05 Oct 2012

New Commonwealth Environmental Offsets Policy has greater emphasis on direct offsets

The Commonwealth Government's new Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) Environmental Offsets Policy has been released, with a greater focus on direct offsets.

The Policy replaces the draft 2007 policy statement Use of Environmental Offsets under the EPBC Act.

What are environmental offsets under the EPBC Act?

The EPBC Act is designed to protect matters of national environmental significance and other protected matters. If a proposed action is likely to have a significant impact upon a protected matter then it must be referred for assessment under the EPBC Act.

Environmental offsets are measures to compensate for the adverse impacts of an action on the environment that cannot be adequately reduced through avoidance or mitigation. Avoidance and mitigation measures are still the primary strategies for managing the potential impact of a proposed action. The focus of an offset is to compensate for any residual significant impact after avoidance and mitigation steps have been taken.

Most State and Territories have their own environmental offsets policies that may be triggered for a project in addition to the EPBC Act Environmental Offsets Policy. The Environmental Offsets Policy recognises these State and Territory policies, and provides that these offsets can count towards an offset under the EPBC Act to the extent it compensates for the residual impact to the relevant protected matter.

Scope of the Environmental Offsets Policy

The Policy relates to all protected matters under the EPBC Act including adversely impacted heritage values, and applies to offsetting requirements in terrestrial and aquatic (including marine) environments.

The Policy has five key aims:

  • to ensure the efficient, effective, timely, transparent, proportionate, scientifically robust and reasonable use of offsets under the EPBC Act;
  • to provide proponents, the community and other stakeholders with greater certainty and guidance on how offsets are determined and when they may be considered under the EPBC Act;
  • to deliver improved environmental outcomes by consistently applying the Policy;
  • to outline the appropriate nature and scale of offsets and how they are determined; and
  • to provide guidance on acceptable delivery mechanisms for offsets.

Greater emphasis on direct offsets – and new advanced offsets introduced

According to the Policy, direct offsets must be a minimum of 90% of the total offset requirement. The remaining offset requirement (up to a maximum of 10%) may be made up by "other compensatory measures" to complete the 100% offset requirement. Deviation from the 90% direct offset requirement will only be considered in limited circumstances.

While this reinforces the move to direct offsets, the concept of "advanced offsets" has been introduced. These are a supply of offsets for potential future use, transfer or sale, established before any impact is undertaken. While an advanced offset can reduce an overall future offset requirement, it does not influence whether or not an action referred under the EPBC Act will be determined as acceptable.

Other features of the Environmental Offsets Policy

The Policy requires that the "conservation gain" for the impacted protected matter, which is delivered by the offset, is to be new or additional to what is already required by a duty of care or to any environmental planning laws at any level of government.

As with the previous policy, a risk-based approach incorporating the precautionary principle is taken when determining whether offsets are a suitable option and whether they can compensate for the residual impacts on a case-by-case basis.

A new Offsets assessment guide helps both the Government and the proponent to gauge the suitability of any offset proposal, and the amount of any offset required.

The best legal mechanisms for protecting land are intended to be permanent, however, at a minimum, offsets should be secured for at least the duration of the impact.

When does the new Environmental Offsets Policy apply?

The Policy applies to any new referrals and variations to approval conditions from 2 October 2012 and to any projects currently under assessment for which a proposed decision has not yet been made.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.