Reforms represent ‘transformative shift’ of Australia’s environmental regulatory landscape

These changes, if passed, are intended to streamline approvals, strengthen environmental protections, and introduce new compliance obligations. While the reforms promise efficiency and clarity, they also introduce complexity and significant front-loading of assessment requirements.

Once passed, this voluminous reform package could take several years to fully implement, and it will take much longer to determine whether the reforms have achieved their dual goals of streamlining processes and increasing environmental protection. 

New ‘National Environmental Standards’

The reforms place new ‘National Environmental Standards’ at the heart of the updated EPBC framework. These standards will operate as legally binding instruments, setting clear outcomes, objectives and parameters for decision-making across all approval pathways.

Initially, two standards will be introduced: one for Matters of National Environmental Significance (MNES) and another for environmental offsets. Together, they will define what constitutes acceptable impact, how offsets must be calculated and secured, and the conditions for achieving net gain. The draft new National Environmental Standard (Matters of National Environmental Significance) 2025 legislation is currently on exhibition until 30 January 2026, with the draft new Environmental Offsets Standard also expected to be released shortly. Other standards will follow. 

The environment minister will have broad powers to make, vary and revoke these standards, ensuring flexibility to respond to emerging environmental priorities. For project proponents, this represents a fundamental shift: proposed actions will no longer be assessed against general principles but against prescriptive, enforceable benchmarks. Early engagement with these standards will be critical to avoid delays and manage risk, while close monitoring of the standards will be required as they are released and evolve over time.

It is yet to be confirmed whether the significant impact guidelines, which set out how proponents must assess whether they are legally required to refer actions under the EPBC Act, will also be updated to reflect the new standards.

Streamlined assessment pathway

Under the current regime, there are seven distinct methods for assessing actions that may significantly impact MNES. The bill proposes the removal of three of these pathways: assessment on referral information; assessment on preliminary documentation; and assessment by public environment report.

These three pathways will be replaced by a new streamlined assessment pathway with no mandatory public consultation and a single assessment report. While timeframes for decision making are set, there are no changes to the current request for further information processes or ‘stop the clock’ provisions which could mean the process is in fact extended beyond the set timeframes.

The other pathways, including the environmental impact statement (EIS) pathway, remain unchanged.

These changes may lead to faster approvals for well-prepared projects, and it is worth noting that there is no public consultation requirement for the low impact and standard pathways. While this may be useful to streamline the process, judicial review risks may also increase. Proposed actions which traditionally would have been assessed via a public environment report may be pushed to an EIS process by default. Assessment under a bilateral agreement may prove to be a good option to avoid this risk.

Bilateral agreements

The reforms reaffirm bilateral agreements as a cornerstone to reduce duplication between federal and state processes. The bills update and strengthen the provisions which enable bilateral agreements to cover not just assessment against the EPBC Act, but also the approval of projects under the EPBC Act.

Under the new regime, state and territory assessment frameworks will need to meet the newly introduced standards to achieve accreditation under a bilateral agreement. Once accredited, actions assessed under those processes will not require separate EPBC approval, delivering significant efficiency gains.

Existing bilateral agreements will remain in operation during transition but, once the reforms take effect, states and territories must update their assessment processes to meet the new standards and obtain re-accreditation. The bill allows minor amendments to existing accredited processes without full re-accreditation, which should help maintain continuity while adjustments are made. While uncertainty will remain while state and federal processes are aligned and new bilateral agreements are negotiated, the long-term outcome may be a more integrated, nationally consistent approach to environmental assessment that materially reduces project risk and approval timelines.

Three new approval tests

The EPBC Act reforms introduce three approval tests. First, compliance with the new standards will become mandatory, setting clear, enforceable benchmarks for MNES and offsets. Second, the ‘unacceptable impact’ criteria will apply and prohibit approval of projects that exceed defined thresholds of harm to MNES, ensuring that certain impacts cannot be offset and must be avoided or mitigated.

Finally, the new ‘net gain test’ requires that all residual significant impacts deliver a measurable improvement in biodiversity outcomes, achieved through offsets or new restoration contributions.

Collectively, these tests represent a fundamental shift from a ‘no net loss’ paradigm to a proactive ‘nature positive’ framework, and are aimed at embedding transparency, consistency and higher environmental performance expectations into the federal approval process. 

Despite this, the unacceptable impact test relies on thresholds tailored to each MNES to be developed through the new National Environmental Standards. The definitions will require careful consideration by proponents as the new standards are developed. While this will take some time, the ultimate outcome could be more clarity for developers, investors and officers assessing impacts.

Bioregional planning and zoning

The bills introduce new bioregional plans as a strategic tool to manage cumulative environmental impacts across regions. These plans will map areas into “development zones”, where certain priority actions can proceed without further EPBC approval, subject to registration and compliance; and “conservation zones”, where restricted actions will be prohibited unless an exemption is granted. Bioregional plans are required to be developed collaboratively with states and territories and are intended to provide greater certainty for proponents and streamline approvals in key areas, including for renewable energy zones and critical minerals.

Implementation of these plans and zones may have long term benefits for projects and cumulative impact management, however, the preparation of these will require significant time and coordination and the prospect of “no go” zones will create uncertainty for proponents in the meantime.

Offsets and restoration contributions

The reforms introduce a fundamental shift in offset policy, moving from a “no net loss” approach to a “net gain” requirement. This means all residual significant impacts on MNES must deliver a measurable improvement in biodiversity outcomes. Key features for offsets under the bills are as follows:

Net gain standard

Offsets must deliver a net positive environmental outcome, not merely compensate for losses.

Restoration contribution option

Proponents may choose to pay a 'restoration contribution charge' into a central fund managed by an independent restoration contribution holder, rather than implementing on-ground offsets directly. This fund will finance strategic restoration projects aligned with national priorities.

Offset standards

A new National Environmental Standard for Offsets will set clear rules for calculating, securing, and delivering offsets, including baseline and gain metrics, legal security requirements and timeframes for delivery.

Enforcement, EPA oversight and penalties

The reforms significantly strengthen compliance and enforcement under the EPBC Act. A newly established National Environmental Protection Agency (NEPA) will assume a dual role of administering approvals under ministerial direction and exercising independent regulatory powers, including audits, investigations and enforcement actions. This shift introduces a more robust compliance culture, backed by a suite of new tools such as environmental protection orders and a register of independent auditors.

Penalties have been recalibrated to ensure meaningful deterrence, with maximum corporate fines set at the greater of A$16.5 million (approx. US$10.67 million), three times the benefit obtained, or 10% of annual turnover, capped at A$825 million. For investors, stakeholders and developers, this underscores the need for rigorous governance and proactive risk management, with non-compliance no longer a manageable cost but a material exposure.

What’s missing? 

There are some gaps in the proposed legislation, including one that has long been the subject of debate: the lack of a ‘climate trigger’. This means that there is no preferential pathway for projects that deliver a clear climate benefit, such as renewable energy developments. These projects will continue to be subject to the same assessment processes as other actions, which may be a missed opportunity at a time when acceleration of climate action is a national priority. 

Secondly, the reforms do not propose a clear or updated mechanism for managing scope changes or varying approval conditions post-approval. Scope modification will still require a close assessment and professional advice to assess whether changes are within the scope of the proposed action or warrant re-referral. Clear guidelines could have been released as part of the reform package.

Thirdly, while there are extensive transitional provisions proposed, these do not currently apply to projects which have relied on self-assessment and have not been referred under the EPBC Act, creating uncertainty for these projects.

Future developments

While the federal government promised the bill would pass later this year, it has been referred to the Senate Standing Committee on Environment and Communications, which has indicated it will issue its report in March 2026. It is unclear if the government can reach a deal with the opposition or the Greens and pass the bill prior to the findings of the committee.

Public submissions will close on 5 December. The coming weeks offers a final opportunity for stakeholders to influence the details of the reforms, particularly the draft standards and offset framework. Assuming passage through parliament later this year, the reforms will be introduced in a staged commencement, with core provisions taking effect immediately and the remainder commencing within 12 months.