Federal Government to audit compliance with environmental offsets conditions

The Federal Government has announced that it will conduct a full audit of compliance with environmental offsets conditions imposed under the Environment Protection and Biodiversity Conservation Act (EPBC Act).

The audit will scrutinise more than 1,000 offset sites that received approval under the EPBC Act within the past two decades. The primary objective is to ensure project proponents are fulfilling their obligations to offset environmental impacts caused by projects and that offsets are delivering their intended environmental benefits.

Snapshot

• Federal Minister for the Environment, Tanya Plibersek, has announced a comprehensive audit of more than 1,000 environmental offset sites. This audit aims to determine if project proponents have adhered to offset requirements and if the claimed environmental benefits have been realised.
• The Government has cautioned project proponents to ensure they are well-prepared and transparent about any issues prior to the commencement of reviews.
• Proponents may face penalties if their projects are found to contravene the conditions of their approval.

The audit aligns with the ongoing reforms to the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).

Professor Graeme Samuel’s 2020 review of the EPBC Act found, amongst other things, that the environmental offsets policy required immediate improvement to ensure that offsets deliver genuine protection and restoration in areas of highest priority and that outcomes should be able to be properly monitored and measured.

The review led to the Australian Government's announcement of the Nature Positive Plan, which outlines the policy position for proposed amendments to the EPBC Act, including in relation to offsets and nature repair.

This is also in the context of the Nature Repair Market Bill 2023 which was introduced to legislate some of the actions set out in the Nature Positive Plan with the aim of encouraging voluntary private sector investment to help restore Australia’s natural environment. In response to concerns raised about the utilisation of the Nature Repair Bill for environmental offsets, amendments were made to the Bill requiring biodiversity certificates to include a statement that the certificate cannot be used for an environmental offsetting purpose where that is the case. Further, environmental offsets are proposed to be dealt with through the development of National Environmental Standards that will be relevant to assessments under national environmental law.

Please find more information about the EPBC Act reforms in our previous note here: Federal Environmental Law Reforms Announced.

Enforcement under the EPBC Act

The EPBC Act provides the Department with the necessary powers and discretion to enforce compliance, deter non-compliant behaviour, and protect the environment. The EPBC Act provides for various enforcement tools, including prosecution and penalties, as well as compliance orders, suspension or revocation of approvals or enforceable undertakings.

Practical steps

Project proponents with offsets conditions in an EPBC Act approval should take several proactive steps to ensure compliance and be in a position to demonstrate satisfaction of environmental responsibilities. This will include:

• review of offset conditions and obligations to confirm the required action or outcome. In appropriate circumstances, consideration may be given to carrying out an internal audit of compliance;
• gathering and maintaining accurate and comprehensive documentation of offset activities;
• identifying any actual or potential non-compliance (including with approved offset management plans);
• addressing any issues of non-compliance or further information requirements;
• staying informed regarding any further updates, guidelines, or requirements.

Further reading

For further reading see the Minister’s media release here: Government launches environmental offsets crackdown

Thanks to Sienna McInnes Smith and Zoe Rodgers for drafting the blog.