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RISK IN CONTEXT

QLD Environmental Protection Amendment Bill Extends Legal Responsibility for Environmental Harm

Posted by Jasper Taanman 05 December 2016

With the introduction of the Queensland Government’s Environmental Protection (Chain of Responsibility) Amendment Bill 2016, persons within parent companies, landowners or with a relevant connection to the first company can now be held personally liable for failures to comply with environmental obligations.

Key changes

The legislation, introduced in April this year, gives the Department of Environment, Heritage and Protection (DEHP) the ability to issue Environmental Protection Orders beyond the company carrying out environmental relevant activities, to the companies’ related persons. A related person includes a parent company, owner of land, or another person DEHP decides has a relevant connection within the company. The relevant connection extends to persons who are capable of significant financial benefit from the companies’ activities or within the previous two years held a position of influence on the company’s obligations under the Environmental Protection Act.

The Queensland Government’s objective in passing the amendment bill is to enhance environmental protection and avoid bearing the costs for managing and rehabilitating sites in financial difficulty. The amendments are not intended to extend the chain of responsibility to arms-length investors such as mum and dad investors, but the exposure to personal liability where the company breaches its environmental obligations are larger than ever.

Importantly, the amendments will take effect retroactively to ensure companies do not make corporate structural changes to avoid the impact of the proposed changes.

Risk implications

Under the new environmental legislation, persons within parent companies, land owners and related persons such as company directors and officers and executives can all be held liable for environmental harm caused by a company’s activities and be issued with an Environmental Protection Order by the DEHP.

Traditional insurance policies such as general liability, property and directors & officers liability are not designed to provide environmental liability protection and can leave companies or their related persons exposed to potentially costly environmental clean-up obligations or third party liabilities. One notable example is a directors & officers liability insurance policy, which generally excludes cover for clean-up costs.

Companies with any operations or interests in Queensland are urged to assess their environmental risks and determine how these risks can be managed, mitigated or transferred.  

Related to:  Australia , Environmental

Jasper Taanman

Senior Account Executive