Extract of letter received from Mark Aston, Manager, Environmental Programs, Health, Safety and Environment, The University of British Columbia

James Berger
Head
Zoology
Bio-Sciences Bldg.

July 1997

Increasing public attention on the negative impact of business and industry on the environment has resulted in an increased range of environmental protection legislation. Many of these efforts to protect the environment hold directors and officers personally liable for the acts of the organization under their control: forty-eight provincial statutes and sixty-six federal statutes impose serious penalties on responsible directors and officers, including large fines and jail sentences. As an administrative head of unit you may be personally liable for your department's violations of environmental legislation.

ENVIRONMENTAL PROTECTION COMPLIANCE (http://www.policy.ubc.ca/)

Approved: January 1994

Reviewed by the Board of Governors November 1995

RESPONSIBLE VICE PRESIDENT

Vice President Academic & Provost

Vice President Administration & Finance

Vice President Research

Vice President Student & Academic Services

• to provide a formal statement of commitment in response to global and local concerns regarding environmental protection;
• to provide a framework for establishing procedures that will ensure consistent response to environmental issues, and demonstrate responsibility and due diligence on the part of the University;
• to develop auditing and monitoring procedures which are effective for a university setting;
• to ensure compliance with all applicable environmental regulations at all sites of University activity;
• to meet all legislated requirements as a minimum standard;
• to provide communication and education about environmental issues;
• to provide a platform for sustainable development efforts at UBC.

UBC will act responsibly and demonstrate accountable management of the property and affairs of UBC in protecting the environment. All individuals in the University community share the responsibility for protecting the environment. Administrative heads of unit are responsible for ensuring compliance with legislation and UBC procedures both on and off campus.

Procedures and reporting structures for matters of compliance with environmental legislation are necessary to demonstrate due diligence of UBC, its Board of Governors, senior officers, students, and members of faculty and staff, by addressing responsibly activities which have potential for exposure to lawsuits and prosecution.

"Where a corporation commits an offense under this Act, any officer, director or agent of the corporation who directed, authorized, assented to or acquiesced in or participated in the commission of the offense is a party to and guilty of the offense, and is liable to punishment provided for the offense, whether or not the corporation has been prosecuted or convicted." ... Section 122 of the Canadian Environmental Protection Act=

Procedures, guidelines and programs addressing specific environmental issues will be developed and updated as required to accomplish the objective of compliance with environmental legislation, with the full participation of the University community. These will include evaluation guidelines and monitoring procedures, effective measures of progress, reporting mechanisms, educational programs, and contingency plans for accidents that affect the environment.

The Manager, Environmental Programs, reporting through the Director, Health , Safety and Environment and the Vice President Administration and Finance, will be responsible for focusing efforts on the most serious problems, promoting development of environmental plans and coordinating activities through administrative heads of unit. These efforts include environmental audits, central monitoring, recording and reporting progress (and instances of non-compliance) on environmental protection issues, providing training to the campus community and serving as the central information source about current and anticipated legislation applicable to UBC as well as providing linkages for sustainable development efforts.

Environmental audits will be performed of all areas and activities under the control of the University. Audits will include evaluation of waste, emissions, hazardous materials, emergency response procedures and the adequacy of training of students, faculty and staff. Such audits will measure the extent of compliance with federal and provincial legislation and identify potential environmental risks.

A plan will be developed by the administrative head of unit for bringing all identified deficiencies into compliance with legislation, in consultation with the Manager, Environmental Programs, and will be forwarded to the Vice President responsible for the unit for approval of actions, timing, and funding.

Monitoring systems and procedures for handling and reporting accidents/incidents will be established for all activities and areas of concern. Administrative heads of unit are responsible for ensuring that the monitoring is carried out in accordance with established systems and for reporting on the monitoring to both the unit's vice president and the Manager, Environmental Programs. Deficiencies detected through monitoring or other means will be corrected as soon as possible.

When the impact or experimental design of activities to be conducted at off campus locations has unknown or potentially harmful environmental consequences, the member of faculty or staff responsible will apply in advance for a certificate of environmental protection from a University screening committee on the environment to review and authorize such activities. Research protocols, consistent with practices approved by the screening committee for individual experiments, may be authorized by the screening committee for experiments which are to be repeated. These steps are necessary because of the university's potential liability for problems arising from off-campus activities.

Administrative heads of unit are responsible for ensuring communication about the goal of compliance with environmental legislation and appropriate training of all persons working or studying within their units in relevant environmental issues and procedures for recognizing, dealing with and reporting accidents that affect the environment.

Reports of all audits, plans for correcting deficiencies, reports on satisfying monitoring requirements, accident-handling procedures and any minor accidents/incidents will be brought, through the senior officers of the University, to the Board of Governors at its regular meetings. Any accidents/incidents of significant environmental impact will be brought to the attention of the Chair of the Board of Governors by the President or his/her designate immediately.

When potentially harmful conditions arise or are discovered, the administrative head of unit is responsible for notifying individuals who might be affected and keeping them aware of efforts to correct the situation (see also the Industrial Health and Safety Regulations of the Workers' Compensation Board of B.C.).

The Manager, Environmental Programs ensures that consultations with the campus and surrounding communities about the state of compliance and progress toward it take place.

The Manager, Environmental Programs will publish annually a report which includes information on the audits conducted, the compliance issues dealt with and outstanding, training and communication activities, and responses to accidents affecting the environment

See also the Policy and Procedures (to be developed) on Sustainable Development.

Due diligence means the care a reasonable person would take, having regard to all the circumstances and information about which that person knew or ought to have known.

Environment means the biophysical conditions under which people or things live or are developed.

Environmental audit means a systematic, objective method of identifying and verifying that laws, regulations, procedures and University guidelines for environmental, health, occupational hygiene, safety and emergency preparedness standards are being followed. The examination involves analysis, testing and confirmation of procedures and practices. In addition, the process evaluates the adequacy of the environmental management system -- communications, clear delineation of employee responsibilities, training and quality control.

University community means all persons associated with The University of British Columbia, including students, members of faculty and staff, visitors, contractors, suppliers, tenants, and users of facilities.

See "Environmental Legislation Handbook" held by the Head of Zoology.

The Atomic Energy Control Act relates to the development and control of atomic energy. All users of radioisotopes at the University must be licensed and registered with the Radiation Safety Office at UBC. Contact the Radiation Protection Officer, 822-7052, for further information.

CEAA is an Act which establishes a federal environmental assessment process for projects conducted at, on or affecting federal lands.

CEPA is the primary legislation by which the federal government regulates activities affecting the environment.

It provides for the identification, assessment and management of toxic substances and authorizes regulations controlling their discharge into the environment. CEPA is divided into several sections including: toxic substances, environmental quality objectives, guidelines and codes of practice, international air pollution, and ocean dumping.

Offences and penalties for which a person can be prosecuted under the Act include fines of up to $1 million and 5 years imprisonment.

An Act relating to cash contributions by Canada in respect of insured health services provided under provincial health care insurance plans and amounts payable by Canada in respect of extended health care services.

An Act to provide for the management of the water resources of Canada, including research and the planning and implementation of programs relating to the conservation, development and utilization of water resources.

An Act respecting wildlife in Canada.

An Act to authorize the taking of special temporary measures to ensure safety and security during national emergencies and to amend other Acts in consequence thereof.

An Act respecting the manufacture, testing, sale, storage and importation of explosives.

The Fisheries Act applies Canada wide to any body of water that may contain fish. Anyone undertaking an activity that may use waters that are frequented by fish, or located near such waters, should be aware of the stringent provisions of the Fisheries Act. The deposition or permitting of a deposit of a deleterious substance into waters frequented by fish or in an area where such a substance may enter any such water is prohibited. The deleterious substance does not have to render the waters it enters deleterious, only the substance itself must be deleterious.

Offences and penalties under the Fisheries Act include $1 million and three years imprisonment.

An Act which controls and regulates the sale of feeds.

An Act which regulates agricultural fertilizers.

An Act respecting diseases and toxic substances that may affect animals or that may be transmitted by animals to persons, and respecting the protection of animals.

An Act to prohibit the advertising, sale and importation of hazardous products. The Act creates the category of hazardous materials known as controlled products. Suppliers of these types of products must provide labels and Material Safety Data Sheets to purchasers. This Act is the foundation for the WHMIS system.

An Act to provide for the control of narcotic drugs.

An Act to regulate products used for the control of pests and the organic functions of plants and animals. This Act, and associated regulations, regulate the production and registration of pesticides. The Act requires that any controlled product used in pest control be registered, conform with certain specified safety standards, and be properly labeled and packaged, before it may be imported, exported, or sold.

An Act to promote public safety in the transportation of dangerous goods. This Act provides the framework for the regulatory system for dangerous goods. The regulations contain extensive requirements and exemptions with respect to the transportation of dangerous goods. The Act applies to the handling, offering for transport, and transportation of dangerous goods by all modes of transportation in Canada and through Canada whether or not the goods originate from or are destined for any place in Canada.

Offences and penalties are up to a maximum of $1 million and two years imprisonment.

See "Environmental Legislation Handbook" held by the Head of Zoology.

This legislation complements the Canadian Environmental Assessment Act and results in a single comprehensive environmental impact assessment process. The scope of review for projects includes the environmental, economic, social, cultural, and heritage effects of the project. Projects requiring a review are defined by the Environmental Assessment Reviewable Projects Regulation.

Offences and penalties include fines of up to $200,000 for corporations and individuals and imprisonment for 12 months.

The Forest Practices Code deals with forest practices on Crown lands and private lands subject to a woodlot licence or a tree farm licence. It establishes a legislative framework and sets requirements for planning and forest practices, provides for compliance and enforcement, and establishes and empowers decision makers.

Offences and penalties include fines ranging to $1 million and three years imprisonment for first offences, and fines up to $2 million for subsequent offences. Where irreparable damage has been done fines of up to $1 million per damaged hectare of land may be levied.

The Health Act imposes a duty upon any person who causes a health hazard to take immediate steps to prevent the discharge of the hazard into the land, air or water and to immediately report the event to the proper authorities.

Maximum penalties under the Act are fines of up to $500 and imprisonment of up to six months.

The Park Act prohibits any person from transporting garbage, refuse, domestic or industrial waste through, in, or over a park except with a permit for park use.

Maximum penalties are $2,000 and six months imprisonment.

The Pesticide Control Act governs pesticide use in British Columbia and prohibits the application, storage, transportation, or possession of a pesticide for purpose other than for which it is sold, or prescribed. Licenses, certificates and permits are issued under the act.

Individuals are required to obtain certain certifications and permits for use of pesticides.

Offences and penalties constitute a maximum personal fine of up to $2,000 and/or six months imprisonment.

The Transport of Dangerous Goods Act sets up a framework to regulate the transportation of dangerous goods within British Columbia by highway or rail. The act is coordinated with Federal legislation.

Offences and penalties include a fine of up to $100,000 and imprisonment for up to two years.

The Waste Management Act is the primary statute regulating the environment in British Columbia. It prohibits generally the discharge of all wastes to the environment and pollution, unless the discharge is specifically exempt or is made in accordance with a system of permits or approvals. It is an omnibus piece of legislation that regulates most aspects of the environment.

Offences and penalties include up to $1 million for each day the offence continues. Additional fines can also be levied if a person acquires monetary benefits as a result of the offence. Where a person intentionally causes damage to or loss of the use of the environment or shows wanton or reckless disregard for the lives or safety of others causing risk of death or harm a person is liable to a fine of up to $3 million and imprisonment for up to 3 years.

For the six month period between April 1 to September 30, 1992, 147 charges were laid against 100 operations and individuals.

The Workers Compensation Act allows regulations (in addition to the Industrial Health and Safety and other regulations) to be made for the disclosure of information about materials that are dangerous or potentially dangerous to a worker (refer to WHMIS regulation).

A person who contravenes or fails to comply with a regulation or order for disclosure of information is liable to a fine of $10,000 or imprisonment for up to 3 months.

See "Environmental Legislation Handbook" held by the Head of Zoology.

The University is subject to compliance with Municipal Bylaws. Those primarily concerning the environment are the Sewer Use and Air Quality Management Bylaws. These restrict, prohibit and regulate, through a system of permits, release of materials.

Sewer Use Bylaw No. 164 - Greater Vancouver Sewerage and Drainage District - Index MSUB1.

Regional Sewer Use Bylaw (guide) - Greater Vancouver Sewerage and Drainage District - Index MSUB2

Sewer Use Bylaw No. 167 - Greater Vancouver Sewerage and Drainage District - Index MSUB3

Municipal Solid Waste and Recyclable Material Bylaw No. 181 - Greater Vancouver Sewerage and Drainage District - Index MSUB4

Municipal Solid Waste and Recyclable Material Bylaw No. 183 - Greater Vancouver Sewerage and Drainage District - Index MSUB5

Air Pollution Control Bylaw No. 603 - Greater Vancouver Regional District - MAB1

Air Quality Management Bylaw No. 725 - Greater Vancouver Regional District - MAB2

Codes of Practice

Generally it is not a legislative requirement to be compliant with code of practice and guideline documents, however, Policy #6 (Environmental Protection Compliance), states that "UBC will act responsibly and demonstrate accountable management of the property and affairs of UBC in protecting the environment." As a result code of practice and guidance documents should be followed and adhered to wherever possible and in the spirit of the law.

In some cases these documents are referred to and adopted by regulatory bodies.

- Proposed Amendments to The Feeds Regulation - GFeR1, Aug-96

- Proposed Amendments to the Seeds Regulation - GSR1, Aug-96

- Proposed Amendments to the Health of Animals Regulations - HAR1, Aug-96

- Proposed Amendments to the Fertilizers Regulations - GFtR1, Aug-96

- Proposed Policy Statement, C123 - GAEC1, May-95

- Guidelines for Industry Emergency Response Contingency Plans - GBCE1, Mar-92

- Special Waste Legislation Guide - GBCE1, 1993

- Summary of Environmental Standards and Guidelines for Fuel Handling, Transportation and Storage - BGEC2, 1995

- Guidelines for Establishing Transfer Stations for Municipal Solid Waste - GBCE4, Feb-96

- Protocol for Management of PCB Contaminated Special Waste - GBCE5, Dec-96

- Protocol for Management of PCB Transformers - GBCE6, Jul-96

- Abandonment of Permits and Approvals - GBCE7, Jun-86

- Emission Criteria for Gas Turbines - GBCE8, Dec-92

- Guidelines for Developing a Liquid Waste Management Plan - GBCE9, Aug-92

- Pest Management Plans - Guide for Completion of Forms - GBCE10, Jul-94

- Ozone Depleting Substances Regulation Compliance Guide - GBCE11

- Emission Criteria for Biomedical Waste Incinerators - GBCE12,= Jun-91

- Emission Criteria for Municipal Solid Waste Incinerators - GBCE13, Jun-91

- A Guide to the Emergency Program Act (1993) - GBCEPA1, 1993

- A Guide to the New Emergency Program Act - GBCEPA2, 1993

- National Fire Code of Canada - Part 1 only (General) - GNFC1, 1995

- National Fire Code of Canada - Part 4 only (flammable & combustible) - GNFC4, 1995

- Environmental Code of Practice for Above Ground Storage Tanks Systems Containing Petroleum Products and Allied Petroleum Products - GCCME1, 1994

- Environmental Code of Practice for Underground Storage Tanks Systems Containing Petroleum Products and Allied Petroleum Products - GCCME2,= 1993

- Guidelines for the Management of Biomedical Waste in Canada - GCCME3, Feb-92

- Background Information on the DRAFT New Substances Notification Regulations For Biotechnology Products (Part III) - Microorganisms, biopolymers and biochemicals - GCEPA2, 1992

- DRAFT Guidelines for the Notification and Testing of New Substances - Biotechnology Products: Microorganisms, biopolymers, biochemicals - GCEPA3, 1994

- Draft Regulations Respecting The Registration of Storage Tank Systems for Petroleum Products and Allied Petroleum Products - GCEPA4, 1993

- Draft Technical Guidelines For Underground Storage Tank Systems Containing Petroleum Products - GCEPA5, 1993

- Installation Code of Oil Burning Equipment, CSA B139-M91 - GCSA1, 1991

- General Requirements for Oil Burning Equipment, CSA B140.0-M87 - GCSA2, 1991

- Emergency Planning for Industry CSA Z731-M91 - GCSA3, 1991

- Phase 1 Environmental Site Assessment CSA Z768-94 - GCSA4, 1994

- Guidelines and Regulations Applicable to Underground and Aboveground Storage Tank Systems Containing Petroleum Products - GEC1, 1994

- Guideline for the Management of Waste Materials Containing Polychlorinated Biphenyls - GEC2, 1978

- Guideline on Central Collection and Storage Facilities for Waste Materials Containing Polychlorinated Biphenyls - GEC3, 1978

- Users Guide to the Hazardous Waste Manifest - GEC4, 1993

- Users Guide to the Hazardous Waste Export/Import Notice - GEC5,= 1993

- Users Guide to Implementation - Export and Import of Hazardous Waste Regulations - GEC6, 1993

- Users Guide to Hazardous Waste Classification - GEC7, 1993

- Laboratory Biosafety Guidelines - GHC1, 1996

- Standard Test Procedures for Evaluating Leak Detection Methods - GEPA1, Jun-90

- Shared Responsibilities - A British Columbia Biomedical Waste Action Plan - GWRC1, Apr-94

Workers Compensation Board of BC

- A Hantavirus Risk Control Program for Employers and Workers - GWCB1, 1996

The first part of this section contains a brief outline of a small selection of recent legal decisions surrounding environmental issues. The second part of the section discusses R. v. Bata Industries (1992) which had significant implications regarding Director's and Officer's Liability under environmental law.

BC's environmental non-compliance report, covering April 1 to 30 September 1995, lists 109 operations that did not meet environmental standards.

Between April 1 and 30 September 1995 the BC government laid 239 environmental charges against 154 business, industries and individuals. During this period 150 convictions and $128,271 in fines were handed= down.

Philip Environmental Services was fined $100,000 after pleading guilty to unlawfully disposing of 75,000 kg of hazardous waste in Edmonton's Cloverbar landfill. Timothy Underwood, Technical Service Representative for Philip at the time, was sentenced to three months in jail for knowingly releasing a hazardous substance into the environment.

In three months in 1996 Environment Canada laid 148 charges against companies for exporting hazardous wastes to the US without proper notice under the Canadian Environmental Protection Act.

In August 1994 the BC Supreme Court in R. v. Robert Seraphim, held that the president of two mining companies had failed to exercise due diligence to prevent the companies from breaching the conditions of their waste management permits. Highly toxic effluent containing cyanide escaped from the companies' leaching operations; the court convicted the president for the companies' pollution offences under the Waste Management Act and levied a personal fine of $15,000 against the president.

For directors faced with this potential exposure, the usual defensive practice has been to seek corporate indemnification, or directors' and officers' liability insurance coverage. In BC, however, these forms of protection will probably not be available for pollution offences subject to criminal prosecution.

In R. v. Prospec Chemicals Ltd., January 15, 1996, the Alberta Provincial Court ordered Prospec Chemicals to obtain certification under the ISO 14001 environmental management system specification by June 30, 1998 and to post a $40,000 letter of credit to ensure compliance. If the ISO 14001 certification program is not in effect as of December 31, 1997, Prospec Chemicals is required to deliver a letter from an ISO accredited auditor confirming that Prospec Chemicals has met all the prerequisites for accreditation. In addition, Prospec Chemicals was ordered to pay a fine of $100,000.

On February 13, 1996, in Minister of Environment, Lands & Parks v. Alpha Manufacturing Inc., et al., the BC Supreme Court granted an injunction to prevent a landfill operation from accepting demolition debris after the Minister of Environment canceled its Waste Management Act Permit.

Alpha Manufacturing Inc. leased land at Burns Bog to conduct landfill operation. Since 1987 demolition debris had been accepted for landfilling under the authority of a Waste Management Act permit. On January 10, 1996 the Minister canceled the permit on the basis that it was not in the public interest. Alpha and other defendants continued to receive and store demolition debris at the site.

A Vancouver area battery recycling company has been charged with dumping toxic slag in an abandoned Okanagen mine. Metalex Products of Richmond and its owner, Mel Davis; Paul McKenzie, owner of Dankoe Mine; and Eugene Larabie of Laroth Engineering have each been charged with 10 counts of violating the Waste Management Act. They are to appear in provincial court in Penticton on June 9, 1997.

_____________________________

¹ Enviroline, volume 7, #10, page 5.

² EnviroLine, volume 7, #10, page 5.

³ EnviroLine, volume 7, #5, page 4.

⁴ EnviroLine, volume 7, #8, page 4.

⁵ Letter of the Law, volume 7, #4 (Singleton, Urquhart & Scott).

⁶ Ladner Downs - Environmental Law Bulletin, May 1996, page 4.

⁷ Ladner Downs - Environmental Law Bulletin, May 1996, page 4.

_______________________________________________________________________

Environmental Law

Practice Group

May 28, 1992

In this case, two Bata directors who knew of an illegal discharge by their corporation were convicted of "failing to take all reasonable care" to prevent the discharge, fined $12,000 each, and prevented by court order from being idemnified (sic) by Bata.

British Columbia enforcement authorities have recently charged a number of directors under the Waste Management Act.

The Bata decision is significant because it lays out a standard for determining personal liability of directors of any corporation doing business in Ontario, regardless of where it is incorporated.

The Ontario standard will demand more diligence of a director than is currently required under the British Columbia Waste Management Act where a director, officer and employee can be personally convicted only if he "authorized, permitted, or acquiesced in" the illegal discharge. Although the legal meaning of these words has not been authoritatively settled by the court and remains the subject of debate, in B.C. a director is not likely to be convicted unless he knows of the illegal discharge.

Because a critical element of a charge against a director will be his personal knowledge, a director should not provide a statement to an officer or representative of the Ministry of Environment without obtaining prior legal advice. Any statement provided to the Ministry of Environment may be used as evidence to support charges against both the corporation and the director and it may be the only evidence against the= director.

The less demanding standard of British Columbia law may not last long in light of the government proposals to bring in a comprehensive Environmental Protection Act in 1993. A central theme of the recently released discussion paper on the proposed Act signals a policy shift from "pollution control" to "problem prevention."

While the convicted Bata directors clearly knew of the discharge, the court's judgment states that if a corporation does not have a functioning pollution prevention system, the directors could be still convicted even if they were not aware of the discharge.

The court stated that the following questions should be answered and principles should be applied to determine whether an individual director has discharged his personal duty:

1. Have the directors created a pollution prevention system?

-- Was there supervision of inspection?

--Was there improvement in business methods?

-- Did a director exhort those he controlled or influenced?

2. Did the directors ensure that corporate officers have been instructed to:

3. The directors are responsible for reviewing the environmental compliance reports provided by the officers of the corporation, but are justified in placing reasonable reliance on reports provided to them by corporate officers, consultants, counsel, or other informed parties.

4. The directors should substantiate that the officers are promptly addressing environmental concerns brought to their attention by government agencies or other concerned parties including shareholders.

5. The directors should be aware of the standards of their industry and other industries which deal with similar environmental pollutants or risks.

6. The directors should immediately and personally react when they have notice that the system has failed.

In the Bata case, three directors were charged with "failing to take all reasonable care to prevent" a discharge contrary to the Ontario Water Resources Act and the Environmental Protection Act of Ontario. Bata had stored leaking and foaming waste drums outside on the premises of its shoe manufacturing operations at Batawa, Ontario. The liquid was discharged into the ground and impaired the quality of the groundwater.

The Ontario Court ruled that to secure a conviction the Crown must first prove that a discharge of contaminant into the natural environment has occurred. Once this is established the defendant Director must show that he was duly diligent in preventing the corporation from causing or permitting an unlawful discharge. To prove this he will have to show he met the standards as set out above.

The Court also said that depending on the nature and structure of the corporate activity, one would hope to find remedial and contingency plans for spills, or a system of ongoing environmental audit, training programs, sufficient authority to act and other indices of a pro-active environmental policy.

The Court convicted the corporation and fined it $120,000 because it did not establish a proper system to prevent the commission of the offence, nor did it take reasonable steps to ensure the effective operations of whatever system existed.

In ruling on the personal liability of the individual directors the Court found as follows:

The Court found that Mr. Bata, the Chairman was not guilty. Once he was aware of problems he had made money available to correct them. He did not have personal knowledge of this problem and he was aware of his environmental responsibilities and gave directions accordingly.

Mr. Marchant had personal knowledge of the leaking drums on site. He took no temporary measures even though money was available, and took no action until the Ministry arrived on the scene.

As President, he had a duty to give instructions and see that the instructions were carried out. He failed in this and was convicted.

Mr. Weston failed to take all reasonable care. As on-site general manager, he was in control of the particular facility where the environmental problems where the environmental problems were created and he did not address the problems directly. He had knowledge of the environmental problems and should have been alerted to their significance after he received the first quote for costs to clean up this particular problem. In addition, Mr. Weston had the duty to perform personal inspections of the plant on a regular basis and to do so in a diligent manner. Lastly, he was the person with authority to expend funds for remediation. Therefore, he could not rely on his subordinate to carry out the entire responsibility and if he is going to delegate such responsibility it is still incumbent on him to receive detailed reports from that delegate.

Due diligence for directors has now been mapped out in general. While providing what appears to be common sense it also points out the intention and conviction of the legislators. Non-compliance is a serious matter and this case reveals that compliance is more cost effective.

With the B.C. Government promising to replace the existing Waste Management Act with a new Environmental Protection Act next year, we believe that it is prudent for directors of corporations doing business in British Columbia to ensure that a pollution prevention system that meets the standards of the Bata case is functioning in their corporation.

Directors of a company incorporated in British Columbia should also note that their company can only indemnify them with the approval of the court. To win court approval, a director will have to show that he had reasonable grounds for believing that his conduct was lawful.

Clearly, the emphasis of the Court was to establish a system to convey information to directors. A system must encompass the practices of the industry and clearly set out the delegated responsibilities and who is to receive the information gathered.

The design of a pollution prevention system will vary with the environmental risks of the industry and the size of the corporation. Once the system is in place, its operation must be monitored by the directors and the monitoring should be recorded in the minutes of the corporation. The Bata court has ruled that directors bear the ultimate responsibility of ensuring that the system has been designed and is operating properly. In effect the court has said that the internal organization of the corporation -- long the sole preserve of management and its consultants -- must meet a legal standard required by environmental law.

Directors will be wise to demand a periodic review of their corporation's pollution prevention system and management will be well advised to brief the directors on the system before they are asked. If there was ever any doubt, the environment must now be placed on the board meeting agenda.

NEXT BULLETIN: A primer on Environmental Auditing

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Environmental Law Practice Group

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David H. Searle, Q.C. 643-2966

D. Ross Clark 643-2911

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