Before it’s too late

With its new environmental regulatory reform package to both safeguard natural habitat and streamline big project approvals, the federal government hopes we can have our cake and eat it too.

Sweeping reforms of environmental laws planned by the Albanese government aim to reverse the dramatic decline in Australia’s natural habitat and, at the same time, to simplify the approvals and planning process for major projects such as new mines or transport developments. But they will also place major projects under closer regulator, shareholder and activist scrutiny, and are likely to lead to an upswing in project litigation. The government has vowed to next year introduce a wholesale reform of environmental laws, based on a 252-page report into current environmental planning laws by former chair of the Australian Competition and Consumer Commission (ACCC) Graeme Samuel AC.

In his foreword to the Independent Review of the Environment Protection and Biodiversity Conservation (EPBC) Act 1999, Samuel writes that the EPBC Act is outdated, requires fundamental reform and does not enable the Commonwealth to effectively fulfil its environmental management responsibilities to protect nationally important matters. In fact, he states the act is a barrier to holistic environmental management. “The Act, and the way it is implemented, results in piecemeal decisions, which rarely work in concert with the environmental management responsibilities of the states and territories,” he states.

Reform agenda

At the centre of Samuel’s reforms are new National Environmental Standards, a set of binding and enforceable regulations, which will prescribe how all activities contribute to national environmental outcomes and which focus on outcomes for matters of national environmental significance. The standards are a mix of what Samuel calls “matter-specific” standards — such as protecting Australian World Heritage properties, protecting wetlands, and the conservation and recovery of threatened species — and separate standards requiring First Nations participation in decision-making, and governing compliance and enforcement of the standards.

The reforms aim for single-touch assessment, rather than requiring both state and federal approval for projects, as often happens now, with each arm of government operating by different rules. State and territory governments will each adopt the National Environmental Standards and then undertake assessment of projects on behalf of the Commonwealth.

“The purpose of the National Environmental Standards is to get consistency across the country in terms of standards relating to matters of national environmental significance, compliance, community consultation and engagement,” says Samantha Daly, a planning and environment partner at law firm Johnson Winter & Slattery.

The result could be a more streamlined and efficient process for project approvals, she says.

It could also mean more stringent environmental requirements for projects, but ultimately this will depend on the extent to which Samuel’s proposed National Environmental Standards are taken up by the federal government.

The former Coalition government was proposing to adopt standards that essentially match existing environmental standards for each state and territory. There is an expectation that the Labor government will introduce tougher standards, although no detail has yet been released. “Company directors should keep an eye on these standards because as soon as the legislation makes its way through parliament, they will have an impact on projects,” says Daly.

Directors will need to incorporate the time frames and costs into their planning for EPBC applications and factor in the risk of not receiving approval, she adds. And even if approval is granted, directors should be mindful that compliance and enforcement will potentially be far more onerous that they are now.

New watchdogs, more transparency

Samuel calls for a mandated, rigorous compliance and enforcement regime to ensure decisions made are consistently and fairly enforced. The government has already promised to introduce a national Environmental Protection Agency. The report also calls for the establishment of an Environment Assurance Commissioner, which would be responsible for monitoring and auditing implementation of the EPBC Act and the National Environmental Standards, including the National EPA. It would for the first time gather together national environmental data in the one place.

“What that means for directors is there is going to be a dramatic increase in transparency around projects that need to be assessed under the EPBC Act, and in particular around the compliance and enforcement issues surrounding those projects, because [the information] will all be readily accessible to the public,” says Louise Camenzuli, head of environment and planning at Corrs Chambers Westgarth.

Making more data publicly available will place greater accountability on project proponents and subject them not only to greater public scrutiny, but also to more shareholder activism. “Directors need to be carefully considering how that data will be used as part of the shareholder activist toolkit,” says Camenzuli.

The Samuel Review also calls for the introduction of a limited merits review (LMR) for development assessment and approval decisions, available to directly affected or interested persons or bodies who have an opinion from a senior legal counsel that the litigation has a reasonable prospect of success. LMR outcomes would result in the decision being affirmed, referred back to the decision maker, or varied.

It’s a provision that for the most part doesn’t currently apply to the EPBC Act and will likely lead to more litigation. “No matter how limited you might make a merits review, the moment you create a merits review, I assure you the full parameters of that will be explored,” says Camenzuli.

For directors, it means approaching project approvals with real rigour and considering how robust their environmental assessments supporting those projects are, she says. Directors should be asking a lot of questions about any projects or operations which impact matters regulated by the EPBC Act and they need to understand how the projects are tracked and monitored over time.

Government reaction

Along with introducing a national EPA, Minister for the Environment and Water Tanya Plibersek has promised the government’s formal response to the Samuel Review by the end of this year and to develop new environmental legislation to go to parliament in 2023. “We will consult thoroughly on environmental standards. But in the meantime, I want to see an immediate start on improving our environmental data and regional planning, establishing a shared view around what needs to be protected and restore the areas where development can occur with minimal consequences,” she said in July at the State of the Environment Report 2021 launch.

The five-yearly report — held back by the previous government until after the federal election — outlines the environmental challenge for governments and businesses. “Our inability to adequately manage pressures will continue to result in species extinctions and deteriorating ecosystem conditions, which are reducing the environmental capital on which current and future economies depend,” it states.

Prepared by a panel of 32 experts, the report says “increasing pressures from climate change, habitat loss, invasive species, pollution and resource extraction” have taken their toll on Australia’s deteriorating ecosystems. The statistics are damning. Since 2016, when the previous State of the Environment Report was released, 53 animal species were either added to the endangered list or upgraded to the critically endangered list. The report came to the same conclusion as the Samuel Review — that the nation lacks a framework to deliver holistic environmental management.

The Samuel Review states that governments should shift their focus from individual project approvals to a focus on clear outcomes, integrated into national and regional plans for protecting and restoring the environment, and plans for sustainable development. It envisages considering impacts on matters of national environmental significance from a regional perspective — rather than just waiting for a developer to come with a proposal and then addressing it.

“If, for example, there are areas within the country that are particularly special and require particular protection, then that will be considered at a cumulative level and at a regional level,” says Daly.