Major amendments to the Environment Quality Act (the EQA) which came into force on November 4, 2011 significantly increase the amounts of the fines that may be imposed pursuant thereto. The maximum fine that may be imposed on a legal person is increased to $6 million ($1 million for a natural person). The minimum and maximum fines double for a second offence and triple for a subsequent offence. The maximum term of imprisonment is increased to 3 years (5 years less a day for a subsequent offence).
Directors and officers are treated severely in the amended EQA: fines that may be imposed on them are double those that would apply in the case of a natural person for the same offence. In addition, if the legal person (including, for such purposes, a partnership and an association without legal personality (term used in the EQA), in addition to a corporation) commits an offence under the EQA or its regulations, the directors and officers are presumed to have committed the offence themselves, unless it is established that they exercised due diligence and took all necessary precautions to prevent the offense. The EQA makes no distinction based on the type of legal person involved (public or private corporation, partnership, etc.) or its size.
Furthermore, directors and officers of a legal person become solidarily liable with the legal person for the payment of any amounts due to the Minister, unless they establish that they exercised due care and diligence to prevent the failure which led to the claim.
The implementation of procedures to allow directors and officers to establish due diligence now becomes paramount. However, it should be borne in mind that such measures cannot guarantee that a due diligence defence will always be available.
New and important powers are granted to the Ministry of Sustainable Development, Environment and Parks (MSDEP), including the power to revoke, modify, suspend or refuse authorizations (including, generally, any permit which may be issued pursuant to the EQA or its regulations) if the applicant (or authorization holder), or certain persons that are legally or factually related to it, including its directors, officers and major shareholders and a person with whom it has entered into a contract for a loan of money (excluding banks and certain other financial institutions), have been convicted of, for instance, an offence under a fiscal law, an indictable offence connected with activities covered by the authorization, an indictable offence under certain sections of the Criminal Code (offences related to participation in criminal organizations) or an offence under the EQA or one of its regulations.
The MSDEP is further granted the power to impose, starting in February 2012, newly created administrative monetary penalties (AMPs), pursuant to a regime intended to be rapid be fast and simple. We expect that the AMP regime, not subject to the burdens of criminal standards, will be used much more frequently than the penal system (historically seldom used). The amount of the AMP will vary according to the nature of the provision with which the person failed to comply, from $1,000 to $10,000 for a legal person and from $250 to $2000 for a natural person, for each day the failure continues.
The frequency at which AMPs will be imposed remains to be seen but AMPs are regulatory and not subject to the burden of criminal proof or to criminal procedures and so could be used quite frequently. A general framework regarding AMPs is expected to be published soon by the MSDEP.
Finally, the limitation period for penal proceedings following an offense under the EQA is considerably increased.
Directors and officers should be aware that due diligence regarding environmental matters becomes an inevitable requirement and in many circumstances will require measures beyond those currently taken by businesses.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
