An Overview of regulatory and jurisprudential considerations regarding directorial liability for corporate environmental obligations.
Author(s): Sander Duncanson
, Janice Buckingham
, Emily Paplawski
A new directive which came into effect on December 1, 2021 gives the Alberta Energy Regulator more flexibility and wider discretion to enforce director and officer obligations relating to oil and gas facility abandonment and reclamation. At the same time, a statutory due diligence defence is available to help avoid liability. In their webinar, Osler partners Sander Duncanson and Janice Buckingham and associate Emily Paplawski address director and officer obligations and review the implications of recent case law developments.
With Directive 88, the Alberta Energy Regulator has broad discretion to require security deposits, along with the ability to use other regulatory tools to address liability management. An inventory reduction program has been established which involves the regulator setting mandatory closure spend targets. Recent revisions to Directive 87 include increased financial disclosure requirements, with the licensee obligated to submit financial summaries in a form prescribed by the regulator, along with audited annual financial statements.
Directors and officers of companies that own or operate well sites, facilities, pipelines or oil sands projects may be liable for fines, jail time or both for certain offences if they take a positive step to direct, authorize or participate in the contravention. Examples include knowingly contravening a reclamation certificate or an environmental protection order, and failing to conserve or reclaim specified land.
The statutory due diligence defence prohibits conviction of directors if they establish on a balance of probabilities that they took all reasonable steps to prevent the commission of the offence. Such defences are highly fact dependent, and the courts will consider such factors as the nature and gravity of the adverse effect, the availability of alternative solutions, and whether preventative systems were in place.