Is your environmental investigation "essential"? Environmental services during the COVID-19 pandemic

16 minute read
27 April 2020

As the COVID-19 pandemic continues, Canadians are adjusting to a new way of life, characterized by physical distancing, closure of non-essential places of business and working remotely. One thing that has remained constant is that Canadian businesses are still required to comply with environmental obligations – but what about voluntary environmental work? Given provincial requirements to close "non-essential businesses" and no clear end of restrictions in sight, lenders, developers, and buyers and sellers of real estate, among others, may be wondering to what extent they can engage environmental consulting services at this time. Environmental consulting firms may be questioning what types of services they can continue to provide.

Essential Services – Federal Guidance

In Canada, Public Safety Canada released guidance on functions it considers essential in the context of the COVID-19 pandemic. The list of essential services and functions, found on their website, is meant to help provinces, territories and other local governments as well as the private sector in understanding and determining the scope of possible essential services. The guidance, however, is just that, and is not meant to act as a directive or law.

The federal list generally provides that the following industries (and support services provided for those industries) are essential: health, water, food, information and communications, electricity industry, natural and propane gas, petroleum workers, transportation, manufacturing, finance, safety and government.

Additionally, the federal list provides that the following activities are essential:

  • Care and maintenance of contaminated sites; and
  • Land registration services, real estate agent services, home inspection services, and moving services.

Essential Services – Provincial Order

Each province has provided its own list of businesses that are "essential" and may remain physically open during the pandemic. In Ontario, this list is found in an Order made under the Emergency Management and Civil Protection Act. This order is effective as of March 24, 2020 and was further updated on April 4, 2020. The list of essential services that may remain open is, in many cases, broadly worded and open to interpretation.

In its FAQ on essential businesses, the Government of Ontario directs business owners to review the list of essential services and determine whether their business fits into any of the categories listed. The Government of Ontario states that it will not provide written confirmation or advice on whether a business is essential. Those who fail to comply with the Order are subject to daily set fines of $750 or may be open to prosecution under the Provincial Offences Act. If convicted, violators could be sentenced to fines up to $100,000 and one year in jail for an individual; fines up to $500,000 and one year in jail for a director or officer of a corporation; or a fine up to $10,000,000 in the case of a corporation, for each day the offence continues.

The most recent version of the "essential services" list permits the following places of businesses to remain open, among others:

  • Businesses that deliver or support the delivery of community services. The list of services includes environmental rehabilitation, management and monitoring, and spill clean-up and response;
  • Banking/credit union activities including credit intermediation;
  • Real estate agent services; and
  • Maintenance, repair and property management services strictly necessary to manage and maintain the safety, security, sanitation and essential operation of institutional, commercial, industrial and residential properties and buildings.

If a place of business is closed as non-essential, the business may still operate remotely for the purposes of providing goods (by mail, delivery or for pick-up) or providing services online or by remote means. Further, the Order authorizes access to closed places of business but only on a temporary basis and for certain specific purposes, including,

(a) performing work at the place of business in order to comply with any applicable law; or

(b) allowing for inspections, maintenance and repairs to be carried out at the place of business.

Accordingly, prior to the provision of environmental services (or any type of service) to any place of business, the service provider and person responsible for the business must first determine that the service is essential and then that the place of business may provide access in order to receive the service in accordance with the Order.

We note that the first version of the Order contained a broader list of essential businesses and a more detailed set of "environmental services" businesses that left the scope of services less open to interpretation:

40. Businesses that support environmental management/monitoring and spill clean-up and response, including environmental consulting firms, professional engineers and geoscientists, septics haulers, well drillers, pesticides applicators and exterminators, management of industrial sewage/effluent (e.g. for mining operations), and environmental laboratories.

The Order has now been extended to May 6, 2020 but may be updated or changed at any time. Businesses are advised to review the most-updated list on the Government of Ontario's website.

What Might this all Mean for Environmental Services?

Environmental consulting and engineering firms conducting "environmental rehabilitation, management and monitoring and spill clean-up and response" are permitted to remain open as essential services. A large part of environmental services, however, are conducted at the property of clients or third parties, rather than at the firm's place of business. In addition, certain environmental services, in particular environmental site assessments ("ESAs"), support other services such as real estate and financial services, which have been deemed essential.

The analysis of whether a specific environmental service such as an ESA may be performed is not straightforward. It requires consideration of the specific fact scenario. First, consideration should be given as to whether the particular service falls under the definition of an essential service. Second, consideration should be given to whether the business at which the service is to be provided is permitted to be open. If the business is not essential, access is only permitted under the Order if it is provided for one of the specific purposes set out in the Order, which includes (a) performing work at the place of business in order to comply with any applicable law; or (b) allowing for inspections, maintenance and repairs to be carried out at the place of business. Each case will have to be evaluated based on its unique facts.

Below we provide three common situations that are being encountered by businesses and consulting firms at this time along with some considerations to assist in determining if environmental work, including ESAs, should proceed. For legal advice on your specific situation or if you require further information on this issue, the Environmental Group at Gowling WLG can assist.

As a reminder, any work that can be conducted remotely should be conducted remotely, and physical distancing and other recommended or required precautions (like screening or following self-isolation requirements) should be undertaken by essential employees who are not working remotely.

As stated above, most environmental investigations will require at least some work that cannot be conducted remotely and that must be conducted at the premises of others. Take for example, the typical Phase I or II. A Phase I is a non-invasive investigation that assesses whether current or historical property uses (on the subject property or neighbouring properties) have the potential to cause or have caused soil and groundwater contamination. It involves reviewing records as well as conducting interviews and a site reconnaissance. A Phase II is an intrusive investigation of a property undertaken to determine whether potential contaminants identified in the Phase I are present in soil or groundwater. The Phase II involves on-site drilling and soil and groundwater sampling and may include investigations within buildings. If environmental contamination is confirmed through a Phase II or otherwise, further investigation, delineation or remediation may be recommended or required. Regular groundwater monitoring may also need to be conducted.

1. Required Site Clean-up or Monitoring

Businesses are certainly permitted (and in fact required, unless they have been granted or extension of time) to take action, including retaining the services of environmental consultants, to comply with environmental laws. This would include work done pursuant to Ministry of the Environment, Conservation and Parks ("MECP") Director's Orders or Provincial Officer's Orders or monitoring required by an Environmental Compliance Approval, Certificate of Property Use or otherwise. Consultants are likely permitted to offer services in these cases because the services would fall into the permitted categories of "environmental rehabilitation, management and monitoring", given the known environmental concerns and expectations of the MECP. These services can be provided even to businesses that are closed, because access is being provided to do work in order to "comply with applicable law".

It seems that obligations under the Environmental Protection Act ("EPA"), Ontario Water Resources Act and Technical Standards and Safety Act, such as the obligation to address the adverse effects of spills under Part X of the EPA, would also be included in this category of permitted work. This may include recent spills or historical spills that are in the process of being investigated, delineated or remediated. For example, s. 93 of the EPA requires:

The owner of a pollutant and the person having control of a pollutant that is spilled and that causes or is likely to cause an adverse effect shall forthwith do everything practicable to prevent, eliminate and ameliorate the adverse effect and to restore the natural environment.

Work being performed to ameliorate the environment can and should continue.

2. Addressing Existing Contamination

Businesses or individuals who own or operate Brownfield properties or "contaminated sites" at which environmental work is being conducted on a voluntary basis, as well as the consultants retained to perform the work, may wonder if ongoing remedial or risk management work can continue or whether new work can begin. As set out above, the Order explicitly permits "environmental rehabilitation, management and monitoring" services to continue. Remedial and risk management work would appear to fall within these types of services. Monitoring, which is explicitly included, is an essential component of remedial and risk management works. However, consultants and businesses retaining consultants should nevertheless exercise good judgment and consider whether some or all remedial work should be paused until the Order is lifted, provided that it can be done without adverse impacts to the environment or the business itself.

If a closed business is required to provide access to an environmental consultant to address or continue addressing existing contamination, consideration should be given as to whether temporary access is being provided for "inspections, maintenance or repairs". In the case of an ongoing environmental remedial or investigative project or routine groundwater monitoring, an argument could be made that these activities are akin to "inspections" or "maintenance". Of course, physical distancing and other recommended or required precautions (like screening or following self-isolation requirements) should be undertaken (see recommendations for workers from the Government of Ontario here.) If access can be provided remotely (such as by providing a lockbox or keypad code), this is the best and safest approach.

In addition, while the federal list of essential services does not establish a directive or standard, it is intended to provide some guidance and may be of assistance in interpreting whether certain types of activity might be considered essential. The federal list specifically references "management of contaminated sites", providing some support for the argument that the ongoing management of contaminated sites is an essential service.

3. Environmental Due Diligence and Site Investigations

ESAs performed for due diligence purposes may arguably fall within the scope of "environmental management" services under the Order and thus be permitted to continue. However, where there is no known environmental issue at a site, consultants and their clients may wonder whether an ESA for due diligence purposes can qualify as "environmental management". It may be of assistance to note that beyond the definition "environmental rehabilitation, management and monitoring," due diligence ESAs may be implicitly permitted because financial and real estate services are permitted to continue under the Order. Typically, ESAs (a Phase I and potentially a Phase II) are conducted when a property or business is being sold or transferred and may also be required by financial institutions prior to lending. As such, if real estate and financial services are to continue, environmental due diligence must be available to buyers, sellers, lenders and others in the form of ESAs.

Where a Phase I or Phase II ESA performed for due diligence purposes requires access to a business closed under the Order, environmental consultants and businesses will also want to consider whether access is being provided for the purpose of "allowing for inspections, maintenance and repairs to be carried out at the place of business." Like other types of inspections conducted during a sale process, an ESA should be considered akin to an "inspection" as it allows for the assessment of the property for the purposes of sale or financing. However, consultants and businesses should satisfy themselves that they fall within this exemption on a case by case basis, and if in doubt, seek legal advice or delay the work until COVID-19 restrictions are lessened.

Where ESAs are permitted, all precautions and good judgment must still be exercised. Although much of the work required by a Phase I ESA is conducted remotely through desktop study review of documents, it also includes a site reconnaissance. Depending on the specific requirements of the parties involved in a transaction, a virtual reconnaissance might be considered. A virtual reconnaissance may not be permitted for a Phase One performed pursuant to Reg. 153/04 but in a due diligence context, may be acceptable to counterparties. The limitations and risks of conducting a remote reconnaissance under each particular circumstance should be highlighted and discussed between the consultant and client prior to proceeding in that fashion. Any other issues or restrictions encountered because of COVID-19, such as difficulties and delays accessing records required to complete the Phase I, which may result in a data gap, should also be raised. Consultants should ensure that any limitations and data gaps resulting from COVID-19 issues are clearly noted in writing in addition to being discussed with the client and may wish to consider including a standard caveat in reports prepared during COVID-19. If the consultant is not comfortable proceeding with the Phase I in light of specific limitations encountered, or the objectives or requirements of the work cannot be met, then the works should not proceed.

Phase II ESAs require physical access to a property and potentially any buildings on that property. Again, physical distancing and other recommended or required precautions (like screening or following self-isolation requirements) should be undertaken (see recommendations for workers from the Government of Ontario here.) The precautionary measures being taken can be added to a site specific health & safety plan. As with the Phase I, including a COVID-19 caveat in the report should be considered and any restrictions imposed by COVID-19 should be noted in the report and discussed with the client.

Gowling WLG continues to provide ongoing updates and resources to clients on its COVID-19 resource page. This article is not legal advice and should not be relied upon as such for any specific situation.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.