COVID-19: What Are the Implications for Corporate Environmental Obligations

The management of the current health and economic crisis linked to the COVID-19 pandemic is impacting the application of environmental protection rules.

The Ministry of the Environment and the Fight against Climate Change ("MEFCC") has adopted certain temporary measures as will be further detailed, to facilitate projects supporting efforts to fight the pandemic. With respect to the other environmental standards, Quebec does not intend, for the time being, to relax its requirements, therefore cautioning both continuation and cessation of activities.

Overview of Measures Taken by the MEFCC

Temporary Exemptions from the Requirement for Ministerial Authorization 

On April 2, MEFCC announced a temporary measure exempting companies from having to obtain prior environmental authorization under section 22 of the Environment Quality Act ("EQA") to modify their usual production to convert it into a priority service or activity that meets demands related to the pandemic.

However, such an exemption is not immediately applicable since the concerned companies must notify the MEFCC of this temporary change, as detailed below. The MEFCC undertakes to respond within a maximum of 48 hours following receipt of all the required information and only after receiving this response from one of the MEFCC employees will the company be authorized to operate these alternative activities.

To successfully invoke this exemption, companies must provide the MEFCC with the following information:

• Name and address of the company;
• Person responsible for the modification or addition (telephone and e-mail);
• Place of production (address);
• Type of change or addition;
• Rationale for the change/addition related to COVID-19;
• Duration of the change or addition;
• Product and/or service good;
• Anticipated production quantity;
• Industry sector affected by the change.

The information should be sent to the following email address: declaration.industrielle@environnement.gouv.qc.ca. 

This exceptional measure is temporary and only valid for the duration of the government-declared state of health emergency. Thus, the MEFCC indicates that at the end of the period covered by the decrees, the temporary activities must cease as soon as possible. The regular activities of each of these companies will have to resume in accordance with the ministerial authorizations in force, if any.

As a reminder, other exemptions from the requirement to obtain prior ministerial authorization under section 22 of the EQA remain applicable.

Extension of the Public Consultation Period for Draft Regulations Under the EQA

On February 19, MEFCC published no less than 28 draft regulations under the EQA as amended in 2018. A public consultation period on these texts was scheduled up to April 19, 2020, and was recently extended to May 19, 2020 to take into account the current context.

Among these draft regulations, the Draft Regulation respecting the supervision of activities according to their impact on the environment brings together all the activities that the MEFCC intends to exempt from the obligation to obtain prior environmental authorization under section 22 of the EQA or to submit to a declaration of conformity.

Quebec's Minister of the Environment and the Fight against Climate Change (the "Minister") anticipates that these texts will be adopted in July 2020 and that most of the provisions will come into force on December 31, 2020. No extension of these deadlines has been communicated at this time.

Necessary Measures to be taken to Comply with Environmental Requirements in Times of Crisis

Subjecting Companies to the Usual Rules of Environmental Protection

Despite the temporary - and strictly limited - relaxation of the application of section 22 of the EQA, companies operating an activity, even if they benefit from this exemption, are required to comply with the same environmental standards as before the crisis.

During the state of health emergency period, inspections can be done by the MEFCC, but are limited to situations where there is a significant risk for the environment quality.

It should also be noted that "businesses associated with environmental emergencies" are recognized by the government as an essential service for which the continuation of activities is permitted. Thus, in the event of a contaminant spill or environmental emergency, provincial and federal rules in this area remain applicable. 

On April 7, the MEFCC announced an extension of the deadline for filing certain reports. In particular, the deadline for filing the 2019 report on emissions of certain contaminants into the atmosphere provided for in the Regulation Respecting Mandatory Reporting of Certain Emissions of Contaminants into the Atmosphere is extended to July 31, 2020, rather than June 1st, as provided for in the regulation.

With respect to other reporting requirements under the EQA or its regulations to the MEFCC, no deferrals have been officially announced. The MEFCC has however stated that it could accommodate, depending on the circumstances, the compagnies affected by the current crisis. Consequently, unless otherwise specified by MEFCC, companies must submit the various 2019 reports to which they are subject within the regulatory timelines, even in the event of temporary cessation of their activities. 

However, the suspension of the deadlines has been decreed with respect to judicial deadlines. For example, with respect to challenges of administrative monetary penalties ("AMPs") before the Tribunal administratif du Québec, the 30-day legal deadline for filing an appeal is suspended and will resume on the day the state of health emergency ends. We note, however, that no announcement has been made regarding the suspension of the time limits before the AMP Review Office, as the 30-day time limit from the notification of the notice of claim to request the review of an AMP does not appear to be extended.

Obligation to Report in Case of Temporary, Partial or Permanent Cessation of Activities

The current crisis will undoubtedly have a considerable impact on the Quebec economy, as some businesses may be forced to temporarily or permanently cease some or all of their activities.

In the event of temporary cessation, the EQA does not provide for any specific mechanism, thereby the security measures provided for in the Act, regulations or authorizations must be maintained, particularly in the case of storage of hazardous or residual materials, as the case may be.

However, the permanent cessation of activities, whether partial or total, is not beyond the control of MEFCC and may thus trigger several obligations. We suggest that you review your various environmental obligations if you are considering ceasing your activities due to the pandemic. 

We also point out that there are risks related to the cancellation of authorizations issued in the event of a permanent cessation of activities. Indeed, the cessation of some of these activities for two consecutive years entails the automatic cancellation of the existing authorization, with the exception, where applicable, of any measures provided for therein concerning the restoration of the premises in the event of cessation of activities and post-closure management. In addition, in accordance with section 31.24 of the EQA, the Minister is authorized to automatically revoke an authorization in the event of partial cessation of operation of an industrial establishment, regardless of the period of cessation.

Consequently, in the event of temporary cessation of an authorized activity that is expected to last beyond the duration of the state of health emergency, we recommend that, as far as possible, MEFCC be informed of the temporary nature of these measures.

Environmental Risk Management in a Transactional Context 

Environmental risk management in a transactional context may present some challenges in the current pandemic. Indeed, the use of environmental site assessment studies (Phase I or Phase II) is common for a buyer to assess the potential risks associated with the acquisition. However, the conduct of these studies may be affected by government measures, such as the prohibition of non-essential services, for instance those of environmental consultants, from operating when the situation is not related to the management of an environmental emergency. It is therefore important and prudent in these circumstances to provide for contractual terms and conditions to manage environmental risks.

For 25 years, BCF's mission has been to support Canadian businesses. We know the issues you face and our Environmental Law team is available to help you use the resources at your disposal. Do not hesitate to contact one of our members if you need advice and support regarding these new measures.