Former prime minister Scott Morrison's decision to reject a gas exploration licence off the NSW coast has been formally quashed by a Federal Court judge, who agreed it was "infected by apprehended bias".
Mr Morrison announced in late 2021 that his government would reject a two-year extension of the exploratory drilling licence, PEP-11, which covers about 4,500 square kilometres offshore from Manly to Newcastle.
It was later revealed this decision was made at time when Mr Morrison had sworn himself into the portfolio of then-resources minister Keith Pitt, circumventing Mr Pitt's intention to grant the extension.
Asset Energy, which owns an 85 per cent interest in PEP11, sought orders against the Commonwealth quashing the decision, alleging it was affected by bias in the form of predetermination.
Earlier this month, the Albanese government and Asset Energy agreed to end the case and vacate Mr Morrison's decision, paving the way for a future decision on the project to rest with a joint authority comprising the federal and NSW governments.
The Federal Court still needed to determine whether it had the power to make the orders sought and whether it was appropriate.
If it had progressed, the case likely would have involved argument about whether Mr Morrison was validly appointed as the responsible minister.
But in a written decision, Justice Darren Jackson said it was not appropriate to enter into that matter.
"The parties now submit that it is unnecessary to resolve that issue. I agree that it is unnecessary," he said.
"Moreover, the court should not address the validity of Mr Morrison's appointment, as it raises questions of the construction and application of the Constitution which need not be answered in order to do justice between the parties."
Mr Morrison made several public remarks about the project prior to his decision, including in April 2021.
"That will go through processes, but I've made it absolutely crystal clear that's not something I support, and you can expect my view on that to be rock solid," he said at a press conference at the time.
According to a joint memorandum between the parties in the case, it is now accepted the decision was "infected by apprehended bias".
"In light of the consent position of the parties I am satisfied that the other matters referred to provide a proper basis to conclude that the decision was affected by apprehended bias," Justice Jackson said.
The judge said Mr Morrison's public comments conveyed "implacable opposition" to the licence application.
"Mr Morrison's public comments might lead a fair-minded observer to reasonably apprehend that when he did come to deliberate on the matter, sometime between 10 and 14 December 2021, his mind might have been closed to persuasion."
The judge made orders that the PEP-11 decision be quashed, that the application be remitted by the relevant joint authority "to be determined in accordance with law", and for the Commonwealth to pay Asset Energy's costs.
Mr Pitt released a statement on Tuesday night saying he at all times "discharged my responsibilities in accordance with the ministerial standards, the cabinet handbook and legislation" on PEP-11.
The decision now rests with a joint authority made up of the Albanese and NSW governments.
Mr Pitt questioned whether Anthony Albanese had an "open mind" on the project, pointing to the current prime minister's comments from 2021 that Labor would stop PEP-11.
Earlier this month, Federal Resources Minister Madeleine King said the government would follow protocol going forward, but would not comment on the future of the project.
Earlier on Tuesday, NSW Treasurer Matt Kean said his party would "stand up and stop the PEP-11 project going ahead".
