Environmental Protection and Biodiversity Conservation Act 1999 (Cth) Amendments - Some Key Changes

The Environment Protection Reform Act 2025 and National Environmental Protection Agency Act 2025, along with a collection of additional acts (together, the Amendments), have resulted in various changes to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).

This article addresses three areas of change. These are:

(a) a revised environmental offset framework;

(b) an expanded National Interest Exemption; and

(c) a restructured penalty regime for non-compliance.

This article covers each of these in turn.

The National Interest Exemption has been in force since 20 February 2026. The environmental offset framework and penalty regime for non-compliance are set to take effect by 1 December 2026.

These areas of change are especially relevant for proponents of projects that trigger obligations pursuant to the EPBC Act, including those in development, mining, agriculture, renewable energy, and waste and resource recovery.

1. Environmental Offset Framework

The Amendments seek to revise the current environmental offset framework. Before an approval can be granted, an action must now satisfy three mandatory tests:

(a) Unacceptable Impacts Test – the action must not have an unacceptable impact on a protected matter, taking into account any conditions.

(b) Consistency with the National Environmental Standards (NES) – the action must be consistent with any NES prescribed by regulation.

(c) Net Gain Test – any significant residual impact on a protected matter must not merely be offset but offset in a way that produces a measurable improvement.

Unacceptable Impacts Test

Offsets cannot generally convert an unacceptable impact into an acceptable one. If an impact is unacceptable, it must be avoided or addressed through other conditions.

Consistency with the NES

The Department of Climate Change, Energy, the Environment and Water (DCCEEW) has released a draft Offset National Environmental Standard (Offset NES), which proponents must demonstrate compliance with. In broad terms, its objective is to ensure offsets properly make up for the residual significant impacts of a project on a protected matter, in a way that leaves that protected matter “better off”.

Net Gain Test

The term “net gain” is not defined within the EPBC Act. If an action will have a residual significant impact, a project will pass the net gain test if there is a condition for either, or both, of the following:

(a)     Direct delivery of offsets – proponents may design, implement and manage restoration or conservation actions themselves, consistent with the traditional offset model.

(b)     Payment of a restoration contribution charge – proponents pay a restoration contribution charge to a new independent statutory office, the Restoration Contributions Holder, which will pool contributions across projects to fund more strategic restoration outcomes.

Proponents must now demonstrate a measurable improvement against an agreed baseline. This adds complexity (and cost) at the front end of a project, though the restoration contribution charge may offer  flexibility in how that obligation is ultimately met.

This revised offset framework is intended to commence by or on 1 December 2026.

2. The National Interest Exemption

The Amendments also expand the Minister for the Environment’s power in relation to exemptions for a proponent from the usual environmental assessment and approval requirements under Part 3 of Chapter 2 of the EPBC Act, on the basis of the national interest.

A National Interest Exemption may be sought by a person proposing to take an “action” or by a “designated proponent”. In deciding whether to grant an exemption, the Minister has very broad discretion. The EPBC Act provides no detailed criteria beyond a requirement that the Minister be satisfied it is in the national interest that the relevant Part 3 or Chapter 2 requirement (the specific referral, assessment, or approval provision from which the exemption is sought) not apply. Relevant considerations may include Australia’s defence or security, a national emergency, or anything else the Minister considers relevant.

However, this is a more robust version of the older equivalent exemption found in the former section 158 of the EPBC Act. A key difference is that the Minister may now impose conditions on a National Interest Exemption for the purposes of protecting, repairing, or mitigating damage caused by the exempted action. This means an exemption no longer removes a project from environmental oversight altogether. Conditions, potentially significant ones, may still apply.

Proponents should also be aware that a National Interest Exemption does not require an application. The Minister may grant one on their own initiative. The National Interest Exemption should also not be treated as a planning fallback. It remains available, but it is discretionary, cannot be relied upon in advance, and – even where granted – may still come with binding environmental conditions.

The National Interest Exemption provisions commenced on 20 February 2026.

3. A Restructured Penalty Regime

The Amendments establish the National Environmental Protection Agency (NEPA). The NEPA was formally established on 1 July 2026. It is anticipated that future amendments will see NEPA’s CEO vested with regulatory and enforcement powers, with the CEO to be supported by NEPA. The CEO will be able to issue Environment Protection Orders, which are directions requiring work to cease where a contravention is causing, or risks causing, serious environmental harm.

Criminal penalties

Criminal offences have maintained penalties of imprisonment ranging from two to seven years. However, the Amendments have increased fines, increasing the previous 120 penalty units (~$39,600) and 420 penalty units (~$138,600) to 1,000 penalty units ($330,000).

Civil penalties

Civil penalties under the EPBC Act apply to the same provisions as criminal offences. Prior to the Amendments, individuals face a fixed cap of 5,000 penalty units (~$1,650,000) and body corporates faced a fixed cap of 50,000 penalty units (~$16,500,000). The Amendments replace these fixed caps with the new variable formula under which penalties are set at the greater of the existing cap (5,000 penalty units) or three times the financial benefit gained or detriment avoided as a result of the contravention.  For a body corporate, a third limb is added: 10% of annual turnover for the relevant 12-month period, capped at 2,500,000 penalty units (~$825,000,000).

In practical terms, if breaching the EPBC Act was profitable because it saved money, avoided delay or generated revenue, the penalty can now be set as a multiple of that benefit rather than a fixed, predictable amount.

When do these changes apply?

The Amendments are staged. NEPA commenced on 1 July 2026 with its related enforcement functions expected later this year. The major criminal and civil penalty increases taking effect by 1 December 2026, applying to contraventions occurring wholly on or after that date.

Conclusion

These Amendments impact approvals, offsets and penalties, and introduces a new, independent regulator of environmental compliance.

The National Interest Exemption has been in force since 20 February 2026, and as of 1 July 2026, NEPA has been established in legislation. The remaining changes – the environmental offset framework and penalty regime – will be in effect by 1 December 2026.