Canada: COVID-19 – Impact On Environmental Compliance And Due Diligence

Written by Bryan J. Buttigieg, Miller Thomson LLP
As these strange times continue to evolve, it is important to ensure that all companies whose operations raise environmental compliance issues try to think through and plan for what might happen in the coming weeks and perhaps months. In particular, both self-imposed and regulatory quarantine protocols may have a significant impact on critical staff levels at a facility. While we are all deep into implementation of directives about working from home when we can, there are, of course, a number of essential jobs that require physical presence for a plant to operate properly.

Despite all the dramatic changes going on in our lives, all conditions of operating permits such as Environmental Compliance Approvals remain in full force, and all obligations such as spill prevention, spill remediation, spill reporting and regular compliance reporting continue to apply. It is never an excuse to say something happened due to a staff shortage. If there are insufficient resources to conduct an operation in full compliance of environmental obligations, there is an obligation to revise operating plans including if necessary, reducing production levels, rather than continuing business as usual in the expectation that regulators will somehow turn a blind eye to non-compliance.

Care needs to be taken to ensure that all safety and regulatory requirements continue to be met. Careful thought should be given as to what minimum staffing would be needed to keep a facility operating safely and in full compliance. Consideration will have to be given as to whether production changes are needed to reduce the risk of an undesirable incident due to unexpected staff shortages. There may, in turn, be impacts on supply chain and customer obligations. While cross border closures are not supposed to impact the movement of goods, what happens if border screening is in place and a driver with essential supplies is refused crossing? Consider communicating regularly with any spill response contractors who are on retainer or may be needed: Are they adequately staffed? Will they be in a position to respond if needed? If not, what other steps need to be taken? We are at the stage where these are becoming foreseeable events and as such planning is required in order to ensure as orderly and safe a transition as possible.

Consider creating a dedicated COVID-19 Environmental Compliance Team whose main purpose is to review all applicable environmental obligations and try to anticipate internal compliance risks in the event of reduced staffing levels. Ensure that if employees are asked to step into temporary roles due to the absence of others, proper training is given on all obligations including spill detection and reporting. Be prepared to make quick decisions and make changes as the situation evolves. Communicate decisions to all affected clearly and concisely and ensure there is a channel for employee feedback and comments as quite often, those in the field will be the first to identify practical difficulties with any changes to long standing work practices.

Proactive communication with the regulators might be a useful step to consider. While many government employees are also working from home, they continue to enforce regulatory obligations. Proactive communication with a local abatement officer might be a useful way to ensure there is awareness of any special steps you are taking and an ongoing dialogue to ensure any concerns raised by the regulator are addressed.

Similarly, industry organizations might have put some thought into protocols applicable to all members that would assist you in ensuring you are exercising the appropriate level of diligence. Consider the need for community communications with neighbours or neighbourhood groups at this stage.

As the current situation continues to develop, vigilance to ensure ongoing environmental compliance is going to remain of utmost importance in order to minimise any additional disruption to daily business operations beyond that being caused by events that cannot be controlled or foreseen.

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.


Bryan Buttigieg is recognized as one of the leading practitioners of environmental law in Canada and is certified by the Law Society of Ontario as a specialist in Environmental Law. His practice includes a combination of litigation and transactional advice involving civil litigation and regulatory defence representation in environmental and occupational health and safety matters.

The Phase I Environmental Site Assessment: Unexpected COVID-19 Victim?

Written by David Quigley and Bryan Williamson, Akin Gump Strauss Hauer & Feld LLP and Summer Gell, Partner Engineering and
Science, Inc.

A number of commentators note the impacts of the COVID-19 crisis on the commercial and residential real estate markets. Some are obvious: falling interest rates, bargain hunting by investors (and some lenders) and a very different foreclosure environment.1 Recently, a less obvious impact emerged, as these lenders/servicers, investors and purchasers struggle with how to assess the environmental condition of the underlying assets. This brief alert provides answers to some frequently asked questions about phase I ESAs in the COVID-19 era.

Can I still do an ESA?

A number of states and some localities promulgated stay-at-home orders prohibiting all but “essential activities” for the next few weeks, if not months (and perhaps longer). Though each state is different, and must be analyzed as such, a number of the restrictions provide lists of industries or activities that are “essential” and therefore exempt from shelter-in-place mandates. For example, an initial Virginia executive order allows professional services firms to remain open, provided that they adhere to social distancing recommendations, enhance sanitizing practices on common services and apply relevant workplace guidance from state and federal authorities.2 Other states, like Illinois, delineate essential categories, including real estate and legal services, as “essential.”3 These approaches at least implicitly seem to allow for the conduct of ESAs (and ESAs are still taking place). Many states allow consultants to apply for an explicit authorization if squeamish about moving forward. (Note that while some states allow for environmental investigation as part of remediation activities, this may not encompass the typical phase I ESA).4

Beyond these states permitting consulting or related services directly, other states may allow for a phase I ESA where it “supports” a different service deemed “essential,” such as financing, particularly for a transaction that supports the agriculture, energy, manufacturing, hazardous materials and waste sectors.5 Still other states omit ESAs from stay-at-home orders entirely, raising complicated questions of interpretation.

If I can do an ESA, what will it look like?

If your state or locality allows for an ESA, that does not mean it is business-as-usual. As with other services in the COVID-19 era, commonsense efforts should be taken to minimize personal contact before, during and after site assessments. These measures may include adherence to social distancing guidelines; driving (not flying) to sites when possible; proper use of personal protective equipment; and wireless or pre-arranged access to tenant suites or interior building areas. Interviews should be conducted remotely, where feasible. To the extent possible, spaces to be viewed by the consultant should be “cleared” of people for three or more days prior to arrival. If, as will often be the case, this is not possible, then the consultant may seek to restrict her “walk-through” to vacant or limited areas of the facility.6

With all these restrictions, is the ESA “legal”?

While they likely did not have a pandemic in mind, the existing federal regulations and the industry standard governing ESAs already provide for deviations to normal operating procedures. Specifically, the phase I standards include a mechanism through which consultants identify “data gaps” encountered during environmental investigations.7 Historically, data gaps include inadequate records detailing adjacent sites, unreturned interview questionnaires and missing information about physical objects identified at the site (e.g., pipes, vents, tanks). Given the COVID-19 disruption, we expect to see a number of additions to these traditional data gaps, such as: limited or no access to interior areas; inability to locate and interview key personnel; and inability to access regulatory records or obtain Freedom of Information Act responses from government agencies due to staffing reductions and office closures. Much like the interruptions caused by governmental delays and flight cancellations experienced in aftermath of the September 11, 2001, terror attacks and office closures seen during the Great Recession, external forces are likely to hamper even the most diligent and experienced consultants.

The fact that these data gaps exist does not render the phase I invalid (necessarily). As always, it is up to the environmental professional to determine whether any identified data gaps are “significant,” such that they affect “the ability of the environmental professional to identify conditions indicative of releases or threatened releases of hazardous substances, and as applicable, pollutants and contaminants, petroleum or petroleum products, or controlled substances, on, at, in, or to the subject property.”8 Often, experienced consultants can identify other sources of information to resolve any data gaps, such as owner/user interviews or government and third-party environmental databases. Regardless of the significance of identified data gaps, however, consultants must be sure to document and evaluate any data gaps within the text of the ESA report.

OK, it’s “legal.” But is it useful?

Assuming you get an ESA with a number of data gaps, questions will arise as to its utility in evaluating environmental risk. Your counsel and consultants can identify site-specific approaches to find alternative sources of information to “fill” data gaps or at least “put a box around” the potential liability resulting therefrom. Beyond that, the usefulness of the assessment will depend on the use for which it is intended.

If you are trying to determine or allocate risk to close a deal, the above strategies may suffice (or at least may allow for the procurement of insurance to close the deal). If you are looking for financing, it likely will depend on the specific bank. Some may require complete or even more fulsome information than usual as they struggle to measure and manage risk in a pandemic-impacted world. Others may feel comfortable moving forward given the “cost” of money currently, even if they may include more detailed “update” provisions or requirements allowing them to get a clearer picture down the road. If you are looking for protection from Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) liability, that path is still developing. While EPA announced in March that it may exercise discretion in enforcing specific instances of noncompliance with some environmental laws, this policy explicitly does not apply to “activities that are carried out under Superfund and RCRA Corrective Action enforcement instruments.”9 At this time, it is not yet clear what, if any, relief will be provided through CERCLA’s innocent landowner and lender liability requirements.


1 Christopher Rugaber, Federal Reserve Cuts Interest Rate to Near Zero in Response to COVID-19 Outbreak, TIME, Mar. 15, 2020, https://time.com/5803563/federal-reserve-interest-rate-cut-zero/; Katy O’Donnell, HUD, Fannie, Freddie suspend foreclosures, evictions during outbreak, POLITICO, Mar. 18, 2020, https://www.politico.com/news/2020/03/18/hud-suspends-foreclosures-evictions-coronavirus-135783.

2 Virg. Exec. Order No. 53 (March 23, 2020), https://www.governor.virginia.gov/media/governorvirginiagov/executive-actions/EO-53-Temporary-Restrictions-Due-To-Novel-Coronavirus-(COVID-19).pdf. Similarly, Washington state published lists of “critical” sectors and examples of essential personnel permitted to work during the crisis. Wash. Proclamation 20-25 (March 23, 2020), https://www.governor.wa.gov/sites/default/files/WA%20Essential%20Critical%20Infrastructure%20Workers%20%28Final%29.pdf.

3 See, e.g., Ill. Exec. Order No. 2020-10 (March 20, 2020), https://www2.illinois.gov/Documents/ExecOrders/2020/ExecutiveOrder-2020-10.pdf (deeming “professional services” essential, including legal and real estate services).

4 See, e.g., “COVID-19: Essential Services,” Office of Governor Charlie Baker and Lt. Governor Karyn Polito, https://www.mass.gov/info-details/covid-19-essential-services#health-care/-public-health-/-human-services- (deeming essential “[l]icensed site clean-up professionals and other workers addressing hazardous spills, waste sites, and remediation”).

5 Wash. Proclamation 20-25, supra note 3.

6 Still, many components of the phase I ESA report, such as historical use and satellite reviews, environmental database searches, lien and title searches, phone interviews, and electronic questionnaires, should remain unaffected.

7 According to the U.S. Environmental Protection Agency’s (EPA) “all appropriate inquiries” (AAI) rule and ASTM Practice E-1527-13, a data gap is “a lack of or inability” to obtain required information “despite good faith efforts.” 40 C.F.R. § 312.10; ASTM E-1527-13 § 12.7.

8 U.S. ENVTL. PROTECTION AGENCY, ALL APPROPRIATE INQUIRIES RULE: REPORTING REQUIREMENTS CHECKLIST FOR ASSESSMENT GRANT RECIPIENTS (2014), https://www.epa.gov/sites/production/files/2014-08/documents/aai-reporting-fact-sheet-and-checklist-062111-final.pdf.

9 Memorandum from Susan Parker Bodine, U.S. Envtl. Protection Agency, to All Governmental and Private Sector Partners (Mar. 26, 2020), https://www.epa.gov/sites/production/files/2020-03/documents/oecamemooncovid19implications.pdf, at 2. Similarly, some states, such as Texas, also announced their intention to provide limited enforcement relief during this crisis. See “TCEQ Reporting Requirements for Regulated Entities,” Texas Commission on Environmental Quality (last visited Apr. 9, 2020), https://www.tceq.texas.gov/response/covid-19/regulated-entities-reporting-requirements (announcing the Commission’s exercise of “administrative relief and enforcement discretion for various reporting requirements by regulated entities” during the COVID-19 pandemic).


About the Authors

David Quigley advises lenders, sellers and buyers on evaluating the environmental liabilities associated with commercial, multifamily and industrial transactions. He develops solutions that are cost-effective and realistic in terms of the role of client as lender and the value of the property or portfolio.

Bryan C. Williamson is an environmental and natural resources lawyer, advising and representing clients on a range of environmental regulatory, transactional and litigation matters. His experience extends to issues involving federal and state environmental protection laws.

Summer Gell is a principal at Partner Engineering and Science, Inc. who leverages her 25+ years of experience and background as an environmental scientist to provide valuable solutions to her clients’ environmental and engineering due diligence needs. Summer is an expert on all things Freddie and Fannie, having worked on hundreds of agency and multifamily deals in recent years. She also serves as the national account manager for several CMBS lenders and life companies.

U.S. EPA awards EPA Awards $2.3 Million in Funding for Businesses to Develop Innovative Environmental Technologies

The U.S. Environmental Protection Agency (U.S. EPA) recently announced that it had awarded $2.3 million in funding for 23 contracts with small businesses through its Small Business Innovation Research (SBIR) program to develop technologies that will help protect human health and the environment. This year’s funded technologies are focused on clean and safe water, air quality monitoring, land revitalization, homeland security, sustainable materials management, and safer chemicals.

“EPA’s Small Business funding supports our economy and opens doors to further environmental protection by fostering and encouraging small businesses to bring groundbreaking technologies to market,” said EPA Administrator Andrew Wheeler. “With EPA funding, these entrepreneurs will be able to develop their ideas to address priority EPA issues ranging from cleaning up PFAS contamination to reducing food waste.”

These small businesses are receiving Phase I funding of up to $100,000 from EPA’s SBIR program, which awards contracts annually through a two-phase competition. After receiving a Phase I award, companies are eligible to compete for a Phase II award of up to $400,000 to further develop and commercialize the technology.

SBIR Phase I recipients include:

  • Aerodyne Research, Inc., Billerica, Mass., to develop an ethylene oxide monitor with an ultra-low limit of detection.
  • AirLift Environmental LLC, Lincoln, Neb., to develop a remedial treatment to remove PFAS and associated co-contaminants from soil and groundwater.
  • Creare LLC, Hanover, N.H., to develop a hydrodynamic cavitation technology to destroy PFAS in drinking water.
  • CTI and Associates, Inc., Novi, Mich., to test and evaluate a novel technology for the concentration and destruction of PFAS in landfill leachate.
  • Hedin Environmental, Pittsburgh, Pa., to create a treatment process for contaminated waters at coal and metal mines.
  • Mesa Photonics, LLC, Santa Fe, N.M., to create a compact, fast, sensitive and selective optical sulfur dioxide monitor.
  • Onvector LLC, King of Prussia, Pa., to develop a technology that destroys PFAS in water and wastewater utilizing a plasma arc reactor.
  • Physical Optics Corporation, Torrance, Calif., to create a 3D mapping and visual system to detect radiation contamination for homeland security applications.
  • RemWell, LLC, Potsdam, N.Y., to design a remediation technology using sonolysis for PFAS contaminated groundwater.

The U.S. EPA is one of 11 federal agencies that participate in the SBIR program, enacted in 1982 to strengthen the role of small businesses in federal research and development, create jobs, and promote U.S. technical innovation. To be eligible, a company must be an organized, for-profit U.S. business and have fewer than 500 employees.

What can the Act of God Defence in Regulatory Offences tell us about Responding to the COVID 19 Crisis

Written by Stanley Berger, Partner, Fogler Rubinoff

In April 2008 water bodies in Alberta were frozen over and as a result, migratory birds were drawn to Syncrude’s open tailings ponds where over 1600 waterfowl died from exposure to bitumen. Syncrude was prosecuted under federal and provincial environmental laws for the adverse impacts of the tailings on migratory birds.

The company defended itself by arguing that that the convergence of record snowfalls and the freezing of the adjacent waters that the waterfowl would naturally use for sustenance during spring migration amounted to an Act of God which could not reasonably be anticipated. The company had a system of deterrents which had worked reasonably well in previous years to prevent the loss of all but a small number of birds drawn to the open tailings, but the record snowfall had interfered with their planned deployment.

The Court, conceded that the convergence of adverse weather, open tailings, frozen natural water bodies and bird migration was an unavoidable natural event. (2010) ABPC 229 at par. 136) Nevertheless, the Court reasoned that while the exact circumstances or degree of severity may have been unpredictable, the convergence of these critical factors was not remarkable. The company’s response was deficient whether it had been “the second worst snowfall in 65 years that occurred, coupled with a late breakup and quick thaw or, or some lesser but still significant amount of snow or rain. “(at par. 138) On October 22, 2010

Provincial Court Judge Tjosvold imposed fines and orders totaling three million dollars for violations of Alberta’s Environmental Protection and Enhancement Act and Canada’s Migratory Birds Convention Act. see Berger and Myers, Prosecution and Defence of Environmental Offences, Sentencing Service on Thomson and Reuters Proview at https://nextcanada.westlaw.com/.

Lessons Learned: Regulatory Due Diligence During and After COVID  19

Regardless of whether one is religious or not, COVID 19 would certainly fit within the Act of God defence if faced with a charge of non-compliance with a regulatory offence. But the level of sympathy expected to be extended by a court to this defence will ultimately depend upon the magnitude of the harm environmental, health and safety or otherwise and the steps taken by a defendant to plan for a once in a lifetime event. The nuclear industry offers an excellent example. Licensees of nuclear facilities have always been required to deploy minimum complements of workers at all times to ensure that critical activities such as the operation of the nuclear reactor and its cooling systems are maintained. There are always control room operators on hand even during a pandemic though additional precautions are taken to ensure that their health and safety are optimized. Businesses should review their regulatory licenses and approvals and identify which of their operations need to be maintained at all times in order to protect public health and safety and the environment. Once identified, budgets
and schedules should be set for implementation. Particularly, but not exclusively where costs are prohibitive or actions are not feasible, transparent communication with the relevant regulatory authorities should be initiated without delay to ensure that there is a mutual consensus on the expectations of the parties. Finally, those expectations should be reduced to writing and kept on line so that they are readily accessible. Given the magnitude of the current crisis, regulators may not respond to e-mails in a timely fashion, so businesses should ensure that all requests for reviews of compliance plans are sent and kept electronically.

This republished article is intended for general information purposes only and should not be relied upon as legal advice.


About the Author

Stan Berger has practiced regulatory law for 37 years. He represents nuclear operators and suppliers, waste management operators, renewable energy operators, receivers-in-bankruptcy, municipalities and First Nations. He was an Assistant Crown Attorney in Toronto for 8 years, Senior counsel and Deputy Director for Legal Services/Prosecutions at the Ministry of the Environment for 9 years and Assistant General Counsel at Ontario Power Generation Inc for 14 years.  He is the author of a quarterly loose-leaf service published by Thomson Reuters entitled the Prosecution and Defence of Environmental Offences and the editor of an annual review of environmental law.  Mr. Berger was the President of the International Nuclear Law Association (2008-2009) and the founder, and President of the Canadian Nuclear Law Organization.

Practical Tips for Managing Environmental Issues During the Coronavirus Pandemic

Written by Sheila McCafferty Harvey and Reza Zarghamee, Pillsbury Law

Due diligence and compliance challenges require flexible approaches and creative solutions.

Practical Tips Regarding Due Diligence

The COVID-19 pandemic already has created significant disruptions to daily business and governmental activities, as employees across industries have been encouraged to practice social distancing and work from home. Moreover, an increasing number of states have issued shelter-in-place orders and nonessential business shutdowns, which may last for several months.

Among the challenges facing companies in these circumstances is the practical matter of how they may satisfactorily conduct environmental due diligence under such conditions for corporate and real estate transactions. To explain, in transactions involving the transfer of title to real property or the creation of a leasehold interest (since the 2018 BUILD Act), prospective purchasers and lessees must satisfy the requirements of the All Appropriate Inquiries (AAI) Rule (40 CFR Part 312) to obtain innocent status and, thus, qualify for one or more affirmative defenses to liability under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, et seq. (CERCLA). The baseline level of environmental due diligence under the AAI Rule is the performance of a Phase I Environmental Site Assessment in accordance with the ASTM E 1527-13 standard. An ASTM-compliant Phase I also has become the industry standard for environmental due diligence required by financial institutions and insurers for purposes of project financing and obtaining insurance coverage, respectively, although such companies tend to allow somewhat greater flexibility in terms of strict adherence to the standard.

A Phase I contains many components, some of which may be performed on a “desk-top” basis. Environmental Data Resources LLC, the provider of the EDR Radius Map Report that accompanies the majority of Phase I reports, is committed to providing its services during the pandemic. As a result, between the services of EDR and the Phase I author, assuming responsive information is available online, the expectation is that environmental consultants should be able to continue to perform these tasks, despite the new paradigm of working at home. However, an essential component of the ASTM standard is a site visit of the subject property. Non-essential business shutdowns and shelter-in-home orders may prevent consultants from performing such visual inspections in certain states. Although the ASTM standard allows for the specification of “data gaps” and “limiting conditions/deviations,” the site visit is such a core requirement of the standard that, in the ordinary course, failure to perform one within 180 days of the closing date of a transaction renders a Phase I inadequate for purposes of qualifying for CERCLA defenses.

EPA has yet to give any indication about how it will treat the failure to perform a site visit due to COVID-19-related disruptions in terms of Phase I user’s eligibility for the CERCLA defenses. A distinct possibility thus exists that a Phase I consisting of a desk-top only review will be deemed inadequate, regardless of the exigent circumstances preventing a site visit. Therefore, to the extent possible, companies should schedule Phase I ESAs to occur after the expiration of non-essential business shutdowns or shelter-in-home orders. If a Phase I cannot be delayed, then companies may wish to consider creative means of performing the site inspection, e.g., perhaps using drones to examine interior and exterior site features or using FaceTime to direct any facility personnel onsite to perform the site surveillance.

For a Phase I intended to satisfy a business purpose (e.g., securing a loan, obtaining insurance coverage), failure to satisfy the ASTM standard could have undesirable consequences. However, because agreements between private parties are negotiable, the party commissioning the report has, in theory, greater flexibility in terms of working around the COVID-19-related obstacles. Specifically, the inability to obtain firsthand information regarding a site may be excused or addressed in business agreements. To this end, the party commissioning the report is encouraged to proactively engage the other parties seeking to rely on the report to discuss whether a report without a site visit would suffice and, if not, what possible alternatives would be acceptable for purposes of obtaining the business objective.

Practical Tips Regarding Environmental Compliance Obligations

Proactiveness is also necessary to ensure continued compliance with environmental cleanup obligations, permit conditions, and environmental due diligence standards during the COVID-19 pandemic. In evaluating options and implementing measures to ensure continued compliance with environmental legal requirements, businesses are encouraged to take a systematic approach, which may entail all or some the following steps:

  • Develop an internal team responsible for the COVID-19 response: The establishment of clearly defined roles and a chain of command can be tremendously useful to ensuring that the tasks needed to maintain compliance are expeditiously performed.
  • Consult existing plans and internal policies: Some businesses already may have in place plans and policies that have been triggered by the current crisis or are otherwise useful. For example, environmental management systems, hazardous waste contingency plans and risk management plans may contain specific protocols for exigent circumstances that may prevent compliance with legal obligations (e.g., the inability to remove hazardous waste within the 90-day threshold specified for large quantity generators) or trigger certain preventative measures (e.g., the securing of extremely hazardous substances regulated under Section 112(r) of the Clean Air Act as part of a risk management plan).
  • Identify what tasks and deadlines are required or coming up in the near-term and whether they are at risk of being impacted: Businesses should develop lists of upcoming environmental tasks and deadlines, including scheduled remedial activities, sampling, submittals to agencies, commitments to private-parties under environmental indemnities, etc. For items due in the next few months, an assessment should be made about the degree to which the requisite task may be affected by COVID-19-related disruptions. A broad view of how current conditions may affect the ability to discharge obligations should be taken in this regard. For example, it may be useful to ascertain which tasks require outside vendors or subcontractors and the likelihood that they would be available to assist.
  • Review relevant statutes, regulations, guidance, and other documents for authority that might excuse or delay performance: Applicable laws, regulations, and legal instruments such as permits and orders should be consulted to determine if they contain provisions that afford relief from the obligations discussed in the previous bullet. The EPA has policies and guidelines regarding governmental expectations during emergency situations, and an increasing number of states have issued guidance on how businesses may invoke enforcement discretion during the current crisis. Pillsbury is closely monitoring these developments and tracking them on its website. Where such agency guidance is vague or off-point, businesses are recommended to consult the specific documents establishing their legal obligations, as many consent orders, cleanup agreements, private-party indemnities, and permits contain provisions that bound parties may invoke to obtain relief from requirements that may be difficult or impossible to perform because of COVID-19-related restrictions. “Force majeure” clauses are a good place to start, as these provisions serve to excuse or delay performance under exigent circumstances. Some such clauses explicitly designate pandemics and governmentally declared emergencies and shutdowns as force majeure events. However, they often also have time limits, so they should be reviewed as soon as possible.
  • If legal authority affording relief is identified, follow the specified procedures for invoking the authority and providing notice. This should be done as early as possible, especially if the applicability of specific guidance or provision is questionable, to ensure enough time to react if a third party (e.g., governmental agency) disagrees about the existence of an adequate basis to excuse or delay performance.
  • Document efforts to comply and reasons impeding performance. The legal landscape is extremely fluid right now, giving rise to a heightened potential for legal disputes over failure to perform. For this reason, as well as the fact that many force majeure clauses require it, businesses should document all efforts to comply, as well as information supporting the contention that COVID-19-related disruptions have prevented compliance, as such information may be useful in supporting petitions for enforcement discretion.

Key Takeaways

  • The COVID-19 pandemic is impeding the ability of businesses to perform transactional environmental due diligence and usual compliance activities.
  • How courts and businesses (e.g., lenders, insurers) will value attempts to perform All Appropriate Inquiries that, because of COVID-19-related orders, may not include such activities as physical inspections of the subject property is uncertain. Though we may see various guidance emerge in the coming days, much like the numerous hastily promulgated stay-home orders, we can expect a patchwork with ample ambiguity and unanswered questions.
  • In such a dynamic and unprecedented legal and business climate, proactive and creative compliance strategies, and effective strategies to document parties’ efforts to comply with existing obligations, can help hedge against transactional and compliance risks.

About the Authors

Sheila Harvey, Pillsbury’s Energy Industry Group leader, is an accomplished adviser on environmental and energy policy and regulatory issues and their impact on transactional and litigation matters.

Reza Zarghamee advises U.S. and international clients on a vast array of environmental matters, including the strategies for performing compliance audits, transactional due diligence, remediation, and SEC disclosures.

 

Use of Drones in Environmental/Engineering Services

Written by Walter Wright Jr, Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C

The use and functions of unmanned aerial vehicles (i.e, drones) in service industries is rapidly evolving.

Environmental services and/or environmental monitoring/enforcement is an example of an area in which the usefulness of drones is being recognized.

By way of example, as noted in a previous post (see post here), the Louisiana Department of Environmental Quality as early as 2018 added drones as a tool in the agency’s environmental protection missions. The three drones employed by the agency are used for activities such as:

  • Surveillance
  • Enforcement
  • Permit Support Documentation
  • Waste and Landfill Inspections
  • Legal Dumping of Chemicals, Oil or Waste Tires
  • General Emergency Response Functions Involving Facility Discharges, Train Derailments, Truck Accidents, Oil Spills
  • Investigations of Unusual Events

An example in the environmental services area is the Little Rock/Springdale firm of Pollution Management, Inc., (“PMI”) which operates a drone for certain environmental/engineering services.

The company states it uses a drone in the engineering area for activities such as:

  • aerial imagery (i.e., dam/levee inspections, slope failures, structure layout, etc.)
  • Topographic data (civil site layout, flood studies, landfills, industrial site design)

In the environmental area the drone is stated to be utilized for aerial site reconnaissance for areas that are:

  • Large areas of land
  • Not easily accessible by foot or vehicle
  • May not be easily observable due to thick vegetation or other impediments

In other words, drones apparently have certain potential inherent advantages when it comes to their ability to cost effectively observe for environmental assessment purposes larger or relatively inaccessible areas.

Note that the utilization of drones for income-producing purposes is subject to Federal Aviation Administration (“FAA”) rules and restrictions. PMI indicates that Professional Engineer Brad Wingfield recently passed his FAA Part 107 aviation exam. As a result, he is certified to pilot drones for commercial purposes.


About the Author

Walter Wright practices Environmental and Energy Law in the Little Rock, Arkansas, office of Mitchell Williams Law Firm.  He has taught Environmental Law at the University of Arkansas at Little Rock School of Law since 1989.  Mr. Wright is a graduate of the University of Arkansas and the George Washington University National Law Center in Washington, D.C.

Challenges to Environmental Investigations and Cleanups During the COVID-19 Crisis

Written by John McGahren, Stephanie R. Feingold, Ariel Kapoano, and Jenna Ferraro, Morgan, Lewis & Bockius LLP

Business closures and remote work requirements, work stoppages, travel restrictions, state and federal government slowdowns, and supply-chain disruptions are impacting parties’ abilities to satisfy obligations pursuant to environmental settlements, including administrative consent orders or judicial consent decrees with the US Environmental Protection Agency (EPA), and administrative orders with various state environmental agencies as well as compliance obligations under federal environmental laws such as the Clean Air Act, Clean Water Act, and Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).

State Guidance

Although the CDC has released guidelines recommending work from home and social distancing, there are currently no federal mandates or executive orders requiring business shutdowns or mandatory quarantine. Instead, many states, counties, and municipalities are releasing executive orders as well as nonbinding policies ranging from shelter-in-place to closing nonessential businesses and limiting gatherings of people.

These state and local mandates uniformly exempt “essential businesses” from such directives. The “essential business” exemption includes services and sectors that promote public safety, health, and welfare, although exactly what constitutes an “essential business” can vary. For example:

New York: Executive Order 202.6 exempts “essential businesses” to include healthcare operations (including research and laboratory services); essential infrastructure (including utilities); telecommunication; airports and transportation infrastructure; essential manufacturing (including food processing and pharmaceuticals); essential retail (including grocery stores and pharmacies); essential services (including trash collection, mail, and shipping services; news media; banks and related financial institutions); providers of basic necessities to economically disadvantaged populations; construction; vendors of essential services to maintain the safety, sanitation and essential operations of residences or other essential businesses; and vendors that provide essential services or products (including logistics and technology support, child care, and services needed to ensure the continuing operation of government agencies and provide for the health, safety, and welfare of the public).

New Jersey: Executive Order No. 104 exempts “essential businesses,” defined to include “grocery/food stores, pharmacies, medical supply stores, gas stations, healthcare facilities and ancillary stores within healthcare facilities.” All gatherings within the state are limited to 50 persons or fewer, except for “normal operations at airports, bus and train stations, medical facilities, office environments, factories, assemblages for the purpose of industrial or manufacturing work, construction sites, mass transit, or the purchase of groceries or consumer goods.”

It is less clear, however, whether environmental cleanups and investigations would constitute “essential businesses” subject to these exemptions. Furthermore, some states have expanded their initial executive orders, and others may follow suit. For example, while Pennsylvania initially recommended the closure of nonessential businesses, on March 19 Governor Tom Wolf signed an executive order forcing the closure of all but “life-sustaining” businesses. The state will begin enforcement actions against noncompliant businesses on March 21 under the terms of this order. Construction activities, for example, are no longer permitted to operate in Pennsylvania.  Additionally, on March 19, Governor Gavin Newsom of California signed an executive order requiring all residents to stay home, except as needed to maintain continuity of operations of the 16 “federal critical infrastructure sectors” including critical manufacturing, chemical, emergency services, energy, healthcare and public health, financial services, food and agriculture, and water and wastewater. And on March 20, just one day after having directed 75% of all nonessential employees to stay home, New York Governor Andrew Cuomo announced that he would be putting out an executive order mandating that 100% of employees in “nonessential” businesses in the state stay home.

Many state environmental agencies have not yet released guidance on the impacts of COVID-19. Moreover, even if environmental cleanups are permitted to proceed, maintaining the recommended “social distancing” in site investigation or remediation activities presents a challenge. Further challenges to ongoing site investigations and cleanups may also arise due to workforce absenteeism due to illness or caring for an ill family member.

EPA Guidance

EPA has not yet released guidance on the impact to agency operations due to COVID-19. Moreover, each site is differently situated, so there may be no one-size-fits-all solution. Parties currently remediating sites pursuant to settlements with EPA should carefully scrutinize their respective agreements and orders, including the force majeure clauses, to determine whether current circumstances may constitute such an event, and how and when to notify the agency. Most such provisions require notification within days, or even hours, of the discovery of the force majeure event, prompting yet more uncertainty as to whether there has been a trigger based on the novel pandemic response gripping the nation.

For example, EPA’s Model Consent Decree Language and Model Administrative Consent Order Language both define force majeure events as any event arising from “causes beyond the control” of respondents that “delays or prevents the performance of any obligation” under the order despite respondents’ “best efforts to fulfill the obligation.”

Each ongoing cleanup faces unique challenges depending on locality and nature of the cleanup. Responsible parties should consider outreach to EPA requesting the following actions:

  • Recognize the rapidly changing circumstances at the local, state, and federal level caused by COVID-19
  • Temporarily suspend notice deadlines for force majeure events caused by the COVID-19 crisis, as well as waive penalties for failure to timely notice or meet a deadline where the implications of COVID-19 have made it impracticable or impossible
  • Work with responsible parties on an individualized basis to determine whether ongoing work can continue and the extent to which deadlines should be extended, and follow a dispute process in the event of disagreement
  • Acknowledge that there may not be a one-size-fits-all approach for sites that are at different stages of remedial progress and subject to varying state restrictions

Until state and federal environmental authorities take affirmative action, responsible parties should consider proactive outreach to their EPA and state agency contacts for their specific cleanup sites for further guidance in this unprecedented situation, and stay tuned for further announcements on the status of environmental cleanups in the midst of the COVID-19 pandemic.

Copyright 2020.  Morgan, Lewis & Bockius LLP.  All Rights Reserved. 

 This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.


About the Authors

John McGahren is the Princeton litigation practice leader and deputy chair of the firm’s global environmental practice. John counsels clients on litigation, enforcement, and transactional matters. He prosecutes and defends citizen suits, Superfund and RCRA disputes, Clean Water and Air Act litigation, state law actions, and natural resource damage claims.

Stephanie R. Feingold represents clients in litigation and dispute resolution and provides environmental and regulatory counseling. Her work spans investigations, cost recovery and contribution actions, and enforcement actions brought by and against environmental agencies and government authorities, as well as private party actions.

Ariel Kapoano represents clients in complex environmental, toxic tort, contract, and consumer fraud litigation matters. She has experience in all aspects of litigation including factual investigation, discovery management, motions practice, and trial.

Jenna C. Ferraro is a part of the firm’s litigation team, which counsels clients and provides legal services in a wide range of areas, including general civil and commercial litigation, environmental law and toxic torts. Jenna’s experience includes many aspects of litigation, including discovery matters and motion practice.

The Five Things you need to know about Incident Management and Reporting

Intelex, a company specializing in the development of EHS and quality software, recently published an insight report entitled “The Five Things you Need to Know about Incident Management and Reporting“.  The report provides information on the legal obligations to report serious injuries and fatalities, best practices for incident reporting and management, and how incident reporting and management can be linked to operational excellence.

In the introduction of the report, the cause of the Titanic disaster is discussed.  It report states that the average person would cite an iceberg as the cause of the ship’s sinking.  In contrast, a risk or safety manager would respond that the tragedy was caused by a series of events – management failures, poor-quality construction, employee errors/lack of training, poor planning, and either the failure to track incidents or the inability to analyze incident data in a meaningful way – that ended with the sinking of the ship.

EHS incidents can be painful for injured employees, the environment, and an organization’s bottom line, but incident management and reporting doesn’t have to be a pain point if done correctly.

Looking Ahead: Bold Predictions for the Next Decade

Written by Bill Leedham, P. Geo., CESA

As it is the start of the new decade, I’ve dust off my crystal ball and make a few bold predictions for the decade(s) to come.

Sustainability and the ‘Green’ Economy

We have already seen emerging technologies and new industries geared towards sustainability. In a world where finite resources are dwindling, and with increasing pressure for renewable sources of energy, it’s easy to foresee further consumer demands for a more “green” economy. Hopefully this results in more than just advertising buzzwords, but rather a planned and sincere approach to waste reduction, sustainable resource management, and true ‘cradle-to-grave’ responsibility from manufacturer to end consumer for all products.

 New Problems and New Opportunities

The last decade saw an increasing awareness of emerging contaminants such as micro-plastics, PFOS and PFOA. Similar to past generations experiences with their own ‘new’ contaminants such as asbestos and UFFI; I am sure we will encounter as-yet undiscovered sources of contamination. Whether such pollutants will be associated with cobalt mining for lithium battery production, cannabis waste from commercial growers or by-products from cellular agriculture; it’s how we deal with these new pollutants that may set us apart from past pollution legacies – or not. Developing technical solutions to these new problems will also create unique opportunities for the environmental consulting, remediation and waste management industries.

Lingering Legacies

While we will no doubt experience new environmental contamination issues in the future, we must not forget about the existing pollution problems and the legacies they create. As our population grows, we will continue to create more waste and run out of conventional landfill space – which will require an increase in recycling, re-use, waste reduction and diversion, and alternative methods of waste disposal. Plastic pollution in our waterways is a massive problem that must be solved before there are more plastics than fish in the oceans. Reclamation of abandoned ‘orphan’ oil wells, out-of-service mines, and eventual cleanup of depleted oils sands production facilities and shale-oil fracking sites should be planned for and financed today, so they don’t bankrupt our children and grandchildren.

Environmental Activism and Increasing Political Divides

The rise of environmental activists like Greta Thunberg seems to go hand in hand with the increasing divides between the political right and left, and the growing gap between the very wealthy and the very poor. Unfortunately, I think these gaps may widen further unless we can find a reasonable compromise that all sides can accept. In my opinion such balance would represent real sustainability, but I’m not sure that is achievable in this age of hyper-sensitivity and social media-driven ‘fake’ news from all sides. Regardless of your political persuasion or economic strata; I think we all can (and should) agree that common goals like pollution prevention, waste reduction, clean air, safe water, habitat protection, species biodiversity, are all worthy and necessary endeavours. The sooner we stop arguing and start listening to each other, the sooner we can solve some of these problems and promote and maintain a healthy environment and a truly sustainable economy.


About the Author

Bill is the Head Instructor and Course Developer for the Associated Environmental Site Assessors of Canada (www.aesac.ca); and the founder and President of Down 2 Earth Environmental Services Inc. You can contact Bill at [email protected]

What Exactly Is Canada Doing About The Protection Of Our Environment?

Written by Paula Lombardi, Siskinds LLP

The Federal Government is required under the Federal Sustainable Development Act, S.C. 2008, c.33 (“Act1) to provide Canadians with a strategy as directed by the precautionary principle.

The precautionary principle is defined in section 2 of the FSDA, for implementing any thing, action or process to develop, improve and protect our environment of threats of “serious” or “irreversible damage”, regardless of lack of full scientific data, or cost-effective measures to prevent “environmental degradation”.

The FSDA was passed in June of 2008, and as statutorily required, the federal government implemented the first written objectives to Canadians in a report known as the “Federal Sustainable Development Strategy” (FSDS) for the years 2010 to 2013. The Act requires that the FSDS be updated every three (3) years by the Minister of the Environment based on the precautionary principle. The federal government’s fourth and most recent update is entitled “Achieving a Sustainable Future. A Federal Sustainable Development Strategy for Canada 2019 to 2022″ and was released on June 19, 20192 (the “2019-2022 FSDS”). Every Canadian including Indigenous organizations, non-governmental organizations, academics, businesses (large or small) are invited before the end of each reporting period to make comments on the draft report prior to its release. While the 2019-2022 FSDS report is complete, comments on the new report or ideas on implementation of its goals can be made on the federal government’s Commitments Board or by sending an email to [email protected].

As we enter a new decade, the re-elected liberal federal government will be working with Canadians to attain the thirteen (13) sustainable development goals by 2022. These goals include: lowering emissions; developing more green operations; preserving healthy coasts and oceans; growing clean technology; improving infrastructure; improving lakes and rivers; maintaining lands and forests; ensuring healthy wildlife; providing clean drinking water; creating sustainable food; connecting Canadians with nature; and, encouraging sustainable communities to live clean.

The question is whether these development changes really affect each Canadian? The answer is yes.

These development goals can only be achieved and sustained through action by individuals, the business sector and provincial governments. For example, in December of 2017, The Minister of the Environment and Climate Change Canada (“ECCC”) the Honourable Catherine McKeena stated: “Sustained action on Great Lakes restoration is key to the health and economic prosperity of citizens in this important region.”3 The ECCC gave close to $45 million in new funding to the Great Lakes Protection Initiative to take action on identified priorities (i.e. 2017 State of the Great Lakes Report). These priorities included reducing toxic and nuisance algae and harmful pollutants to restore water quality, and improving and protecting its ecosystem.

The creation of the Canada-Ontario Lake Erie Action Plan4 set out 120 actions to help reduce phosphorus entering Lake Erie. The City of Hamilton has contributed $14 million5 to the Randle Reef Sediment Project. Although this immense multi-year initiative remains on budget with the goal to be completed by 2022, it could only remain possible by the FSDA and application of the precautionary principle.

The 2019-2022 FSDS report is a free public document that all Canadians can easily access by downloading from the federal government website or visiting http://www.fsds-sfdd.ca/downloads/FSDS_2019-2022.pdf.

Footnotes

1 https://laws-lois.justice.gc.ca/eng/acts/f-8.6/page-1.html#h-240603

2 http://www.fsds-sfdd.ca/index.html#/en/intro/annexes#tabs

3 https://www.canada.ca/en/environment-climate-change/corporate/transparency/priorities-management/departmental-results-report/2017-2018/results.html#toc3

4 https://www.canada.ca/en/environment-climate-change/services/great-lakes-protection/action-plan-reduce-phosphorus-lake-erie.html#toc4

5 https://www.hamilton.ca/city-initiatives/our-harbour/budgets-and-fast-facts

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.


About the Author

Paula Lombardi is a partner of Siskinds LLP, and practices in the areas of environmental, municipal, regulatory and administrative law. Prior to joining Siskinds, Paula worked as an associate at a Bay Street law firm where her practice focused on occupational health and safety, environmental and regulatory matters.  Paula recently spent two years as in-house counsel for a major privately owned US corporation, whose owner is on the Forbes 500 list, and was responsible for all Canadian legal and business issues relating to the import and export of goods, transportation of hazardous materials, remediation of contaminated sites, construction of large infrastructure projects, regulatory compliance, NAFTA matters, and preparation of environmental assessments in the US and Canada.