Environmental Due Diligence and Managing Environmental Risk Presented as part of the Law Society of Saskatchewan’s Seminar: Due Diligence and Legal Opinions (March 2016)
Environmental Due Diligence: Why? Environmental due diligence and managing environmental risk are now fundamental parts of most (if not all) commercial transactions mergers and acquisitions, real estate, project development, financing, bankruptcy Environmental issues are relevant to: seller, purchaser, developer, contractor, lessor, lessee, financier, trustee in bankruptcy, receiver or insurer Risk is manageable and issues can be overcome!
Environmental Due Diligence: How? Legal counsel needs: firm understanding of environmental regulations and liabilities ability to scope, conduct and manage environmental due diligence experience to allocate and manage environmental risk in the transaction documents an understanding of available insurance products, when necessary
Environmental Regulations Saskatchewan Legislation The Agricultural Operations Act The Oil and Gas Conservation Act The Conservation Easements Act The Pest Control Act The Crown Minerals Act The Pipelines Act, 1998 The Dangerous Goods Transportation Act The Provincial Lands Act The Environmental Assessment Act The Public Health Act, 1994 The Environmental Management and Protection Act The Reclaimed Industrial Sites Act The Fire Safety Act The Saskatchewan Employment Act The Fisheries Act (Saskatchewan) The Water Security Agency Act The Forest Resources Management Act The Weed Control Act The Heritage Property Act The Mineral Resources Act, 1985 The Wildlife Act, 1998 The Occupational Health and Safety Act
Environmental Regulations Federal Legislation Canada National Marine Conservation Areas Act Forestry Act Canada Oil and Gas Operations Act Hazardous Materials Information Review Act Canada Petroleum Resources Act International River Improvements Act Canada Shipping Act Migratory Bird Convention Act Canada Water Act Navigable Waters Protection Act Canada Wildlife Act Northwest Territories Waters Act Canadian Environmental Assessment Act Nuclear Energy Act Canadian Environmental Protection Act Nuclear Fuel Waste Act Criminal Code Nuclear Liability Act Department of the Environment Act Nuclear Safety and Control Act Emergencies Act Pest Control Products Act Energy Efficiency Act Species at Risk Act Energy Supplies Emergency Act Territorial Lands Act Environmental Violations Administrative Monetary Transportation of Dangerous Goods Act Wild Animal and Plant Protection and Regulation of Penalties Act International and Interprovincial Trade Act , Federal Sustainable Development Act Fisheries Act
EMPA 2010 On June 1, 2015: The Environmental Management and Protection Act, 2002 The Clean Air Act The Litter Control Act The State of the Environment Report Act The Environmental Management and Protection Act, 2010 (“EMPA 2010”)
EMPA 2010 Not repealed: The Hazardous Substances and Waste Dangerous Goods Regulations The Mineral Industry Environmental Protection Regulations, 1996
What’s New and Relevant? EMPA 2010 Highlights: A new duty to report a discovery A new requirement to report on environmentally impacted sites on Minister order A new environmentally impacted sites regime New categories of “persons responsible” and contractual transfer of liability and risk A new public environmentally impacted sites registry
What’s New and Relevant? What’s important to you? Understating: – environmental regulatory liability in the context of environmental due diligence and risk management the new environmentally impacted sites process and the contractual transfer liability the public environmentally impacted sites registry
Environmental Regulatory Liability Causes of environmental regulatory liability: – by discharging, or the allowing the discharge of, a substance into the environment that may cause or is causing an adverse effect, unless expressly authorized – by being a person responsible for an environmentally impacted site – by failing to comply with a permit, environmental protection plan, order or the Code
Environmental Regulatory Liability Causes of environmental regulatory liability: – by discharging, or the allowing the discharge of, a substance into a waterworks that that may cause or is causing water to be unsafe for human consumption or that may cause or is causing a substance in water to vary from permitted concentrations – by altering, or causing to be altered, or the removal or addition of material from or in or to, a bed, bank or boundary of a watercourse or water body – by abandoning, discarding or disposing, or allowing the abandonment, discard or disposition, of waste, except as expressly permitted
Environmental Regulatory Liability Causes of environmental regulatory liability: – by abandoning, discarding or disposing, or allowing the abandonment, discard or disposition, of a hazardous substance except as expressly permitted, or – by being made subject to an immediate environmental protection order or an environmental protection order
Environmental Regulatory Liability EMPA 2010 prohibits a discharges unless expressly authorized pursuant to: – EMPA 2010 – any other Act of the Legislature of Saskatchewan or the Parliament of Canada – any permit, license or order made pursuant to EMPA 2010 or any other Act of the Legislature of Saskatchewan or the Parliament of Canada – the Code – an accepted environmental protection plan
Environmental Regulatory Liability Importantly: – EMPA 2010 contains a new Section 2(3) which deems an adverse effect to exist where a person exceeds any permissible limit, standard criteria or condition that is prescribed or set out in the Code – EMPA 2010 now includes a duty to report a discovery, which consequently expands the scope of persons who have a duty to report and a duty to take corrective action
Duty to Report a Discovery Who has a duty to report a discovery: Every person who owns or occupies land on which a substance is discovered that may cause or is causing an adverse effect Every person, who while conducting work, discovers a substance that may cause or is causing an adverse effect
Duty to Report a Discovery What is reportable: A substance that may cause or is causing an adverse effect A substance discovered in a quantity or concentration that could pose a serious risk to the environment or public health or safety A substance that meets the criteria of Table 2 of the Discharge and Discovery Reporting Standard In all instances a discovery is only reportable when confirmed No requirement to report previously reported discharges or if a report is required pursuant to an Approval to Operate, Environmental Protection Plan or other legislation (eg. The Pipelines Act, 2012)
Duty to Report a Discovery When to report: If serious risk to the environment or public health or safety, then immediately In any other situation, within 30 days from the discovery In accordance with the times frames of an approved Environmental Protection Plan
Duty to Report a Discovery The issues: “every person, who while conducting work, discovers” developers, contractors and subcontractors, real estate agents, environmental consultants/engineers, municipal inspectors, financial intuitions Obligations to report substances that “may cause” an adverse effect Environmental and transactional due diligence pre-agreement negotiations Implications for the owner/occupant following the discovery duty to take immediate emergency remedial action (even if not a “person responsible”), Government knowledge of an environmentally impacted site, impact on value and marketability of land
Requirement to Report on Environmentally Impacted Sites The requirement: The Ministry of Environment has broad power to require an owner or occupier of land to provide to the Ministry a written report containing (among other things) all sites owned or occupied that contain or main contain a substances that may cause or is causing an adverse effect The issues: Uncertainty in application: “causing” vs. “may cause” and “contain” versus “may contain” Implications for the owner/occupant following the report – first step to ordering a site assessment under Section 13
The New Environmentally Impacted Sites Regime The “contaminated sites” regime now replaced with the “environmentally impacted sites” regime The MOE may order a person who is or may be a “person responsible” to conduct a site assessment if the MOE reasonably believes the site to be an “environmentally impacted site” Issues: MOE does not need to be certain that the person ordered to complete a site assessment be in fact a person responsible Financial burden (particularly if not a “person responsible”) Options : Immediate and limited option of seeking judicial review of the MOE’s belief Do nothing and wait until an environmental protection order is issued and appeal to the Saskatchewan Court of Queen’s Bench
Recommend
More recommend
