Land Court: ERC calculator not strictly binding

In Century Mining Ltd v Department of Environment and Science [2021] QLC 3, the Land Court of Queensland addressed the main issue of whether the estimated rehabilitation cost (ERC) calculator must be strictly complied with to determine the correct amount of ERC to be paid by a miner in Queensland.

In Queensland, miners must provide security for mine rehabilitation as determined by the Department of Environment and Science (DES) for the ERC to fulfil their obligations under the Environmental Protection Act 1994 (EPA) Ch 5 Part 14.

Century Mine is an open-cut zinc and lead mine in north-west Queensland, which ceased mining in the pit in 2015. As of 2018, Century Mining Ltd has been reprocessing tailings to recover zinc.

The DES decided that the amount of ERC for Century Mining’s activity was $230,465,718, which was a decision it confirmed after internal review on 28 February 2020. However, Century Mining submits that the ERC payable is $173,271,205.71.

Century Mining Ltd appealed the internal decision made by DES, and in this case, the court had to stand in the shoes of the DES to determine the ERC amount to be paid by Century Mining, and was entitled to make a fresh decision.

Land Court considers Century Mining’s cover design and extent to which DES must follow ERC guideline

There were two key legal issues in this case.

The first issue was about the design for covers of the waste rock dump and the tailings storage facility originally proposed by Century Mining, but rejected by DES. The covers prevent seepage of potentially acid-forming material in the waste rock dumps and the tailings storage facility, which causes environmental harm.

The court accepted evidence from expert witnesses in their joint expert report, which concluded that the cover design by Century Mining would meet its environmental obligations, provided it met certain design requirements.

The second legal issue was about the extent to which the DES must follow the ERC guideline issued under section 550 of the EPA when making an ERC decision, as the guidelines contain an approved calculation methodology to calculate the correct level of ERC. In this case, the parties wanted to deviate from the approved calculation methodology so that the agreed estimated cost of implementing the design requirements specified in the joint expert report would be used instead.

Purpose of ERC guidelines and consideration of relevant rehabilitation plans, reports, evaluations and assessments

As a minimum, the decision-maker must have regard to the guideline. However, the court ultimately held that a strict application of the approved calculation methodology was not necessary. Instead, the court found that the purpose of the guideline was to “provide guidance” and help the applicant to comply with the requirements of section 298 of the EPA, rather than be a rigid calculation tool.

The court found that there was “no statement in the guideline that suggests that DES, in making the ERC decision, must slavishly apply the amount arrived at using the approved calculation methodology”, especially as otherwise, there would be no residual discretion for the decision-maker.

In addition, section 2.5.1 of the guidelines identifies several criteria that “must be considered” in making the ERC decision. One criterion is “any relevant rehabilitation plans, reports, evaluations and assessments”. Thus, it follows that a relevant report could affect the ERC amount decided by a decision-maker under the ERC guideline. Given that the joint expert report was site-specific consideration of a proposed method to manage the risk of seepage of the acid-forming materials, the court held that this report must be considered by the decision maker.

At any rate, the court also noted that the ERC guideline is subordinate to section 300 of the EPA, which requires the DES to decide the amount of the estimated cost of:

(a) rehabilitating the land on which the resource activity is carried out, and

(b) preventing or minimising environmental harm, or rehabilitating or restoring the environment, in relation to the resource activity.

What the Land Court’s decision means for the Department of Environment and Science

The court ultimately preferred the expert assessment method to prevent seepage rather than that adopted in the calculator, and found that the expert-assessed method was still consistent with section 300 of the EPA.

In conclusion, the DES must have regard to the guideline when making a decision, but does not have to make a decision that is the manifestation of the approved calculation methodology. It is up to the decision-maker to use their discretion to determine the weightings to be given to sources such as the guidelines and expert reports, as long as it is consistent with the purpose of the EPA in sections 298 and 300.

This article appears courtesy of Colin Biggers & Paisley. It has been modified slightly from the article which Colin Biggers & Paisley first published online on 11 February 2021. Karen Zhu is a paralegal who prepared this article under the supervision of Partner Brent Van Staden.

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