Australia’s national environmental legislation – on the brink of major reform

26 February 2021

What’s the latest?

The Environment Protection and Biodiversity Conservation Amendment (Standards and Assurance) Bill 2021 (New Amendment Bill) was introduced to Federal Parliament yesterday. It supplements the Environment Protection And Biodiversity Conservation Amendment (Streamlining Environmental Approvals) Bill 2020 (Earlier Amendment Bill) introduced last year.

The New Amendment Bill establishes a legal framework for National Environmental Standards and an Environmental Assurance Commissioner to oversee the devolution of environmental decision-making powers to the States and Territories.

These Bills (together referred to as the Amendment Bills) are the first step in enacting some of the recommendations coming out of Professor Graeme Samuel AC’s independent, statutory review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

This update explores:

  • The findings of Prof. Samuel’s review;
  • The implications of the Amendment Bills; and
  • Where to from here.

The final report

The Australian Government released the Independent Review of the EPBC Act – Final Report (October 2020) (Final Report) on 28 January 2021.

This report rounds out the comprehensive review of the EPBC Act that Prof. Samuel has been leading since October 2019 – considering Australia’s primary piece of national environmental legislation – its successes, failures and future prospects.

The review’s June 2020 Interim Report was damning. It found that Australia’s environment is in an “overall state of decline” and that the EPBC Act is “ineffective” in protecting or conserving the environment for the future.

The tenor of the Final Report is unchanged – it concludes that the “environment is not sufficiently resilient to withstand current, emerging or future threats, including climate change”, the EPBC Act “facilitates ongoing decline” and that this “complex and cumbersome” law needs fundamental reform.

There are 38 recommendations for change. Although we are still waiting on the Government’s official response to the Final Report, if its response to the Interim Report and the implications of the Amendment Bills are anything to go by, we are going to see some significant changes to the environmental regulatory system in Australia over the next couple of years.

Recommended stages of reform

Prof. Samuel wants to see reform occur over a two year period, in three tranches. This builds on the ‘three phase’ reform pathway suggested in the Interim Report and categorises reforms into ‘urgent’ (tranche 1), ‘medium-term’ (tranche 2) and ‘long-term’ (tranche 3) changes. We discuss key aspects of each of these tranches below.

Tranche 1 reforms – now

National Environmental Standards

Legally enforceable National Environmental Standards are the “centrepiece” of Prof. Samuel’s recommended reforms. Many of the other recommendations rest on these Standards. The intent of the Standards is to:

  1. Describe the environmental outcomes the EPBC Act is designed to achieve; and
  2. Set the boundaries for decision-making on EPBC Act approvals by the Commonwealth and accredited State and Territory governments or bodies.

Prof. Samuel has developed 4 Standards, included in Appendix B to the Final Report (Proposed Standards), that he says should be accepted by the Australian Government “in full” and implemented immediately – these deal with Matters of National Significance (MNES), Indigenous Engagement and Participation in Decision-Making, Compliance, Enforcement and Data and Information. Other Standards will likely deal with Commonwealth actions and actions involving Commonwealth land, Transparent processes and robust decisions, Environmental monitoring and evaluation of outcomes Environmental restoration including offsets and Wildlife permits and trade.

The intent of the Standards is laudable – to provide clarity and consistency of regulatory requirements, allowing devolution of decision-making to the States and Territories and removal of duplication, as well as a more co-ordinated and holistic assessment of environmental impacts (rather than being purely transaction-based), leading to better environmental outcomes. It looks almost certain that National Environmental Standards will become part of the national environmental framework going forward, however the exact content of the Standards remains uncertain.

The Final Report acknowledges that the Standards that can be implemented in the short-term are constrained by certain factors, including the current requirements of the EPBC Act and the quality of data, information and systems. In some respects the ultimate aims of the Standards will have to wait for, and evolve with, future EPBC Act amendments. For example, a significant constraint is the concept of ” significant impacts on MNES” which is embedded in the Act’s key, existing regulatory controls (the referral/approval triggers). This is quite different to the idea of active restoration of the environment, which is the stated ultimate aim of the Final Report. Whilst some changes have been made to the Proposed Standards, as compared to earlier iterations of the Standards included in the Interim Report, arguably the latest proposals still include some concepts that go beyond the regulatory status quo under the EPBC Act. For example, the proposed Standard for ‘Threatened Species and Ecological Communities’ requires that “at a minimum” all actions and decisions “avoid adverse impacts” and “ensure no net reduction” of habitat. Express references to cumulative impacts and the principle of non-regression also arguably go beyond the current legal settings.

Another aspect of the Proposed Standards that may complicate practical implementation, is their application to all “actions, decisions, plans and policies”. Prof. Samuel’s stated intent is that the Standards should apply at all levels of the environmental regulatory process – at both a system and project scale. Whilst this is an admirable aim in theory, the very different nature of decisions and actions by the Commonwealth or State Government versus at individual proponent level – including the different levels of knowledge, information and control of broader impacts – means that it is not clear that a Standard applicable to a national policy decision will also be capable of application and compliance at a project-level.

With this in mind, we think that further changes are likely to be made to the Proposed Standards before they are brought into law.

Regulatory bodies

The Final Report recommends three new players in the environmental regulatory system:

  1. An independent statutory position called the Environment Assurance Commissioner (EAC) – responsible for reporting to the community and the Australian Parliament on the performance of the Commonwealth, State and Territory governments and other accredited bodies;
  2. An independent Office of Compliance and Enforcement, within the Commonwealth Department of Agriculture, Water and the Environment – holding regulatory powers to deliver compliance and enforcement of the Standards; and
  3. An overarching advisory committee called the Ecologically Sustainable Development Committee – responsible for developing a framework for monitoring, evaluating and reporting on how effective the EPBC Act is being.

As noted above, the New Amendment Bill introduces the EAC.

The proposed Office of Compliance and Enforcement referred to in the Final Report represents a subtle shift from the recommendations in the Interim Report, which had proposed an independent compliance, enforcement and assurance regulator. The Final Report still recommends that these functions not be subject to actual or implied direction from political interference but adds the comment that it should be an Office within the existing Department. Minister Ley’s response to the Interim Report, whilst generally supportive of the report findings, was clear that the Government would not support “additional layers of bureaucracy such as the establishment of an independent regulator” (see media statement 20 July 2020). It will be interesting to see whether the proposal to create an independent office within the Department is more palatable to the Government.

Devolution of decision-making to States and Territories

The Final Report recommends that the EPBC Act be amended immediately to fix minor ‘inherent fragility’ in the framework for approval bilateral agreements. This will allow approval bilaterals, underpinned by the Standards and oversight of the EAC, to be used as the mechanism for the devolution of single-touch environmental approvals to States and Territories in the short-term. These ‘minor’ amendments form part of the Earlier Amendment Bill, introduced to Parliament late last year.

Harnessing Indigenous Australians’ environmental knowledge

Numerous Indigenous-specific reforms have been allocated priority in the first wave of reform. The Final Report concludes that the current system of decision-makers consulting the Indigenous Advisory Committee “typifies the culture of tokenism” and ensures that “Indigenous knowledge and views are not fully valued” in environmental decision-making. Prof. Samuel’s draft Standard on Indigenous engagement and participation in decision-making sets out recommended minimum standards for meaningful involvement of Indigenous Australians’ in EPBC Act processes.

Also, mirroring the WA Government’s recent efforts in this space and with reference to the Juukan Gorge incident here in WA, the Final Report encourages immediate review of Australia’s various Indigenous cultural heritage laws to ensure that they provide the level of protection expected by the community.

Levelling-up data, information and systems

The Final Report advocates a “quantum shift” in the quality of data and information that currently informs environmental decision-making under the EPBC Act. Prof. Samuel wants to see a clear, authoritative source of environmental information that people can rely on – a national supply chain of information. Prof. Samuel recommends appointing an interim environmental information supply chain “custodian” to start this work.

Changes to offsets policy

Prof. Samuel has also flagged revision of the offsets policy as another priority reform. Essentially the Final Report indicates that applicants should not expect offsets to be on the table from the outset – there may be changes to the environmental offsets policy to make offsets only available when in line with Standards, where they are ecologically feasible and where outcomes can be measured.

Tranche 2 – within 12 months

Major legislative reform

If the Australian Government follows the reform pathway carved by the Final Report, in tranche 2, we can expect major EPBC Act amendments. These amendments would, among other things, enshrine the need for proactive measures to recover, repair and enhance MNES so that the Standards can go beyond the status quo of only preventing significant impacts on MNES.

The Final Report encourages a shift away from individual project assessment and approvals, and a move towards more holistic actions, decisions and policy-making that is centred on effective and adaptive planning and achieves the ultimate aim of not only protecting but restoring the environment. For example, a decision at a project-level must not prevent the Standard for Matters of National Significance from being met. There is also a push for governments to work together more, develop and implement integrated national and regional plans for protection and restoration of the environment, and also ensure that cumulative impacts are systematically considered. Here, we may see amendments to deal with recovery, repair and enhancement of MNES and regional and strategic planning around ‘big-ticket’ environmental issues in Australia like management of feral animals and climate change.

Further amendments are also proposed to:

  1. Replace the existing bilateral agreement process with a robust and efficient accreditation process, allowing the regulatory processes and environmental management arrangements of State, Territories, and potentially other bodies, to be accredited to make decisions under the EPBC Act;
  2. Completely overhaul Parts 3 to 10 of the EPBC Act, to more effectively integrate the Standards into decision-making;
  3. Provide for a more holistic approach to improving environmental outcomes through regional plans and strategic national plans; and
  4. Implement limited merits review ‘on the papers’.

Tranche 3 – by 2022

Finally, the Review wants to see the EPBC Act “fully modernised”. We may see a complete overhaul of the Act and separation of distinct issues into separate legislation. The Commonwealth is also charged with instigating a “refresh” of intergovernmental cooperation and coordination with the States and Territories – to collaborate more on harmonised environmental laws, finalise a single national list of protected matters, develop a shared program for regional and strategic plans, leverage Commonwealth reforms in data and information and develop a national environmental monitoring and evaluation framework.

The Amendment Bills

The Earlier Amendment Bill received a fairly rocky reception from the Senate and interest groups outside Parliament, after its initial one-week passage through the Lower House. Labor, Greens and Crossbench Senators objected to the Bill on environmental and process grounds, including that the Bill pre-empted recommendations of the Final Report (having been drafted prior to the Final Report) and that it should not be passed in advance of confirmed legally enforceable Standards and devolution arrangements.

The Environment and Communications Legislation Committee recommended that the Earlier Amendment Bill be passed in November 2020, but with an amendment to clarify that bilateral agreements “will be underpinned by strong Commonwealth-led National Environmental Standards”. However as recently as last week, the Senate passed a Motion condemning the Morrison government’s handling of the EPBC Act review and calling on the introduction of strong national environmental standards and a “genuinely independent ‘cop on the beat’ for Australia’s environment”, suggesting the Earlier Amendment Bill was unlikely to be passed in its original form.

The New Amendment Bill was introduced to the House of Representatives yesterday and referred to the Environment and Communications Legislation Committee. The Bill attempts to overcome some of the issues raised in the Senate, by inserting a new Chapter 3A Part 5A providing a legal basis for the National Environmental Standards, to underpin bilateral agreements, and establishing a body to oversee the accreditation of States and Territories and the devolved decision-making process.

Under the new Amendment Bill, the National Environmental Standards will be legislative instruments, which makes them subject to consultation requirements and potential disallowance by Parliament (i.e. although legislative instruments do not need to be passed by Parliament, they have to be laid before Parliament and are essentially subject to a veto power). However, the initial standards – referred to as ‘interim standards’ – will not be subject to the disallowance provisions.

What’s next?

Minister Sussan Ley received the Final Report in October 2020. We still await the Australian Government’s official response to all of Prof. Samuel’s 38 recommendations.

In the next couple of months it will be interesting to see what happens to the Amendment Bills, the Proposed Standards and implementation of the Final Report recommendations more broadly. We suspect that the lack of power to disallow the ‘interim standards’ will be an issue in the Senate, if the Standards are not intended to be finalised prior to passage of the Bill.

All parties seem to agree that changes to the Commonwealth environmental regulatory system are both necessary and urgent. However there may be some way to go before we see consensus on the content of the National Standards or the necessary legislative amendments.

This article was written by Lucy Shea, Partner and Yvette Khoo, Associate.


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