Australia: Act commences to extend legal responsibility for environmental harm in Queensland

Key Points:

The regulator can now extend responsibility for clean-up, rehabilitation and associated costs to a "related person".

The Queensland Parliament passed the Environmental Protection (Chain of Responsibility) Bill 2016 with amendments on 22 April 2016. The Act commenced on assent yesterday and will allow the regulator to extend responsibility for clean-up, rehabilitation and associated costs to a "related person". The definition of a "related person" is central to the Act and was the subject of the key amendments made in Committee.

We previously examined the Bill when it was referred to the Agriculture and Environment Committee; its report into the Bill was released on 15 April 2016.

Overview of key provisions of the Environmental Protection (Chain of Responsibility) Act

The Act:

  • allows the Chief Executive administering the Environmental Protection Act to issue environmental protection orders (EPOs) to a "related person" in certain circumstances, including where an EPO is issued to a company or in relation to a "high risk company";
  • allows the Chief Executive administering the Environmental Protection Act to amend an environmental authority (EA) to include a financial assurance condition where it is being transferred, whether that is by way of transfer between entities or by share sale;
  • limits the Court's ability to stay a financial assurance condition that is being challenged only to cases where 75% of the decided financial assurance has been paid.

Agriculture and Environment Committee recommendations

In the very compressed submission period, 89 submissions were made to the Committee about the Bill, mostly about the breadth of the definition of "related person".

The Report contained six recommendations, including that the Committee could not agree whether the Bill should be passed.

The other Committee recommendations in summary are:

  • comprehensive list of definitions: the Minister consider amendments to include other terms such as "executive officer" and "related person" in the new chapter regarding to whom an environmental protection order (EPO) can be issued;
  • land owners: omit the words "the person who owns land on which the company carries out, or has carried out, a relevant activity" of who is a "related person" as inclusion of these words along with the definition of "owner" in the Act includes persons who may not be in a position to influence or control the activities conducted by the company;
  • statutory guideline: require the Minister to table a statutory guideline outlining how the Department of Environment and Heritage Protection will administer its powers in relation to "related persons" and determine whether a person has a "relevant connection" to a company;
  • issuing EPOs: allow the administering authority to issue an EPO to a related person of a company only if an EPO has also been issued to the company (where the company still exists); and
  • stay of decisions on financial assurance: direct the Department to consult industry and legal bodies in relation to a stay of decisions about the amount of financial assurance required under a condition of an EA, to find a less onerous percentage than the proposed 85% of the amount of financial assurance that was decided by the administering authority.

What's different in the Act?

The Act was passed with a number of amendments, most notably to the definition of "related person" of a company to exclude from the definition:

  • landowners for land on which a resources activity is carried out, unless the person is an associated entity of the company:
  • registered native title parties and certain interests under the Aboriginal Land Act 1991 and Torres Strait Islander Land Act 1991.

Other amendments made in Committee concerned:

  • amendments to ensure that "mum and dad investors", contractors and employees are not a "related person" by requiring that any financial benefit received or capable of being received be "significant";
  • excluding from the financial benefit considerations benefits under a native title agreement, compensation payable under resources legislation or make good arrangements under the Water Act;
  • what is a transfer that triggers the ability to amend an EA to include a financial assurance condition, to extend it to changes in control of a holding company (designed to capture share sales);
  • guidelines to be made under the EP Act that must be considered in deciding whether to issue an EPO to a "related person";
  • a review of the operation of the new provisions within two years after commencement;
  • the decision about financial assurance may only be stayed where the administering authority has been given security for at least 75% of the decided amount - the Bill originally required 85%.

How does the Act apply?

The amending legislation commence on assent yesterday, however some provisions will operate retrospectively, including that:

  • Decisions about whether a person or entity constitutes a "related person" may consider circumstances before the commencement of the amending legislation.
  • The power to issue an EPO to particular persons is extended to include a person who becomes a related person during the transitional period (ie. the period from the start of the introduction day (the day the Bill was introduced into the Legislative Assembly, 15 March 2016) to the day the amending Act commenced).
  • An EPO may impose requirements relating to a relevant activity carried out, or environmental harm caused, before the commencement.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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