Encouraging compliance with environmental laws and regulations by significant and chronic offenders of such laws is a challenge for government. Unfortunately, responsible operators and “good corporate citizens” can be the victims of collateral damage in such regulatory efforts. One such example is the introduction of Environmental Penalties (EPs) by the Ontario government in its recently introduced Bill 133.
The bill has several key elements of which EPs are but one. The bill also includes increased fines for conventional offences, new sentencing guidelines, and a change of threshold for offences from “likely to occur” to “may occur.”
Bill 133 also broadens the scope of directors and officers liability in requiring that they take all reasonable steps to prevent any contravention of the EPA and OWRA and not just to prevent unlawful discharges. The difficulty with the approach is that directors and officers could be prosecuted for failure to report even a minor regulatory violation or any failure to comply with each (or even a minor) condition of a Certificate of Approval.
The bill requires that a person charged with the offence (of failing to carry out such a duty) has the onus of proving that the duty was carried out. The reverse onus, along with the other changes to directors and officers liability, could have a significant impact on boardrooms in Ontario.
The new EPs are only the most recent version of a tool that was proposed by the previous conservative government, which called them administrative monetary penalties (AMPs). That proposal, which also sought to streamline the enforcement process, was withdrawn in part because of the outcry from stakeholders. But they have returned in this new guise.
And a similar outcry has again erupted from corporations that view themselves as the subject of environmental legislation, and also industry organizations, including those that represent waste management companies such as the Ontario Waste Management Association (OWMA). The government appears surprised.
While the bill was initially proposed to be passed into law by late 2004, it had only received first reading in the Ontario legislature at press time. It remains to be seen what, if any, changes will be made by the government prior to the bill’s becoming law.
The most significant elements of the EP provisions are that individuals and companies can be charged $20,000 and $100,000 per day respectively. These maximum penalties (the ministry encourages people not to refer to them as “fines”) impose absolute liability, meaning that no due diligence defence is available (as there is in the case of conventional regulatory offences). The due diligence defence is available for charges brought pursuant to existing environmental legislation is Ontario. However, it remains to be seen how much EPs will replace more conventional regulatory mechanisms for dealing with environmental offences.
Another significant element of the proposed EPs is that they do not preclude conventional charges for the same offence. That means an EP could be levied against a person or company for a particular action, such as a release of a contaminant into the environment, the penalty imposed could be significant, but nonetheless a further charge could be brought under the Environmental Protection Act. A far larger fine might then be imposed after a trial. This is “double jeopardy” of the kind that is generally not permitted at law absent specific legislative authority.
Ministry of Environment’s position
In order to counter some of the criticism being levelled against the government, the Ministry of the Environment has stated that Bill 133 is only “enabling legislation” and that regulations will be introduced at some future time that will limit the application of EPs to only approximately 140 industrial facilities that are already the subject to increased regulatory scrutiny. Unfortunately, this amounts to the ministry saying, “trust us.” As the legislation is currently drafted, a substantial portion of the Ontario industrial matrix would be subject to EPs. Except for a desire to introduce such legislation quickly, it’s difficult to know why the government introduced the bill without its accompanying regulations.
Finally, in attempting to assuage those who may be concerned that EPs will have a general and significant impact, the ministry has pointed to the provisions in Bill 133 that will provide for the entering into Settlement Agreements between the ministry and entities subject to an EP. These Settlement Agreements could provide for reduced penalties along with an ongoing relationship with the ministry that would (hopefully) minimize future liability. The difficulty once again is that no details are provided for the implementation of Settlement Agreements within Bill 133 itself.
Implications for industry
Until the final form of Bill 133 finds its way to the floor of the legislature and is approved, it will be difficult to know exactly what the bill’s impact on industry will be. Regulations introduced after the proclamation of Bill 133 could have significant implications on waste management and related businesses. It appears at this time that the government is serious about some of the key elements of Bill 133 and that industry is going to face new regulatory risk in Ontario. In combination with the current concerns over environmental assessment regulation in the province, the waste and recycling industry must prepare itself for change.
Adam Chamberlain is a certified specialist in environmental law with Aird & Berlis in Toronto, Ontario. Contact Adam at firstname.lastname@example.org