INSIGHT

A new era of environmental governance: national agencies and tougher penalties

By Bill McCredie, Emily Johnstone, Julieane Materu, Jarryd Roberts, Kim Borchard, Caitlin Tomaro
Climate Change Environment & Planning Environment, Social, Governance

Stage 2 of the Nature Positive reforms brings new agencies and a focus on enforcement 15 min read

Legislation has been tabled in Parliament to create Environment Protection Australia—an independent federal agency with expanded compliance and enforcement powers, and another new body, Environment Information Australia, to house national environmental data and manage environmental reporting.

­­­Following announcements in April about next steps in the Federal Government's 'Nature Positive' reforms, three Bills have been tabled in Parliament to implement Stage 2 of the three stages of amendments to the Environment Protection and Biodiversity Conservation Act 1999 (Cth).

In this Insight, we take a closer look at the creation of these two key agencies and the expansion of compliance and enforcement powers as part of the Government's environmental reform agenda.

Key takeaways

  • Significantly, the Bills package introduces a statutory definition of 'nature positive' for the first time in the EPBC Act review process. Nature positive means ‘an improvement in the diversity, abundance, resilience and integrity of ecosystems from a baseline’.
  • The legislation will create a new, independent federal 'EPA', Environment Protection Australia (EPA), and a new specialist agency to house national environmental data and reporting, Environmental Information Australia on 1 July 2025.
  • The EPA will have wide-reaching powers under multiple environmental laws, with enhanced enforcement powers (including Environment Protection Orders, expanded audits and higher penalties under the existing EPBC Act). These new powers are included in the Stage 2 reforms and will commence once the legislation receives royal assent, and are not tied to the establishment of the EPA. Project proponents and asset owners can expect a shift in compliance approach before the balance of the reforms are in force.
  • The new Environmental Information Australia will have a range of important functions, including responsibility for defining the 'baseline' for nature positive, management of state of the environment reporting, and housing environmental data.
  • No timeline has been confirmed for Stage 3 of the reforms while public consultation continues.

Overview

Three Bills have been tabled before Federal Parliament to progress the Nature Positive reforms:

 

Bill

What does it do?

1               

Nature Positive (Environment Protection Australia) Bill 2024 (EPA Bill)

Creates Environment Protection Australia—key regulator for federal environmental laws

2               

Nature Positive (Environment Law Amendments and Transitional Provisions) Bill 2024 (ELA Bill)

Introduces new compliance and enforcement tools, and supports the creation of the EPA and Head of Environment Information Australia

3               

Nature Positive (Environment Information Australia) Bill 2024 (EIA Bill)

Establishes Environment Information Australia, to manage environmental reporting and store and manage environmental data

Environment Protection Australia

The EPA Bill sets up the architecture for an independent environmental regulator, Environment Protection Australia. It is described as Australia's first 'national, independent environmental protection agency'. Under the Bill, the EPA is established as an independent federal entity, led by a CEO who will be appointed for a term of up to five years.

National environmental laws with EPA functions
  • Environment Protection and Biodiversity Conservation Act 1999
  • Environment Protection (Sea Dumping) Act 1981
  • Hazardous Waste (Regulation of Exports and Imports) Act 1989
  • Ozone Protection and Synthetic Greenhouse Gas Management Act 1989; Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Act 1995; and Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Act 1995
  • Product Emissions Standards Act 2017
  • Recycling and Waste Reduction Act 2020
  • Underwater Cultural Heritage Act 2018.
Key EPA functions
  • Issuing permits and licences
  • Undertaking compliance and enforcement activities
  • Activities delegated by the Minister, including assessments and decision-making about development proposals, including approval conditions.

A strong focus of the EPA Bill is securing the independence and transparency of the EPA. The EPA will be a separate statutory entity from the date it is established (rather than operating initially under the auspices of the Department as indicated in previous announcements). The EPA's CEO cannot be directed in the exercise of its responsibilities. While the Minister may provide the CEO with a non-binding Statement of Expectations and the CEO must respond with a Statement of Intent, the CEO is not otherwise required to comply with the Minister's wishes or directions. The CEO is also empowered to engage an advisory group of experts to assist the EPA in the performance of its functions and exercise of its powers, but again is not obligated to accept their recommendations.

These structures should afford the EPA with a broad discretion to exercise its powers and functions. The Minister will retain responsibility for setting government policy, rulemaking and, it is anticipated, the power to 'call in' approval decisions. These mechanisms are expected in Stage 3 of the reforms.

There are also measures proposed to ensure the EPA's operations are transparent. The Statements of Expectations prepared by the Minister, and Statements of Intent by the EPA, must be published online. The EPA is also required to establish and maintain a public register of decisions. The EPA will prepare annual reports and publish the results of independent five-yearly reviews into its activities.

Environmental law amendments and transitional provisions

The second Bill, the ELA Bill, builds on the EPA Bill. It contains various transitional provisions to assist in establishing the EPA and Head of Environment Information Australia, and also makes substantive amendments to the EPBC Act to strengthen the compliance and enforcement regime.

Powers conferred on CEO of the EPA

The ELA Bill confers regulatory powers and functions on the CEO of the EPA under the EPBC Act and other national environmental laws. Broadly, this includes the power to issue permits and other approvals, and to oversee compliance. The Minister and Secretary can delegate all or any of their powers to the CEO or EPA staff. The Director of National Parks is also given broad enforcement powers where the conduct relates to a federal reserve or conservation zone.

Strengthened compliance and enforcement powers

The ELA Bill amends the EPBC Act to include a range of new compliance and enforcement tools for the CEO of the EPA, including tougher penalties. The new tools include:

  • A new power to issue Environment Protection Orders, designed for use in urgent circumstances to prevent, rectify and mitigate conduct posing an imminent risk of serious environmental damage to a 'protected matter' or where serious damage has already occurred following a breach of the EPBC Act or with a condition of an environmental authority. An EPO can require an activity to stop or not commence, for the way in which activities are carried out to change, or for specified actions to be taken. The Bill creates significant penalties for non-compliance with an EPO (up to 1000 penalty units or $313,000), reflective of similar schemes in state and territory jurisdictions. There is no merits review for an EPO.
  • A new civil penalty formula (modelled on comparable regimes targeting financial crime) for the most serious civil provisions in the EPBC Act, including taking an action without approval or breach of an approval condition. Significantly, corporations will face maximum penalties of the greater of 50,000 penalty units ($15,650,000), three times the value of the benefit derived/detriment avoided, or 10% of their annual turnover (up to a maximum of 2.5 million penalty units) ($782,500,000)). Imposing substantially higher penalties on breach of an approval condition brings a significant additional compliance risk for business, and new approval conditions should be reviewed carefully for ambiguity in requirements.
  • Pecuniary penalties would also increase for the most serious criminal offences under Parts 3 and 9 of the EPBC Act. For example, the penalty for taking an action that has or is likely to have a significant impact on a listed threatened species will be punishable by imprisonment for a term of not more than seven years, a fine of not more than 1000 penalty units ($313,000) (increased from 420 penalty units or $131,460), or both.
Audit system

The existing audit regime in the EPBC Act will also be expanded. Currently, 'directed environment audits' (where the Minister must give prior notice) are limited to people holding an environmental authority (Part 9 approval). Under the new laws, the Minister could issue notices requiring audits by persons who are subject to an EPO, a conservation order, a remediation determination or a remediation order.

The ELA Bill also introduces 'compliance audits' for a range of activities purported to be undertaken under the EPBC Act without prior notice. Compliance audits are intended to give the Minister an additional, flexible tool for monitoring compliance with the legislation.

Existing penalties for auditors who do not comply with an audit notice or who conceal information relevant to an audit will be retained. To help build community confidence in the audit system, there will be a new requirement for the Minister to maintain a register of independent auditors who can assist with both directed and compliance audits.

'Stop the clock' changes: assessments

The ELA Bill also makes a targeted amendment to procedure for assessment of proposed actions under the EPBC Act by project proponents. Requests for information need to be accompanied with reasons for the request, and proponents will be given the opportunity to notify the Minister if they do not want requests for further information to 'stop the clock' on statutory decision timeframes in certain circumstances. This includes when the Minister is deciding:

  • whether a proposed action is a controlled action;
  • an assessment approach; and
  • whether or not to approve the taking of an action.

The change is described as giving proponents a greater understanding of why further information is being requested, and a greater say in statutory decision-making timeframes. There are otherwise no changes proposed to assessment and approval processes in the Bills package, with these changes expected in Stage 3.

Environment Information Australia

As hinted at in the second bill, the third bill introduces a new body called Environment Information Australia within the Department of Climate Change, Energy, the Environment and Water. The EIA Bill calls for consistent reporting of environmental data, reinforcing the Government's commitment to enhanced transparency.

A new Head of Environment Information Australia

The Nature Positive (Environment Information Australia) Bill 2024 (Cth) establishes the Head of Environment Information Australia (HEIA). The Bill will commence, and the HEIA will be established, on 1 July 2025. Despite being an employee in the DCCEEW, and overseeing a Division within it, the HEIA will hold an independent position.

Key functions of the HEIA:

Report on Australia's progress towards nature positive

The HEIA will report on whether, and to what extent, nature positive is being achieved in Australia.

For the first time, the Bill defines 'nature positive' as an improvement in the diversity, abundance, resilience and integrity of ecosystems from a baseline. The HEIA must determine a baseline for nature positive.

Progress toward nature positive may include improvements to one or more of the attributes of diversity, abundance, resilience and integrity, for an ecosystem, species or both.

While improvements in the attributes of species may be sufficient to achieve nature positive, they are not necessary. For example, the diversity, abundance, resilience and integrity of an ecosystem may in fact be improved by reducing the abundance of a particular species, such as a scenario in which over-grazing kangaroos threaten an ecosystem.

Establish and maintain environmental economic accounts

The HEIA will establish and maintain environmental economic accounts. Environmental economic accounts are statistical accounts that describe the condition of the environment and its relationship with the economy.

The HEIA will seek the assistance of the ABS in performing this function.

The HEIA must give the Minister a statement of at least one account per year. The Minister will table the statement in Parliament.

Maintain a public environment data portal

The HEIA will provide the Minister, the CEO of the new federal EPA and the public with access to high-quality information and data relating to the environment.

The Explanatory Memorandum to the Bill explains, 'Access to authoritative sources of high-quality environmental information underpins a Nature Positive Australia by informing policy, project, investment and regulatory decision-making'.1

This will include, for members of the public, access to a searchable, non-statutory, national public portal. The portal will contain information from a range of sources, including scientific bodies, academic institutions, stakeholders, environmental groups, the Government, and state and territory agencies.

Maintain a public register of national environmental information assets

The HEIA must maintain a register of national environmental information assets.

Data, information or a system that is maintained by a federal entity, a state or territory government body or any other person or body may be declared to be a national environmental information asset.

Report on Australia's State of the Environment every two years

Under current law, a State of the Environment Report must be prepared every five years.2 The 2021 report was authored by independent environmental scientists and experts.

Under the Bill, the HEIA must report on Australia's State of the Environment every two years. The report will draw on knowledge of scientists and Aboriginal and Torres Straight Islander peoples.

Within six months of publishing a report, the Minister must table a response in Parliament. The response will specify environmental targets and timeframes.

The next report will include information about progress towards meeting these national environmental goals. The report will also analyse trends relating to the state of the environment.

Information and confidentiality

While the Bill provides that the HEIA may request information, advice or documents from any person or body, there is no penalty for failing to comply with a request.

Entrusted persons can use or disclose relevant information in accordance with the Bill.

There are protections in the Bill against unauthorised use or disclosure of protected information. An example of a category of protected information is information that, should it be disclosed, could reasonably be expected to prejudice the protection of public safety or the environment.

Review mechanism

There will be an independent review of the operation of the new law every five years. The first review must be completed by 30 June 2030.

The Minister may prescribe rules to give effect to the new law. More detail about the implementation of the Bill will be available once these rules have been made.

What's next?

The release of these Bills marks a step forward in the Government's environmental reform agenda with the creation of these two key agencies and an expansion of compliance and enforcement powers. Proponents and asset owners can expect to see a shift in the attitude to compliance and enforcement matters sooner, with these aspects of the reforms set to commence once the ELA Bill receives royal assent. The balance of the reforms are scheduled to come into effect on 1 July 2025.

Public consultation is continuing as the Government prepares its Stage 3 reforms, focusing on streamlining development assessments and approvals, restoration and contributions, First Nations engagement, regional forest agreements, exemptions and the role of climate change. The full implications and scope of the Government's environmental reform agenda will become clearer once these Bills are published for comment, although no timeline has yet been confirmed.

We will continue to monitor progress and will provide further updates once more information is released.

Footnotes

  1. EM, page 2

  2. Section 516B, EPBC Act