Environment Victoria Inc v AGL Loy Yang Pty Ltd

The Supreme Court of Victoria considered whether the Environment Protection Authority (EPA) acted lawfully when it amended the licences of Victoria’s major coal-fired power stations to tighten limits on various pollutants but declined to impose direct restrictions on greenhouse gas emissions. Environment Victoria argued that the EPA was legally required to consider the principles of environmental protection in the Environment Protection Act 1970, the climate change considerations in the Climate Change Act 2017, relevant State environment protection policies, and the recommendations of a community consultation process, and that its failure to regulate greenhouse gases rendered its decisions invalid. The Court accepted that climate change considerations under the Climate Change Act were “mandatory” factors for decisions made under the 1970 Act, but it reasoned that these obligations only applied to the specific decisions the EPA actually made—namely, to amend conditions relating to pollutants such as mercury, particulates, and sulphur dioxide. Because the EPA had not chosen to exercise its power to regulate greenhouse gases, the Court held it was not unlawful for it to limit its consideration to pollutant emissions. The Court further found that the “principles of environmental protection” in the 1970 Act, which used the word “should,” were aspirational rather than mandatory, meaning their omission could not invalidate the decision. It also held that the EPA had adequately considered relevant State policies and the outcomes of the statutory consultation process, and that its reasoning process, while not detailed on every point, was intelligible and sufficient. Ultimately, the Court concluded that the EPA’s approach reflected a permissible exercise of statutory discretion: it had lawfully decided to strengthen controls on certain pollutants without venturing into greenhouse gas regulation, a matter Parliament had not explicitly required. Accordingly, the Court dismissed Environment Victoria’s challenge, emphasising that if society wishes for greenhouse gas emissions to be directly regulated through licensing, this must be mandated by legislative reform rather than imposed by the courts.