Fullerton Cove judgment highlights need for CSG law reform

Just before the Easter long weekend, the Land and Environment Court dismissed a case brought by residents against Dart Energy’s coal seam gas pilot project in Fullerton Cove near Newcastle. The Court lifted an injunction on drilling that had been in place since September last year, allowing Dart to proceed with drilling their wells. However, five days later, Dart announced that it would suspend its project due to proposed new controls for CSG at State and Federal levels, including the NSW Government’s recent restriction on CSG within 2km of residential areas, and the Commonwealth’s EPBC Act water trigger.

The case
The Fullerton Cove Residents Action Group (FCRAG) brought the case because they were concerned that the Department of Trade and Investment did not consider any groundwater assessment before granting approval for the project. The project site is located on a floodplain, and includes 12 months of continuous gas and water extraction from CSG wells drilled to depths of 800-900 metres.

FCRAG were also concerned that there had not been proper assessment of ecological impacts, given the site is next to the Hunter Estuary Reserve, an internationally listed wetland which is home to many migratory birds. They also argued that a full Environmental Impact Statement (EIS) was required, including mandatory public consultation, which had not been prepared for Dart’s project.

In September 2012, the Court granted an interim injunction against Dart Energy stopping it from drilling the gas wells until the full case was determined. It was the first injunction granted against a CSG company by the NSW Land and Environment Court.

The main case, decided on 28 March 2013, tested the rigour of the assessment process under Part 5 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) for CSG pilot production.

What the Court said
The Court found that the requirement under Part 5 of the EPA Act for the Department to consider environmental effects of the CSG pilot project ‘to the fullest extent possible’ did not include consideration of a groundwater assessment. This was despite the fact that the pilot project included 12 months continuous gas and water extraction, with an option to extend to 2 years.

Justice Pepper found that the Department’s failure to obtain or consider any groundwater assessment before approving the pilot project under Part 5 of the EPA Act did not amount to legal error. In making this finding, her Honour took into account several factors, including that it was a pilot project only, and that the Department had knowledge of the geology of the area generally.

The Court also found that even though no ‘7-part test’ for threatened species and ecological communities was carried out, it was sufficient for the Department to have ‘general regard’ to the 7-part test for threatened species.

Finally, the Court found that this pilot project was not likely to have a significant effect on the environment and therefore no EIS was required.

What does this decision mean for other CSG projects?
Pilot production can have the same kinds of environmental effects as full-scale production, albeit on a smaller scale. The Court’s finding in this case highlights significant problems with leaving the assessment of those impacts up to Part 5 of the EPA Act for CSG pilot projects. This is particularly problematic because most CSG exploration (including pilot production) involving five or fewer wells is assessed under Part 5.

In this case, Dart gained approval for 12 months’ continuous gas and water extraction, with an option to extend up to two years. The Court’s finding that no groundwater assessment is required by Part 5 in such circumstances is significant. It raises serious questions about the effectiveness of the EPA Act in protecting groundwater resources when it comes to CSG pilot production.

The project site is next to the Hunter Estuary Reserve, home to many protected migratory birds, and contained identified endangered ecological communities. The Court’s further finding that it wasn’t necessary for 7-part tests to be carried out for those species and communities also highlights serious deficiencies in the Part 5 environmental assessment process for biodiversity.

The judgment confirms that Part 5 of the EPA Act is unable to properly deal with assessment of CSG pilot projects, particularly when it comes to groundwater. If CSG pilot production can be approved under Part 5 without a groundwater study, it is difficult to see how the community can have any confidence that groundwater impacts are being rigorously assessed, or indeed at all. It is important that the new planning system addresses these deficiencies.

*Elaine Johnson is a Solicitor at EDO NSW

Image: Tawny Sunrise by Su Walker