Environmental Prosecutions in Canada: Key Enforcement Trends

Over the past five years, environmental enforcement in Canada has become increasingly aggressive:

• Regulatory scrutiny is expanding at the federal level: Regulators’ focus is expanding to a broader range of industries, beyond traditional resource and energy sectors
• Penalties are escalating: Environmental fines in Canada regularly reach hundreds of thousands, and in many cases millions of dollars, for major corporations
• Personal risk is in the spotlight: Directors and officers have increasing individual liability and exposure, including for circumstances they were not aware of

For businesses operating in Canada, the message from recent prosecutions is clear: environmental compliance and the risk of prosecution are now front-line legal and reputational risks.

Environmental prosecutions can significantly impact corporate reputation, and can impose substantial costs — both to defend them and if convicted, to pay ever-increasing fines. Companies operating in extractive industries, construction, and energy sectors are the historical focus of federal environmental regulators and are familiar with the importance of ensuring environmental compliance programs, governance structures, and due diligence practices are designed to withstand heightened regulatory scrutiny. But a shifting regulatory focus has expanded environmental risk to new sectors and new industries not historically familiar with environmental concerns, including plastics manufacturing, automotive, and the cosmetics industry.

Below, we outline four trends reshaping the current enforcement landscape and the leading cases that illustrate them.

Four Trends Defining Environmental Enforcement

1. Intensified regulatory scrutiny. Environment and Climate Change Canada (ECCC) and its provincial counterparts are investigating more conduct, more often, and with greater technical sophistication. Enforcement is increasingly proactive rather than complaint-driven.
2. Escalating penalties. Convictions that once attracted fines in the tens of thousands of dollars now often see fines in the high hundreds, or millions of dollars — and, in some recent cases, the hundreds of millions. Courts have signalled that penalties must be large enough to deter, and not merely to be absorbed as a cost of doing business.
3. Enforcement is reaching beyond the resource sector. Historically concentrated in mining, oil and gas, and forestry, environmental prosecutions are now touching manufacturers, automakers, importers, and other businesses for whom being environmental compliance may not have been a front-of-mind business risk.
4. Directors and officers face increasing personal liability. Recent cases have highlighted that charges against a corporation’s directors & officers should no longer be considered as companion charges to a corporation’s prosecution. In R v Mossman, the British Columbia Court of Appeal confirmed the threshold for director & officer exposure can be low, and does not require actual knowledge of the circumstances around their company’s commission of an environmental offence.

Recent Enforcement Cases

CASE STUDY — PENALTIES

R. v. Volkswagen: The “New Era” of Penalties

The 2020 prosecution of Volkswagen for its global “defeat device” scheme - in which software was used to circumvent emissions requirements — marks an obvious inflection point in the scale of fines issued for environmental offences. Between 2008 and 2015, 120,000 Volkswagen diesel vehicles were imported into Canada in reliance on the representation that its vehicles met Canadian emissions standards after Volkswagen had installed a device that could provide false results during standardized emissions testing. Volkswagen acknowledged that this was a global scheme, concealed for approximately a decade, and was charged with 60 offences under the Canadian Environmental Protection Act (CEPA for the Canadian portion of its scheme). The company pleaded guilty to 58 offences and was ordered to pay $196.5 million, the largest environmental fine in Canadian history. Volkswagen’s U.S. parent had already paid $4.6-billion USD in penalties in the U.S.

In sentencing, the court described the penalty as signalling a “new era” of environmental enforcement in Canada. The large fine was applied despite the company fully cooperating with ECCC’s investigation and settling $2.39-billion in consumer claims.

Key takeaway: The decision made it clear that deliberate non-compliance will attract penalties commensurate with both the seriousness of the conduct and the resources of the offender.

CASE STUDY — COMPLIANCE

FCA Canada Inc. v. Canada: “Substantial Compliance” is Not Compliance

FCA Canada Inc. v. Canada addressed something more mundane, but equally important: recordkeeping.

FCA (formerly DaimlerChrysler Canada Inc.) imported vehicles into Canada bearing the National Emissions Mark, a trademark owned by ECCC, which guaranteed that vehicles were compliant with applicable Canadian greenhouse gas and air pollutant emissions standards. ECCC audited the company’s records supporting the use of the trademark and FCA produced over 2200 pages of records. Some records were stored with a third-party engine supplier and FCA argued they could not be produced because they were not in their possession and contained proprietary and confidential information to which FCA did not have direct access. Despite FCA’s substantial effort to comply, ECCC issued notices of violation carrying penalties of $1,000 per business day, accumulating over a 47-day period primarily in connection with the third-party held records. FCA appealed to the Environmental Protection Tribunal of Canada but the appeal was dismissed, with the tribunal noting among other things that it did not have the jurisdiction to review ECCC officers’ discretionary enforcement decisions.

The holding illustrated that “substantial compliance is not compliance.” Technical and administrative obligations — record retention, reporting, and documentation — are independently enforceable in their own right. Despite substantial efforts to comply, a company that honours the spirit of a regulation but falls short on its precise requirements remains exposed.

Key takeaway: For compliance teams, the case highlights the importance of closely reviewing regulatory requests for documents, not counting on extensions to deadlines, and that significant deference will be granted to ECCC’s discretion.

CASE STUDY — PERSONAL LIABILITY

R. v. Mossman: Personal Liability Reaches Directors and Officers

In February, 2026, the British Columbia Court of Appeal issued a consequential decision in Mossman, which directly addressed the personal liability of directors and officers for environmental offences committed by their corporations. Mr. Mossman was a director, president, and COO of a public mining company. Despite the company having a full Board of Directors and over 100 employees, Mr. Mossman was the key operating employee at the mine site and was responsible for permit compliance. A series of effluent discharges occurred in 2014 and 2015 that were not reported and charges were laid by ECCC – unusually, against Mr. Mossman only and not against the company.

Mr. Mossman was not aware of the discharges. He did not raise a due diligence defence but argued a conviction could not be sustained since he did not have knowledge of the circumstances surrounding the offences. The Court held that liability could attach on the basis of “acquiescence” — meaning an individual need not be shown to have had direct knowledge of the offending conduct to be found personally liable. It is sufficient for a person to assume voluntary control over a regulated activity and fail to prevent a foreseeable offence associated with a regulated activity. This signals a low threshold for individual liability and suggests that directors and officers may need to consider a broader range of circumstances in which they could be subject to environmental prosecutions.

The decision has been appealed to the Supreme Court of Canada, and if heard, its ultimate resolution will carry national implications for how personal liability of directors and officers is assessed. Until then, directors and officers should assume that passive awareness — or even a failure to inquire — may be enough to ground personal liability, or at least invite the possibility of charges. In future prosecutions, once the Crown establishes the actus reus of the offence within a strict liability framework, the accused’s protection lies not in the absence of knowledge, but in the due diligence defence.

Key takeaway: Directors and officers cannot assume a lack of direct knowledge will shield them from environmental liability; proactive oversight and due diligence are essential.

What This Means for Your Organization

Taken together, these developments point in a single direction: the cost of environmental non-compliance is rising, both for companies and for those sitting at the top of their organization.

Businesses should:

• Treat compliance documentation as a front-of-mind legal obligation, not an administrative afterthought — recordkeeping failures are independently prosecutable and may be pursued by regulators.
• Reassess whether their industry is “in scope” — enforcement is no longer confined to traditional resource sectors. Automotive manufacturers, cosmetics importers, and other non-traditional sources of environmental compliance concerns should remain on alert.
• Ensure directors and officers are actively informed and engaged on environmental compliance, and that adequate systems are in place to assess and manage risk.
• Build and document due diligence — in a strict liability regime, a robust, well-evidenced due diligence program is the minimum requirement to be able to advance a meaningful defence to prosecutions.

The era of modest penalties and narrow enforcement is in the past. Organizations that invest now in rigorous compliance - and that ensure their leadership is meaningfully engaged - will be far better positioned to manage the heightened risks ahead.

This post is based on a McCarthy Tétrault Environmental Law Update webinar. It is provided for general information only and does not constitute legal advice. For guidance on environmental compliance or enforcement matters specific to your organization, please contact a member of our team.