Environmental Enforcement

On March 4 the federal Minister of Environment tabled an Act known as Bill C-16, which will amend a number of federal Acts related to the environment. The affected Acts are:

• Canadian Environmental Protection Act, 1999;

• Canada Wildlife Act;

• Migratory Birds Convention Act, 1994

• Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act

• International River Improvements Act

• Antarctic Environmental Protection Act

• International River Improvements Act

• Canada National Parks Act

• Canada National Marine Conservation Areas Act

• Saguenay-St. Lawrence Marine Park Act.

Bill C-16 was debated at second reading and is currently before the Standing Committee on Environment and Sustainable Development. Given the introduction of Bill C-16, coupled with the federal government’s recent announcement of its intention to increase the number of enforcement officers and to improve its laboratory equipment and technical expertise, companies and their consultants need to be aware of how the new enforcement legislation might impact their operations. Recent enforcement activity by the Alberta Government against Suncor et al under Alberta’s Environmental Protection and Enhancement Act, for example, has resulted in fines and other remedial measures amounting to $850,000, making the Suncor decision an expensive example to learn from.

Key features of Bill C-16 include:

• Increasing fines for large corporations who commit serious offences generally, especially for repeat offences. Fines range from minimum $15,000 to a maximum of $12,000,000;

• Differentiating between penalties for individuals (including officers and directors of corporations), small resource corporations and large corporations;

• Establishing a positive duty of care on directors and officers to ensure compliance with the Act;

• Directing that fines be paid to an Environmental Damages Fund unless otherwise ordered by the court;

• Creating a public registry for corporate offenders; and

• Identifying factors that the courts need to consider in sentencing.

So what defence does a corporation have in the face of environmental enforcement? The answer is showing “due diligence.” Understanding what is required to prove your due diligence means keeping abreast of legal developments and recent enforcement activity.

Suncor Energy fails to monitor its contractors

In the case of Her Majesty the Queen v. Suncor Energy, and a companion case heard in the Provincial Court of Alberta Criminal Division, there is no written decision. However, the following information is based upon a review of the agreed statement of facts, the Crown’s submissions, and the final orders granted.

The enforcement action started with Alberta filing two separate charges against Suncor and its contractor, one for failing to install pollution control equipment at its facility near Fort McMurray and failing to tell Alberta Environment about it, and another for dumping under-treated wastewater from a company-owned work camp near Fort McMurray into the Athabasca River.

According to the agreed statement of facts, the Suncor Millennium Wastewater Treatment Plant is owned by Suncor, but during the period of the offence it was operated by Suncor’s contractor who in turn contracted part of the running of the plant to a subcontractor.

Alberta Environment discovered that the subcontractor had falsified laboratory results and the alteration of those results, in all cases but one, hid the fact that there had been violations of the TSS (Total Suspended Solids) parameter. The contractor had no knowledge of the falsification but was found culpable based on its failure to investigate and properly supervise the subcontractor. Similarly, Suncor had no knowledge of falsification, but again Suncor was found culpable based on its failure to investigate the competency of its contractor and failing to properly supervise that contractor.

In the Crown’s submissions, she relied on two Supreme Court of Canada cases, R. v. Sault Ste. Marie (City) of 1978, and Canadian Dredge & Dock Co. v. The Queen of 1985. The Crown argued that certain aggravating factors were relevant to the sentence, including Suncor’s previous convictions in 1983, 1990 and 1994.

Joint submissions were made by the Crown and defence counsel as part of a creative sentencing effort. Pursuant to section 235(1) of the Alberta Environmental Protection and Enhancement Act, the fines were levied in addition to other creative sentencing measures, such as a mandatory requirement to update the Alberta Water and Wastewater Operators Association training course to increase its emphasis on professional responsibility, and a requirement to fund a scholarship program and training.

Precautionary measures

What can companies do to prepare for the new environmental enforcement regime? They must:

• keep abreast of legal developments and recent enforcement activity;

• review their compliance assurance systems;

• conduct litigation risk assessments;

• have a plan in place for immediate legal assistance during investigations and enforcement proceedings.

Finally, they must review and obtain assistance to ensure they are complying with the rules, such as on emissions monitoring.

Sarah Hansen, Daniel Kiselbach and Tony Crossman are partners with Miller Thomson, LLP, based in its Vancouver office. E-mail: shansen@millerthomson.com,Tel. (604)687-2242.