The Australian Government has recently tabled its reforms to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) and associated national environmental laws in Commonwealth Parliament.
The reforms are the most significant changes to national environmental laws since the EPBC Act commenced and are intended to remove barriers to productivity, streamline environmental approval pathways for national priority projects and achieve stronger environmental protection. All of which are key objectives coming out of the Samuel Review in 2021 and Commonwealth Government’s 2025 Economic Reform Roundtable.
We anticipate that aspects of the reforms may be welcome news for industry sectors constrained by material EPBC approval delays and seeking certainty for project delivery. Key reforms which present opportunity for certain industry sectors include the new ‘national interest’ approval pathway (particularly for critical minerals, energy transition, social housing and defence projects), priority projects in new bioregional development zones and increased focus on accrediting State and Territory Governments to assess and approve projects under the EPBC Act.
The reforms are not, however, without risk for large scale projects in Australia. Industry will need to be mindful of the new requirement to satisfy the ‘unacceptable impact’, ‘net gain’ and National Environmental Standard test – with much of the detail for those tests yet to be prescribed. Proponents will need to ensure their projects align with these tests to facilitate a streamlined and effective approval strategy.
Transitional provisions apply to projects currently subject to assessment under the EPBC Act and proponents will need to ensure how that regime will apply.
In this article we set out the key changes to the EPBC Act and implications for proponents of major projects in Australia.
Environmental assessment and approval pathways
Bilateral agreements and accreditation
The EPBC Act will be amended to reduce duplication in development assessment between Federal and State processes determining large scale projects in Australia.
Those changes include an updated mechanism to allow accreditation and bilateral arrangements with States and Territories more efficient. However, an approvals bilateral agreement will be required between the Governments – and that agreement will only be granted where State/Territory environmental approval processes meet (among other matters) the requirements of the proposed National Environmental Standards, unacceptable impact and ‘net gain’ tests.
This will effectively allow State and Territory Governments to reach agreement with the Commonwealth Government so that they can take the lead on assessing and determining projects. However, there is a question around the timeframe for such agreements to be reached and whether the applicable State/Territory Government processes will satisfy the threshold tests above.
Approval pathway streamlining
The EPBC Act is proposed to be amended to streamline assessment pathways, decision making and post decision powers. Those amendments include (among other matters) removing the Assessment on Referral Information, Assessment on Preliminary Documentation and Public Environmental Report (and consolidating into the Environmental Impact Statement pathway), limiting consultation requirements with other Ministers and power to require certain inquiries.
Other changes include providing for certain minor and preparatory works to commence while the broader action is still being assessed (with the consent of the Commonwealth Environment Minister) and non-controlled decisions will cease to have effect after 5 years, if the action is not substantially commenced to reduce ‘land banking.
Bioregional planning
The EPBC Act will provide for bioregional plans which will be developed in collaboration with the State and Territory Governments.
The bioregional plans are intended to allow a ‘region’ to be mapped to include (among other matters) development zones and conservation zones. Priority actions in development zones (a ‘go’ zone) will be allowed (subject to specific restoration measures and conditions) without requiring further approvals, while restricted actions in conservation zones (a ‘no go’ zone) will be prohibited unless proponents have obtained an exemption. The Commonwealth Environment Minister will also need to consider any applicable bioregional plannings in making decisions under the EPBC Act.
The ‘bioregional planning’ mechanism has the potential to present streamlined and efficient approval delivery pathways for certain industry sectors. However, the extent of that benefit will turn on the nature and scale of registered projects in development zones – and associated clarity (and flexibility) with applicable restoration measures and conditions.
National interest approval pathway
The EPBC Act is proposed to be amended to allow the Commonwealth Environment Minister to approve certain projects that are in the national interest even if they are inconsistent with the National Environmental Standards and do not meet the other key requirements of the EPBC Act such as the unacceptable impact and net gain test.
The action will, however, only be able to be approved to the extent the inconsistency is reasonably necessary for the action to achieve the national interest outcomes. The Commonwealth Government has indicated the power is intended to be used ‘rarely’ and not for certain categories of projects (such as fossil fuel projects). However, we expect this pathway may provide significant opportunity to obtain streamlined EPBC Approvals for certain industry sectors such as critical minerals, defence, social housing and energy transition projects.
Climate
The EPBC Act will require proponents, as part of an application for a controlled action, to disclose estimated Scope 1 and 2 greenhouse gas emissions and associated emissions mitigation measures and abatement targets.
The much publicised ‘climate trigger’ (requiring EPBC referral of projects based on greenhouse emissions) is not proposed. The Commonwealth Government’s preferred approach is to implement a regime which works in tandem with the operation of the Safeguard Mechanism which is the Commonwealth Government’s primary mechanism to meet Australian’s climate targets.
NOPSEMA approved actions
The EPBC Act is proposed to be amended to allow the Commonwealth Environment Minister to declare that offshore projects do not require approval under the EPBC Act, if the Commonwealth Environment Minister is satisfied that the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (and associated Environment Regulations) provide the same environmental protections at the EPBC Act (including relevant National Environmental Standards).
National Environmental Protection Agency established
Australia’s first national independent environment protection agency, the National Environmental Protection Agency (NEPA) is proposed to be established by the National Environmental Protection Agency Bill 2025.
NEPA’s primary roles will be to undertake regulatory, compliance, implementation and enforcement actions under the EPBC Act (and a number of other Commonwealth environmental laws).
While the ultimate decision-making power for approvals will remain vested with the Commonwealth Environment Minister, the Minister will be able to delegate powers to NEPA to (among other maters) undertake environmental assessment and recommendations to the Minister.
A robust stakeholder management strategy and relationship with NEPA will be critical to the successful delivery of any projects requiring approval under the EPBC Act.
Environmental protection strengthened
Unacceptable impact
The EPBC Act will prohibit approval of projects with ‘unacceptable impacts’ on matters of national environmental significance (MNES).
The test for unacceptable impacts are broad and complex. For example, in relation to listed threatened species, an unacceptable impact includes a significant impact that seriously impairs, will seriously impair, or is likely to seriously impair, the viability of that listed threatened species.
Concerns have been raised by industry and the Coalition that the definition for ‘unacceptable impact’ is too broad and there is not sufficient certainty for business as to whether proposed project will be immediately refused on the basis that it gives rise to ‘unacceptable impacts’.
The EPBC Act will also precent proponents from relying on offsets to reduce the impacts of projects below the threshold for ‘unacceptable impact’. Proponents will instead be required to implement other mitigation and management measures to achieve that objective.
National Environmental Standards
The Commonwealth Environment Minister will have power to make new legally enforceable National Environmental Standards -and will be required to apply those Standards in decision making under the EPBC Act. The Standards are intended to improve environmental outcomes and certainty for industry sectors by achieving consistent, clear and quality decisions.
The benefit of this proposed reform to business will turn on the clarity and certainty flowing from the drafting of the National Environmental Standards – which the Commonwealth Environment Minister has indicated won’t be finalised until next year and would likely be set under regulations. However, draft Standards for MNES and Environmental Offsets are expected to be released for consultation shortly.
The National Environmental Standards present material implications for business as proposed projects will need to be consistent with those Standards to be approved under the EPBC Act (unless certain exemptions or the national interest test applies).
Offset and compensation obligations changed
The EPBC Act will require proponents to ensure all residual significant impacts of a project are compensated to a net gain in respect of specific matters of national environmental. This mechanism is intended to reduce delays for project approvals by setting compensation requirements upfront. Proponents of projects will also be required to avoid or mitigate environmental damage before they look to offsets.
The compensation obligation will be able to be satisfied by proponents either delivering environmental offsets that compensate for residual significant impacts, paying a restoration contribution charge to the Commonwealth Government or use of Nature Repair Market biodiversity certificates.
Biodiversity offset obligations at a State and Commonwealth level are becoming an increasingly complex and material risk for large scale projects. It will be critical for industry to understand the proposed changes to the offset regime and associated ‘net gain’ obligations. However, the meaning of ‘net gain’ is yet to be prescribed by the Commonwealth Environment Minister in the regulations.
Compliance powers and penalties significantly increased
NEPA’s compliance and enforcement powers in the EPBC Act are proposed to be significantly strengthened, including to increase criminal penalties for individuals and corporations (including to provide for a new civil penalty formula that applies to serious contraventions), new powers to issue environment protection orders and expanding investigation and audit powers.
Penalties for certain offences against the EPBC Act could be at least $1.65 million for individuals, and for corporations those civil penalties could range from $16.5 million to as high as $825 million (determined by reference to benefits gained from the breach).
Next steps
The Commonwealth Government’s challenge to get the proposed reforms through the Senate this year (or at all) without material changes have been well publicised – with the Coalition and the Greens ruling out supporting the reforms in their current form.
The Coalition (and certain industry lobby groups) have indicated they may seek changes in respect of the Commonwealth Environment Minister’s powers to pre-emptively refuse projects based on ‘unacceptable impact’ and the requirement for companies to disclosed expected annual emissions and mitigation strategies. The Greens have raised concerns about the absence of a ‘climate trigger’ and have indicated they may seek stronger protections for native forests.
We will continue to track the passage of these significant national environmental reforms. If you would like to discuss any aspect of the reforms, please contact our Environment and Planning Team.