According to the 2010 Scorecard of Red Tape Reform released by the Australian Business Council, the Australian Capital Territory (“ACT”) is the worst jurisdiction in Australia for “red tape” in business regulation. This is particularly evident in property development and construction, which is an industry of very considerable importance to the ACT’s economy. Whilst the community recognises that importance, it also values Canberra’s natural environment and the maintenance of good urban amenity, which are major drawcards of living and working in Canberra.

Finding the right balance, between development and conservation, is a constant challenge.

In this context, a major concern for the community and for developers alike is to identify when and where an environmental impact assessment (“EIS”) should be required for major or sensitive projects, and the procedures that must be followed by the ACT Planning and Land Authority (“ACTPLA”) and the relevant Minister in undertaking such an assessment.

Recent changes to Canberra’s planning and development laws will:

• reduce the range of projects for which an EIS will be required;
• allow agencies and the Minister to give exemptions from the need to prepare an EIS, for specified reasons and for limited periods;
• impose additional costs on developers in the form of ill-defined reimbursements of agency costs;
• require the publication of Ministerial exemptions.

In this Property Reporter we give a summary of the relevance of EISs to development approvals, and how the new laws will change the existing rules and procedures and impact on developers.

“Tracks” that development applications have to negotiate 

Development proposals, which are not prohibited or exempt, are put into three different “tracks” for assessment purposes. These tracks are the “code”, “merit” and “impact” tracks. The tracks apply to proposals of increasing levels of complexity and impact. They have different, appeal rights, statutory time-frames and document, assessment and notification requirements.

The impact track requires the broadest level of assessment. All development proposals that require an EIS are included in the impact track.

What is an EIS?      

An EIS will be required where a development proposal includes certain “activities” or takes place in certain areas. These activities and areas are identified in the Planning and Development Act 2007 (“the Act”).

An EIS details the anticipated environmental effects of a development. It is prepared by the proponent of the development, based on a scoping document supplied by ACTPLA. The scoping document identifies the matters, relevant to the particular development proposal, which are required to be addressed by the proponent in the EIS. Of particular importance for any EIS is a consideration of the “potentially significant” environmental impacts that the development may cause.

If an EIS is required for a development, the draft version of the EIS must be lodged with ACTPLA within 18 months after the scoping document is given to the proponent. The final version of the EIS must be submitted with the development application to which it relates. Depending on the requirements of the scoping document, the requirement to undertake an EIS and the approval processes which follow its submittal can significantly delay a development.

Problems and concerns about the operation of the old law          

The Australian Labor Party governs the ACT with the support of The Greens. These political parties identified different concerns about the EIS system. Developers, also, had expressed concerns about what they considered to be an overly wide EIS catch-net under the Act.

The amendments to the Act, which have now been passed by the ACT Legislative Assembly in the form of the Planning and Development (Environmental Impact Statements) Amendment Act 2010, seek to accommodate and balance these different concerns.

Essentially, there were three perceived shortcomings of the previous EIS law:

• the wide scope of development proposals requiring EISs;
• lack of flexibility not to require an EIS;
• the use of a Ministerial work-around, to exempt development proposals from the EIS requirement, which lacked transparency.

Scope of proposals requiring EISs reduced        

Several of the triggers for EISs under the old law did not have a clear “environmental” dimension, in physical terms. For example, an EIS was required for a development proposal for a correctional facility. A correctional facility has obvious social and economic implications. However its environmental impact pales in comparison to the impact of projects, such as energy-producing or infrastructure projects, which are the traditional targets of EIS requirements.

Two other items, now also perceived to have not such a great “environmental” dimension, have also been removed from the list of triggers for an EIS. They are proposals for an ongoing commercial aquatic facility, and proposals to vary a lease to change its concessional status.

Flexibility not to require an EIS where "no significant adverse impact"   

Under the old law, if a development proposal fell within the description in the EIS schedule to the Act, then an EIS would have to be undertaken and submitted with the development application. Regardless of the size or potential impact of the development proposal, no latitude existed for ACTPLA to decide that the proposal really did not merit a full EIS.

This inflexibility, coupled with the broad language used, has meant that (in the words of the Minister during debate on the amendments):

Some straightforward works associated with normal land development have been subjected to sometimes unnecessary assessment… Taken literally, almost all new houses and certainly every new housing estate would require an EIS for routine but essential infrastructure.

To overcome this, the new law introduces a subjective test into the question of whether an EIS will be required. Thus, in some cases, the EIS “triggers” are now conditional upon the development proposal having a significant adverse environmental impact. For example, in the case of proposals “for construction of a transport corridor”, an EIS will only be required “if the proposal is likely to have a significant adverse environmental impact”.

An adverse environmental impact is said to be “significant” if:

(a) the environmental function, system, value or entity that might be adversely impacted by a proposed development is significant; or

(b) the cumulative or incremental effect of a proposed development might contribute to a substantial adverse impact on an environmental function, system, value of entity.

In ascertaining the significance of the impact of a development, regard may be had to the kind, size, frequency, intensity, scope and length of time of the impact, and the sensitivity, resilience and rarity, of the function, system value or entity likely to be affected. It does not matter if the impact occurs on the site of the development or elsewhere.

Formal opinions about environmental impacts        

In some cases where an EIS can be avoided where it would not have a significant adverse environmental impact, the opinion about that impact must be obtained from (in most cases) the Conservator or (in one case) the Heritage Council. A proponent seeking such an opinion must provide evidence that the development will not have a significant environmental impact. Any such opinion is publicly notifiable, and will expire after 18 months.

The new law allows the Conservator or Council (as the case may be) to recover costs directly and indirectly incurred in the opinion making process, and regardless of whether the opinion has the effect of avoiding the need for the developer to prepare an EIS or not. The legislation provides no guidance or transparency as to what costs the relevant authority may incur in that process, nor as to the quantum of those costs. If the Conservator or the Council does not give the opinion within 30 days after the developer’s application for the opinion, the authority is deemed to have rejected the application.

Where formal opinions are not available, proponent must self-assess     

In some cases where an EIS will only be required if the development is likely to cause a significant adverse environmental impact, there is no option for obtaining an environmental significance opinion from a relevant authority. In such cases the proponent will need to self assess which assessment track the proposal falls into. If the proponent underestimates the significance of the environmental impact of the proposal, the development application would be lodged in the wrong assessment track (“merit” instead of “impact”), and ACTPLA would refuse the application.

Avoiding an EIS where there has already been one        

Under the old law, the requirement for an EIS could be exempted where the Minister was satisfied that another study sufficiently addressed the expected environmental impact of the development proposal concerned. Anecdotal evidence indicates that this exemption was used widely in order to save development applications that would clearly have minimal environmental impact, and which should not have required an EIS but for the stricture and rigidity of the EIS requirements under the old law.

The Greens, in particular, were concerned about this “escape route” and the lack of public accountability of the Minister when it was used. To address this concern, under the new law any exemption granted by the Minster under this power will be a publicly notifiable instrument, and will expire after 18 months.

Curtailment of EISs for proposals concerning urban and future urban land           

The new law further curtails the requirement for an EIS in relation to some developments that are to occur on urban land, or on land that is designated as a future urban area in the Territory Plan.

For example, an EIS will not be required for proposals that involve clearing more than 0.5 hectares of native vegetation if the site concerned is in an existing or future urban area.

Comment - Understanding risks and predicting outcomes       

The new law can be expected to lead to fewer EISs, because there will now be fewer triggers and more exemptions. In that regard “red tape” has undoubtedly been cut.

At the same time, the publication of exemption decisions may lead to greater political shyness on the part of the Minister, and therefore fewer exemptions.

Developers will also be concerned to know the costs they may have to pay when seeking an opinion from the Conservator or the Heritage Council.

Close communication with the relevant authorities, in order to choose the appropriate development application “track” and to predict outcomes, will continue to be fundamentally important for both time and cost in ACT property development.

For more information, please contact Daniel Moulis or Alistair Bridges on +61 2 6163 1000 or email daniel.moulis@moulislegal.com or alistair.bridges@moulislegal.com

This memo presents an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted. It does not constitute legal advice.

© Moulis Legal 2011