Bill 89: Québec Will Be Tougher on Directors and Officers Who Violate the Environment Quality Act
Bill 89 An Act to amend the Environment Quality Act in order to reinforce compliance ("Bill 89") was presented by the Minister of Sustainable Development, Environment and Parks (the "Minister") to the Québec National Assembly on April 15, 2010. The same day, the Minister announced in a press release that "thanks to these new measures, we will be tougher on polluters".
Among the proposed measures to amend the Environment Quality Act ("EQA"), we note the following:
- introduction of administrative penalties ranging from $250 to $2,000 for individuals and from $1,000 to $10,000 for corporations;
- increase of the maximum daily fines from $500,000 to $6 million for corporations, from $25,000 to $2 million for their directors and officers and from $25,000 to $1 million for individuals;
- presumption of statutory liability of directors and officers of an offending corporation;
- increase in standard limitation periods from 2 to 5 years and greater scope of exceptions;
- expansion of authorities’ powers to refuse the issuance or renewal of a permit or to revoke it;
- designation of aggravating factors to be taken into account by judges in sentencing.
The amendments proposed in Bill 89 will be of concern to all stakeholders involved in activities likely to affect the quality of the environment: corporations, their directors and officers and individuals. However, directors and officers seem to be particularly targeted.
It is notably proposed that directors and officers be presumed responsible for an offense committed by the corporation or association or by its representative, agent or employee. Thus, once the Crown has proved the commission of an offense by the corporation or association, no additional evidence will be necessary to convict their directors and officers. To rebut this presumption and avoid a conviction, the director or officer will have the burden of proving that the offense was committed without their knowledge or consent, and despite measures taken to prevent it. Up to now, the Crown has been unsuccessful in obtaining many convictions as it has been difficult to prove that the offense committed by a corporation is the result of complicity, order, authorization, advice or encouragement from the director or officer. The proposed changes could make the systematic pursuit of directors and officers of offending corporations more appealing to the Crown.
Furthermore, Bill 89 introduces new fines for directors and officers that are double the amount of those applicable to individuals. Thus, for severe violations, such as discharge of a prohibited contaminant into the environment, a judge could impose directors and officers a fine up to $2 million per day in addition to a maximum term of imprisonment of 3 years. For more minor offenses, such as non-compliance with a certificate of authorization, the fine for directors and officers could reach $500,000 per day of violation. Moreover, a recent conviction of a director or officer (within 2 years generally and 5 years for more serious offenses) may notably allow authorities to revoke the corporation’s operating permit, regardless of whether the offense is related to the permit requirements.
Under the proposed amending legislation, a corporation (and possibly its directors and officers) committing an offense under the EQA, may be subject to new administrative penalties. Following the commission of an offense, a notice (in the form of a ticket) may be sent to the offender who then has 30 days to pay the required penalty or to contest it. Penal prosecutions may be instituted in addition to the administrative penalty. In such cases, payment of the penalty shall not constitute admission of penal liability. The alleged offender may ask for a ministerial review of the decision which, if unsuccessful, can be contested before the Administrative Tribunal of Québec ("TAQ"). The Minister may require directors and officers who allowed the infraction to assume solidarily the cost of the penalty if the corporation defaults on its payment once contestation periods or appeal recourses are exhausted.
Unlike the federal Bill C-16 Environmental Enforcement Act assented on June 18, 2009 ("Bill C-16") which prohibits the use of a due diligence defence in an administrative penalty’s challenge, Bill 89 is silent in this regard. How much weight the TAQ will give to such a defence in practice remains to be seen.
Bill 89 is part of a movement already well underway in Canada to strengthen compliance with environmental laws. In Ontario, a system of administrative penalties for designated industries was established in 2007. By the end of 2009, about twenty penalties ranging from $700 to $25,000 had been imposed mainly for exceedances of wastewater discharge criteria and failed toxicity tests. At the federal level, Bill C-16 increases fines under several environmental statutes, reaching up to $6 million for large corporations, and introduces the regime of an administrative penalty system to be complemented by regulations.
At the time of writing, no public consultation on Bill 89 has been announced. Several interest groups are nonetheless already at work collecting feedback from their members and preparing for future representations. We have been informed that the government is urging for a speedy adoption of this Bill, possibly before the end of this parliamentary session (scheduled for mid-June). If Bill 89 is adopted in its current form, directors and officers may want to ensure the environmental management system in place limits as much as possible the risk of environmental violations by the corporation for which the price to pay could be very high.