“The Buck Stops at the Top” – Lessons Learned: Mining Company Executive Found Guilty of Environmental Offences

Introduction

On July 7, 2023, the British Columbia Provincial Court (Court) found the president and chief operating officer of a mining company guilty of several environmental offences arising from the discharge of waste from the company’s mining operations on Banks Island, British Columbia. The decision provides a sober reminder and some lessons learned to directors, officers and employees that they may be held personally liable for their company’s compliance with environmental laws.

Culpability for environmental offences — such as a spill or operating outside of an applicable regulatory standard — typically falls on the corporation. Directors or officers of a company infrequently face primary liability for violations of environmental laws because environmental harm is typically the result of systemic problems in how the company operates, rather than any one person’s conduct. Regulatory authorities rarely pursue charges against employees who are merely doing their job. Nonetheless, individual directors, officers and employees of a company can be held personally liable for environmental offences in certain circumstances.

The Decision

In R. v. Mossman and Meckert, the Court found Mr. Mossman guilty of failing to comply with a waste discharge permit held by Banks Island Gold Ltd. (BIG) and breaching the Metal and Diamond Mine Effluent Regulations (Regulations). The Court found that BIG had discharged water containing zinc and total suspended solids above the threshold set out in the permit and the Regulations.

Mr. Mossman was the president and chief operating officer of BIG and the mine manager of BIG’s Yellow Giant Mine (Mine). The Court accepted that Mr. Mossman was “unquestionably the key operating mind of BIG on the ground at the [Mine]” and that he “was the person who could control what BIG did and did not do.” Mr. Mossman had submitted BIG’s permit applications for the Mine and was the contact person for BIG with regulatory officials.

The Crown alleged that Mr. Mossman (and one other officer) committed environmental offences arising from BIG’s disposal of waste from the Mine. These offences fell under four general categories:

1. Failing to report environmental spills

2. Discharging mine waste into the environment

3. Constructing or operating unauthorized works and in and about a stream

4. Discharging substances above permitted amounts

The Court found Mr. Mossman not guilty of the first three categories of offences. However, the Court found Mr. Mossman guilty with respect to discharging substances above the limits allowed by BIG’s waste discharge permit and the Regulations. The Court reasoned that Mr. Mossman was responsible for ensuring that BIG completed environmental monitoring and complied with its permits. The Court noted that “[t]he buck stops at the top.”

The Court was particularly critical of the fact that Mr. Mossman had permitted BIG to continue mining and discharging mine waste over several months when the composition of its waste discharges was not being monitored. This was because BIG had failed to pay a laboratory bill due to cash flow issues, which led to the laboratory withholding relevant discharge test results until the bill had been paid. The Court found that Mr. Mossman had a duty to ensure BIG ceased operations until it could verify the discharges were within permitted ranges. By allowing continued operation, the Court reasoned that Mr. Mossman had assumed the risk that the discharges might exceed the permitted amounts (which they did).

The Court also noted that there had been no evidence of due diligence by Mr. Mossman, meaning Mr. Mossman had not taken reasonable steps to prevent the exceedances from occurring.

Lessons Learned

Mr. Mossman’s conviction serves as a cautionary tale for company leaders with environmental compliance obligations. In particular, the decision highlights the following takeaways:

• While primary liability for environmental offences most often falls on the company, directors and officers can be held liable for the company’s breach of its environmental obligations. Generally speaking, the key issue when determining directors’ and officers’ liability is whether the individual had management and control of the undertaking or conduct that led to the offence. Certain environmental statutes in Canada create an obligation for directors and officers to take all reasonable care to ensure compliance with applicable regulations or prevent the commission of an offence.

• Directors, officers and senior management are responsible for ensuring that adequate systems are in place to manage and monitor a company’s compliance with its environmental obligations. These systems must be designed to avoid foreseeable issues. In this case, the Court found that the laboratory holding the test results due to BIG not paying the laboratory’s bills was a foreseeable event, which Mr. Mossman ought to have foreseen and prevented.

• Directors, officers, and senior management should ensure the company has robust environmental policies, practices and procedures to ensure effective reporting of and responses to environmental incidents. Depending upon the industry, this may involve clearly assigning and delegating responsibility for compliance with environmental obligations.

• Directors, officers and senior leadership must act on reports of non-compliance and ensure their instructions are implemented. Leadership who ignore reports or advice from their environmental managers may find themselves assuming liability for non-compliance.

• Directors, officers and senior leadership must also act on reports that management and monitoring measures have failed. In this case, the Court noted that Mr. Mossman should have ordered BIG to cease operations until accurate monitoring measures were restored.

For more information please contact:

Tony Crossman            +1-604-631-3333
Rochelle Collette         +1-604-631-3379
Nicholas Tollefson       +1-604-631-3316

Or any member of our Environmental group.