On December 10, 2021, the Government of Canada released a paper detailing trends in environmental fines during the previous ten-year period. This document, entitled A Discussion Paper Regarding the Environmental Fines and Sentencing Regime: 10 Years Later, provided a detailed analysis of the rise in environmental fines during the past 10 years, surveying 10 different pieces of environmental legislation.¹

Although this summary did not consider some of the most common pieces of legislation used for environmental prosecutions, such as the federal Fisheries Act, it is clear that fines for environmental offences continue to increase across a variety of different legislative regimes.

More than a cost of doing business

The Alberta Court of Appeal, in the leading decision of R. v. Terroco Industries Limited, stated environmental fines should not be viewed as merely licensing fees or the cost of doing business.² The Terroco decision also outlined the principles to be considered in sentencing in environmental cases, which include (1) culpability, (2) prior record and past involvement with the authorities, (3) acceptance of responsibility, (4) damage/harm, and (5) deterrence.³

Individuals and corporations must be aware of their obligations under the legislation that govern their businesses and activities. Even a simple mistake by a first-time offender can result in costly fines and the expense of responding to a regulatory investigation and prosecution.

First time offenders may face stiff penalties

R. v. Gibson Energy ULC

An example of the issues faced by first-time offenders is the recent decision of the Alberta Provincial Court in R. v. Gibson Energy ULC.⁴ Gibson Energy operated a large petroleum storage and pipeline terminal in the east end of Edmonton. However, the spill in question did not relate to petroleum products but the release of chlorinated municipal tap water into the North Saskatchewan River. This water contained a sufficient concentration of chlorine and ammonia to render it “a substance deleterious to fish” under the Fisheries Act.

The release of the water occurred as a result of the catastrophic failure of the facility’s fire suppression system. Over 30 million litres were released over the course of approximately 45 hours. Gibson Energy’s due diligence defence failed at trial as a result of the Court finding the fire suppression system was negligently designed and maintained and the company failed to take all reasonable measures to mitigate or remedy the impact of the release into the river.

Despite being a first-time offender and the harm to fish being on the less significant side of the spectrum, with no actual harm proven, the Crown sought a penalty in the range of CA$8 million to CA$10 million . Counsel for Gibson Energy proposed a fine of CA$450,000. After hearing extensive evidence on sentencing from both sides, including numerous experts, the Court imposed a global fine of CA$1.5 million. This fine also took into account the duration of the offence under Section 78.1 of the Fisheries Act, with the discharge of chlorinated water occurring over almost two full days.

R. v. Teck Coal Limited

In R. v. Teck Coal Limited⁵, Teck faced charges under the Fisheries Act of unlawfully depositing a deleterious substance into a local river. Piles of waste rock from coal mining operations released oxygen, selenium, calcium and other naturally occurring elements through exposure to precipitation, which carried these elements into surface water and groundwater. Eventually, this contaminated water reached local waterways, including the Fording River.

The Court found that this release of a deleterious substance resulted in serious harm to the environment. During sampling and testing of Westslope Cutthroat Trout in the area, concentrations of selenium in tissue samples were in the adverse effects range, demonstrating a direct effect of the discharge on local wildlife. At the time of the offences, Teck was considered a first-time offender by the Court.

Although proceeding as a joint sentencing submission, a significant fine was also imposed on Teck in the amount of CA$60 million, with CA$58 million being allocated for the management, conservation and control of fisheries under the Fisheries Act. When taking the time period of the discharge into account, the fine equated to CA$80,000 for each day on which the offences occurred.

Overall trends continue upwards

When examining the information aggregated by the Government of Canada in its 10-year summary, the upward trend for fines is clear. For the Canadian Environmental Protection Act, 1999, six of the top ten fines occurred within the past three years. For the Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act, three of the top five fines in the past 10 years occurred in 2021.

Looking ahead

As demonstrated by both the Gibson Energy and Teck decisions, even first-time offenders with clean records may face significant fines, both in contested sentencing and joint submissions. Protection of the environment remains a priority for all levels of government and the public at large. Both companies and individuals must be proactive to avoid incidents, which may attract significant penalties. This upward trend is likely to continue, as courts will look to previous fines imposed when sentencing future offenders.

To read other articles in the Dentons’ pick of Canadian Regulatory Trends to Watch in 2022 series, click here.

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¹ https://publications.gc.ca/collections/collection_2021/eccc/En4-439-2021-eng.pdf 
² R. v. Terroco Industries Limited, 2005 ABCA 141 at para 60.
³ R. v. Terroco Industries Limited, 2005 ABCA 141 at para 34.
⁴ R v Gibson Energy ULC, 2021 ABPC 124 (See: https://www.canlii.org/en/ab/abpc/doc/2021/2021abpc124/2021abpc124.html?resultIndex=1)
⁵ R. v. Teck Coal Limited, 2021 BCPC 118 (See: https://www.canlii.org/en/bc/bcpc/doc/2021/2021bcpc118/2021bcpc118.html?autocompleteStr=R.%20v.%20Teck%20Coal%20Limited%2C%202021%20BCPC%20118&autocompletePos=1)