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Focus: Key planning reforms for developers, miners and major projects in NSW

19 January 2017

In brief: The NSW Government has kicked off 2017 by releasing proposed reforms to the State's ageing planning legislation. Partner Bill McCredie (view CV), Planning Special Counsel Marcia Doheny (view CV) and Senior Associate Michael Zissis outline the key proposed reforms for developers and major project proponents, including miners.

 
 

How does it affect you?

  • The current flexibility to modify existing projects approved under the repealed Part 3A is proposed to come to an end. Proponents should strategically consider whether to apply for modifications under the current rules before the proposed reforms take effect or within a two month transitional period.
  • Developers will not be able to modify their approvals to 'regularise' unlawful works already constructed. This will limit options to respond to enforcement action about such works and may make planning due diligence more critical to property buyers and lenders.
  • Some of the proposed reforms should reduce the timeframes it takes to obtain planning approvals, while others will:
    • impose obligations to undertake more community consultation;
    • bolster the enforcement powers of authorities to take action about non-compliance; and
    • open new avenues for third parties to mount court challenges against approvals.
  • Submissions about the proposed reforms can be made until 31 March 2017 (the closing date was originally 10 March but has now been extended). This process provides proponents with the opportunity to:
    • highlight any practical and adverse implications of the reforms to project pipelines; and
    • in the context of the NSW Government's greater reform agenda, potentially influence which reforms will be proposed in the future (including what incentives could be offered in conjunction with the more onerous consultation requirements).

Background

Four years ago, the NSW Government proposed a complete overhaul of the Environmental Planning and Assessment Act 1979 (NSW) (the Act) which was not supported by the Parliament and ultimately not pursued.

In this political context, it is understandable that the reforms contained in the public consultation draft Environmental Planning and Assessment Amendment Bill 2017 (the Draft Consultation Bill) released last week propose to amend parts of the Act only, rather than replace the Act in its entirety.

The NSW Minister for Planning says the proposed reforms are designed to reduce delays in the development assessment process. The reforms may, nonetheless, result in more onerous processes for major projects, particularly existing projects approved under the repealed Part 3A of the Act.

Key reforms for major project proponents – including miners, utilities, heavy industry and developers

Stopping 'flexible' modifications under Part 3A

The Government wants to stop major project proponents using the existing flexible scope to modify approvals under the now repealed Part 3A. Miners have, for example, used the modification process to update operational conditions in approvals as future stages have become viable, rather than having to apply for new planning approvals.

The following is proposed under the reforms:

  • Applications to modify existing approvals granted under the repealed Part 3A can be made within a 'two month window' following the eventual passage of the legislation. Those applications will be determined under the wide modification power in Part 3A.
  • Applications to modify Part 3A approvals after the two-month period will generally be assessed as if the approval was for 'State significant development'1 and therefore subject to the 'substantially the same' test. Where the modified proposal is not substantially the same as the approved development, a new planning consent will be needed.
  • For modification applications already made, those applications will still be determined under the broader modification power in the repealed Part 3A provided an Environmental Impact Statement (EIS) is lodged within 12 months of the reforms taking effect.

Proponents should consider whether to initiate a modification application before or within the potential 'two-month window'. Seeking modifications to address inflexibility in current conditions or where conditions in planning consents conflict with those in other approvals (such as the project's Environmental Protection Licence (EPL)) may be worthwhile to minimise the impact of the reforms.

Current strategies for obtaining modifications and approvals for existing Part 3A projects will need to be updated once the proposed reforms take effect.

Additional community consultation requirements

Under the proposed reforms:

  • An EIS for State significant development will be required to demonstrate how community consultation has been undertaken. Expected consultation activities should be outlined in new guidelines about the EIS process set for release later this year.
  • Public authorities able to 'self-assess' their activities under Part 5 of the Act may also need to seek concurrence from or notify other NSW agencies about activities in infrastructure corridors.
More enforcement tools to address non-compliance

To support the Department of Planning & Environment's (the Department) increasing regulatory enforcement activities, the proposed reforms include a new power for the Secretary to accept enforceable undertakings from proponents to address non-compliance.

Enforceable undertakings could be used by the Department as an alternative to fines or prosecutions against proponents for significant non-compliances. Where an undertaking is given and then breached, the court will be able to make orders and issue fines.

The Minister will also gain a power to unilaterally impose new conditions on existing approvals to require monitoring or environmental audits.

Conditions requiring financial security and more offsets

It is proposed to amend the Act to allow conditions requiring financial securities to fund the decommissioning or rehabilitation of sites.

The Government says this reform responds to concerns about developments where the landholder is not the proponent, particularly wind farms and quarries where turbines are constructed and materials extracted by proponents under private landholder agreements.2

Further, and while not included in this package of reforms, the Government has signalled its intention to make a new policy to guide authorities on how to impose conditions requiring offsets for the general environmental impacts of proposed development, not just biodiversity impacts.3

Changes to the Planning Assessment Commission process

Under the proposed reforms, the Planning Assessment Commission (the Commission) will no longer have a role in reviewing development proposals. The Government estimates this change will provide potential time savings of between 70 and 160 days per proposal.4

Some groups have criticised that there is no proposed change to the current prohibition of third party merit appeals to decisions of the Commission following a public hearing.5 Third parties will, nonetheless, still be able to commence judicial review proceedings in relation to determinations of the Commission.

Public hearings held by the Commission will now occur at two stages - the first in the final weeks of the public exhibition period, prior to the close of public submissions; and the second, described as a 'more inquisitorial' hearing, will be held once the Department has prepared its draft assessment.

The Commission will be re-named the 'Independent Planning Commission' and Commissioners will be bolstered by the inclusion of the Mining and Petroleum Gateway Panel members.

Duplication and inconsistency of conditions in major project approvals

Compliance and environmental managers regularly wrestle with the parallel, and sometimes overlapping and inconsistent, conditions contained in the different approvals for major projects (for example, the conditions imposed on a mining project under the planning approval, EPL and mining lease).

To address this, the NSW Government is introducing the concept of a 'transferrable' condition – this is a specific condition in a development consent that will cease to have effect on the issue of another authorisation (such as an EPL) 'if the consent authority is satisfied that the matters regulated by those conditions will be adequately addressed by such an authorisation which it is issued'.

These potential reforms would be improved if the Act provided certainty about when a transferrable condition lapses (giving proponents comfort they no longer need to comply with it) and allowed modifications to resolve inconsistencies between planning conditions and conditions in subsequently issued approvals.

Key reforms for developers

Tighter rules for modifications and unapproved works

Under the proposed reforms, modifications to existing approvals will not be permitted to 'regularise' unlawful works already completed.

The court will also be empowered to 'invalidate' construction certificates that are inconsistent with relevant planning approvals. This proposed reform is 'to ensure that significant changes are not made to the development envisioned by the planning approval' via the subsequent building certification process.6

It is also proposed that decision-makers publicly notify the reasons for their decisions about development proposals, including explaining how the views of the community were taken into account and the importance of certain conditions. These notified reasons will be considered when assessing any future modification.

New community consultation obligations

The Act will include new powers to require certain consultation activities be undertaken before making a development or modification application. It is currently unclear what those activities will be, however the Department is currently considering options and potential incentives. Submissions about the proposed reforms will presumably inform what those incentives will be.

Under the proposed reforms:

  • Applications for development consent will generally require a minimum 14 days public exhibition period; and
  • Councils and other planning authorities will develop new 'Community Participation Plans' to outline how the community can make submissions. Authorities will be able to specify mandatory participation requirements in these plans.
More independent panels to make planning determinations

The proposed reforms purport to make local planning panels, already established in some council areas, a more regular feature of the planning system. The proposed amendments include:

  • establishing rules about the membership and functions of panels; and
  • new powers for the Minister to direct councils to:
    • establish a panel to determine particular development assessments, for example 'where it is needed to address sustained community concern about the timeliness or quality of a council's planning decisions, or about a conflict of interest';7 and
    • otherwise delegate more planning decisions to council staff, which should speed up assessment timeframes.8

With the potential of more proposals being determined at a local-level by panels, the Government may raise the thresholds for 'regionally significant development' which are determined by regional planning panels. Most notably, development with a capital investment value of more than $30 million will likely become 'regionally significant development' (up from the current threshold of $20 million).

Step-in powers

Under the proposed reforms, the Secretary will gain discretionary powers to 'step-in' on behalf of another NSW agency where:

  • an agency has not provided advice, concurrence or conditions of approval in time; or
  • two or more agencies involved in the assessment process have issued conflicting advice or conditions.

The Secretary will also gain a power to restart the assessment process where it has been 'paused' by an agency by requesting unnecessary information.

Expanding and enforcing the complying development pathway

Concerns have been raised about the potential expansion of 'complying development', which is able to be approved by certifiers via a shorter approval pathway with a complying development certificate (CDC).9 These concerns stem from recent announcements that medium-density housing types, like terraces and townhouses, will become 'complying development'.10

It is proposed that CDCs could include 'deferred commencement' conditions and conditions requiring the payment of special infrastructure contributions. This would support the wider use of the complying development pathway, such as greenfield developments on not yet subdivided lots.

The reforms also contemplate that particular types of complying development will only be able to be approved by council certifiers (and not private certifiers), which may negate some of the potential time savings of expanding the complying development pathway given the smaller pool of council certifiers.

The Government has also foreshadowed requiring certifiers to provide a copy of any proposed CDC for development in metropolitan areas to neighbours and the local council. Further, certifiers will be required to give a copy of the CDC as issued, including endorsed plans, to neighbours in the same way they currently provide copies to councils.

These changes are proposed in conjunction with changes to the Act to allow:

  • a council to issue temporary stop work orders to investigate whether work is being carried out in accordance with a CDC; and
  • the court to deem a CDC invalid if the development does not comply with relevant standards.

These changes may provide a new avenue for a council, neighbours or other third parties to challenge the validity of a CDC in the court.

Next steps and the greater reform journey

Submissions about the Draft Consultation Bill can be made until 31 March 2017 (recently extended from 10 March).

The NSW Government has indicated it wants to introduce the reforms to the Parliament for debate shortly thereafter.

The focus of the proposed reforms on more community consultation emphasises the need for proponents to prepare legally and technically 'complete' applications and EISs, and to respond to submissions raised during the assessment process, to reduce the risks of delays associated with post-decision appeals.

The supporting documents to the Draft Consultation Bill refer to the Department taking a greater leadership role in the system and 'working with councils and agencies to identify opportunities for improvement and [support]'.11 This will be key in our opinion. The establishment of the State Assessment and Referral Agency to better coordinate some planning processes in Queensland has been central to realising the benefits of reforms in that State in recent years.

The proposed reforms contained in the Draft Consultation Bill are understood to be the first stage of a larger legislative reform agenda (see, for example, our interview with the Minister). Future phases may contain aspects of the 2013 reforms not included in the proposed reforms, such as:

  • tracked code assessment for certain developments;
  • reducing the number of land use zones in the Standard Instrument to encourage more merit-based decisions on development proposals; and
  • an 'amber light' approach to the assessment of development applications requiring consent authorities to encourage modifications to proposals before deciding to refuse an application.

Separate to the Draft Consultation Bill, the Department currently has a number of related planning reforms on consultation. The closing dates for current consultations are listed below.

Planning reform items currently on consultationClosing date for submissions
New Coastal Management framework – including draft Coastal Management SEPP and maps 20 January
'Improving voluntary planning agreements' Policy (our Client Update is available here) 27 January
Draft Social Impact Assessment guidelines for State Significant mining, petroleum production and extractive industry development 3 March
Proposed reforms to Act (outlined in this article) 31 March
Draft District Plans for Sydney and proposed update to A Plan for Growing Sydney (Towards Our Greater Sydney 2056) released by Greater Sydney Commission 31 March

These consultation processes provide proponents with opportunities to highlight the practical (and, at times, adverse) implications of proposed reforms which may not be appreciated by the policy-makers.

Further, given the larger legislative reform agenda, submissions may also influence which reforms will be proposed in the future.

Footnotes
  1. Modification applications for existing transport, energy, water and telecommunications projects, as well as health, education and community services, initially approved under Part 3A of the Act will be determined as if 'State significant infrastructure' following the 'two-month window' under the proposed reforms.
  2. NSW Department of Planning & Environment, Planning Legislation Updates: Summary of proposals January 2017 (January 2017) p 28.
  3. ibid.
  4. ibid. p 38.
  5. See, for example, statements from the Lock the Gate Alliance quoted in Hannam, P. ''Very disappointing': Baird government mining approvals plan stirs unease', The Sydney Morning Herald (9 January 2017).
  6. NSW Department of Planning & Environment, Planning Legislation Updates, op cit. p 44.
  7. ibid. p 36.
  8. ibid. p 37.
  9. See, for example, Stuart, R. 'Sydney housing: Caution about reforms designed to speed up development, combat housing affordability', ABC News Online (9 January 2017).
  10. NSW Department of Planning & Environment, Explanation of Intended Effects: Proposed Medium Density Housing Code (28 October 2016).
  11. NSW Department of Planning & Environment, Planning Legislation Updates, op cit. pp 18-19.

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