Background to cost recovery
Cost recovery for environmental impact assessments under the EPBC Act has arrived.
Legislation and the associated Regulations have just passed through Parliament to enable cost recovery fees to be applied to environmental impact assessments and strategic assessments under the EPBC Act. Cost recovery means that the Commonwealth Department of Environment (DoE) will now require fees to be paid for environmental impact assessments under the Act from the 1st October (see details of dates below).
DoE has introduced cost recovery as a means to share the cost of protecting the environment between the community and those who gain financial benefit from development. This new approach also provides incentive to industry to undertake early engagement in the assessment process and incorporate the most environmentally acceptable outcomes into their business planning.
The fees that will apply to projects are described in the Cost Recovery Impact Statement (CRIS). The CRIS says that the referral fee will be a fixed fee of $7,352. If the project then goes through to the assessment phase, a base cost (determined by the assessment pathway); complexity cost (determined by the number of project issues) and a technical/operational cost will have to be paid at each statutory stage. More costs may be applied to a project for other activities such as where a variation to the project is requested or the quality of assessment information provided to DoE is considered to be missing key information (i.e. a ‘stop clock’ is required).
Cost recovery will also apply to strategic assessments. There is not much guidance in the CRIS as to how it will apply, only that the amount to be paid will be specific to each project. We assume that DoE will negotiate costs with each proponent well before the strategic assessment begins.
Is anyone exempt from paying cost recovery fees?
It should be noted that there are provisions for exemptions and waivers in the provisional CRIS. Individuals and small businesses will be exempt from paying environmental impact assessment fees given they will be disproportionately impacted by cost recovery fees. The government is allowing such exemptions to ensure that there is not a disincentive for small businesses and individuals to refer to DoE, and subsequently ensures the governments costs of increasing compliance to investigate non-referred project will remain less than the cost of granting exemptions.
Decisions to waive fees will be made on a case-by-case basis. DoE may decide to waive the fee (or part of the fee) if the primary objective of the project is to protect or conserve the environment (consistent with the objectives of the EPBC Act); there are exceptional circumstances; its in the public’s interest to waive the fee; or that a stage of an assessment is not applicable and the applicable fee should be waived.
What are the implications of cost recovery for projects?
The implications of cost recovery on projects for proponents will depend on the complexity and available information for each project. These two factors will affect timeframes and costs associated with the project. Here’s a few tips to ensuring reduced timeframes and costs where possible:
Planning your project to reduce the risk and extent of impacts on matters of National Environmental Significance (MNES) will also help reduce your timeframes and reduce costs. You could achieve this through altering your project design (early on) or implementing effective and beneficial environmental mitigation and management measures.
The simplest way to reduce timeframes (and costs) for the assessment process of your project is to provide clear, complete and robust information to DoE. Certainty and simplicity will be a big winner for you during an assessment process by DoE. Definitely provide a clear description of your project scope and reliable and relevant data. Limit unnecessary or poorly thought out changes to your project scope or footprint and relevant impacts throughout the assessment process. This will only lead to more complications and time required by DoE to tease out the information and issues and, as a result increase costs.
We would also encourage you to engage with DoE early. This will help DoE to have a clear understanding of what the project is, what the assessment requirements are and what the overall environmental outcomes will be. The assessment process then has the best chance of running smoothly and within the statutory timeframes.
Will cost recovery make the assessment process more efficient?
We think that cost recovery has the potential to make the assessment process more efficient for proponents. The introduction of fees may encourage better engagement and information gathering by both the proponents and DoE, hopefully resulting in a smoother assessment and approval pathway for all parties involved.