Draft NSW Biodiversity Offsets Policy for Major Projects

There is currently no standard method for the assessment of impacts of major projects on biodiversity. The draft NSW Biodiversity Offsets Policy for Major Projects (Offsets Policy) is seeking to introduce a standardised approach that provides guidance in assessing and offsetting the biodiversity impacts of major projects.

At this point in time, biodiversity impact assessments are undertaken on a case-by-case basis which can result in significantly different offset requirements for different projects.  The Offset Policy aims to minimise these discrepancies and provide an assessment procedure that is practical and reasonable.

The Offsets Policy will apply to major projects in NSW (projects that are declared State Significant Development or State Significant Infrastructure by the Minister for Planning and Infrastructure).

The policy principles

The policy is underpinned by seven key principles:

Principle 1 – Impacts must first be avoided and unavoidable impacts minimised through mitigation measures.

Proponents must avoid and minimise impacts before considering offsets.  A proponent will need to justify why impacts can’t be avoided or minimised.

If an impact can’t be avoided, a reasonable effort must be made to minimise the impact, and offsets used to compensate for the remaining impacts.

Any impacts that are more complicated and severe (e.g. extinction of a species) will require additional consideration by a consent authority before an offset can be used.

Principle 2 – Offset requirements should be based on reliable and transparent assessment of losses and gains

The Framework for Biodiversity Assessment will need to be applied on behalf of proponents in a transparent and repeatable method for assessment by ecological consultants who are accredited specialists under the existing NSW BioBanking Scheme.

Principle 3 – Offsets must be targeted to the biodiversity values being lost or to higher conservation priorities

Offsets will need to have a ‘relationship’ to the biodiversity values being lost:

• Vegetation - the policy no longer requires like-for like’ offsets.  The offsets can now include similar vegetation in the same locality if those vegetation types are more highly cleared than the vegetation that will be impacted by the development in question
• Threatened species - if a species is not critically endangered or listed under the Environment Protection and Biodiversity Conservation Act 1999, with approval, a species may be offset with a similar species in the locality that is under the same or greater level of threat, and
• Aquatic biodiversity - offsets can include similar aquatic habitat in the catchment that is more threatened than the aquatic habitat being impacted upon.

The Offset Policy will broaden the scope of entities that can fulfil offset requirements, and recognises that protecting and improving biodiversity of a similar value, but under a greater level of threat can also provide benefits to the state.

 

Principle 4 – Offsets must be additional to other legal requirements

Offset land can already be managed under legal requirement. The Offset Policy requires offsets to be in addition to other existing native vegetation management.

Public land can be used for offsets even if it has existing legal requirements for environmental management, however a 5% - 7.5% overall discount to the number of biodiversity credits will apply to that land.

Land that is used to create carbon credits which are not 'legal requirements' (i.e. voluntary carbon offsets) can also generate biodiversity credits under the scheme. This means that one offset site can potentially generate both biodiversity credits and carbon offsets.

Principle 5 – Offsets must be enduring, enforceable and auditable

As the impact on biodiversity is usually permanent, the mechanism used to manage an offset site must also be enduring.  As such management actions are required to be enforceable and auditable and comply with the following criteria:

• objective of ongoing management
• sufficient resources available
• plan of management in place
• mechanism can't be altered without an alternative arrangement, and
• the conservation of the offset must be in perpetuity and disclosed to future owners.

Currently, Biobanking agreements are the only mechanism in NSW that satisfy all of the above criteria.

Principle 6 – Supplementary measures can be used in lieu of offsets

Supplementary measures may be used in lieu of offsets if an appropriate offset site cannot be found, however reasonable attempts must be made before supplementary measures will be considered by a consent authority.

Supplementary measures will need to be commensurate with the cost of establishing an offset site.

Principle 7 – Possibility to discount offset if the proposal will provide significant social and economic benefits to NSW

In very limited circumstances, a consent authority will consider modification of offset requirements if it would otherwise prevent a project from proceeding.
 

How the policy will work

The policy principles will guide the Framework for Biodiversity Assessment.  The Framework for Biodiversity Assessment proposed by the Offsets Policy has two stages.

Stage 1 – Biodiversity assessment

Under the Offset Policy, a proponent is required to:

• avoid and minimise impacts on biodiversity
• assess the remaining impacts
• determine if the impacts require further consideration, and
• complete a biodiversity assessment report.

Stage 2 – Fulfil offset requirements

Subject to the outcome of the biodiversity assessment report, the proponent is required to prepare a Biodiversity Offset Strategy setting out one of the following ways to fulfil the offset requirements:

• offset a site secured by a biobanking agreement
• mine site rehabilitation
• contribution to supplementary measures, or
• contribution to a biobanking fund.

The proponent must then submit the biodiversity assessment of Offset Strategy as part of the project application for consideration by consent authority.
 

Biobanking agreements

The preferred offsetting method will be through a biobanking agreement, where an offset site is dedicated to protecting and improving biodiversity to counterbalance the losses of biodiversity on the development site. This is materially different to the current situation whereby proponents have a choice of what method they choose to secure land (eg conservation agreement, covenant etc).

The offset site can be owned by a proponent or, alternatively, the proponent can contribute monetary payments to a landowner to manage an area of biodiversity on their land. 

Improvements in biodiversity on an offset site will be calculated in ‘biodiversity credits’.  A biobanking agreement will identify the number and type of biodiversity credits that will be generated through the landowner’s management actions.  A proponent can then purchase biodiversity credits to compensate for the loss of biodiversity on their development site. 

Once the biodiversity credits have been purchased, they are ‘retired’, removing them from the market to prevent them from being traded in the future.

Voluntary conservation agreements (VCA) are currently the preferred offset mechanism for most major projects in NSW as they provide greater flexibility for the proponent. Also, one of the benefits of a VCA as opposed to a biobanking agreement is the exemption of this land the subject of a VCA from Council land rates.  The Local Government Act 1993 does not currently exempt land the subject of a biobanking agreement from land rates.
 

New flexible ways to achieve your offset requirements

The Offsets Policy has introduced new, more flexible ways (in addition to the biobanking agreements) in which proponents can achieve their offset requirements to ensure that the best and most credible offsets are provided:

• Mine site rehabilitation - Proponents will be able to count ecological rehabilitation of mine sites in calculating offsets, where there are 'good prospects of biodiversity being restored'.
• Broadening of the 'like-for-like' biodiversity requirement - this recognises that the exact same biodiversity may not always be available for an offset.  If like-for-like is not available, offsets that are a 'higher conservation priority' may be targeted, provided they have a relationship to the biodiversity being lost.
• Supplementary measures - If all reasonable measures have been made to locate an offset site, but one is not able to be found, a proponent is able to provide funds for supplementary measures such as:
• threatened species recovery programs
• threat abatement programs, or
• contribution to biodiversity research and survey programs.
  The contribution will be calculated based on what the cost of an offset site would have been for that project.

 

Possibility of a discount on your offsets?

The Offsets Policy will allow a consent authority to reduce offset requirements in certain limited circumstances, where ‘significant social and economic benefits accrue to NSW as a consequence of the proposal’, and the project’s offset requirements may make the project unviable. 

The potential to reduce offset requirements has been introduced under the Offset Policy in recognition that under the Environmental Planning and Assessment Act 1979 a consent authority is required to consider the social and economic aspects of a proposal.
 

Biodiversity offsets fund

The NSW Biodiversity Offsets Fund for Major Projects (Offsets Fund) complements the Offset Policy’s supplementary option by enabling proponents to contribute a monetary amount to satisfy their offset requirements. The fund will then purchase offsets on behalf of the proponent.  The establishment of the Offsets Fund will:

• give proponents increased certainty - proponents will be able to understand upfront how much money they will need to contribute to fulfil their offset requirements
• enable a more strategic and coordinated purchase of offsets located in strategically important biodiversity areas in NSW such as land adjacent to wetlands and rivers, and
• facilitate landowners to establish offset sites on their land that could result in an additional income stream. 

 

Transitional provisions

The transitional period is likely to commence during the second half of 2014.  It is intended that after approximately 18 months, the policy will be implemented through legislation. It is not clear from the draft Policy how the Policy (once finalised) will apply to current development applications where Director-General’s requirements have been issued but the development assessment process is not yet complete.

The Offset Policy will not apply to existing offset sites secured under other long-term mechanisms.
 

Find out more at our free seminar

Partner Samantha Daly and Director of Umwelt environmental consultants Barbara Crossley will lead a panel of experts:

• Environmental law expert Patrick Holland from McCullough Robertson’s Sydney office
• Travis Peake, Manager Ecology/Associate, Umwelt – expert in biodiversity assessment and offsets, and
• Andrew McIntyre, Regional Manager, Hunter Central Coast at the NSW Office of Environment and Heritage

in a free seminar in the Hunter Valley focusing on what you need to know about the NSW Biodoversity Offsets Policy.

Date: Friday 2 May 2014

Venue: Singleton Diggers Club, York Street, Singleton  NSW  2330

Time: 7.15am for 7.30am - 9.00am (light breakfast included)

RSVP: Monday 28 April 2014

Enquiries: Donna White on 1300 MCR 888 (1300 627 888)

Click here to register.

Samantha Daly, Patrick Holland, Kate Swain

High Court rules mining leases do not necessarily extinguish native title

On 12 March 2014 the High Court handed down a unanimous decision in Western Australia v Brown [2014] HCA 8 that mining leases granted pre-1975 do not extinguish native title if the lease does not grant exclusive possession.  The High Court confirmed that mining rights and native title rights can co-exist and, importantly, clarified when native title rights will be extinguished by statutory rights at common law.

Background

The State of Western Australia (WA) entered into an agreement in 1964 with joint venturers to grant two mineral leases to develop iron ore deposits at Mount Goldsworthy (State Agreement).  The State Agreement was made pursuant to section 4(1) Iron Ore (Mount Goldsworthy) Agreement Act 1964 (WA).   Two mineral leases were granted to the joint venturers on 17 February 1966. 

In accordance with the mining leases and the State Agreement, the mining and township infrastructure was built over one-third of the mineral lease area.  The mine was closed in December 1982.  The town was closed 10 years later.

The parties agreed that, subject to extinguishment, the Ngarla People held non-exclusive native title rights over the land (subject to the mineral leases) to access and camp on the land, to take flora, fauna, fish, water and other traditional resources (excluding minerals) from the land, to engage in ritual and ceremony on the land and to care for, maintain and protect from physical harm particular sites and areas of significance.

The State Agreement stipulated that the joint venturers would allow the State and third parties to have access over the mineral lease area provided that such access over shall not unduly prejudice or interfere with the operations.

The questions before the High Court were whether native title had been extinguished as a result of:

• the mineral leases conferring exclusive possession over the land
• the rights under the mineral leases being inconsistent with the native title rights and interests, or
• the joint venture parties exercising their rights to develop and construct mines, a town and associated infrastructure.

The Judgment and the effect of this decision

This High Court decision is relevant for statutory grants made pre-1975.  Leases granted after 1975 are dealt with in accordance with the Racial Discrimination Act 1975 (Cth) and the Native Title Act 1993 (Cth).  Leases granted before 1975 must refer to the common law to determine whether native title has been extinguished.  By addressing the three questions before the Court, this judgment has clarified the test for extinguishment.

Addressing the first of the three questions, the High Court determined that the rights provided under the mineral leases at the time of grant did not give the joint venturers exclusive possession of the land.   On the contrary, the State Agreement provided that both the State and third parties were entitled to access over the land the subject of the leases.  Neither the mineral leases nor the State Agreement expressly provided that the joint venturers were entitled to both possess the land and have the right to exclude any and everyone from the land for any reason or no reason at all. 

With respect to the second question, the High Court ruled that rights granted under the mineral leases were not inconsistent with native title rights.  The court considered whether the existence of the rights granted to the joint venturers necessarily implied that the claimed native title rights and interests could no longer exist.  

The mineral leases did not give the joint venturers a right of exclusive possession.  In this respect, the mineral leases were no different from the pastoral leases considered in Wik Peoples v The State of Queensland (Wik) the mining leases considered in Western Australia v Ward (Ward) or the Argyle mining lease also considered in Ward.  The joint venturers were given limited rights to carry out mining and associated works anywhere on the land without interference by others.  Those rights were not, and are not, inconsistent with the coexistence of the claimed native title rights and interests over the land.

The High Court reasoned that at the time of grant of the mineral leases the native title holders could have exercised all of the rights that are now still claimed on the land without breach of the rights granted to the joint venturers.  Accordingly, there was not then, and is not now, any inconsistency between the rights granted to the joint venturers and the native title rights and interests claimed.

With respect to the third and final question, the High Court overturned the decision of De Rose v South Australia [No 2] (2005) 145 FCR 290 (De Rose).  In the case of De Rose it was held that exercising the right to construct improvements on a pastoral lease was inconsistent with the native title rights and interests claimed.  The construction and improvements on the pastoral lease extinguished native title upon the improved land.  The High Court held that the case of De Rose should not be followed. 

The High Court clarified that although the joint venturers did not have exclusive possession of the land (for reasons discussed above), if the joint venturers were undertaking activities, such as building a house, that was inconsistent with the native title rights and interests, the mining lease rights took priority over the exercise of native title rights.  However, the construction of a house (or any other improvement) will not extinguish the native title rights and once the joint venturers cease to exercise their rights under the mining lease, the native title holders can continue to exercise their rights over the area. 

The extinguishment test

The High Court decision clarified that neither the grant of a mining lease itself nor the construction of improvements (including building houses and towns) on the lease extinguished native title rights.  The holder of the mining lease will need to consider the rights of the mining lease at the time it was granted to determine whether the rights granted extinguish any alleged native title rights and interests (and if so, to what extent).  The court has referred to this as an ‘objective inquiry involving the comparison of rights’.  A determination must be made at the time of grant as to what extent the mining lease rights are inconsistent with native title.  To the extent there is no inconsistency with the rights under the mining lease, the non-exclusive rights can co-exist.

What does this mean for mining companies and pastoralists?

The High Court did not distinguish the mineral leases discussed in this case from the pastoral leases considered in Wik and the mining leases and the Argyle mining lease considered in Ward.  Accordingly, this decision shares practical implications for both mining lease holders and pastoral lease holders. 

This decision has no ramifications for mining or pastoral leases where exclusive possession rights have been granted.  The leaseholder will have exclusive possession where the whole of the land the subject of the mineral lease grant or pastoral lease must be used in a way which would not permit any use of the land by native title holders. 

Importantly, where a mining or pastoral lease does not grant exclusive possession, the leaseholder cannot rely on exercising their rights under the lease as a means of extinguishing native title.  The leaseholders must consider the legal nature and content of the two sets of rights to determine whether they are inconsistent at the time of grant.  There cannot be degrees of inconsistency of rights.  The two sets of rights are either inconsistent or they are not.  To the extent of inconsistency, native title will be extinguished. 

Lyndal Hanrahan, Dominic McGann