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.

Guide to Community Actions that drive Brownfields Development

The United States Environmental Protection Agency (U.S. EPA) recently developed a Guide to help communities with brownfields to
more successfully address community revitalization and brownfields-related challenges.  The guide outlines concrete actions communities can take to address these challenges.

Through the three case studies described in the Guide, it is shown that attracting public or private investment for the reuse of brownfield properties can bring economic and social benefits to communities, in addition to improving environmental conditions.

The Guide provides details of the five steps for successful brownfield redevelopment:

  1. Lead with stakeholder involvement that empowers the local community to become redevelopment champions.
  2. Create a site reuse vision that is exciting and realistic.
  3. Remove barriers to brownfield redevelopment (i.e., expediting zoning and permitting approvals).
  4. Engage developers and end-users.
  5. Complete site preparations and close the deal.

The Guide also discusses opportunities for obtaining brownfield grants and technical assistance.  The U.S. EPA provides grants and technical assistance to local, state and tribal governments and nonprofit organizations. As of February 1, 2019, these federal government investments in brownfield remediation projects have leveraged $27.527 billion in cleanup and redevelopment funding from public and private sources and resulted in the creation of over 144,800 jobs.

Tritium Spill at Nuclear Power Plant in Ontario

As acknowledged by Bruce Power, there was a spill of 20-litres of heavy water containing radioactive tritium at the Bruce Nuclear Power plant near Kincardine, Ontario on March 28th.

Staff at Bruce Power Unit B responded to a release of approximately 20 litres of heavy water in Unit 6 which has been shut down since Jan. 17 for Major Component Replacement. The spill occurred when crews were flushing a system as part of layup activities for the unit.

Heavy water from the reactor contains levels of tritium, and station staff followed their procedures to promptly stop the spill and safely clean it up, including assembling Bruce B employees away from the affected area while the cleanup occurred. Barriers were established to restrict personnel and tritium levels monitored by station monitoring equipment and staff.

Representation of a Tritium atom

There have been no adverse impacts to our employees, the environment or the public. An investigation to determine the cause of the event is underway and once complete, steps will be taken to implement any lessons learned.

Heavy water is essential to the operation of Canada’s CANDU nuclear power reactors; used as both a moderator and a heat transfer agent. Heavy water is chemically the same as regular (light) water, but with the two hydrogen atoms (as in H2O) replaced with deuterium atoms (hence the symbol D2O). Deuterium is an isotope of hydrogen; it has one extra neutron.

Tritium is a radioactive form, or “isotope”, of hydrogen. It has two neutrons where regular hydrogen does not have any, which makes tritium unstable and therefore radioactive.  It is produced as a by-product of nuclear reactors.

Bruce Power is Canada’s only private sector nuclear generator, annually producing 30 per cent of Ontario’s power.  The power plant in Kincardine, along the eastern shores of Lake Huron, also produces medical isotopes that are used to keep medical equipment sterilized.

 

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.

Texas Oil Company to pay $115,000 Civil Penalty to resolve violations of Oil Pollution Prevention Regulations

Agreement with Texas-based company resolves findings of non-compliance

The U.S. Environmental Protection Agency (EPA) recently announced a proposed settlement with Citation Oil & Gas Corp. (Citation) of Houston, Texas, to resolve alleged violations of federal regulations intended to prevent oil pollution. The Clean Water Act violations pertain to oil spill prevention requirements and Spill Prevention, Control, and Countermeasure (SPCC) regulations at Citation’s Park County, Wyoming, oil production facilities. Citation will pay a civil penalty of $115,000 to resolve the alleged violations.

This proposed settlement resulted from EPA’s investigation of two spills at Citation facilities. The first spill occurred on February 9, 2016, when Citation released approximately 300 barrels of crude oil from its Embar 3 Facility into Buffalo Creek, a tributary of the Big Horn River. The second spill occurred on August 21, 2019, when Citation released approximately 1000 barrels of produced water from its North Waterflood Station into the same tributary.

“Companies that store oil have a responsibility to follow laws that protect the public and the environment,” said Suzanne Bohan, director of EPA Region 8’s Enforcement and Compliance Assurance Division. “Due to the harm oil can cause when released to water resources and the environment, every effort must be made to prevent spills and to clean them up promptly once they occur.”

In investigating Citation’s spills, EPA discovered deficiencies in Citation’s SPCC plans for the North Waterflood Station and Middle Waterflood Station. The company corrected these deficiencies and submitted corrected plans to EPA, helping ensure that water resources and communities where Citation operates are better protected from damaging oil spills.

Federal oil spill prevention, control, and countermeasure rules specify requirements for businesses that store oil and prevent oil discharges that can affect nearby water resources. For more on the Clean Water Act’s prohibition against discharges of oil into waters of the U.S. and SPCC regulations, visit: https://www.epa.gov/compliance/clean-water-act-cwa-compliance-monitoring#oil.

This proposed Consent Agreement is subject to a 30-day public comment period and final approval by the EPA’s Regional Judicial Officer. To access and comment on the Consent Agreement , visit: https://www.epa.gov/publicnotices/notices-search/location/Wyoming

Source: The U.S. Environmental Protection Agency (EPA)

Environmental Due Diligence Carries on, With Limitations, During the COVID-19 Pandemic

Written by Michael A. NesteroffLane Powell PC

COVID-19 Resource

Banks, borrowers and their supporting professionals, like everyone else, are having to adapt to the rapidly-changing circumstances surrounding COVID-19. With commercial and multi-family real estate, one of the more difficult issues is how to conduct a Phase I Environmental Site Assessment in order to qualify as the “All Appropriate Inquiry” that most lenders require. A full Phase I investigation includes items such as a site visit, interviews with knowledgeable people, and records research, but each of those are constrained during this global pandemic and shelter-in-place or stay-at-home orders. Lenders and environmental professionals, however, are getting creative and flexible in the ways they address this unique situation.

Lender Adaptations

Because banks are considered an essential business service, many lenders are continuing to process loan applications, although they face the same logistical issues that we all are confronting with working from home. Depending on the type of loan involved, banks may be more flexible with the level of environmental due diligence required. For example, a refinance of a loan on a property where there was a recent Phase I, or the property has not changed, may not require any additional environmental review or a desktop review may suffice. Instead of one-size-fits-all approaches to due diligence, banks now are evaluating what’s needed on a property-by-property basis. In some instances, the environmental review may be called a “Limited Site Investigation,” instead of a Phase I, with follow-up site inspections conducted when the crisis abates.

Consultant Approaches

Environmental professionals, while not specifically called out as an essential business service, are considered support for an essential business service, such as a bank. This allows them to conduct the necessary site assessments and fieldwork but, in many cases, they may not be able to do so because the subject property is closed; the people to be interviewed are staying at home, whether because of stay-at-home orders or illness; and the government agencies and offices with relevant property records are not open to the public. Furthermore, the consulting firms are cognizant of the health and safety needs of their employees and don’t want to place them at unnecessary risk.

In some instances, such as hospitals, long-term care facilities, assisted living facilities, nursing homes or senior living communities, environmental consultants simply are not conducting in-person interior inspections. In other cases, multi-family properties for example, the inspections may consist of looking only at vacant units and common areas, but foregoing occupied units. Other workarounds include the site contact walking through the building on FaceTime or having a resident take photographs. One pitfall is that a building occupant or resident may not be as aware of what to look for, or may even want to minimize issues that an environmental consultant would spot. If a site visit is absolutely necessary, some consultants are scheduling visits for weekends or evenings when fewer people are around, having the site contact open all doors, wearing gloves, and maintaining social distancing as much as possible. For larger, open properties, use of a drone may be a helpful substitute.

Communication between the client and the environmental professional is key. If the scope of work may be more limited by current conditions, that should be made clear from the outset and the parties reach consensus on the necessary adjustments. Communication between the consultant and site contact also is important, although privacy issues prevent inquiring about a site contact’s COVID-19 status. Indeed, not everyone is convinced that current measures, such as social distancing, are warranted. In those situations, the consultants are having to communicate in advance their practices and expectations.


About the Author

Mike Nesteroff is a preeminent environmental lawyer with extensive experience representing clients in environmental litigation, agency negotiations, property acquisition and leasing issues, and counseling clients on risk and compliance. During his 31 years at Lane Powell, Mike has represented clients in litigation claims involving hazardous material investigations, cleanups and cost recovery at sites in Washington, Oregon and Alaska. He has obtained a several million-dollar cost recovery judgment on behalf of one client and a defense verdict in another cost recovery case. Mike has also represented clients in litigation involving public records and obtained a favorable court of appeals ruling on a previously-untested exemption in the Washington Public Records Act.

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.

 

Ontario: Waste Processing Company Fines Increased to $170,000 for Environmental Protection Act Violations

The Ontario Environment Ministry recently announced that an appeal court varied the sentence of an Ontario waste processing company and increased the fine from $140,000 to $170,000. The $30,000 fine increase reflected the anticipated cost of an embedded audit. The victim fine surcharge also increased from $35,000 to $42,500. The sentencing court also vacated the Order requirement that the company conduct the embedded audit.

The appeal court ruling stems from two separate matters in which an Ontario waste processing company, Quantex, was convicted of violations related to permitting waste to pass from its control without accurately completing a manifest, for transferring waste subject to land disposal restrictions without giving notice to the receiver, and for permitting the emission of an air contaminant to an extent that it may cause personal discomfort.  The offences occurred in 2016.

The company was originally convicted in 2018.  The Ontario Court of Justice granted the Crown’s appeal of the sentence that had been imposed on June 26, 2018 after a guilty plea, and increased the fine from $140,000 to $170,000, plus victim fine surcharge.

On June 26, 2018, Quantex was convicted of three violations and was fined a total of $140,000 plus a victim fine surcharge of $35,000 with 2 years to pay. The court also issued a probation order requiring the company to retain an independent auditor to conduct an embedded audit of some of the company’s waste management practices.

In December 2018, when the embedded audit was to begin, Quantex advised the Crown that it had sold the facility. It subsequently became apparent that the company had sold the facility prior to being sentenced in June 2018 and that Quantex had provided inaccurate information to the sentencing court. Therefore, the earlier sentencing had been conducted on the basis of inaccurate information.

At the time of the violations, Quantex Technologies Inc. operated a hazardous and liquid industrial waste transferring/processing site in Kitchener under ministry approval.  In the first matter, between November 2015 and January 2016, Quantex accepted hazardous wastes which were bulked together and shipped to another waste processing/transfer facility. Ministry inspection indicated that the waste manifest did not accurately reflect the waste classifications and that Quantex had not notified the receiver that some of the waste was subject to land disposal restrictions. As a consequence, the receiving facility was not aware that some of the waste had classifications that were not approved under the company’s ministry approval.

In the second matter, in August 2016, Quantex employees were transferring liquid industrial and/or hazardous wastes from storage totes into a tanker trailer on-site, and the truck’s vacuum pump and exhaust was being discharged into the air. During the transfer period, neighbours experienced burning and irritated eyes, a chlorine-like odour and difficulty breathing. The occurrence was reported to Quantex, which ceased the operation immediately.

The Environment ministry’s Investigations and Enforcement Branch investigated and laid charges resulting in three convictions.

$1.2 million Fine for Solvent Spill in Alberta

Drever Agencies Inc. was recently fined $1,250,000 in Wetaskiwin Provincial Court for an offence under the Canadian Fisheries Act. The company pleaded guilty to a charge of depositing a deleterious substance into water frequented by fish. The fine will be directed to the Government of Canada’s Environmental Damages Fund.

The incident which led to the fine occurred in August 2017. Environment and Climate Change Canada enforcement officers responded to a report of a solvent spill on a commercial property in Wetaskiwin. A number of dead fish were observed in an unnamed creek that flows into the Battle River. An investigation determined that approximately 1800 litres of Petrosol solvent leaked from a storage tank owned by Drever Agencies Inc. and entered the creek. Through laboratory analysis, it was confirmed that the solvent was deleterious (harmful to fish).

Wetaskiwin is a city of 12,000, approximately 70 kilometres south of Edmonton. The city name comes from the Cree word wītaskiwinihk, meaning “the hills where peace was made”

As a result of the conviction, the company’s name will be added to the Environmental Offenders Registry.

Undated Photo of Drever Agencies Facility (Source: Drever Agencies Web Site)