Environmental law reforms: implications of upcoming changes

The environmental compliance landscape changes on 1 July 2026, with the next stage of reforms to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) set to commence. This follows the suite of Bills passed in November 2025. Supported by half a billion dollars in federal funding, including a new cash injection from the 2026-27 Federal Budget, this second tranche of reforms will establish two new bodies: the National Environmental Protection Agency (NEPA) and the Head of Environment Information Australia (EIA). 

This comes as two further draft National Environmental Standards (NES), part of the EPBC Act reforms – the NES for Data and Information and the NES for Community Engagement – are released for public consultation. Subordinate regulations are also to come into effect on 1 July 2026.

The remaining EPBC Act reforms will commence on or before 1 December 2026. This will include the introduction of the ‘net gain’ offset and restoration framework, the ‘unacceptable impacts’ threshold for impacts to protected matters, and requirements for projects to be approved consistent with the newly finalised NES. 

In addition, as part of Australia’s climate-related financial disclosure regime, on 1 July 2026, Group 2 companies, registered schemes, registered superannuation entities, and disclosing entities will start their first reporting period.

Key takeaways from the upcoming regulatory reforms

• Business and industry should prepare for stricter environmental compliance requirements to commence from 1 July 2026, with the establishment of NEPA introducing new audit mechanisms and environment protection order powers, and heightened penalties for environmental breaches.
   
• The reforms are directed at streamlining environmental approvals. The regulations commencing on 1 July 2026 detail a new pathway for taking minor or preparatory action. The Federal Budget, released in May 2026, allocates over $150 million over four years to progress bilateral agreements that transfer federal assessment and approval directly to state and territory governments.
   
• Many businesses will be required to share and manage more environmental data from 1 July 2026, with the concurrent launch of EIA and the commencement of mandatory climate-related financial disclosures for Group 2 entities. The Budget announced a circa $105 million investment in artificial intelligence to upgrade environmental data, streamline regulatory systems and fast-track assessments, and the Budget and the government’s broader Whole-of-Government Regulatory Reform Agenda concurrently announced an increase to the threshold for Group 3 entity reporting.

EPBC Act reforms commencing 1 July 2026

The National Environmental Protection Agency (NEPA)

As of 1 July 2026, NEPA will be established as an independent regulator for Australia's national environmental laws. The agency is headed by an independent Chief Executive Officer, as the accountable authority of NEPA. John Bradley PSM, former head of Victoria’s Department of Energy, Environment and Climate Action and Department of Environment, Land, Water and Planning, was announced as the inaugural CEO on 12 June 2026. 

NEPA's core responsibilities include:

• undertaking compliance and enforcement activities;
   
• approving, changing, or cancelling environmental permits and licences; and
   
• monitoring and reviewing the operation of accreditation instruments, bilateral agreements, and bioregional plans under the EPBC Act. 

A key aspect of NEPA’s responsibilities is introducing a new category of compliance audits that can be conducted without prior notice. As part of this auditing regime, NEPA will be required to maintain a public electronic register of ‘registerable decisions’ and compliance outcomes. This requirement will enhance the transparency of decision-making in a manner that will enable greater public scrutiny of proponents’ environmental compliance records. 

The NEPA CEO will have broad powers to issue environment protection orders (EPOs) or ‘stop work orders’ where, for example, the CEO reasonably suspects a breach of the Act or there is an imminent risk of serious damage to the environment. The duration of EPOs will be limited to a maximum of 14 days, which the CEO of NEPA can only extend by an additional 14 days. 

Enforcement of EPOs will also be supported by civil penalties for non-compliance, with higher penalties of up to 5,000 penalty units for an individual (which currently equates to $1.65 million) applying under the reformed Act. A body corporate can face penalties up to the greater of 50,000 penalty units ($16.5 million) or 10% of its annual turnover.

The NEPA CEO will also have powers to make rulings on how the laws, regulations or standards under the EPBC Act should be applied in specific circumstances. This includes powers directly vested in it by both the EPBC Act and the National Environmental Protection Agency Act 2025 (Cth), and further powers that are only enlivened upon delegation by the Minister. 

The powers directly vested in the NEPA CEO under the EPBC Act include:

• power to issue environment protection orders under new Division 13A (new ss 474A–474H);
   
• power to make Rulings under new Part 19C (new ss 514YL–514YT);
   
• expanded directed environmental audit and compliance audit functions (ss 458–462K); and
   
• power to establish and maintain the auditor register (s 462G).

These provisions come into effect on 1 July 2026 and operate independently from any delegation by the Minister. The Minister may also delegate any of its functions (including the power to assess and approve projects) under the EPBC Act to the NEPA CEO, except for those functions specified in section 515(1A). This dual mechanism means that NEPA is operationally independent from the Minister, and that its operational scope may expand over time as the Minister chooses to delegate further functions.

The Head of Environment Information Australia

From 1 July 2026, the Environment Information Australia Act 2025 (Cth) (EIA Act) will establish the statutory office of the Head of EIA. Consequential amendments in the EPBC Act will commence on the same day.

The Head of EIA is intended to serve as an independent source of environmental data and information to support decision making under the EPBC Act. Projects assessed under the EPBC Act from 1 July 2026, whether directly, under a bilateral agreement, or under a NOPSEMA declaration, will be expected to meet data and information standards that are consistent with the frameworks overseen by the Head of EIA.

The Head of EIA will also be responsible for producing State of Environment reports every two years, establishing environmental economic accounts and declaring national environmental information assets such as a public environment data portal. The first report must be prepared no later than 15 December 2028. This represents a significant shift towards evidence-based environmental decision-making with regular, transparent reporting on environmental conditions.

Draft subordinate legislation to inform EPBC Act provisions 

The federal government has recently published an exposure draft of the subordinate legislation (draft regulations) that will inform the provisions of the EPBC Act commencing on 1 July 2026.

The government is currently proposing that the regulations come into effect with the legislative amendments on 1 July 2026.

Key features of the draft regulations include:

• Reducing duplication in environmental assessment: the draft regulations prescribe the criteria and National Environmental Standards that state, territory, and Commonwealth management or authorisation frameworks must be consistent with in order to be accredited under bilateral agreements or Commonwealth accreditation declarations. They also establish the regulatory settings for a new Ministerial power to declare that offshore petroleum activities regulated by NOPSEMA do not require separate EPBC Act approval. 

• Greater certainty for project delivery: new regulation 4.05 sets out detailed requirements for proponents to obtain the Minister's agreement to undertake minor or preparatory works while a controlled action is under assessment. This includes:

  • the information that must accompany an application,
     
  • a 20-business-day decision timeframe, and
     
  • the threshold test that any impacts must be ‘minor and repairable’.
     

• Greater environmental protections: the draft regulations prescribe criteria for making and reviewing Protection Statements for listed threatened species and ecological communities, and establish matters to be considered in the five-yearly review of Rulings. 

• Supporting NEPA's compliance functions and responsibilities: the draft regulations also introduce a comprehensive auditor registration framework. The framework prescribes the qualifications, experience, and independence requirements for registration, the form and publication of the auditor register, provisions for suspension and deregistration, and reporting obligations following the completion of compliance audits.

Update on National Environmental Standards 

As summarised in our previous insight, EPBC Act reforms: Senate Committee recommendations, the Senate Environment and Communications Legislation Committee made a number of recommendations in its report in relation to the reforms implementing the NES. In response to these recommendations, the NES for Matters of National Environmental Significance and the NES for Offsets have undergone a second round of drafting and public consultation, which closed in May and June respectively. 

The federal government has recently released exposure drafts for the NES for Data and Information and the NES for Community Engagement, which are open for public consultation until 8 July 2026. The NES for Data and Information sets out five principles requiring that data and information used in decision-making under the EPBC Act is:

• representative;
   
• transparent;
   
• comparable to data used in other EPBC Act decisions;
   
• reusable; and
   
• ethical. 

The NES for Community Engagement sets out four principles requiring that engagement on proposals under the EPBC Act is carefully planned and considerate, transparent, ethical and protective of privacy, and accessible. These are the principles against which projects referred for EPBC Act assessment will need to comply. The government is yet to release an exposure draft for the final NES, for First Nations engagement.

The NES are a significant component of the EPBC Act reforms which will place new limitations on when a decision-maker may approve a controlled action. The NES reforms will either commence on 1 December 2026 or at an earlier date set by proclamation.

Funding to support EPBC Act reforms

The Federal Budget provides more than $500 million over four years to implement the EPBC Act reforms, including its funding to establish NEPA (discussed above), and to support a growing pipeline of environmental approval applications. 

Since October 2022, the government has invested more than $600 million to address resourcing gaps in the approvals system, lifting the proportion of on-time decisions under the EPBC Act from 78% in 2022–23 to 95% in 2025–26. The Budget’s investment into legislative reforms is intended to create a faster and more predictable approval process encouraging private investment, reduce regulatory duplication, clarify community consultation requirements, and consolidate investment facilitation through the Investor Front Door, which may simplify regulatory compliance. 

A further $179.9 million over four years from 2026–27 will fund bilateral agreements with states and territories and the development of bioregional plans. These plans, combined with NEPA's use of AI to modernise environmental data systems, are intended to reduce jurisdictional duplication and give project proponents, particularly in the energy sector, earlier certainty on site viability. Separately, $105.9 million has been allocated to build AI-enabled tools that will allow states and territories to conduct and assess environmental approvals on the Commonwealth's behalf, with the aim of streamlining the assessment process and improving access to baseline environmental data. 

Commencement of Group 2 reporting under the climate-related financial disclosure regime 

From 1 July 2026, the reporting period begins for Group 2 entities, who now face mandatory climate-related financial disclosure requirements via annual sustainability reporting under the Corporations Act 2001 (Cth).

Group 1 entities’ reporting period started on 1 January 2025. Now, the disclosure requirements will be activated for Group 2 entities, who are those where at least two of the following are met at EOFY:

• consolidated revenue ≥A$200 million
   
• value of consolidated gross assets ≥A$500 million
   
• ≥250 employees

They also include entities registered (or required to register) under the National Greenhouse and Energy Reporting scheme, and asset owners where the value of assets (and the assets of the entities it controls) at EOFY is ≥A$5 billion.

Federal Budget environmental commitments and changes

Beyond the EPBC Act reforms, the federal government is continuing to focus on its climate and energy policy agenda through several mechanisms in the recent Federal Budget that have direct business implications.

Investment in energy transition

The $22.7 billion Future Made in Australia initiative remains the centrepiece of the government's clean energy investment strategy, funding tax incentives for hydrogen and critical minerals production, clean energy manufacturing, and associated workforce development. 

These Budget measures operate against the backdrop of the pre-existing Safeguard Mechanism policy settings review, which is a legislative requirement scheduled for the 2026–27 financial year under the Safeguard Mechanism Reforms Rules 2023. That review will assess whether the scheme is appropriately calibrated to deliver emissions reductions in line with Australia’s 62–70% reduction target by 2035. It will also consider the Carbon Leakage Review’s recommendations on whether to implement a Carbon Border Adjustment mechanism for select commodities. The review’s outcomes will directly shape the regulatory environment in which the Budget’s clean energy and decarbonisation spending is deployed. 

The Budget also commits $148 million over three years to support Australia's relationships with the Pacific and trade partners internationally ahead of COP31. 

Changes to climate-related financial disclosure obligations

The Whole-of-Government Regulatory Reform Agenda and the Budget concurrently announced an increase to the monetary thresholds determining classification as a ‘large proprietary company’ subject to mandatory sustainability reporting in Group 3 of the climate-related financial disclosure regime. The thresholds are proposed to double from $50 million to $100 million of consolidated revenue, and from $25 million to $50 million of consolidated gross assets. The 100-employee threshold remains unchanged. 

Group 3 entities are required to report from 1 July 2027. This threshold increase will result in fewer entities qualifying as a ‘large proprietary company’, and therefore fewer entities being required to prepare annual audited financial reports, directors’ reports, and sustainability reports encompassing climate-related financial disclosures. The government will consult on additional reforms to reduce reporting burden while maintaining core sustainability reporting requirements.

These reforms constitute part of the government's broader productivity agenda, which includes reducing financial sector compliance costs by $780 million per year through 14 legislative reforms.

Preparing for upcoming environmental compliance

1 July 2026 is a significant milestone for many organisations, with further significant changes on the near horizon. Many organisations will now be obligated to report under the climate-related financial disclosures reporting regime, and those developing major infrastructure, including in housing and energy, will need to consider the application of the EPBC Act reforms as they continue to commence over the balance of the year. 

Entities affected will need to assess their compliance frameworks and reporting against the new July frameworks and obligations. It is also imperative that those with current or future projects subject to EPBC Act compliance review and engage with the NES (including making submissions) as they are released, ahead of the final reform milestone later in the year.