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What you need to know
- On 27 April 2016, the Queensland Government introduced the Environmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld).
- The Act amends the Environmental Protection Act 1994 (Qld) and aims to enhance environmental protections by giving the Department of Environment and Heritage Protection greater powers to enforce compliance with existing environmental obligations.
- Persons associated with sites that are subject to Environmental Authorities need to be fully aware of their liability, particularly where the Environmental Authority holder is at risk of experiencing financial difficulty.
On 27 April 2016, the Queensland Government introduced the Environmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld) (the Act). The Act amends the Environmental Protection Act 1994 (Qld) (the EP Act) and aims to enhance environmental protections by giving the Department of Environment and Heritage Protection (DEHP) greater powers to enforce compliance with existing environmental obligations.
The Act establishes a 'chain of responsibility', which includes rehabilitation of a site, through to a 'related person' of a company. A 'related person' can include:
- a holding company of the company
- a person who owns land on which the company carried out a relevant activity, or
- a person that the administering authority decides has a relevant connection with the company.
What is the purpose of the Act?
The ultimate aim of the Act is to make companies in financial difficulty and any 'related person' (such as a parent company), responsible for managing sites against risk of environmental harm and incomplete rehabilitation work.
The purpose of the Act is therefore to avoid a situation where the state becomes responsible for cleaning up sites when a company runs into financial difficulty.
What are the key changes?
- Allowing an Environmental Protection Order (EPO) to be issued to a person that has some relevant relationship to the company that is in financial difficulty (which may include, for example, a parent company or executive officer).
- Providing that if one of these EPOs is issued, and the recipient fails to comply with it, DEHP may require the recipient to pay the costs of taking action stated in the order or monitoring compliance with the order.
- Enabling DEHP to amend an Environmental Authority (EA) when it is transferred, to impose a condition requiring the provision of financial assurance.
- Ensuring that authorised officers under the EP Act have powers to access sites no longer subject to an EA and sites still subject to an EA but no longer in operation. New powers will equip the regulator with the power to enter sites when a business has collapsed or handed back its licence to operate. If a business has failed to take steps previously demanded under an EPO, the regulator can then perform emergency works and recover its costs from a person in the chain of responsibility.
- Compelling persons to answer questions in relation to alleged offences committed, even if answering may tend to incriminate the person (this would include, for example, compelling employees of a company in financial difficulty to answer questions about alleged offences committed by that company).
- Expanding the ability of DEHP to access information for evidentiary purposes.
- Increasing the 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.
How does it affect your business?
The key effect of the Act is to allow DEHP to issue an EPO to a person that has a relevant connection to an EA holder. Prior to commencement of the Act, DEHP was only allowed to issue an EPO directly to the operator that holds the EA. The aim of the amendment is to capture related persons that have profited from activities carried out under the EA.
The amendment also captures persons that have the ability to influence environmental performance on the site, whether financially, through the ability to give directions, or otherwise. This means that a related person of a company in financial difficulty, like a parent company or a company director, can be required to take action to prevent or clean up environmental harm. Moreover, where the state needs to step in to undertake this work itself or through contractors, the regulator can seek to recover the relevant costs.
As a result of the expanded EPO provisions, there have been concerns voiced that banks may become hesitant to provide funding for mining projects in case they are made liable as a related party through the 'chain of responsibility'. The absence of Queensland Government guidelines relating to how the administering authority is to decide whether a person has a relevant connection with a company and whether to issue an EPO to related persons appears to be creating some level of investor uncertainty and threatening Queensland mining projects. The Queensland Government has however been clear that the Act is not intended to capture banks in their role as lenders to companies with environmental obligations.
In an effort to resolve difficulties in the investigation of companies suspected of offences, the Act now prohibits a person, including an executive officer of a company, from failing to answer questions about a suspected offence because the answer may incriminate the person. Despite incriminating evidence for a person who answers a question being inadmissible in most civil or criminal proceedings against the person, the evidence will be admissible in proceedings for which the falsity or misleading nature of the answer is relevant.
The Act also increases the powers of authorised officers to access properties to gather evidence as well as expanding the evidentiary powers of DEHP. Further to this, the DEHP can now impose conditions requiring financial assurance on transfer of an EA to ensure that there are sufficient funds available to clean up a site.
Persons associated with sites that are subject to EAs need to be fully aware of their liability, particularly where the EA holder is at risk of experiencing financial difficulty.
To read further, a glossary of key concepts and relevant terms can be accessed here.
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.