MP Tony Burke at Mulligan's Flat Sanctuary following the launch of two Biodiversity Fund woodland restoration projects.

Tony Burke at Mulligans Flat Sanctuary yesterday. Photo: Rohan Thomson

Federal Environment Minister Tony Burke says developers on land of national significance who do not refer their projects for Commonwealth environmental scrutiny risk serious penalties.

Commenting on a NSW government-approved development of 2000 homes at Tralee on the border with the ACT, Mr Burke said his environmental office regularly dealt with inquiries over Commonwealth legislation.

''Lots of companies and developers at different points, when they are not sure, make a referral and the department gives them guidance whether it is something which is required to have a decision under national environmental law.

''If a particular developer makes a decision without the advice of the department that they are going to go their own way and not check whether federal laws should be invoked, then they do so at their own risk and there are serious penalties if they go ahead with the development, that actually required a federal approval.''

The Department of Environment, Water, Heritage and the Arts reminded the Village Building Company last month of its obligations under the legislation. But the residential developers said they did not need federal approval.

Mr Burke said some issues did not require a federal referral. ''The test isn't whether there is any impact, the test is whether or not there is a significant impact.''

Village has been advised of the likelihood of its development being scrutinised by Mr Burke's office because of the amount of box-gum grassy woodland at Tralee, but the developer, relying on NSW approvals, said its scaled down project was in the clear.

Mr Burke was speaking after launching woodland restoration projects worth more than $2 million throughout the ACT, where critically endangered grassy woodland remains, despite extensive historical clearing across Australia.

Mr Burke said he suspected no environmental asset had been cleared as much as box-gum grassy woodland. The Commonwealth was trying to connect what was left with wildlife corridors for endangered species including small mammals.

''But the more we can find these points of connectivity, the more your small animals can move back and forth, the more your birdlife can have a range of places to forage, and the more we find that we are not simply a nation that is preserving our pristine locations, we also want to be a nation that is reclaiming so much of what we have lost.''

ACT Environment Minister Simon Corbell said ecosystems did not stop at the territory border and part of the project, covering 60,000 hectares of nationally significant woodlands, would involve collaboration with NSW.