Amendments to Federal environmental regulation

In brief

The Federal Government has implemented a variety of policy and legislative reforms to its environmental approvals regime. Partner Chris Schulz, Senior Associate Emily Gerrard and Associate Katherine Kirby report on two legislative amendments that facilitate recent reforms: the introduction of a 'user pays' system for environmental assessments and the Federal Government's proposed 'one stop shop' environmental approvals.

Background

Since the Abbott Government's election, it has been actively pursuing reforms to streamline environmental assessments and approvals. As has been widely reported, the Federal Government is proposing to accredit state and territory approval processes under national environmental law, to create a single environmental assessment and approval process (the One Stop Shop Proposal). Currently, each state and territory has an 'assessment bilateral agreement' with the Federal Government. These existing bilateral agreements enable eligible projects to be assessed under a state/territory accredited environmental assessment (Assessment Bilateral Agreement). However, the Federal Minister retains the power to approve the project (and place any relevant conditions on that approval). Under the new One Stop Shop Proposal, the Commonwealth proposes to enter into a revised Assessment Bilateral Agreement and a new one stop shop 'approval' bilateral agreement with each of the state/territory governments (Approval Bilateral Agreement). The combined effect of these agreements will mean that eligible projects will be able to be assessed and approved under a single process undertaken at the state/territory level.

The One Stop Shop Proposal has come under criticism, including from the Senate Environment and Communications References Committee (the Committee), which recently expressed 'grave concerns' about the One Stop Shop Proposal, particularly that it may increase the complexity of processes.¹ The Committee also considered it 'inappropriate for the Commonwealth to be devolving its responsibilities for matters of national environmental significance to the States and Territories.'²

Despite criticisms, as reported in our Client Update of 19 May 2014, Queensland, New South Wales, the ACT and Tasmania have progressed draft Approval Bilateral Agreements with the Federal Government. The table below summaries the current status of the negotiation of the bilateral agreements with each state and territory.

Bilateral agreement implementation – key amendments

In addition to the 'one stop shop' policy developments, the Federal Government has proposed amendments to the EPBC Act to facilitate the One Stop Shop Proposal and its application to LCM and CSG developments. The amending bill, the Environment Protection and Biodiversity Conservation Amendment (Bilateral Agreement Implementation) Bill 2014 clarifies the current regime relating to bilateral agreements.

A key change proposed by the Bill is the clarification of the regime around declarations which may be made by Federal or state/territory Ministers under bilateral agreements, that a particular project which appears to be covered by the agreement, is no longer covered by that agreement. Under the new provisions, if this occurs, then the project is taken to have been referred to the Minister under the EPBC Act (thereby by bringing it back within the EPBC Act referral and approval processes). While the draft Approval Bilateral Agreements for New South Wales, Queensland, the ACT and Tasmania demonstrate an intention to put in place parameters for when such a declaration may be made, theoretically, this mechanism allows controversial or significant projects to be taken out of the 'one stop shop' process. If the action has already been assessed or bilateral assessment is underway at the time that the declaration is made, the Federal Minister will determine whether all or part of this assessment can be used to inform an approval under the EPBC Act.

Other amendments proposed by the Bill include:

• extending the bilateral accreditation of state or territory authorisation processes to those set out in guidelines and instruments made under state or territory law, not just those contained in legislation or regulations (as is currently the case);
• providing the Minister with the power to allow minor amendments to a management arrangement, authorisation process or assessment process accredited under a bilateral agreement;
• expanding the types of entities that can approve actions under Approval Bilateral Agreements, for example, local government or expert bodies;³ and
• removing the requirement for states/territories to be party to the national partnership agreement on LCM and CSG development in order to access the Independent Expert Scientific Committee on CSG and LCM development's (IESC) advice. This amendment is coupled with a requirement for Approval Bilateral Agreements covering LCM and CSG developments to include an undertaking that the relevant state/territory Minister must obtain and consider the IESC's advice if the action is likely to have a significant impact on water resources.

The Bill's developments

The Bill was referred to the Senate Environment and Communications Legislation Committee for inquiry. The inquiry report was released on 23 June 2014. Key issues noted by the Committee included whether the 'one stop shop' would:

• create a more complex approvals process;⁴
• 'result in efficiency gains and cost reductions';⁵
• adversely impact environmental standards;⁶
• place excessive additional burden on the states and territories;⁷ or
• raise potential conflicts of interest.⁸

Specific issues relating to other amendments proposed by the Bill were also raised, such as concerns about the ability of the Minister to amend authorisation and assessment processes without public consultation and parliamentary oversight.⁹ Similar concerns were also raised about the proposal to allow for the accreditation of an instrument under law.¹⁰

Despite the issues identified by the inquiry, the Committee recommended that the Bill be passed.¹¹

In addition, the Senate Environment and Communications References Committee conducted a separate inquiry into environmental offsets in environmental approvals under Federal legislation. The Committee called for consistency between the Federal and state/territory regimes and the application of a single national standard,¹² and expressed concerns about how this could be achieved in light of the Federal Government's One Stop Shop Proposal.¹³ The Committee considered 'that the relevant state and territory standards and legislation should meet the national offsets standard, not merely be accredited as meeting the objects of the EPBC Act.'¹⁴ It is possible that this recommendation will lead to a national standard relating to environmental offsets.

Cost recovery

For a number of years, the Federal Government has considered implementing a cost recovery scheme under the EPBC Act. In 2011 and 2012, it undertook consultation on a proposed scheme.¹⁵ The process recently culminated with assent of the Environment Protection and Biodiversity Conservation Amendment (Cost Recovery) Act 2014 (Cth) (the Cost Recovery Act). The Cost Recovery Act introduces a 'user pays' system to the EPBC Act for environmental assessment activities (noting that there is already some 'cost recovery' under the Act).¹⁶

The Cost Recovery Act enables regulations to be made that prescribe fees for services provided under the EPBC Act or regulations.¹⁷ The regulations can also prescribe methods for determining fees; the consequences of failing to pay fees; refunds; exemptions; and waivers.

Documents released by the Department of Environment indicate that when the scheme is introduced project proponents are likely to be subject to the following fees:

• a 'referral fee' of $7352 (when a referral under the EPBC Act is submitted);
• assessment 'base costs' for 'each statutory stage in the assessment process'; and
• additional 'complexity costs' or 'contingency fees' (if required) which may be payable at each assessment stage.¹⁸

The assessment 'base costs' under the regulations could be in the range between $8500 to $30,500.¹⁹ 'Complexity costs' for actions will be determined on a 'case-by-case basis' and will be in addition to the base cost amount²⁰. The regulations made under the Cost Recovery Act will provide the final amounts payable.

The Cost Recovery Act allows for the Minister to determine the fees that may be charged for controlled actions being assessed by inquiry or by strategic assessment. The Explanatory Memorandum indicates that cost recovery may not be appropriate where a strategic assessment has a general public benefit.²¹ Current timeframes for decision making by the Minister or Secretary will be extended where fees are not paid in respect of the service being provided.

According to the Government, the Cost Recovery Act 'provide[s] incentives to industry to undertake early engagement and incorporate the most environmentally acceptable outcomes into their business planning, as this may reduce the level of assessment required and therefore any costs payable'.²² Given that project proponents already have significant other incentives to do this, it will be interesting to observe whether these cost recovery initiatives provide any additional incentive to proponents.

The fee arrangements in the Cost Recovery Act will not apply to assessments undertaken by the states and territories under the One Stop Shop Proposal discussed above.²³ However, the states/territories may impose their own fees.²⁴

Action Management Plans

The Cost Recovery Act has an ancillary function of establishing a formal process for developing and submitting an 'Action Management Plan' under the EPBC Act. An Action Management Plan will set out how managing impacts on a protected matter will be managed by the project proponent.

Under the new provisions, a proponent may make a decision to 'elect' to submit an Action Management Plan for approval, and communicate that decision to the Minister at any time before an action is approved under the EPBC Act. Once the Minister has granted an approval, the proponent's decision to elect to submit an Action Management Plan cannot be revoked.

Previously, the Minister (of his own volition) could impose a condition on an approval requiring the preparation and submission for approval of an action management plan. This power has been repealed and replaced so that 'a condition can be attached to an approval requiring the preparation of an action management plan… only where a person has made, or is taken to have made, an election'.²⁵ This 'election' process is likely to be used as a means to gain efficiencies.

A fee may be charged (under regulations) for the approval of an Action Management Plan by the Minister, unless the proponent submits an Action Management Plan prior to the approval of an action.²⁶ This will create an incentive for proponents to make the election and submit an Action Management Plan at an earlier stage, but may effectively penalise proponents of large or complex projects who seek to wait until project details are further developed before preparing an appropriate Action Management Plan.

The Minister has a discretion to publish an Action Management Plan and seek public comment on it before deciding whether to approve a project. The Cost Recovery Act also makes provision for the amendment of Action Management Plans (however, a fee may also apply).

Other recent developments

The Federal Government has recently announced changes to the way it conducts its work under the EPBC Act Compliance and Enforcement Policy. According to the Government, these changes are intended to reduce the likelihood of approval condition breaches and increase the Department's ability to detect breaches. The changes include:

• a risk-based 'project prioritisation model', similar to that used by the Australian Taxation Office, to focus monitoring resources to maximise environmental benefit. This will be complemented by priority planning to target emerging environmental issues and industry sectors;
• a risk-based 'case prioritisation model', based on that used by the Australian Crime Commission, to focus investigations on the highest priority matters; and
• the introduction of a new compliance and enforcement database to improve tracking and recording of investigations and associated information.

The Government proposes to use these new measures to target high-risk projects to ensure compliance and protection of Australia's environment and heritage. A related consequence will mean that lower-risk projects will face less scrutiny.

Conclusion

The Federal Government is continuing to focus on streamlining environmental regulation and cutting 'green tape'. Broadly, the One Stop Shop Proposal amendments to the EPBC Act simply tighten processes around the main substantive foundations to bilateral agreements, which were already part of the EPBC Act. However, the changes in the Government's approach, coupled with the One Stop Shop amendments will further streamline the two-tier approval process.

Project proponents should be aware of the new 'user pays' system that is implemented by the Cost Recovery Act and factor this into project timelines and costs.