Canada: July 24, 2020 Update - Cross-Country Check-In: COVID-19 And The Environment

This Bulletin is current to July 24, 2020 and will be updated as events warrant.

The COVID-19 pandemic has created an unprecedented global crisis impacting all aspects of life in Canada. While Canada has a complex environmental regulatory regime at both the federal and provincial levels, some governmental and regulatory bodies have taken steps to temporarily alter legal requirements in order to lessen the burden on businesses and protect public health.

In general, obligations under Canadian environmental legislation remain in effect and consequences for failure to comply remain as they were. The major exceptions to this are Alberta, Saskatchewan and Quebec, where relief measures have been imposed - however, as normal business starts to resume, many of these measures have been modified or terminated accordingly meaning that obligations more closely resemble the ordinary course.

This Bulletin discusses the current state of Canadian environmental law requirements and enforcement activity in light of COVID-19, together with suggestions for action and a discussion on the long-term implications of how companies respond to the crisis with respect to their environmental obligations.

Since our last Bulletin on May 20, 2020, the following key changes to Canadian environmental law requirements and enforcement activities have occurred:

• Alberta has initiated its Relaunch plan resulting in most of the relief measures in relation to environmental law requirements having expired or been repealed, meaning that obligations more closely resemble the ordinary course. In addition, the suspension of limitation periods for proceedings has been lifted.
• Additional relief for certain filing, reporting, application and compliance requirements has been provided in relation to the transfer of dangerous goods, Saskatchewan's mining exploration programs and Ontario's greenhouse gas emissions quantification, reporting and verification requirements.
• The Ontario Environmental Bill of Rights exemption for minimum public consultation has been lifted.
• Ontario's new Excess Soil regime has been delayed to 2021.
• Ontario recently passed the COVID-19 Economic Recovery Act, an omnibus bill that will amend the Environmental Assessment Act along with 19 other pieces of legislation.
• The Tribunal Administratif due Quebec, Territory and Environment Section has mostly resumed normal operations.
• New Brunswick has allowed the resumption of all businesses as long as necessary COVID-19 protections are in place.

For up to the minute updates on federal and provincial orders, directions and statements arising from the COVID-19 crisis as they relate to environmental regulation, including exceptions and modifications, please contact us directly.

A.   Compliance with Environmental Laws

Subject to the exceptions discussed below, statutory environmental obligations on individuals and companies remain in effect and regulatory bodies continue to exercise their authority to inspect, investigate and issue orders as well as to prosecute parties for failure to comply. Accordingly, any assessment, reporting, investigation, remediation, risk management and clean-up requirements in relation to contaminants, waste and spills remain in full force and effect and all due diligence and compliance activities normally undertaken should be maintained.

a.  Environmental Approvals

Where a party, facility or property has been issued an approval, permit or license by an environmental regulatory body ("Environmental Approval") including in relation to emissions, waste management and the storage, use, handling, treatment and disposal of contaminants, the holder of the Environmental Approval must continue to comply with its terms.

That said, the ability of Environmental Approval holders to comply with those requirements may be impacted by recent federal and provincial orders and directions relating to specific occupational health and safety obligations intended to limit the spread of COVID-19 or simply preventing specific activities and industries from carrying on operations (i.e. having been deemed non-essential). For more information on current essential designations across Canada, please click here.

For example, compliance with the terms of an Environmental Approval may become challenging as a result of social distancing requirements and reduced supply availability leading to facilities being short-staffed or unable to carry out normal operations. Businesses are encouraged to look for alternative ways of ensuring compliance such as setting up temporary staffing protocols. For more information on COVID-19 occupational health and safety requirements and issues, please click here and here.

In instances where it may be difficult or impossible to comply with the terms of an Environmental Approval, discussions with the regulatory body should be initiated immediately. We would expect regulators to be willing to become involved in how best to address particular challenges at issue which should decrease the likelihood of a regulatory order being issued or charges laid.

b.   Environmental Due Diligence

We recommend implementing the following best practices with respect to due diligence:

• Identify qualified individuals at your facility tasked with specifically managing environmental compliance during the COVID-19 crisis.
• Continue to monitor any regulatory changes or notices that may apply to your facility, operations and property.
• Identify any potential compliance issues that may arise or have already arisen as a result of the crisis and implement proactive measures to address or prevent them including updating staffing protocols to address social distancing and safety requirements, engaging alternative suppliers and making alternative arrangements with third party consultants and agents whose normal services may also be impacted by the circumstances.
• Ensure that employees assigned to temporary roles as a result of changes to staffing protocols or duties are properly trained.
• Make sure you keep detailed records of modifications made as a result of COVID-19 orders and directions, including any temporary procedures, policies and guidelines.
• Establish a special purpose Environmental Management System ("EMS") in the form of a comprehensive system ensuring environmental compliance and preventing the commission of environmental offences. An EMS will include the appointment of specific individuals to manage environmental compliance at the facility and train and supervise employees as well as a system of communication between these individuals and the board of directors regarding the operation of the EMS and any non-compliance events, among other things. The EMS should take into account extreme health, economic, political and environmental events (often referred to as "acts of God" or included in "force majeur" clauses).
• Existing EMS's should be reviewed and updated as necessary to ensure they incorporate the operational challenges faced in the context of an "act of God" or "force majeur" event. Alternatively, a stand-alone "extreme event, pandemic or public health emergency" plan may be developed which addresses and modifies as necessary any obligations under the existing EMS.
• Most jurisdictions have deemed environmental and waste management, monitoring, remediation and spill response services provided by environmental consultants as essential. However, the current essential services list for a particular jurisdiction should be assessed on a case-by-case basis to ensure there are no direct impacts on ordinary course environmental due diligence or on required environmental due diligence in the context of transactions.
• Where compliance with any material environmental requirement may not be possible, begin discussions with the regulator immediately.

B.   Enforcement Challenges

As noted, in the absence of any indication to the contrary, failure to comply with any environmental laws including any term of an Environmental Approval creates a risk of enforcement action.

Normally, enforcement actions are preceded by inspections and investigations often involving in-person attendances at a facility for evidence gathering and face-to-face interviews. COVID-19 requirements may temporarily hinder provincial officers from carrying out these activities due to social distancing requirements, travel restrictions and limited availability of protective equipment. In addition, many businesses are temporarily closed down or operating at modified capacity so physical access to premises is further limited and arrangements may need to be made for provincial officers to gain access to these sites.

Even when sufficient information is gathered to complete the investigation, the ability of the regulator to pursue the prosecution through the court system will depend on the forum and the urgency of the matter as most courts are currently only hearing urgent matters including proceedings aimed at preventing serious or irreparable harm to a person, property or the environment. Information on changes to court operations and civil procedures is available on the court website for each jurisdiction.

While we expect that regulator response to environmental emergencies such as spill events will remain a priority, regular non-urgent inspection and investigation activities may be reduced during or postponed until after the period of the pandemic. As a result, there may be renewed enforcement efforts once the crisis has ended. However, in the absence of any statements to the contrary by regulators, and subject to the exceptions noted, companies and individuals should conduct themselves on the basis that inspections and investigations will remain active.

C.   Exceptions and Modifications to Environmental Compliance Obligations

Please refer to the Appendix to this Bulletin below for a summary of all exceptions and modifications to environmental compliance arising from COVID-19 federal and provincial orders, directions and statements as they relate to environmental regulation.

IN CLOSING

We emphasize that whether any company (or its directors or officers) will be granted relief from environmental liabilities should not be assumed even though these are extraordinary times. The answer will depend, as it always has, on the application of long-standing legal principles as well as on the discretion of the regulators.

Concepts such as due diligence, officially induced error, regulatory and prosecutorial discretion and evidentiary issues all in various ways affect environmental liabilities. The key question remains how will such concepts be applied in the COVID-19 era? There is still little useful experience to guide us in this situation and so obtaining legal advice will be of central importance.

What is clear is that the circumstances to which these principles and concepts will be applied are unprecedented in nature as well as scope. This, we believe, makes prudence and enlightened due diligence the core principles to be followed by companies and their officers and directors in these extraordinary times. How companies respond and act in these circumstances will have important implications not just for immediate environmental liabilities but for longer term CSR and ESG responsibilities as well.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2020