NSW EPBC Act Bilateral Agreement amended: what this means for biodiversity offsets

After a very long wait, New South Wales now has a bilateral agreement which deals with its new biodiversity legislation.

On 24 March 2020 the NSW Government and the Australian Government finalised amendments to the NSW Bilateral Agreement under the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), to respond to the introduction of the NSW Biodiversity Conservation Act 2016 (BC Act). The amendments are to reinforce the Australian and NSW Governments' commitment to:

• streamlining environmental assessments and offsets
• strengthening intergovernmental cooperation and promoting a partnership approach to environmental protection and biodiversity conservation
• reducing regulatory burden to ensure that assessments are undertaken in shorter timeframes

The Australian Government has also endorsed the NSW Biodiversity Offsets Scheme through the introduction of the Environment Protection and Biodiversity Conservation Act Condition Setting Policy. Previously there were differences between NSW Government and the Australian Government as to how biodiversity offsets should be implemented. The Conditions Policy can be utilised for any New South Wales proponent who requires an EPBC Approval to determine their biodiversity offset requirements under the NSW Biodiversity Assessment Method.

What the Bilateral Agreement does

Almost all substantial development projects in NSW will need development approval of some kind under NSW laws. In addition, projects which are likely to have a significant impact on a designated matter of national environmental significance (MNES), or a significant impact on the environment on Commonwealth land, or a significant impact on the environment (if carried out by a Commonwealth agency) will need approval under the EPBC Act.

The Bilateral Agreement effectively accredits various kinds of assessment under NSW approval laws for the purposes of the EPBC Act, and so avoids the need for a separate assessment under the EPBC Act.

Amendments to the Bilateral Agreement

The current NSW Bilateral Agreement was made under the EPBC Act on 26 February 2015, when biodiversity offset requirements in NSW law were governed by the former Threatened Species Conservation Act 1995. The BC Act was made in late 2016 and, while it imposes a more rigorous approach to biodiversity offsets, it allows proponents to pay a designated amount into a Biodiversity Conservation Fund (BCF) instead of sourcing and delivering specific offsets for their project. The Commonwealth was concerned that this option would not adequately cater for the “like-for-like” components of its policy, and this led to extensive negotiation in an effort to promote recognition of NSW offset arrangements under the EPBC Act.

This also provided an opportunity to address some other outstanding issues with the existing Bilateral Agreement.

In summary, the changes to the Bilateral Agreement include:

1. Accrediting the BC Act: Now projects which include an assessment of biodiversity impacts and (where relevant) offset arrangements under the BC Act will be eligible for accredited assessment under the Bilateral Agreement instead of needing a separate assessment under the EPBC Act.
2. Broadening the scope of the agreement to include Commonwealth land, actions and agencies: Previously the Bilateral Agreement specifically excluded actions in Commonwealth areas or actions carried out by Commonwealth agencies, but now such projects can be assessed under the Bilateral Agreement if they are either State significant infrastructure or State significant development under the Planning Act and the Commonwealth Minister for the Environment and the NSW Minister for Planning and Public Spaces agree they should be assessed under the Bilateral Agreement.
3. Excluding projects assessed under Division 5.1 of the Environmental Planning and Assessment Act 1979 (Planning Act): Previously, projects which were carried out under this “self-assessment” scheme (mostly public infrastructure projects, mining and CSG exploration, and licensed private water utility infrastructure) and also needed EPBC Act approval were covered by the Bilateral Agreement, but that is no longer the case.
4. Transitional arrangements: all new eligible major projects will be assessed under the new provisions of the Bilateral Agreement. Projects which have already been determined to be controlled actions, prior to the amendments, will be assessed under the original Agreement. In addition, previously endorsed NSW impact assessment and offset methodologies such as the NSW Biodiversity Offset Policy for Major Projects and the bio-banking rules established under the repealed Threatened Species Conservation Act 1995, can still be used for calculating offsets for transitional projects.

Endorsement of Biodiversity Offsets Scheme (BOS)

As part of the arrangements accompanying the Bilateral Agreement amendments, the Australian Government also endorsed the Biodiversity Offset Scheme under the BC Act (BOS), which includes the biodiversity assessment method (BAM), the biodiversity credit system and the offset rules set out in the Biodiversity Conservation Regulation 2017 (BC Regulation).

This means that if a project proponent has:

• a legal obligation to retire biodiversity credits under NSW law (generally via the conditions of a development consent or State significant infrastructure approval under the Planning Act), and
• an EPBC Act approval that was made on or after 24 March 2020 or, if issued prior to this date, EPBC Act approval conditions that allow for payment into a Commonwealth-endorsed Fund,

the proponent can use the various options in the BC Act to satisfy the offsetting requirements of its EPBC Act approval. This would include, for example, retiring biodiversity credits or making payments into the BCF.

However, in order to secure the Australian Government’s endorsement of the BOS, the BC Regulation was amended to prevent the “variation rules” under the BC Act, which allow for variations from the requirement for “like-for-like” offsets where “like-for-like” offsets cannot be found, to be used for offsetting impacts on any threatened species or ecological communities listed under the EPBC Act. This means that:

• proponents cannot use the variation rules when selecting the types of biodiversity credits they will use to offset biodiversity impacts from a project; and
• while proponents can still make payments into the BCF instead of retiring biodiversity credits, the NSW Government cannot use the variation rules when taking seeking to apply those payments to specific offsets.

This is intended to ensure the EPBC Act achieves like-for-like outcomes in biodiversity offsetting.

Conditions Policy

The Conditions Policy outlines the Australian Government's approach to considering State and Territory approval conditions when approving a project under the EPBC Act. The Conditions Policy relevantly applies to projects which require approval under the EPBC Act and:

• the project already has State or Territory conditions that relate to a MNES, or
• the project has been assessed under an EPBC Act bilateral agreement and the State or Territory has proposed conditions for the relevant MNES, or
• the project has been assessed under an accredited assessment process and the State or Territory has proposed conditions for the relevant MNES.

Although the Conditions Policy is not a statutory document, it is intended to provide guidance on how the Australian Government is to determine whether (when considering a project which is subject to State or Territory conditions related to a MNES):

• a single condition to require compliance with particular State or Territory conditions is attached to an approval under the EPBC Act;
• customised conditions are attached to an approval under the EPBC Act; or
• no conditions are attached to an approval under the EPBC Act.

The Australian Government has now endorsed the BOS for the purposes of the Conditions Policy. This should also assist in streamlining the regulatory process to avoid potential duplication of approval conditions or the inclusion of unnecessary approval conditions, particularly where NSW approval conditions can appropriately manage the environmental impacts on the matter of national environmental significance.

These new arrangements are a welcome step for proponents of NSW projects, and should facilitate a simpler and more cost-efficient approach to EPBC Act biodiversity offsets in NSW.