Two Federal Court decisions on complex environmental assessment regimes for gas and water resources

Two recent decisions of the Federal Court demonstrate how complex environmental assessment regimes operate under Commonwealth laws governing gas and water resources.

The decisions are relevant to project proponents and government authorities operating within the specific legislative regimes considered and more broadly.

• Doctors for the Environment (Australia) Incorporated v National Offshore Petroleum Safety and Environmental Management Authority (No 2) [2025] FCA 989 (DEA v NOPSEMA)
• Murray Lower Darling Rivers Indigenous Nations v Commonwealth [2025] FCA 1029 (MLDRIN v Commonwealth)
• Further reading

Doctors for the Environment (Australia) Incorporated v National Offshore Petroleum Safety and Environmental Management Authority (No 2) [2025] FCA 989 (DEA v NOPSEMA)

On 22 August 2025, Justice McElwaine dismissed a judicial review application brought by Doctors for the Environment (Australia) Incorporated (DEA) in DEA v NOPSEMA. The challenge related to the decision of the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) to approve an environmental plan for the Scarborough Gas Project (Project) being carried out by Woodside Energy Scarborough Pty Ltd (Woodside) under the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2023 (Cth) (Regulations).

Woodside's Project and assessment requirements

Woodside submitted its environmental plan for the Project in January 2025 (Project EP). The Project EP assessed that the Project's "Scope 3"¹ greenhouse gas emissions were 878 million tonnes over the life of the Project. The Project EP acknowledged the uncertainty associated with this estimation and included measures to monitor and reassess whether the impact was realised.

The Regulations require a title holder's environmental plan to include details of the control measures that will reduce the identified impacts and risks to "as low as reasonably practicable" and of an "acceptable level", and include environmental performance outcomes and standards.²

NOPSEMA can accept an environmental plan if it is "reasonably satisfied" that the environmental plan meets all the acceptance criteria, including:

• That the plan is appropriate for the nature and scale of the activity.
• Demonstrates that the environmental impacts of the activity will be reduced to "as low as reasonably practicable" and of an "acceptable level".³

Arguments and decision of the Court

DEA argued the decision of NOPSEMA to approve the Project EP was invalid as the Regulations required the Project EP to specify what constitutes an acceptable level of Scope 3 emissions, or NOPSEMA could not be reasonably satisfied that the plan met the acceptance criteria. It further alleged that the proposed control measures in the Project EP were inadequate as they included a process for annual review and the application of additional adaptive management measures.⁴

NOPSEMA argued that DEA's approach placed excessive emphasis on the statutory definitions and failed to give proper regard to the operative provisions and the statutory scheme as a whole. The impact of Scope 3 emissions is a matter for evaluative and context-sensitive assessment, and the fact that better methods may exist for identifying the risk is irrelevant.⁵

Woodside submitted that DEA's approach was overly prescriptive and the decision of NOPSEMA was within the discretion afforded under the Regulations.⁶

McElwaine J dismissed DEA's challenge, finding that the Project EP sought to demonstrate that the environmental impacts from Scope 3 emissions will be of an acceptable level by postulating a worst-case scenario. Whether this approach was satisfactory was a matter for NOPSEMA to determine when making its decision.⁷ The nature of an environmental plan is inherently forward-looking and must accept some level of uncertainty with respect to future environmental impacts and risks. The prescriptive approach DEA argued for would require specific numerical benchmarks to be set for each impact or risk, and is inconsistent with the flexibility permitted by the assessment regime.⁸

Key takeaways

1. The regime under the Regulations for the assessment of impacts of offshore petroleum and gas projects is one that is adapted to assess a broad range of impacts, including direct and indirect impacts from the operations of offshore projects.
2. Such projects will invariably include a component of downstream impacts and risk, such as Scope 3 emissions or other environmental harms caused by petroleum products, that are inherently uncertain.
3. The decision encourages project proponents to craft sophisticated but flexible management controls to address indirect impacts, where those impacts are uncertain due to global or regional factors that are outside the control of proponents.

Murray Lower Darling Rivers Indigenous Nations v Commonwealth [2025] FCA 1029 (MLDRIN v Commonwealth)

On 29 August 2025, Stewart J handed down the decision in MLDRIN v Commonwealth relating to challenges to the Murray Darling Basin Authority's (Authority) decision to recommend the Minister for Water (Minister) accredit the NSW Murray-Darling Fractured Rock Water Resource Plan (Water Resource Plan) under the Water Act 2007 (Cth) (Water Act) and the subsequent accreditation by the Minister.

Preparation of the Water Resource Plan and Water Act regime

The Water Resource Plan is a resource management plan for groundwater resources in the NSW portion of the Murray-Darling Basin which covers 597,926 square kilometres and extends beneath alluvial and porous rock groundwater resources.

On 31 August 2022, Murray Lower Darling Rivers Indigenous Nations (MLDRIN) provided advice to the Authority criticising the proposed Water Resources Plan, because it was inconsistent with consultation requirements for First Nations organisations in the Basin Plan 2012 (Cth) (Basin Plan). MLDRIN's criticisms centred on the consultation with the Tati Tati and Barkandjii Nations being incomplete, and the NSW Government's approach to consultation on native title generally excluding non-claimants.

On 21 October 2022, the Authority recommended the Minister accredit the Water Resource Plan under s 63 of the Water Act, which the Minister did on 15 November 2022.

The case turned on the interrelationship between the power of the Authority to make recommendations to the Minister and the legislative references to consistency with the Basin Plan.

A water resource plan "must be consistent" with the relevant Basin Plan, and the Authority or Minister must have regard to "the extent to which the water resource plan is consistent" with the Basin Plan when exercising their powers under the Water Act.⁹

The Minister's decision was invalid, as agreed

The Commonwealth conceded that the Minister's decision to accredit the Water Resource Plan was invalid and should be set aside on the basis that the Water Resource Plan was not before the Minister when she approved it, despite having the Authority's recommendation and a brief of material. The substantive issues remaining related to the validity of the Authority's decision to recommend the accreditation of the Water Resource Plan to the Minister.

The Arguments and decision of the Court

MLDRIN contended that the incomplete consultation with the Tati Tati and Barkandji Nations constituted a failure to have regard to the First Nations consultation requirements in the Basin Plan as required by the Water Act, and the decision to recommend was therefore invalid. It argued that consistency with the Basin Plan was a precondition to the Authority's exercise of power to recommend.¹⁰

The Commonwealth respondents submitted that "consistency" with the Basin Plan did not mean that strict compliance was required with each provision of the Basin Plan. They argued there was no precondition of objective consistency with the Basin Plan relevant to the exercise of the Authority's power to recommend a water resource plan for accreditation. The Commonwealth argued the only express precondition to the Authority's power was to consider the extent of the consistency, requiring an evaluative judgement of degree and policy.¹¹

Stewart J agreed with the Commonwealth respondents, holding that the requirement that a water resource plan must be consistent with a Basin Plan has a qualified effect. He considered the words "having regard to the extent to which the water resource plan is consistent" contemplates that a water resource plan might not be strictly consistent with the Basin Plan.¹² The sole precondition to the Authority making a recommendation is that the Authority has regard to the extent of the consistency between a water resource plan and the Basin Plan.¹³ His Honour observed that the requirement in the Basin Plan for there be "consultation with relevant Indigenous organisations" is not a requirement that can readily be assessed on a "yes" or "no" basis - it will be a matter of degree, as both the "consultation" and "relevant organisations" components involve evaluative assessment.¹⁴

Stewart J also rejected the argument of MLDRIN that the Authority's decision to recommend accreditation was legally unreasonable.¹⁵ The decision of the Minister was nevertheless invalid on the ground that was not in dispute. The Court ordered the decision be remitted to the Minister for reconsideration in accordance with law.

Key takeaways

1. The case highlights that government decisions with respect to environmental approvals can have both discretionary and mandatory components. Decision-makers and those seeking approval must be able to understand the difference, and the objective and subjective factors relevant in each case.
2. Despite the stated relevance of First Nations' values and uses in the Basin Plan,¹⁶ the decision suggests that the regime under the Water Act and Basin Plan provides states with significant discretion when carrying out consultation with First Nations groups.

Further reading

The above decisions are further examples of Australian courts considering the scope of impact assessment for resource projects. We have recently discussed the importance of the NSW Court of Appeal's decision in Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd [2025] NSWCA 163 in a previous article.

Should you require further information on the above decisions or advice on their application to a project, our Environment & Planning team are able to assist.

Footnotes