Fundamental reforms to Australia's environmental laws: new standards, unacceptable impacts and national interest test

The EPBC Act reform package comprises seven Bills, with the most significant changes outlined in the Environment Protection Reform Bill 2025 (Reform Bill), the National Environmental Protection Agency Bill 2025, and the Environment Information Australia Bill 2025. The Bills mark the second attempt in the last two years to address the independent review of the EPBC Act led by Professor Graeme Samuel AC in 2020 which found that this legislation was not delivering for the environment, for business or for the community. According to the Samuel Review, the EPBC Act needed fundamental reform to be able to adequately respond to the overall decline of the natural environment but also streamline approvals processes and allow nationally important projects like renewable energy, housing and critical minerals to proceed.

The Environment Protection Reform Bill 2025 proposes substantial amendments to the EPBC Act. We set out below the key reforms introduced, together with preliminary views as to their implications.

Introduction of National Environmental Standards

The Commonwealth Environment Minister will have the power to make, vary and revoke national environmental standards (Standard), and to apply the Standards to decision-making under the EPBC Act. The Standards, a cornerstone of the Samuel Review, are intended to improve environmental outcomes and certainty for business by ensuring the quality and consistency of decision-making. Each Standard must prescribe one or more outcomes or objectives, and also the parameters, processes to be followed or actions to be taken to achieve each outcome or objective. They will be legislative instruments like Regulations and will be subject to further public consultation before they are finalised, likely after the Bill is passed.

The first two Standards will be the Standard for Matters of National Environmental Significance (MNES) and the Standard for Environmental Offsets. A draft policy paper for each of these was released as part of the limited, targeted consultation undertaken over recent weeks but they have not yet been made public.

Introduction of new tests for decision-making

Actions and many other decisions under the EPBC Act will generally need to satisfy three new tests:

• Approval cannot be inconsistent with any Standard;

• Actions cannot have an unacceptable impact on a MNES (the "unacceptable impacts" test) (s136B); and

• Actions with residual significant impacts must pass the "net gain" test.

The detail sits in Standards and Regulations that haven’t been released.

The "unacceptable impacts" test

Projects with unacceptable impacts on MNES will not be capable of approval under the EPBC Act. Unacceptable impacts will not be able to be compensated for through offsets and will need to be avoided or mitigated below the unacceptable criteria before a project can be approved.

"Unacceptable impacts" are described for each kind of MNES. For example, a significant impact on a listed threatened species will be an unacceptable impact where:

• the impact "seriously impairs" the "viability" of the species (drawing on the definitions for these terms, a significant impact will be unacceptable where it results in the species' ability "to survive and recover in the wild in a particular region" being "seriously altered for the worse"); or, alternatively

• the impact is likely to cause serious damage to "critical habitat" of the species and the habitat is "irreplaceable" and necessary for the species to remain viable (habitat is defined as irreplaceable where it is impossible to reverse damage to the habitat or restore, recreate or replace the habitat in a "relevant timeframe and location" and with the function, complexity and scale necessary to support the species).

Each description includes a number of defined terms, making interpretation complex at times. Our early analysis of the drafting suggests the threshold for an "unacceptable impact" is not as high as the Government intends when applied to real-world examples, and that further testing is required to ensure that unintended consequences are avoided.

Offset requirements and the "net gain" test

All residual significant impacts of an action on MNES must be compensated to a net gain. The previous concept adopted last year was "nature positive" in line with the Global Nature Positive Summit which was held in Australia. Actions will pass the "net gain" test where a condition is imposed on the approval requiring an offset and/or payment of a restoration contribution charge that results in a "net gain" for the MNES in question. This is intended to ensure projects will deliver real conservation gains for the environment.

Provision is made for restoration contribution payments to be paid into a new Restoration Contributions Special Account to be managed by a new independent body. The Bill also allows for the use of Nature Repair Market biodiversity certificates for environmental offsetting purposes. These two additional offsetting options could, if implemented effectively, provide proponents with greater flexibility for how offsetting obligations can be met, but the details remain to be confirmed in the Offsets Standard. The meaning of "net gain" is also left for prescription or determination by the Minister and not defined in the Bill.

Strategic assessment, bioregional planning bilateral agreements and accredited assessments

Proposed amendments are intended to allow strategic assessments and regional planning to be used more often to provide for a landscape scale assessment of classes of actions, reducing assessment timeframes and resulting in better environmental outcomes.

New bioregional plans identifying development zones and bioregional guidance plans can be prepared and, where relevant, must be taking into account by the Minister when granting approvals. Certain registered "priority actions" may be undertaken in bioregional plan development zones without approval. The proposed amendments ensure that both bioregional plans and bioregional guidance plans can adopt non-legislative conservation planning and environmental management documents that are updated from time to time.

The proposed amendments also update the provisions of the EPBC Act relating to accreditation and bilateral agreements to make these mechanisms more durable (allowing accreditation to continue even where the statutory framework is amended). In order for a State/Territory environmental impact assessment process to be accredited for the purposes of the EPBC Act, to remove the duplication of State and Commonwealth approval processes currently experienced by projects, an approvals bilateral agreement will be needed between the Governments, and the State framework will need to satisfy (or be capable of satisfying in the context of the approval of an action) the three "not inconsistent with Standards", "no unacceptable impacts" and "net gain" tests. For most States/Territories, we would not expect agreement of an approvals bilateral to be likely in the short to medium term, meaning true gains in approval efficiency and reduction in duplication may be some way off for many proponents.

Streamlined assessment processes

Amendments are proposed to streamline the existing EPBC Act assessment and approvals pathways, including removing three existing assessment pathways, and replacing them with a single new streamlined assessment pathway with reduced assessment timeframes. Existing pathways that are to be consolidated are Assessment on Referral Information, Assessment on Preliminary Documentation and Public Environment Report.

Transparency of requests for further information is to be improved by a requirement to publish reasons. Other streamlining amendments include making the requirement to consult with other Ministers discretionary and removing the power to order an inquiry.

However, the shorter assessment timeframes are arguably offset by a failure to limit the decision-maker's discretion to stop the clock, the number of requests that can be made for further information or the reasons that may be given, risking ongoing delays. Replacement of three existing assessment pathways with a single new streamlined pathway may ultimately have the opposite effect, pushing more projects to the more onerous Environmental Impact Statement process.

Introduction of national interest approval

A specific power is introduced for the Commonwealth Minister to determine that the taking of a specified action is a national interest proposal in circumstances when an action is a controlled action currently under assessment under the EPBC Act. In these circumstances, the proposal does not need to satisfy the three tests.

Some of the matters that the Minister may consider in determining the national interest are defence, security, strategic interest and Australia's obligations under an agreement with another country. The Minister's discretion is broad and the power significant. In addition to new Defence projects, this power could potentially be relied on for critical minerals and other nationally significant projects, allowing EPBC Act approval to be granted even where inconsistent with the Standards or causing an "unacceptable impact".

Strengthening the national interest exemption

Amendments are proposed to allow conditions to be attached to an action covered by a national interest exemption and providing for a set period for which such an exemption is granted. The Minister will also be able to initiate a national interest exemption without a proponent applying for it.

New bodies to be established

The National Environmental Protection Agency (NEPA) will be established by the National Environmental Protection Agency Bill 2025, to undertake regulatory and implementation functions under a range of environmental Commonwealth laws.

Environment Information Australia (EIA) will be established by the Environment Information Australia Bill 2025 to improve the availability and accessibility of high-quality information and data and to provide regular, comprehensive and transparent reporting, including on the State of the Environment.

The versions of the NEPA Bill and EIA Bill introduced to Parliament this week are essentially the same as the corresponding Bills introduced to Parliament in 2024.

The Bill also provides for a Restoration Contributions Holder, an independent statutory office holder tasked with delivering restoration actions funded by restoration contribution charges.

Climate disclosures

Proposed amendments will require proponents to disclose estimates for Scope 1 and 2 greenhouse gas emissions as part of the assessment of a controlled action. Proponents will also be required to disclose associated emissions mitigation measures and abatement targets along with the estimated emissions. The reforms do not include a climate trigger but instead support the disclosure of climate information to support the operation of the Safeguard Mechanism which is the Federal Government's chosen legislation to meet Australia's climate targets.

Greater First Nations engagement in decision-making

The Bill makes a number of improvements including in relation to information sharing and the composition and functions of statutory committees, ensuring greater First Nations engagement in decision-making. The reforms will codify the involvement of First Nations people, via the Indigenous Advisory Committee (IAC), into environmental governance and decision-making. This includes:

• The IAC will be consulted in the development of a national environmental standard relating to engagement with First Nations peoples. 

• Incorporation of cultural knowledge into the threatened species and ecological communities listing processes.  

Stronger enforcement

The new civil penalty formula is modelled on comparable schemes in Commonwealth legislation targeting financial crime, such as through the Corporations Act 2001 and Australian Securities and Investments Commission Act 2001. Penalties are to be significantly increased. For example, the penalty for taking an action impacting a threatened species without approval is to be more than doubled, to a maximum of $1.65million for a company. For certain contraventions the civil penalty could be as high as $825million for a company, and more if the company derived a benefit.

New environmental protection orders (EPO) are provided for in circumstances where a breach presents an imminent risk of serious damage, allowing for a broad range of orders including "stop work". Drafting also seeks to exclude the operation of the natural justice hearing rule in relation to the issue or variation of an EPO. An EPO could have very serious implications for a proponent, such as requiring "stop work" without a specified end date, so the express exclusion of natural justice is unusual and potentially concerning.

Increased Ministerial discretion

The Reform Bill would introduce a new power to make rulings, which can be used to set out the Minister’s opinion on how the law, regulations or subordinate instruments (for example, the Standards) should be applied in particular circumstances, such as project approval decisions. Where made, the Minister, CEO of the NEPA, or delegated decision-maker must act consistently with that ruling unless it would be inappropriate to do so considering the individual circumstances of the decision.

The Bill amends the reconsideration request requirements, closing the avenue used by public interest groups to challenge decisions on controlled actions. The amendments:

• allow the Minister to determine, on a case-by-case basis, that an action that was previously not a controlled action, but was subsequently decided to be a controlled action following a reconsideration, could continue to be taken while being assessed under the EPBC Act, subject to conditions to limit the environmental impacts of the action;

• clarify the requirements for making a reconsideration request, including imposing a 28 day time limit for third parties to request a reconsideration of a decision that an action is a controlled action; and

• include a new ability for a proponent to ask the Minister to reconsider a not controlled action (particular manner) decision if the particular manner is no longer appropriate. In this scenario, the Minister will be able to reconsider the particular manner conditions.

Removal of EPBC Act approval requirement for offshore projects

The Reform Bill will allow the Minister to declare that offshore projects do not require separate approval under the EPBC Act, if the Minister is satisfied that the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act) and OPGGS Environment Regulations provide the same environmental protections as the EPBC Act, replacing the existing strategic assessment. This would include relevant NES.

Transitional provisions

The Reform Bill outlines a suite of transitional provisions in Schedule 1, Part 3 and they remain to be scrutinised in detail. These transitional provisions will be relevant particularly for projects currently ongoing an assessment process under the EPBC Act, for example specific amendments may not apply to a project where the assessment is underway.