Biobanking scheme now law in NSW

By Claire Smith and Jack Fan.

Key Points:
The effectiveness of the new biobanking scheme will greatly depend on the content of the assessment methodology, the regulations and the trading rules which are all still to be released.

Last year we looked at the proposed Biodiversity Banking and Offset Scheme. The Bill was enacted as the Threatened Species Conservation Amendment (Biodiversity Banking) Act 2006 (NSW) on 4 December 2006. This article provides an update on implementation of the scheme and examines some of the last minute amendments that were made to the Bill to appease various stakeholders.

Who will benefit from the Scheme?

The biobanking scheme has been hailed as a "win-win" solution for biodiversity conservation that will provide:

• a financial incentive for landowners to manage and conserve endangered plants, animals and ecosystems on their properties in order to earn "biodiversity credits"; and
• more flexibility for developers who can purchase credits to offset impacts on biodiversity arising from their development proposals.

The Act includes a number of new provisions designed to provide better protection to key stakeholders.

Amendments to the Act have clarified that, when a biobanking agreement has been executed, varied or terminated, the Registrar-General is responsible for registering the agreement, variation or termination as an interest on the title of the property. If a biobank site is compulsorily purchased, the owner will retain any right it has to compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW).

Persons with an interest in land (ie. mortgagees and covenantees) will need to be consulted before the Minister of Environment can enter into a biobanking agreement with the registered landowner to allow resolution of any conflicting requirements imposed by the mortgage or covenant.

The Minister of Environment now has the power to vary or terminate biobanking agreements without the consent of the owner of the biobank site in the event that a mining authority or petroleum title is granted over that site and biodiversity values would be adversely affected. The Minister can, however, order the holder of the mining or petroleum right to retire an equivalent amount of credits to offset any loss arising as a result of any mining activity.

Developers will also have more certainty. Additional provisions in the Act have clarified that, where a developer obtains a biobanking statement, a planning decision maker cannot impose additional requirements in relation to threatened species pursuant to the assessment procedure set out in Part 4 of the Environmental Planning and Assessment Act 1979 ("EP&A Act"). Further, the Act makes it clear that, if the Director- General refuses to issue a biobanking statement to a developer, this refusal will not prejudice any merits based threatened species assessment under the EP&A Act.

For conservationists, the Act includes a new provision which allows the Director-General to defer the retirement of biodiversity credits pending the completion of actions that will restore or improve biodiversity values affected by development.

Biobanking assessment methodology

The biobanking assessment methodology will be crucial to the success of the biobanking scheme as it will calculate the number of credits:

• that will be generated by management activities to promote biodiversity conservation on the biobank site; and
• required to offset impacts on biodiversity caused by the development activity.

There is still a significant amount of uncertainty as to how the "improvement or maintenance of biodiversity values" will be assessed. The Act has included the following additional principles to guide the Minister of Environment in approving the assessment methodology:

• biodiversity values should be conserved across appropriate local and regional scales,
• all types of ecological communities should be adequately conserved, and
• any areas conserved under the biobanking scheme must be viable in the long term.

The Department of Conservation and Environment ("DEC") has launched a three-month pilot program to trial the draft assessment methodology before it is released for public consultation. The aim is to conduct some practical testing of real properties to assess the workability and suitability of the methodology in different situations and locations across New South Wales.

A Ministerial Reference Group ("MRG") comprised of key stakeholders including industry groups, catchment management authorities and environment groups will assist in finalising the assessment methodology and associated regulations.

The regulations will address issues such as dispute resolution, periodic review and consultation requirements, amounts to be paid into the Biobanking Trust Fund before transfer of a biodiversity credit and provisions to ensure that credits can only be created for biodiversity improvements over and above existing minimum requirements and not where conservation benefits arise from government funding (eg. land reserved under the National Parks and Wildlife Act 1974 (NSW) would be excluded as it is already primarily managed for conservation).

Voluntary participation

Participation in the biobanking scheme will be entirely voluntary. Under the original Bill, a provision was to be inserted into the Environmental Planning and Assessment Act 1979 (NSW) to allow the Minister for Planning to declare participation in the biobanking scheme mandatory for certain specified developments (via a State Environment Planning Policy). Under the Act, all references to making participation in the biobanking scheme compulsory have been omitted.

Two-year trial period

Initially, the biobanking scheme will be trialled for a two-year period. At the end of two years, the Minister, with the assistance of the MRG, will review the success of the biobanking scheme. At this stage, the public will be given an opportunity to make submissions on any changes that are needed to improve the operation of the scheme.

Notably, despite the fact that the first two years of the biobanking scheme are labelled as a "trial period", the Act does not contain a sunset clause. Therefore, participants in the scheme should be aware that the requirements of the Act will remain in force after the initial two-year trial unless specifically repealed.

Fit and proper person

The Act contains a provision which gives the Minister power to include a "fit and proper person test" in the regulations. The intention is to allow accreditation of conservation brokers and introduce a screening process for landowners ie. to ensure that people with poor environmental records are not permitted to manage biobank sites.

Lodging an appeal

The Act has extended the time for lodging an appeal against a decision of the Director General to 3 months of notification of the decision (the original period under the Bill was 28 days).

Where to from here?

The Act sets up a basic framework for the implementation of the biodiversity scheme. The effectiveness of that scheme in promoting biodiversity conservation and, at the same time, streamlining the approval process for developers, remains uncertain. Much will depend on the content of the assessment methodology, the regulations and the trading rules which are all still to be released.

Expressions of interest from landowners to participate in the DEC's pilot program as either a biobank site or a development site closed on 28 February 2007. Following the pilot program, a draft of the assessment methodology will be made available for public comment. Key stakeholders should carefully review the assessment methodology and make submissions to ensure their interests are protected. At present, it is envisaged that the two-year trial biobanking scheme will commence towards the end of 2007.