Background: The Nature Positive Plan
In December 2022, the Federal Government unveiled significant overhauls to the national environmental legislation, responding to the broad-reaching recommendations for reform contained in the independent review of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), known as the Samuel Review. The reforms were set out in the Nature Positive Plan: Better for the environment, better for business (Nature Positive Plan).
The Nature Positive Plan aims to create the legislative and policy settings for a 'Nature Positive Australia,' where nature is being repaired and regenerated, seeking to reverse fears of a downward trajectory. The reforms represent a complete overhaul to Australia's environmental laws with implications across all sectors. Proponents of current and future projects should be watching developments carefully, as the risks and opportunities presented by the Nature Positive Plan will become more clear in the coming months.
Early plans to implement the Nature Positive Plan by the end of 2023 shifted following public consultation. Earlier this year, the Minister for the Environment (Minister) announced the reforms would be delivered in three stages:
- Stage 1: Passing of the Nature Repair Act 2023 (which came into effect on 15 December 2023), along with modifications to the 'water trigger' in the EPBC Act to include unconventional gas;
- Stage 2: Creation of new statutory environmental bodies to oversee, inform and enforce national environmental laws; and
- Stage 3: Implementation of the balance of the changes outlined in the Nature Positive Plan, which are broadly considered to be the more substantive changes proposed in the Nature Positive Plan.
On 29 May 2024, the initial step in implementing Stage 2 was taken when the Minister tabled three key Bills. These Bills are summarised below.
Creation of environmental regulator
The first Bill introduced to Parliament was the Nature Positive (Environment Protection Australia) Bill 2024 (EPA Bill). In a move to bolster environmental protection and governance, the EPA Bill would establish a new national body known as Environment Protection Australia (EPA), Australia's first independent environmental regulator. The EPA is expected to commence its role from 1 July 2025, depending on the timing of the passing of the EPA Bill. Until then, it will function as a division within the Department of Climate Change, Energy, the Environment and Water (Department).
The EPA Bill is supported by the Nature Positive (Environment Law Amendments and Transitional Provisions) Bill 2024 (Amendment Bill), which makes some key changes to the EPBC Act.
Key aspects of the EPA Bill and Amendment Bill, as they relate to the creation of the EPA, are explored in further detail below.
CEO appointment to the EPA
The EPA will be led by a Chief Executive Officer (CEO). The EPA Bill sets out the experience necessary for the appointee, including knowledge of or experience in public sector governance and regulation. A person can hold the position for a maximum of five years and can only be removed by the Governor-General in certain circumstances.
EPA independence
The EPA Bill seeks to set the parameters of the EPA independence by providing a framework to regulate the interaction between the Minister and the CEO of the EPA. The Minister will be able to issue a Statement of Expectations to the CEO at any time to guide the EPA's strategic direction. However, a Statement of Expectations cannot direct the CEO or the EPA. In turn, the CEO is required to draft a Statement of Intent in response to the Minister’s expectations, a document that will be made publicly available on the EPA's website, promoting transparency and accountability in the operation of the EPA.
While certain proponents support the independence of the EPA to reduce political interference in regulatory functions, industry members have also expressed concern that without clear guardrails, the EPA may act outside of government intent. They argue that there are no direct provisions in the draft legislation which give the Minister the ability to hold the EPA to account for poor management or failing to meet the Minister's expectations.
Additional oversight, transparency and accountability measures which have been built into the framework include that the Minister will retain responsibility for rule-making powers and setting government policy, a mandated requirement for the CEO to establish and maintain a public register of decisions, a five-yearly review of the EPA to assess the extent to which the EPA has supported the delivery of accountable, efficient, outcomes-focused and transparent environmental regulatory decision-making, and requirements to publish certain documents, such as annual reports.
Single regulator
The Amendment Bill transfers regulatory, compliance, permitting and licencing powers of the Minster under nine key federal environmental laws to the CEO. These powers relate to recycling and waste exports, hazardous waste, sea dumping, ozone protection, underwater cultural heritage, air quality and species permitting, along with certain powers under the EPBC Act. The intent is that by bringing together the regulation of Australia’s key national environmental laws under one organisation, the EPA would have the capability to be a modern national environmental regulator.
Stronger compliance and enforcement powers
The Amendment Bill aims to strengthen the EPBC Act's existing compliance and enforcement powers by expanding and updating audit powers, introducing environment protection orders, increasing criminal and civil penalties for serious contraventions, and introducing a civil penalty formula.
These powers would commence the day after the Amendment Bill receives Royal Assent, so they can be utilised immediately in combating non-compliances with the EPBC Act and other national environmental legislation, and are not tied to the establishment of the EPA.
These are explored in further detail below.
Environmental Protection Orders
The Amendment Bill introduces new powers for the Minister to issue Environment Protection Orders (EPOs) in response to urgent circumstances where there is an imminent threat of serious damage to a protected matter, or where the damage has already occurred. Similar mechanisms exist in state and territory laws.
EPOs would be enforceable against individuals or corporations to take action to ensure compliance with the EPBC Act, or to take action to investigate, prevent or control environmental harm. Before issuing an EPO, the Minister must reasonably believe that there has been a breach or a likely breach of the EPBC Act, its regulations, or the conditions of an environmental authority, posing an imminent serious risk.
EPOs can require temporary measures while more permanent solutions, like remediation plans, are being developed. EPOs remain in force until the Minister deems them unnecessary or until a specified expiry date.
A new strict liability offence will be introduced which applies to individuals who contravene an EPO. The Amendment Bill also makes it an offence to hinder or obstruct another person in complying with an environment protection order. The penalty for both these offences is currently $99,000 for an individual or $495,000 for a body corporate.
Expanded audit powers
Under the EPBC Act, directed environmental audits enable the Minister to mandate a person to conduct an audit, and that person must then commission a registered auditor to execute the audit as per the notice. These audits are restricted to holders of an environmental authority or permit under the EPBC Act.
The Amendment Bill plans to establish a register of independent auditors that are appointed to carry out legislated audits. This will replace the existing provision that allows environmental authority holders to appoint auditors. This shift towards independent auditors is intended to ensure a higher degree of assurance.
The Amendment Bill proposes enhanced audit powers by introducing compliance audits and broadening the scope of directed environmental audits to include individuals bound by an EPO, conservation order, remediation determination, or order. The Minister (or the EPA under delegation) may require an audit to be conducted without prior notice.
Additionally, the EPBC Act prescribes penalties for auditors who fail to address specific matters requested in an audit notice or deliberately overlook important information or documentation, with the intention to deter fraud and misconduct.
Stronger penalties
The proposed changes introduce a new civil penalty formula aimed at strengthening the consequences for non-compliance with environmental laws. This formula draws on models used in other Commonwealth legislation that target financial crime, such as those in the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. The Explanatory Memorandum for the Amendment Bill explains that this position has been taken because environmental crime is comparable as the damage to Australia’s international reputation and economy, insufficient penalty amounts undermine trust and accountability, and rectification is long-term, complex, a burden on taxpayers and in some cases, is impossible.
The Amendment Bill introduces fines for serious offences of:
- for individuals: the higher of 5,000 penalty units or three times the value of the benefit derived or detriment avoided because of the contravention; and
- for corporations: the higher of 50,000 penalty units, three times the value of the benefit derived or detriment avoided, 10% of the annual turnover in the 12 months preceding the breach by the company and its related bodies corporate, capped at 2.5 million penalty units (approximately $825 million).
Additionally, certain penalties for criminal offences under Parts 3 and 9 of the EPBC Act are increased to 1,000 penalty units.
Other amendments
The EPA Bill and Amendment Bill also propose to give the EPA a number of other powers and functions, including:
- issuing permits and licences under various federal environmental laws;
- undertaking delegated activities from the Minister under the EPBC Act, which may ultimately include deciding whether actions are controlled actions under the EPBC Act, and whether to approve those controlled actions;
- creating a publicly available register of registerable decisions; and
- sharing relevant information with other Commonwealth entities and State and Territory government bodies or for law enforcement purposes.
In addition, the Amendment Bill introduces 'stop the clock' provisions which are intended to give project proponents more control and clarity during the environmental assessment and approval process.
Under the proposed changes, when the Minister determines that more information is needed to make decisions the proponent will be notified of the reasons for this requirement. The proponent will then have up to five business days to inform the decision-maker if they want the statutory decision-making timeframes to be 'stopped', or paused, while they gather the additional information.
Environmental information
The final Bill tabled by the Minister was the Nature Positive (Environment Information Australia) Bill 2024 (EIA Bill). The EIA Bill establishes a new statutory position known as Head of Environment information Australia (HEIA), who is to oversee Environment Information Australia (EIA), a division within the Department which will be responsible for providing data and information to inform decision-making under national environmental law.
Nature positive commitment
For the first time, the EIA Bill enshrines in Commonwealth legislation the concept of 'nature positive', being "an improvement in the diversity, abundance, resilience and integrity of ecosystems from a baseline." The HEIA is responsible for setting that baseline, and providing a monitoring, evaluation and reporting framework in relation to whether 'nature positive' is being achieved in Australia.
Environmental information
The EIA Bill creates a function of the HEIA to provide the Minister, the CEO of the EPA and the public with 'access to high quality information and data relating to the environment'. Within this is an acknowledgement that access to authoritative sources of high quality environmental information underpins a Nature Positive Australia by informing policy, project, investment and regulatory decision making.
The Explanatory Memorandum describes that this environmental information and data will be obtained from a range of sources, including scientific bodies, stakeholders, environmental groups and Commonwealth, State and Territory agencies. The information will be made available through an accessible, searchable, and interoperable national public portal.
The EIA Bill also provides the HEIA with the power to designate data or information which is critical to the CEO's or the Minister's functions as a 'national environmental information asset'. This includes data or information held by private entities. The HEIA is to maintain a register of national environmental information assets.
Environmental reporting
The HEIA will have independent responsibility for preparing and publishing State of the Environment reports and environmental economic accounts.
Under the current EPBC Act, State of Environment reports are required to be published every five years. The EIA Bill increases the regularity of reporting to every two years and reports must draw on the knowledge of people with scientific expertise and Aboriginal and Torres Strait Islander peoples.
The EIA Bill also creates new responsibilities of the Minister to:
- table in Parliament a response to the findings of the State of Environment Report within six months of the report's publication, including environmental targets to be achieved (national environmental goals); and
- provide an annual statement summarising new and updated environmental economic accounts.
The EIA Bill introduces the concept of 'environment economic accounts', being statistical accounts that describe the condition of the environment and its relationship with the economy.
The EIA Bill also requires that the Minister to undergo independent reviews of the operation of the EIA Bill every five years.
Use and disclosure of environmental data and information
The EIA Bill includes a regime for the use and disclosure of information for the purposes of the functions of the HEIA and people assisting the HEIA, which would balance the appropriate use and disclosure of information against the protection of sensitive information.
Information held by 'entrusted persons' under or in accordance with the EIA Bill is subject to protections on use and disclosure. Entrusted persons are authorised to use and disclose information in accordance with Australian Privacy Principle Guidelines including to reduce serious risk to human health or the environment, with consent of the person to whom the information relates, or for court proceedings.
The EIA Bill introduces civil penalties for disclosure of 'protected information' in a way that is not authorised under the Bill.
Provision of national environmental data
The EIA Bill demonstrates a focus on transparency and public availability of environmental data to enable a more holistic environmental data ecosystem in Australia. The EIA Bill creates the framework for an iterative system of environmental reporting. Ultimately, under the EIA Bill, the public can expect across a two year cycle:
- a new state of the environment report;
- a response to the state of the environment report, including new or updated national environmental goals;
- two annual environmental economic accounts; and
- two annual statements by the Minister summarising the new and updated EEAs.
These reporting cycles may be supplemented by public reporting on the findings of the monitoring, evaluation and reporting framework at a regularity to be determined by the HEIA.
The EIA Bill does not prescribe requirements or constraints around the setting of the baseline against which 'nature positive' will be assessed. Scientists, policy makers and environmental lawyers may be familiar with the 'shifting baseline' effect, where changing expectations across generations may result in an imperceptible lowering of standards.
Further, while the HEIA can declare national environmental information assets, the EIA Bill does not provide additional protections to these assets, or explain how they will be better integrated into national environmental decision-making.
However, data provided to the Department, including information to support an application for approval of proposed actions under national environmental law, will remain subject to commercial, personal or privileged non-disclosure protections.
Nature Positive Plan: Next steps
The Bills passed the House of Representatives on 4 July 2024 without amendment and will now be considered by the Senate. The Senate referred the provisions of the Bills to the Environment and Communications Legislation Committee for report, which is holding public hearings from 26 July 2024 and is due to publish its report by 8 August 2024.
Greater insight into the ultimate form of the proposed new laws that may result from these Bills, and the potential implications for your business, will become clearer as the Bills finalise their passage through Parliament.
More detail on the broader reform package will also emerge once the draft Bills for the Stage 3 reforms are released for public feedback, possibly towards the end of 2024 or after the 2025 Federal Election. The Federal Government has committed to the legislation giving effect to Stage 3 being subject to public consultation on a comprehensive exposure draft before being introduced in the Parliament. This consultation will focus on the assessment and approvals system, restoration contributions, First Nations engagement, regional forest agreements, exemptions from approvals and climate change.
Please contact our team for advice and assistance in relation to these reforms and environmental protection legislation in Australia.