By Aaron Gadiel, Partner

Greenfield land developers are now facing a new layer of planning complexity.

Last week the NSW Government released the text of new proposed biodiversity legislation.  It will impose new burdens on developers seeking approval for land clearing that does not affect threatened species.

In the same week, the Government introduced new coastal management legislation into parliament.  It foreshadows a new system of over-arching quasi-zoning that will affect development applications and rezoning in the years to come.

Proposed biodiversity legislation

The NSW Government has released the draft Biodiversity Conservation Bill 2016 for public comment.

This proposed legislation is part of a package that is intended to replace the Threatened Species Act 1995 and the Native Vegetation Act 2003.

The public focus of the proposed legislation has been on its impact on farmers. However, the proposals will also significantly affect the way that approvals are handled for many urban development sites in greenfield areas.

Existing situation

At present, when issues of biodiversity are considered, the major focus for planning authorities is whether there is ‘likely to be a significant effect on threatened species, populations or ecological communities, or their habitats’.

This is the key question that most flora and fauna assessments attempt to address.  The process of answering this question is often (informally) known as the seven-part test.

Typically an urban developer will seek to modify a proposed development up-front, to ensure that its ecologist is able to confirm that there will not be any significant effect.  Most urban development proposals are able to do this.  This may often involve some element of mitigation or offsetting.

If the development cannot be modified in this way:

• the developer will need to have a species impact statement prepared; and
• the development application will require the concurrence of the Office of Environment and Heritage.

Alternatively, the developer can currently choose to avoid this process by electing to purchase and surrender biodiversity credits (created under the ‘biobanking scheme’).

Use of the biobanking scheme by urban developers has been sporadic at best.  Most developers prefer to manage the process by mitigating impacts and, if necessary, arranging for offsets (either onsite or elsewhere) outside of the biobanking scheme.

If there are no threatened species impacts (when the land has a modern urban zoning), the clearing of native vegetation at a level that is consistent with the zoning and planning controls is (currently) generally permitted without the need for offsetting.  This is because the clearing of such native vegetation is an anticipated impact that is understood to be part of the normal trade-off necessary to secure new housing and services within an expanded urban footprint.

For example, the key objective of a typical R1 zone (‘General Residential’) is the provision of the housing needs of the community.  There is currently no presumption that the land clearing will need to be offset if:

• the zoning is a modern zoning;
• no other planning controls require the protection or maintenance of the natural environment on the site;
• there is not likely to be any significant effect on threatened species; and
• the level of land clearing is unexceptional for the development type.

The proposed legislation, if it proceeds in its current form, will change this status-quo.

New compulsory biodiversity offsets scheme

The new legislation sets up a new biodiversity offsets scheme.  Its structure is generally similar to the existing biodiversity biobanking scheme.

However, unlike the existing scheme, participation in the new biodiversity offsets scheme will be mandatory in certain cases.  Some form of participation in the scheme will be required whenever development is of an extent or kind that is likely to ‘have an impact on biodiversity values’.

‘Biodiversity values’ includes ‘vegetation integrity’.  That is, the degree to which vegetation has been altered from a near natural state’.

Development that materially changes the state of vegetation to reduce its resemblance to what it might have looked like in its natural state will have an ‘impact’ on ‘biodiversity values’.  The type of vegetation is not limited to threatened flora.

As a consequence, any development that involves any significant clearing of native vegetation is likely to impact on ‘biodiversity values’.

This is important for two reasons.

Mandatory biodiversity development assessment report

Firstly, for such development, a developer will need to obtain a ‘biodiversity development assessment report’ from an accredited biodiversity assessor — if the proposed development will ‘exceed the threshold’.

However the proposed legislation does not say what the ‘threshold’ will be.  This will only be set out in regulations to be made under the legislation.  The regulations will not be finalised until after the legislation has been passed by parliament.

Nonetheless, the wording of the proposed legislation strongly suggests that the compulsory elements of the scheme will not be limited to development that triggers the existing seven-part test.

That is, it seems likely that development that does not have any significant effect on threatened species would trigger a need for a ‘biodiversity development assessment report’.  The report will need to be submitted with a development application.

The report will detail proposed measures to avoid and minimise the impact of the development.  It will also outline the biodiversity credits that would need to be:

• obtained by the developer (eg by purchase); and
• ‘retired’ (given to the government for cancellation),

to offset the ‘residual impacts’ of the development.

If development consent is to be granted, there is a presumption that the consent will only be granted with a requirement that the necessary biodiversity credits will be obtained.  However, there is discretion for a consent authority to waive or reduce the requirement when it is ‘justified having regard to the environmental, social and economic impacts of the proposed development’.

There is nothing in the proposed legislation to suggest that land that has already been zoned urban will be exempt from the requirement to obtain a ‘biodiversity development assessment report’ (although it is possible that this will be done in the regulations).

If no exemption is made in the regulations, the development proponent will need to make out an argument why there should be no or reduced offsetting in the context of the proposed development.

Additional discretion for the consent authority

Secondly, the consent authority will have the discretion to impose a development consent condition requiring the offset of impacts on biodiversity values — even where there is no obligation to submit a ‘biodiversity development assessment report’ with a development application.  This discretion extends to mandating that biodiversity credits be obtained and retired by the developer.

This means that even if the government sets a ‘threshold’ so it excludes typical greenfield urban development projects, consent authorities will still have a discretion to require credits be obtained and retired to offset adverse impacts on native vegetation (even when the vegetation is not threatened flora).  This is in sharp contrast with the current voluntary biobanking scheme.

Cashing out offsetting obligations

A developer may be able to make a cash payment to the Biodiversity Conservation Fund instead of obtaining and retiring biodiversity credits.  This helps developers who might otherwise find it difficult to source the right credits.  This option will only be available if the Environment Minister exercises his or her discretion to publish an ‘offsets payments calculator’ once the legislation has been passed.

If an ‘offsets payments calculator’ is published, it may mean that the practical effect of all of the new obligations will simply be to impose a new cash levy on the carrying out of some greenfield urban development.  The size of the cash payment would be determined by the official payments calculator.  It is likely that the size of the payment will vary depending on the extent and nature of the impacts.

Serious and irreversible impacts on biodiversity values

The proposed legislation allows regulations to be made that would prevent development consent being granted for development that seriously and irreversibly impacts on biodiversity values. (This requirement would not apply to state significant development.)

This effectively has the potential to create a new class of ‘prohibited development’.  That is, even where development may be permitted under a local environment plan, a consent authority may be stripped of the ability to assess the development proposal on its merits (because of a state government regulation).

Under the current legislation even development that might have an irreversible impact on the natural environment may be approved, if the social and economic benefits warrant it.  This new legislative framework envisages that there will be some development types that can never be approved (as part of the normal development assessment stream) irrespective of the social and economic benefits.

It will not be clear which development types will be regarded as causing ‘serious and irreversible impacts on biodiversity values’ until the regulations are finalised.

Submissions can be made

The proposed legislation has been released for public consultation.  Submissions will be accepted until 28 June 2016.

New Coastal Management Act

The government has introduced legislation for a new Coastal Management Act 2016 (the Act) into the NSW parliament.  It will repeal the Coastal Protection Act 1979.

This new legislation introduces new planning risks for developers who have a site within a coastal locality.

The legislation envisages that there will be a new state environmental planning policy (SEPP).  The policy will replace the existing State Environmental Planning Policy No 71—Coastal Protection (SEPP 71).  However, the new coastal management SEPP will have a greater impact than SEPP 71.

The new coastal management SEPP will divide every part of the ‘coastal zone’ into one of four management areas.  These are:

• the coastal wetlands and littoral rainforests area;
• the coastal vulnerability area;
• the coastal environment area; and
• the coastal use area.

This is effectively a new form of over-arching zoning that will apply to land in the vicinity of the coast.  The definition of ‘coastal environment area’ and ‘coastal use area’ makes it clear that land in the vicinity of the coast will be included.

Of key interest to landowners and developers will be the extent to which their coastal land is included in ‘the coastal use area’ as opposed to other areas.

For example, the ‘coastal environment area’ is defined to include land adjoining coastal waters, estuaries, coastal lakes and coastal lagoons.  The management objectives for this area focus on the protection and enhancement coastal environmental values and natural processes.  There is no mention of ‘development’.

This contrasts with the ‘coastal use area’.  The area is defined to include ‘land adjacent to coastal waters, estuaries, coastal lakes and lagoons where development is or may be carried out’. Generally speaking, the scheme seems to envisage that land on the coast may be developed if it is in a ‘costal use area’, but subject to an additional layer of regulation (beyond that which might apply in non-coastal areas).

It seems it would be difficult to carry out urban development  in a coastal environment area, coastal vulnerability area and coastal wetlands and littoral rainforests area.

The coastal management SEPP may effectively scupper a development application even if the zoning of land under a local environmental plan is otherwise favourable.

Additionally, the coastal management SEPP will be capable of adversely affecting future rezoning decisions and development control plan provisions.  This is because local councils will be obliged to give effect to the management objectives for various coastal management areas in their ‘coastal management program’.  As a consequence, each local council will then be obliged to give effect to its coastal management program when preparing planning proposals (for rezonings and other changes to planning controls) and development control plans.

In short, developers and other landowners will want to carefully study any draft or final coastal management SEPP to determine what it says about their land.

The government has promised that it will not finalise the coastal reforms until a second stage of public consultation is completed. It says that this will take place in 2016 and will involve a full draft of the coastal management SEPP and maps of the coastal management areas.  This will presumably take place after the Coastal Management Act 2016 has been passed by the parliament.

The bottom line

Anyone who had hoped that land use planning and development in NSW would be simplified might be disappointed by these latest legislative proposals.  These proposals will mean that — in some circumstances — planning controls in local environmental plans that appear to support housing and other urban development will play a reduced role.

These new proposals will create new risks for greenfield urban developments that involve clearing of native vegetation or are in a coastal locality.