Are you at Risk? The Role of Environmental Auditing in the Liability Dilemma

"The vulnerability of Canadian and U.S. companies, their directors, officers and employees to onerous penalties associated with violations of environmental statutes and common law actions has provided the impetus for the increasing use of environmental audits. This trend is developing in direct proponion to the cost and difficulty of obtaining liability insurance. Companies operating in British Columbia should be cognizant of developing legislative and enforcement trends and their implications for individual and corporate responsibility. Canadian mining companies doing business in the U.S. should be particularly aware of the environmental exposure which may be assumed with property acquisition or by operations which produce or use any of an ever-increasing list of regulated substances.The environmental audit is now a key component of prudent business planning which will identify noncompliances and environmental liabilities, outline defensive strategies, and assist in a legal defence should charges be laid. This paper will discuss the purpose and mechanics of an environmental audit with emphasis on those features which will maximize protection against statutory and common law actions.IntroductionThe environmental audit is but one weapon in a comprehensive defensive strategy for corporate and individual survival in an increasingly litigious world. The principles of the environmental audit have been formulated as a logical response by management to an ever-growing list of environmental vulnerabilities, which often have the potential to result in plant shutdowns, prosecutions or fmancial liability of major proportions. Accordingly, the audit may play a critical role in maintaining profitability as well as assisting in the defence of a company and its employees against actions taken by regulatory agencies and citi7.cns under statute and common law. Should convictions result from these actions, the penalties are likely to be ameliorated by the demonstration of due diligence through management policy supporting the audit procedure.An awareness of environmental sensitivities, strict adherence to licensing requirements, and planning for environmental emergencies are now generally considered to be as important to profitable performance as operating costs, metal prices, and labour peace. Why is this so? The increased priority given to environmental matters is partly a result of changing attitudes amongst the mining profession, but perhaps more importantly, it is also a direct consequence of the proliferation of ever more stringent environmental legislation, the targeting of management for responsibility and the draconian penalties imposed for violations of such legislation. Contributing to this trend are recent court decisions involving disputes of an environmental nature in which the standard of care required for a successful defence now requires almost super-human diligence in environmental management. The principle of ""strict liability"" (in which negligence or permit violation does not have to be shown) is also being increasingly applied in the resolution of civil actions."