Canadian Environmental Law Introduction
Main environmental regulations
What are the main statutes and regulations relating to the environment?
Under Canada’s constitution, environmental regulation is shared between the federal government and the 10 provinces / 3 territories, (referred to collectively as “provinces”). Where there is a direct conflict between federal and provincial environmental statutes in relation to the same matter, federal law prevails, but such conflicts are rare, and overlapping requirements are common. Municipalities also play a growing role.
Federal environmental laws are based on federal constitutional powers such as international borders; international relations; trade and commerce, navigation and shipping, seacoasts and fisheries, criminal law, and a somewhat contentious power to legislate in the national interest for “Peace, Order and Good Government”. The federal government also has primary jurisdiction over federal works and undertakings, such as the land and activities of the federal government, its agencies and corporations, the armed forces, and a variety of federally regulated entities such as the railways, aviation, inter-provincial transport, grain elevators, etc.
Thus, the principal federal statutes are:
- · Canadian Environmental Protection Act, 1999 (CEPA)
- · Fisheries Act
- · Canadian Environmental Assessment Act (CEAA)
- · Species at Risk Act (SARA)
- · Transportation of Dangerous Goods Act, 1992
- · Canada Shipping Act
- · Hazardous Products Act
- · Pest Control Products Act
Provincial environmental laws are based on provincial constitutional powers, such as over municipalities, local works and undertakings, property and civil rights, provincially owned (public) lands and natural resources. In inland areas, most environmental laws that affect private activity are provincial.
Each province has its own environmental statutes. For example, Ontario statutes include:
- · Environmental Bill of Rights
- · Environmental Protection Act (EPA)
- · Ontario Water Resources Act (OWRA)
- · Clean Water Act
- · Environmental Assessment Act (EAA)
- · Pesticides Act
- · Safe Drinking Water Act
- Nutrient Management Act
- Green Energy Act
- Toxics Reduction Act
Acceptable activities, standards and thresholds vary between jurisdictions.
As well, many sectoral laws, i.e., those relating to a resource (e.g., forestry) or industry (e.g., mining, oil/gas extraction, nuclear power) include substantial environmental requirements.
In addition, Canada has a vibrant system of common law and administrative law, which often have a marked effect on environmental law. Quebec has a general legal system based on the French Civil Code.
Integrated pollution prevention and control
Is there a system of integrated control of pollution?
There is no single fully integrated pollution control system. In general, regulators issue permits one medium at a time, i.e. separate permits for air, water and waste. However, some regulators issue the entire range of permits, and some statutes cover the entire range of potential contaminating emissions.
What are the main characteristics of the rules applicable to soil pollution? (e.g., persons that are liable for the clean-up, levels of contamination, retroactivity)
Soil pollution laws are primarily provincial, and vary in terms of persons that are liable for the clean-up, levels of contamination, retroactivity. However, most share the following features:
- a polluter pays principle;
- retroactive liability for polluters, which has been upheld by the Supreme Court;
- non-polluters may also be held liable, on the basis of control of either the contaminating activity or the contaminated site;
- personal liability, in some cases, for officers and directors;
- generic cleanup standards for more than 100 contaminants, plus an optional system of risk assessments if the generic criteria cannot be met; and
- varying cleanup standards depending on land use, on soil texture and on whether the groundwater is used for drinking.
Cleanup standards are regularly reviewed and usually become more stringent with time. The provinces and federal government have an active but slow process of trying to harmonize their cleanup standards, through the Canadian Council of Ministers of the Environment.
Several provinces have established registries of contaminated sites, or those that have been remediated. In Ontario, owners have some protection from ministry orders once they have registered a remediation. This is done by filing a Record of Site Condition (RSC) on the Environmental Site Registry, in which a “qualified person” certifies that the property meets the required soil, sediment and groundwater standards for a particular property use.
Proof of remediation, e.g., through an RSC, is sometimes required in order to obtain a building permit or other development approval. For example, Ontario and BC require environmental investigations and remediation for certain changes in land use (e.g., from industrial/commercial to residential/parkland).
The federal government has a less active, and less effective system for federal lands, but cannot be compelled to comply with provincial rules.
Special rules have been established to manage the liability of lenders, receivers, trustees in bankruptcy, municipalities on tax sales and other non-polluters who must frequently manage contaminated sites.
Regulation of waste
What types of waste are regulated and how? (e.g., definition of waste, need of authorisation, control of the waste and associated activities, what obligations people and companies have)
Waste is very broadly defined, and includes many items with a net economic value.
Waste collection, transfer, storage, processing and disposal are closely regulated. Virtually everyone engaged in collection, transfer, storage, processing or disposal of provincially regulated waste requires a specific provincial authorization, and must often post financial security to guarantee their compliance. It is very difficult to obtain authorization to establish a new waste disposal site.
Waste generators are liable for the proper management of their waste. Officers and directors have a particular duty to ensure that their corporations manage their waste lawfully.
Recycling is encouraged, but is also subject to substantial regulatory oversight. Some exemptions from regulation are available, under strict conditions, such as the re-melting of scrap metal. Recently, provinces have encouraged or required producers of many materials to implement product stewardship programs to divert them from landfill, such as glass, paper, aluminium, tires, batteries, motor oil and electronics.
Hazardous and liquid wastes have caused many problems and are regulated especially tightly, by both federal and provincial governments. Generators of hazardous waste must register, report and pay fees for each type and quantity of waste they generate. They must track each load of the waste until final disposal at an appropriate facility, using six part manifests. Hazardous wastes can no longer be land-disposed without pre-treatment, which is also the generator’s responsibility. Penalties for improper management of hazardous wastes are severe.
Exports and imports of hazardous waste or hazardous recyclable material require prior notice and authorization in accordance with the Basel Convention and the Export & Import of Hazardous Waste & Hazardous Recyclable Material Regulations under CEPA. This is an area that has received recent prominence in terms of enforcement.
There are increasingly tight restrictions on the spreading of wastes on agricultural or other land. Ontario’s Nutrient Management Act, 2002 has improved management of waste-source nutrients (including fertilizers, biosolids, compost, manure, septage, pulp and paper sludge) that are applied to farmland.
Regulation of air emissions
What are the main features of the rules governing air emissions? (e.g., need of licence, main contaminants, limits of emission, limits of concentration in the air)
Air emissions of most contaminants from stationary sources generally require provincial permits. More than 100 parameters are regulated, from suspended particulate matter and smog precursors to toxics. Visible emissions and odours are included. Permit terms are usually governed by ambient air quality objectives, point of impingement limits, and technological feasibility. Compliance is determined by both modelling and monitoring (stack and ambient). Standards vary between provinces and are periodically revised, to take account of new science and to add new contaminants. As the standards become stricter, industry is usually given time to adjust.
Air emissions from mobile sources (vehicles) are primarily governed federally, in cooperation with the US. Programs such as Drive Clean force vehicles to have their pollution controls maintained.
Are there any specific provisions relating to climate change? (e.g., has your country ratified the Kyoto Protocol? Is there a “cap and trade” system in force in your jurisdiction? What is the probability of complying with the target imposed? What kinds of industries are subject to emission allowances trading? How are allowances allocated? Is there a registry to manage allowances ownership and transfers?)
When Canada ratified the Kyoto Protocol to the UNFCCC in December 2002, it committed to reduce its GHG emissions to 6% below 1990 levels over the 2008-2012 period. However, GHG emissions have continued to increase substantially, and the rapid development of the oil sands will push them up even farther. The Canadian government is not taking serious action on climate change.
Under the federal Kyoto Protocol Implementation Act (KPIA), which came into force in June 2007, the federal government is required to take action to “ensure that Canada takes effective and timely action to meet its obligations” under the Protocol. However, the government has not complied with the KPIA. Judicial review of the government’s flouting of this law was rejected by the Federal Court, which held that the legislation is “not justiciable”. The Supreme Court of Canada refused to hear an appeal from this decision.
Canada does collect some information on greenhouse gas emissions, and files its National Inventory Report as required under the UN Framework Convention on Climate Change. Until July 2009, emission reporting was required from facilities that emit more than 100,000 tonnes of certain GHG [in CO2e / year]; now, the federal reporting threshold is 50,000 tonnes. Some provinces are collecting more data or propose to; for example, Ontario has mandatory reporting for sources that emit 25,000 or more tonnes of CO2 per year.
Most Canadian provinces, other than the oil capital, Alberta, belong to the Western Climate Initiative. Alberta has a cap and trade program that will allow GHG emissions to rise as long as “carbon intensity” is reduced; allowances were allocated free. If additional allowances are needed, polluters can purchase them from the government for a fixed, low price. BC has a cap and trade program based on hard caps. BC and Quebec have carbon taxes. Ontario and other provinces are working towards a cap and trade program by 2012.
Protection of fresh water and sea water
How are fresh water and seawater, and their associated land, protected? (e.g., are they subject to public or private ownership, authorisation, limits to extractions and discharges?)
The federal government has jurisdiction over seacoast and inland fisheries. Under the Fisheries Act, the federal government regulates water pollution and prohibits any discharge of a “deleterious substance” into water frequented by fish, and any works or undertakings that result in the “harmful alteration, disruption or destruction” of fish habitat. Breaches can attract very large fines. Regulations under the Fisheries Act set effluent limits for deposit of deleterious substances in certain industry sectors, such as pulp and paper, petroleum refineries, meat/poultry processing plants and metal mining. The Canada Shipping Act restricts discharges from ships. In addition, under CEPA, the Minister of the Environment has the power to set guidelines to prevent and reduce marine pollution from sources on land.
Provinces also regulate discharges into and takings of fresh water, including groundwater. Typically, the discharge of pollutants is prohibited, unless permits or approvals have been issued. The pollutants that are controlled include a wide variety of toxics, as well as human waste, coloured liquids, debris, etc. As well, municipal sewer use by-laws usually govern discharges of liquid waste into a municipal sewer.
In eastern provinces, ground and surface water is unowned until captured. Large water takings from surface or groundwater, e.g. in excess of 50,000 litres of water daily, also require a permit, except for special uses such as firefighting. Restrictions are developing on major, inter-basin transfers. In western provinces, water use is subject to a water rights system, primarily based upon chronological priority. Water use is some areas is oversubscribed, and additional allocations may be unavailable.
Provinces have stringent rules to protect human health through control and regulation of drinking water systems and drinking water testing, treatment and distribution. Water quality must meet strict standards. In addition, there is a growing movement to protect drinking water sources by regulating land use in source areas, such as Ontario’s Clean Water Act, 2006.
Protection of natural spaces
What are the main features of the rules protecting natural spaces? (e.g., what types of natural spaces are protected? Are there different forms or classes of protection? How can private rights be affected?)
Parks Canada is responsible for protecting the ecosystems of Canada’s 42 national parks and national park reserves; the latter are areas that are intended to become national parks, pending settlement of aboriginal land claims, and are managed as national parks under the Canada National Parks Act. National historic sites are protected under the Historic Sites and Monuments Act; migratory bird sanctuaries are established under the Migratory Bird Sanctuary Regulations to the Migratory Birds Convention Act, 1994. Certain public lands are designated as national wildlife areas under the Canada Wildlife Act, and the Minister of the Environment may take such measures as are necessary to protect any wildlife species that is threatened with extinction. The Canada National Marine Conservation Areas Act establishes marine conservation areas and reserves, and marine protected areas are designated under the Oceans Act.
Provincial parks, including natural reserves, conservation reserves and wilderness areas, are administered by the provinces. Typically, provinces have statutes similar to Ontario’s Provincial Parks and Conservation Reserves Act, which establish and manage provincial parks and conservation reserves. As well, heritage properties may be protected through statutes such as the Ontario Heritage Act, and the Historical Parks Act.
In addition, some environmental rules are applied in the management of Canada’s vast tracts of Crown land, as a matter of administrative discretion.
Protection of flora and fauna species
What are the main features of the rules protecting flora and fauna species? (e.g., what types of flora and fauna species are protected? Are there different forms or classes of protection?)
The Species At Risk Act was enacted to prevent wildlife, fish and plant species from becoming extinct and to provide for recovery of endangered or threatened species. As well, the Act provides for management of species that are of special concern. Recent caselaw is beginning to give this some teeth. The Species at Risk Public Registry is publicly accessible and facilitates access to the recovery strategies in place to stop or reverse the decline of a species.
Migratory birds are protected under the Migratory Birds Convention Act, 1994.
The Canada National Parks Act provides that where any substance that can injure flora or fauna is discharged or deposited in a park, any person in charge or control of the substance must prevent any danger to flora and fauna, for example by cleaning up or paying for the cleanup. The government may make any needed regulations to protect flora and fauna.
Some provinces also have their own endangered species laws. For example, Ontario’s Endangered Species Act, 2007 came into force on June 30, 2008. Its purpose is to identify and protect Ontario native species at risk and their habitats, and to promote recovery of species at risk.
Noise, odours and vibrations
What are the main features of the rules governing noises, odours and vibrations? (e.g., limits of emission, authorities with regulatory power on noise, odours and vibrations, noise zoning, etc)
Noise, odour and vibration are regulated as part of air pollution; see above. They can also be common law nuisances. Many municipalities have enacted noise by-laws.
Liability for damage to the environment
Is there a general regime on liability for environmental damage? (If so, how is the scope of the regulation governing liability for damage to the environment defined? How is environmental damage defined? What are the main features of such regime?)
Both federal and provincial environmental legislation prohibit any activity that may cause damage to the environment. Individuals, corporations, corporate officers and directors may be prosecuted for environmental offences, and if convicted, are liable for large fines and/or prison terms. The “polluter pays” principle is evident in that penalties may also require that offenders pay significant amounts into environmental coffers, such as the federal Environmental Damages Fund (EDF); the monies are used to repair the actual harm done by the pollution, or allocated to fund projects in the community in which the pollution occurred.
In June 2009, the federal government passed the Environmental Enforcement Act, to amend nine existing environmental statutes and create the Environmental Violations Administrative Monetary Penalties Act ( in force December 10, 2010). It establishes minimum penalties and increases maximum penalties for environmental offences, make the liabilities and duties of corporate directors and officers consistent across statutes, and mandate that all federal environmental fines will be paid in to the EDF.
In addition, as indicated above, Canada has a vibrant system of common law and administrative law, which allows those damaged by pollution to sue those responsible. Class actions for environmental harm are growing in popularity. Québec has a legal system based on the French Civil Code, which recently resulted in a $15 million class action award for noise and dust from a non-negligent cement plant.
Is there any type of environmental tax? (What are the typical environmental taxes in your jurisdiction? What are the taxable events?)
There is no federal environmental tax. British Columbia and Québec have a carbon tax based on how much energy is used. There are also some fees for the generation of hazardous waste. Producers of certain products pay a provincial levy to fund recycling.
Hazardous activities and substances
Regulation of hazardous activities
Are there specific rules governing hazardous activities? (Do such activities require a licence? What are the main activities subject to these rules? Which authorities have power to control these activities, etc?)
A cooperative federal-provincial regime governs the transport of dangerous goods, under a series of related statutes with names like the Transportation of Dangerous Goods Act. Most other hazardous activities are regulated under the general environmental laws described above, or under special sector-specific laws such as the Atomic Energy Control Act or the Mining Act.
Regulation of hazardous products and substances
What are the main features of the rules governing hazardous products and substances? (What are the definitions of a ‘hazardous product’ and a ‘hazardous substance’? What is the legal procedure for making it marketable, etc?)
There are special rules on the use and reporting of hazardous substances, at the federal, provincial and now municipal levels.
Owners or operators of facilities that manufacture, process, use or release any of over 300 listed substances must report their pollutant releases, disposals and transfers each year to the National Pollutant Release Inventory (NPRI). Currently, over 8500 facilities report to the NPRI. This information is published by Environment Canada and is publicly available via the internet.
In addition, some provinces and one municipality require emitters to measure and report their emissions.
Specific substances may be regulated under the Canadian Environmental Protection Act as toxic substances.
Canada’s Hazardous Products Act (HPA) regulates the advertising, sale or import of products that contain is toxic or dangerous substances. The HPA may ban or restrict certain products from import, sale or advertisement in Canada. The Controlled Products Regulations under the HPA establishes the Workplace Hazardous Materials Information System (WHMIS), a national standard for classification of hazardous materials in the workplace. WHMIS requirements require employers to ensure that products used, stored, handled or discarded in the workplace are properly labelled and that Material Safety Data Sheets are available to workers. As well, workers must receive education and training concerning these products.
Exceptions are products that fall under other federal laws, such as the Explosives Act, Pest Control Products Act, Nuclear Safety and Control Act, and the Tobacco Act, and to hazardous wastes and certain other products. The Transportation of Dangerous Goods Act, 1992 imposes restrictions on transportation of goods that could be dangerous to the public should an accident occur.
As well, CEPA may also place restrictions on the substances used in some products, where these are deemed to be toxic. For example, substances may be added to the federal List of Toxic Substances, which is developed by the Ministers of the Environment and Health. New substances must undergo safety and environmental tests before they are imported or produced, under the New Substances Notification Regulation under CEPA.
Ontario has adopted a new law called the Toxics Reduction Act, 2009, which will require large facilities to develop inventories of toxic substances, and toxic substance reduction plans. Bans on the cosmetic use of pesticides are spreading across the country.
What are the regulatory requirements regarding the prevention of industrial accidents? (e.g., the need to file with the authorities prevention plans – both within the company and in relation to the community, measures to prevent the ‘domino’ effect, implications in urban planning)
Under CEPA’s Environmental Emergency Regulations, an environmental emergency (E2) plan is mandated for certain substances. Those who own or manage these substances at or above specified thresholds must report quantities on hand to the Minister, and the EEP must include the maximum quantity of the substance, the characteristics of the storage place and surrounding area that may increase risk of harm to humans or the environment, the type of environmental emergency that might occur at the place, and a description of measures that will be used to prevent, prepare for, respond to and recover from any environmental emergency, as well as a list of persons who will carry out the plan.
Provinces prevent workplace accidents through laws such as Ontario’s Occupational Health and Safety Act. Those with poor safety records must pay much higher rates under the worker’s compensation regimes.
Environmental aspects of transactions
Environmental aspects in M&A transactions
What are the main environmental aspects to consider in M&A transactions?
(Include the difference between acquisition of shares and acquisition of assets)
In a share purchase or amalgamation, the purchaser acquires all assets and liabilities of the target company. This can include liability for historic contamination, no matter how many years in the past. In some cases, an asset purchaser may acquire assets without historic environmental liabilities, but the purchaser always acquires responsibility for current contamination
Environmental issues typically negotiated in M&A transactions include:
- · Current environmental compliance (typically through compliance audits and representations and warranties);
- · Regulatory issues, such as orders/investigations;
- · transfer of permits and approvals, where permitted by law;
- · identification of, and allocation of liability for, environmental risks and liabilities, usually associated with contaminated sites, and identified through Phase I and Phase II environmental site investigations,
- · whether to remediate contamination, and if so how and at whose cost, and
- · civil disputes and lawsuits.
Environmental aspects in other transactions
What are the main environmental aspects to consider in other transactions? (e.g., financing, IPOs, real-estate transactions)
The main issues, typically, are
- · identification of, and allocation of liability for, environmental risks and liabilities, usually associated with contaminated sites, and identified through Phase I and Phase II environmental site investigations,
- · whether to remediate contamination, and if so how and at whose cost, and
- · related civil disputes and lawsuits
In some cases where a property is contaminated, but the surface of the site is safe for use, a purchaser or tenant may buy or lease a layer of the land above the groundwater, or merely the building above it. The purpose of this transaction is to ensure that the purchaser or tenant does not acquire possession or control of the contaminated layer, which is retained by the vendor together with responsibility for off-site migration of contaminants. This is known as a piecrust or bluefield arrangement.
Environmental impact assessment
Activities subject to environmental impact assessment
Which types of activities are subject to environmental assessment? (e.g., do environmental assessments act as a licence? Do they only cover industrial projects, or other non-industrial projects and programmes and plans as well?)
The federal Canadian Environmental Assessment Act (CEAA) applies to projects conducted by the federal government and to certain private sector projects, listed on the Inclusion List, that involve federal approvals, lands or funds. This includes many non- industrial projects. In the recent stimulus program, many federal EAs have been waived. The scope of projects subject to federal EA remains contentious, and is being reconsidered by the Supreme Court.
Most provinces also have environmental assessment requirements. In Ontario they apply primarily to public-sector undertakings; some private projects that compete with the public sector, e.g. roads, landfills, water and sewage works and electricity projects, are also covered. Some other provinces extend EA requirements to a broader range of private activity.
Regulations set out the classes or types of projects that are reviewable. Most projects are governed by class environmental assessments, which limit discretion, set out detailed requirements for the EA and almost guarantee approval. Very few projects undergo a full public hearing.
Federal and provincial EAs may be conducted jointly. Both are required to be performed early in the process, before irrevocable decisions are made. This does not always happen.
Environmental assessment process
What are the main steps of the environmental assessment process?
The main steps in EA are to evaluate the need for the project, alternatives to the project, and alternative methods of carrying out the project, in light of a very broad definition of environmental impact (including socio-economic and cultural factors.) This requires the proponent to propose a project and to study the environmental effects of the project and the alternatives. Recent amendments have allowed regulators to limit some of these steps through “scoping”.
Under CEAA, the responsible federal authority must identify which governmental bodies are involved and must plan the environmental assessment. There are four options for a federal assessment: screening, class screening, comprehensive study and review panel. Although almost all projects go through a screening, the responsible minister may order a comprehensive study or review panel. Similarly, the provincial ministers have discretion to order a more detailed individual EA of a controversial project.
Provincial environmental assessments also include some environmental investigation and public consultation. To limit the cost and time requirements of EA, provinces often use scoping and class approvals. Some green projects are entitled to less onerous environmental assessment processes.
Public consultation is mandatory at different stages of an environmental assessment, including a growing duty to consult with aboriginal groups. The public must generally be given notice and an opportunity to comment early in the process and again before a final decision is made. The decision-maker must consider public comments and either order additional study or approve or deny the project.
Which authorities are responsible for the environment and what is the scope of each regulator’s authority? (e.g., who may impose sanctions? Who may grant permits or subsidies?)
Every jurisdiction has an environmental ministry of some form, but environmental responsibilities can be widely shared within each government. For example, under federal environmental laws, the following Ministers are responsible for administration of the principal statutes:
- · Minister of the Environment: CEPA, SARA, CEAA, the Migratory Birds Convention Act, 1994, Canada Wildlife Act;
- · Minister of Fisheries and Oceans: Fisheries Act and the Oceans Act;
- · Minister responsible for Parks Canada: Canada National Parks Act and the Canada National Marine Conservation Areas Act;
- · Minister of Health: Hazardous Products Act
- · Minister of Transport: Transportation of Dangerous Goods Act, 1992
The provinces often have similar duplication, and municipal governments also regulate many environmental activities.
In Canada, regulators, abatement officers and government ministers generally have broad discretionary powers. Decisions regarding permits must generally consider the ‘public interest’ and economic issues as well as environmental ones.
Some environmental legislation mandates certain actions. For example, under CEPA, the federal government must enact regulations to control risks from substances that have been officially classified as toxic.
What are the typical steps in an investigation?
Unlike an inspection, which is conducted to determine compliance, the purpose of an investigation is to gather evidence in order to prosecute an offence. In both the federal and provincial regimes, investigations may take place without notice. Typically, enforcement officers (and sometimes police) attend on site with a search warrant. They meet with the owners/operators, collect samples for analysis and examine records and other documents, including electronic data, and make copies of them. They may also interview potential witnesses and may videotape aspects of the investigation. Anything that the enforcement officers reasonably believe is related to commission of an offence or that will provide evidence of an offence may be seized. The investigator and Crown counsel will decide whether there is sufficient evidence to proceed with a prosecution.
Powers of regulatory authorities
What powers of investigation do the regulatory authorities have?
Abatement officers are typically authorized to enter private property, inspect and copy paper and electronic records, question employees, see machinery operate and take samples, upon production of their identification. With prior judicial authorization, they can use force. They have limited powers to seize evidence of offences.
Investigators are more restricted in their powers once they have reasonable and probable grounds to believe that an offence has been committed. They cannot enter private property without permission, except with a judicially authorized search warrants.
What is the procedure for making administrative decisions?
Environmental statutes commonly provide for administrative decisions: for example, environment ministries or Ministers may make decisions to approve projects or to grant or refuse licences, permits or approvals based on advice given by ministry personnel. Public feedback is frequently required to assist the decision-maker, although public hearings are typically not held at this stage. Public hearings are quasi-judicial, with procedures that are similar to court procedures. The process is less formal, with less stringent rules of procedure and evidence.
Sanctions and remedies
What are the sanctions and remedies that may be imposed by the regulator for violations?
An enforcement officer or senior official may issue a wide variety of administrative orders. They can require a violator to stop or limit discharges of pollution, to monitor or study pollution, to make reports or to remediate contamination. In extreme cases, they can order an offender to stop operations.
Most environmental statutes create a variety of offences, such as failing to comply with an order or permit, discharging too much pollution, failing to make required reports, etc. Officers and directors often have personal liability for offences committed by their corporations.
These offences can be prosecuted in the criminal courts. If prosecuted and convicted, offenders may be subject to substantial fines or prison. In addition, several statutes give courts authority to make numerous remedial orders, including restitution, publication, remediation or some form of public service.
Civil penalties are also used in some jurisdictions, such as British Columbia, Alberta and Ontario. There is no due diligence defence available to such penalties; efforts to prevent or mitigate an offence are only a factor for reduction of the penalty and not a defence. The same offence may be the subject of both civil and criminal penalties.
Appeal of regulators’ decisions
To what extent may decisions of the regulators be appealed, and to whom?
Most Canadian statutes provide a statutory right to appeal an administrative decision to a tribunal, board or court or to a government minister or Cabinet, usually within 15 or 30 days. Usually, these deadlines cannot be extended. There may also be a right to first request an internal review by a more senior official. There is usually no automatic stay of the order pending appeal. A party to a hearing before a tribunal may (usually) appeal to a court from its decision on a question of law.
Are environmental law proceedings in court civil, criminal or both?
The procedural provisions of the Criminal Code apply to CEPA charges, and a conviction for these charges results, in some senses, in a criminal record. This can affect a convicted person’s ability to travel, and to obtain certain forms of employment.
Provincial prosecutions take place in the criminal courts, but are not fully criminal, and do not result in a criminal record. More relaxed procedural rules apply.
Tort cases, breaches of contract, appeals from tribunals and similar proceedings take place in the civil courts.
Powers of courts
What are the powers of courts in relation to infringements and breaches of environmental law?
Criminal courts can impose fines and jail. As mentioned above, some statutes give courts broad powers to make remedial orders in the context of a conviction for an environmental offence.
Civil courts can award damages and also have a rarely used power to provide injunctive relief.
Are civil (contractual and non-contractual) claims allowed regarding breaches and infringements of environmental law?
Civil claims may be made for breach of contract, or in tort, for nuisance (public or private), negligence, trespass, and strict liability (also called Rylands v. Fletcher, from the UK House of Lords case). Recently, the scope of application of Rylands v Fletcher was narrowed significantly by an Ontario Court of Appeal (CA) decision. The CA overturned the trial decision in Smith v. Inco, a class action lawsuit relating to loss in property value from historic nickel contamination by a refinery. The decision limits Rylands v Fletcher to unexpected and unintended mishaps, not intentional emissions, and the CA found that refinery operations did not constitute a “non-natural use” of property. The CA also reduced the scope of private nuisance claims based on historic contamination, holding that the mere presence of contaminants on property does not constitute actual, substantial physical damage to the property, unless it creates an actual risk to human health or otherwise interferes with the normal use of that property. The plaintiffs will seek leave to appeal the decision to the Supreme Court of Canada.
In some cases, claims based on breaches of statutory duty may be asserted. However, provinces have specifically granted statutory immunity from prosecution to municipalities, for example, for certain nuisances (e.g., most sewage backups).
Defences and indemnities
What defences or indemnities are available?
Due diligence is the most common defence to an environmental offence or civil suit. Where a defendant took all reasonable steps to prevent the commission of an offence, or reasonably believed in a mistaken set of facts that would have justified his/ her action/ inaction, he or she will usually escape conviction. What constitutes ‘due diligence” will depend on the circumstances and is determined by the court or tribunal on a case-by-case basis. The standard is generally high, and rising. As mentioned above, due diligence is not a defence to administrative penalties.
Parties may indemnify each other for environmental liabilities, and such indemnities will generally be enforced.
Where an administrative order is directed to more than one person, those persons are generally jointly and severally liable for complying with the order, and can then seek contribution and indemnity among themselves. Joint and several liability can also arise in civil torts such as nuisance or negligence.
Most provinces have a two-year limitation period for environmental offences, meaning that a prosecution cannot be brought after two years from the later of the date of the offence or the date that the minister/ ministry became aware of the offence. The Northwest Territories and Nunavut have a three-year limitation period. Similar limitation periods apply to civil cases (minus the exception for the Minister’s knowledge). They can be extended if the pollution is undiscovered or continuing to flow.
Directors’ or officers’ defences
Are there specific defences in the case of directors’ or officers’ liability?
Canadian environmental legislation usually imposes liability on directors and officers of corporations (and sometimes agents or employees). Under CEPA, if a director, officer or agent of a corporation assented to, or participated or acquiesced in the commission of an offence, that person is guilty of the offence, whether or not the company is prosecuted.
It is the duty of an officer or director to ensure that the corporation complies with applicable environmental law.
Most provincial environmental legislation also imposes liability on directors and officers, especially for acts in which they participate. In some cases, officers and directors have a positive duty to take all reasonable care to prevent the contravention of environmental laws, especially in relation to more serious offences relating to actual pollution or hazardous waste.
What is the appeal process from trials?
Convictions may be appealed once, without leave, to higher courts, and further with leave. Decisions of all civil courts are appealable to courts of appeal. Tribunal decisions can usually be appealed, in some cases with leave, to the civil courts.
International treaties and institutions
Is your country a contracting state to any international environmental treaties, etc?
According to the Canadian Department of Foreign Affairs and Trade, Canada is a contracting state to well over 130 environmental bilateral and multilateral treaties, such as the Framework Convention on Climate Change, the Convention on Biological Diversity, the Kyoto Protocol, the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal, the Convention on the Trade in Endangered Species, the Convention on Nuclear Safety and the Montreal Protocol on Substances that Deplete the Ozone Layer.
Canada also has numerous agreements with the United States, such as agreements on shared resources such as the Great Lakes and on cross border movement of hazardous wastes. The North American Free Trade Agreement, between Canada, the US and Mexico, also affects environmental matters, and has been invoked in several environmental disputes.
International treaties and regulatory policy
To what extent is regulatory policy affected by these treaties?
To a significant extent. Canada usually endeavours to meet its obligations under environmental treaties with appropriate legislation. For example, it meets its Basel Convention and US treaty obligations through the Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations under CEPA. Canada has sometimes been forced to alter its regulatory policy by s. 11 investor lawsuits under NAFTA. For example, attempts to direct all PCBs to an Alberta destruction facility, and to ban methyl tertiary-butyl ether (MTBE) in auto fuel, were found to be in restraint of trade.
One major challenge of Canada’s federal structure is that international treaties often affect areas of provincial jurisdiction, and the federal government cannot compel the provinces to implement legislation to give effect to them. Québec is particularly resentful of federal demands in this regard.
Updates and Trends
Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?
Over the past several years, a number of provinces have enacted legislation to promote the use of clean energy and reduce greenhouse gases (GHG), which directly targets global warming. For example, through its Climate Change and Emissions Management Act (CCEMA) and Specified Gas Emitters Regulation, Alberta regulates GHG emissions from large industrial emitters. Under British Columbia’s Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act, the province can set standards for the renewable fuel content in B.C.’s transportation fuel blends.
Ontario’s Green Energy Act, 2009 exempts renewable energy projects from a wide range of municipal and provincial approvals, and has contributed to a rapid growth in renewable electricity generation. This Act introduced North America’s first comprehensive feed-in tariff (fixed-price contract) program that guarantees specific rates for energy generated from renewable sources. It is designed to encourage the development of renewable energy projects by a range of generators, including First Nations and Métis communities, homeowners, farmers, schools, stores, factories, co-ops, offices and larger-scale commercial generators.
Unfortunately, Canada’s federal government has not responded to climate change imperatives. In October 2011, Canada’s Commissioner of the Environment and Sustainable Development released his report, as required under the Kyoto Protocol Implementation Act (KPIA). Not only is Canada not on track to meet its GHG emissions target under the Protocol, its 2008 emissions exceeded the Kyoto target by 31 percent. Of note, these 2008 emissions also exceeded 1990 emissions by 24 percent. The Commissioner also found that the federal climate change plan lacks information required under KPIA and key management systems it needs to achieve, assess and report on GHG emission reductions — despite over $9 billion having been allocated under the plan to reduce these emissions.
In 2010, the federal government committed to a GHG emission reduction target of 17 percent (relative to its 2005 emission levels) by 2020, under the Copenhagen Accord, which targets GHG emission reduction following the Kyoto commitment period, which ends in 2012. In January 2011, Environment Canada reported that the government is on target to generate about 25 percent of reductions needed to achieve the 2020 target. In 2011, Canada officially revoked its Kyoto commitments, and is no longer a party to the Protocol.
A major concern in Canada is the potential liability of municipalities for failing to protect against foreseeable damage relating to matters that fall under their jurisdiction, including erosion, sewer and storm water, fire and floods. For example, sewage and storm water infrastructure in many municipalities is being built to standards based on historical weather patterns, not the severe weather events that lie ahead.
Dianne Saxe and Jackie Campbell
Reproduced with permission from Law Business Research. The original version of this article was first published in Getting the Deal Through – Environment 2012 – Online Edition, (uploaded in November 2011). For further information please visit www.GettingTheDealThrough.com