Financial assurance requirements for large industrial projects in BC under review in Public Interest Bonding Strategy

The BC Ministry of Environment and Climate Change Strategy (MoE) has now released two “What We Heard” reports that summarize the feedback received from industry, the public, and Indigenous peoples on the multi-year Public Interest Bonding Strategy initiative that is underway.

The MoE’s Public Bonding Strategy is currently considering expanding financial assurance and closure plan requirements for “large industrial projects” governed by the Environmental Management Act, Mines Act, Forestry Act, and other BC environmental laws. 

Owners of large industrial projects that require authorizations and permits under these laws but do not have bond requirements or other financial assurance requirements in place should follow this policy space closely.

The MoE’s review is still underway and legislative changes have not yet been proposed, but changes to the financial assurance and closure plan requirements may affect current and future owners of large industrial projects in the mining, forestry, oil and gas, energy, manufacturing, and other sectors.

Background 

The objective of the Public Interest Bonding Strategy is to “ensure that owners of large industrial projects, not the people of British Columbia, pay the full costs of environmental clean-up and reclamation, even if projects are abandoned.” 

The strategy aims to address the risk that a company could abandon a site without addressing environmental liabilities, making clean-up and reclamation costs the responsibility of the BC government and taxpayers. This may arise when a project owner has not provided sufficient financial assurance to cover the full costs of environmental clean-up and reclamation, or where a project is not cleaned up or remediated because there is no clear requirement for the owner to do so.  

To prevent creating these types of contaminated sites, the MoE is reviewing existing BC environmental laws and considering expanding financial assurance and closure plan requirements for a range of industries. 

“Large industrial projects” affected

The MoE has not identified the types of “large industrial projects” that would be affected. “Large industrial projects” may eventually capture projects in a range of sectors governed by statutes such as the Environmental Management Act, Mines Act, Land Act, Forest Act, Environmental Assessment Act, and others.

In BC, the mining, oil and gas and energy sectors already have comprehensive frameworks in place to address financial assurances, bonding, closure, and environmental liabilities. The MoE’s stated goal is to “fill gaps” for industries and projects not already covered by existing regulations. However, there is a risk of increased regulatory burden if new requirements are added on to existing regulations.  

Historic sites with no ongoing industrial activities will not be affected.  

Potential changes to financial assurances and closure plans

Some of the proposals the MoE is considering include:  

• New requirements for financial assurance mechanisms for existing and new projects that pose high environmental and financial risks. This could include bilateral arrangements where industry provides funds to government or a third party for cleanup (e.g., cash, pooled funds, qualifying environmental trusts), forms of assurance involving third parties (e.g., surety bonds, guarantees, irrevocable letters of credit) and security interests (e.g., liens on the assets of industry).
• Identifying “large industrial projects” based on “risk-based” criteria that examine both environmental and financial risk (e.g., project location, nature and history of project, financial strength and compliance history of project owners and operators).  
• Expanded corporate liability of directors and officers of a corporation. Many environmental statutes already make directors and officers liable for fines and administrative penalties where they have “authorized, permitted or acquiesced” in committing an offence or contravening a statute. The MoE has not yet indicated what changes may be made. 
• For new projects, closure plans and financial assurance may be considered during provincial environmental assessments.
• An increased role for Indigenous groups, including in clean-up, reclamation, and environmental stewardship programs, especially in areas that are highly sensitive or valued by Indigenous communities.  

The MoE’s multi-year review of environmental laws is ongoing and there will be more opportunities for engagement and feedback.