Directors and senior managers are personally liable for the environmental offences of their organisations under state and territory law. It’s a compelling reason to ensure that your organisation’s environmental management is ship shape. Add to that the potential cost and inconvenience of being embroiled in a regulatory investigation or prosecution. The reputational impacts of enforcement and it just makes good sense to focus on environmental compliance and to close out those difficult issues in 2017.
Non-compliant conduct may have significant financial consequences. Both direct penalty or damages consequences, and long-term reputational and brand consequences. Given this context corporate counsel have numerous challenges.
1. Maintain Enterprise Operations Compliance
One should understand the company’s compliance obligations and ensure that the corporate management system adequately meets those compliance requirements. These may range from meeting regulatory or permit air and water emission caps, complying with reporting requirement etc.
Environmental laws and their enforcement vary from place to place. Matters that are regulated include air emissions, water and wastewater treatment and discharges, waste management. Generally, release of contaminants including issues relating to contaminated land redevelopments. Additional areas which are regulated include pesticide use, underground and above ground storage tanks and the transportation of dangerous goods.
2. Comply with Waste Management Law
Laws govern the classification of wastes for disposal and recycling purposes. They determine approval and documentation requirements for those engaged in waste transportation, waste disposal, and recycling operations. Certain classes of waste generators may have approval or registration requirements, as well as waste classification and reporting requirements. Waste generators may be subject to requirements to progressively reduce the waste they generate.
The use of unlicensed waste facilities or operators may lead to penalties and waste removal requirements. As well, the disposal of waste on one’s own site without an approval may result in penalties and waste removal orders.
3. Comply with Product Stewardship Obligations
A corporation’s obligations with respect to the fate of its products may not end at the time of sale. Some places impose requirements for manufacturers, importers or distributors of certain products to participate in programs to enable consumer return of products.
4. Protect Officers and Directors
Environmental laws provide for officer and director liability in certain circumstances of corporate non-compliance. Generally speaking, officers and directors who permit non-compliance, actively or through acquiescence, may be prosecuted. And in some circumstances those who fail to take adequate measures to pro-actively prevent corporate non-compliance may be prosecuted. Penalty amounts may be significant.
5. Protect Affiliated Corporations
Accordingly, corporate counsel has to be mindful of the Canadian jurisdictions in which this exposure exists, and ensure that corporate decision-making and lines of accountability adequately manage this risk
6. Maintain a Defence-Ready Corporation through Due Diligence
The regulatory offence system therefore creates the incentive for companies to be in a position to prove due diligence if prosecuted. This entails being able to prove that the company exercised all reasonable care with respect to the relevant aspects of the operation in issue.
7. Maintain a Defence-Ready Corporation in the Face of Absolute Liability
However, the costs and delays inherent in the prosecution of environmental offences have given rise to systems of absolute liability administrative penalties for environmental offences in some jurisdictions.
These systems are intended to facilitate the imposition of penalties for lesser contraventions, those not deemed to warrant a conventional prosecution. Due diligence is not an available defence to administrative penalties. Officers and directors may also be subject to administrative sanctions on a similar basis. The emergence of these regimes places an emphasis on ensuring current corporate compliance with all facets of applicable environmental law. Also, it rigorously ensures compliance is maintained on an ongoing basis.
8. Train your people!
It can never be overstated how essential this is. Training for your personnel, from site staff, to executives and board members is an integral component of effective environmental compliance. In my experience most incidents happen because a site operator didn’t know the rules.
Classic examples are that they didn’t know that they “weren’t supposed to switch off that pump” or “that it was the type of incident that should be reported to management”. The environment courts are increasingly making critical commentary about training (or lack of appropriate training) and so this is an area to watch.
10. Identify Environmental Risks and Opportunities
Accounting standards and securities laws require adequate disclosure of environmental liabilities and risks. Corporates need to be aware of the current standards for disclosure and the ongoing guidance of regulators and the accounting profession in this area. Climate change associated risks have given these issues heightened importance, including risks of carbon emission constraints and the costs of corporate adaptation.Add to favorites