Environmental, Health and Safety Update

Canada

Proposed changes to federal environmental laws

As reported in several of Torys’ EH&S Bulletins,¹ the federal government passed the Canadian Environmental Assessment Act, 2012 in an effort to streamline the federal environmental assessment (EA) process. Recently, the federal government proposed amendments to the Regulations Designating Physical Activities, which designate the project types that can trigger a federal EA. The proposed amendments would, among other things,

• designate certain new project types, including diamond mines and railway yards; and
   
• exclude certain previously designated project types from the federal EA regime, such as groundwater extraction facilities, potash mines, heavy oil and oilsands processing facilities, and pipelines and electrical transmission lines that are not regulated by the National Energy Board.

The government has also recently proposed the Application for Authorization under Paragraph 35(2)(b) of the Fisheries Act Regulations. These regulations describe the documentation and information required for applications for authorization for the harmful alteration or disruption or destruction of fish habitat under s. 35(2)(b) of the Fisheries Act and establish procedural requirements and time limits for application processing.

For further information, please see the Regulations Amending the Regulations Designating Physical Activities and the Application Regulations.

Environment Canada releases second sustainability strategy

Environment Canada recently released a draft of the federal sustainable development strategy titled Planning for a Sustainable Future, which focuses on climate change and air quality, among other areas. The draft is the second such strategy that Environment Canada had released under the Federal Sustainable Development Act, which requires Environment Canada to develop a strategy every three years, so that its decision making is more transparent and accountable to Parliament. The first cycle of the federal development strategy was released in 2010, as reported in Torys’ June 2010 Climate Change Bulletin. Environment Canada will accept submissions on the draft strategy until June 14, 2013.

For further information, please see Environment Canada's website.

Ontario

Court rejects claim by purchaser of contaminated property

The Ontario Superior Court of Justice recently dismissed a lawsuit by Midwest Properties Ltd. against Thorco Contracting Ltd. and its principal (collectively, the Defendant) relating to the migration of contamination onto a property that Midwest had purchased in 2007. Since 1973, Thorco had used a neighbouring property to store petroleum hydrocarbons (PHC). After it was discovered that PHC contamination had, for an unknown length of time, been migrating from the Thorco property into soil and groundwater on Midwest’s properties, the Ministry of the Environment (MOE) ordered Thorco to investigate and take steps to remediate that contamination. Despite this order, Midwest also claimed against the Defendant that the ongoing migration of contamination onto its property gave rise to claims in nuisance and negligence, and provided a statutory remedy under the spills compensation provision in section 99 of the Environmental Protection Act (EPA). The Court dismissed the lawsuit for the following reasons, among others:

• Since the MOE had already ordered remediation of Midwest’s property, section 99 of the EPA could not be interpreted to allow Midwest to recover remediation costs because this would amount to double recovery; and
   
• Midwest did not demonstrate that it had not purchased a property that was already contaminated. If it purchased a contaminated property, Midwest had not demonstrated that contamination levels increased since it purchased the property in 2007, or that Thorco had caused that further contamination of the site since it was acquired by Midwest.

For further information, please see Midwest v. Thordarson (2013 ONSC 775).

Environmental Tribunal prevents appellant changing grounds for appeal

The Tribunal recently refused to allow a condominium developer to change its proposed grounds for seeking leave to appeal an Environmental Compliance Approval (ECA) under Ontario’s EPA. Brimley Progress Development Inc. intended to build condominiums on vacant land adjacent to a manufacturing facility operated by Atlantic Packaging Products Inc. In October 2012, Atlantic applied to the MOE for an amended ECA seeking to expand its manufacturing capacity at the facility. The MOE issued the ECA, and subsequently, Brimley appealed the approval on grounds related to the expected noise from the facility. Months later, Brimley acknowledged that its concerns about noise had been satisfied, and it attempted to raise new grounds of appeal, specifically in relation to water and vapour particulate emissions from the facility. Although the Tribunal ruled that it had the authority to allow an applicant to change its ground for seeking leave to appeal an ECA – even after the expiry of the 15-day limitation period, it decided not to exercise this power in Brimley’s favour. The Tribunal ruled that it will not exercise this power when an applicant appears to raise new grounds "as an afterthought once the period for filing an application had expired."

For further information, please see the Brimley Progress Development Inc. v. Director, Ministry of the Environment and the ERT Order: 12-145.

Environmental Tribunal refuses to stay a cleanup order against directors and officers

The Tribunal recently refused to stay a cleanup order against former directors and officers of a bankrupt company. Northstar Aerospace (Canada) Inc. owned and operated an industrial facility in Cambridge, Ontario, where in 2004, TCE groundwater contamination was discovered. Contamination was also identified in a residential area near the facility. Over the next eight years, Northstar spent $15 million to remediate the contamination without the MOE issuing any order. However, in 2012, disclosures about Northstar’s financial circumstances resulted in the MOE issuing two orders under the EPA against Northstar and its U.S. parent corporation. In 2012, Northstar received Companies’ Creditors Arrangement Act protection and the Ontario Superior Court approved the sale of the Canadian assets (excluding the Cambridge facility) of Northstar and its U.S. parent corporation. The Court also ruled that the companies were not legally obliged to continue to comply with the first order. (The second order related to providing a financial assurance.) Subsequently, Northstar was adjudged bankrupt and a trustee in bankruptcy was appointed. The Cambridge facility vested in the trustee. The Minister of Environment directed the MOE to carry out some or all of the work in the first order. The MOE was to conduct the work until such time as any other person assumed responsibility for the work to be done in the first order.

The MOE ordered the former directors and officers of Northstar and of its parent company to personally fund the work required in the first order, at an estimated cost of $15 million. The MOE alleged that because, among other reasons, the directors and officers had failed to create a trust account to secure funding for the remediation prior to Northstar’s insolvency, they "failed to carry out their duty and exercise authority as a director/officer to make adequate provision to ensure implementation of the remediation strategy generally and in accordance with the obligations imposed by section 93" of the EPA as well as the first order. The former directors and officers appealed the order naming the officers and directors and brought a motion for a stay pending the outcome of their appeal to the Tribunal. They argued that the MOE did not have jurisdiction to make them vicariously liable for the environmental remediation by their bankrupt company in accordance with federal insolvency laws. They also contended that Northstar could not have established a trust account immediately prior to insolvency because it did not have the money. The Tribunal rejected the directors’ and officers’ motion for a stay as "there is no automatic stay of most orders under the EPA, including this Order. … If the Tribunal were to routinely grant stays to those who simply ignore their statutory obligations, this would amount to a situation where there is an automatic stay pending appeal. The Legislature clearly opted for another approach when it amended the stay provisions of the EPA." The Tribunal’s refusal to granted the stay has been appealed to the Divisional Court.

For more information, please see Baker v. Director, Ministry of the Environment.

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¹ See, for example, the April 2012 and November 2012 editions.

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