Environment Protection Reform Bill 2025: Draft MNES and Offsets Standards open for public feedback

Highlights

• Each draft Standard states objectives, outcomes and principles to be applied when making prescribed decisions under the EPBC Act.
• Adverse impacts on protected matters would need to be avoided, mitigated, repaired, and compensated in accordance with a four-step mitigation hierarchy.
• Compensation, through either or both an offset activity or payment of a restoration contribution charge, will only be allowed as a last resort, once all other steps in the mitigation hierarchy have been exhausted, and only where it is permissible under the EPBC Act and Regulations.
• Compensation would need to result in a ‘net gain’, such that there is a measurable improvement for the affected protected matter relative to an agreed baseline.
• You can provide feedback on the draft documents until Friday, 30 January 2026.

What are the draft Standards?

As noted in our in-depth analysis, the Reform Bill proposes major changes to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act), including the introduction of a new power for the Minister to make National Environmental Standards to be applied in decision-making under the EPBC Act. The draft MNES Standard and Offsets Standard are the first to have been released as part of the proposed reforms. Each is accompanied by a draft Policy Position.

It is proposed that there will be new requirements for certain decisions under the EPBC Act to not be inconsistent with the MNES Standard and Offsets Standard (subject only to a ‘national interest’ exemption), including decisions by the Minister about whether to approve an action, and what conditions to attach to an approval.

In practice, the MNES Standard and Offsets Standard will have broader relevance for proponents and the community, by setting out what must be done to protect, conserve and, where necessary, restore protected matters through the regulatory process. It is expected that proponents will look to them for guidance when designing and planning their actions, for example.

Each of the draft Standards states objectives, outcomes and principles to be applied when making prescribed decisions under the EPBC Act. As explained in the draft Policy Positions, the principles outline what needs to be demonstrated to facilitate the realisation of the outcomes, and to effectively promote the objectives.

Draft MNES Standard

Some of the key principles outlined in the draft MNES Standard would require that:

• actions appropriately consider the application of the mitigation hierarchy; and
• actions with residual significant impacts to protected matters are compensated.

The mitigation hierarchy is a four-step framework designed to help proponents to limit, as far as reasonably possible, adverse impacts on protected matters. It is also designed to help the Minister to assess whether an action’s significant impact is residual and thus acceptable. The four sequential steps are to avoid, mitigate, repair, and compensate.

Repair will only be allowed for impacts which are minimal and temporary in nature, and generally only where the repair activities can be done in a timely manner and are feasible and sustainable in the long term for the protected matter.

Compensation is to be a last resort, once all other steps in the mitigation hierarchy have been exhausted. Actions which will, or are likely to, result in residual significant impacts on protected matters (after applying appropriate avoidance, mitigation and repair measures) will need to be compensated through either or both an offset activity or payment of a restoration contribution charge.

It is proposed by the Reform Bill that the Minister will only be able to approve an action if satisfied that it will not have, or be likely to have, an unacceptable impact on a protected matter. The draft Policy Position clarifies that compensation will not be able to be used to make an unacceptable impact acceptable.

Draft Offsets Standard

The Reform Bill proposes to introduce a specific power for the Minister to impose conditions on an approval requiring compensation, including by way of the provision of an offset. The Offsets Standard will play an important role in imposing offset conditions, but would only be able to be considered by the Minister where residual significant impacts on a protected matter are not unacceptable and are allowed to be compensated for under the EPBC Act and Regulations. The Regulations will prescribe impacts to protected matters which cannot be compensated.

The intention is that all residual significant impacts will need to be fully compensated to achieve a net gain through an offset. This will mean there must be a measurable improvement for the affected protected matter relative to an agreed baseline, reflecting what would occur in the absence of the offset activity. The Regulations will include information on how a net gain can be demonstrated at the project and landscape scale.

Other key principles outlined the draft Offsets Standard would require that:

• offset sites are securely protected such that there is a reasonable expectation that the projected gain will be delivered and maintained for the duration of the impact. Wherever possible, robust legal instruments such as covenants should be used to secure the offset;
• arrangements should be made to ensure that any offset site is managed until the offset has been delivered and throughout the ensuing ‘maintenance period’, which is generally 25 years for temporary impacts or 100 years for other impacts. If the outcome of an offset activity is demonstrated to be self-sustaining before this time, the proponent may request that their liability cease and the agreed maintenance period be amended accordingly. The maintenance period is not intended to be linked to the security of the offset;
• offsets provide a tangible benefit to the affected protected matter by directly contributing to its overall conservation outcome;
• offsets deliver benefits that would not have occurred without the offset - they go beyond existing obligations, and protections;
• offsets provide for a like-for-like outcome for the affected protected matter to compensate for residual significant impacts;
• from a policy perspective, offsets should be delivered in areas that are both ecologically and socially relevant to the affected protected matter, to ensure they provide meaningful outcomes for both ecological and social equity; and
• offsets are secured and actively managed at the offset site prior to the relevant impact starting at the impact site. Conditions will require the offset to be in place prior to the impact commencing; however, an offset may be delivered in stages. The offset identified for each stage must commence before the corresponding impact occurs.

What’s next?

The draft MNES Standard and Offsets Standard and accompanying draft Policy Positions are available here. The Department is inviting feedback on the documents until Friday, 30 January 2026.

In the meantime, the Senate Environment and Communications Legislation Committee will be examining the Reform Bill (and related Bills) and will provide its report by 24 March 2026.

Please get in touch if we can assist you to understand how the proposed reforms could impact your projects, or to make a submission about the draft documents.