Who’s the BOS?

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The NSW Biodiversity Offset Scheme (BOS) will now apply to federal development approvals in NSW

By Peter Burnett

Federal environment minister Sussan Ley has announced new arrangements with NSW covering the application of biodiversity offsets under federal environmental impact assessment (EIA) laws. Under these arrangements the NSW Biodiversity Offsets Scheme (BOS) will cover both federal and state requirements and the federal policy on offsets will no longer apply.

Sounds complicated and technical, should we care? Absolutely we should. EIA is the cornerstone of our approach to environmental protection in Australia; offsetting has gone from being rare to common over the last 20 years; and the manner in which state and federal governments coordinate their approach to assessing development is key to effective environmental regulation. Everyone with an interest in protecting the environment should care about this new proposal.

Is this an improvement? Do the feds just want to get out of EIA? With offsets becoming the de facto bottom line in EIA, who’s the BOS now?

It is complicated

EIA is complicated, but doubly so under Australia’s federal system, where federal and state governments have overlapping EIA laws. Governments have been trying for decades to reach agreement on reducing the resulting duplication, but with limited success.

When the Environment Protection and Biodiversity Conservation Act (EPBC Act) was passed in 1999, one of its big selling points was that it would put an end to EIA duplication through a mechanism known as bilateral agreements, or ‘bilaterals’ for short.

There are two kinds of bilateral. An ‘assessment bilateral’ accredits a state to undertake a single EIA process to inform two approval decisions, one by the Federal environment minister and one by the state.

The more powerful ‘approvals bilateral’ accredits a state to assess and approve developments, without any federal involvement, on the basis that the state system has been accredited as meeting all federal environmental standards under the EPBC Act. The feds tried to go there twice, once under Julia Gillard and once under Tony Abbott, but these ‘one stop shop’ initiatives failed both times.

So we are only talking about assessment bilaterals here.

One of the problems with assessment bilaterals is that they combine two assessments into one but leave two separate approval decisions to be made, applying two sets of policy, including on offsets.

So this latest decision, under which the Commonwealth will apply the NSW BOS instead of its own offsets policy looks like it should streamline decision-making.

And that’s how Minister Ley and her NSW counterparts are selling it, of course. But what about substantive standards on environmental offsets? Does the BOS deliver environmental outcomes as good as, or better than, the federal offsets policy?

How do the two offsets policies compare?

The NSW BOS has some real strengths, especially that it is a statutory scheme administered by a government-controlled trust. This enhances governance by providing consistency, continuity and transparency. It leaves the non-statutory federal policy, which lacks even the basic transparency of a public offsets register, in the shade.

Nevertheless, some environment groups opposed federal endorsement of the BOS. A key concern was that the BOS is aimed at biodiversity generally, rather than at the threatened species and communities protected under the EPBC Act. As a result, it does not have a requirement that offsets address impacts on a ‘like-for-like’ basis, for example to offset an impact on the Eastern Quoll with something that benefits the Eastern Quoll.

NSW addressed this concern by amending its Biodiversity Regulation to impose a like-for-like requirement, but only for impacts on matters protected by the EPBC Act.

Another key concern raised by environment groups is that the BOS typically delivers smaller offsets than the federal policy, especially for species or ecological communities that have a higher threat status (eg, a species listed as critically endangered). The main reason for this difference is that the federal policy, unlike the NSW BOS, uses a discount factor, related to the likelihood of extinction. This discount factor increases the offset quantum as the threat status increases.

Presumably NSW objected to introducing a similar discount factor for federally protected species and communities. So the Commonwealth accepted the NSW position, justifying this with the argument the level of threat ‘would still be considered’ by the Commonwealth ‘as part of the broader regulatory process’.

Despite these soothing words, I think it’s unlikely that the Commonwealth will impose an additional offset in such cases, which arise regularly, because this would undermine the (streamlining) purpose of endorsing the NSW policy in the first place. At best, this caveat provides an escape clause to be invoked in egregious or highly controversial cases.

Different policies in different states?

One effect of Commonwealth endorsing a NSW-specific offsets policy is that this is likely to lead to different outcomes in different states. This is clearly undesirable from an environmental point of view, as ecosystems and bioregions straddle borders. I imagine Minister Ley might agree in principle but defend the difference in outcomes on pragmatic grounds.

The application of different policies also made my lawyer’s antennae twitch. Not only does the the Constitution prohibit the Commonwealth discriminating between states in certain cases, but the EPBC Act itself contains sections that translate these constitutional prohibitions into specific bans.

For example, sections 55 and 56 of the EPBC Act prohibit the environment minister from discriminating between states and parts of states through bilateral agreements in certain circumstances. However, it turns out that neither the Constitutional prohibitions nor the sections of the EPBC Act apply in this specific case, for reasons too complicated to explain here.

So, as undesirable as it might be to have two different policies on the same thing, there is no law against it in this case.

Streamlining or watering down?

In the short term, whether this is a good initiative, a streamlining or a watering down in the interests of putting the states in the driving seat, is a mixed question.

Clearly it will reduce the regulatory impact of overlapping the EIA schemes. And the NSW BOS does have some significant strengths, which the Commonwealth would do well to imitate when it responds to the current review of the EPBC Act.

But it is a worry that the Commonwealth has adopted a policy specifying what is an acceptable biodiversity offset, but then decided that a lower offset is acceptable if the impact occurs in NSW.

In the longer term, however, the more important policy question is not whether an offset is acceptable under a policy, but whether it is sufficient.

This highlights a fundamental weakness of the EPBC Act itself, which is that the Act doesn’t specify any objective standard of environmental sustainability, but leaves it to the environment minister to decide what is ‘acceptable’. Something that is clearly acceptable to a minister may nevertheless fall far short of sufficient.

Hopefully the current review of the EPBC Act led by Professor Graeme Samuel will recommend an approach that sets clear benchmarks for what is sufficient to maintain biodiversity and ecological integrity, and then requires that those benchmarks be met.

Image by Terri Sharp from Pixabay

All the way with EIA

There’s still value in persisting with Environmental Impact Assessment

By Peter Burnett

For more than a decade I’ve been working and researching in the field of Environmental Impact Assessment (EIA). I keep telling myself to move on, that my priorities lie in overarching environmental policy frameworks and that EIA is just one decision-support tool (admittedly one that is very popular), best adapted for dealing with local issues. But I can’t stay away from EIA. Is there new life for this old tool?

Why can’t I stay away from EIA?

It’s partly a ‘boys-and-their-toys’ thing. I’m a lawyer by training and EIA has developed from a simple idea of gathering all the relevant environmental information for decision-making into a complex nested set of processes that can take up hundreds of legislative pages. It’s even more complicated in Australia’s federal system, which has EIA at national and state levels. I admire the sophistication of the EIA process as it has evolved and enjoy nutting out how this complicated system applies to any particular development project.

It’s partly an ‘in-the-club’ thing. Having been responsible for administering EIA under Australia’s national environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and having been accepted by peers as having some knowledge and expertise, I found myself reluctant to let this ‘club membership’ expire when I changed status from senior public servant to PhD candidate in 2013. So I found a way to make EIA one of my case studies in a thesis that was focused on high level policy relating to sustainability.

But the strongest reason was my belief in the potential of this tool. My instinct was that even though EIA didn’t seem to be achieving its original aspirations of leading to decisions that would protect the environment, not just in particular cases but across the board, it still had potential to play a major role in doing so.

But I wasn’t quite sure why it didn’t seem to work or how it might be improved, beyond the consensus view to make more use of strategic approaches to EIA. This would avoid the ‘salami slicing’ or ‘death of a thousand cuts’ involved in project-based EIA decisions such as the approval of individual mines or housing divisions.

Regulating discretion

One of my research findings concerned the way in which discretionary decision-making works in our legal system. EIA decisions need to be at least partly discretionary to allow decision-makers to tailor approval conditions to a multitude of cases and circumstances. Yet if that discretion is to be exercised consistently, it must also be constrained.

The problem here stems from the way the legal system has evolved to regulate discretion. First there are general principles of administrative law, which are directed to making sure that decision-makers takes fair decisions based on all the relevant information, at the same time preventing them from straying off the reservation by taking irrelevant factors into account or doing someone else’s bidding. These general rules are usually supplemented in EIA by statutory directions to consider specific environmental factors, such as the principles of Ecologically Sustainable Development (ESD).

But in either case the courts treat these as rules of due process. Short of the rare instances in which a substantive decision has no apparent rational basis (or in special cases such as the NSW Land and Environment Court) they won’t go into the merits of the decision. They regard merits as the province of governments or their appointed statutory expert decision-makers.

So they won’t tell a decision-maker what to decide. Fair enough. But Parliament can tell the decision-maker what to decide, although this is harder than it seems.

Take the EPBC Act. At first blush, it seems to be steering decision-makers towards a goal of ESD. But on closer examination the Act uses qualified language, saying it wants to ‘promote’ ESD. Then it takes a reductionist approach and breaks (an undefined) ESD into five ‘principles of ESD’ which the decision-maker must simply ‘consider’.

We’re back to due process. If he or she chooses, the decision-maker can pay lip service to these ‘considerations’ and then take any decision at all, short of irrationality.

Even if the Act used the clearest of language to define ESD and direct decision-makers to achieve that goal in all their decisions, this is probably not enforceable, because in such a broad context the courts would regard the question of whether any given decision achieved ESD (or other clearly defined policy goal) was one of merits or expertise, not law.

Can we fix it?

My research conclusion was that there were only two ways to ensure that individual EIA-based decisions deliver environmental policy goals in an enforceable way. Both involve translating the policy goal into limits of acceptable action at any given place and narrowing the scope for discretion, and the two approaches are related.

The first is environmental planning. In an ideal world of environmental plans, if you want to build a mine, the relevant plan will tell you whether this is possible on an unrestricted basis, or on conditions; for example that there were offsets available for certain vegetation losses.

The second, a combination of specific decision rules plus comprehensive environmental information (which often needs to be geospatial, thus bearing some resemblance to planning) will achieve a similar result. If you want to build a mine and there is a rule against clearing critical habitat, the answer depends in part on whether the mine site is listed as critical habitat. And a decision to approve a mine in an area of critical habitat would be challengeable in court, because this is not an instance of discretion but the breach of a rule.

There would still be a role for EIA and discretion under both these approaches, but its task would be more oriented to the detailed conditions under which the proposal should proceed. Of course, these approaches would be expensive and, in our federal system, particularly complex.

They also shift decision-making away from pluralism and trade-offs towards a more constrained application of rules. This is uncomfortable territory for politicians, but a necessary evil if we are to make EIA an instrument of our high-level policy goals.

Sticking with EIA

So I found a way to satisfy my urge to stay involved with EIA, by connecting it to policy and information. To highlight that connection, consider this poetic metaphor inspired by John Masefield’s poem, Sea Fever. We need to shift our attention from the ‘tall ship’ of EIA to the entire voyage of environmental decision-making, which requires both a clear sense of destination (policy) and fulsome environmental information, ‘a star to steer her by’.

EIA is an important tool but unless we have a clear sense of where we want it to take us and ensure the necessary information is available to guide its application, then this venerable tool will not be delivering the environmental outcomes it was established for.

Image by MonikaP from Pixabay

Making better sense of Australia’s Environmental Impact Assessment

Surely we can put an end to overlap and duplication

By Peter Burnett

Environmental Impact Assessment (EIA) is a cornerstone of our system for protecting environmental values in Australia. A long standing problem with the EIA process has been the need to do them to meet both state and federal requirements.

You wouldn’t think that eliminating duplication and overlap between federal and state EIA processes (without compromising environmental outcomes) would be that hard. And yet so it has proven to be.

To date, there have been four attempts to address this issue, on each occasion by creating a mechanism under which the Commonwealth could accredit state EIA processes. Success has been limited and, with an election coming on, some are returning to this rather muddy policy watering hole. The Minerals Council of Australia, a major industry stakeholder, has renewed its call for more progress in this area, while Labor on the other hand recently ruled accreditation out, though it remains in favour of efficient regulation.

Surely there’s a solution here? To appreciate how difficult the issue is, consider what has gone before.

A short history of the fight to end duplication

Prime Minister Hawke was the first to put this topic on the agenda. He raised it as part of his 1990 ‘New Federalism’ push. The overarching theme was efficiency, and removing duplication in EIA was one way to achieve it.

The main result was an accreditation mechanism in the Intergovernmental Agreement on the Environment (IGAE, 1992). Unfortunately, attempts by several states to gain accreditation came to nought. This can be put down in part to the fact that Hawke had been replaced as Prime Minister by Paul Keating, and Keating wasn’t a great fan of cooperative federalism.

Next up it was Robert Hill, Environment Minister in the first Howard Government. He went one step further than the IGAE and included provision for accreditation in Australia’s new national environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).

There were two types of statutory agreement, one for accreditation of environmental impact assessment processes (‘assessment bilaterals’) and another for accreditation of state final decisions on development proposals (‘approval bilaterals’). With an assessment bilateral, there is only one EIA but still two decision-makers, one federal and one state. Only an approvals bilateral gets it down to a single process and a single (state) decision-maker. Despite the availability of a statutory process, agreement proved difficult and although some assessment bilaterals were negotiated in the early 2000s, approvals bilaterals proved a bridge too far.

The Gillard government was the next to take on the challenge, this time under the title of a ‘Seamless National Economy’ program. However, Prime Minister Gillard pulled the plug on negotiations, on the basis that the result of accrediting different state systems would be to ‘create the regulatory equivalent of a Dalmatian dog’.

Finally, the Abbott Government pursued a ‘one-stop-shop’ initiative to accredit the states. It managed to negotiate assessment bilaterals with every state, a modest achievement, but the holy grail of approvals bilaterals fell by the wayside when the Government discovered that it needed some minor tweaks to the EPBC Act to make accreditation work smoothly. Environment groups were successful in persuading several cross-benchers about the risks of environmental standards slipping, and the Government allowed its amendment Bill to lapse with the 2016 election, without calling on a final vote.

Is it worth another try?

Why is doing this so hard?

The first problem is partly that environment is a shared federal and state responsibility. Even though land management is primarily a state responsibility, the feds were actually on the scene first, with the Whitlam Government passing Australia’s first EIA law in 1974. The feds have been there ever since and I can’t see them vacating the field in favour of the states.

Nor can I see a solution in amending the Constitution. The Hawke Government looked at this in 1989 but, in contrast to some non-environmental Constitutional proposals it had taken to referendum, abandoned the idea without taking it to the people. Giving all the power to one level of government seems to be going too far, yet this is cake that resists the cutting knife.

The second problem is that decisions to approve (or not) development proposals like mines are discretionary. While an approvals bilateral under the EPBC Act could protect against egregious decisions (eg a development likely to cause an extinction), it’s much harder to write an agreement that would stop a pro-development state minister from simply ‘going easy’ on a developer by imposing weak conditions. Standards might be maintained on paper, but accreditation might exacerbate the existing weakness of EIA, the so-called ‘death of a thousand cuts’, by making each of those cuts a little larger.

This leaves the option of going around the problem. If we can’t solve it by accreditation, what about a completely different approach? If there are two objectives, reducing duplication while protecting the environment to a high standard, I think there are only two approaches that can work.

Environmental planning

The first is environmental planning, which involves getting ahead of the game and working out, comprehensively, where development can and can’t occur and under what conditions. If environmental planning is done well, approving particular developments can become quite straightforward. Trouble is, it’s expensive and may also be politically unpalatable because it can bring on all your development disputes at once, as the planners start consulting society about various possibilities, some of which may otherwise never have arisen.

The second is a very detailed set of rules, for example a rule prohibiting development in areas of critical habitat for threatened species. A major problem with this approach is that you either have to identify sensitivities such as critical habitat in advance (which starts to look like environmental planning) or identify them during assessment, which could weigh individual assessments down with some expensive and time consuming extra work, thus failing the test of efficiency.

The solution? If there were an easy option, governments would have taken it long ago. My own view is that we have to bite the bullet and do environmental planning. It would cost, but if done well (which has to include doing the consultation well) I think the investment would pay long term dividends, both environmental and economic. Trouble is, modern governments are very focused on the short-term and tend to give short shrift to long term propositions. The solution is there, but don’t hold your breath.

[Image by Sumanley xulx from Pixabay]