Increased scrutiny, novel measures, and higher penalties: Trends in environmental investigations, enforcement, and prosecutions

JENNIFER: Hello, I’m Jennifer Fairfax, Chair of the Environmental disputes, investigations and enforcement practice at Osler based in Toronto.

Environmental enforcement actions can result in orders or minor administrative penalties or fines. But, there is a growing trend driven by provincial ministries of the environment and federal regulators (like Environment and Climate Change Canada or ECCC) to:

• carry out more frequent facility inspections and inquiries,
• refer administrative and minor non-compliances for investigation, even if there’s been no negative impact to the environment,
• cooperate and conduct concurrent investigations with other regulators,
• adopt novel strategies to pursue more aggressive enforcement, and
• pursue higher fines, including in the six-figure range.

This is of particular concern to corporate defendants given that the courts have already said that corporations cannot rely on s. 12 of our Canadian Charter of Rights and Freedoms. This is the right to be free from cruel and unusual punishment, like disproportionately high fines.

In terms of investigations and enforcement action against corporate entities in Canada, here is what we are seeing:

We’re seeing environmental regulators have upped their game in inspection and oversight.

• The Ontario Ministry of the Environment has increased its scrutiny over
  • spills (especially those involving water or wastewater),
  • hazardous waste,
  • permit compliance, and even
  • (alleged) failures to report minor incident that have no possible risk of any impact to the environment.
• Environment Canada has also stepped up in conducting inquiries, such as under the Fisheries Act and the Canadian Environmental Protection Act, and its regulations.
• Inquiries can range from routine and even surprise inspections, to calls and emails following up on filed waste manifests and submitted reports.

“Minor Infractions” are being referred for investigation and are even being prosecuted, like a missed sampling event required in a permit, that can be referred to an investigator for a formal investigation. An investigator can ultimately recommend charges.

We have seen situations where both federal and provincial environmental regulators investigate the same incident together and share information. This can happen when a release to water occurs, that engages both the federal Fisheries Act and provincial spill laws, or when wildlife is impacted.

Regulators and prosecutors are using novel methods to increase fines beyond what may appear to be the true statutory maximums, such as imposing an “Additional Penalty”. For example, courts have the discretion to increase fines to add on the “monetary gain” the corporation (allegedly) obtained from committing the offence.

Recent cases in Canada show the tendency of Environment Canada to seek substantial penalties for violations of legislation. Cases have tended to range from $1 to-2 million, particularly for violations of the Fisheries Act, the Canadian Environmental Protection Act, and the Migratory Bird Convention Act.

A conviction with a high penalty gains press attention, and can negatively affect a corporation’s permit/license applications, its transactions, security disclosure, and overall its ESG report card.

One key step to navigating this increased regulatory scrutiny, investigation and enforcement action is to be ready from the “get go” – when the environmental inspector comes “knocking”. We’ve provided checklists and tips on how to be ready on our group’s page on Osler.com.

To find out more about these and other issues affecting the investigation, enforcement and prosecution of matters relating to the environment, please reach out to learn more about how Osler can help your organization navigate the challenges in this increasingly complex area of law.