Environmental Regulators Getting More Vigilant

By James Mahony, Daily Oil Bulletin

An Edmonton lawyer who defends companies charged with environmental "crimes" summed up his advice yesterday for anyone considering playing on the edge of laws affecting the environment.

"You can pay me now, or you can pay me later," Stuart Chambers told a Calgary business audience, explaining his workload has been bolstered recently by the notably more proactive approach prosecutors -- both federal and provincial -- have taken in pursuing environmental offences in Alberta.

While fines and warnings were once typical, criminal prosecutions are more common now, with fines soaring well above the modest sums of years past. As well, increased vigilance by regulators has come as interest groups -- typically, environmentalists -- and the media more closely scrutinize companies' operations in the resource sector.

Now, when a company errs, it's more likely to hit the evening news, Chambers told the Canadian Institute's conference on Environmental Law & Regulation in Alberta. "The ducks at Syncrude Canada Ltd. made CNN," he noted in reference to the 2008 incident on the company's northern Alberta tailing ponds.

As well, he cited other trends affecting producers and oilfield service firms, among other players in the province's oil and gas sector. One is a growing tendency for environmental regulators to pursue criminal charges against companies, with no willingness to spare contractors, sub-contractors or employees who happen to be caught in the web.

In addition, it's becoming more common now for individuals, whether employees or executives, to be prosecuted, in addition to the company itself. Like an earlier speaker, Chambers cited a recent Alberta case in which an individual was convicted of a criminal offence. In a similar case, a manager got a four-month jail term for lying to regulators.

"We see enforcement as being ever-more prevalent," Chambers said, noting that maximum penalties on a range of environmental offences have been increased across the board. In many cases, prosecutors will charge companies with so-called "strict liability" offences. Unlike common criminal offences like theft, prosecutors need not prove the offender intended to commit the offence, he said.

With a strict liability offence, the prosecutor need only prove the facts underlying the offence, say, a release of toxic effluent in a river. Once the facts are proven, the onus shifts to the accused -- typically, the company -- which must then raise a defence of due diligence, in effect, showing it took all reasonable steps to avoid committing the offence.

According to Chambers, it's at this stage that the case for the defence can break down, and not because the company was not doing its best to avoid committing the offence, he said.

"Where [companies] often have a problem if something goes wrong is where they haven't documented [their due diligence]. So, we see a company that has made good due diligence efforts, but can't show that." For the lawyer trying to prove due diligence in court, the situation creates problems, he said.

"For example, if I want to show employees were trained, how do I do so? Do you have attendance logs showing they attended classes and passed exams? Do you have a sign-off sheet on a policy handbook?" In some way, the lawyer defending the company needs to be able to show the court that the training occurred and employees were present.

Chambers underscored another point for companies planning for the time when environmental incidents might occur. "A due diligence defence cannot be constructed after the fact," he said. "In order to have [that] defence, you need to have your system in place [before the incident]."

A natural first step in setting the stage for such a defence is identifying where the company's greatest risks, hazards, and potential exposure lies, he said. "Design your preventative plans to stop those [things] from happening, or to mitigate risks if they do. Train your employees, and document all of that."

A basic task for many companies is creating a formal Incident Response Plan (IRP) that sets out sequentially the steps company employees and executives need to follow, should an incident occur. Employees should be apprised of the plan, which often identifies key individuals, such as a site co-ordinator, in the event of an incident.

Typically, central to the IRP is the company's obligation to promptly report the incident to regulators, often at an early stage. At the same time, Chambers said the company and its employees have an ongoing obligation to preserve the evidence, whether in the form of documents, records or such evidence as water or effluent samples.

Earlier in the day, Alberta Crown Prosecutor Peter Roginski outlined some of the conduct likely to get his attention, when it comes to environmental incidents. Apart from the adverse consequences of the incident itself, such as a spill, he said any evidence that a company, its executives, employees or agents -- including contractors -- have shown deceit, falsification or misrepresentation is a red flag for prosecutors.

To make for smoother relations with prosecutors, he suggested companies remember that a criminal prosecution is not a civil matter -- that both the process and the remedies differ from civil litigation. A rule of thumb, he said, is that the earlier a matter is dealt with, the better, both for the prosecutor and the company charged.

In the early stages, Roginski said cases may be disposed of through "early case resolution," with a broader range of possible outcomes, while if the matter is left until the later stages, the Crown is more likely to be seeking the most serious penalties available, for example, under Alberta's Environmental Protection Enhancement Act, to name one law under which his staff may prosecute companies.