Australia: Queensland's new environmental offsets framework: where does local government stand? Part 1

Last Updated: 16 June 2015
Article by Luke Grayson, Nadia Czachor and Ian Wright

In brief - New environmental offsets framework requires action from Queensland's local governments

The environmental offsets framework provided for in the Environmental Offsets Act 2014 (Act) and the Environmental Offsets Regulation 2014 (Regulation) requires action to be taken by a local government before it is able to impose offset conditions and manage environmental offsets. This article outlines the key aspects of the environmental offsets framework for local government, particularly in respect of impacts on koalas and koala habitat.

Legislation aims to counterbalance environmental impacts of development

On 28 May 2014, the Queensland Parliament passed the Act and the Regulation, the operative provisions of which commenced on 1 July 2014. The current reprints of the Act and the Regulation are each dated 19 December 2014.

The main purpose of the Act is stated to be "to counterbalance the significant residual impacts of particular activities on prescribed environmental matters through the use of environmental offsets (Act, section 3(1))."

The Act provides that the main purpose is achieved by (Act, section 3(2)):

  1. establishing a framework for environmental offsets;
  2. recognising the level of protection given to prescribed environmental matters under other legislation;
  3. providing for national, State and local matters of environmental significance to be prescribed environmental matters for the purpose of this Act; and
  4. coordinating the implementation of the framework in conjunction with other legislation.

Themes of this article

This article focuses on the ability of a local government to impose an offset condition on a development approval or infrastructure agreement under the Sustainable Planning Act 2009 (SPA), along with any pre-conditions to, and limitations on, that ability. In particular the article addresses the following questions:

  • What is an offset condition?
  • What is an environmental offset?
  • When can an offset condition be imposed by a local government?
  • How are environmental offsets provided?
  • What action is required from a local government?

What is an offset condition?

In general terms, an offset condition is a condition which:

  • may be imposed on an agreement, licence, permit or other authority; and
  • requires, or otherwise relates to, an environmental offset (Act, section 7(1) and schedule 2).

When considered in the context of a local government's power under the SPA, an offset condition includes a condition imposed by a local government on a development approval, or as part of an infrastructure agreement (Act, schedule 2), so long as the condition relates to an environmental offset.

The interpretation of "environmental offset" must therefore be considered to determine whether a condition is an offset condition.

What is an environmental offset?

In general terms, an environmental offset is an activity which is undertaken to counterbalance an adverse impact of a prescribed activity on a prescribed environmental matter that:

  • remains, or will or is likely to remain, despite on-site mitigation measures; and
  • is, or will or is likely to be, significant (Act, sections 7(2) and 8(1)).
  • For an offset condition to be valid, the following conditions must therefore be satisfied:
  • Prescribed activity - The activity for which the environmental offset the subject of the offset condition is required must be a prescribed activity.
  • Counterbalance for a prescribed environmental matter - The environmental offset must require activities to be undertaken to counterbalance an adverse impact on a prescribed environmental matter.
  • Remaining adverse impact - The adverse impact must remain, or be likely to remain, despite on-site mitigation measures.
  • Remaining adverse impact is significant - The remaining adverse impact must be, or be likely to be, significant.

Environmental offset condition: prescribed activity

A prescribed activity relevantly includes development the subject of a development approval for which an environmental offset may be required under a local planning instrument (Act, section 9; Regulation, section 4 and schedule 1 (item 7)). A number of other activities are also prescribed activities, however, these are not considered as part of this article.

Environmental offset condition: counterbalance for a prescribed environmental matter

Under the Act, a "prescribed environmental matter" is (Act, section 10(1)):

...any of the following matters prescribed under a regulation to be a prescribed environmental matter--
  1. a matter of national environmental significance;
  2. a matter of State environmental significance;
  3. a matter of local environmental significance.

The Regulation relevantly states the matters of national environmental significance along with the matters of State environmental significance (Regulation, section 5 and schedule 2). (Whilst these matters are not thoroughly addressed here, local governments should be aware of the content of these matters as they are of relevance to a local government for reasons discussed below.)

In addition to the prescribed matters of national and State environmental significance, the Regulation relevantly provides that a matter of local environmental significance is a prescribed environmental matter if (Regulation, section 5(4)):

  • an environmental offset is required under a local planning instrument for the matter; and
  • the matter is not the same, or substantially the same, as any of the following:
    • a matter of national environmental significance under section 5(1) of the Regulation;
    • a matter of State environmental significance under schedule 2 or section 5(3) of the Regulation.

It is unclear at this stage what degree of similarity is required for matters to be considered "substantially the same".

Environmental offset condition: remaining adverse impact

In order for a local government to impose an offset condition, the adverse impact for which the offset condition is imposed must remain, or be likely to remain, despite on-site mitigation matters.

If on-site mitigation will prevent the adverse impact from being likely to remain, an offset condition cannot be imposed in respect of that adverse impact.

If on-site mitigation will not prevent all adverse impacts from being likely to remain, an offset condition may be imposed in respect of the remaining adverse impact.

Environmental offset condition: remaining adverse impact is significant

In order for a local government to impose an offset condition, there must be a remaining adverse impact for which the offset condition is imposed which is, will or is likely to be, significant.

The Act does not provide any guidance as to what is considered significant in respect of matters of local environmental significance (Act, section 8; Regulation, schedule 2 (sections 7 and 12)). Although the Queensland government has produced the following guidelines, these specifically do not apply to the assessment of matters of local environmental significance:

If a local government decides to identify matters of local environmental significance in a local planning instrument, the local government may develop its own set of significant residual impact guidelines for the matters of local environmental significance, which should be made publicly available (Environmental Offsets Policy, section 1.1.2). By developing and making available local significant residual impact guidelines, the local government would provide more certainty for developers and greater efficiency in the assessment of development applications for local governments.

For a condition imposed for a non-juvenile koala habitat tree under the Koala SPRP, the DSDIP Significant Residual Impact Guideline refers to the decisional criteria contained in the Koala SPRP to determine whether an action is likely to have a significant residual impact (DSDIP 2014, section 3.5.1).

When can an offset condition be imposed by a local government?

A local government is subject to a number of restrictions on imposing an offset condition under the Act and Regulation which are outlined below.

Restrictions on imposing an offset condition: local significance

  • A local government may impose an offset condition only for one of the following two matters (Act, section 15(4)):
  • a matter of local environmental significance identified in a local planning instrument, which by definition excludes matters which are the same, or substantially the same, as a matter of national environmental significance or State environmental significance (Act, schedule 2; Regulation, section 5(4)(b));
  • a non-juvenile koala habitat tree located in an area shown as bushland habitat, high value rehabilitation habitat or medium value rehabilitation habitat on the "Map of Assessable Development Area Koala Habitat Values" under the South East Queensland Koala Conservation State Planning Regulation Provisions (Koala SPRP) (Regulation, section 37 and schedule 2, (section 6(3))).
  • Restrictions on imposing an offset condition: timing

  • Generally, a local government may only impose an offset condition on a development approval or as part of an infrastructure agreement where the application was lodged on or after 1 July 2014 (Act, section 95(1)), subject to the following exceptions:
  • Permissible change - Where an application is made after 1 July 2014 to amend a development approval (or infrastructure agreement) granted prior to 1 July 2014 and the amendment may or is likely to result in a significant residual impact on a prescribed environmental matter, the local government may impose an offset condition on the amended approval or agreement (Act, section 95(4)). This most relevantly includes an application for permissible change to a development approval where the approval was granted prior to the commencement of the Act on 1 July 2014.
  • Undecided applications - Where a development application was lodged but not dealt with before the commencement of the Act and the local government is considering whether to impose an offset condition on the development approval, the local government may, at the request of or with the agreement of the applicant, consider all or part of the environmental offsets policy under the Act instead of all or part of any other previously relevant policy (Act, section 95A).
  • It is unclear how this applies in the context of an infrastructure agreement which includes an offset condition which was not executed prior to 1 July 2014. However, it is likely that the infrastructure agreement must be considered against the Act, Regulation and Environmental Offsets Policy, rather than against the law in force at the time that the infrastructure agreement was initially being negotiated.

  • Decided applications - Where a development approval or infrastructure agreement which was lodged before the commencement of the Act has been granted subject to an offset condition imposed under another Act, the applicant may apply for an amendment of the approval or agreement to (Act, section 95B(1) and (2)):
    • allow the selection and delivery of an environmental offset in accordance with the environmental offsets policy;
    • allow a financial settlement offset determined in accordance with the environmental offsets policy; or
    • remove a requirement to provide an environmental offset for an environmental value that is not a prescribed environmental matter or an impact on a prescribed environmental matter that is not a significant residual impact.

    Where a local government receives an application of this type, the local government may (Act, section 95B(6) and (8)):

    • decide to make the amendment only if satisfied that the environmental values for which the environmental offset was required have not yet been impacted by the activity that is authorised by the approval or agreement; and
    • if the local government decides to make the amendment, make any other amendments the local government considers relate to the amendment and are necessary or desirable.

Restrictions on imposing an offset condition: Commonwealth

A local government cannot impose an offset condition if either of the following has been assessed under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) or the Great Barrier Reef Marine Park Act 1975 regardless of whether or not the assessment has resulted in the imposition of an offset condition (Act, section 15(1), (2) and (5)):

  • the same, or substantially the same, impact;
  • the same, or substantially the same, prescribed environmental matter.

Interestingly, if an impact has been assessed by the Commonwealth government, a strict interpretation of the legislation would prohibit a local government from imposing an offset condition on the same, or substantially the same, impact even where the impact is being assessed on a different matter by each government. It is unclear whether this was the intention of this restriction.

Restrictions on imposing an offset condition: removal of conditions

An applicant may apply for the removal of an offset condition imposed by a local government where the Commonwealth government or State government has imposed an offset condition which relates to the same, or substantially the same, impact and the same, or substantially the same, prescribed environmental matter (Act, section 25A(1) and (2)). However, the offset condition imposed by the local government will prevail over the condition imposed by the State government in the circumstances prescribed in the Regulation, most notably where a local government imposes an offset condition in respect of koala habitat or a non-juvenile koala habitat tree under the Koala SPRP (Act, section 25A(3); Regulation, section 36).

Imposing an offset condition for koalas

Of particular relevance to local governments (especially in South East Queensland) are conditions in respect of koalas, which have the following characteristics:

  • All levels of government - All levels of government may impose an offset condition in respect of either koalas or koala habitat.
  • Matter of national environmental significance - Koala (combined populations of Queensland, New South Wales and the Australian Capital Territory) is a listed vulnerable species under the EPBC Act and as such is a matter of national environmental significance under the Act (Regulation, section 5(1)(d)).
  • Matter of State environmental significance - Koala habitat is a matter of State environmental significance in any of the following circumstances (Regulation, schedule 2, (section 6)):
    • Non-juvenile koala habitat tree - A tree will be a matter of State environmental significance as a non-juvenile koala habitat tree if the tree is:
      • a koala habitat tree, being Angophora, Corymbia, Eucalyptus, Lophostemon or Melaleuca (this list is quite broad, including trees which are not typically considered koala food trees, as many of these trees are potentially utilised by koalas for shade rather than food);
      • non-juvenile, being more than 4m high or having a trunk with a circumference of more than 31.5cm at 1.3m above the ground; and
      • in an area shown as bushland habitat, high value rehabilitation habitat or medium value rehabilitation habitat on the Map of Assessable Development Area Koala Habitat Values under the Koala SPRP;
    • Habitat for vulnerable koala - Habitat will be a matter of State environmental significance if it is habitat for the koala (South East Queensland bioregion);
    • Habitat for special least concern koala - Habitat will be a matter of State environmental significance if it is habitat for the koala.
  • Local government powers - A local government may impose an offset condition in respect of koalas (Act, section 15(4); Regulation, section 37):
    • where the condition relates to a non-juvenile koala habitat tree that is a matter of State environmental significance; or
    • where a local planning instrument identifies an environmental matter in respect of the koala that is not, and is not substantially the same as, a matter of national environmental significance or State environmental significance. However, it is difficult to imagine circumstances in which this could arise.
  • Interplay between Commonwealth and local government conditions - It is unclear whether an offset condition imposed by the Commonwealth government in respect of a significant impact on the listed vulnerable koala overrides an offset condition imposed by a local government in respect of a significant impact on a number of non-juvenile koala habitat trees, on the basis that the conditions relate to substantially the same matter. This will be particularly controversial where the Commonwealth government purports to override a condition imposed by a local government by deciding not to impose a Commonwealth offset condition.

How is an environmental offset provided?

Once a local government imposes an offset condition on a development approval or as part of an infrastructure agreement under the SPA, a proponent may elect to deliver the environmental offset for the activity, or a stage of the activity, by one of the following methods (Act, sections 18 (1)-(2), 21 and 23):

  • Proponent-driven offset - This delivery method involves providing an environmental offset through an action that a proponent undertakes directly or indirectly.
  • Financial settlement offset - This delivery method involves making a payment by the proponent to the local government in relation to delivering an environmental offset, of an amount required by the local government.
  • Combination of a proponent-driven offset and financial settlement offset - This delivery method involves providing some combination of the two previous delivery methods.

Requirements for proponents when determining the delivery method

When electing the delivery method, the proponent must provide the notice of election in the approved form, which may be found on the Queensland government website (Act, section 18(2)).

  • Where the proposed delivery method involves a proponent-driven offset, the notice of election must be accompanied by an offset delivery plan about how the proponent will undertake the offset, which must satisfy each of the following (Act, section 18(3)-(5); Regulation, section 8):
  • Describe how an offset will be undertaken - Describe how an environmental offset will be undertaken and the conservation outcome will be achieved. A conservation outcome is achieved if the offset is selected, designed and managed to maintain the viability of the matter to which the offset relates (Act, section 11). This requirement is achieved by:
    • effectively accounting for and managing the risks of the environmental offset failing to achieve the conservation outcome,
    • ensuring the environmental offset provides benefits in relation to the relevant matter of local environmental significance or the non-juvenile koala habitat tree, in addition to any other benefit provided under a requirement of, or of an authority under, an Act,
    • having transparent governance arrangements that can be readily measured, monitored, audited and enforced, and
    • ensuring the environmental offset is of a size and scale proportionate to the significant residual impact on the matter of local environmental significance or the non-juvenile koala habitat tree.
  • Agreement of landowner - State that the proponent, and any other entity that owns land on which the environmental offset will be undertaken agree to the offset being undertaken and be signed by each of these entities.
  • Description of impacted matter - Describe the matter of local environmental significance or the non-juvenile koala habitat tree to which the offset condition relates.
  • Description of the land - State the following in respect of the land on which the environmental offset will be undertaken:
    • whether the offset condition will be delivered, wholly or partly, on this land (this requirement is uncertain in its operation and may be a drafting error in the Regulation);
    • particulars of, or a description sufficient to identify, this land;
    • details of any person with an interest in this land;
    • the existing land use of this land and any impact that land use may have on the delivery of the offset;
    • the measures the proponent will take to secure this land as a legally secured offset area, including why the measures are considered reasonable and practicable, the period during which the proponent will take the measures and why the period is considered reasonable for securing the land.

Local government requirements on receiving a notice and offset delivery plan

Once the local government receives a notice in the correct form and any required offset delivery plan, the local government must satisfy each of the following:

  • Consideration - Consider the notice and any offset delivery plan, including by considering (Act, section 19(1); Regulation, section 9):
    • each relevant environmental offsets policy, which is currently the Queensland Environmental Offsets Policy (version 1.1) (Environmental Offsets Policy), which is discussed below, but can also include any local government policy approved by the Minister and prescribed under the Regulation;
    • whether the offset delivery plan satisfies the requirements for an offset delivery plan (stated above);
    • whether an activity proposed in the offset delivery plan is restricted or prohibited or requires permission under any law, such as where the proposal would involve the proponent undertaking assessable development; and
    • the impact undertaking the environmental offset under the offset delivery plan will, or is likely to, have on other prescribed environmental matters on the land on which the environmental offset will be undertaken.
  • Decision - Decide whether it is appropriate to deliver the environmental offset in the way stated in the notice and any offset delivery plan, or whether the offset should be delivered in a different way (Act, section 19(2)).
  • There is no statutory authority for making an information request. However, it is reasonable for a local government to make a non-statutory and informal request for information where there is insufficient information in the notice for the local government to make a decision.

  • Notification - Give the proponent a notice which states (Act, section 19(3), (6) and (8); Regulation, part 7):
    • the way in which the environmental offset is required to be delivered;
    • the proponent is required to enter into an agreed delivery arrangement within a stated reasonable period of time;
    • that the proponent may apply for a review of the decision; and
    • how and when the proponent may apply for a review of the decision.

For further information, please contact:

Ian Wright Nadia Czachor
Local government
CBP Lawyers

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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