Ontario’s proposed Framework for approval reform should get strong business support. But an unadvertised detail on page 21, not mentioned in any of the summaries, may give some organizations concern:

the Ministry is proposing changes that would allow the Ministry to assign responsibility for cleanup and costs to a parent company where financial assurance was absent or inadequate.

Should parent companies pay?

The current system of financial assurance has not worked very well.
For decades, Ontario taxpayers have been picking up the bill for environmental cleanups where polluters put up too little, or no financial assurance. In case after case, the ministry’s own calculations of how much financial assurances necessary have proved to be inadequate. In the Detox decision mentioned last week, Ministry witnesses admitted that, in the 30 cases where they have called on financial assurance, it has never once been sufficient. In General Chemical, the Ministry had approved financial assurance of $3.5 million just before the company restructured, abandoning a lagoon that would cost at least $12 million more. The Ministry settled its claim against the officers and directors for several million dollars, but that still left the taxpayer with a big bill.

There have been a few cases where cleanup liability has successfully been imposed on parent companies, but this has always been difficult. Now, the Ministry wants to make it the norm. This should add some surprising complications to a wide variety of transactions.