Cutting Through the Weeds: A Look at Environmental Issues Impacting Businesses

Mathieu:          Hi, I’m Mathieu Rompré.

Peggy:             And I’m Peggy Moss, and this is the Blakes Continuity podcast. [Sound of tree branches breaking, followed by a loud thud.] Ow!

Mathieu:          Peggy, you’re okay?

Peggy:             Yeah, I just fell out of a tree. I swear I used to be able to swing up to that branch. Do you think it’s possible my arms have gotten shorter in the last six months?

Mathieu:          Actually, no. But lots of things are changing, including environmental regulations. And today, we are talking to three lawyers who know a lot about how to help clients work through those changes.

Peggy:             Okay, I’ll swing up. Let’s talk with Grace Smith of Toronto, Tony Crossman of Vancouver and Terri-Lee Oleniuk of our Calgary office.

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Peggy:             Tony, what are some of the big questions your clients are thinking about in terms of environmental law right now?

Tony:               I think one of the big questions that people are asking about is ESG, or sustainability. ESG is environmental, social and governance issues. It’s a way of assessing a company that you want to invest in, and it’s gone even further for businesses for sale and looking at due diligence as well. And the environment part of that is assessing, you know, […] the environmental performance, not only in the past but in the future, and the really hot issue there is climate change.

Pre-pandemic, this was a very big issue for many businesses, and climate change in the context of a business can become a very material risk for those who are investing in these businesses. It’s not only the physical risk, such as extreme weather events, rising sea levels, things like that, but also things like the transition to a low carbon economy. That brings in things like a reputational risk, policy, regulatory risks and market risk, among others. So, I think that’s one of the big issues that we saw certainly pre-pandemic.

Peggy:             You mention the pandemic and certainly that’s been top of mind for a lot of us and for many businesses. What’s the impact of COVID-19 been for your clients in terms of operations, environmental regulation and enforcement?

Tony:               Yeah, the pandemic obviously brought many challenges, and to those which have environmental regulatory obligations, it posed particular challenges because the restrictions of the pandemic in terms of no travel, physical distancing and the extra load on laboratories that analyze samples meant that for many operations which were required to not only monitor and sample their emissions and report to regulators, they just couldn’t do that, or not in the time frame that they were required to do. So, there was a lot of communication with regulators as to whether, you know, that could be suspended or relaxed in some way. We saw Alberta suspend some of those environmental regulations, particularly on the reporting and monitoring side, but other jurisdictions generally did not.

However, what we heard from regulators was, look, if you do have issues because of the pandemic, then you should note them, and we’ll take them into account when we’re looking, if there’s a non-compliance with those regulatory requirements. And so, that’s been our advice to clients is to, obviously, do the best you can in the very challenging times, but document the challenges you have in case those regulators come knocking later on.

Peggy:             You mentioned distinctions, Tony, between regulations in Alberta and other places. Are there different challenges now then there were six months ago and are there different challenges across different jurisdictions?

Tony:               I think the answer is that each jurisdiction probably has it’s own particular challenges. I think there is some general common challenges, but each jurisdiction has their own particular regulators and had their own response to the pandemic and got plan going forward. And because environmental regulation generally boils down on a day-to-day basis to provincial jurisdiction, as opposed to federal, national jurisdiction, we are going to see differences. I don’t know if they’re going to be significant, but certainly the Alberta one with suspending things was a significant difference compared to the other provinces.

Mathieu:          Terri-Lee, what are your thoughts on the challenges provinces are facing?

Terri-Lee:         I think the biggest challenge that our clients are facing who operate across multi-provincial jurisdictions are again the different restrictions that vary from location to location, and I think another big challenge is the prolonged nature of the pandemic. So, back when we all started working from home last March, I think most of us, including our clients, thought this would persist and be disruptive for only perhaps a few months, and here we are now six months in, with no short-term end to this.

So, I think our expectations have shifted quite a bit, and for our clients, it’s now really about approaching environmental and regulatory requirements, government programs, business opportunities from this more longer-term perspective.

Mathieu:          You’re based in Calgary yourself. Do you notice any issues that are specific to Alberta?

Terri-Lee:         So, in Alberta the governments and regulators, like the utilities commission, the energy regulator, Alberta environment, they all responded fairly quickly to the pandemic in terms of lifting reporting requirements, relaxing enforcement measures, providing utility bill relief and that type of thing, so I’d probably it was the most relaxed province in terms of reducing requirements for that period of time.

However, the vast majority of these came to an end in July, but a few of them are still in place, so again it’s really important to take a look at your business, where you operate, the applicable legislation that you operate under and the conditions of any approvals you have to determine what you need to report on for your company and when.

And the other thing I wanted to mention is that, even though we’re in the middle of a pandemic, and these are fairly challenging times, there’s still a lot of development opportunities in various sectors. So, the Alberta government has made well reclamation a priority through it’s site rehabilitation program. It’s also recently released a new natural-gas strategy to support the development of petrochemicals, hydrogen, LNG and natural gas for powerplants.

The other thing is we’re also seeing a lot of movement in the renewable electricity generation space through the development of different wind and solar projects in the province as well some storage, and I think this is due in part to Alberta’s openly competitive electricity market as well as offtake opportunities through power purchase agreements with corporate counterparties.

So, those are some issues that are specific to Alberta that I think people should think about.

Mathieu:          The suspension of mandatory requirements like Tony described could be interpreted as a good thing for business, but is there a downside? What do businesses have to keep in mind going forward?

Terri-Lee:         I have a couple thoughts on that. So, first, I think it’s really important to understand the details regarding the exact nature of the suspension of mandatory requirements, and so on a regulator by regulator and jurisdiction by jurisdiction basis because they do differ.

And what I mean by that is, for example, if you’re looking at environmental reporting, is it the actual data collection that’s been suspended? So, for example, is there no longer a requirement to say, go out in the field and take water samples, or is it just the actual reporting that’s been suspended? So, you still need to go out in the field and take samples and have a laboratory analyze those samples, but you no longer need to submit reports until a later time. So, it’s really important to understand this. It’s also critical that businesses keep an eye out for when these suspensions are lifted. Again, on a jurisdiction by jurisdiction, regulator by regulator basis to ensure that you don’t end up in an enforcement situation.

And just second, we’ve been seeing COVID numbers rising and restrictions put back in place in certain provinces, but it’s possible that even in the face of a second wave and increasing restrictions that regulators and governments might not suspend those mandatory compliance requirements as they did in the past, so it’s important that companies have plans in place to ensure compliance in the event that COVID restrictions are back in place and become onerous over a longer period of time, but compliance is still required.

So, those are things that I think businesses need to keep in mind.

Mathieu:          Thank you, Terri-Lee. Grace, how did regulators in Ontario respond to COVID-19? Was Ontario’s response different from other provinces?

Grace:             So overall I think the response is fairly similar to the other provinces. You know, we saw a patchwork of responses such as, sort of, informal and formal extensions of filing deadlines. We also saw the tribunals, like the Ontario Energy Board and the Environmental Review Tribunal, suspend oral hearings and have made a move towards virtual proceedings, so those are changes that I think everyone has, kind of, seen across the board.

But one major change that we had that I don’t think was experienced in other provinces was that as part of the pandemic response, the government introduced major amendments to the Environmental Assessment Act. These were introduced as part of the omnibus Bill 197, the COVID-19 Economic Recovery Act. And the Environmental Assessment Act, it’s a major piece of legislation in Ontario, and it governs how the environmental impact of proposed projects is assessed. So, this is, you know, a big change, and it’s something that was in the works, but now it’s come a lot faster than we expected.

Mathieu:          Do you have a sense of what’s next in terms of regulations that businesses will face in Ontario?

Grace:             I mean, even related to the Environmental Assessment Act changes that we’ve just seen, although that has been passed, those changes are enforced, they will be transitioning it in phases, and part of that is that we will be waiting for the government to draft regulations that will actually set out, kind of, the substantive pieces of those changes. So, we’ll be waiting for that. Those changes are anticipated, we’ve seen a glimpse of it. They’ve posted some proposals on the Environmental Registry, but that will be something that people should keep an eye open for, and obviously, you have an eye to how those changes are going to impact their business and any future projects they have planned.

Another thing that is upcoming is the changes to the Excess Soil Management Regulation in Ontario. This is something that’s been in the works for a really really long time and, actually, because of COVID did get delayed. So, now that’s coming into force on January 1^st, so again that’s another change that people will need to keep an eye on and, obviously, make sure that they’re going to be in compliance of that when it does come into effect in the New Year.

Peggy:             Tony, Terri-Lee and Grace, thank you for your pragmatic guidance and insights about a complicated topic.

Mathieu:          Listeners, if you’d like more information about environmental law and regulations, check out our Blakes Take 2 video on Canada’s green recovery plan and climate change disclosure. To watch it, go to Blakes.com/bt2-environment.

Peggy:             Until next time, stay well and stay safe.