On September 17th BLG held our annual Ontario Environmental Seminar. This newsletter summarizes a number of topics covered at that event. If you would like to be included on the invitation for future Environmental seminars, please contact Rick Coburn at 1.416.367.6038 or by email at rcoburn@blg.com.

Project Development Under the New Fisheries Act Scheme

In 2012, several significant changes were made to the Fisheries Act (the Act) and more were announced but are not yet in force. In 2013 we have seen some draft regulations and policy announcements giving some sense of direction but leaving many questions unanswered. The new amendments, once fully implemented, will impact the Act’s purpose, its language, and the approval process for future projects.

Some major changes to and coming to the Act include:

  1. a shift in the Act’s focus from protecting all fish habitat to protecting the productivity of three specific fisheries (commercial, aboriginal, and recreational), the fish that support those fisheries and their associated habitats;
  2. a new broad goal of “making sure [the three types of fisheries] are productive and sustainable for future generations”;
  3. a definition of “serious harm to fish” limited to the permanent alteration to, or destruction of, fish habitat and applying only to the three protected fisheries and the fish that support them; and
  4. a new duty to report harm to habitat where an unauthorized occurrence results in serious harm to fish that are part of the three protected fisheries and the fish that support them.

The Act will provide for new mechanisms to obtain project approval. Projects will be able to be approved as prescribed by regulation, as authorized by the Minister, or as authorized by another entity that has been set up to allow authorizations on behalf of the Minister. Project approval conditions will be enforceable: a violation of the conditions imposed by the project approval authority will be an offence.

The Act’s existing section 35 project approval process will remain available but there will be an expanded requirement to provide plans and specifications. These requirements are extensive and may well impact the cost and timing of approvals. New statutory factors will be a mandatory requirement, considered for every project approval, focusing on the ongoing productivity of commercial, recreational or aboriginal fisheries. These factors will include: the contribution of the fish impacted by the project to the ongoing productivity of commercial, recreational or Aboriginal fisheries; fisheries management objectives which means the socioeconomic, biological and ecological goals of the relevant fishery; measures by the project to avoid, mitigate or offset serious harm to fish; and the public interest. Submissions for approval will need to address all these factors.

Although not yet clear since the regulations are still under development, these project approval mechanisms and approval factors, along with the government’s announced intent of fewer submissions and fewer permits, suggest that economic factors such as jobs and the benefit to the local economy may come into play for getting project approval. However, the policy announcements by Department of Fisheries and Oceans (DFO) would suggest the bureaucracy is resisting these changes. This perhaps explains the long delay, now 15 months, in bringing the major changes into force.

DFO has indicated it is moving towards becoming a centralized agency and away from permitting or approving smaller projects on a project by project basis. Rather, it is developing broader standards and guidelines. These will hopefully streamline the review process and reduce the number of projects requiring approval going forward.

Project proponents and developers must however continue to be vigilant, both in this time of transition and when the new scheme is fully in place, since there will be an increased emphasis on self-reliance, apparently a reduced presence by DFO to provide  assistance,  and increased penalties in the statute should enforcement action be warranted.

Bill McNaughton
Vancouver
604.640.4120
wmcnaughton@blg.com

2013  Environmental Law Case Update

1.  R. v. Castonguay  Blasting  Ltd., 2011  ONCA 292; SCC appeal  heard  May 17, 2013, decision under reserve: Do trivial harm discharges need to be reported?

The Supreme  Court of Canada (SCC) is presently considering the scope of the terms “contaminant”, “adverse effect” and “discharge” under Ontarios Environmental Protection Act (EPA),in a decision likely to have broad ramifications for environmental  law across Canada. The case involves fly rock from a blasting operation that damaged a car and a residential property; no one was injured and the owner was compensated. The incident was timely reported to Ontario’s ministries of labour and transportation but not to the Ministry of the Environment  (MOE), which elected to charge Castonguay Blasting Ltd. for failure to report discharge of a contaminant. In a split 2-1 decision, the Ontario Court of Appeal ruled that a rock is a “discharge”  having an “adverse effect” on the environment.

Castonguay requested and was granted leave to appeal  from the decision to the SCC. The question under reserve, in practical terms, is whether Canadian courts should take a strict literal, as opposed to a purposive, interpretative approach to environmental legislation. In brief, does a “discharge” need to cause real environmental harm to engage the EPA?

2.  Podolsky v Cadillac  Fairview  Corp., 2013 ONCJ 65: Can light reflecting from windows be an EPA “discharge”?

Of a similar vein, this case involves birds flying into an office building’s windows, which reflected trees nearby creating an illusion of a wooded area. A private prosecution alleged the reflective glass created a discharge of “radiation” causing an adverse effect to the environment - injury or death to birds.

The trial judge ruled that the building owner did in fact permit an EPA “discharge”.  However, the owner successfully established a due diligence defence. Avian collision mitigation measures, including “bird deterrent strategies” in compliance with industry standards, were found to have reasonably minimized the reflective effect.

3.  Kawartha Lakes (City) v. Ontario (Environment), 2013 ONCA 310: Can an innocent owner be stuck with clean-up costs caused by a neighbour?

A fuel oil spill on residential property streamed over municipal property into Sturgeon Lake. The offending owner ran out of money to cover remediation costs so the MOE issued a clean-up order against the municipality, which challenged it
using an innocent property owner defence.

The Ontario Court of Appeal upheld the MOE order finding that the EPA’s purpose – to ensure protection of the environment – trumped the polluter pays principle. The policy decision behind shifting the cost from Ontario’s taxpayers to municipal taxpayers is less than clear.

4.  Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67: Can federal insolvency legislation be used to stay provincial monetary orders?

Newfoundland  and Labrador (NL) wanted AbitibiBowater  Inc. (AB) to pay for the clean-up  of five contaminated sites at a cost of approximately $100 million. NL argued that environmental protection orders are not “claims”  under the federal Companies’ Creditors Arrangement Act. AB countered that a province cannot disturb the priority scheme established by federal insolvency legislation.

The SCC held that the NL legislation could not disturb the federal insolvency process, at least not on the facts of this case. The decision provides important guidance on the manner in which insolvency proceedings will be approached when environmental contamination issues arise.

Barry Glaspell                 
Toronto                                             

Aimee Collier
Toronto
416.367.6436 
acollier@blg.com    

Species At Risk In Ontario: The Saga Continues…

There are now over 150 species with general habitat protection under the Endangered Species Act (“ESA”), of which 22 species are also subject to species- specific regulation.

Habitat protection affects landowners, developers and proponents of infrastructure in Ontario. Even approved projects may be affected, subject to transition rules.

The ESA regime  allows  for five types of permits: overall benefits permits, health or safety permits, protection or recovery permits, social or economic benefit permits, and aboriginal permits. The most relevant permit for infrastructure and private sector development projects is the overall benefits permit which allows a party to perform an activity not otherwise  allowed  under the ESA in exchange  for demonstrating an overall benefit to the species in Ontario. Notably, the benefit must occur in Ontario and not specifically where the harm has occurred.

New transition rules permit “streamlining” procedures, and exemptions have also been introduced by regulation. In some cases, projects may proceed with permits, provided that mitigation plans are prepared in accordance
with the regulation.

Rick F. Coburn
Toronto
416.367.6038
rcoburn@blg.com

Establishing Environmental Damages: Key Case Law Principles

How damages are assessed in the environmental law context has been a bit of “moving target” over the last decade but there are a few key principles that emerge when you take a closer look at the case law.

Standard of Clean Up

Tridan Developments Ltd. v. Shell Canada Products Ltd., 2002 CanLII 20789  (ON CA) is an earlier case that considers a property owner’s entitlement to remediation damages after its property became contaminated by a neighbouring site. This case establishes that a plaintiff’s entitlement to recover will depend on the facts of each case and asserts that there is no automatic right to have one’s property cleaned up to a pristine condition post-contamination.

Pre-Purchase Knowledge

In Cousins v. McColl-Frontenac Inc. 2006 NBQB
25, the New Brunswick Queen’s Bench appears to scale back a plaintiff’s right to damages for contamination migrating onto its land when the plaintiff was aware of the risks before purchase. Further, the court refused to award damages
for a lost development opportunity based on a purely speculative approach to what could have been done with the plaintiff’s land but for the contamination.

Material Physical Damage

In Smith v. Inco 2011 ONCA 628 the Ontario Court of Appeal held that a plaintiff must establish
that contamination causes material physical damage to the property before damages can be recovered; mere chemical alteration is not enough. The plaintiff did not argue that the the properties at issue were rendered less useful as a result of Inco’s nickel deposits, nor was there any evidence of risk to human health. As a result of this decision, defendants now argue that plaintiffs must establish “material physical damage” to be entitled to damages.

Pre-Purchase Due Diligence

The importance of purchasers performing due diligence prior to purchasing land was reiterated this year in Midwest v. Thordarson, 2013 ONSC 775. The plaintiff in this case sued for damages because the property it purchased was contaminated by an off-site source. The contamination existed at the time of purchase and there was no evidence that the contamination had continued to migrate and/or worsened since that time. Practically speaking, purchasers should consider conducting baseline intrusive testing upon purchase to make it easier to establish subsequent contamination claims, not just because of an on-site source, but also because of off-site contamination.

Additional Considerations

There are several other risks that could prevent the plaintiff from recovering damages for contamination in the environmental case law. For example, the contamination may be patent or it may not render the property unfit for use.
Additionally, the consultant tasked with testing for contamination may not have been negligent and, therefore, is not liable. Finally, it can be difficult
to prove causation because there are multiple defendants or because the plaintiff cannot locate the defendant. These risks make it important to obtain good technical and legal advice before purchasing land and especially in industrial areas where the risk of contamination may be higher.

Gabrielle Kramer
Toronto
416.367.6113
gkramer@blg.com

Environmental Assessment In 2012-2013

There has been important fallout from Federal Environmental Assessment (“Federal EA”) amendments undertaken in 2012 and 2013. Most notably, the changes have resulted in a reduced number of Federal EAs for projects.

The Regulation lists classes of “designated projects” on as requiring a Federal EA. As a result, some federal decisions, such as Fisheries Act authorizations, no longer trigger a Federal EA.

In fact, projects that do not fall into the “designated projects” description will not require Federal EA unless the Minister decides otherwise.

The effects of this legislative change thus far have been palpable. For example, over 5,000 Federal EAs took place in 2008, but in the past year only 40 projects proceeded through  the Federal EA process.

Several important  Federal EA issues remain  on the horizon because the Northern Gateway Pipeline process continues and various mining projects, such as the Mary River Project in Nunavut, will continue  to test the new Federal EA regime. In many instances Aboriginal involvement will also need to be addressed in a more substantial way.

Adam Chamberlain
Toronto
416.367.6172
AChamberlain@blg.com

New Regulatory Oversight: Lessons From Alberta’s Recent Reforms

In the past year, Alberta has undergone unprecedented environmental regulatory reform impacting its energy sector.

On June 17, 2013, the majority of the Responsible Energy Development Act (“REDA”) was proclaimed in force, creating the Alberta Energy Regulator (the “AER”).  Under REDA, the AER will  ultimately assume specified regulatory functions from the Energy Resources Conservation Board, Alberta Environment and Sustainable Resource Development and Alberta Energy, with respect to upstream oil, gas, oil sands and coal development. The appointment of a single energy regulator had been one of six recommendations made by the provincially appointed Regulatory Enhancement Task Force, with a view of improving Alberta’s investment attractiveness for the development of its energy resources. The appointment of the single regulator, which is consistent with recent parallel federal regulatory streamlining initiatives, results in one application, one review and one decision.

Previously, on September 1, 2012, the Lower Athabasca Regional Plan (“LARP”) came into force. Under LARP, which  is the first  of seven regional plans to be introduced in Alberta, consideration must be given to the combined impacts of existing and future activities in Alberta’s oil sands, in deciding whether to grant regulatory project development approvals. Under LARP, environmentally sensitive areas are identified and protected, while future development is regulated with the objective of ensuring that it occurs in an environmentally responsible manner.

Building on LARP, on October  17, 2012,  the Alberta
Government announced the establishment of a new arm’s length environmental monitoring agency, the Alberta Environmental Management Agency (the “Agency”). The first of its kind in Canada, the Agency will utilize a science-based approach to monitor, evaluate and report on land, air, water and biodiversity. The intention is that the data, which will be collected initially from the Lower Athabasca Region, will be scientifically credible, accessible and open.

As a result of these reforms, the level of provincial government involvement in regulatory decision making for oil and gas project development appears to be on the rise. Among the issues to be addressed is identifying and maintaining the delicate balance between environmental responsibility and resource development.

Michael  G. Massicotte
Calgary
403.232.9602
MMassicotte@blg.com

Quebec Employers Now Required To Take Action on Asbestos

Recent amendments to the Regulation respecting occupational health and safety (the Regulation) came into force in Quebec on June 6, 2013. Asbestos is a recognized carcinogen that presents considerable health risks to those who are exposed to it. While the new amendments are not the first attempt to regulate exposure to asbestos, they represent an increased effort to establish more uniform practices.

The Regulation generally places the onus on the employer (not the property owner) to comply with the new rules. Employers have several new responsibilities:

  1. Duty to Inspect: An employer must inspect certain buildings (depending on their construction date) under its authority to locate asbestos containing materials. This inspections must be repeated every two years.
  2. Duty to Repair: If the inspection reveals that asbestos containing materials are not in a good state of repair or are liable to emit asbestos fibres, the employer has an obligation to remove it, enclose it in a permanent structure, coat it with or soak it in a binder, or cover it with materials resistant to fibres.
  3. Duty to Keep Registrar: Employers have to keep a registrar containing information on asbestos containing materials, including the results of the required inspections.

Flocking, heat insulating materials and other materials that traditionally contained asbestos (such as ceiling tiles, vinyl tiles, caulking, etc.) are presumed to contain asbestos, unless the employer can demonstrate otherwise. Proof to refute the presumption may be based on documentation showing that materials were installed after the specified dates in the Regulation or by providing a report prepared by a laboratory participating  in an inter-laboratory quality control program.

As practical advice, employers who are tenants should try to impose an obligation on the landlord pertaining to asbestos and require a representation regarding the absence of asbestos. On the other hand, landlords should consider carrying out the required inspections (an ensuing work) to ensure they are done properly. Whether costs can be passed along to tenants will depend on the wording of the lease.

Isabelle Tremblay
Montréal
514.954.3143
itremblay@blg.com

 

Authors

Gabrielle K. Kramer 
GKramer@blg.com
416.367.6113

F.F. (Rick) Coburn 
RCoburn@blg.com
416.367.6038

Other Authors

William K. McNaughton
Michael G. Massicotte
Barry Glaspell
Aimee Collier
Adam Chamberlain

Expertise

Environmental
Environmental Law