Streamlining the regulation of environmental offsets in Queensland

In brief

Legislation recently introduced into the Queensland Parliament will establish a new regime for the provision and regulation of environmental offsets in Queensland. Partner Bill McCredie, Special Counsel Rosanne Meurling and Lawyer Julieane Bull report on the key changes and identify some matters yet to be addressed. 

What is proposed

The Bill and Regulation

The Environmental Offsets Bill 2014 was introduced into the Queensland Parliament on 13 February 2014 and provides the framework for imposing and managing environmental offsets. A yet-to-be-released regulation will contain much of the detail to support the framework.

What is an environmental offset?

An environmental offset is defined as an activity undertaken to counterbalance a significant residual impact of a prescribed activity on a prescribed environmental matter.

The prescribed activities and prescribed environmental matters will be identified in a regulation.

A significant residual impact generally means an adverse impact, whether direct or indirect, of a prescribed activity that remains, or will or is likely to remain, whether temporarily or permanently on all or part of a prescribed environmental matter, in circumstances where the impact is, or will or is likely to be, significant.

Environmental offsets policies

Currently, environmental offsets in Queensland are regulated by five separate State offsets policies. The Bill will replace these policies with a single State environmental offsets policy, which will be prescribed under a regulation.

At the local government level, each council may have its own environmental offsets policy, but these policies will also need to be prescribed under the regulation.

In the interests of certainty, environmental offsets policies may only be amended or repealed through the regulation.

Despite the potential for environmental offsets policies to exist at all three levels of government, restrictions apply on the imposition of multiple environmental offset conditions (as discussed below).

Environmental offset conditions

The Bill provides that, where another Act allows an offset condition to be imposed on an authority (for example, an offset condition imposed on an environmental authority under the Environmental Protection Act 1994 (Qld) or an offset condition imposed on a development permit under the Sustainable Planning Act 2009 (Qld)), the administering agency of that Act may only impose an offset condition if it is satisfied that:

• the prescribed activity will, or is likely to have, a significant residual impact on a prescribed environmental matter; and
• all cost-effective on-site mitigation measures have been, or will be, undertaken.

The framework around the imposition of offset conditions is important. First, by reference to a 'significant' residual impact it sets a higher threshold for the types of impacts that must be offset than is currently in place under the existing State offsets policies. This is likely to result in a reduction in the number of environmental matters requiring offsets. Second, the regime recognises the concept of 'cost-effectiveness' with respect to on-site mitigation measures.

The Bill prevents the duplication of offset conditions by providing that an administering agency (be it the State or a local government) must not impose an offset condition if the significant residual impact on the prescribed environmental matter relates to an area where there is an existing Commonwealth condition about the same or substantially the same impact and area. There is a similar limitation on a local government imposing an offset condition if there is an existing State offset condition. This is an improvement on the current situation, but assumes either that approvals are obtained in a particular order or that there is a degree of integration in the approval processes that does not currently exist.

Importantly for major projects, including resources projects, the Bill does not purport to limit the functions or powers of the Coordinator-General under the State Development and Public Works Organisation Act 1971 (Qld) and other powers and obligations under that Act.

Options for offset delivery

Where an offset condition is imposed on an authority under another Act, the Bill will deem certain conditions to be imposed on the authority.

Those conditions require, among other things, the authority holder to:

• elect, prior to the commencement of the prescribed activity, whether it will satisfy the offset condition by means of a proponent-driven offset, a financial settlement offset, or a combination of the two; and
• agree with the administering agency about the delivery of the offset condition by entering into an agreed delivery arrangement.

There are no timeframes stated in the Bill for the administering agency to give the authority holder notice that it agrees or disagrees with the proposed delivery method. If there is a dispute, the mechanism for dealing with the dispute is to be prescribed in the regulation. As it currently stands, this process is not satisfactory as it has the potential to significantly delay the start of a project.

Types of offsets

A proponent-driven offset is an environmental offset proposed by an authority holder that is to be undertaken by the holder. An offset delivery plan must be prepared for a proponent-driven offset, and this plan is also subject to approval by the administering agency.

The authority holder may deliver a proponent-driven offset directly or indirectly. An example of indirect delivery is where the environmental offset is provided by the authority holder contracting with a broker to carry out the activities.

The entity which owns the land to which the environmental offset relates is required, at the time of election, to sign the offset delivery plan. In the Bill, 'land' includes waters.

A financial settlement offset is a payment of an amount of money by the authority holder to either the relevant local government or the department administering the Bill, depending upon whether the offset condition relates to a matter of local or other environmental significance.

The calculation of the financial settlement offset will be in accordance with an offsets calculator to be prescribed under the regulation.

On receipt of the financial settlement offset, the money must be paid into the local government's trust fund or the department's Financial Offset Account. Responsibility for delivery of the offset then transfers to the local government or the department.

New mechanism for legally securing offsets

The Bill provides for a new mechanism for legally securing an offset area, called an environmental offset protection area.

These areas may be declared by the chief executive of the department administering the Bill upon application by a landowner, and can be declared over separate parcels of land that do not necessarily need to be adjacent or owned by the same entity.

The declaration of an environmental offset protection area cannot be made until each person with an interest in land (including a person holding a mining claim, mineral development licence or mining lease) has consented.

An environmental offset agreement is a mandatory requirement for an environmental offset protection area. The agreement will be binding on landowners, successors in title and those with a registered interest in the land. Failure to comply with the agreement may result in an offence being committed.

Limitations on offsetting the offset

There are limitations on the use of legally secured offset areas for a prescribed activity.

An authority holder is not permitted to carry out any prescribed activity in a legally secured offset area if a delivery or management plan or agreement (however described) applies to all or part of the area and the carrying out of the prescribed activity will delay, hamper or stop the delivery of the conservation outcome for the prescribed environmental matter as stated in the delivery or management plan or agreement for the area.

Gaps in the Bill

There are a number of potential gaps in the Bill. Notably, it does not:

• deal with advanced offsets (that is, where an area of land is identified by a landowner as being useful for the purposes of an environmental offset at some time in the future), other than to provide that a regulation may provide for these mechanisms, including their use and trade;
• refer to strategic investment corridors and direct benefit management plans; or
• permit applicants with undecided applications to opt in to the new mechanism, as the Bill only applies to an application for an authority made after the Bill commences.

What's next?

The Bill has been referred to the Agriculture, Resources and Environment Committee for consideration, with a report by the committee due on 28 April 2014. There is the opportunity to make submissions to the committee by 24 March 2014.

Much of the detail will be contained in the regulation, the State environmental offsets policy and the offsets calculator, all of which are yet to be released. It will be important for proponents to monitor the release of these documents, and to make submissions about these documents, if the opportunity arises.

The Bill is a positive step towards streamlining the environmental offsets regime. The success of the new regime is, however, dependent on the clarity and transparency of the documents yet to be released, and some improvement in the processes contained in the Bill.