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Covid-19 | Newsletter

Down but Not Out: Essential Business Regulation and Reopening Despite Continued Concerns About COVID-19

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Capital Perspectives - Newsletter

The world as we know it has changed. As the COVID-19 pandemic has wreaked havoc across the globe – with no nation left untouched – the go-to response of almost every government has been the near total shutdown of its economy.

The fear and unease of the first weeks of the pandemic is only now beginning to subside. As government leaders addressed us daily and around the clock, we were met with stark images of suffering, empty store shelves, and a stock market rout (with the vaporization of trillions of dollars in market cap). It was, and remains, an uncertain time.

The act of searching for the necessities that were once readily available at the local supermarket has, in a very real sense, reminded us what is essential in our society: the energy and social connection that we find in the bustle of daily life, the economic stability that has been absent in the last several months and, most importantly, the physical and mental health of our community.

The shutdown of the economy mandated by provincial governments was necessary. It is clear this decision has saved lives by reducing the spread of the virus and allowing our frontline healthcare workers the time and resources to treat those who are gravely ill. The economic cost, however, has been significant. Millions of Canadians are unemployed. Businesses of every size have been affected and will face on-going challenges in the medium-term. All levels of government have intervened with billions of dollars in financial support and programming to alleviate the economic effects of the pandemic.

With a vaccine for COVID-19 not in immediate sight, governments and businesses are now faced with a delicate balance: reopen the economy while preventing a "second-wave" of COVID-19 infections.

Shutting Things Down – The Immediate Response in Canada

It is a feature – not a defect – of Canada's federal system that the Government of Canada was limited in the actions it could take in the immediate aftermath of the arrival of COVID-19. With provincial governments holding the constitutional levers of health and property, the federal response sidestepped a nasty dispute with provinces by not invoking the federal Emergencies Act and instead focused, first and foremost, on the closing of international borders in order to abate the continued entry of the virus into Canada, first closing the border to international visitors on March 13, and then closing the Canada/US border to traffic a few days later.

Note, however, that the Government of Canada made deliberate efforts with our American counterparts to ensure that the closure only limited non-essential (recreational) travel, meaning the border remained open to traffic that ensured the preservation of vital supply chains – a clear demonstration of the inherent tension in permitting continued economic activity despite heightened risk to public health outcomes.

So provincial governments have taken the lead in invoking emergency and public health legislation in order to shut down non-essential business under their own legislation. Provinces have taken this responsibility seriously, effectively shutting down entire portions of their economies in a matter of hours to protect public health. Quebec was the first province to announce a mandatory closure of all non-priority services on March 23. Ontario followed suit a day later, shutting down non-essential business when it filed its mandatory business closure regulation.

Every province has been responsible for crafting its own list of essential businesses that may remain open during the crisis. The design and drafting of those regulations have had considerable effect on the type of business that has continued to take place. For example, Ontario's list of essential businesses contained a "supply chain exception," which permitted the continued operation of businesses that contribute to supply chains by supplying businesses that have been deemed essential inside or outside Ontario. No similar exception exists in Quebec, meaning a business that is vital to supply chains and deemed essential in Ontario cannot legally operate one province over.

Drafting critical regulations amid a crisis is a difficult task, so provinces have engaged with stakeholders and gradually refined their lists of essential businesses over time. This means the legal environment for essential businesses can shift from day to day, both in terms of the businesses that are considered essential and the obligations on those businesses to maintain public health requirements. The incremental development of these regulations, and the willingness of governments to adapt them, is a crucial feature of any reopening strategy.

Threading the Needle with a Safe Economic Restart

Many provinces have started to resuscitate economic life by relaxing mandatory business closures. Achieving this goal in a way that continues to protect public health will be a difficult task, as will be communicating the gradual reopening measures to the public in a way that gives businesses certainty and provides a feeling of fairness.

Ontario, for example, is now entering "Stage 2" of its Framework for Reopening the Economy. While Stage 1 allowed for very limited reopening of businesses province-wide (such as curb-side pickup for online retail sales), Stage 2 allows a much broader swath of the economy to reopen (including bars and restaurants with patio services, to the great relief of the authors of this article). On a regional basis, Stage 2 reopening will first take place in areas covered by certain "public health units." Notably, the entire Greater Toronto Area is left out of initial reopenings under Stage 2.

Excluding the GTA from the first wave of Stage 2 reopening makes sense from a regulatory and policy perspective, since the GTA is the source of most new coronavirus cases in the province. But it also yields curious practical outcomes: why should an interior shopping centre in one GTA municipality not be permitted to reopen in accordance with social distancing guidelines while another, just a 10-minute drive away (but in a different public health unit), be permitted to reopen? This is not a rhetorical question, since these decisions will have an enormous impact on the livelihood of business owners and their employees. Nor is it intended to be critical of the provincial response, but instead serves to emphasize the inherent tension in achieving divergent public policy goals with respect to the economy and public health.

It is safe to say that there will be no "grand reopening" of the economy, where a proverbial ribbon is cut and commerce returns to pre-pandemic levels. The reopening of Canada's economy, and indeed that of the world, will be a slow process. We must be patient and approach the reopening in a prudent manner, based on evidence about local needs.

Paul Burbank is an associate with the Fasken Ottawa office. He is part of the Communications Law group where he advises on telecommunications and broadcasting law in Canada, as well as other regulatory and administrative law matters. Paul also works with Fasken's Government Relations and Political Law group on strategy and compliance matters.

Kai Olson is an associate with the Fasken Ottawa office. He practices in the area of political law and advises clients on lobbying law, lobbyist registration and compliance and public-sector conflict of interest matters. Kai also acts for clients who are the subjects of regulatory investigations or enforcement proceedings for political law offences.

To read the full Capital Perspectives: Ottawa Newsletter, please click here (PDF).