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The seemingly never-ending litigation related to a spill of furnace oil fuel in the City of Kawartha Lakes is inching closer to resolution.

In Technical Standards and Safety Authority v Kawartha Lakes, 2016 CanLII 41685 (ON ERT) the Environmental Review Tribunal (the “Tribunal”) tackled the issue—apparently for the first time—of who can be ordered by a municipality under section 100.1 of the Environmental Protection Act (“EPA”) to provide compensation for clean-up of contamination caused by a spill.

The facts and implications of this case have been analysed ad nauseam. Back in December 2008, a spill of furnace oil occurred on a private property. The oil migrated off the property through a neighbouring property owned by the Kawartha Lakes and into an adjacent lake. When the private property owners ran out of funds to pay for the clean-up, the Ministry of Environment and Climate Change (the “Ministry”) surprisingly ordered Kawartha Lakes, as a flow-through property owner, to complete the remediation. Kawartha Lakes then in turn used its power under section 100.1 to order compensation for the clean-up from the private property owners, who subsequently appealed the section 100.1 orders issued by Kawartha Lakes.

One of the private property owners argued that she was not properly named in Kawartha Lakes’ section 100.1 order as she was not residing at the property when the spill occurred. Kawartha Lakes argued that because she had been properly named in a section 157.1 prevention order issued by the Ministry, she must also be liable under section 100.1.

Interestingly, the Tribunal rejected Kawartha Lakes’ argument, finding that although the EPA must be interpreted broadly, sections 100.1 and 157.1 are substantively distinct provisions. While under section 157.1 a Ministry officer may issue a prevention order against “any person who owns or who has management or control of an undertaking or property”, section 100.1(1) empowers a municipality to issue a clean-up order against “the owner of [the] pollutant or the person having control of the pollutant” [emphasis added]. Although the one property owner was an owner of the property, she never actually resided at the property and never had ownership, management, or control of the furnace oil at any time. As such, the Tribunal found she was not a proper section 100.1 orderee and revoked the order as directed against her.

Together, both of the private property owners also argued that Kawartha Lakes’ section 100.1 order failed to comply with the requirements of section 100.1(3), which requires such an order to include:

(a) a statement identifying the spill to which the order relates;

(b) a description of things for which the municipality or local board incurred costs or expenses for a purpose referred to in subsection (1);

(c) a detailed account of the costs and expenses incurred in doing the things; and

(d) a direction that the person to whom the order is issued pay the costs and expenses to the municipality.

 Although the Tribunal made clear that it did not condone Kawartha Lakes’ approach—which was light on details in some respects—it refused to grant an appeal on this basis.

They further argued that Kawartha Lakes was seeking costs that were not related to costs incurred in preventing, eliminating, and ameliorating adverse effects to the environment, as required by section 100.1(1), particularly insofar as the environmental consultant it had hired was providing “consulting services” as opposed to undertaking actual remediation work. The Tribunal rejected this argument. It found that consulting work that includes monitoring could fall within the wording of section 100.1(1) where there has been a spill and a continued risk of migration or discharge.

Finally, the private property owners further argued that the costs incurred by Kawartha Lakes were “unreasonable having regard to what was done,” which would be a breach of section 100.1(15)(b)(ii). The Tribunal acknowledged that the clean-up and prevention work could have been done more effectively at a lower cost, but ultimately rejected this argument. Kawartha Lakes had not participated in the early post-spill stages of the clean-up (when things might have been done more inexpensively), and the costs ultimately incurred were not unreasonable. Assessing reasonableness, the Tribunal concluded, does not involve simply identifying the lowest cost option that could have been adopted and concluding that all other options are unreasonable.

The Tribunal also confirmed that the proper scope of a section 100.1 hearing is narrow and defined solely by section 100.1(15).

To our knowledge, this is the first time the Tribunal has ruled on the validity of a municipal order under section 100.1. As a result of this decision, municipalities can expect that their capacity to obtain section 100.1 compensation will be limited to issuing orders against those in management and control of spilled contaminants—establishing a party’s ownership of a property may not in itself be enough to ground an order against them. Municipalities should also expect tribunals to thoroughly scrutinize expenses incurred and details surrounding such as part of any remediation that they undertake prior to issuing a section 100.1 order, and so should take steps to ensure the costs it incurs are reasonable, thoroughly detailed, and properly accounted for.

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