Independent review of the EPBC Act

Articles Written by Samantha Daly (Partner), Angus Hannam (Associate)

A bold and brave new world for Commonwealth Environmental Protection Laws?

Earlier this week, Professor Graeme Samuel AC released his Interim Report of the Independent Review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). The EPBC Act, which is the centrepiece of Australia’s federal environmental law, is required to be reviewed at least once every 10 years. This latest review commenced on 19 October 2019 and examines the operation of the EPBC Act and the extent to which its objectives have been achieved.

Professor Samuel’s views were bold and unequivocal – in its current form, the EPBC Act is neither ensuring effective environment protection and biodiversity conservation, nor efficient regulation of business. The national outlook is one of decline and increasing threat to the quality of the environment. At best, the operation of the EPBC Act has contributed to slow the overall rate of decline. The Interim Report lays down an ambitious reform agenda which if accepted by the Government would involve:

  • hardwiring the requirement for Ecologically Sustainable Development (ESD) into the EPBC Act;
  • establishing a devolved system in which the Commonwealth sets National Environmental Standards (Standards) and the states/territories are primarily responsible for assessment and approval processes;
  • pursuing a so-called “regional planning” approach to regulation in favour of ad hoc and project-specific assessment of environmental impacts;
  • instituting a modern and centralised system of information and data collection; and
  • creating a new independent federal environmental regulator to strengthen monitoring and compliance.

We discuss these broad themes of the reform proposal beneath, along with some of the specific proposals of note that have emerged from the Interim Report.

Key features of the agenda for reform

Ecologically Sustainable Development

According to the Interim Report, the EPBC Act in its current form fails to articulate the precise outcomes it is seeking to achieve for “matters of national environmental significance” (MNES). It is focussed instead on matters of process which, due to their technical and prescriptive nature, generate significant administrative delay and expense with no additional environmental benefit. It is proposed that ESD should explicitly be made the overall and ultimate outcome of the EPBC Act, which means that development to meet the needs of Australians today should be done in a way that ensures the environment, natural resources and heritage are maintained for the benefit of future generations.

In practical terms, this means that the EPBC Act must require the Environment Minister to apply and deliver ESD, rather than just consider it, and decisions must be based on a thorough assessment of ESD. The Interim Report also recommends the creation of an ESD Committee who would provide an advisory role to the Minister, including in relation to the making of the Standards, regional plans, and accreditation arrangements for devolved decision-making. The Minister would then be required to provide reasons as to how the advice of the ESD Committee was considered in decision-making.

National Environmental Standards

To pave the way for devolved decision-making, Professor Samuel recommends that the Environment Minister be responsible for developing a set of legally-enforceable Standards in consultation with political, scientific, indigenous, environmental and business stakeholders. The Standards, which are proposed to cover a suite of subject matters including ESD, matters of national environmental significance, decision-making processes and monitoring, compliance and enforcement, would set benchmarks for environmental protection in the national interest, providing the ability to measure the outcomes of decisions. Appendix 1 of the Interim Report includes a Prototype Standard for MNES as a ‘starting point for developing a Standard for MNES’. However, based on recent comments by the Environment Minister it is possible that the prototype Standards included in the Report may in fact be adopted (at least initially) as the applicable Standards for the purpose of the EPBC Act.

Professor Samuel was particularly scathing about what he considered a culture of tokenism and symbolism with regards to the consideration of indigenous knowledge and views under the EPBC Act. For instance, he pointed to the operation of the Indigenous Advisory Committee (IAC) which is not required to provide decision-makers with advice, but must instead be invited by the Minister to provide its views. In addition to a recasting of the IAC to a new Indigenous Knowledge and Engagement Committee, he recommended the introduction of a Standard for best practice Indigenous engagement. He also recommended a thorough review of current cultural heritage laws and consideration of the role of the EPBC Act in providing national-level protections. In this regard we refer to our previous article.

The Environment Minister would assess State and Territory policies, plans and regulatory processes against the Standards, then decide whether they should be formally accredited to assess and approve projects. It is hoped that widespread accreditation would result in efficiency gains through the avoidance of regulatory duplication and a further step towards a “One Stop Shop” for environmental approvals and regulation. As things presently stand, resources sector projects, for instance, take an average of almost 3 years, or 1,103 days to gain approval under the EPBC Act, excluding any time taken for post approval requirements or appeals. Of those projects, the Interim Report found the Minister has taken an average of 223 days to make an approval decision.

Proper role of the Commonwealth

In relation to the continuing role of the Commonwealth under a new system of Standards, Professor Samuel remarked:

“pursuing greater devolution does not mean that the Commonwealth ‘gets out of the business’ of environmental protection and biodiversity conservation. Rather, the reform directions proposed would result in a shift with a greater focus on accrediting and providing assurance oversight of the activities of other regulators and in ensuring national interest environmental outcomes are being achieved”

The Standards would not operate to eliminate assessment and approval processes altogether at the federal level. The Commonwealth would retain those capabilities in cases where it has sole jurisdiction, where accredited arrangements are not in place or cannot be used, at the specific request of a jurisdiction, or where it exercises its ability to step in on national interest grounds. Assessment and approval processes for this residual category of cases would proceed under rationalised pathways according to high-impact and low-impact developments.

Professor Samuel rejected calls for the remit of the EPBC Act and the field of MNES overseen by the Commonwealth to be expanded. In his view, expansion to cover environmental matters that are state and territory responsibilities would result in muddled responsibilities, further duplication and inefficiency. Instead the EPBC Act should focus on the places, flora and fauna that the Commonwealth is responsible for protecting and conserving in the national interest.

Notably, the Interim Report did not recommend the introduction of a new climate trigger, stating that the appropriate vehicle for addressing and reducing greenhouse gas emissions was specific government policy mechanisms. It further recommended that the water trigger which was introduced for coal seam gas and large coal mining developments in 2013 should be retained but modified. It would be limited to consideration of any project risking “irreversible depletion or contamination of cross-border water resources” with these terms to be defined in the relevant Standard applying to this MNES.

Regional planning

A significant focus of the Interim Report was on the ad-hoc nature of environmental impact assessment and approval under the EPBC Act, rather than the adoption of wide-scale, strategic approaches. Professor Samuel found that decisions are largely made on a project-by-project basis, with the assessment of impacts done in isolation of other current or anticipated projects. In turn, this approach underestimates the cumulative impacts that development can have on a species, ecosystem or region. The proposed reforms would allow for the development of various regional planning tools including regional recovery plans and bioregional plans (which may identify areas where protection, conservation and restoration are necessary), and encourage the further use of strategic assessments. To address nationally pervasive issues, the EPBC Act would allow for the development of strategic national plans.

Further specific proposals of the Interim Report

In addition to the above big-ticket items for reform which were placed at the forefront of the Interim Report, Professor Samuel touched upon a range of other, specific reforms which included the following:

A limited avenue of merits review

Professor Samuel rejected any proposal to remove the extended standing provisions under the EPBC Act, which grant standing beyond persons directly affected by a decision. He did, however, suggest a potential requirement for applicants relying on extended standing to show they have an arguable case, or to show their case raises matters of exceptional public importance. In addition to existing rights of judicial review, he recommended the introduction of limited rights of merits review “on the papers”, although it is unclear how this would operate in practice. Merits review would be limited to specified decisions within the Environmental Impact Assessment process, and be limited to those matters raised and maintained by the applicant during the course of the regulatory decision, or matters arising from a demonstrable material change in circumstances. Applications would also need to demonstrate they were in the interest of the desired outcomes.

Offsetting

Professor Samuel recommended that the 2012 offsets policy be replaced with clear offsetting laws. If offsets were supported with greater certainly under the EPBC Act, this could be the catalyst for a market response. Under the policy, proponents must exhaust all reasonable options to avoid or mitigate impacts on MNES before resorting to offsets. In practice, however, he found that offsetting has become the default negotiating position and a normal condition of approval rather than the exception. Reform is needed so that offsets can only be considered once options to avoid and then mitigate impacts have been actively considered and demonstrably exhausted. To deliver ESD, offsets need to include a focus on restoration where presently they are poorly designed and implemented, delivering an overall net loss for the environment. Professor Samuel also recommended that the EPBC Act require a decision-maker to accept robust advanced offsets that are created before approval is granted, including potentially through the purchase of credits in a biodiversity restoration market.

National supply chain of information

A key theme of the Interim Report was the inadequate, fragmented and disparate collection of environmental data and information. Professor Samuel advocated for a “single national source of truth” for the public, proponents and government to deliver certainty and efficiency in decision-making, and restore public and industry confidence in the system, given the reported lack of transparency around how information is collected and incorporated into decision-making processes. Improved information and data management would likewise improve monitoring and evaluation of outcomes. In the absence of a central repository or clearly linked repositories where data can be curated into information and knowledge, proponents and governments expend additional costs in collecting and re-collecting the information they need. Professor Samuel called for the overhaul of antiquated departmental systems for information analysis and sharing and the introduction of a designated custodian for the national environmental supply chain. In his view, nothing less than a “quantum shift” was required in the quality of accessible data and information available to parties.

An independent compliance and enforcement regulator

The Interim Report noted the absence of a strong compliance culture associated with the administration of the EPBC Act. It considered that the Department has positioned itself as a collaborative regulator, working to reach agreement with the regulated community, and failing to bring to bear the full force of the law in appropriate cases. Across the history of the EPBC Act, just 41 breaches have been subject to compliance outcomes. In part, enforcement of the EPBC Act has been impeded by its complexity, as well as limitations in powers at the regulator’s disposal. Accordingly, Professor Samuel called for the introduction of an independent regulator that is not subject to actual or implied political direction from the Minister. Under a devolved model, state and territory decision-makers would assume primary responsibility for monitoring, compliance and enforcement of conditions and report on their accredited arrangements including all breaches and the responses taken to them. The Commonwealth would retain the ability to intervene in project-level compliance where egregious breaches are not being effectively dealt with by the devolved regulator. The independent regulator should be equipped with a full range of powers and be empowered to impose higher penalties so that compliance is not just a cost of doing business.

Next steps

Whilst the recommendations of Professor Samuel laid down in the Interim Report are bold and wide-sweeping, the ultimate outcome of the review remain to be seen, with the Final Report due to be delivered to the Government by the end of October 2020. Between now and then, the Interim Report has recommended fast-tracking of a number of short-term fixes aimed at clearing up existing duplication, inconsistency, gaps and conflicts in the EPBC Act. It has also recommended the development of Interim Standards which can be later tailored with greater specificity and granularity in conjunction with a complete legislative overhaul. A phased approach is hoped to deliver immediate improvements to the effective and efficient operation of the EPBC Act, whilst allowing the time for the detailed work required to deliver more complex reforms including a substantial re-drafting of the EPBC Act. Given the breadth and depth of the recommended reforms, it is likely that the reforms would take years to implement should the full suite of reforms (or even the majority of reforms) be adopted.

In the interim, Professor Samuel has invited all interested parties to provide comments on the Interim Report, including anything that might have been missed, how the proposed reform directions might be improved, and any fundamental shortcomings by Monday 17 August 2020. Comments made by Sussan Ley, Minister for the Environment over recent days suggest the Government is receptive to the proposal for a devolution model and intends to legislative prototype Standards as early as next month. She has, however, swiftly rejected the recommendation for an independent regulator.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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