New Queensland Bill to significantly extend liability for environmental damage beyond just Clive Palmer’s facilities

On Tuesday 15 March, Dr Steven Miles, Minister for Environment and Heritage Protection, introduced the Environmental Protection (Chain of Responsibility) Amendment Bill (“the Bill") into the Queensland Parliament. In introducing the Bill, the Minister referred specifically to the Yabulu nickel refinery and the risk of taxpayers footing the bill for environmental damage. In the press, the Bill has been described as a legislative response to Clive Palmer’s association with the troubled Queensland Nickel refinery.

The Bill includes sweeping powers for the EPA to make orders against a wide class of “related persons” of mining companies for past and present breaches of EPA licenses. Having been introduced to Parliament without community consultation, the Bill has already created waves within the natural resources sector. AMEC’s Chief Executive Officer, Simon Bennison, has stated that the industry has been “left in the dark”, and warns that without consultation there could be “unintended consequences for jobs in Queensland”.

This article considers the scope of the Bill, and areas that may be of concern to those involved – even tangentially – in mining and natural resources projects.

The Scope of the Bill

The most significant amendments proposed under the Bill will affect the “Environmental Management” provisions of theEnvironmental Protection Act (“the Act”). The amendments create a status of “related person”, who can be made as liable for breaches of EPA Licences and orders as the company the subject of an initial order (“the Company”).

The scope of who can be a “related person” will likely be a cause of concern for more than just company directors and executives, as the provisions are drafted widely to include holding companies, site landowners, and – most controversially – those decided by the EPA to be “related persons”, who have a “relevant connection” with the company. First, the EPA can have regard to any person who has benefitted financially, or who is capable of benefitting financially, from the works (“relevant activity”) of the company. Secondly, the EPA can have regard to a person who is, or has been at any time in the previous two years, in a position to influence the company’s conduct concerning environmental issues governed by the EPA.

The Bill provides some guidance on how the EPA will determine this “relevant connection” element. Relevant factors include the extent of control by the person, their position (if any) within the company, their financial interest in the company, structures which give the person financial benefit, agreements between the person and the company (and whether these were arm’s length), and, interestingly, the extent to which the person has complied with requests for information as to their relationship with the company.

The range of people and entities potentially affected by the Bill is significant, and many individuals and companies may suddenly find themselves within (or at risk of being placed in) this “related person” category. For example, depending on the circumstances, these provisions could apply to the receivers and other administrators and possibly to financiers.

What can be required of a “Related Person”?

The EPA will have wide powers to impose a range of orders against “related persons”. These are encompassed largely in one provision which will allow the EPA to extend any order made to the company, to its related persons. The order may impose “any requirement…that is being, or has been, imposed on the company, as if the related person were the company”. If an order is made against a related person, and that person fails to comply with its terms, the EPA can also issue a cost recovery notice against the person to reclaim their costs incurred.

These sections reveal the Bill’s original purpose – of holding individuals who are associated with sites that have caused environmental damage accountable for the costs of environmental repair. When the scope of orders possible, and the range of people and entities affected under the Act are considered, the potential risks to those affected by these provisions are very wide.

High Risk Companies – a Greater Risk for Related Persons too

Importantly, the Bill contains several provisions concerning “high risk companies”. Related parties of companies who are in more serious financial trouble (those in receivership, liquidation etc.) will be at risk of receiving orders in their own right – without an order ever being made against the original company. They will be as liable as if they were the high risk company. They may be required to take action to prevent or minimise the risk of environmental harm, to rehabilitate or restore land that has been damaged, or to give the EPA a bank guarantee for their compliance with the order.

Financiers, liquidators, receivers and other entities should beware this section when it is considered that exerting management and control over the company may place them in the “related person” category.

Retrospective Application

In his speech to Parliament, Dr Miles proposed a commencement date for a number of undisclosed provisions to be set at the day the Bill was introduced. If this will include the “related person” sections (which take up the majority of the Bill), any person or company who has exercised control over a company that may have breached EPA rules and requirements in the past two years (see above) from 15 March 2016 should be considering their legal position.

The notes accompanying the Bill admit that “an element of retrospectivity cannot be avoided”. Whether or not this is true, the Bill – if passed – may reach back as far as March 2014.

Key Dates

On Friday 18 March a public briefing was held by the Agriculture and Environment Committee on the Bill, and invitations were extended for written submissions. The closing date for these submissions is Thursday 31 March. A further public briefing will occur on Tuesday 5 April.

Conclusion

In his speech to Parliament, Dr Miles emphasised that the Bill would not affect arm’s length and “mum and dad” investors, nor contractors and employees, but the wording of the Bill raises risks for many other companies and individuals who have been associated, past or present, with a company in trouble with the EPA. The Bill was designed to prevent troubled operators from shirking their responsibilities and leaving the costs with taxpayers, but it appears to have the potential to do much more.