NSW Court of Appeal reserves decision on validity of Waste to Energy regulations

Ian Malouf’s The Next Generation (TNG) appealed against the decision by the NSW Land and Environment Court that the NSW Thermal Waste to Energy regulation is valid. You can read earlier reports on the case here and here.

The NSW Court of Appeal heard the appeal on March 6, 2023 and reserved its decision on whether the Waste to Energy regulation is valid.

The regulation became part of the Protection of the Environment Operations Act (PEO Act) last year. If the regulation was found to be invalid, it is unlawful and therefore cannot be applied to any waste to energy proposals.

The regulation states waste to energy operations can only be carried out in certain NSW regional precincts (see below).There is no precinct within the Greater Sydney area.

This was an important win for Western Sydney residents who have been fighting for seven years to stop Malouf’s Next Generation Waste to Energy facility at Eastern Creek.

What is a regulation?

Parliament considers Bills which when passed become Acts of Parliament. These are also known as laws or statutes. Regulations are specific rules that are made under the authority of an Act of parliament. Regulations are sometimes called ‘delegated’ or ‘subsidiary’ legislation because they are made under the power of an Act of parliament. Sometimes disputes arise about whether regulations are outside what parliament intended to be the powers or scope of the Act. If a court finds that a regulation is outside the powers or scope of an Act, it is invalid.

Residents in Western Sydney welcomed the regulation

Residents of Western Sydney celebrated when they were told by politicians that the NSW Thermal Waste to Energy regulation meant that waste to energy incinerators would no longer allowed in Western Sydney. Unfortunately the situation proved not to be so simple.

Ian Malouf’s The Next Generation (NSW) Pty Ltd (TNG) had another card to play. It challenged the validity of the Thermal Energy to Waste regulation in October 2022. The case was heard in the NSW Land and Environment Court and the Chief Judge Preston delivered his judgement on November 24. He refused to make a declaration that the regulation was invalid and found: “Next Generation has not established that the Thermal Energy from Waste Regulation is in excess of the regulation-making power.” In other words, he found the regulation is valid, dismissed TNG’s case and ordered it to pay court costs.

Once again, many residents in Western Sydney hoped that this would be the end this matter. But Malouf has made a fortune out of waste and real estate in NSW. He is worth more than $700 million. So he has plenty of financial resources available to exhaust all legal options. He appealed against Judge Preston’s decision.

Malouf was represented in his appeal this week by senior counsel Kristina Stern, who is a leading barrister in public law and commercial disputes. The state of NSW was represented by Richard Lancaster, also a highly regarded specialist in regulatory law. Some residents protested outside the court and listened to the proceedings.

What is the validity case about?

The validity case is about whether the NSW Parliament intended the PEO Act to encompass a regulation prohibiting polluting activities in a particular place in NSW. Does the regulation sit within the purposes of the PEO Act or not? Stern argued that the POE Act provides for a comprehensive scheme for granting licences, varying them or taking proceedings if conditions are breached but not for prohibiting a whole class of applications. The NSW government is arguing that it is within the powers of the Act to pass a regulation that has the effect of prohibiting an activity in certain areas of NSW.

The case is not about waste to energy itself. It is a public law case, not an environmental one. For members of the public observing in court, it can be hard to make sense of the legalistic arguments about the interpretation of the law based on complicated cases that occurred decades ago, long before waste to energy plants even existed.

Malouf has two cases before the courts at the moment

Malouf’s legal challenge to the validity of the regulations is one of two cases that he currently has before the court.

The second case is Malouf’s appeal against the NSW Planning Commission’s refusal to grant him approval to build his waste to energy incinerator at Eastern Creek. This case will be based on the court’s consideration of the environmental impacts of the proposed incinerator on the community and whether it meets environmental requirements and standards.

Western Sydney residents campaigning against TNG’s incinerator in 2017. Photo: GreenLeft

Malouf’s proposed waste to energy incinerator would be built right next to Bingo’s giant waste landfill and recycling facilities at Eastern Creek that already have serious impacts on the community. Malouf, who sold the landfill to Bingo in 2018, remains on the board of the Macquarie subsidiary that owns Bingo.

When the NSW Planning Commission refused to approve his incinerator in 2018, Malouf appealed to the NSW Land and Environment Court. The NSW Planning Commission, Blacktown Council, and an adjacent landholder Jacfin Pty Ltd are opposing his appeal, which is scheduled to be heard in September 2023. Assuming that case goes ahead, it will include the testimony of many experts who are currently preparing studies and reports.

The three parties opposing Malouf have already indicated that they will argue that the appeal should be refused because the new regulation does not allow for any waste to energy incinerator in Greater Sydney. If they were to win on this legal point, all the rest of the environmental evidence could be irrelevant.

If Malouf loses the validity case, he could withdraw the appeal but even that is not certain (see below).

To understand why, you need to know about State Significant Infrastructure provisions.

How do the State Significant Infrastructure Provisions affect the case?

The NSW government classified Malouf’s proposal as a State Significant Infrastructure (SSI) project.

State Significant Infrastructure projects were put in place by the previous LNP government. Under the the Environmental and Planning Assessment Act, if a SSI project is approved by the Minister for Planning, the NSW Environmental Protection Authority is not allowed to refuse to grant the project a pollution or other environmental licence that is required before a project can operate.

In the case of projects that are not SSI, the EPA can refuse a licence if it it considers that a project will not meet its safety standards.

Example from Westconnex planning

In the case of the Westconnex interchange project at Rozelle, the EPA came to the view that the construction impacts would not be acceptable and the project should not be approved. The EPA objections were overridden and the project was approved which meant the EPA had no choice but to grant a pollution licence. This also means that even when State Significant projects have repeated licence violations, the EPA cannot cancel a licence.

This issue of how the Waste to Energy regulation affects SSI projects was raised in the validity hearing this week. Most of TNG’s case was about whether the Waste to Energy regulation is within the power of the PEO Act. But Ms Stern also raised the issue of whether the regulation is in conflict with the NSW Planning and Assessment Act, in particular Section 4.41 that deals with SSI. In other words, it is possible that the regulation is valid but that it doesn’t override the State Significant Provisions in the Environmental and Planning Assessment Act. This could open a way for the project to continue even if the regulation is consistent with the PEO Act.

One of three senior judges sitting on the case, Justice Beech-Jones then mentioned the possibility of a declaration that the NSW Planning and Assessment Act overrides the regulation even if it is valid.Ms Stern seemed to indicate that could be a welcome result while pressing on with her argument that the regulation is completely invalid.

Justice Beech-Jones

We should stress that this is just discussion in court that might not be reflected in the final decision, which will be decided by a majority of three judges.

This is one reason why residents cannot yet be confident that waste to energy incineration is dead in Sydney – especially because there will be a review of the Waste to Energy regulation in 2025, which is just two years away. A regulation can also be changed.

How will the decision about validity of regulations affect priority regions?

The NSW Waste to Energy regulation identifies regions where waste to energy can be developed in NSW.

The only region where an application for waste to energy has been lodged with NSW Planning outside Sydney is in the Southern Goulburn Mulwaree Precinct (see map).

Veolia has lodged an Environmental Impact Statement for a waste to energy incinerator at its Woodlawn facility. This statement has been strongly criticised by the EPA.

If the regulation is valid, Veolia’s project will continue to progress through the planning process despite the strong opposition of Goulburn Council and others and EPA concerns about its Environmental Impact Statement. Members of the community have told CEM that they are concerned that the Department of Planning and Environment and the NSW EPA that developed the priority precinct policy and regulation will be assessing whether projects should go ahead or not. (CEM will do further blog posts on these issues.) In other words, they are concerned about a conflict between the EPA’s role as a policy maker, and its role in evaluating EIS.

Note: Report prepared by journalist Wendy Bacon who is a member of CEM. CEM aims to report on legal and regulatory matters in a way that assists communities so we welcome feedback.

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