Australia: DEHP's new weapons to ensure clean-up of mining sites in Queensland: are you in the firing line?

On 22 April 2016, amendments to the Environmental Protection Act 1994 (Qld) (EPA) were passed by the Queensland Parliament by way of the Environmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld) (Act).

The stated aims of the Act are to provide better environmental protection for mining sites operated by companies in financial difficulties, and also to avoid the State bearing any costs associated with managing and/or rehabilitating such sites.

The Act seeks to achieve these aims in a number of ways, including by allowing:

  • the Department of Environment and Heritage Protection (DEHP) to issue environmental protection orders (EPOs) to a 'related person' of a company operating a mining site; and
  • the DEHP to recover any costs associated with them taking action specified in an EPO where a related person does not comply with the EPO.

Background

The introduction of the Act on 15 March 2016 was predominantly triggered by the Yabulu Nickel Refinery being placed into voluntary administration, and the associated concern that the Queensland government could be left with the financial responsibility for the environmental clean up of the Refinery. The introduction of the Act triggered responses from many stakeholders who were concerned about the Act's reach, due to its wide drafting and therefore potentially far-reaching effects. While the amendments made before the passing of the Act aimed to alleviate these concerns, many are still concerned about the breadth of persons who may be captured by the Act.

Overview of Changes

Environmental Protection Orders

Currently, an EPO can be issued by the DEHP to require a company who is conducting an activity to remedy a risk of environmental harm or to prevent further harm from the conduct of the activity. The Act expands the range of persons to whom the DEHP may issue an EPO by providing that an EPO can be issued to a 'related person' of the company who is conducting the activity. Such an EPO may impose any requirement on the related person that is being, or has been, imposed on the company as if the related person were the company.

The Act also provides that where a company is deemed to be a 'high risk company', the DEHP can issue an EPO to a related person of that company regardless of whether the 'high risk company' itself is being or has been, issued an EPO.

Who is a 'related person'?

A person will be a related person of a company if:

  1. the person is the holding company of the company; or
  2. the person owns land on which the company carries out, or has carried out, a relevant activity other than a resource activity; or
  3. the person is an associated entity of the company and owns land on which the company carries out, or has carried out, a relevant activity that is a resource activity; or
  4. the DEHP decides the person has a relevant connection with the company.

What does 'relevant connection' mean?

The DEHP may decide that a person has a relevant connection with a company if the DEHP is satisfied that the person is:

  • capable of significantly benefiting financially, or has significantly benefited financially, from the carrying out of a relevant activity by the company; or
  • in a position (or in the previous two years has been in a position) to influence the company's conduct in relation to the way in which, or extent to which, the company complies with its obligations under the EPA.

Examples of a related party under the relevant connection test appear to include parent companies or company directors (including shadow directors).

The Act does provide a non-exhaustive list of the factors which can be considered by the DEHP in determining whether or not a person has a relevant connection with the company carrying out the activity. Some of these factors are:

  • the extent of the person's control over the company; and
  • whether dealings with the company were at arm's length, on a commercial footing, for the purposes of providing professional advice or for the purposes of providing finance or taking a security.

The Act also provides that the chief executive may make guidelines about how the DEHP decides whether a person has a relevant connection with a company (and therefore whether that person is a related person). These guidelines must be considered by the DEHP.

Importantly, the DEHP can also consider matters occurring before the commencement of the Act in deciding whether a person has a relevant connection with a company. To that end, the Act also provides the DEHP can retrospectively issue EPOs to a person who was a related person at the time of the Act's introduction on the 15 March 2016 (regardless of whether that person is currently a related person).

Does the Act exclude anyone from being a related person?

In response to concerns about the Act's potential application to landowners who have limited or no ability to prevent the relevant activity from being undertaken on their land, the Act now effectively excludes owners of the underlying tenure of mining and petroleum leases and native title parties from being a related person.

The Act makes clear that when deciding whether a person is a related person, it is irrelevant that the person is capable of significantly benefiting financially, or has significantly benefited financially, or has been in a position to influence the company, because of:

  • an agreement or obligation relating to native title, Aboriginal cultural heritage or Torres Strait Islander cultural heritage;
  • a conduct and compensation agreement, or compensation paid or payable, under resource legislation; or
  • a make good agreement for a water bore under the Water Act 2000 (Qld).

However, where the landowner is an associated entity of the company, and the company is carrying out a resource activity, then that associated entity will still be a related person. 

If I am a related person, will I be issued with an EPO?

Simply because the DEHP deems you to be a related person does not mean the DEHP will be able to automatically issue an EPO to you. The amendments to the Act provide that before issuing an EPO, the DEHP may consider whether the related person took all reasonable steps, having regard to the extent to which the person was in a position to influence the company's conduct, to ensure that obligations under the EPA were complied with and that rehabilitation would be adequately funded. Further, the DEHP must consider any guidelines that the chief executive has made about when EPOs can or should be issued to related persons.

Amendments to Environmental Authorities

The Act allows the DEHP to amend an environmental authority where:

  • another entity becomes the holder of the authority;
  • another entity becomes a holding company of a holder of the authority; or
  • where an EPO is amended or withdrawn.

However, in the circumstance where another entity becomes the holder of the authority, the only condition that may be imposed on the environmental authority is one requiring the holder of the environmental authority to give the DEHP financial assurance.

Further, these changes will capture parties who became a holder of an environmental authority during the transitional period, and parties who became the holding company of a holder of an environmental authority during the transitional period. The transitional period means the period between the Act's introduction into the Legislative Assembly (15 March 2016) until its commencement date (27 April 2016).

Transitional and Retrospective Provisions  

Parts of the Act are retrospective and will therefore apply prior to the Act's commencement on 27 April 2016.  For example, a related person includes a person who was a related person during the transitional period. Further, an EPO may impose requirements relating to a relevant activity carried out, or environmental harm caused, before the commencement of the Act.

Other Changes

There are other changes to the EPA that will flow from the Act including:

  • enabling the DEHP to recover any costs of taking action where a related person has failed to comply with an EPO;
  • increasing the conditions or grounds that need to be considered or satisfied before a court can stay a decision about an amount of financial assurance or a decision to issue an EPO (for example, having to provide security for at least 75% of the DEHP assessed financial assurance amount);
  • providing power to authorised officers under the EPA to be able to access sites no longer subject to an environmental authority and sites still subject to an environmental authority but no longer in operation;
  • compelling persons to answer questions in relation to alleged offences; and
  • expanding the ability of the DEHP to access information for evidentiary purposes.

Review

There will be a review of the Act two years after its commencement to consider whether the new provisions remain appropriate.  

Concluding Thoughts  

Even with amendments made prior to the passing of the Act, the DEHP will still have considerable discretion in deciding who will be captured by the legislation. This discretion may make it difficult for parties to determine with any degree of certainty whether they may be subject to the new liabilities created by the Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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