Posts

Supreme Court of Canada to hear Alberta’s “orphaned” oil wells case

By – Michael Nowina and Glenn Gibson, Baker McKenzie

On November 9, 2017, the Supreme Court of Canada granted the Alberta Energy Regulator and the Orphan Well Association’s request for leave to appeal from the decision in Grant Thornton Ltd. v. Alberta Energy Regulator, 2017 ABCA 124.  By granting leave, Canada’s highest court will weigh in on the Alberta Court of Appeal’s determination that secured creditors in a bankruptcy should be paid before environmental claims arising from abandoned oil and gas wells.

Map of all Orphan Wells in Alberta

As described in our previous blog post, on April 24, 2017, a majority of the Alberta Court of Appeal determined that certain sections of the Oil and Gas Conservation Act and Pipeline Act were inoperative to the extent that they conflicted with the Bankruptcy and Insolvency Act (BIA). Under the appellate decision, a bankruptcy trustee or receiver is not required to satisfy the environmental remediation obligations in priority to other creditors.  On the other hand, the dissenting judgment noted concerns that the effect of the majority decision would be to create an incentive for corporations to avoid the end-of-life obligations of wells by using insolvency laws and shift the environmental remediation costs onto the public and other oil and gas producers.

 Leave to the Supreme Court

Leave to the Supreme Court will only be granted where the court is of the opinion that the question raised by the case is of public importance or one that ought to be decided by the Supreme Court. In their leave application, the Orphan Well Association and the Alberta Energy Regulator identified the following issues to be clarified by the Supreme Court:

(a) Given the exclusive jurisdiction of provinces to regulate their natural resources, whether regulatory obligations created by provincial legislation conflict with or frustrate the scheme of priorities set out in the BIA?

(b) Whether select provisions of the BIA enable a receiver or trustee to pick and choose which provincial laws it will comply with?

(c) Are end-of-life obligations associated with oil and gas development also duties owed to the public?

The Minister of Justice and Solicitor General of Alberta intervened in the leave application. In supporting the leave application, the Province of Alberta’s position on leave was that the majority decision of the Court of Appeal interfered “with critical provincial regulatory functions in a manner that is inconsistent with the constitutional division of legislative powers and the balance of confederation.”

The Supreme Court granted a motion to expedite the appeal, and it will likely hear the appeal in the first half of 2018. The Supreme Court’s decision is an opportunity for the court to clarify the interaction of federal insolvency laws with the province’s jurisdiction to regulate natural resources as well as whether the public and other oil and gas producers ought to bear the burden of environmental remediation. The decision will have significant implications for the oil and gas industry, lenders, and regulators across the country. We will continue to provide updates on the status of the hearing as it becomes available.

This article was originally published on the Baker McKenzie website.

_________________

About the Authors

Michael Nowina is a member of the Firm’s Dispute Resolution and Global Financial Restructuring & Recovery practice groups. Mr. Nowina has a diverse civil litigation practice, with a focus on fraud recovery, insurance defence and insolvency law. Mr. Nowina has appeared before all levels of courts in Ontario and regularly appears on matters on the Commercial List in Toronto.

Glenn Gibson is a member of Baker McKenzie’s Litigation & Government Enforcement Practice Group in Toronto. She joined the Firm in 2015 as a summer student and completed her articles of clerkship in 2017.  Glenn acts for various clients on contractual disputes, jurisdictional disputes, commercial class actions, matters involving fraud and commercial arbitration. She is a contributor to www.canadianfraudlaw.com, www.globalarbitrationnews.com, and the Baker McKenzie International Arbitration and Litigation Newsletter.

When Is a Discharge to Groundwater Subject to the U.S. Clean Water Act? Can You Say “Significant Nexus”?

By Seth Jaffe, Foley Hoag LLP

Whether the United States Clean Water Act regulates discharges to groundwater has been a topic of significant debate.  At this point, there seems to be something of a trend in the cases towards concluding it does, but it remains true that all of the courts of appeal that have addressed the issue have concluded that it does not.  As I have noted, the problem with the “yes” answer is that pretty much all groundwater eventually discharges to surface water, making all such discharges subject to the CWA.  How can that be, given that groundwater is not considered to be “waters of the United States?”

Chief Judge Waverly Crenshaw recently addressed the issue in Tennessee Clean Water Network v. TVA.  Judge Crenshaw’s solution was creative – meaning he pretty much made up out of whole cloth.  That doesn’t necessarily mean that it’s wrong, however.

The case involves coal ash management at the TVA’s Gallatin plant.  Some of the – unlined – ponds directly abut the Cumberland River.  The plaintiff citizen groups brought claims under the CWA, alleging that TVA was discharging pollutants to the River – via groundwater – without an NPDES permit.  They requested an injunction requiring that the TVA remove the coal ash from the ponds, at a cost of $2 billion.

Gallatin power plant, operated by the Tennessee Valley Authority in mid-Tennessee on the north bank of the Cumberland River. Location of the main coal-burning facility is indicated by the icon and label.

Judge Crenshaw was clearly frustrated by an absolutist position on either side.  Clearly, he does not think that any link between groundwater and surface water, no matter how attenuated, can be enough for jurisdiction to attach.  On the other hand, he was also trying to reckon with the specific case in front of him.  As he saw it, the Gallatin ash ponds were a complete environmental mess.  They immediately abut the Cumberland River, clearly a water of the United States.  Can the outcome really be different if the ponds discharge directly to the River than if they discharge to groundwater 10 feet from the River, where that groundwater then discharges to the river?

His solution?

the Court concludes that a cause of action based on an unauthorized point source discharge may be brought under the CWA based on discharges through groundwater, if the hydrologic connection between the source of the pollutants and navigable waters is direct, immediate, and can generally be traced.

I confess I like this solution, because it is practical and will generally yield reasonable results.  It avoids either effectively regulating all groundwater under the CWA or having to conclude that the CWA can’t reach situations such as the Gallatin ash ponds.

The problem?

There’s no textual support for this solution in the CWA.  To me, this test sounds a lot like Justice Kennedy’s “significant nexus in Rapanos.  There too, his position received a lot of support at a practical level, while many commentators noticed that the CWA says nothing about a “significant nexus.”

We all know how well that’s worked out.

This article was first published in Law and the Environment, a blog from Foley Hoag LLP.

______

About the Authors

Seth D. Jaffe

A partner at Foley Hoag, Seth Jaffe is recognized by Chambers USA, The Best Lawyers in America and Massachusetts SuperLawyers as a leading… MORE

Kathleen Brill

Kathleen Brill is an Associate practicing in the Administrative Department of Foley Hoag’s Boston office. Before joining Foley Hoag, Kathleen had considerable experience…MORE

 

Heiltsuk First Nation to sue Kirby Corporation over 2016 diesel spill

As reported in Coast Mountain News, this month marks the one-year anniversary of the October 13 oil spill in Bella Bella, British Columbia. With the community’s recovery efforts undermined by government and Kirby Corporation’s refusal to take responsibility for the spill and to cooperate in its aftermath, the nation says it has no option but to turn to the courts.

“The oil spill continues to be a catastrophic injury to our food sources, culture, and economy,” says Heiltsuk Tribal Council Chief Councillor, Marilyn Slett. “Thanks to Kirby Corporation and the governments of British Columbia and Canada, our community’s road to recovery keeps getting longer and longer.”

The Nathan E. Stewart articulated tug/barge was southbound from Alaska when it ran aground at Edge Reef near Athlone Island on Oct. 13, 2016. (Photo Credit: Western Canada Marine Response Corporation)

Kirby Corporation and government have kept information secret about what occurred on October 13, 2016 when the Nathan E. Stewart grounded, sank and spilled oil into Gale Pass. The Heiltsuk Tribal Council made numerous separate requests for information to the polluter (Kirby Corporation) and various government agencies, including Transport Canada, the Transportation Safety Board, and the Canadian Coast Guard. Those requests were largely denied or ignored.

The Nation claims this secrecy and lack of collaboration has continued throughout the post-spill recovery.

“Recently, we learned the B.C. Ministry of Environment and Kirby have been secretly negotiating an agreement on the post-spill environmental impact assessment since early this year,” says Chief Councillor Slett. “Since this nightmare began, the polluter and provincial and federal governments have ignored our questions and environmental concerns, our collaboration attempts, and our rights as indigenous people. We have no choice but to turn to the courts.”

The nation is preparing to take legal action, aiming to recover damages suffered by its members as well as to examine the actual state of Canada’s “world class” oil spill response system.

The case will seek compensation for loss of commercial harvesting of marine resources and infringement of Aboriginal rights relating to food, social and ceremonial importance of marine resources — factors that the current oil spill liability framework does not account for.

“When I’m not harvesting Gale Pass to feed my family, I am working there as a commercial fisherman, earning an income to support them – and I’m one of many,” says harvester and volunteer oil spill responder, Robert Johnson. “Despite our reliance on Gale Pass, the governments of British Columbia and Canada and Kirby the polluter have little interest in understanding the impacts of this oil spill on the health of my community, this environment, or our economy.”

The existing oil spill response framework excuses the polluter and government from full responsibility for oil spill impacts on Aboriginal rights otherwise protected by the Constitution.

As such, the government of British Columbia and Kirby are not required by law to do comprehensive impact assessments of the oil spill. To date, they have rejected multiple Heiltsuk requests to participate in a study of the current and long-term impacts of the oil spill on the health of the ecosystem and marine resources and the social and economic consequences associated with the loss of harvest and use of the impacted area.

Instead, Kirby Corporation and the BC Ministry of Environment are proposing a limited environmental assessment covering a minority of the area and species affected.

Heiltsuk Nation will be asking the courts to assess whether this existing regime of liability for oil spills can really be considered constitutional.

“We’re learning the hard way that indigenous people and coastal communities can’t count on polluters, Western Canada Marine Response Corporation, or the governments of B.C. and Canada in a crisis situation,” says Kelly Brown, Director of the Heiltsuk Integrated Resource Management Department. “For our sake, and the sake of our neighbours, we are consulting with a range of experts to assess damages, recovery times, and, ultimately, determine how we can prevent a similar disaster in the future.”

The Nathan E. Stewart sinking off Bella Bella, British Columbia

Analyses of the oil spill response have revealed massive safety and planning oversights by the polluter and federal and provincial government regulations. They include: a lack of spill response materials; ineffective booms and delays in employing them; a lack of safety instructions and gear for Heiltsuk first responders exposed to diesel and dangerous marine conditions; and confusion over who was in charge in the early hours of the oil spill.

“Government representatives travel the province, country, and the world preaching reconciliation and nation-to-nation relationships with first people. Meanwhile, back home, they are avoiding our calls and emails, excluding us from meetings, and ignoring our rights,” says first responder and Hereditary Chief Harvey Humchitt. “If the courts have to explain that this is not what nation-to-nation relationships and reconciliation look like, so be it.”

The Heiltsuk Tribal Council expects the results of the various impact assessments, legal analyses, and evaluations to materialize in the coming weeks.

Canada: BC Court Of Appeal Rules That Contaminated Property Must Be Assessed Using Highest and Best Use

Article by Luke Dineley and Jacob Jerome Gehlen

Borden Ladner Gervais LLP

In a highly anticipated decision for the valuation of contaminated property in British Columbia, the BC Court of Appeal overturned a decision of the BC Supreme Court and set out how contaminated property should be assessed for tax purposes.

The case involved a Brownfield – a contaminated commercial property with potential for economic redevelopment. The property in question had been operated as a retail gas station, automobile dealership, and repair shop. The soil on the property was contaminated, and the contamination had spread to neighbouring properties. The owner of the property was in considerable financial distress. In addition to tax arrears, legal bills, and accounting bills, she was defending a claim from the owner of a neighbouring property. She therefore arranged to sell the property to this owner through a share purchase agreement for $42,363.24, which was sufficient to cover her debts. She also obtained a full indemnity from any legal liabilities she might have in the future regarding the contamination. The existing structure on the property was renovated and converted into income-producing multi-tenant commercial retail units.

Abbotsford, British Columbia

In 2013, the property was assessed for taxation purposes.

The assessor had valued the land and improvements at $975,000. The property owner, Victory Motors (Abbotsford) Ltd. (“Victory Motors”), appealed, and the Property Assessment Review Panel reduced that assessment to $500,000. Victory Motors appealed to the Property Assessment Appeal Board (“Board”), claiming the property had no value. The Board reinstated the original assessment. The owner appealed again, to the Supreme Court of British Columbia. That court found that the Board had erred in law, and remitted the matter to the Board for reconsideration. The Assessor appealed that decision.

The Court of Appeal allowed the Assessor’s appeal and restored the Board’s decision.

The issue before the Court was this: how does one properly assess the value of contaminated land for taxation purposes? The assessor determined that because renovation into a two-storey structure would require remediation, the best use of the property was as it currently stood: a one-storey commercial structure. The assessor’s estimate did not otherwise take into account the presence of contamination. Their approach is known as the “income approach,” whereby a property’s value is determined according to the subject property’s highest possible annual net income. The Board agreed with the assessor’s method and ultimate evaluation.

The Supreme Court, however, held that the Board had erred in law. The chambers judge found that the assessor had ignored the property’s brownfield status, which any potential buyer would have in mind as a risk. The chambers judge further held that the land should be valued not according to value for the present owner, but according to the market in accordance with the BCCA’s decision in Southam Inc. (Pacific Newspaper Group Inc,) v. British Columbia (Assessor of Area No 14 – Surrey/White Rock), 2004 BCCA 245 [Southam]. Because there was no evidence a competitive market for the property existed, the Board’s decision was therefore unreasonable.

However, after the BCSC decision was released, a five-judge division of the BCCA overturned Southam in Assessor of Area #01 – Capital v. Nav Canada, 2016 BCCA 71, leave to appeal refused [Nav Canada]. Nav Canada supports the Board’s income-based approach.

Applying Nav Canada, the Court of Appeal allowed the assessor’s appeal and restored the Board’s decision. The Court applied the “highest and best use” principle of assessment, and found that a multi-tenant retail building was the “best use” for the purposes of assessment. The Court held: “that property has value to its current owner can be a sufficient basis on which to determine its value.” In Nav Canada, the BCCA had held that even where there was no other potential purchaser, “one must regard the owner as one of the possible purchasers.” The Court in this case agreed, and held that “when, for whatever reason, there is no market for a property that has value to its owner, that owner can serve as a proxy for a competitive market.”

Going forward, property owners should be aware that even though there are no purchasers lining up to bid for a brownfield, that property may still be assessed at a high value for taxation purposes.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

About the Authors

Luke Dineley is a partner in both our Insurance and Tort Liability Group and Environmental Law Group in Borden Ladner Gervais LLP‘s Vancouver office. Luke focuses his practice on civil litigation, with an emphasis on insurance and tort law, and environmental law.  In the area of environmental law, Luke’s experience includes representing and advising clients on a wide variety of contaminated site issues relating to both commercial and residential properties — including cost-recovery actions on behalf of plaintiffs and defendants. In addition, Luke has represented and advised major companies on environmental regulatory compliance, emergency spill responses, and environmental prosecutions. Luke is also an executive board member of the British Columbia Environmental Industry Association and frequently publishes and speaks in the area of environmental law.

 

Jacob Jerome Gehlen is an articling student at Borden Ladner Gervais LLP‘s Vancouver office. He has a Juris Doctor law degree from the University of Toronto and a Bachelor’s degree from McGill University.

Canada: Managing Prosecution Risk When Regulators Issue Permits or Orders

Article by Stanley D. Berger

Fogler, Rubinoff LLP

A recent decision from the Yukon Territorial Court is a reminder of how important communication between the regulator and the regulated can be. At the same time, perhaps as an illustration of the power of fate, at least in a narrow set of circumstances, communication may make no difference at all. In R. v. Cobalt Construction Inc., released September 14, 2017 the sole shareholder/director and his road construction company were charged with failing to provide a detailed decommissioning plan in accordance with the conditions of a permit for a facility designed to accept, store and treat dirt contaminated with petroleum hydrocarbons. The defendants failed to establish a due diligence defence to the charges because of poor communication with the authorities, but were acquitted anyways because it was impossible for them to comply given the weather conditions during the time frame for compliance.

Cobalt Construction Inc. Vehicles (Credit: Brian Boyle/CBC)

The regulator’s plan required sampling results be obtained after contaminated piles of dirt were tilled as configured. The soil was to be mixed two weeks before the samples were taken for analysis. The sample results would then inform further elements of the plan including identification of an appropriate receiving facility. The defendant director testified that it would have been impossible to till the soil as required within the time frame set out by the regulator because snow on the ground would have prevented use of the excavator and the ground would have been frozen requiring a ripper to be used to break up the ground, thereby destroying the configuration of the piles. The defendants had in the initial plan set out dates for sampling beyond the time frame required by the regulator, but failed to offer any explanation as to why the sampling could not be done within the imposed time frame. Further, the defendants at no time sought an extension of time for performing the sampling. The Crown prosecutor argued that the authorities were under no obligation to notify the defendants that their initial plan was insufficient to satisfy the regulatory requirements. The Court observed that the more detailed the decommissioning plan provided, the more likely fairness would demand notification by the authorities of the deficiency and an opportunity to correct it. Conversely, the less detailed the plan, the less likely fairness would demand notification. “To decide otherwise would mean that a defendant could evade responsibility and delay consequences simply by making a cursory attempt at compliance.” The Court suggested that if the defendants had fleshed out the plan and included options for receiving facilities and restoration that would be contingent on the sampling results, this would trigger notification by the regulator that the plan was deficient. However, the initial plan provided was so clearly and objectively deficient on its face that the regulator had no obligation to notify the defendants that the plan did not comply and did not further require the authorities to give the defendants an opportunity to rectify the deficiencies prior to laying charges. The Court consequently rejected the defence of due diligence. Nevertheless, the Court acquitted the defendants, accepting the defence of impossibility, notwithstanding the absence of due diligence.

 The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

________________

About the Author

 Stanley Berger is certified by the Law Society of Upper Canada as a specialist in environmental law.  He was called to the Ontario Bar in 1981. He joined the law firm of Fogler Rubinoff on July 4 2013.  Stanley was the founder of the Canadian Nuclear Law Organization and served as its President between 2008-2015, and remains a board member.  He is also is a former President of the International Nuclear Law Association.  He has taught nuclear law for the Nuclear Energy Agency in France and is an adjunct professor for York University’s Professional Master’s Degree in Energy.  Stanley is the author of a quarterly publication entitled “The Prosecution and Defence of Environmental Offences” and edits an annual review of environmental law.

Stanley represents suppliers and operators in the nuclear industry on nuclear liability, regulatory and supply chain issues. He provides legal advice to the Nuclear Waste Management Organization. Other clients include the CANDU Owners Group and a large Ontario municipality. His environmental practice includes litigation before courts, boards and tribunals, as well as solicitor’s work on behalf of renewable energy companies, landowners and waste management entities. He represented a First Nation on regulatory matters relating to a renewable energy project. His practice also includes the protection of proprietary information on applications before Ontario’s Freedom of Information and Privacy Commission.

This article was originally published on the Fogler, Rubinoff LLP website.

Alberta Coal mine fined $1 million for Fisheries Act Violations

Sherritt International Corporation (Sherritt) recently pleaded guilty in the Provincial Court of Alberta to three counts of contravening the Canadian Fisheries Act.  Sherritt was sentenced to pay $1,050,000.  As a result of this conviction, the company’s name will be added to the Environmental Offenders Registry.

The Coal Valley Mine, which was owned by Sherritt, from 2001 to 2014, is an open-pit coal mine located 90 km south of Edson, Alberta.  The Coal Valley Mine is a 20,660 Ha. surface mine. The mine operates both truck/shovel and dragline pits and utilizes a dragline for coal removal. The area has a long history of mining and the Coal Valley Mine was opened in 1978 to supply coal to Ontario Hydro and for overseas export.

Coal is uncovered at the mine using the two draglines  and two truck/shovel fleets. The exposed coal is hauled from the mine to the heavy media wash plant where the waste is removed and then loaded on trains to be shipped to the ports. Current annual production of the mine is 3.0 million tonnes and the plant has capacity to operate at 4.0 million tonnes per year.

On August 3rd, 2012, Environment and Climate Change Canada (ECCC) enforcement officers visited the mine in response to a spill report, and they determined that effluent being deposited from a waste-water pond was deleterious to fish. ECCC enforcement officers subsequently issued a direction under the Fisheries Act, which resulted in the deposit being stopped.  Further investigation by ECCC determined that there were two previous releases of deleterious effluent from waste-water ponds, on July 27th, 2011.

The releases went into tributaries of the Athabasca River, including the Erith River portions, which are identified by the Government of Alberta as “ecologically significant habitat” for Athabasca rainbow trout, a species at risk.

The waste-water ponds at the Coal Valley Mine collected surface water that was treated with a chemical flocculant to remove suspended sediment before being discharged.  Both suspended sediment and an excess of flocculant can be toxic to fish.

Of the $1,050,000 fine, $990,000 will be directed to the Environmental Damages Fund (EDF).  The EDF was created in 1995 by the Government of Canada. The fund follows the polluter pays principle, and it ensures that court-awarded penalties are used for projects with positive environmental impacts.

Teck Coal Ltd. fined $1.4 million for Toxic Release

Teck Coal Limited recently pleaded guilty to three counts of contravening the Canadian Fisheries Act in the Provincial Court of British Columbia.   The court ordered the company to pay a penalty of $1,425,000, which will be directed to the federal Environmental Damages Fund, and used for purposes related to the conservation and protection of fish or fish habitat or the restoration of fish habitat in the East Kootenay region of B.C.  Additionally, Teck Resources will post information regarding this conviction on its website.  As a result of this conviction, the company’s name will be added to the Environmental Offenders Registry.

Teck Coal’s Line Creek Operations is located in southeastern British Columbia.  On October 17th, 2014, enforcement officers from Environment Canada and Climate Change (ECCC) launched an investigation following a report that fish had been found dead in ponds connected to Line Creek which runs adjacent to the coal mining operation.  During the investigation, ECCC enforcement officers found that the effluent from the water treatment facility going into Line Creek was deleterious to fish.  Numerous dead fish were found in the Line Creek watershed as a result of this discharge, including Bull trout.  Bull trout are identified as a species of special concern in this area of British Columbia.

The company has a permit to discharge treated effluent into the Line Creek, however in the fall of 2014, there was a malfunction of the treatment system.  As a result, toxic levels of nitrate, phosphorus, selenium and hydrogen sulfates entered the Line Creek, subsequently killing over 74 fish.

Line Creek is identified by the Government of British Columbia as part of a “Classified Water” system.  This provincial classification means that the water system is seen to have a high fisheries value and it requires special fishing licenses.

Teck’s West Line Creek Active Water Treatment Facility cost $120 million to construct.  The facility treats up to 7,500 m3 (2 million gallons) of water per day – enough to fill three Olympic-sized swimming pools.  Selenium concentrations are reduced by about 96% in treated water, to below 20 parts per billion.  Nitrate concentrations are reduced by over 99% in treated water, to below 3 parts per million.

Teck’s West Line Creek Active Water Treatment Facility

Teck’s Line Creek operation produces steelmaking coal – also called metallurgical coal or coking coal — which is used to make steel.  The processed coal is transported by sea to the Asia-Pacific region and elsewhere.  The current annual production capacities of the mine and preparation plant are approximately 3.5 and 3.5 million tonnes of clean coal, respectively. Proven and probable reserves at Line Creek are projected to support mining at planned production rates for a further 23 years.

Canada: Environmental Review Tribunal gives Ministry Broad Preventative Powers over Migrating Contamination

Article by Stanley D. Berger, Fogler, Rubinoff LLP

On September 1, 2017, the Ontario Environmental Review Tribunal in the matter of Hamilton Beach Brands Canada Inc. et al. v. the Director, Ministry of the Environment and Climate Change made a preliminary ruling that the Director had jurisdiction to make an order under s.18 of the Ontario Environmental Protection Act (Ontario EPA) requiring a person who owns or owned, or has or had management or control of a contaminated undertaking or property to delineate contamination that had already migrated to off-site properties.  The property in question, formerly a small-appliance manufacturing business, was contaminated and the various contaminants were of concern to the Ontario Ministry of the Environment and Climate Change, having migrated to other Picton residential, commercial and institutional properties where they might be entering nearby buildings by vapour intrusion.  Section 18 of the Ontario EPA provides that the Director may make orders preventing, decreasing or eliminating an adverse effect that may result from the discharge of a contaminant from the undertaking or the presence or discharge of a contaminant in, on or under the property.  The Director’s Order was challenged on three grounds:

  1. The adverse effect the Director could address was limited to a future event or circumstance (given that s.18 is prospective and preventative);
  2. The adverse effect had to relate to the potential off-site migration of a contaminant that was on an orderee’s property at the time the order was made;
  3. The order could require work only on site but not off-site, to address the risk of an adverse effect.

The Tribunal rejected all three arguments, reasoning that adverse effects resulting from contamination were frequently ongoing rather than static, with no clear line between existing and future effects.  The Tribunal looked to the purpose of the Ontario EPA which was to protect and conserve the natural environment and found the orderees’ arguments were inconsistent with this purpose.  Contamination and adverse effects were not constrained by property boundaries and therefore it was immaterial whether the contaminant was on the orderee’s property at the time the order was made. Finally, the list of requirements that could be ordered under s.18(1) EPA included off-site work.

 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

About the Author

Stanley Berger is certified by the Law Society of Upper Canada as a specialist in environmental law.  He was called to the Ontario Bar in 1981. He joined the law firm of Fogler Rubinoff on July 4 2013.  Stanley was the founder of the Canadian Nuclear Law Organization and served as its President between 2008-2015, and remains a board member.  He is also is a former President of the International Nuclear Law Association.  He has taught nuclear law for the Nuclear Energy Agency in France and is an adjunct professor for York University’s Professional Master’s Degree in Energy.  Stanley is the author of a quarterly publication entitled “The Prosecution and Defence of Environmental Offences” and edits an annual review of environmental law.

Stanley represents suppliers and operators in the nuclear industry on nuclear liability, regulatory and supply chain issues. He provides legal advice to the Nuclear Waste Management Organization. Other clients include the CANDU Owners Group and a large Ontario municipality. His environmental practice includes litigation before courts, boards and tribunals, as well as solicitor’s work on behalf of renewable energy companies, landowners and waste management entities. He represented a First Nation on regulatory matters relating to a renewable energy project. His practice also includes the protection of proprietary information on applications before Ontario’s Freedom of Information and Privacy Commission.

This article was originally published on the Fogler, Rubinoff LLP website.

Canada: Oil Spill Liability – Kawartha Lakes Continues

By Donna Shier, Partner and Certified Environmental Law Specialist, Joanna Vince, Senior Associate and Raeya Jackiw, Student-at-Law, Willms & Shier

Background

In the most recent decision in the ongoing Kawartha Lakes saga, the Superior Court of Justice found homeowner Mr. Wayne Gendron partly responsible for an oil spill that destroyed his lakeside property.  The Court also found Mr. Gendron’s fuel distributor liable for a portion of the costs.  This decision serves to warn homeowners that a distributor’s delivery of fuel does not mean that their tanks are safe. It also cautions fuel distributors that they may be liable for spills brought about by a homeowner’s negligence.

The Facts

Thompson Fuels (“Thompson”) supplied 700 liters of fuel oil to two tanks in Mr. Gendron’s basement.  Mr. Gendron had installed the fuel tanks himself without proper shut off valves, contrary to industry standards.

During a period of financial difficulty, Mr. Gendron filled these fuel tanks with less expensive stove oil.  The stove oil introduced water and microbes into the tanks, causing the tanks to corrode.  When Thomspon delivered the fuel oil one of the tanks leaked, spilling approximately 600 liters.

In the hours following the fuel delivery Mr. Gendron tried to manage the spill on his own by collecting what he believed to be all of the leaking oil in Tupperware containers.  Approximately 24 hours later, Mr. Gendron called Thompson to complain that it had not delivered his entire shipment of fuel oil – he was short about 600 liters.  Mr. Gendron never called to report the spill to the MOECC’s Spills Action Centre hotline.

The fuel oil migrated under Mr. Gendron’s house, through the City of Kawartha Lake’s drainage system, and into nearby Sturgeon Lake. The Ontario Ministry of the Environment and Climate Change (MOECC) ordered Mr. Gendron and his wife to “ameliorate the adverse effects caused by the discharge of the furnace oil” and “restore the natural environment… to the extent practicable.”  Mr. Gendron began remediation of the contamination of his property and the contamination of Sturgeon Lake.

Early remediation efforts were complicated by the frozen lake and soil. Mr. Gendron’s personal insurance was rapidly exhausted.  His insurer eventually refused to fund further off-site remediation of Sturgeon Lake.

The remediation efforts cost nearly $2 million  and required the demolition of Mr. Gendron’s home.

Sturgeon Lake, Kawatha Lakes Region, Ontario

The City’s MOECC Order

The MOECC ordered the City of Kawartha Lakes to clean up any fuel oil remaining in the City’s culverts and sewers that could re-contaminate Sturgeon Lake.  The City appealed the order first to the Environmental Review Tribunal, then to the Divisional Court, and ultimately to the Ontario Court of Appeal, losing each time. (See our previous article on the Court of Appeal’s decision here.)

Environmental Protection Act Claims

Using its powers under the Ontario Environmental Protection Act (“EPA”), s. 100.1 the City ordered compensation for its remediation costs from Mr. Gendron, Thompson and the Technical Standards and Safety Authority (“TSSA”).  Mr. Gendron, Thompson and the TSSA appealed the order to the Environmental Review Tribunal.  Thompson and the TSSA settled with the City and withdrew their appeals.  Mr. Gendron’s appeal was unsuccessful and he was required to pay more than $300,000 of the City’s costs.  Mr. Gendron then brought a claim for contribution and indemnity against Thompson under EPA, s. 100.1(6).  In this most recent case, the Court found that Mr. Gendron could not make out his EPA claim because ownership and control of the fuel oil had transferred to him when the fuel oil was delivered to him by Thompson.  Mr. Gendron’s claim for contribution under the EPA was dismissed.

About the Authors

Donna Shier, Partner & Certified Environmental Law Specialist.  With almost 40 distinguished years of experience practicing environmental law, Donna Shier is one of Canada’s leading environmental counsel to major industrial corporations. Donna is also frequently called upon by corporate, commercial and real estate lawyers to assist their clients with environmental legal issues, and provides environmental law expertise to external litigation counsel. Donna is a qualified mediator and is an accredited member of the ADR Institute of Canada. Donna is called to the bar of Ontario.

Joanna Vince, Senior Associate.  Joanna Vince has significant expertise representing a wide range of clients with environmental issues, civil claims and prosecutions, orders and appeals. Joanna was admitted to the bar of Ontario in 2011.  Joanna has a B.Sc. (Hons., High Distinction) in biology and environmental science, and a Certificate in Environmental Studies. Joanna’s knowledge of and commitment to environmental issues was recognized by the University of Toronto, which awarded her the Arthur and Sonia Labatt Fellowship and the Douglas Pimlott Scholarship. Also at the University of Toronto, Joanna assisted with preparing academic papers and books as a research assistant on wind power, carbon taxes and climate change.

Raeya Jackiw, Student-at-Law.  Prior to articling at Willms & Shier, Raeya was a summer student at the firm and conducted legal research on issues in environmental, aboriginal, energy, constitutional, administrative, contract, tort, and civil procedure law. She has a Juris Doctor, Certificate in Environmental Law from the University of Toronto, a Masters Degree in Environmental Science from the University of Guelph, and a Bachelor’s Degree in Environmental Science from Queen’s University.

This article was originally published on the Wilms & Shier website.

Auto paint and Supply company fined for environmental violations

Fine Auto Paints and Supplies Ltd. of Toronto, Ontario, was fined recently $25,000, after pleading guilty in the Ontario Court of Justice last month to one count of contravening the Volatile Organic Compound Concentration Limits for Automotive Refinishing Products Regulations, under the Canadian Environmental Protection Act, 1999.

An investigation by Environment Canada and Climate Change (ECCC) enforcement officers revealed that the company had sold automotive refinishing products that contained Volatile Organic Compounds (VOCs) in excess of the allowable limit.

VOCs are primary precursors to the formation of ground level ozone and particulate matter which are the main ingredients of smog. Smog is known to have adverse effects on human health and the environment.

As a result of this conviction, the company’s name will be added to the Environmental Offenders Registry.  The Environmental Offenders Registry contains information on convictions of corporations registered for offences committed under certain federal environmental laws.

The fine will be directed to the Environmental Damages Fund (EDF).Created in 1995, the Environmental Damages Fund is a Government of Canada program administered by Environment and Climate Change Canada. The Fund follows the “polluter pays” principle and ensures that court-awarded penalties are used for projects with positive environmental impacts.