New Federal EPA and Information Authority: with major changes imminent, here's what you need to know

The significant changes to Federal environment law are closer, with the introduction into Parliament of three Bills that, if passed, will introduce a new federal environmental protection agency and a new information repository entity, Environment Information Australia. The Bills also introduce a statutory definition of "nature positive", albeit with limited application for the present.

The two new Federal agencies are planned to commence from 1 July 2025, but the significant new enforcement and compliance powers would commence earlier, potentially almost immediately on the Bills passing Parliament. At a minimum, you should be reviewing and auditing your environmental compliance systems, and the impact of the Bills more generally on your operations and any future expansion plans, now ahead of the commencement date.

A quick recap: What is the Nature Positive Plan?

The Nature Positive Plan is the Government's formal response to Professor Graeme Samuel's 2020 review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). The Nature Positive Plan is progressing in three stages:

• Stage 1 is now complete with the establishment of the Nature Repair market and the expanded water trigger.
• Stage 2 seeks to implement the commitment set out in the Nature Positive Plan to "restoring public accountability and trust in environmental decision-making through an independent EPA, regular reporting on progress towards environmental goals and making environmental data publicly accessible". The three Bills represent the commencement of this stage.
• Stage 3 will complete the environmental law reforms proposed in the Nature Positive Plan, including the establishment of National Environmental Standards, a new assessment and approvals framework, and a process for accrediting State/Territory approvals systems, along with provision for regional planning and a new offsets framework.

The Government has committed to releasing a comprehensive exposure draft for public consultation on Stage 3 matters before introducing the Bills to Parliament but has not given any timeframes for these steps. Reaching agreement on National Environmental Standards, and an approvals framework reliant on an entirely new standard for what is considered to be an acceptable impact on the environment – moving from avoiding significant impacts to requiring a "nature positive" outcome – is complex. While there is general agreement from all stakeholders that the conceptual goal of these reforms is desirable and necessary, practical implementation of the changes in a way that still allows responsible development is much more difficult. Our experience being involved in the consultation process suggests that release of a workable exposure draft is likely to be some way off. This, no doubt, is part of the reason why Stage 2 is being progressed in advance of the Stage 3 reforms.

The Stage 2 Reform Package

The Nature Positive (Environment Protection Australia) Bill 2024 (Cth) (EPA Bill) and the Nature Positive (Environment Information Australia) Bill 2024 (Cth) (Information Bill) propose to respectively establish the two new Federal entities:

• Environment Protection Australia (EPA) – the foreshadowed independent, national environmental regulatory agency; and
• the Head of Environment Information Australia (Head of EIA) – a new office to be held by a senior executive of the Department of Climate Change, Energy, the Environment and Water (Department), responsible for improving the availability and accessibility of environmental data.

The third Bill, the Nature Positive (Environment Law Amendments and Transitional Provisions) Bill 2024 (Cth) (Transitional Bill) amends the EPBC Act and several other Acts to provide for the powers of the EPA. In addition to establishing two new government entities, the EPA Bill introduces new enforcement powers, and the EIA Bill provides a definition of "Nature Positive".

The national EPA

The Government's announcement of 16 April stated that the national EPA would be independent, and would initially operate within the Department before transitioning to become a statutory agency. The EPA"s remit would include:

• undertaking environmental assessments;
• deciding project approvals and conditions;
• issuing permits and licences;
• educating industry, business and the community regarding environmental laws;
• speeding up development decisions and project assessments,
• and enforcing the law through new powers.

The Agency that emerges through the Stage 2 package of three Bills is broadly consistent with the announcement. The EPA Bill proposes to establish the EPA as a statutory entity, with its substantial powers and functions vesting in the office of the CEO of the EPA, who will be independent of direction from the Minister. The Bill also provides for the Minister to publish a Statement of Expectations for the CEO, and the CEO must provide a Statement of Intent in return.

The Bills provide for the CEO of the EPA to assume the regulatory powers currently exercised by the Minister under the EPBC Act, including powers to appoint inspectors, carry out environmental investigations, and issue permits for activities in Commonwealth areas that impact listed threatened species, critical habitat, listed migratory species, cetacean and listed marine species. The Government indicated in its media release that it will ask the new EPA to examine illegal land clearing and offset conditions as a priority.

The CEO of the EPA will also assume regulatory responsibilities under several other Federal environmental laws, including the issue of permits under the Environment Protection (Sea Dumping) Act 1981 (Cth), granting of export licences and co-regulatory arrangements under the Recycling and Waste Reduction Act 2020 (Cth), and regulating the import and export of hazardous waste under the Hazardous Waste (Regulation of Exports and Imports) Act 1989 (Cth).

The Transitional Bill provides for certain new powers to be exercised by the Minister once that Bill receives assent (which is to occur before the other two Bills), including the expanded and updated environmental audit powers and a new power to issue stop work orders. However, these powers will ultimately also be transferred to the CEO of the EPA once that agency is established.

The powers relating to EPBC Act assessments and approvals are not given to the CEO of the EPA at this stage, however it is expected that this will occur as part of the Stage 3 reforms. In the meantime, the Transitional Bill allows the Minister to delegate these powers to the CEO or certain other employees of the EPA. This opens the possibility for those powers to be transferred to the EPA by delegation, in the same way that they are currently delegated to Departmental officers.

The CEO's statutory independence introduces a subtle difference in the delegation of Ministerial powers to that office from delegations to Department officers. It is difficult to predict how this factor may affect the exercise of delegated powers, including how often they are used, but some clarity may be provided through the publication of Statements of Expectation and Intent by the Minister and CEO.

New Head of EIA

The second new entity introduced by the package is the office of the Head of EIA. Like the CEO of the EPA, the Head of EIA is proposed to be independent of direction from the Minister and the Secretary responsible for the Department or the legislation. The Head of EIA is evidently intended to provide a means of tracking Australia's progress towards "nature positive". To that end, the EIA Bill introduces a statutory definition of "nature positive", which is discussed in more detail below.

The other key functions of the Head of EIA will be to provide the Minister, CEO and the public with access to high quality information and data relating to the environment or relating to their role, and to prepare and publish biennial State of the Environment reports. To these ends, the Head of EIA will have the capacity to request information (but not mandatorily require it) and to disclose information, subject to certain constraints intended to protect confidential or other sensitive information. The non-mandatory nature of the data gathering power proposed, along with confidentiality and copyright limitations, may limit how comprehensive and useful the resulting dataset can be.

The meaning of "Nature Positive" and National Environmental Goals

As noted above, the Information Bill defines "nature positive" to mean "an improvement in the diversity, abundance, resilience and integrity of ecosystems from a baseline". Whether there has been an improvement is to be evaluated with regard to the diversity, abundance and resilience of species that form part of ecosystems.

The Head of EIA will be required to determine the baseline, and to develop and implement a monitoring, evaluation and reporting framework in order to gather, assess and publicly report on information as to whether and to what extent nature positive is being achieved in Australia.

Although the definition of "nature positive" is confined to the Information Bill and linked to the functions of the Head of EIA, it is clearly relevant to the broader reform package, and we anticipate that the same definition will be used in the Stage 3 reforms which are yet to come.

The new process for preparing and publishing State of the Environment Reports introduces the related concept of National Environmental Goals. These are required to be specified by the Minister in a response to each State of the Environment Report and comprise environmental targets to be achieved and the period within which they are to be achieved.

It appears likely that both the definition of "nature positive" and National Environmental Goals will influence the way in which assessments and approvals are undertaken in the future. The exact nature and extent of that influence will not be clear until an exposure draft of the Stage 3 reforms is released.

Environmental Protection (or "stop-work") Orders

The reforms also propose to introduce a new power to issue environmental protection orders (frequently referred to as "stop-work orders"). This power will be held by the Minister in the first instance, but will eventually be transferred to the CEO of the EPA. Environmental protection orders can be issued where the Minister reasonably believes that a person is, or is likely to, contravene the Act, the contravention causes, or poses an imminent risk of, serious damage to a matter protected under the EPBC Act, and the order is necessary to ensure future compliance or prevent or mitigate the damage.

An order may impose any requirements that the Minister considers reasonably necessary, including a requirement to discontinue or not commence specified activity. Hence the shorthand expression "stop-work order".

Environmental protection orders represent a significant extension of the enforcement powers in the EPBC Act. Currently, the Minister's direct intervention powers are limited to conservation orders, which can only be issued for activities within Commonwealth land or waters. Outside Commonwealth areas, the Minister cannot intervene directly, but must commence prosecution or seek an injunction, both of which require determination by a Court. The new power will enable the Minister to intervene directly where there is a suspected breach of the EPBC Act, with a lower threshold for intervention than what would be required to prosecute or obtain an injunction.

Increased criminal and civil penalties

As foreshadowed in the announcement, the Stage 2 reforms provide for substantial increases in criminal and civil penalties for serious contraventions of the EPBC Act. These changes, along with environmental protection orders, are to commence on the day after the Transitional Bill receives assent.

Maximum criminal penalties for offences that unlawfully cause significant impacts on matters of National Environmental Significance are proposed to more than double, from 420 to 1,000 penalty units. For an individual, this equates to an increase from $131,460 to $313,000, in addition to the existing potential term of imprisonment. Bodies corporate can be fined up to 5 times that, meaning an increase in the maximum fine from $657,300 to $1.565 million.

Civil penalties are proposed to increase even further. In addition to the status quo of up to 5,000 penalty units for an individual ($1,565,000) and 50,000 penalty units for a corporation ($15,650,000), the reforms will introduce new, alternative approaches to calculating a maximum fine. If the Court is able to determine the value either or both of the (financial) benefit derived and the (financial) detriment avoided by the contravention of the Act, the penalty may be set at a multiple of 3 times that amount. If that amount exceeds the usual maximum penalty, the higher figure will be imposed.

For corporations, the increase in potential penalties is even more dramatic. In addition to the above approaches to determining the maximum civil penalty for a corporation, the Court may set the penalty at 10% of the annual turnover of the body corporate for the 12-month period before the contravention, with a cap of 2.5 million penalty units. This equates to a notional maximum penalty of up to $782,500,000 for the breach of a civil penalty provision in Part 3 or subsection 142(1) of the EPBC Act.