Major reforms on the horizon for Australia’s national environmental laws

Snapshot:

• Development of National Environmental Standards in accordance with the recommendations of the Samuel review
• Establishment of a federal EPA with broad responsibility for approvals, compliance and enforcement
• States and territories will be able to apply to become accredited under the EPBC Act to allow for single touch decision-making
• Significant changes to environmental offsets and establishment of a ‘nature repair market’
• Implementation of a new regional planning system including a three-tiered map designed to pre-identify areas for protection, restoration and sustainable development
• Proponents will be required to publish their expected Scope 1 and 2 greenhouse gas emissions, and to disclose how their projects align with Australia’s national and international obligations to reduce emissions
• Establishment of a new Data Division within the Department of Climate Change, Energy, the Environment and Water
• Members of the public will be given opportunities to contribute to the monitoring of the environment and compliance with the Standards
• New mandatory guidelines for identifying and quantifying the social and economic impacts of each proposed development.

In this article we provide an overview of the key reforms set out in the Nature Positive Plan, in particular the development of National Environmental Standards (Standards), the establishment of a new federal Environment Protection Agency (EPA) and a system for single touch approvals, as well as reforms to environmental offsets and the creation of a nature repair market, and what they could mean for industry in years to come.

Development of National Environmental Standards

The Government adopted the key recommendation of the Samuel review, being to develop and implement a set of Standards to underpin the operation of the EPBC Act by setting out the environmental outcomes that the EPBC Act seeks to achieve. The Government has said that its first priority will be to develop the Standard for Matters of National Environmental Significance (MNES), using the MNES Standard contained in the final report of the Samuel review as the starting point for public consultation. Standards relating to First Nations Engagement and Participation in Decision-Making, Community Engagement and Consultation, Regional Planning, and Environmental Offsets will next be given priority. A Standard for Compliance and Enforcement will follow the establishment of the new federal EPA, and a Standard for Data and Information will follow the establishment of the Data Division.

All Standards will be enshrined in legislation and will be subject to regular review. They will apply to all decision-making under the EPBC Act and will be administered and enforced by the federal EPA. Any future amendments to existing Standards will be able to strengthen, but not weaken environmental protection.

The federal EPA

The Government will establish a federal EPA to be responsible for approvals, compliance and enforcement under the refreshed EPBC Act. The EPA’s regulatory functions will be funded according to a cost recovery, ie user pays, model. The core responsibilities of the federal EPA will be to:

• Carry out project assessments and make approval decisions
• Monitor enforcement of approvals, including approvals made under accredited arrangements
• Advise and provide assurance to the Minister on the operations of states, territories and other Commonwealth decision-makers under accredited arrangements, including on their compliance with the Standards
• Administer legislation dealing with wildlife trade, sea dumping, ozone and synthetic greenhouse gas management, hazardous waste, product emissions standards, recycling and waste reduction, and underwater cultural heritage.

The Minister will retain a power to ‘call in’ any decision that would otherwise be made by the EPA, as well as to approve proposed developments that would have an unavoidable negative impact on MNES, but only where this would be clearly in the national interest. Although the Minister will be able to issue the EPA with a public Statement of Expectations, she will not otherwise be able to direct the agency. The Minister will retain responsibility for policy, regional planning and Standard-setting activities under national environmental law.

Single touch approvals and rationalisation of existing assessment pathways

States and territories will be able to apply to become accredited under the EPBC Act to allow for single touch decision-making. The Minister will be responsible for deciding whether to accredit a state or territory to carry out environmental assessments and make approval decisions, which will require compliance with the Standards, and full transparency of environmental performance data and decision-making. The Government has said it will work with the parties to existing accredited arrangements and agreements to integrate the new Standards and requirements into their processes. At present, assessment bilateral agreements are in place with all states and territories, however there are no approval bilateral agreements.

To further streamline environmental assessment under the EPBC Act, the Government will rationalise the six existing pathways for assessment of proposed developments to implement a new, risk-based approach. For proposed development that clearly requires detailed assessment, the Government has said it will explore options to advance straight to assessment and bypass the referral phase.

Changes to environmental offsets and establishment of a nature repair market

The Government will introduce a new hierarchy applying to environmental offsets which will be strictly enforced. Proponents will be required to demonstrate that they have made attempts to avoid and mitigate harm to MNES before resorting to environmental offsets. Where they are unable to find or secure like-for-like offsets which deliver a net benefit for MNES, they will be permitted to make a conservation payment. Conservation payments will be priced according to the cost of like-for-like habitat restoration (including land value) and management, and an additional premium designed to address risks and ensure an overall environmental benefit from the proposed development. Payments will be made to and invested by a body such as an independent government trust, eg the NSW Biodiversity Conservation Trust. To provide certainty and confidence in the application of offsets, a Standard for Environmental Offsets will be developed. A National Environmental Offsets System will be released by the end of 2022, which will track and report on the use and delivery of environmental offsets.

Under current settings, it is difficult for proponents and investors to invest in nature or establish offsets without some form of land ownership or tenure. Usually offsets will be established through the purchase of land or entry into bespoke contracts with landholders. In recognition of this issue, the Government will establish a nature repair market to make it easier for individuals and businesses to invest in nature. Along with the carbon market, it will be subject to regulation by the Clean Energy Regulator, and once it is operating effectively, the EPA may permit certain types of market projects identified through the nature repair scheme to be used to meet approval obligations.

Three-tiered regional planning approach

To give project proponents greater certainty by providing clear indicators of conservation priorities and where development impacts will largely be prohibited, the Government will implement a new regional planning system. Regional plans will be built around a new three-tiered map designed to pre-identify areas for protection, restoration and sustainable development. Land will be mapped as either Areas of High Environmental Value, where development will largely be prohibited, Areas of Moderate Environmental Value, where development will be allowed subject to approval, or Development Priority Areas, where development can proceed without a separate EPBC Act approval. The meaning of the term ‘High Environmental Value’ will be the subject of specific consultation.

The Minister will be required to approve regional plans following a negotiation with relevant states or territories, as well as regional natural resource management bodies and local government. The Government will work with state and territory governments to identify locations for initial regional plans. Priority areas for consideration will be those experiencing development pressure and with high biodiversity values, eg urban growth areas, renewable energy zones and future development areas. Once they are in place, individual projects will need to demonstrate compliance with applicable regional plans.

Other reforms set out in the Nature Positive Plan

In addition to the above headline reforms, the Government has committed to a range of other reforms, including:

• Proponents will be required to publish their expected Scope 1 and 2 greenhouse gas emissions, and to disclose how their projects align with Australia’s national and international obligations to reduce emissions
• The water trigger will be expanded to include all forms of unconventional gas, including shale and tight gas, in addition to coal seam gas and large coal mining developments
• The establishment of a new Data Division within the Department of Climate Change, Energy, the Environment and Water to provide clear authoritative sources of high-quality environmental information. Data will be available through a public portal, which will bring together and make accessible data from a range of sources including proponents and state and territory regulators
• Members of the public will be given opportunities to contribute to the monitoring of the environment and compliance with the Standards. Although it is not precisely clear what these ‘opportunities’ will look like, the Government has said it will examine the possibility of strengthening third-party enforcement. The Government will not introduce a right to limited merits review of decisions, instead maintaining the current ability for third parties to bring judicial review claims
• To better incorporate social and economic considerations in decision-making, there will be new mandatory guidelines for identifying and quantifying the social and economic impacts of each proposed development. Relevant government authorities will also be able to provide authoritative review of proposed developments and advice on social and economic matters, with the costs of independent analysis to be borne by proponents.

What now?

The Nature Positive Plan is the first step in a process of consultation and discussion. The Government has said that a package of new national environmental legislation will be prepared in the first six months of 2023 to implement the reforms, and stakeholders will be given an opportunity to comment on an exposure draft Bill, along with the draft Standard for MNES. In 2023, the Government has committed to focussing on the development of the MNES Standard, the design of the federal EPA, including the development of an appropriate cost recovery model, and working with states and territories to identify initial locations for regional plans.