Queensland Government Clarifies Liability Of "Related Persons" For A Company's Environmental Cleanup Bill.

 
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In the Alerts issued by Jones Day in March and April 2016, we referred to the passage of the Environmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld) ("Act"), which amends the Environmental Protection Act 1994 (Qld) ("EPA"), by the Queensland Parliament on 22 April 2016.

As a result of the Act, it is now possible for a "related person" of a company to be issued with an environmental protection order ("Order") by the Department of Environment and Heritage Protection ("Department"), rendering the person liable for the company's environmental cleanup responsibilities under the EPA where:

an Order is being, or has been, issued to the company by the Department (section 363AC of the EPA); or

the company is a "high risk" company (section 363AD of the EPA), meaning a company that is in external administration or that is an associated entity of such a company.

Under section 363AB of the EPA, a "related person" includes a parent company and, where a company is undertaking resources activities on land that it does not own, the landowner if it is an associated entity of the company. More broadly, however, a related person also includes any person the Department decides has a "relevant connection" with a company.

Section 363AB(2) of the EPA states that the Department may decide a relevant connection exists if:

a person is capable of significantly benefiting financially, or has significantly benefited financially, from the activities of a company issued with an Order or a high-risk company; or

a person is, or has been at any time during the previous two years, in a position to influence the conduct of such a company in relation to the way in which or the extent to which the company complies with its obligations under the EPA.

Guideline

In response to a flood of concerns from stakeholders that financiers, shareholders, insolvency practitioners and directors would face undue liability risks arising from the breadth of the relevant connection test, the Queensland government issued a Guideline on 27 January 2017, which the Department is obliged under section 363AB(7) of the Act to take into account in determining whether a relevant connection exists in a particular case.

The Guideline sets out a range of prescribed factors and factual scenarios that provide great clarity in assessing the persons who are likely to be found by the Department to be related persons under either limb of the relevant connection test.

Significant Financial Benefit

According the...

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