Australia: Environment offset conditions for mining and petroleum activities

Resources and Energy
Last Updated: 16 March 2011
Article by Martin Klapper

The Environmental Protection and Other Acts Amendment Bill 2009 (the Bill) introduces environmental offset conditions to authorities for mining and petroleum activities. Resources companies applying for an environmental authority or development approval need to be aware that the administering authority could soon be able to impose an environmental offset condition as part of that approval.

The Bill is likely to be finalised by the Queensland Parliament in the next few weeks. Here, partner Martin Klapper and solicitor Damian Roe outline the main changes the Bill introduces, and explain the concept of 'environmental offset conditions'.

Background to the Environmental Protection and Other Actsmendment Bill 2009

The Bill amends the Environmental Protection Act 1994, the Fisheries Act 1994, the Nature Conservation Act 1992 and the Sustainable Planning Act 2009. It was introduced into the Queensland Parliament on 12 November 2009 but was not debated until 10 March 2011. Because it has been before the house for more than 16 months, it is likely that the Parliament will be anxious to finalise the Bill quickly.

Amendments to the Environmental Protection Act 1994

The Bill amends the Environmental Protection Act 1994 by introducing the concept of an environmental offset condition and allowing the administering authority to impose an environmental offset condition on an environmental authority for mining activities, an environmental authority for petroleum activities and an environmental authority for a mining lease. While the Queensland Government's Environmental Offsets Policy has been in existence since 1 July 2008, the Bill makes it clear beyond doubt that environmental offset conditions may be imposed.

Amendments to the Sustainable Planning Act 2009

The Bill also amends the Sustainable Planning Act 2009 to provide that a concurrence agency or the assessment manager may impose a condition related to an environmental offset on a development approval. An environmental offset condition is governed by the usual reasonableness and relevance tests, and may only be imposed if the concurrence agency or assessment manager is satisfied that the applicant has demonstrated that all cost effective, onsite measures to avoid and/or minimise any negative impact the development has on the naturalenvironment are being, or will be, carried out.

How environmental offset conditions work

An environmental offset condition is a condition that requires, or otherwise relates to, an environmental offset. Environmental offsets are works or activities undertaken to counter-balance the impacts of the relevant activity on the natural environment. An environmental offset condition will generally require a proponent to:

  • provide a financial contribution to an environmental offsets trust;
  • provide a guarantee and/or financial assurance; or
  • enter into an offsets agreement.

The offsets agreement will outline the actions the applicant must take to secure the offset. The applicant will be required to enter into the offsets agreement before the environmental approval is granted. Applicants may wish to take a proactive approach, and propose entering into an offsets agreement to address any negative impacts of the proposed development at the application stage.

An environmental offset condition may only be imposed if the administering authority, assessment manager or a concurrence agency is satisfied that the proponent has demonstrated that all cost effective on-site measures to avoid and/or minimise the negative impacts of the development are being, or will be, carried out.

Interestingly, the Bill allows an environmental offset condition to apply not only to the site of the development, but also to a site outside the boundaries of the proposed environmental authority or development approval.

The scope and size of the required offset will be determined by the amount and types of environmental values lost due to the development. The loss or damage may be measured using a 'metric', which is an objective measure of the particular environmental value.

If the offset takes the form of a financial contribution, the amount must cover the full costs of locating, securing and managing the relevant offset. This includes: search costs; transaction costs; any other administrative costs; market-based costs of purchase of an offset; market-based costs of agreements with third parties to supply an offset; costs of meeting management plan conditions; and costs of monitoring and reporting. A risk premium may also be added by the environmental offsets trust to cover risks to the trust's ability to secure an appropriate offset.

Existing approvals

The Bill will not affect existing environmental authorities. However, if an applicant seeks to amend an existing approval, an environmental offset condition may be imposed. Additionally, if the transfer of an environmental authority also requires an amendment of its conditions, an environmental offset condition may be imposed.

For more information on the Environmental Protection and Other Acts Amendment Bill 2009 or environmental offset conditions, please contact HopgoodGanim.

© HopgoodGanim Lawyers

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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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