Raising the Green Flag: The Environmental Program (Second of Two

In the previous Law article, The Environmental Audit (see our January, 1991 issue), we left the corporation and its directors with a completed environmental audit that pointed out both actual and potential areas of environmental risk and suggested procedures to deal with them. This audit, in effect, provided a “snapshot” of the corporation’s operations and actual or potential liabilities. But new environmental “problems” can appear at any time and the statutory duty (at least in Ontario) imposed on the directors and officers to ensure that operations of the corporation are carried on in a manner that will avoid environmentally unacceptable occurrences is ongoing. So, Big Brother will still be watching, even though he may have been satisfied for the moment.

What then is the next step that the corporation and its directors should take? Most importantly, a comprehensive environmental program, which will include the preparation of environmental corporate policy, and a manual should be prepared for the audit and its recommendations. Simplistically, an environmental program is little more than taking the “snapshot” of the corporation’s operations, as set forth on audit report, and establishing a program that anticipates “all” potential environmental “problems” that may arise. Procedures are put in place, to be followed should they occur. These procedures are reduced to writing in the form of an environmental manual, or code of procedure, that must at the same time be concise, clear and understandable to senior officers and supervisory staff and to site personnel, who will be the first persons to encounter a problem.

As an obvious spinoff of this procedure, the directors should state an environmental policy that will govern the corporation’s operations and stand as a benchmark for acceptability. The wording of such a statement must be carefully considered, as it will, no doubt, be one of the standards against which the corporation will be judged, possibly by the courts. Accordingly, the policy should be under constant review to ensure that it is up-to-date.

The following are some things that might be considered when establishing a program:

* Estalish clear lines of communication within the corporation with sufficient people indentified so that an employee reporting a problem will not be met with “I’m sorry, Mr. X is on holidays for two weeks.” It is advisable to set forth the “pecking order” for the persons named so that the reporting employee is left in no doubt as to the order in which named people are to be contacted;

* Clearly identify the person or persons who will be the corporate spokesperson(s) for the public, media and authorities;

* Consider having mini manuals for specific jobs. An employee who handles loading equipment may not necessarily have to know the procedures relating to a spill within the mill. Employees are more likely to read and remember a procedure that is terse;

* Establish procedures for prompt and full notification to the authorities by a named corporate representative (again, name alternative people);

* Make it as clear as possible that employees are not to discuss the problem with anyone, including the authorities, unless authorized by the appropriate corporate designee, and preferably in his or her presence. A corporation must never attempt to hide the event or the facts relating to it, but this does not mean that the authorities should be just “turned loose” to do as they wish. It is an unfortunate fact that some government investigators like to embark on “fishing expeditions” and in so doing may uncover some entirely unrelated matter. It is important to remember that, if a problem arises, the investigators are on the corporate premises to investigate that matter and the circumstance relating to it, not to indulge in whatever investigation they wish. Besides, employees who think they know “exactly what happened” in fact often do not know what they are talking about. Be warned however: you must not impede the investigation. The investigators have wide powers to lay charges if they think that they are being obstructed. If an investigation is commenced, legal counsel should be involved as early as possible;

* Set appropriate procedures to contact necessary advisers, including legal counsel, as promptly as possible, naming as many contacts as possible with addresses and phone numbers. Choose your advisers in advance and discuss the procedures with them. If an adviser does not give out his home number, it is time to change advisers;

* Consider setting up some sort of incentive plan for employees who show constructive ingenuity in identifying new or changed areas of concern, suggest improvements to procedures, or become more knowledgeable in the environmental field as it relates to the corporate operations;

* Establish an internal system to educate employees on procedures and to make certain that they know the procedures that affect them;

* Establish and follow procedures for reviewing and updating. These should extend not only to the manuals but also to the environmental policy established by the board and to the program itself;

* If relations are good between the corporation and the governmental staff, it may be possible to get helpful input from them. Do not, however, expect them to “approve” the manual, in whole or in part;

* Always bear in mind that, under most legislation (and certainly in the eyes of most investigators), no spill or occurrence is so “minor” that it can be ignored. For example, recently a diamond driller got into trouble because at the drill site he was draining the oil from his machine into a metal pan which was sitting on a sizable trap (there was no indication of spillage or splashing). The environmental inspector required that drills be taken back to camp in order to have oil changes. One of the most difficult things to have employees accept is the requirement that any incident must be reported promptly and in detail.

It cannot be emphasized too strongly, however, that the program, manual and policy are not “prepare-it-file-it-and-forget-it” documents. They must be “living” documents that are constantly open for improvement. If a problem arises, can be either the corporation’s best line of defence, or a strong piece of evidence for the Crown in prosecuting a charge. If the manual is a “living” one, setting out reasonable procedures based upon a realistic assessment of the corporation’s operations, it may well be the basis of a successful defence.

Where do the officers and directors fit in? Obviously the operating officers will be directly involved in the preparation of the manual. But the statutory duty extends to all officers and directors, even the nominee director of convenience. Accordingly, directors should learn about, and to some extent become involved in, the operations of the corporation (see Directors Beware in our June, 1988 issue). Specifically, with respect to the matters at hand, they should regularly review and consider the policy, plan and manual. They should see that the procedures are being implemented and that the operations of the corporation are being carried out in accordance with its requirements. This can be done by having an appropriate report on the matter as a standard agenda item for board meetings and in fact having meaningful reports tabled and discussed.

If concerns are identified or recommendations made, they must be followed up and not just noted and thereafter ignored. As has been mentioned before, the designating of a member of the board to keep abreast of and report to the board on environmental matters is worth considering.

In this whole exercise of introspection, it must be remembered that the environmental authorities are becoming more militant and uncompromising in their considerations and they are doing so with the blessing and encouragement of the public and the politicians. The fines are increasing (in Ontario, a recent amendment has again doubled the fines available under the Environmental Protection Act) and the authorities will not hesitate to go after a “lazy”
director.

So prepare the plan and manual(s) and establish a policy, make them realistic and as complete as possible and then go ahead and raise the “green flag.” But be prepared to defend its significance to the death, or, in Ontario, to pay the $2-million-a-day fine.