Legal Practice Briefing
10 November 1995
AMENDMENTS TO ADMINISTRATIVE PROCEDURES APPROVED UNDER THE EPIP ACT
On 5 May 1995, amendments to the Administrative Procedures approved under the Environment Protection (Impact of Proposals) Act 1974 ('the EPIP Act') came into force. These amendments represent the Commonwealth's response to the decision of the Federal Court in Tasmanian Conservation Trust Inc v The Minister for Resources and Anor (1995) 127 ALR 580 ('Gunns case'). In the light of these amendments, the Minister has discontinued his appeal against the decision in Gunns case.
This briefing provides a short summary of the decision in Gunns case. The decision was discussed in more detail in Legal Practice Briefing No. 16 which was published on 23 February 1995. However, it is critically important to note that as a result of the amendments to the Administrative Procedures many of the issues discussed in Legal Practice Briefing No. 16 are no longer relevant to the operation of the EPIP Act. Accordingly, Legal Practice Briefing No. 16 must be read subject to this briefing.
This briefing provides a detailed analysis of the amendments to the Administrative Procedures and summarises the operation of the EPIP Act in light of these amendments.
It is not possible to identify in this briefing all of the relevant issues or to set out procedures that will ensure compliance with the EPIP Act in all cases. As there are serious consequences for the Commonwealth and private parties if Commonwealth actions and decisions are vulnerable to challenge, officers should seek further legal advice in relation to any specific issues that arise.
The object of the EPIP Act is to ensure, to the greatest extent practicable, that matters affecting the environment to a significant extent are fully examined and are taken into account in relation to Commonwealth actions and decisions: subsection 5(1). It is the Administrative Procedures approved under the EPIP Act which detail the environmental assessment process applying to Commonwealth actions and decisions.
In Gunns case, the Federal Court set aside a decision of the Minister for Resources to grant a licence to export woodchips because the Minister failed to comply with the requirements of the Administrative Procedures approved under the EPIP Act.
At the time the Minister for Resources granted the licence, paragraph 1.2.1 of the Administrative Procedures required that, as soon as possible after 'any initiative' had been taken in relation to a 'proposed action', the Minister responsible for the action, or a person on behalf of that Minister, was to inform the Department of the Environment, Sport and Territories ('DEST') (in practice, the Environment Protection Agency ('the EPA') in DEST) of the proposed action and designate a proponent. A 'proposed action' was, essentially, an action that was likely to affect the environment to a significant extent.
Accordingly, prior to the amendments, the Administrative Procedures required Commonwealth decision-makers to address two issues before making a decision or taking action:
- whether the relevant action would be likely to have a significant effect on the environment; and
- whether an 'initiative' would be taken in relation to the proposed action.
In Gunns case, the Minister for Resources decided not to refer the proposed grant of the woodchip licence to the EPA and not to designate a proponent. Sackville J held that the Minister made an error of law in determining that there was no occasion to designate a proponent. The error arose because, the Court held, the Minister applied the wrong test. He did not consider whether the proposed action affected or would affect the environment to a significant extent. Rather, he addressed the question whether the environmental impact of the proposed action was substantially different from that of proposals previously assessed. Accordingly, the Minister for Resources failed to comply with the EPIP Act because he failed to consider whether the woodchip operations were likely to affect the environment to a significant extent.
It was submitted on behalf of the Minister that it was not necessary to consider whether there was likely to be a significant effect on the environment because no 'initiative' had been taken. It was argued that the grant of the woodchip licence in 1994 was not an 'initiative' because it was simply repetitive of earlier actions contemplated in an environmental impact assessment conducted in 1985. However, Sackville J rejected this argument. Sackville J concluded that the consideration by the Minister of the application for an export licence in 1994 constituted an initiative.
Implications of Gunns Case
Gunns case confirmed that, before taking action or making a decision, Commonwealth decision-makers were required to specifically consider whether a contemplated action was likely to have a significant effect on the environment. A decision might be set aside if there was a failure to specifically address this issue or, if the action was environmentally significant, there was a failure to refer the matter to the EPA and observe the relevant assessment procedures. Although this aspect of the decision graphically highlights the potential significance of the EPIP Act, it is consistent with the previous understanding of the Act and is relatively uncontroversial.
However, Gunns case had major implications for ongoing Commonwealth decisions and actions in relation to projects for which a proponent had been previously designated under the EPIP Act for example, Commonwealth export approvals in relation to a mine operating within the scope of an earlier assessment. Gunns case demonstrated that, even if a project had previously been assessed under the EPIP Act, it was still necessary to designate a proponent in respect of each Commonwealth action proposed to be taken in relation to that project unless the Commonwealth action did not constitute an 'initiative'.
The concept of an 'initiative' thus became critically important. However, Sackville J gave only limited guidance on what constituted an 'initiative', although he suggested the concept would be construed widely. On this basis, there was significant uncertainty as to whether, in relation to a project that had been previously assessed under the EPIP Act, it was necessary to continue to designate a proponent each time the Commonwealth took action. For example, Gunns case suggested it was likely that, at least in some cases, a proponent would need to be designated before the Commonwealth granted an export approval in relation to a mining operation, even when the mine was generally operating within the scope of a previous assessment. This aspect of the decision created significant uncertainty about the operation of the EPIP Act and, to an extent, represented a departure from the previous understanding of the Act's operation.
The decision in Gunns case also identified another area of uncertainty. The Administrative Procedures required Commonwealth decision-makers to examine the environmental significance of a 'proposed action'. However, on the basis of the reasoning in Gunns case, it was unclear whether the 'proposed action' was the Commonwealth action (for example, the grant of an export approval) or the relevant private operations (for example, the mining operations).
As a result of the uncertainty identified in the decision in Gunns case, it was decided to amend the Administrative Procedures. These amendments came into effect on 5May 1995. A motion to disallow the amendments was defeated in the Senate on 27 June 1995. As indicated above, in the light of the amendments, the Minister has discontinued his appeal against the decision in Gunns case.
The Operation of the EPIP Act - the Amended Administrative Prodedures
The two most significant features of the amendments to the Administrative Procedures are:
- the deletion of the concept of an 'initiative' and its effective replacement by an exception for Commonwealth actions which are covered by an existing and adequate assessment: and
- the insertion of a definition of an 'environmentally significant action'.
The following paragraphs summarise the application of the EPIP Act to Commonwealth actions and decisions in light of the amendments to the Administrative Procedures. It is noted that there may be some Commonwealth legislation that does not allow environmental factors to be considered in relation to particular decisions. The EPIP Act will not apply to such decisions. Further advice should be sought if this issue arises.
Step 1: Is there a Commonwealth action?
The Administrative Procedures apply to every action that is a 'Commonwealth action'. A 'Commonwealth action' is essentially defined to include an action of a kind referred to in any of paragraphs 5(1)(a) to (e) of the EPIP Act that is proposed to be taken by, or on behalf of, the Commonwealth or an authority of Australia, either alone or in association with any other government, authority, body or person. The actions referred to in paragraphs 5(1)(a)(e) are as follows:
(a) the formulation of proposals;
(b) the carrying out of works and other projects;
(c) the negotiation, operation and enforcement of agreements and arrangements (including agreements and arrangements with, and with authorities of, the States);
(d) the making of, or the participation in the making of, decisions and recommendations; and
(e) the incurring of expenditure.
The definition of 'Commonwealth action' will include action of a kind identified above which arises in relation to direct financial assistance granted, or proposed to be granted, to the States: subsection 5(2) of the EPIP Act.
It is clear that a wide range of actions will attract the operation of the Administrative Procedures including the granting of export approvals, the funding of projects, the conduct of defence activities and decisions on the operation of airports.
Step 2: Is the proposed Commonwealth action an 'environmentally significant action' or is it, for other reasons, desirable to designate a proponent in order to achieve the object of the EPIP Act?
Before the Commonwealth action is taken, the Minister responsible for the action ('the action Minister'), or a person acting on the Minister's behalf, is required to consider whether the action that is proposed to be taken is an action for which a proponent should be designated. A similar obligation is imposed upon Commonwealth authorities. (In this briefing, a reference to the action Minister includes a reference to a person acting on behalf of the action Minister or, where appropriate, the Commonwealth authority responsible for the action.)
The Administrative Procedures require a proponent to be designated in relation to a Commonwealth action if the action Minister is satisfied that:
- the action is an environmentally significant action; or
- for other reasons, it is desirable to designate a proponent in order to achieve the object of the EPIP Act.
In effect, before a Commonwealth action is taken, the action Minister is required to consider whether the action is an 'environmentally significant action' or whether it is, for other reasons, desirable to designate a proponent in order to achieve the object of the EPIP Act.Is the action an environmentally significant action?
An 'environmentally significant action' is defined as follows:
' "environmentally significant action" means a Commonwealth action that will, or is likely to:
(a) affect the environment to a significant extent, or to result in such an effect; or
(b) have the effect of permitting or causing an action by another person that:
(i) would otherwise be unlikely to occur; and
(ii) will, or is likely to, affect the environment to a significant extent, or to result in such an effect; or
(c) have the effect of promoting or facilitating an action by another person that will, or is likely to, affect the environment to a significant extent, or to result in such an effect.'
In very general terms, the action Minister must consider whether a Commonwealth action or any action permitted, caused, promoted or facilitated by that Commonwealth action is likely to have a significant effect on the environment.
For example, it is clear that a Commonwealth decision to grant a licence will be an environmentally significant action if the activities to be carried out under that licence are likely to have a significant effect on the environment. Accordingly, in deciding whether the grant of an approval to export coal is an environmentally significant action it is necessary to consider the environmental effects of the coal mining operations. Although the amendments make this position clear, the Administrative Procedures have always operated in this way the High Court essentially recognised this position in 1976 in Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1.
By way of further example, a decision to provide funds to a project which is likely to have a significant effect on the environment will be an environmentally significant action, assuming the project would not otherwise proceed or the Commonwealth decision may be characterised as 'promoting' or 'facilitating' that project.
The decision as to whether a proposed Commonwealth action is an 'environmentally significant action' will, like all administrative decisions, be subject to judicial review. Accordingly, it must be made after considering all relevant factors and no irrelevant factors and must not be manifestly unreasonable.
The following paragraphs are intended to provide some guidance on the criteria to be applied in deciding whether a Commonwealth action is likely to be an 'environmentally significant action':
- 'Significant' in the context of the EPIP Act is used in the sense of 'an important or notable effect on the environment': Gunns case at 603 citing Drummoyne Municipal Council v Roads and Traffic Authority of New South Wales (1989) 67 LGRA 155.
- 'Likely', in the context of New South Wales environmental impact assessment legislation, has been defined as meaning a 'real chance' or 'real possibility' and not 'more probably than not': see Rundle v Tweed Shire Council (1989) 68 LGRA 308. The term 'likely' when used in the Administrative Procedures should be given a similar meaning.
- It is necessary to 'look to the whole undertaking of which the relevant activity forms a part to understand the cumulative and continuing effect of the activity on the environment': Gunns case at 603, citing Kivi v Forestry Commission of New South Wales (1982) 47 LGRA 38. Clearly, the action Minister will be required to consider indirect effects when deciding if a proposed action is an 'environmentally significant action'.
- Both site-specific and cumulative and continuing effects can be relevant for example, the effect of associated infrastructure requirements must be considered when deciding if the proposed establishment of a defence base or an airport is an environmentally significant action: Gunns case at 603 citing Jarasius v Forestry Commission of New South Wales [No.1] (1988) 71 LGRA 79.
- Section 5A of the EPIP Act effectively provides that a Commonwealth action will be an environmentally significant action if the Commonwealth action or any action caused, permitted, promoted or facilitated by that action could threaten with extinction, or significantly impede the recovery of, a native species that is listed as endangered, vulnerable or presumed extinct, or an ecological community that is listed as endangered, under the Endangered Species Protection Act 1992. Information about species and ecological communities that are listed under this Act can be obtained from the Australian Nature Conservation Agency.
If a project has previously been subject to designation, this suggests the project was considered previously to be likely to have a significant effect on the environment. If a decision is now taken not to designate a proponent in respect of the same or a similar project, it would be prudent to address the issue of why the project is now considered not likely to have a significant effect on the environment. (The Administrative Procedures provide for an exception in limited circumstances if a proponent has previously been designated: see Step 4 below.)
Any decision on what environmental impacts may be attributable to the making of a decision and the extent of these impacts will require careful evaluation of environmental issues and evidence. In making this decision a Commonwealth decision-maker is not required to consult the EPA however, non-consultation may carry the risk of overlooking relevant factors and so give grounds for legal challenge.
It is possible that a Commonwealth decision-maker will believe that he or she has not been able to obtain sufficient evidence to consider adequately whether a Commonwealth action is an environmentally significant action, even after consulting with relevant parties. If such circumstances arise, further legal advice should be sought.Is it, for other reasons, desirable to designate a proponent in order to achieve the object of the EPIP Act?
The action Minister is also required to consider whether it is, for other reasons, desirable to designate a proponent in order to achieve the object of the EPIP Act. The intention of this provision is to provide the action Minister with a broad discretion to designate a proponent and refer the matter to the EPA even if he or she is not satisfied that the Commonwealth action is an environmentally significant action.
In practice, the obligation to consider this issue will not arise if a proponent is designated on the basis that the action Minister is satisfied that the Commonwealth action is an environmentally significant action.
Step 3: Referral to the EPA and designation of a proponent.
If satisfied that a Commonwealth action is an 'environmentally significant action' or that, for other reasons, it is desirable to designate a proponent in order to achieve the object of the EPIP Act, the Commonwealth action must be referred to the EPA and a proponent must be designated.
Once a proponent is designated, the Commonwealth action becomes a 'proposed action' for the purposes of the Administrative Procedures.
Step 4: The exception a proponent previously designated.
In some circumstances, a proponent need not be designated even if the Commonwealth action is an environmentally significant action.
The exception, contained in paragraph 1.2.2 of the Administrative Procedures, is potentially applicable to a Commonwealth action ('the later Commonwealth action') in circumstances where a related Commonwealth action ('the earlier Commonwealth action') has already been referred to the EPA and a proponent designated. As such, the exception will be most relevant to ongoing projects or activities in respect of which regular Commonwealth actions are taken for example, a mine in respect of which regular export approvals are granted by a Commonwealth Minister. This exception was specifically included in the Administrative Procedures to overcome the uncertainty associated with the 'initiative' concept.
The mere fact that a proponent has been designated previously will not automatically attract the exception. It is necessary to consider whether, as a result of the previous designation, the environmental effects of the later Commonwealth action have adequately been assessed. More specifically, the exception will apply only if the action Minister considers:
- that the environmental effect of the later Commonwealth action has been fully taken into account in giving effect to the procedures in relation to the earlier Commonwealth action (paragraph 1.2.2(a)); or
- that the environmental effect of the later Commonwealth
- is an extension of the environmental effect of the earlier Commonwealth action; and
- is not of a nature significantly different from that of the effect of the earlier Commonwealth action; and
- does not significantly add to the effect of the earlier Commonwealth action (paragraph 1.2.2(b)).
The application of the exception in paragraph 1.2.2 will involve careful consideration of environmental issues and evidence. The following paragraphs are intended to provide only general guidance.
It is important to note that paragraph 1.2.2 will obviate the need to designate a proponent only if the action Minister considers that the environmental effects attributable to the later Commonwealth action have been fully taken into account (paragraph 1.2.2(a)) or are such that the criteria in paragraph 1.2.2(b) are satisfied. That is, designation is not required only if the action Minister is able to conclude in good faith and on the basis of relevant factors that one of the tests in paragraph 1.2.2 is satisfied. If the action Minister is not able to so conclude (for example, because he or she has insufficient information), a proponent must be designated.
Paragraph 1.2.2(a): The first limb of the exception will be satisfied if the environmental effect attributable to the later Commonwealth action has been fully identified and considered in giving effect to the Administrative Procedures in relation to an earlier Commonwealth action. This test may be satisfied, for example, if the Minister:
- identifies the environmental effects of the later Commonwealth action;
- examines the scope of the environmental impact assessment performed in relation to the earlier Commonwealth action. (This may be an environmental impact assessment prepared under State legislation if that assessment was considered by the EPA in deciding that no assessment of the earlier Commonwealth action was required under the EPIP Act); and
- is satisfied that the environmental effects of the later Commonwealth action were fully identified and examined in the earlier environmental impact assessment.
For example, if an environmental impact statement ('EIS') was prepared under the EPIP Act in 1988 in relation to a coal mine and the environmental effects associated with that mine in 1995 were fully identified and considered in the 1988 EIS, it will not be necessary to designate a proponent before granting an export approval from that mine in 1995.
Paragraph 1.2.2(b): The second limb of the exception requires the action Minister to compare the environmental effect of the later Commonwealth action with the environmental effect of the earlier Commonwealth action. Under this limb, it is not necessary to designate a proponent when the later Commonwealth action will result in an extension of the environmental effect beyond that of the earlier Commonwealth action provided that the extension of the effect on the environment is:
- not of a nature significantly different from the effect of the earlier Commonwealth action; and
- does not significantly add to the effect of the earlier Commonwealth action.
The difference between the first limb and the second limb of the exception in paragraph 1.2.2 is illustrated in the following example. Assume that it is proposed the coal mine assessed in 1988 will triple in size in 1995 and new port facilities will be constructed to accommodate this increase. If these developments were fully assessed in the 1988 EIS then the first limb of paragraph 1.2.2 would apply and further designation would not be required. However, if these developments were not fully assessed in the 1988 EIS it is necessary to consider, before granting an export approval in 1995, whether the environmental effect of the expanded mine will be of a nature significantly different, or will significantly add to, the environmental effect of the 1988 mine. If so, a proponent will need to be designated before a 1995 export approval is granted.
It is important to note that, notwithstanding that the exception in paragraph 1.2.2 would otherwise apply, a Commonwealth action may be referred to the EPA and a proponent designated if the action Minister considers that it is desirable to designate a proponent in order to achieve the object of the EPIP Act: see Step 2 above.
Step 5: Determining the level of assessment
Once a matter is referred to the EPA and a proponent is designated, it is the responsibility of the EPA and the Minister for the Environment, Sport and Territories ('the Environment Minister') to determine the level of assessment that is required. The Environment Minister may, but is not obliged to, require that:
- a public environment report ('PER') be prepared; or
- an EIS be prepared (an EIS is more detailed than a PER).
It is important to note that the designation of a proponent does not necessarily lead to a requirement for a PER or an EIS. In determining the level of assessment, the EPA and the Environment Minister must take into account a range of environmental factors and any other relevant environmental assessment, including any previous Commonwealth or State assessment. In practice, it is common for the EPA to determine that no PER or EIS is required if an adequate State assessment has already been conducted.
The Environment Minister may not require a PER or an EIS if satisfied that to do so would be contrary to the public interest.
Step 6: Preparing the environmental impact assessment
The Administrative Procedures set out the relevant processes that must be followed if the preparation of a PER or EIS is directed: for example, the relevant public consultation procedures. Although not expressly stated in the Administrative Procedures, it is clear that the proponent of the proposed action must prepare the EIS or the PER. The proponent may be a non-Commonwealth entity for example, a company applying for foreign investment approval.
Step 7: Carrying out a proposed action while the assessment is conducted
The clear intention of the EPIP Act is that a proposed action should not be carried out until the assessment process under the Administrative Procedures has been complied with. If a proponent is designated in relation to a proposed decision and the decision is then taken before the Administrative Procedures are complied with, it is possible a court would set aside that decision if the decision were challenged: for example, on the basis of a failure to take into account relevant factors.
However, the amendments to the Administrative Procedures expressly provide a mechanism enabling the Environment Minister to permit certain proposed actions to be undertaken before the assessment process is complete: see paragraphs 1A.1.11A.1.5. A proponent must be designated before permission is sought.
Permission to proceed with a proposed action is available only in relation to the 'ongoing operations of a project', such as a mine that has been operational for some years. Permission will not be available in relation to new projects in respect of which there are no 'ongoing operations'.
It must be noted that permission is not automatically available. The Environment Minister may grant permission only if it is considered in the public interest to do so. In assessing the public interest, the Environment Minister must take into account any relevant advice provided by the action Minister. In addition, the permission may be granted subject to a condition that the proposed action must not be continued after a specified time if the relevant assessment process is not completed by a specified time.
For example, assume a proponent is designated in relation to the grant of an export approval from a mine that has been operational for a number of years. Prima facie, the export approval cannot be granted until the Administrative Procedures are complied with. However, if the Environment Minister considers it is in the public interest to do so, he or she may permit an export approval to be granted from the mine while any required assessment is being undertaken under the Administrative Procedures.
Step 8: Environment Minister makes recommendations
At various stages in the assessment process (whether or not an EIS or PER is required), the Environment Minister may make comments, recommendations or suggestions concerning the proposed action to the action Minister. For example, the Environment Minister may recommend that certain conditions should be imposed in relation to a proposed action in order to protect the environment.
Step 9: Consider the assessment and the recommendations of the Environment Minister
All ministers, departments and Commonwealth authorities are obliged to ensure that the outcomes of any environmental assessment including any PER or EIS and the comments, recommendations or suggestions made by the Environment Minister or his or her Department are taken into account when deciding whether to proceed with a Commonwealth action and, if so, what conditions should be imposed.
However, the Environment Minister is not given the power to veto a proposed Commonwealth action. In particular, the relevant decision-maker is not bound to give effect to the outcome of a PER or EIS or to the comments, recommendations or suggestions of the Environment Minister. The decision-maker is merely required to consider these factors before proceeding with the proposed action. In this respect, it is relevant to note the comments of a US Supreme Court judge who stated, in relation to the US National Environment Policy Act (on which the EPIP Act was based), 'NEPA merely prohibits uninformed rather than unwise agency actions': Robertson v Methour Valley Citizens Council (1989) 109 S.Ct. 1835 at 1846.
However, it must be understood that the consequences of non-compliance with the EPIP Act and the Administrative Procedures are potentially significant. A failure to observe the required processes whether it be a failure to designate a proponent or a failure to ultimately take into account the outcomes of the assessment process may result in a court setting aside a Commonwealth decision. This is, of course, precisely what occurred in Gunns case.
Note: Two flowcharts have not been included in this HTML version. The flowcharts are:
Table A: Deciding whether to designate a Proponent under the EPIP Act
Table B: Summary of EPIP Act process after designation
Please contact the AGS Corporate Communications if you would like to be sent printed copies of the flowcharts. Telephone (02) 6253 7052.
The Administrative Procedures make provision for various other matters including:
- in limited circumstances, the granting of an exemption to a Commonwealth action, or a class of Commonwealth actions, from all or any of the requirements of the Administrative Procedures;
- the conduct of inquiries into the environmental aspects of Commonwealth actions for example, the Shoalwater Bay Commission of Inquiry: see also section 11 of the EPIP Act; and
- the carrying out of a review by the EPA of the environmental aspects of a Commonwealth action, whether or not that Commonwealth action has been completed.
To ensure compliance with the EPIP Act, Commonwealth officers may wish to consult the EPA in relation to environmental issues that arise in relation to proposed actions and decisions. The Attorney-General's Legal Practice should be consulted in relation to any legal issues arising from the application of the legislation.
Review of the EPIP Act
The EPA is currently undertaking a comprehensive review of the EPIP Act. Many of the substantive reform issues identified in the review will be the subject of further consultation in 1996: for example, issues relating to the role of the Commonwealth and the jurisdiction of the EPIP Act and issues relating to the process for initiating assessment under the Administrative Procedures.
However, the Commonwealth is currently considering proposals which would deliver procedural improvements to the Commonwealth's environmental impact assessment process. These proposals, if implemented, would involve amendments to the Administrative Procedures in early 1996. The proposals are aimed at improving the effectiveness and efficiency of the assessment process once proposals are referred to the EPA.
Please note that the obligations described in this Briefing are unlikely to be materially altered if the proposals currently being considered are implemented. However, some additional obligations may be introduced.
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The material in this briefing is provided for general information only and should not be relied upon for the purpose of a particular matter. Please contact the Legal Practice before any action or decision is taken on the basis of any of the material in this briefing.