As we reported in March, the Queensland Government introduced proposed amendments to theEnvironmental Protection Act 1994 (Qld) (EP Act) would give the environmental regulator the ability to issue environmental protection orders (EPO) to parties connected with the holder of an environmental authority (related persons).
The Environmental Protection (Chains of Responsibility) Amendment Bill 2016 (Bill) received widespread attention and comment on its introduction. Following a report into the Bill handed down by the Agriculture and Environment Committee, the Bill has now been passed through Parliament.
In response to a large number of submissions made to the introduction of the Bill, a number of key changes were made before its passage.
Amendments have been made to the new legislation to facilitate the development of a statutory guideline to govern the application of the new regime.
The guideline will clarify how the regulator will decide:
- Whether a person has a relevant connection to an authority holder;
- Whether to issue an environmental protection order to a related person; and
- Which related person or persons to issue an environmental protection order.
The guideline is to be a disallowable instrument (meaning the guideline will be a legislative instrument that must be put forward for consideration by Parliament).
The Minister has committed to developing the guideline in consultation with various impacted organisations and their representatives.
All reasonable steps test
In addition to the new guidelines, the Government has introduced a threshold test for the regulator to consider when issuing an EPO to a related person.
In deciding whether to issue an EPO to a related person, the regulator may consider whether, having regard to the extent to which the person was in a position to influence the company’s conduct, that person took all reasonable steps to ensure that:
- The company complied with its environmental obligations under the EP Act; and
- Made adequate provision to fund the rehabilitation and restoration of the land because of environmental harm from a relevant activity carried out by the company.
This reasonable steps test is a welcome addition, and has the potential to operate as a safety valve for parties concerned by the wide reaching scope of the new legislation.
In this regard, the ability to seek judicial review of a decision by the regulator to issue an EPO to a related person should give some comfort, particularly to parties who are not in a position to manage or influence the day-to-day operations of a company.
In considering whether adequate provision has been made for clean up costs, it will be interesting to see whether maintenance of all financial assurances is sufficient in the eyes of the regulator.
Changes to protect land owners, native title and cultural heritage parties
Key changes have been introduced to ensure the new laws do not capture the owners of land on which a company is carrying out a resources activity. Protection has also been introduced for land owners, occupiers, native title and cultural heritage parties that receive a financial benefit from the company undertaking the relevant activity. Financial benefits provided under make good agreements for water bores will also be excluded from the operation of the new provisions.
It should be noted that a person who owns land on which a company undertakes relevant activities other than resources activities will still be regarded as a related person of the company for the purpose of the new laws.
Significant financial benefit
In considering whether a person is a related person of an environmental authority holder, the regulator will undertake a‘relevant connection’ test. One limb of the test is whether the person has benefited, or is capable of benefiting, financially from the carrying out of a relevant activity by the holder.
The Government has amended this test such that, to be considered to have a relevant connection, the person must receive, or be capable of receiving, a significant financial benefit.
No additional guidance has been offered at this stage as to the intended application of the change, other than to ensure that ‘mum-and-dad’ investors and ‘small-scale shareholders’ are not encompassed. A comparison will be made between the size of the financial benefit against the scale of the activities under consideration.
It is likely that the new guidelines will further clarify what constitutes a significant financial benefit.
Change in control to trigger new or changed FA
The Bill as introduced allows the regulator to introduce new or increased financial assurance requirements on transfer of the relevant environmental authority.
This power has been extended to circumstances where, by a transfer of shares in the company that holds an environmental authority, the authority holder has a new holding company.
The new legislation is now awaiting assent before commencement, which is likely to occur within the next fortnight.
Following commencement, we will closely monitor development of the new statutory guidelines, which will give further clarity to the extent and reach of the new regime.