Government announces major reforms to EPBC Act

An ambitious package of 'nature positive' reforms 10 min read

On 8 December 2022, the Federal Government released its long-awaited response to Professor Graeme Samuel's 2020 review of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), titled 'Nature Positive Plan: better for the environment, better for business' (Plan).

The Government has outlined an ambitious package of reforms to national environmental law which are aimed at addressing environmental decline and focusing on 'nature-positive outcomes'. These reforms will have significant implications for project proponents across various sectors.

In this Insight, we outline our thoughts on the key measures proposed by the Government.

A new federal EPA

The centrepiece of these reforms will be the establishment of a federal Environment Protection Agency (EPA). The EPA will have responsibility for assessing actions and granting approvals under the EPBC Act (which notably is a role that goes beyond that recommended by Professor Samuel).

It will also be responsible for enforcing compliance with the EPBC Act, and the Sea Dumping, Ozone and Synthetic Greenhouse Gas Management, Hazardous Waste, Product Emissions Standards, Recycling and Waste Reduction, and Underwater Cultural Heritage Acts.

The EPA will be an independent agency with its own budget. The Minister will be able to issue the EPA with a Statement of Expectations but will not be able to direct the EPA in the exercise of its functions.

The Minister will have the power to 'call in' decisions that would otherwise be made by the EPA. It is an open question as to whether this will prove to be positive for proponents. On the one hand, it means a proponent may call on the Minister to step in if it is hitting a roadblock with the EPA. On the other hand, objector groups may also campaign and seek to influence the Minister to call in applications where there are particular concerns about a project's environmental impacts, which may give rise to uncertainty and project risk for proponents. Given the ability for state and territory decision-making processes to be accredited under the proposed reforms (discussed below), and that the 'call in' power will not apply to decisions made under accredited processes, this power may have limited application in any event if the majority of states and territories become accredited decision-makers.

The Department of Climate Change, Energy, the Environment and Water will still exist. It will include a Data Division with a legislative mandate to provide environmental data to the EPA, the Minister and the general public and for expanded State of the Environment Reporting.

National Environmental Standards

If the initial National Environmental Standards are unduly onerous, there will be no mechanism to recalibrate to a more balanced requirement in the future.

The Government proposes to implement a series of National Environmental Standards which will apply to all decision-making under national environmental law. This was a key recommendation of the Samuel review and an important step towards enabling single-touch approvals (see below).

If implemented effectively, the National Environmental Standards will provide much needed predictability and clarity around decision-making under national environmental law. There are currently very few publicly available policy documents that explain how the merits of actions are considered under the EPBC Act.

Consultation on the proposed National Environmental Standards will commence in 2023 and it will be critical for industry to participate in this process. This is because once a National Environmental Standard has been adopted, it will only be able to be amended if the amendments improve environmental protection. Therefore, if the initial National Environmental Standards are unduly onerous, there will be no mechanism to recalibrate to a more balanced requirement in the future.

Single-touch approvals

Significantly, the Government has committed to giving effect to the previous Government's proposal to accredit state and territory approval processes, providing an opportunity for 'single-touch' approvals. Accredited approval processes, as well as existing accredited assessment processes, will now be subject to National Environmental Standards, which will be integrated into existing accreditation arrangements.

The Plan is not particularly optimistic regarding the benefits that may be delivered by accrediting approvals processes. It notes that as accreditation will take time, and not all jurisdictions will seek or continue to satisfy the requirements for accreditation, the Government will continue to play a role in environmental decision-making. The Government states that streamlining and additional reforms, such as those to regional planning and offsets, will deliver better, faster environmental decision-making.

The Plan indicates that the EPA will perform an assurance role and provide independent oversight of accredited state and territory decision-makers. It is unclear how this assurance role will operate in practice and whether it will partially erode the efficiency that could otherwise be delivered by devolving decision-making power to the states and territories.

The Plan also indicates that the EPA will be responsible for publishing mandatory guidelines to inform the development and submission of environmental, social and economic information in support of applications. While this may provide useful guidance and greater certainty to proponents, there is also a risk that these guidelines may be overly prescriptive and impose onerous requirements in relation to the information required to be included in applications. Industry should seek an opportunity to actively participate in consultations on any guidelines.

Regional Plans

The Government proposes to develop a series of Regional Plans which will designate:

• areas of high environmental value—where development will largely be prohibited;
• areas of moderate environmental value—where development will be allowed subject to an approval process and any agreed rules; and
• development priority areas—where development can proceed without federal environmental approval (but subject to state and territory laws).

This is a potential gamechanger for proponents. While the Regional Plans offer the prospect of providing greater certainty of outcomes in areas that are subject to a plan, and swifter assessment and approval timeframes, they will also effectively create 'no-go' zones for development. It will be particularly important for industry to ensure there are appropriate transitional provisions incorporated into the new legislation so that projects which have been in planning for a number of years are not subject to immediate prohibition imposed by the adoption of a Regional Plan that designates the project area as being of high environmental value.

This is a potential gamechanger for proponents.

The Plan is not clear whether all development in areas of moderate environmental value will require referral and approval under the EPBC Act or only those actions that will have a significant impact on a matter of national environmental significance.

It is also not clear whether the Government proposes to prepare Regional Plans for all areas of Australia over time (which would be a significant undertaking). The Government will be prioritising areas experiencing development pressure and with high biodiversity values, including urban growth areas, renewable energy zones and future development areas.

The Government aims to complete the first round of regional planning by 2028. Significantly, while the Government has made it clear that the National Environmental Standards and exposure draft legislation to facilitate implementation of the standards will be released for public comment, the Plan indicates that the Regional Plans will be negotiated with the relevant states or territories, as well as regional natural resource management bodies and local government. There is no mention of consultation with industry or an opportunity for industry to comment on these plans. Given Regional Plans may identify large swathes of land for conservation and effectively prohibit development in certain areas, industry should seek an opportunity to engage actively in the development of the content for these plans.

Requirement for net-positive outcomes

The first National Environmental Standards that will be developed (in 2023) will be a standard for Matters of National Environmental Significance (MNES).

Projects and plans approved under the EPBC Act will need to:

• avoid unacceptable and unsustainable impacts on matters of national environmental significance; and
• deliver net-positive outcomes for Matters of National Environmental Significance.

The requirement to achieve a net-positive outcome (as opposed to no-net loss) is a significant change to national environmental law and effectively raises the bar for projects to obtain approval. This is consistent with the Government's aim of ensuring that national environmental law delivers nature-positive outcomes.

Climate change

The Government is not proposing as part of this response to introduce a climate change trigger into the EPBC Act and has said it will not duplicate existing mechanisms for reducing greenhouse gas emissions (notably the ongoing review of the Safeguard Mechanism that applies to over 200 of Australia's largest emitting facilities).

However, it will require all projects assessed under national environmental law to estimate the emissions that will be generated as a direct result of the action (scope 1) and the emissions arising from the indirect consumption of an energy commodity (scope 2). Proponents will also need to outline their approach to managing emissions in line with the Government's emissions-reduction commitments.

The exclusion of other indirect (scope 3) emissions from this requirement is significant and suggests that less focus will be placed on scope 3 emissions in decision-making. We expect that point will be hotly debated by environmental groups.

The Government has also stated that regional plans, strategic assessments and other strategic planning will be required to consider climate change and include environmental adaptation, and that the changing climate will be a mandatory consideration in 'environmental planning approaches'. It is not clear whether this means climate change will be a mandatory consideration in approval decisions, which would be a major shift in approach and potentially have far-reaching consequences, including creating new grounds of appeal against approval decisions.

However, other statements in the Plan suggest the Government does not intend to use its power to approve or refuse projects (particularly projects with significant scope 3 emissions) as a mechanism to meet its emission reduction targets.

Offsets

A new National Environmental Standard will strengthen the requirements surrounding environmental offsets.

The Government has also committed to releasing a National Environmental Offsets System by the end of 2022.

The Plan indicates that the Government will strictly enforce the requirement to first avoid and mitigate harm to protected matters before relying on environmental offsets. Offsets will also only be able to be used to offset 'like for like' impacts and there will be a requirement to deliver a net benefit for MNES. Offsets will no longer be available for 'averted loss' unless it can be demonstrated that the habitat is under clear and imminent threat.

In a significant development, if a proponent is unable to secure the required offsets, it will be able to make a conservation payment to the Government, which will then use those funds to improve biodiversity outcomes (similar to the NSW Biodiversity Offsets Scheme). However, it appears the value of these payments is likely to be significant, with the Plan noting that the payments will be sufficient to achieve a net environmental outcome and will establish a clear price signal and give proponents an effective incentive to avoid and mitigate environmental impacts (rather than relying on offsets).

The Plan does not explain how the National Environmental Offsets System will interact with offset requirements under state and territory laws.

Nature repair market

A nature repair market will operate in parallel to the offsets system to facilitate public and private investment in nature restoration activities:

The nature repair market will include:

• a system for measuring and describing the biodiversity benefits from projects;
• the issue of biodiversity certificates for approved projects which can be traded;
• registration of biodiversity projects and the ownership of biodiversity certificates; and
• compliance and assurance systems.

While we anticipate that the nature repair market will largely operate separately to the federal offsets system—the Government has foreshadowed that the EPA may allow projects certified under the nature repair market to be used to meet approval obligations (provided they constitute a 'like for like' offset).

Greater protection of First Nations cultural heritage

The Government will also be developing, as a priority, a National Environmental Standard for First Nations Engagement and Participation in Decision-Making.

The Government has provided little detail about what this standard will require.

At the same time, the Government will be working to develop new standalone cultural heritage protection laws.

Water trigger

The water trigger will now be expanded to include all forms of unconventional gas in addition to coal seam gas and large coal mining developments. This is a notable departure from the recommendations of the Samuel review, which contemplated revising the water trigger to apply only to impacts on cross-border water resources, rather than an expansion of the trigger.

Merits review and third-party enforcement

In welcome news for proponents, the Government will not be introducing any rights to seek merits review of decisions under the EPBC Act. The Samuel review had recommended the introduction of a limited form of merits review 'on the papers', which has been rejected by the Government.

However, the Government is examining the possibility of strengthening third-party enforcement provisions. It is unclear at this stage what these changes may entail.

The Government has not responded to other comments by Professor Samuel regarding limiting legal challenges to matters of outcome, and not process, and potentially requiring applicants for judicial review to demonstrate that they have an arguable case or that the case raises matters of exceptional public importance, where they are relying on extended standing provisions.

Removal of the referrals stage for some actions

Proposed developments that clearly require detailed assessment will be able to proceed directly to assessment without the need to first refer the action to the Minister and wait for their decision on the referral.

The Government has also foreshadowed it will look for further opportunities to streamline processes under the EPBC Act as it implements the reforms.