 14(2) of an assessment of the GHG emissions (including downstream emissions) of the development includes consideration of the relevant matter in cl 14(1) of whether conditions of consent should be imposed to ensure that the GHG emissions are minimised to the greatest extent practicable: KEPCO at [99]. This is but a particular illustration of the general principle that consideration of a relevant matter under s 4.15(1) of the EPA Act may require consideration of whether conditions of consent should be imposed directed to addressing the relevant matter, such as mitigating the likely impacts of the development: KEPCO at [101]-[105].
This construction and operation of cl 14 of the Mining SEPP supports reading the words "greenhouse gas emissions" in cl 14(1)(c) as including downstream emissions, notwithstanding that those words are not parenthetically stated in cl 14(1)(c) as they are in cl 14(2). If the consideration required by cl 14(2) of an assessment of the greenhouse gas emissions (including the downstream emissions) of the development involves the consideration required by cl 14(1) of whether to impose conditions to ensure the greenhouse gas emissions are minimised to the greatest extent practicable, it is to be inferred that the greenhouse gas emissions that are the subject of both of those considerations will be the same; in both subclauses, the greenhouse gas emissions include downstream emissions.
This construction gives the words "greenhouse gas emissions" of a development their ordinary meaning. "Greenhouse gases" are gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at specific wave lengths within the spectrum of radiation emitted by the Earth's surface, by the atmosphere itself, and by clouds. This is the property of the gases that causes the greenhouse effect, hence the name greenhouse gases: Intergovernmental Panel on Climate Change, Global Warming of 1.5°C: An IPCC Special Report on the Impacts of Global Warming of 1.5°C above Pre-industrial Levels and Related Global Greenhouse Gas Emission Pathways (Report, 2018) AVII-29. Greenhouse gases include carbon dioxide and methane.
Greenhouse gas emissions are emissions of greenhouse gases from sources, whether natural or anthropogenic. The greenhouse gas emissions of a development, as referred to in cl 14(1) and (2) of the Mining SEPP, are emissions from an anthropogenic source, the development for which consent is sought.
The greenhouse gas emissions of a development are accepted as including Scope 1, 2 and 3 emissions. There are accepted accounting and reporting standards for the greenhouse gas emissions of a development that require consideration of all three scopes of emissions, Scopes 1, 2 and 3 emissions: see the standards cited in Gloucester Resources at [489]. Scope 1 emissions are direct emissions that occur from sources that are owned or controlled by the proponent of the development. Scope 2 emissions are emissions from the generation of purchased energy products (primarily electricity) that are used by the development. Scope 2 emissions physically occur outside the boundary of the development site, such as at the power station that generates the electricity that is purchased. These are upstream, indirect emissions as they arise from sources that are not owned or controlled by the proponent of the development. Scope 3 emissions are emissions that are generated as a consequence of the development, but which arise from sources that are not owned or controlled by the proponent of the development. They are downstream, indirect emissions. All three sources of GHG emissions are considered to be GHG emissions of the development, notwithstanding that only one source (Scope 1) involves direct emissions generated by the development and the other two sources (Scopes 2 and 3) are indirect emissions generated by sources not owned or controlled by the proponent of the development, either upstream (Scope 2) in the supply chain or downstream (Scope 3) in the value chain.
Having regard to this ordinary meaning of the greenhouse gas emissions of a development, the inclusion of the words "including downstream emissions" in brackets in cl 14(2) is confirmatory of the ordinary meaning, rather than extending it. The inclusion of the bracketed words avoids any possible uncertainty as to whether consideration of the greenhouse gas emissions of a development should include consideration of the downstream emissions. The inclusion of the bracketed words in cl 14(2) for this confirmatory purpose does not mean, however, that the non-inclusion of the words in cl 14(1) has the opposite effect, of excluding from the words "greenhouse gas emissions" in cl 14(1) the downstream emissions. The words "greenhouse gas emissions" in cl 14(1) retain their ordinary meaning of including all three scopes of emissions, Scopes 1, 2 and 3.
To construe cl 14(1) and (2) otherwise would lead to difficulties with considering Scope 2 emissions. As earlier noted, the concept of "downstream emissions" refers to Scope 3 emissions generated down the value chain by end users of the fossil fuel product, such as coal or gas. On the construction contended for by Santos that the concept of "greenhouse gas emissions" does not ordinarily include downstream emissions, so that it was necessary for the ordinary meaning to be extended by the bracketed words to include downstream emissions, the upstream or Scope 2 emissions would also not be included in the concept of "greenhouse gas emissions." Scope 2 emissions, like Scope 3 emissions, are indirect emissions generated by sources not owned or controlled by the proponent of the development. If it was necessary expressly to include downstream (Scope 3) emissions in the concept of "greenhouse gas emissions", it would equally be necessary to include upstream (Scope 2) emissions in that concept. If this were to be so, the non-inclusion of upstream (Scope 2) emissions in cl 14(2) would have the consequence that the consent authority is not required to consider the upstream or Scope 2 emissions, only the direct Scope 1 emissions and, by express inclusion, the downstream or Scope 3 emissions. Similarly, the non-inclusion of upstream or Scope 2 emissions in cl 14(1)(c) would have the same effect as the non-inclusion of downstream or Scope 3 emissions in cl 14(1)(c) of causing upstream or Scope 2 emissions not to be considered under cl 14(1). Neither consequence of incomplete consideration of the scopes of emissions of a development can have been intended by the legislative draftsperson, which speaks against this construction of cl 14(1)(c) and cl 14(2) of the Mining SEPP.
It was not a construction that the Department or the IPC adopted. Both the Department and the IPC were of the view that cl 14(1) did require consideration of whether or not the consent should be issued subject to conditions to ensure that greenhouse gas emissions, of all scopes, but certainly including Scope 1 and 2 emissions, are minimised to the greatest extent practicable. That view was correct. The concept of "greenhouse gas emissions" in both cl 14(2) and cl 14(1)(c) includes all three scopes of emissions, not only the direct (Scope 1) emissions but also the indirect (Scopes 2 and 3) emissions.
This construction does not mean, however, that the manner or outcome of the consideration required by each subclause will be the same. It is one thing to consider an assessment of the greenhouse gas emissions, including the downstream emissions, of the development (as required by cl 14(2)), it is another thing to consider whether any conditions should be imposed to minimise to the greatest extent practicable these greenhouse gas emissions, including the downstream emissions, of the development. The different scopes of the greenhouse gas emissions, whether direct or indirect, and if indirect, the degree of control that the proponent has over the indirect emissions, will influence the consideration required by cl 14(1) of whether the consent should be issued subject to conditions to ensure that greenhouse gas emissions of these different scopes are minimised to the greatest extent practicable.
Consider, as one example, Scope 2 emissions. These are indirect emissions from generation of electricity by sources not owned or controlled by the proponent of the development. Yet, because they are upstream emissions, the proponent retains a degree of control over its purchase of the electricity from the source of the emissions, the electricity generator. The proponent can improve energy efficiency in the development, thereby reducing the consumption of purchased electricity and minimising upstream greenhouse gas emissions. The proponent could switch suppliers, from a fossil fuel electricity generator to a renewable energy generator, thereby reducing or eliminating upstream GHG emissions for the purchased electricity. That is to say, the proponent has a degree of control over its supply chain.
Consider, as another example, Scope 3 emissions. These are also indirect emissions from sources not owned or controlled by the proponent of the development, this time downstream in the value chain as a consequence of the use, such as combustion, of fossil fuel product from the development. Yet, there may be a relationship or arrangement between the proponent of the development and the end user of the product of the development that affords the proponent a degree of direction or control over the end user and its consumption of the product. An obvious example is where both the proponent and end user are in the same corporate group, as a result of vertical integration. Although the proponent of the development, such as a coal mine, and the end user, such as a coal-fired electricity generator or steel mill, might be owned and controlled by different corporate entities, by reason of both entities being part of the same corporate group, the proponent may be able to exercise a sufficient degree of direction or control over the end user's consumption of the product or the end user's preparedness to offset emissions generated by the end user's consumption of the product.
These two examples are of circumstances where the proponent of the development might have a sufficient degree of control over the indirect emissions, either Scope 2 or 3 emissions, so as to enable potentially the imposition of conditions of consent for the development to ensure that the indirect emissions are minimised to the greatest extent practicable. However, there will be other circumstances where the degree of control that the proponent of the development has over the indirect emissions, whether Scope 2 or 3 emissions, is insufficient to justify the consent authority imposing a condition of consent requiring the proponent to minimise the indirect emissions. This question of the degree of control of the proponent over the indirect emissions is an evaluative one to be answered by the consent authority on the particular facts and circumstances of the development, the proponent of the development, and the suppliers or end users concerned.
On this construction of cl 14(1) of the Mining SEPP, the IPC was required to consider whether to issue the consent for the Project subject to conditions to ensure that the greenhouse gas emissions, including downstream emissions, of the development are minimised to the greatest extent practicable. I find that MGPA has not established that the IPC in fact failed to consider this matter as required by cl 14(1).
The IPC did consider whether the consent for the Project should be issued subject to conditions to ensure that the Scope 1 and 2 GHG emissions are minimised to the greatest extent practicable; indeed, the IPC imposed conditions to do so, including conditions B20 and B21.
The IPC also considered whether to impose conditions to ensure that Scope 3 conditions are minimised to the greatest extent practicable, but decided not to do so. The IPC's reason was that these Scope 3 emissions are outside the direct control of Santos. To so find did not necessarily involve any misunderstanding or misconstruction of cl 14(1). It may have simply recognised that, by definition, Scope 3 emissions are emissions from the downstream combustion of the product fossil fuel, here, the gas derived from the Project, by end users who are not owned or controlled by Santos. It may also have reflected a finding that the end users of the product gas from the Project would be multitudinous, including hundreds of heavy industry and business customers and over 1.4 million households (p 8 of the Department's response to the IPC). On the material before the IPC, Santos was not shown to have any or sufficient control over these end users and their consumption of the product gas from the Project so as to be in a position to minimise the GHG emissions by the end users' consumption of the product gas.
The IPC made an evaluative decision that it would not be reasonable to impose a condition of consent requiring Santos to minimise to the greatest extent practicable the Scope 3 emissions, as those emissions "were outside the direct control" of Santos, and hence "not able to be reasonably conditioned". The IPC found that Santos could not directly control the demand for or consumption of gas by end users, whether in the energy sector, industry generally or households; that is in the discretion of the end user. On the material before the IPC, Santos was not shown to have any particular relationship with or control over any end user. The IPC contrasted this lack of direct control of Santos over Scope 3 emissions with the direct control Santos did have over the Scope 1 and 2 emissions. That led the IPC to impose conditions requiring Santos to minimise the Scope 1 and 2 emissions, by fully offsetting any exceedances of the predicted Scope 1 and 2 emissions, but not to impose conditions requiring Santos to minimise Scope 3 emissions. This decision was reasonably open to the IPC and did not involve any misconstruction or misunderstanding of the task required by cl 14(1) of the Mining SEPP or cl 4.38(1) of the EPA Act.
For these reasons, I reject ground 3.

The legally unreasonable decision ground

Related to the downstream emissions ground is the ground that the IPC's decision not to impose conditions regulating Scope 3 GHG emissions was legally unreasonable. MGPA argued that the power under s 4.38(1) of the EPA Act to grant consent subject to conditions, and the duty under cl 14(1)(c) of the Mining SEPP to consider imposing conditions to ensure that GHG emissions are minimised to the greatest extent practicable needed to be exercised reasonably: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [24], [63], [90]. The Court should look to the reasons given by the IPC for its decision to determine whether they disclose an evident and intelligible justification for the exercise, or non-exercise, of the power: Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [84]; Minister for Immigration and Border Protection v Singh (2014) 231 FCR 437; [2014] FCAFC 1 at [47]; Duncan v Independent Commission Against Corruption [2016] NSWCA 143 at [228].
MGPA submitted that: "There was a wealth of material before the IPC that established that GHG emissions from the Project would have adverse effects on global climate change, the environment and human health. It was also not in question before the IPC that the majority of the GHG emissions that would be generated by the Project were Scope 3 emissions. The IPC so found at [170] (read with [161[ and [164]). Yet the IPC resolved not to impose any conditions on such emissions. Its reason for so concluding was merely that Scope 3 emissions were "outside the direct control of the Applicant and therefore not able to be reasonably conditioned" (at [172]). It is evidence that the IPC gave no consideration to whether conditions could be applied to require Santos to offset its Scope 3 emissions or to impose mandatory standards in respect of supply chains that it relied upon." (at [29] of Applicant's submissions).
MGPA also submitted that the IPC did not give any consideration to the fact that, in substance, those emissions were Scope 1 emissions (i.e. direct emissions) for NSW and Australia, for they would occur within NSW and Australia and their impacts were an inevitable consequence of the Project (see [15], [416] and [440] of the IPC's reasons). There is an inherent contradiction in the IPC finding, on the one hand, that the Project would supply half of the State's gas supply, yet, on the other, refusing to take any steps to condition the bulk of the GHG emissions that will be generated by the Project on the sole basis that they are "outside the direct control" of Santos. To refuse to condition GHG emissions that are as proximate to a proposed development as the expected Scope 3 emissions are to the Project on the basis that they are not within the direct control of the proponent of the development is not only suggestive of a misapprehension of what cl 14 requires, but is also irrational. Scope 3 emissions by definition are outside of the direct proponent of a mining, petroleum production or extractive industry project.
MGPA submitted that the IPC's reason that the Scope 3 GHG emissions were "outside the direct control of" Santos does not constitute a rational justification for a failure to impose conditions to reduce such emissions in circumstances where the environmental impacts of the GHG emissions were significant, the nature of Scope 3 emissions is that they are outside of the direct control of a proponent of a development, and the IPC imposed other conditions that involved steps being taken outside of the direct control of Santos (such as Condition A9).
Santos contested that the IPC's decision not to impose conditions regulating Scope 3 emissions of the Project was legally unreasonable. Santos noted that courts will not lightly interfere with the exercise of a discretionary power: Minister for Immigration and Border Protection v SZVFW at [11], [52] and Minister for Immigration and Citizenship v Li at [72]. A decision is not legally unreasonable just because reasonable minds may reach a different conclusion about the correct or preferable decision: Minister for Immigration and Citizenship v Li at [28], Minister for Immigration and Border Protection v SZVFW at [12] and [58]. It is particularly rare to find unreasonableness where the expressed reasons demonstrate a justification for a determination: Minister for Immigration and Border Protection v SZVFW at [84]. The justification given by the IPC for not imposing conditions in relation to Scope 3 emissions was that such emissions are not under the direct control of Santos. That is a rational basis for not imposing such conditions, for the reasons Santos gave in relation to the previous ground. It was also based on the material before the IPC, including the Department's response to the IPC's questions. The Department had argued that it should be left to consumers of the product gas to determine the best way to reduce their emissions (p 8 of the Department's response).
I reject this ground. MGPA has not established that the IPC's decision not to impose conditions in relation to the Scope 3 GHG emissions of the Project was legally unreasonable, for the reasons I have given in relation to the downstream emissions condition ground. As required by cl 14(1)(c), the IPC did consider whether the consent for the Project should be issued subject to conditions to ensure GHG emissions, including downstream or Scope 3 emissions, are minimised to the greatest extent practicable. The IPC decided to impose conditions to ensure that Scope 1 and 2 GHG emissions are minimised, including requiring any exceedances of predicted Scope 1 and 2 emissions to be fully offset. The IPC decided that Scope 3 emissions should not be included in these conditions because these emissions are outside the direct control of Santos and not able to be reasonably conditioned. That was an evaluative decision open to the IPC. It had an evidentiary foundation, including the Department's response to the IPC's questions where the Department had argued that Scope 3 emissions should not be the subject of conditions of consent.
The factors advanced by MGPA for imposing a condition in relation to the Scope 3 emissions of the Project might arguably provide support for a decision to impose such a condition, but they do not establish that a decision not to impose such a condition is legally unreasonable, either in the sense that no reasonable consent authority could have decided not to impose such a condition or in the sense that the IPC's decision not to impose the condition lacked an evident and intelligible justification. The question of whether or not the consent for the Project should be issued subject to conditions to ensure the Scope 3 emissions are minimised to the greatest extent practicable was one about which reasonable minds may differ, so that it was not legally unreasonable to make one decision rather than another.
I reject ground 4.

The pipeline impacts ground

The final ground is that the IPC failed to take into account the relevant matter under s 4.15(1)(b) of the EPA Act of the likely impact of a proposed transmission pipeline that would transport gas from the Project to the domestic market.
MGPA contended that, although Santos did not seek in the development application to obtain development consent for any gas transmission pipeline, nevertheless, the construction of a gas transmission pipeline was essential in order for gas produced by the Project to be transported to market. MGPA referred to Santos's statement in the EIS that: "The gas would be made available to the NSW market via a high-pressure gas transmission pipeline which would connect to the existing Moomba to Sydney gas pipeline. The pipeline would be constructed and operated by a specialist pipeline company APA Group, and is not part of this project Environmental Impact Statement (EIS)." (p 1-1 and repeated at p 6-1).
Santos, in its response to public submissions, addressed a concern that had been raised that the EIS did not include an assessment of the environmental impacts of any gas transmission pipeline to transport gas from the Project to market. Santos stated: "As stated in Chapter 1 of the EIS (Introduction), product gas would be made available to the NSW market via a high-pressure gas transmission pipeline that would connect to the existing Moomba to Sydney Gas Pipeline. The Western Slopes Pipeline is proposed by the APA Group to connect the Project to the existing Moomba to Sydney Gas Pipeline. The Western Slopes Pipeline would be a buried, steel gas transmission pipeline running 450 kilometers in a south west direction from the Narrabri Gas Project to its connection with the Moomba to Sydney gas pipeline. The APA Group is a specialist gas pipeline company and is considered a suitable proponent for the purpose of pipeline planning and assessment. The Western Slopes Pipeline is currently being assessed under the Environmental Planning and Assessment Act 1979. The key environmental issues of the pipeline were identified in the Preliminary Environmental Assessment prepared by APA Group and included potential impacts on biodiversity and ongoing land use including agriculture, as well as potential soil, water, heritage and hazard and risk issues. The Secretary's environmental assessment requirement for the pipeline require a detailed assessment of potential impacts on land use and soil as well as feasible alternatives. The public exhibition and submission period for the environmental impact assessment of the pipeline will allow for submissions regarding potential impacts to these matters." (p 6-18 and see also p 5-154).
MGPA referred to the Department's Assessment Report where the Department stated: "Prior to producing gas, Santos would need to connect the Narrabri Gas Project to the existing regional gas pipeline network, which is currently located several hundred km to the south of the site (Figure 13). Although this connection is essential for the project, Santos is not seeking approval for this pipeline as part of the Narrabri Gas Project. The pipeline is likely to be delivered by another party and subject to a separate approvals process under the State Significant Infrastructure provisions of the Environmental Planning and Assessment Act 1979 (EP&A Act)." ([70] and [71] of the Assessment Report).
The Department noted that two possible options for the pipeline connection had been suggested. The first option involved connecting the Project to the already approved Queensland-Hunter gas pipeline located to the east of the site (at [73]). The second option involved developing the proposed Western Slopes Pipeline, which would connect the Project to the Moomba - Sydney pipeline to the west of the site (at [77]). The second option was the one being proposed by the APA Group. The Department noted about this second option: "This pipeline, which is being proposed by the APA Group, is classified as State Significant Infrastructure under the EP&A Act and is in the early stages of the approvals process. The Department has issued the requirements for the EIS and is now waiting for the APA Group to complete the EIS before it starts public consultation and assessing the merits of the project." (at [78]).
The Department considered that the uncertainties concerning both pipeline options justified imposing a condition of consent requiring the approval, construction and commissioning of a gas transmission pipeline before the Project can commence: "Given the uncertainties with both options, Santos has agreed to accept a condition on any development consent for the Narrabri Gas Project requiring it to ensure there is an approved pipeline connection to the project prior to starting to construct the project (Phase 2) and that this connection is in place prior to starting any gas production (Phase 3)." (at [79]).
The Department's recommended conditions included Condition A9: "The Applicant shall not commence: (a) Phase 2 until a planning approval is granted for a transmission pipeline to deliver gas from the development to the domestic gas network; and (b) Phase 3 until a transmission pipeline to deliver gas from the development to the domestic gas network [is] commissioned, to the satisfaction of the Planning Secretary."
The IPC asked Santos a question on notice about which pipeline option was preferred. Santos replied in part: "Santos is still investigating the preferred gas pipeline option for the project, noting that all Narrabri gas will be sold and delivered into the domestic gas market. A decision will be made following further engineering design and commercial negotiations to determine the best outcome for the project and NSW gas customers. The decision will take into account considerations including but not limited to long-term supply security and supply competition for customers. Santos expects to finalise the preferred pipeline option for the project while completing the remaining appraisal works well in advance of development commencing. … Santos has a Project Development Agreement with the APA Group for a proposed pipeline running southwest from Narrabri to connect into the Moomba to Sydney pipeline. The Hunter Gas Pipeline is a separate project from the Narrabri Gas Project. Santos is not a participant in the Hunter Gas Pipeline project, although the DPIE Assessment Report identifies that it is approved and therefore an option for the project. Santos notes that any pipeline development will be subject to the NSW Government's regulatory requirements." (p 4).
The IPC in its Statement of Reasons noted that the EIS for the Project referred to "two pipeline options which will need to be considered in future as a means of transporting the gas to market, should the Project be approved" (at [383]). The IPC noted the concern that had been raised in public submissions that approval of the Project may be the catalyst for the approval and construction of one of the pipeline options and, as a consequence, the IPC was urged to refuse the Project (at [383]).
The IPC noted, however, that Santos' development application did not seek development consent for any gas transmission pipeline and hence the IPC was not in a position to consider the likely impacts of any gas transmission pipeline: "However, the Commission notes that the Application does not include any proposed infrastructure. Therefore, it is beyond the scope of the Commission's deliberations to consider the benefits and costs of a future pipeline. The relevant approvals for any pipeline will need to be secured prior to the construction of that pipeline and that is the appropriate time for the assessment of the relevant environmental, social and economic impacts to be formally considered." (at [384]).
The IPC found that given the uncertainties surrounding the two pipeline options, a condition of consent should be imposed as recommended by the Department: "The Commission noted the uncertainties around the pipeline options and imposes the Department's recommended condition that Phase 2 of the Project cannot commence until planning approval has been granted for a pipeline and Phase 3 cannot commence until the approved pipeline is commissioned." (at [385]).
MGPA contended that the IPC erred in failing to take into consideration in its determination of the development application for the Project the likely impacts of any proposed gas transmission pipeline. Section 4.15(1)(b) of the EPA Act requires consideration of the likely impacts of the development, including the impacts on the natural and built environments. MGPA submitted that, in circumstances where the construction of a gas transmission pipeline was not only essential for the Project to proceed but also was the subject of a condition of development consent (condition A9), the impacts of the pipeline had a "real and sufficient link" with the Project, citing Ballina Shire Council v Palm Lake Works Pty Ltd [2020] NSWLEC 41 at [6]. Contrary to the IPC's reason, the fact that construction of the gas transmission pipeline did not form part of the development application "is not dispositive of the question of whether the likely impacts of the works need to be considered": Ballina Shire Council v Palm Lake Works Pty Ltd at [18] and see also [34]. This is especially so where, as here, there was material before the IPC that identified the approved and the proposed pipeline routes.
MGPA submitted that, in this circumstance, the IPC was required to, but failed to, consider the likely impacts of any gas transmission pipeline. The IPC's failure to do so was a breach of s 4.15(1)(b) of the EPA Act.
Santos disputed that the IPC was required to consider the likely impacts of any gas transmission pipeline. Such consideration would only be required if the likely impacts of a gas transmission pipeline could be said to be likely impacts of the development the subject of the development application. The development the subject of the development application by Santos was limited to the Project. The description of the Project in the development application and EIS did not include any potential gas transmission pipeline. This was made clear in the EIS: "The pipeline will be constructed and operated by a specialist pipeline company APA Group, and is not part of this project Environmental Impact Statement (EIS)" (p 1-1 and p 6-1), and in Santos' response to the public submissions and its response to the IPC's questions.
On this basis, any impacts that construction and operation of any gas transmission pipeline might have cannot be said to be impacts of the Project. The relevant inquiry is not whether any potential gas transmission pipeline might have a "real and sufficient link" with the Project or was the subject of a condition of consent for the Project (Condition A9), but instead whether the impacts of the Project include the impacts of any potential gas transmission pipeline. Santos submitted that they did not for two reasons.
First, there was no defined route for any potential gas transmission pipeline, so as to be able to assess the impacts of the pipeline. Two options were under consideration, but both had uncertainties. The IPC had insufficient information to assess the likely impacts of any potential pipeline without knowing which option was proposed and what was its precise location. Second, the consideration and determination of the development application for the Project did not depend on the approval and commissioning of any gas transmission pipeline. Santos had informed the IPC that it expected to finalise the preferred pipeline option while completing Phase 1 of the Project, which involved ongoing exploration and appraisal activity. Phase 1 did not require the potential pipeline and Phases 2 and 3 could not commence until Condition A9 of the consent was satisfied. Accordingly, there was no immediate necessity for any potential pipeline.
I find that MGPA has not established ground 5. In the circumstances of this development application for the Project, the IPC was not required, in its consideration of the likely impacts of the Project, to consider the likely impacts of any potential gas transmission pipeline.
A consent authority, in the determination of a development application, is required to take into consideration the matters in s 4.15(1) of the EPA Act "as are of relevance to the development the subject of the development application". One of the matters is "the likely impacts of the development, including environmental impacts on both the natural and built environments, and social and economic impacts in the locality" (s 4.15(1)(b)).
In order to undertake the consideration required by s 4.15(1), attention must be given to the particular development application that has been made and the particular development that is the subject of that development application. Consideration of the matter in s 4.15(1)(b) requires identification of the likely impacts of that development that is the subject of that development application.
The phrase "the likely impacts of that development" in s 4.15(1)(b) includes both the direct on-site impacts and the direct and indirect off-site impacts of the proposed development. Direct on-site impacts are impacts of the proposed development on the land on which the development is to be carried out (the development site).
Off-site impacts can be caused by the proposed development directly impacting adjoining land or other land in an area of influence, neither land being land on which the development is to be carried out. Off-site impacts can also be caused indirectly by some other development on other land, provided that the impacts of that other development have "a real and sufficient link" with the proposed development, such as where the impacts are caused by "some further undertaking that is 'inextricably involved' with the proposed development": Bell v Minister for Urban Affairs and Planning (1997) 95 LGERA 86 at 101; Environmental Defence Society Inc v South Pacific Aluminium (No 4) [1981] 1 NZLR 530 at 534-535; Ballina Shire Council v Palm Lake Works Pty Ltd at [6].
As the Full Federal Court of Australia held in Minister for Environment and Heritage v Queensland Conservation Council (2004) 139 FCR 24; [2004] FCAFC 190 at [53], the impact of an action includes not only the direct but also the indirect influences or effects of the action: "'Impact' in the relevant sense means the influence or effect of an action: Oxford English Dictionary, 2nd ed, vol VII, 694-695. As the respondents submitted, the word "impact" is often used with regard to ideas, concepts and ideologies: "impact" in its ordinary meaning can readily include the "indirect" consequences of an action and may include the results of acts done by persons other than the principal actor. Expressions such as "the impact of science on society" or "the impact of drought on the economy" serve to illustrate the point. Accordingly, we take s 75(2) to require the Minister to consider each way in which a proposed action will, or is likely to, adversely influence or effect the world heritage values of a declared World Heritage property or listed migratory species. As a matter of ordinary usage that influence or effect may be direct or indirect. "Impact" in this sense is not confined to direct physical effects of the action on the matter protected by the relevant provision of Pt 3 of Ch 2 of the EPBC Act [Environment Protection and Biodiversity Conservation Act 1999]. It includes effects which are sufficiently close to the action to allow it to be said, without straining the language, that they are, or would be, the consequences of the action on the protected matter."
The Court later indicated that "'all adverse impacts' includes each consequence which can reasonably be imputed as within the contemplation of the proponent of the action, whether the consequences are within the control of the proponent or not." (at [57]): see also Gloucester Resources at [495]-[496].
As I noted in Ballina Shire Council v Palm Lake Works Pty Ltd at [7]-[8]: "The critical factor is that there is a connection between the likely impact and the proposed development. This is because the category of relevant matters required to be considered is "the likely impacts of that development". As Basten JA held in Hoxton Park Residents Action Group Inc v Liverpool City Council (2011) 81 NSWLR 638; [2011] NSWCA 349 at [44]: 'The impact must be one flowing from the development the subject of the development application: the question is how remote a 'likely' impact must be, in order to disqualify it from the scope of the consideration.' Increasing remoteness in the chain of likely consequences will decrease the significance of an impact. This flows from both the concept of "impact" and the concept of "likely". As Basten JA held in Hoxton Park Residents Action Group Inc v Liverpool City Council at [46]: 'Some such limitation must follow from the concept of 'impact': as remoteness from the development increases, impact is likely to decrease, until it no longer has practical significance in terms of approving or refusing to approve the application. Further, the likelihood of a particular impact may diminish with remoteness. 'Likely' in this context has the meaning of a 'real chance or possibility' rather than more probable than not…'".
In the present case, the impacts of any potential gas transmission pipeline are neither on-site nor off-site impacts of the Project that is the subject of the development application. The impacts are not on-site impacts of the Project as the development application did not seek development consent for any gas transmission pipeline or identify the land on which any such pipeline would be constructed. The development application sought consent for the Project on the site, but the description of the Project and the site did not include any gas transmission pipeline.
The impacts are not off-site impacts of the Project for three reasons. First, there is no identifiable and certain other development that will cause off-site impacts. It may be accepted that gas produced by the Project would need to be transported to market by a gas transmission pipeline. However, the nature and route of any gas transmission pipeline remained unknown. Two options were being considered: connection to the already approved Queensland-Hunter gas pipeline located to the east of the site or construction of the proposed Western Slopes Pipeline that would connect the Project to the Moomba-Sydney pipeline to the west of the site, which was the subject of a separate application, assessment and approval process. There were uncertainties with both options, including the route of the connecting pipeline for the first and the route of the proposed pipeline for the second.
In these circumstances, there was insufficient certainty as to what and where would be the other development to be able to consider the likely impacts of that other development. The likely impacts of the pipeline are location-dependent. Without knowing which pipeline is to be used to transport product gas from the Project, what is to be the route of the pipeline, and what are the natural and built environments along the route of the pipeline, it is not possible to assess the likely impacts of the pipeline on the natural and built environments.
Second, even if the likely impacts of an identifiable gas transmission pipeline were able to be identified, such impacts of the pipeline do not have a real and sufficient connection to the Project, so that they could be said to be impacts of the Project. Consider, for example, if the route of the pipeline were to pass through, and likely damage, habitat of a threatened species of plant or animal at a particular location along the route. That would be a likely impact of the pipeline, but its remoteness from the Project is so great as to disqualify it from being an impact of the Project. The carrying out of the Project, including the production of gas, on the site of the Project would not cause the pipeline to be constructed along any particular route that passes through, and damages, the habitat of the threatened species. Of course, the pipeline would transport gas produced by the Project to market, but the mere transportation of gas product does not require the pipeline to follow any particular route connecting the Project with the market. The pipeline could be constructed along a different route that would avoid impacting the habitat of the threatened species. Any impact that the pipeline might have on the habitat of the threatened species, therefore, could not be said to have a real and sufficient link with the carrying out of the Project.
Third, the imposition of a condition of consent, Condition A9, preventing Santos commencing Phase 2 of the Project until a gas transmission pipeline to deliver gas from the Project to market is approved and Phase 3 of the Project until the approved gas transmission pipeline is constructed and commissioned, does not establish that the impacts of any such gas transmission pipeline are impacts of the Project.
Condition A9 is what is referred to as a Grampian condition, after the name of the case in which a condition of this type was described: Grampian Regional Council v Secretary of State for Scotland and City of Aberdeen District Council (1984) SC (HL) 58; [1984] JPL 590. A Grampian condition prevents the development the subject of the consent from being commenced until a specified event (such as the construction of a bridge or an intersection) has taken place, even though that event might not be wholly within the power of the applicant for consent to bring about: see Grampian Regional Council v Secretary of State for Scotland and City of Aberdeen District Council at 67 and see also McCarthy v Mulwaree Shire Council (1992) 78 LGERA 158 at 171; British Railways Board v Secretary of State for the Environment [1993] 3 PLR 125 at 134; [1994] JPL 32 at 32, 38; Newcastle & Hunter Valley Speleological Society Inc v Upper Hunter Shire Council and Stoneco Pty Limited (2010) 210 LGERA 126 at 236; [2010] NSWLEC 48.
Here, the events are the approval, construction and commissioning of a gas transmission pipeline to deliver gas from the Project to market. Condition A9 prevents Santos commencing Phase 2 until the gas transmission pipeline is approved and Phase 3 until the approved gas transmission pipeline is constructed and commissioned.
The imposition of a Grampian condition, by itself, does not establish a real and sufficient link between the impacts of the carrying out of the development that is the subject of the Grampian condition (here, the gas transmission pipeline) and the development for which consent was granted (here, the Project).
For these reasons, having regard to the facts and circumstances of this case, the impacts of any potential gas transmission pipeline were sufficiently remote in the chain of likely consequences as not to be likely impacts of the Project. Accordingly, the IPC did not fail to consider a relevant matter under s 4.15(1)(b) of the EPA Act by not taking the impacts of any potential gas transmission pipeline into consideration in its determination of the development application for the Project. I reject ground 5.

Conclusion and orders

MGPA has not established any of the grounds of review of the IPC's decision to grant development consent to the Project. The summons should be dismissed.
The usual costs order in judicial review proceedings is that costs follow the event. However, these proceedings arguably are brought in the public interest. Rule 4.2(1) of the Land and Environment Court Rules 2007 provides that: "The Court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest."
The parties did not address at the hearing this issue of whether the Court, in the exercise of its discretion under r 4.2(1) or otherwise, should decide not to make an order that MGPA pay Santos' costs of the proceedings. This opportunity should now be given to the parties. If Santos seeks an order that MGPA pay its costs, Santos should so advise MGPA and the Court and file written submissions within two weeks of the date of judgment. MGPA should then file written submissions in response within a further two weeks. I will decide the question of costs on the papers unless either party makes application for an oral hearing, in which case this should be advised in the written submissions that the party files. The Court will then fix a date for the oral hearing on costs. If Santos does not seek an order that MGPA pay its costs, upon notice to the Court being given of that position, the Court will note that there is no order as to costs.
The Court orders: 1. The summons is dismissed. 2. If the first respondent seeks an order that the applicant pay the first respondent's costs of the proceedings, the first respondent is to file and serve written submissions on costs by 1 November 2021. 3. If the first respondent does seek a costs order under order (2), the applicant is to file and serve written submissions on costs by 15 November 2021. 4. If either party seeks an oral hearing on the question of costs, the party is to request an oral hearing in its written submissions filed under order (2) or (3). 5. The parties have liberty to restore the matter for directions on 2 days' notice.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 October 2021

Environmental Planning and Assessment Act 1979(NSW)ss 4.15, 4.17, 4.36, 4.38, 4.40

(2019) 234 LGERA 257

(2010) 210 LGERA 126

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