WHO SHOULD READ THIS
- Financial beneficiaries of Queensland projects that involve an environmentally relevant activity.
THINGS YOU NEED TO KNOW
- The Queensland Government has introduced a new Bill exposing a ‘related person’ to an operator in Queensland to environmental protection orders and rehabilitation costs.
On 15 March 2016, the Environmental Protection (Chain of Responsibility) Amendment Bill 2016 (Bill) was introduced to Parliament.
The Bill, according to its explanatory notes, is intended to better protect the environment and the State from sites operated by companies in financial difficulty. However, the Bill is broadly framed and as it stands may reach any operator in Queensland and, remarkably, its ‘related persons’.
The Bill has been introduced in response to concerns surrounding compliance with the rehabilitation requirements for various projects across the state including the Yabulu Nickel Refinery, the Texas Silver Mine, the Collingwood Tin Mine and the Mount Chalmers Gold Mine.
It has been referred to the Agriculture and Environment Committee for consideration.
Environmental protection orders
The Bill exposes a new and broad range of business executives, operators and investors to the risk of Department of Environment and Heritage Protection (DEHP) enforcement of clean up and rehabilitation costs through an environmental protection order (EPO).
EPOs can prescribe rehabilitation steps involving potentially significant expenditure requirements.
If the Bill becomes law, an EPO may be issued to a related person of a company the subject of an EPO. Related persons to high risk companies may receive an EPO whether the company has received one or not.
A ‘related person’ may include:
- a holding company or a company with a financial interest in the company
- a person who owns land on which the company carries out, or has carried out the relevant activity under its environmental authority
- a person who has a relevant connection with the company (for example, if the person is capable of benefiting or has benefited financially from the activities of the company), or
- a person who is, or has been at any time during the past 2 years, in a position to influence the company’s compliance.
‘Financial interest’ is defined in the Bill to mean a direct or indirect interest in:
- shares in the company
- a mortgage, charge or other security given by the company, or
- income or revenue of the company.
As noted above, a person who owns land on which a company carries out an environmentally relevant activity is, under the Bill at least, a ‘related person’ to the company. How, and why, land ownership constitutes a relationship with the company is not explained in the Bill or its explanatory notes.
In any event, the inclusion of underlying land owners as related persons means they may be the subject of an EPO stemming from environmentally relevant activities carried out by the proponent. This is bound to attract significant attention. Land owners, faced with potentially significant liabilities which are entirely outside their control, will be looking at ways to manage this liability in any way they can. This may give rise in many cases to further complications in the operator/land owner relationship.
The extent of an individual’s financial interest is a relevant factor for DEHP when considering whether the person or entity has a ‘relevant connection’ with the company and therefore whether they are a ‘related person’ who may be subjected to EPOs. This is intended to prevent EPOs from being issued to persons with minor interests in the company or its profits, having regard to the corporate structure and associated financial interests as a whole.
Where requirements under EPOs are imposed on two or more related persons of a company, the order may provide that the related persons are jointly and severally liable for complying with the requirements including for the costs of compliance.
If a related person fails to comply with an order and the State decides to step in to undertake environmental management rehabilitation work under the order, DEHP may issue a cost recovery notice to the related person. The cost recovery notice may claim a stated amount for costs reasonably incurred in taking an action stated in the environmental protection order or in monitoring compliance by the related person with the order.
The Bill also:
- enables DEHP to amend environmental authorities when they are transferred to impose a condition requiring the provision of financial assurance
- ensures that authorised environmental officers have powers to access sites that are no longer subject to an environmental authority as well as sites that have an environmental authority but are no longer in operation, and
- expands DEHP powers to compel a person to answer questions on alleged offences (for example, compelling employees of a company in financial difficulty to answer questions about alleged offences committed by that company).
DEHP’s power to issue EPOs to ‘related persons’ has been introduced with retrospective application.
The Bill provides that if a high risk company has stopped holding an environmental authority, the order may include requirements that could be imposed as if the company still held the environmental authority. There is no requirement that the high risk company stopped holding the environmental authority after the commencement of the Act (or after the Bill was introduced into State Parliament). This would allow for retrospective personal liability even where, for example, the mining tenement the subject of a relevant environmental authority has been disclaimed during liquidation.
In an effort to prevent attempts to avoid the application of the Bill between now and its commencement, some provisions are drafted to operate with effect from 15 March 2016 (when the Bill was introduced to State Parliament).