Impossibility of Compliance Defence – Mount Polley’s attempt at avoiding contravention of its permit

Administrative law – Decisions reviewed – Environmental Appeal Board – Penalties – Compliance with legislation – Judicial review – Evidence – Standard of review – Reasonableness – Environmental matters – Assessment – Permits and licences – Inspections – Natural resources – Mining – Water

Mount Polley Mining Corp. v. British Columbia (Environmental Appeal Board), [2022] B.C.J. No. 1597, 2022 BCSC 1483, British Columbia Supreme Court, August 25, 2022, S. Wilkinson J.

Since 1997, the petitioner, Mount Polley Mining Corp. (“MPM”), operated an open pit copper/gold mine near Likely, BC (the “Mine”). As part of its operations, MPM held a permit issued under the Environmental Management Act, S.B.C. 2003, c. 53 (the “EMA”) to discharge treated effluent from its mining operations (the “Permit”).

In 2014, the Mine was the site of a renowned tailings dam failure. MPM’s operations were suspended until 2015. MPM’s Permit was also amended to include a short-term water management plan, and a 2-year authorization to discharge effluent into Quesnel Lake.

In 2017, the then director under the EMA issued various amendments to MPM’s Permit. The amendments included an obligation on MPM to design and test systems to treat their “mine influenced” water including the development of a detailed design by certain dates.

Between 2018 and 2019, the Ministry conducted inspections of the Mine. Two warning letters were sent to MPM advising that it was in breach of the terms of the Permit. In 2019, the Ministry issued a third warning letter for non-compliance, and advised that the matter was being referred for consideration of an administrative monetary penalty pursuant to section 115 of the EMA.

On December 8, 2020, the Director issued an administrative penalty to MPM in the amount of $9,000 for failure to comply with the Permit. In reaching this conclusion, the Director determined that the nature of the contravention was “major”.

The Director’s decision was upheld by the Environmental Appeal Board, which heard the issue de nova. MPM advanced two key arguments: (1) that it was impossible for it to comply with the Permit (the impossibility of compliance defence); and (2) that the director erroneously characterized the non-compliance as major.

The Board rejected MPM’s first argument, largely on the basis that it could have avoided contravention by appealing the Permit or submitting proof of its efforts to comply. The Board also found that MPM’s failure to comply with the Permit for more than two years undermined the integrity of the legislative scheme and the protection of the environment.

MPM sought judicial review of the Board’s decision.

As noted above, one of MPM’s primary argument before the Board was that certain terms of the Permit were impossible for it to comply with, relying on the common law defence of impossibility. Importantly, section 6 of the Administrative Penalties (EMA) Regulation authorised the Director to impose an administrative penalty, even if a person exercised due diligence to prevent the contravention. Despite this language, MPM said it could rely on the common law defence of impossibility.

The court noted that MPM’s impossibility defence was really one of due diligence and, even if not, the defence of impossibility would require evidence of due diligence before examining whether the defence of impossibility was available. On the issue of due diligence, the court noted that the terms MPM was supposably unable to comply with in the Permit, were deadlines informed by a report commissioned by it and presented to the Board in support of its original permit application. In addition, even by February 2018, MPM was still not claiming the terms were impossible to comply with, only stating that some terms were problematic. It was not until May 2019 when MPM raised the issue and sought to amend the problematic terms of the Permit.

Given these facts, the court found that the Board’s decision on this issue was reasonable. In fact, the court went further and concluded that the Board’s decision that an impossibility defence was not available under the administrative monetary penalty regime under the EMA was correct.

MPM also argued that it was “unaware” that the Director would consider whether the contravention impacted the integrity of the regulatory regime, which it said made the process unfair.  The court rejected this argument. The court concluded that this is precisely the type of factor many decision-makers consider when assessing penalties and it was appropriately considered in this case. Further, the court observed that, given the relatively small size of the penalty, MPM had ample opportunity to make submissions on the issue and present arguments and evidence it felt was relevant. The process was not unfair.

Based on the above, the court found that the decision and penalty imposed on MPM were reasonable. MPM’s petition for judicial review was dismissed.

This case was digested by Adam R. Way, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter. If you would like to discuss this case further, please contact Adam R. Way at away@harpergrey.com.

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