Frequently asked questions about policy and legislation changes

    Environmental Protection (Underground Water Management) and Other Legislation Amendment Act 2016

    How will the environmental impacts of underground water rights be managed?

    The Environmental Protection Act 1994 was amended by the Underground Water Management Act to require a specific assessment of the environmental impacts of groundwater take as a mandatory requirement for environmental authority applications and through clarification of the existing power to impose conditions on environmental authorities.

    The initial environmental scrutiny of projects is achieved by requiring that a minimum level of mandatory information about predicted impacts on groundwater environmental values be included in applications for, and amendments to, environmental authorities.

    This ensures that the department has adequate information to assess and appropriately condition environmental authorities in relation to environmental impacts associated with groundwater.

    During the operational phase, environmental impacts are managed through:

    • amendments to the existing underground water impact report process contained in Chapter 3 of the Water Act 2000
    • an associated power to amend the conditions of environmental authorities in response to impacts identified in an underground water impact report.

    These processes ensure that there is adequate monitoring and other information to allow impacts of groundwater take to be adaptively managed.

    What do the amendments mean for landholders?

    The amendments in the Underground Water Management Act protect the interests of farmers and other landholders whose groundwater is impacted by resource industry activities.

    This is achieved by improving the existing ‘make good’ obligations under the underground water management framework in the Water Act 2000.

    In particular, the Underground Water Management Act:

    • provides greater certainty for landholders by specifying that make good obligations arise where the exercise of underground water rights is the likely cause of the impairment, even if there is some scientific uncertainty
    • provides a cooling-off period for make good arrangements
    • requires resource companies to bear the costs of alternative dispute resolution and to pay landholders’ reasonable costs in engaging a hydrogeologist for expert advice in negotiating a make good agreement
    • ensures that make good obligations are triggered if a bore is impaired by ‘free gas’, which is formed during coal seam gas production.

    Environmental Protection (Chain of Responsibility) Amendment Act 2016

    Does the Act impose a true chain of responsibility and allow environmental protection orders to be issued beyond the company carrying out the activity?

    Yes, under the Act an environmental protection order can be issued to entities:

    • who stand to make a significant profit from the activity
    • with a practical ability to influence environmental compliance
    • who own the land on which the activity is being carried out (with the exception of land underlying mining or resource tenements).

    The intent of the Act is to capture entities with responsibility for the relevant environmental harm.

    Does the company need to be in financial difficulty to be issued with an environmental protection order?

    No, a company does not need to be in financial difficulty for the chain of responsibility to attach. The Act allows an environmental protection order to be issued to a ‘related person’ of the company carrying out the environmentally relevant activity in two circumstances.

    In the event that the company did not (or is unlikely to) comply with an environmental protection order, the department can consider issuing the environmental protection order to a ‘related person’ in line with the chain of responsibility to enforce the original environmental obligations.

    In the circumstances where the company carrying out the activity was in financial difficulty (a high risk company) an environmental protection order can be issued directly to the ‘related person’ to ensure the rehabilitation works are carried out or environmental risks are minimised or prevented.

    Will land owners who were not able to influence activities be affected?

    No, the intent of the Act is to not affect land owners if they had little or no ability to influence the activities carried out on their land. In addition, an owner of the land for the purposes of the related person test does not include native title holders or persons to whom land has been granted under the Aboriginal Land Act 1991 and the Torres Strait Islander Land Act 1991.

    Will the Act expose shareholders, banks or others associated with the project to liability?

    The Act ensures that the related person test captures those responsible for environmental harm, whether through their ability to gain a significant financial benefit from the carrying out of the activity or their ability to influence compliance with environmental requirements on the site.

    The Act is not intended to capture genuine arm’s length investors, particularly not those with only a small interest in the company.

    What level of financial benefit is required to establish a ‘relevant connection’ to the entity carrying out the environmentally relevant activity?

    Only entities which are capable of receiving, or have received, a significant financial benefit will be taken to have a ‘relevant connection’ to the entity carrying out the environmentally relevant activity. Financial benefits of a compensatory nature will not be grounds for finding that a relevant connection or influence exists.

    Does the Act broaden the obligations placed on companies under the Environmental Protection Act 1994?

    The Act broadens the range of persons who may receive an environmental protection order but does not expand existing environmental obligations under the EP Act.

    Does the Act allow the department to increase the amount of financial assurance that has already been provided?

    No. The Act includes the ability for a condition requiring financial assurance to be imposed only where a transfer of an environmental authority or sale of shares have occurred. It does not allow the department to increase the amount of financial assurance already held. Any changes to financial assurance amounts would need to be determined in the usual way.

    Are the changes retrospective?

    Yes, some changes are retrospective.

    The Act ensures that persons or individuals were not able to avoid the new provisions by changing corporate structures or by transferring environmental authorities between introduction of the Bill on 15 March 2016 and commencement of the Act on 27 April 2016.

    The Act also contains an element of practical retrospectivity because it is specifically designed to allow the department to require the clean-up of environmental harm regardless of when this harm occurred.