s quÉbec’s contaminated soil regime: is the...
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S P R I N G 2 0 0 1
EN
VIR
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S Q U É B E C ’ S C O N TA M I NAT E D S O I L R E G I M E :I S T H E “ P O L L U T E R PAY S ” P R I N C I P L E S O O N TOB E H I S TO R Y ?Christine Duchaine (Montréal)
In December, 2000 the Government of Québec introduced an Act to amend
the Environment Quality Act with regard to land protection and remediation
(“Bill 156”) which will drastically change obligations concerning
contaminated land and responsibility for remediation. Pursuant to these
proposed provisions, owners and occupiers of contaminated sites, and
ultimately secured lenders, who did not cause the contamination could be
financially impacted and even responsible for remediation. Remediation
will also become mandatory in certain circumstances.
The Québec Environment Quality Act currently imposes no obligation to
restore a contaminated site. The Minister of the Environment can, however,
issue characterization or remediation orders (“Ministerial Orders”)
pursuant to the Act. Such orders may only be issued to those who have
contaminated a site in whole or in part. The government’s existing
“polluter pays” principle means that owners and occupiers who did not
contribute to the contamination of a site assume none of the cleanup costs.
Bill 156 introduces a diametrically opposite approach. The equitable
“polluter pays” principle may soon be gone in Québec.
Bill 156 would permit Ministerial Orders to be issued against (1) any entity
which contributed to or allowed the contamination of the site, or (2) any
entity which has or had ownership, custody or control of the contaminants.
The principle concern is with the second category since no exceptions
currently exist, unlike in other provinces where there are secured creditor,
innocent purchaser and/or migrating pollution exemptions. As such, this
proposition extends liability beyond that imposed anywhere else in
Canada. For example, in other provinces, such as British Columbia, prior
owners and operators may be liable but if they did not cause the pollution
they may qualify for an exemption. If adopted, Bill 156 will inevitably
impact property value as well as restrict the ability to sell, lease and finance
contaminated land.
I N T H I S I S S U E
1
Québec’s Contaminated
Soil Regime
4
Case Digests
5
Legislative Digests
7
Policy Initiatives
S P R I N G 2 0 0 12
Ever
yone
who
ow
ns o
r ow
ned,
occ
upie
s or
occ
upie
d, o
r be
nefit
s fr
om s
ecur
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ated
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in Q
uébe
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atel
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Regulated contamination levels are a key component of Bill 156. A
regulation will set the concentration levels of various contaminants
above which a site will be considered contaminated. The Ministry
has already indicated that these new standards will correspond to the
Criteria A, B and C (natural state, residential and commercial/
industrial use) presently contained in a non-binding Ministry Policy
issued in 1988 and subsequently replaced in June 1998. Until now,
these criteria were proposed only as guidelines and were not
considered remediation objectives. Pursuant to Bill 156, these criteria
will take on an unexpected importance by becoming minimum
standards. Ministerial Orders could be issued whenever the level of
concentration of a contaminant exceeds these criteria or, without
exceeding or being subject to them, “will be likely to adversely affect
the life, health, safety, welfare and comfort of human beings, other
living species or the environment in general, or to be detrimental to
property”.
A Ministerial Order will trigger a series of events that could have
tremendous impact on its recipient and on the prior, current and
subsequent owners and occupiers of the site. If a characterization
study reveals the presence of contaminants in excess of the above-
mentioned criteria, a notice of contamination will be registered
against title to the property and the land will be added to a list of
contaminated sites kept by the Ministry and by the municipality
where the site is located. No construction or subdivision permit may
be issued by the municipality in respect of a listed property prior to
submission of a satisfactory remediation plan. In any event, a
remediation plan will have to be filed with, and accepted by, the
Ministry. A summary of the remediation plan will then be registered
against title to the land and this plan will become enforceable against
third parties, including subsequent owners, occupiers and secured
creditors. As part of the conditions of the plan, restrictions
concerning the use of a site could be imposed.
E N V I R O N M E N T A L3
Bill 156 will also apply to other situations including: the voluntary remediation of a contaminated site;
whenever contaminants remain in the land; the commencement and cessation of certain commercial and
industrial activities; and, the change in use of certain sites.
In order to undertake certain commercial or industrial activities to be listed in a regulation, the entity
proposing to engage in such an activity will have to undertake to monitor and control the quality of the
underground and surface water and will have to provide the Ministry with a characterization study
determining the initial state of the land, a remediation plan to be implemented upon final cessation of
operations and financial guarantees to ensure implementation of the remediation plan. A draft list of
designated activities is already available. The list contains most of the sectors likely to alter the quality of
the environment.
In the case of a new enterprise, the obligation will be limited to restoring the site to its initial state.
Operations existing at the coming into force of Bill 156, however, will have to completely rehabilitate the
site after closure. The Ministry considers limiting the exposure for new businesses an incentive to use
contaminated sites, instead of virgin lands, for the establishment of potentially polluting activities.
Nonetheless, the potential liability relating to such sites may discourage their use by subsequent owners
or occupiers. The change in use of such land will be subject to its remediation to the extent necessary to
render the land compatible with its projected use. Where contaminants remain in the site, the change in
use must also be submitted for public consultation.
Bill 156 will also require written notice to neighbouring landowners whenever contamination above the
regulated limits is found at property boundaries or when an owner learns of a serious risk of migration.
The notice must also be sent to the Ministry.
Finally, various fines are proposed, including for the failure to request the registration of a notice of
contamination on title or to notify neighbouring property owners of the existence of contamination. In
addition, should someone fail to perform a characterization study or fail to carry out a remediation plan,
the Minister may take any measures necessary to remedy the default and then recover its costs from the
offender. The amount due is secured by a legal charge on all the assets of the offender, both movable and
immovable.
Obviously, Bill 156 is of grave concern to all industrial and commercial sectors. A parliamentary
commission was recently held to receive submissions from interested parties. Although Bill 156 will most
probably be modified prior to its adoption, everyone who owns or owned, occupies or occupied, or
benefits from securities on contaminated land in Québec should immediately assess the implications of
Bill 156 and prepare adequately for the coming into force of this unprecedented legislation.
S P R I N G 2 0 0 14
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.C A S E D I G E S TS
B . C . W A S T E M A N A G E M E N T A C T
G I V E N F U R T H E R C O N S I D E R AT I O N
In the Fall 2000 edition of the Law News we
reported on O’ Connor v. Fleck (July 26, 2000)
and Swamy v. Tham Demolition (August 24,
2000), the first two decisions of the B.C.
Supreme Court to deal with the application and
interpretation of the private cost recovery cause
of action created by the contaminated sites
provisions of the Waste Management Act. On
November 24, 2000 the Court released an
additional decision considering the
contaminated site remediation provisions of the
Act: Beazer East, Inc. v. B.C. (Environmental
Appeal Board).
The Beazer decision suggests, contrary to the
finding in Swamy, that a plaintiff need not seek
findings by and relief from administrators under
the Act’s contaminated sites process and then
exhaust all statutory appeals and judicial review
proceedings prior to instigating a cost recovery
action. In addition, the decision confirms that
although a parent corporation will not be found
liable for a site contaminated by a subsidiary on
the basis of its share ownership, it may be found
liable on the basis that it exercised a sufficient
degree of control over the subsidiary’s
operations at the site.
In 1997 the Ministry of Environment issued a
Remediation Order in respect of a site located
adjacent to the Fraser River in Burnaby, B.C. The
Order named as responsible parties CN Rail (as
prior owner of the site), Beazer East, Inc. (as a
prior owner and operator of the site) and Atlantic
Industries Ltd. (as a prior operator of the site). The
site was contaminated as a result of a wood
treatment operation carried on at the location from
1931 to 1982. Throughout this period, the site was
owned by CN Rail and was leased to the operator of
the wood treatment business (“Op. Co.”). From
1969 to 1988 Beazer was the parent company to
Op. Co. until the subsidiary that owned Op. Co.
was sold. In 1993 Op. Co. merged with and carried
on as Atlantic.
The Court overruled the Environmental Appeal
Board’s decision (reported in the July 2000 edition
of the Law News) that Beazer was a “previous
owner” of the site, reasoning that notwithstanding
the fact that a parent corporation may have de facto
control over the use of a subsidiary’s assets (i.e.
through effecting a change in directors), it does not
have the legal right to control the use of such
assets. (It should be noted that the Court only
considered the one aspect of the definition of
“owner” that the Board had considered in reaching
its decision.) The Court did, however, uphold the
Board’s conclusion that Beazer was a “previous
operator” of the site on the basis that a person who
makes decisions with respect to an operation is “in
control” of the operation and a person who has the
authority to make decisions with respect to an
operation is “responsible” for the operation.
The Court also held that a Remediation Order need
not name the person or persons who contributed
most substantially to a site becoming contaminated
if it would jeopardize the remediation of that site.
Similarly, the Court held that an enforceable private
E N V I R O N M E N T A L5
agreement made between “responsible persons”,
in which one party assumes responsibility for the
contamination of a particular site, may be
disregarded if omitting the name of the absolved
party from the Remediation Order would
jeopardize the remediation of the site. Finally, it
is of note that the Court rejected the argument
that equity and fairness must be considered in
determining who should be named in a
Remediation Order.
N E W B E A Z E R O R D E R
On December 19, 2000 the Ministry of
Environment issued a revised Remediation Order
to CN Rail, Atlantic Industries Ltd. and Beazer
East Inc. requiring aggressive and costly cleanup
at the Big Bend site in Burnaby. The Order
requires installation of hydraulic controls
(estimated capital cost of $10 million plus
annual operating costs between $240,000 and
$750,000), dredging of contaminated sediments
in the Fraser River (estimated at $19 million to
$24 million), capping of river sediments,
monitoring, reporting and posting of financial
security. The Ministry rejected a less expensive
and less aggressive risk assessment approach
citing a preference for “permanent solutions”
and a concern over the level of pollution to the
River. The Ministry has agreed to consider the
installation of a wharf as an innovative
alternative (and one that would substantially
reduce the need for and cost of dredging) to cap
contamination and block site seepage.
The Ministry’s reasons illustrate the need for
solid expert consultant assistance, particularly at
large, complex sites. All parties have appealed to
the Environmental Appeal Board.
C O M P L I A N C E N O B A R T O
C R I T I C I S M
The B.C. Court of Appeal has held that the Forest
Practices Board is within its jurisdiction in
levelling criticism at a forest company’s practices
even where such practices comply with the Forest
Practices Code: Northwood Inc. v. Forest Practices
Board (February 28, 2001).
In auditing Northwood’s compliance with the
Code the Board had noted that certain of
Northwood’s activities, while compliant, were
“not consistent with sound forest practices”. The
Board went on to recommend Northwood
change its practices and that a regulation under
the Code be amended to require better practices
in the future. Northwood had sought a
declaration that the Board did not have the
power to make such criticisms or
recommendations.
L E G I S L AT I V E D I G E S TS
O N TA R I O G E T S T O U G H W I T H
P E N A L T I E S
Ontario’s Toughest Environmental Penalties Act,
2000 received Royal Assent on November 21,
2000. The Act amends the Environmental
Protection Act, Ontario Resources Act and Pesticides
Act.
In each amended Act, maximum fines for
corporations have been increased from $1
million to $6 million per day on a first
conviction and from $2 million to $10 million
per day on subsequent convictions. Maximum
S P R I N G 2 0 0 16
fines for individuals have been increased from
$100,000 to $4 million per day on a first
conviction and from $200,000 to $6 million a
day on subsequent convictions. The maximum
period of imprisonment for individuals has
been increased from two years less a day to five
years less a day.
The Ontario Ministry of the Environment
announced recently the total amount of fines
imposed for environmental offences in the past
year. As of December 5, 2000 fines for the year
totaled $2,628,790, up over $1 million from the
1991 figure. The number of charges laid by MOE
also increased in 2000. As of December 5, 2000
there were 1,520 charges laid compared with a
total of 1,216 in all of 1999.
MOE has also introduced environmental
“SWAT” teams whose goal is to provide a
mobile compliance and enforcement unit
focused on companies and individuals that defy
environmental laws. The “SWAT” team’s 65
members are expected to carry out more than
1,000 inspections each year.
B . C . U R B A N F I S H H A B I TAT
P R O T E C T E D
On January 19, 2001 the Streamside Protection
Regulation was passed under the Fish Protection
Act. The purpose of the Regulation is to preserve
“streamside protection and enhancement areas”
from residential, commercial and industrial
development. These protected areas or buffer
zones are to extend 5 to 30 metres beyond the
outer edge of stream banks. The width of the
required buffer zone depends upon the existing or
potential vegetation conditions in the area and on
the characteristics of the given steam. Even non-fish
bearing streams and streams that are non-
permanent require buffer zones, as do some
ditches.
The Regulation does not provide for the
compensation of land owners even though some
private lands will become ineligible for
development.
The Regulation will be phased in throughout B.C.
over the next five years and will initially apply only
to local governments in the Lower Mainland, the
Southern Interior and on the east side of Vancouver
Island.
O N TA R I O ’ S W A S T E M A N A G E M E N T
R E G U L AT I O N R E V I S E D
Effective March 31, 2001 Ontario’s general Waste
Management Regulation 347 was amended to
provide for the addition of a “derived from” rule
and the adoption of a new toxicity characteristic
leaching procedure in place of the existing leachate
extraction test. The latter amendments will require
the use of a Toxicity Characteristic Leaching
Procedure (TCLP) to determine if waste is
hazardous. The new procedure tests for 88
contaminants.
The “derived from” rule states that any listed
hazardous waste will keep its classification until it
can be clearly demonstrated that it is no longer
hazardous. The schedule of hazardous wastes has
also been updated to include 129 new chemicals
and industrial processes.
MO
E ha
s al
so in
trod
uced
env
ironm
enta
l “SW
AT”
team
s w
hose
goa
l is
to p
rovi
de
a m
obile
com
plia
nce
and
enfo
rcem
ent
unit
focu
sed
on c
ompa
nies
and
indi
vidu
als
that
def
y en
viro
nmen
tal l
aws.
E N V I R O N M E N T A L7
P O L I C Y I N I T I AT I V E S
O N TA R I O M I N I S T R Y A N N O U N C E S
B R OW N F I E L D S L E G I S L AT I O N
In September, 2000 the Ontario Ministry of
Municipal Affairs and Housing, in conjunction
with the Ministry of the Environment and the
Ministry of Economic Development and Trade,
appointed an advisory panel to explore means of
facilitating the cleanup and redevelopment of old
industrial and commercial properties, known as
“brownfields” sites.
The advisory panel issued its advice to the
Ministries in November, 2000. The panel’s
advice included a number of significant changes
in provincial legislation, such as:
• limiting lenders’ liability;
• liability limitations for municipalities;
• limiting liability of non-polluter owners and
developers;
• an improved site certification process; and
• enabling municipal incentive programs to
redevelopment, including tax incentives.
On March 2, 2001 the Minister of Municipal
Affairs and Housing announced that legislation
will be introduced this Spring incorporating
many of the panel’s recommendations.
N E B A N D M V E I R B S I G N M O U
In December, 2000 the National Energy Board
and the MacKenzie Valley Environmental Impact
Review Board signed a Memorandum of
Understanding for cooperation between the two
Boards with respect to environmental
assessments of resource development projects in
the North.
The MacKenzie Valley Environmental Review Board
is responsible for conducting environmental
assessments and impact reviews within the
MacKenzie Valley and is given the authority and
responsibility to coordinate its environmental
impact assessment activities with other parties.
The NEB regulates the construction and operation
of various types of resource development projects
in the Territories, such as oil and gas production
and processing and transmission facilities. As such,
under the Canadian Environmental Assessment Act
and the National Energy Board Act, the NEB is
responsible for environmental impact assessments
in areas outside the MacKenzie Valley. The NEB
may also be jointly responsible for environmental
impact reviews of projects under NEB jurisdiction
within the MacKenzie Valley.
The Memorandum of Understanding sets out a
general framework for cooperation between the
two regulators in carrying out their respective
environmental impact assessment responsibilities.
The purpose is to minimize duplication of effort
(for the regulators, project proponents and affected
parties), to provide for timely review of
development proposals and to increase certainty
for projects subject to environmental impact
assessment in the MacKenzie Valley. The MOU
contemplates that the two Boards will enter into
further project specific agreements for the conduct
of environmental assessments and reviews of
projects within NEB jurisdiction in a manner
which is consistent with the purposes and
principles of the MOU.
S P R I N G 2 0 0 1
The Borden Ladner Gervais LLP Environmental Law News is
necessarily of a general nature and cannot be regarded as legal
advice. The firm would be pleased to provide additional
details and to discuss the possible effects of these matters in
specific situations.
Our Environmental group is chaired by:
G. Ross Switzer (Vancouver)
(604) 640-4150
Our environmental group regional contacts are :
Calgary Montréal
Jonathan Liteplo Christine Duchaine
(403) 232-9653 (514) 954-2529
Ottawa Vancouver
Peter Doody William K. McNaughton
(613) 787-3510 (604) 640-4120
Toronto
F.F. (Rick) Coburn
(416) 367-6038
To obtain additional copies of the Borden Ladner Gervais LLP
Environmental Law News or to change your mailing address,
please contact the editor. Or, visit our website at
www.blgcanada.com where you can view the Environmental
Law News or other Borden Ladner Gervais LLP publications.
E D I TO R
Jonty Bogardus
tel: (604) 640-4227
email: [email protected]