04 Feb 2021

Fundamental reform recommended for "ineffective and inefficient" EPBC Act

By Kathryn Pacey and Olivia Back

While the Final Report of the Independent Review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) recommends a rolling program of fundamental reform, it also calls for immediate action from the Government.

The Final Report of the Independent Review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) was released last week. The Report finds that Australia's current environmental trajectory is unsustainable, and that fundamental reform of the EPBC Act is required to halt the decline with a focus on restoration.

Legally enforceable "National Environmental Standards" are the centrepiece of the reform, with the Report containing 38 Recommendations that are designed to be implemented as a whole, with fundamental rewriting of the Act to be achieved via a program for urgent, intermediate and longer term measures.

The reforms focus on:

  • the development and legislative implementation of National environmental standards, to ensure decision making consistent with the objects of the Act, and consistency in the standard of decision-making;
  • a move away from "transactional" or project-by-project decisions;
  • decisions that meaningfully incorporate Indigenous knowledge and participation;
  • an overhaul of the Commonwealth Indigenous heritage laws;
  • a comprehensive and robust compliance, auditing and reporting culture, supported by an Environment Assurance Commissioner.

The EPBC Act has been in effect for over 20 years, and in that time has undergone very little change. It is a statutory requirement of the EPBC Act that an independent review of the operation of the Act, and the extent to which the objects of the Act have been achieved, is undertaken every 10 years.

Professor Graeme Samuel, AO, has led the second statutory review of the EPBC Act, with the final report dated 30 October 2020 having been released by the Federal Government last week.

The Report concludes that the EPBC Act and its implementation are not effective, and recommends fundamental reform to reverse the current state of environmental decline, and build the resilience of the environment. The Report emphasises that the EPBC Act should not be about stopping all development, nor should it be about permitting all development. It should deliver better outcomes for the environment, while allowing a sensible and sustainable approach to meeting Australia's future development needs.

The Report goes to lengths to emphasise that the fundamental reform recommended in the Report – rather than just adopting the recommended Standards – is needed to prevent the continued decline of our iconic places, and the extinction of our most threatened plants, animals and ecosystems.

National Environmental Standards are the "centrepiece" of reform

The Report recommends the introduction of legally enforceable National Environmental Standards (Standards) to act as the "centrepiece" of the fundamental reform. It is however emphasised that the Standards will not work in isolation. According to the Report, the Standards should be a set of binding and enforceable Regulations that can be applied to multiple scales of decision-making and set "clear requirements for those that interact with the EPBC Act and clear bounds for decision-makers".

Decisions should be consistent with the Standards, with the "rare exception" being where the Commonwealth exercises its discretion, transparently and in the public interest.

The Report includes, as appendices, recommended Standards, that address the following significant areas of concern, for immediate adoption and implementation:

  • matters of national environmental significance (MNES) (Appendix B1 of the Report);
  • Indigenous engagement and participation in decision-making (Appendix B2 of the Report);
  • compliance and enforcement (Appendix B3 of the Report); and
  • data and information (Appendix B4 of the Report)

Other Standards that the Report suggests should be developed without delay are: 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 Report recommends that the full suite of recommended Standards should be adopted immediately and in full. It is envisaged that the Standards would evolve over time and that State and Territory laws could be amended to adopt these Standards. It is also envisaged that existing provisions would be replaced with a requirement for accreditation and implementation of the Standards in relation to, for example, development on Airport Land, the Regional Forest Agreements and offshore oil and gas decisions made by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

The immediate amendment of the EPBC Act to enable the development and implementation of the Standards as Regulations recommended would also include the addition to the EPBC Act of specific provisions relating to the governance, consultation, monitoring, reporting and review of the Standards.

Other key areas of reform

The Report stresses that the Standards must form part of a broader framework of reform and are insufficient on their own. The table below summarises the other main areas of reform outlined in the Report.

 

Matters of National Environmental Significance

Generally the Report does not recommend changes to the Matters of National Environmental Significance under the Act, finding that the matters protected by the EPBC Act should "focus on the places, flora and fauna that the Commonwealth is responsible for protecting and conserving in the national interest". There are three key findings in relation to MNES:

  1. the "water trigger" should be amended so that it does not just apply to large coal mining and coal seam gas activities. Instead, the "water trigger" should be limited to water resources that span jurisdictions (cross-border water resources). Further, the restriction on approvals bilateral applying to the water trigger should be removed;
  2. it was found to be appropriate that the EPBC Act continue to regulate nuclear actions. The prohibition on approval of particular nuclear installations was found to be a policy matter of elected parliaments;
  3. the Report does not recommend the implementation of a "climate trigger" but recommends that:
  4. the full emissions of development proposals required to be assessed and approved under the Act or accredited arrangements should be disclosed; and

the EPBC Act oblige these types of development proposals/accredited arrangements to consider "the likely effectiveness of their avoidance or mitigation measures on nationally protected matters under a range of specified climate change scenarios".

Incorporating Indigenous knowledge systems into decision-making and review of Indigenous cultural heritage protection laws

The Report found that the EPBC Act does not incorporate adequately the knowledge and land and sea management practices of Indigenous Australians.

The current use of the Indigenous Advisory Committee (AIC), without a clearly defined formal role, is described as tokenistic and the previous inclusion of Indigenous Australians in decision-making processes as not genuine.

The Report includes a recommended Standard for Indigenous engagement and participation in decision-making to ensure that the views and knowledge of Indigenous Australians are "respectfully and transparently considered in the operation of the EPBC Act".

The national-level laws for Indigenous cultural heritage protection also require immediate and comprehensive review, according to the findings of the Report, taking into consideration the role of the EPBC Act in providing national-level protections.

Transparency, auditing and reporting

A key criticism of the EPBC Act is that it has not provided transparency or clear oversight in relation to regulatory and decision-making processes, resulting in community distrust that the EPBC Act is delivering for the environment.

An Ecologically Sustainable Development (ESD) Committee is recommended to provide transparent, independent policy advice to the Environment Minister, including on ESD status and trends, and, in doing so, "provide confidence that decision-makers have access to the best available environmental, cultural, social and economic information". It is envisioned this Committee would also have oversight and management of monitoring, evaluating and reporting on the outcomes of the EPBC Act.

To further address the community distrust, it is recommended that an independent Environment Assurance Commissioner (EAC) be appointed immediately. The EAC would oversee the performance of decision-makers (ie. the Commonwealth and accredited parties) and undertake audits to monitor the effectiveness of the Act and its operation. The EAC would also investigate complaints (including from the public) made regarding the performance of accredited arrangements or decision-makers. It is recommended that all findings of the EAC would be published.

The Report recommends immediately implementing arrangements to publish reasons for Commonwealth decisions under Parts 9 and 10 of the Act and, in the second tranche of reform, amending the Act to require publication of all information relevant to, and the reasons for, decisions made under the Act. 

Appeals/Review mechanisms

The Report opines that the reforms recommended in relation to improving transparency and oversight of regulatory processes and decision-making will, by addressing the underlying causes of the community feeling of distrust, decrease the number of decisions that are legally challenged.

In relation to appeals and reviews, the Report advises against adopting a full merits review as "[o]pening decisions on appeal or review to the admission of new documentation or materials for consideration can delay decisions without necessarily improving outcomes" and can promote "forum shopping".

The Report recommends that adjustments to legal review provisions in the EPBC Act should be made to provide for limited merits review ‘on the papers’ for development assessment and approval decisions made under the EPBC Act. 

A new accreditation system

The Report deals with the issue of duplication of State and Territory regulatory processes for development assessment and approval by the EPBC Act, by recommending the adoption of an accreditation system that allows the Commonwealth to recognise and accredit the regulatory processes and environmental policies, plans and programs of other parties, including States and Territories.

Under this model, if a State or Territory could demonstrate it was capable of meeting the requirements of the Standards, it would be accredited by the Commonwealth and could then approve or authorise a project under its own laws, meaning that approval from the Commonwealth Environment Minister would no longer be required. Where accreditation was not possible, the ordinary EPBC Act assessment and approval processes would apply.

Currently, the EPBC Act provides for approvals issued through other Commonwealth agencies in relation to airspace, airports, foreign aid and other activities prescribed under the Regulations (ie. "Section 160 advices"). The Report recommends the removal of the Section 160 advice provisions, as these arrangements could now be subject to the accreditation model (or the standard assessment and approval provisions of the EPBC Act).

The accreditation model would be subject to oversight by the Commonwealth, including auditing by the EAC.

Data and information-sharing

The Report recommends that a national environmental information supply chain be adopted. The supply chain would "cover the entire system of processes and skills to convert raw data into the end products needed to inform the implementation, evaluation, reporting and assurance of the Standards and other aspects of the EPBC Act, including State of the Environment reporting".

A supply chain Custodian, who is independent to the decision-makers, would be responsible for the supply chain.

Other reforms in relation to data include:

  • a complete overhaul of departmental and public-facing systems; and
  • identification and designation of the essential information required to underpin the Standards for MNES as a set of National Environmental Information Assets.

Further, the recommended Standard includes a requirement for sharing environmental data which will apply to, among others, proponents seeking approval.

Compliance and enforcement

The Report calls for a complete overhaul of the compliance and enforcement powers in the EPBC Act, finding the current powers "outdated" and "restrictive".

The Report finds that a strong compliance and enforcement stance is needed that should include:

  • standardised powers to delegate authorised officers to undertake compliance, including to accredited parties;
  • incorporation of modern information sharing provisions – supporting collaboration with other parties; and
  • improvements to coercive powers under the Act to facilitate greater intelligence capability, including using surveillance warrants.

It is also suggested that further funding is required. In the short term, this funding could be used to invest in appropriate tools and systems to deliver surveillance and risk-based compliance.

The Report recommends a review of the adequacy of the penalties in the EPBC Act, with a focus on penalties functioning as an active deterrent, rather than a ‘cost of doing business’ and the creation of an "Office of Compliance and Enforcement" that is focused on EPBC Act compliance.

A Standard for compliance and enforcement is included in the Report. That Standard requires "robust governance arrangements" to ensure independence from actual, perceived or political interference, proportional compliance and adequate resourcing.

Environmental offsets

The Report recommends immediate changes to the Environmental Offsets Policy and that offsets should only be utilised in the following situation:

  • they are applied in accordance with the recommended Standards for MNES;
  • an offset plan demonstrates that they can be ecologically feasible; and
  • outcomes from offsets can be properly monitored and measured.

For the longer term, it is suggested that, offsets should be enshrined in law.

According to the Report, the certainty that these changes would bring would drive early investment in restoration. 

Involvement of private sector

The possibility of greater collaboration between government and the private sector, "to invest in the environment directly and to invest in innovation to bring down the costs of environmental restoration activities", is considered in the Report.

The Report suggests that the Commonwealth should work with the private sector and research organisations "to investigate the feasibility of mechanisms that leverage private capital to deliver greater investment" including funding innovation to reduce the cost of large-scale environmental restoration and utilising opportunities to leverage existing markets, including the carbon market.

The Report suggests, to encourage private sector participation in environmental restoration activities, the Commonwealth should "formally investigate and consider" the following opportunities that would facilitate environmental restoration:

  • co-investment with private capital that would improve the sustainability of private land management;
  • the creation of "a central trust or point of coordination";
  • possibilities to utilise markets already in existence, such as the carbon market; and

changes to the tax code to facilitate environmental restoration.

Next steps

While the Report recommends a rolling program of fundamental reform, it also calls for immediate action from the Government.

In response, the Government has stated that it is "committed to working through the full detail of the recommendations with stakeholders" and has committed to "national standards, to a single touch approach process, rigorous assurance monitoring for bilateral agreements and the modernisation of indigenous cultural heritage protection".

The Bill currently before Parliament which was introduced in August 2020 only addresses limited aspects of the reforms recommended by the Report, and, most notably, does not deal with the Standards. However, if the outcomes of this Report are to be achieved, fundamental reforms to the EPBC Act will be required.

RELATED KNOWLEDGE

Related Knowledge

Get in Touch

Get in touch information is loading

Disclaimer

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.