The Act provides that certain actions (including projects, developments, undertakings or activities) which are likely to have a significant impact on a matter of national environmental significance, known as ‘controlled actions’, are subject to an assessment and approval process by the Environment Minister. The unlawful taking of an action that has a significant impact on a matter of national environmental significance may attract a civil or criminal penalty.

A person proposing to take an action that they think is, or may be, covered by the Act must refer the proposal to the Environment Minister. On the basis of the referral, the Environment Minister decides whether the proposal is a controlled action under the Act. If so, the Minister must choose how the impacts of the proposed action will be assessed. It is through the assessment and approval process that the Commonwealth performs its role in ensuring that Australia's obligations under international environmental treaties are met.

Currently, most proposed major projects must obtain separate approvals from both the Commonwealth Government and the relevant state or territory government. The Coalition and some industry groups, such as the Minerals Council of Australia and the Business Council of Australia, maintain that the duplicative assessment and approvals process is costly, resulting in unnecessary delays or deferral of economic activity, while not yielding any corresponding increase in environmental outcomes.

Bilateral agreements

One of the assessment options available to the Minister under section 87 of the Act is a bilateral agreement entered into with a state or territory. There are two types of bilateral agreements:

• assessment bilateral agreements provide for the accreditation of a state or territory process to assess the environmental impacts of a proposed action. However, after assessment at the state level, the approval decision is still made by the Commonwealth Minister under the Act and
• approval bilateral agreements go further by providing for the accreditation of a state or territory assessment and approval process in accordance with an agreed management plan or authorisation process under a state or territory law. Thus, a proposed action that is covered by an approval bilateral agreement does not require any further approval by the Commonwealth Minister under the Act.

With the exception of an approval bilateral agreement for the Sydney Opera House, thus far the Commonwealth has only negotiated assessment bilateral agreements. Where assessment bilateral agreements are in place, approval requirements are duplicated, but assessment requirements are not.

A push for more bilateral agreements

In 2012, the Labor Government signalled its preparedness to negotiate the transfer of environmental approval powers (that is, the level beyond assessment) to states and territories as part of its response to the Hawke review of the Act.

However, at the Council of Australian Governments meetings in April and December 2012, then Prime Minister Julia Gillard indicated more work was needed to progress such bilateral agreements. One reason cited by the Prime Minister was the need to ensure that high environmental standards would be consistently maintained across all jurisdictions. The Government had commenced negotiations on bilateral approval agreements and became concerned that states and territories may not be sufficiently committed to upholding the environmental standards it expected.

In 2012, the Australian Government also requested that the Productivity Commission (PC) benchmark Australia's major project development assessment processes against international best practice. In February 2013, the PC published an Issues Paper canvassing two potential reforms for consideration: reducing jurisdictional overlap through the use of ‘approval bilateral agreements’ and increasing the use of ‘strategic assessments’. A strategic assessment is a big-picture approach to environment and heritage protection that is able to consider a broader range of impacts on an area than those which look at the impacts of individual action. Thus, for example, they take into account the cumulative effect of proposed or potential area use.

In June 2013, the Coalition announced that, if elected, it would implement a one-stop-shop for environmental assessment and approvals that would set high standards, make swift decisions and deliver certain outcomes.

Several business groups have argued that approval bilateral agreements would result in significant time and cost savings and be a boon to economic activity. However, there is an argument that when measured as a proportion of project value, the majority of costs are incurred in the assessment stage, rather than in the actual approval process. As a result, the potential gains to business from a truncated approval process may be limited.

Environmental groups have expressed concern that these agreements would place undue power in the hands of state and territory governments, whose economic interest in a project may be greater than the Commonwealth’s interest in environmental compliance, as illustrated in the case of The Wilderness Society of WA (Inc) v Minister for Environment [2013] WASC 307. This Western Australian Supreme Court decision overturned a number of decisions relating to the environmental assessment for one of WA’s most controversial development proposals, the Browse LNG Precinct Proposal at James Price Point. Chief Justice Martin ruled that the decisions were unlawful, and therefore invalid, because a number of those participating in the decision-making did not declare their financial interest in the proposal.

Recently, Minister Hunt has clarified that the Commonwealth will not delegate decisions to states that have a ‘conflict of interest’.

Conservation groups and some scientists would prefer that the Commonwealth retain a close and vigilant regulatory role over matters of national environmental significance.