Australia: Environmental Offsets Bill: a new foundation for Queensland environmental offset regulation

Introduction

On 13 February 2014, the Queensland Government introduced the Environmental Offsets Bill 2014(Bill) into Parliament, which will establish a new overarching framework for the regulation of environmental offsets in Queensland.

The Bill aims to simplify and streamline the assessment, approval and delivery of environmental offsets in Queensland. The Explanatory Memorandum to the Bill explains that multiple offset policies in Queensland have led to an 'inconsistent, complex and onerous regulatory framework with little coordination in the assessment and delivery of environmental offsets across the State'. The Bill intends to 'coordinate Queensland's environmental offsets framework, giving effect to a whole of government approach and replacing the complexities surrounding the five existing policies'.

Background

In Queensland, offsets are currently administered through the following general and specific issue offset policies:

  1. Queensland Government Offsets Policy;
  2. Biodiversity Offsets Policy;
  3. Policy for Vegetation Management offsets;
  4. Offsets for Net Gain of Koala Habitat in Southeast Queensland Policy; and
  5. Marine Fish Habitat Offset Policy.

In addition, at the national level, the Federal Government can impose offset conditions under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) in accordance with its Environmental Offsets Policy (October 2012).

Offsets can be secured either by:

  1. land-based direct offsets secured by a legally binding mechanism such as protected area estates (for example, nature refuges) under the Nature Conservation Act 1992 (Qld) (NC Act);
  2. declarations under the Vegetation Management Act 1999 (Qld) (VMA); or
  3. covenants under the Land Act 1994 (Qld) or the Land Title Act 1994 (Qld).

An alternative to direct offsets is an offset payment, which allows a project proponent to meet its offset obligation at the time of approval. In Queensland, offset payments under the Queensland Biodiversity Offsets Policy have been required to be made to the Balance the Earth Trust for the purpose of purchasing land containing State-significant biodiversity values. Offset payments are not permitted in all circumstances. For example, offset payments are not permitted under the Biodiversity Offsets Policy where the impact area is a legally secured area under the VMA or contains extinct in the wild, endangered, vulnerable and special least concern animal wildlife.

The Queensland Department of Environment and Heritage Protection (EHP) requires offset payments to be calculated using its offset payments calculator, which takes into account land value, administration costs and management costs.

It is intended that the Bill will establish a common statutory framework upon which offset conditions will be imposed on development approvals that have been granted under other Acts (for example, an offset condition imposed on a development approval under the Sustainable Planning Act 2009 (Qld)). This will be achieved by, among other things, replacing the existing five separate environmental offset policies in Queensland with a single State environmental offset policy.

Key terms

It is important first to understand the key terms that underlie the Bill. The Bill states that an administering agency may (under another Act) impose an offset condition on an authority for a prescribed activity for a prescribed environmental matter that:

  1. requires an environmental offset to be undertaken; or
  2. otherwise relates to an environmental offset.

The Bill then goes on to set out a number of key terms upon which the new offsets framework is based. These include:

  1. a prescribed activity is an activity:
    1. the subject of an authority under another Act;
    2. for which an offset condition may be imposed under the other Act on the authority;
    3. that is prescribed under a regulation
  1. a prescribed environmental matter is any of the following matters prescribed under a regulation to be a prescribed environmental matter:
    1. a matter of national environmental significance - a matter of national environmental significance under the EPBC Act and the subject of an approval under the EPBC Act;
    2. a matter of State environmental significance - a matter of environmental significance that is dealt with under State law; or
    3. a matter of local environmental significance - that is a matter of environmental significance dealt with under a local planning scheme or planning scheme policy made by a local government.
  1. an environmental offset is an activity undertaken to counterbalance a significant residual impact of a prescribed activity on a prescribed environmental matter.
  2. a significant residual impact is an adverse impact, whether direct or indirect, of a prescribed activity on all or part of a prescribed environmental matter that:
    1. remains, or will or is likely to remain (whether temporarily or permanently) despite on-site mitigation measures for the prescribed activity; and
    2. is, or will or is likely to be, significant.

These key terms will be further defined in the supporting regulations which are yet to be publicly released.

Environmental Offsets Policy

The Bill provides for an environmental offsets policy to be prescribed under a regulation. As stated above, this regulation is yet to be released. As a result, a full appreciation of the operation of the proposed environmental offsets regime is not yet possible.

While the Bill allows for an environmental offsets policy to be prepared by the State Government or a local government, it will only become an offset policy under the Act (when passed) if the document is prescribed by regulation. According to the Explanatory Memorandum to the Bill, the rationale behind this is to ensure that the State is able to ensure consistency and to avoid the creation of multiple overlapping offset policies.

An environmental offsets policy may (but is not required to) do any or all of the following:

  1. set out the circumstances in which an environmental offset may or may not be required;
  2. set out the characteristics of an area that is suitable for undertaking an environmental offset;
  3. provide for the ongoing management and monitoring of, and reporting about, an environmental offset;
  4. provide for deciding the size and scale of an environmental offset so the offset is proportionate to the significant residual impacts on a prescribed environmental matter; or
  5. any other provision relating to the main purpose of the Act (when passed).

An environmental offsets policy has yet to be released.

Offset conditions

Where an administering agency has the power to impose an offset condition, it can only do so, if:

  1. the prescribed activity will, or is likely to have, a significant residual impact on the prescribed environmental matter; and
  2. all cost-effective on-site mitigation measures for the prescribed activity have been, or will be undertaken.

This proposed new threshold of 'significant residual impact' indicates a substantial lowering of the current standard of 'ecological equivalence' under existing Queensland biodiversity and vegetation offset arrangements. As a result, project proponents would no longer have to offset all residual impacts of a proposed development, but rather, only offset impacts that are likely to be 'significant'. It is likely that this will lead to a reduction in the number of environmental matters requiring offsets. The rationale behind this change is explained in the Explanatory Memorandum to the Bill, specifically, that industry stakeholders considered the process for measuring ecological equivalence as 'too expensive and time consuming'.

Another notable element of this proposed threshold is that offset conditions cannot be imposed to address impacts that may be cost-effectively avoided or minimised. In effect, this would allow project proponents to rely on an offset arrangement in the event that the assessment manager is persuaded that on-site mitigation of a significant impact would not be 'cost-effective'.

In order to prevent the duplication of offset conditions, the Bill provides that a State or local agency is precluded from imposing environmental offset conditions where the Commonwealth has imposed an environmental offset condition for the same environmental matter for substantially the same impact in substantially the same area (unless the condition relates to a protected area). Similarly, the Bill stipulates that a local government cannot impose an offset condition that duplicates an existing State offset condition for the same matter for substantially the same impact in substantially the same area.

Types of offsets

There are two types of offsets established under the Bill:

  1. a proponent driven offset, which is an environmental offset which is undertaken by the authority holder. The offset can be delivered either directly by the authority holder on its own land, or indirectly by someone else on behalf of the authority holder (for example, by contracting with a broker); and
  2. a financial settlement offset, which is a payment made by an authority holder to the relevant local government (in the offset relates to a matter of local environmental significance) or to the department administering the Bill (in all other circumstances). In deciding the amount required as a financial settlement offset, the administering agency must calculate the amount in accordance with a process to be prescribed by regulation. Once the financial settlement offset is paid, responsibility for the delivery of the offset then transfers to the relevant local government or department. The calculation process and methodology has yet to be made publicly available.

Offset delivery options

There will be a number of 'deemed conditions' established by the Bill that will apply when an offset condition is imposed on an authority under another Act. If an authority holder (or a person acting under an authority) contravenes a deemed condition, the Bill provides that that person may be dealt with under the Act under which the authority was granted as if the person had contravened an offset condition imposed under that Act.

The deemed conditions require an authority holder to do the following before starting a prescribed activity:

  1. elect (by a notice of election to the administering agency) whether it will satisfy the offset condition by either a proponent driven offset, a financial settlement offset or a combination of these options; and
  2. agree with the administering agency about the delivery of the offset condition.

If the authority holder elects a proponent driven offset, the notice of election must be accompanied by an offset delivery plan which details how the authority holder will undertake the offset and the conservation outcome will be achieved as well as a number of other requirements which are outlined in the Bill and that may be prescribed by regulation at a later date. In addition, the offset delivery plan must be signed by the authority holder and any entity that owns land on which the environmental offset will be undertaken. Once a delivery arrangement is agreed, the deemed conditions require that the authority holder comply with the agreed delivery arrangement, including the agreed offset delivery plan.

The Bill provides no guidance as to the timeframes for the administering agency to give the authority holder notice as to whether it agrees to the proposed delivery method, which may prove problematic in practice. The Explanatory Memorandum to the Bill explains that a regulation 'may provide for a dispute resolution process' in the event that an authority holder and the administering agency cannot reach agreement 'within a stated reasonable time'.

Legally secured offset areas

A legally secured offset area is defined under the Bill as an area of land or waters that is either an environmental offset protection area, an area of high nature conservation value under the VMA or another area prescribed under regulation. However, the area is only a legally secured offset area if the area is subject to a delivery or management plan or agreement (however described) to achieve a conservation outcome. In addition, an area is a legally secured offset area for the purposes of the Bill if, after an environmental offset condition is imposed or agreement entered into in relation to the area, the area is dedicated or declared by regulation as a national park, conservation park, resources reserve or nature refuge under the NC Act.

An environmental offset protection area is a new mechanism to be established by the Bill for legally securing an offset area. The chief executive may declare that an area is an offset protection area upon application by the relevant landowner. A single declaration can be made over several parcels of land (even parcels that are not adjacent) or comprise parcels owned by different persons. However, the chief executive cannot make the declaration unless it reasonably believes that each person that has an interest (for example, a mining interest) in the subject land has consented to the declaration. In order for the declaration to be made, an environmental offset agreement (which is binding on landowners, successors in title, and those with a registered interest in the land) must be entered into between the relevant chief executive or local government and the relevant entity in relation to the delivery of the environmental offset. The Bill provides the minimum requirements of an environmental offset agreement and allows a regulation to make further provision about these agreements in the future. Non-compliance with an environmental offset agreement may result in an offence being committed under the Bill.

A further deemed condition of the Bill prohibits an authority holder from carrying out prescribed activities in a legally secured offset area if the activity will delay, hamper, or stop the delivery of the conservation outcome under the relevant delivery or management plan or agreement.

Major projects exemption

The Bill does not limit or affect the function or powers of the Coordinator General under the State Development and Public Works Organisation Act 1995 or decisions and obligations of other agencies arising from those functions or powers.

The consequence of this is that the Bill and proposed offsets framework will not apply to coordinated projects (such as large infrastructure or resource projects) assessed by the Coordinator General. Accordingly, it is possible that these types of projects may be subject to less rigour in terms of offset obligations and conditions.

Relationship with the EPBC Act

The Bill is designed to provide for Commonwealth accreditation of the State Government environmental offsets assessment process. This would potentially enable the State to carry out assessment on behalf of both levels of government for matters of national environmental significance, removing duplication of environmental offset assessments.

However, this may prove difficult to achieve in practice given that the proposed new Queensland offsets regime is generally less rigorous than the current Federal position. For example, the Federal Environmental Offsets Policy under the EPBC Act requires project proponents to undertake almost exclusively 'direct' compensatory measures (i.e. those actions that provide a measurable conservation gain for an impacted protected matter), whereas the Bill does not require this.

Next steps

The Bill was referred to the Agriculture, Resources and Environment Committee for consideration on 13 February 2014.

The Committee is due to report to Parliament on the Bill on 28 April 2014 after taking into account public submissions. The closing date for public submissions is 24 March 2014.

It is expected that the single environmental offsets regime will come into force by mid-2014.

Conclusion

The Bill appears to be a significant step in the right direction in terms of affording greater efficiency, flexibility and clarity in Queensland's environmental offsets regime, which (along with a reduction in the threshold for requiring environmental offsets) would no doubt be of great benefit to project proponents. However, this position is ultimately dependant on further important documents which are yet to be released, such as the Environmental Offsets Policy and an accompanying regulation for the Bill.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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