03 Apr 2014

NSW Biodiversity Offsets Policy for major projects released for consultation

by Brendan Bateman, Wagih Doueihi

The aim of the new Biodiversity Offsets Policy for Major Projects is to clarify, standardise and improve biodiversity offsetting for major project approvals.

The role and adequacy of biodiversity offsets in the approval of major projects have long been contentious issues. The difficulty in determining the extent of impact on biodiversity of a particular project, and sourcing equivalent compensatory offsets to mitigate those impacts, was brought to the fore last year when the Land and Environment Court refused approval to the expansion of the Warkworth mine in the Hunter Valley, NSW, concluding that the offsets proposed to be provided by the proponent were inadequate (Bulga Milbrodale Progress Association Inc v Minister for Planning and Infrastructure and Warkworth Mining Limited [2013] NSWLEC 48).

In response to the Warkworth decision, the NSW Government has implemented a number of measures. The first was to ensure that the economic benefit of mining projects is the principal consideration in the merit assessment of those projects (via amendments to State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007), and now with a review of its biodiversity offsets policy.

A new Biodiversity Offsets Policy for major projects

The aim of the new Biodiversity Offsets Policy for Major Projects is to clarify, standardise and improve biodiversity offsetting for major project approvals under the Environmental Planning and Assessment Act 1979 (Planning Act).

On 20 March 2014, the NSW Office of Environment and Heritage released a package of documents for public consultation:

  • a draft of the Policy;
  • a discussion paper on a proposed special major projects Offsets Fund which will complement the Policy; and
  • a draft Framework for Biodiversity Assessment.

What major projects fall under the new Biodiversity Offsets Policy?

The Policy will apply to the assessment of projects declared to be State Significant Development or State Significant Infrastructure (major projects) under the Planning Act.

Before a major project can be approved, the Director-General of the Department of Planning and Infrastructure issues certain requirements for environmental assessment. Under the Policy, proponents would also need to determine the biodiversity offset requirement for the project using the Framework for Biodiversity Assessment.

The change is important because it introduces a standard method for assessing impacts of major projects on biodiversity. Under the present framework, biodiversity offsets are usually negotiated between proponents and the consent authority on a case-by-case basis. There are often wide variations in assessments and lengthy and costly debates around the adequacy of an assessment and its outcomes. The resulting offset requirements can vary widely, leading to uncertainty for proponents.

Interaction with the Biobanking Scheme

The NSW biodiversity banking and offsets scheme under Part 7A of the Threatened Species Conservation Act 1995 (NSW) is the subject of a review, which will progress in tandem with the formulation of the Policy.

Nonetheless, the Office of Environment and Heritage has said that the Biobanking Scheme will continue to be an optional regime that developers can use as an alternative to the biodiversity assessment process under the Planning Act.

Proponents who choose to obtain a biobanking statement under the Biobanking Scheme will still have the benefit of the statement (as set out in sections 127ZO and 127ZP of the Threatened Species Conservation Act 1995).

Salient features of the Policy

The Policy incorporates some of the key elements of the Biobanking Scheme, including:

  • use of a methodology to assess biodiversity values and to calculate offset requirements; and
  • use of biobanking agreements as the primary mechanism for securing offsets.

While the way in which biodiversity gains will be calculated under the Framework for Biodiversity Assessment will be broadly the same as under the Biobanking Assessment Methodology, there are substantial differences in the treatment of loss to biodiversity values.

The key points to note are:

  • the Policy will allow proponents to make payments to the Offsets Fund to be used to acquit offset requirements;
  • the Framework for Biodiversity Assessment introduces the concept of "supplementary measures" as a means of compensating for biodiversity losses where biodiversity offsets are not available;
  • the offsets will not always need to be matched to the biodiversity values impacted, that is, the Policy introduces some flexibility to the present like-for-like offsets requirement;
  • the Framework for Biodiversity Assessment does not incorporate the concept of "red flag" areas, which are areas that have high biodiversity value under the Biobanking Scheme;
  • the Policy will allow the consent authority to reduce offset requirements in certain circumstances, including where a project’s offset requirements may make the project unviable and the project would have significant overall social or economic benefits; and
  • mining companies will be able to fulfil some or all of their offset requirements through ecological rehabilitation of the project's mine site.

The Policy will offer significant advantages to proponents of some major projects. In addition to clear and consistent guidance for assessing and offsetting biodiversity impacts, the Policy will provide greater flexibility for proponents to meet their offset requirements.

If appropriate offset sites cannot reasonably be found and if biodiversity credits are not available for the specific biodiversity impact, proponents can provide funds for supplementary measures. Where a proponent cannot offset the same biodiversity impact, the proponent will be able to meet their offset requirements by enhancing biodiversity values of a higher conservation priority.

If overall social and economic benefits are significant, the Policy recognises that it might be reasonable for a consent authority to modify the offset requirement if it would otherwise prevent the project from proceeding.

When will it happen?

Submissions on the consultation package close at 5pm on Friday, 9 May 2014.

The Government's current intention is for the Policy to be phased in via a transitional period during the second half of 2014, and be fully implemented during the first half of 2016.

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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.