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Canada: Environmental Issues In Expropriation

Article by Chidinma Thompson, Borden Ladner Gervais LLP

A. Indirect Expropriation through Environmental Regulation

Claims for indirect expropriation may arise through environmental regulatory regimes. Where legislative schemes operate to interfere with existing property rights, such interference may constitute de facto, or indirect, expropriation. One example of a legislative regime that has been the subject of indirect expropriation claims is the federal Species at Risk Act1 (the “SARA”). Under the SARA, the Governor in Council is empowered to make emergency orders to provide for the protection of certain wildlife species.2 The emergency protection order may extend not only to Crown land, but also private property.3 The SARA provides for a limited compensation scheme. The Minister may provide for reasonable compensation for losses suffered “as a result of any extraordinary impact of the application of” the emergency protection order.4 The Governor in Council may make regulations with respect to the procedures to be followed and the methods to be used to determine the compensation.5

The sage grouse order exemplifies how a SARA emergency protection order may give rise to an expropriation claim. The sage grouse order was the first emergency protection order to be issued under section 80 of the SARA. It was issued to protect the greater sage grouse population in Alberta and Saskatchewan, and came into force on February 18, 2014. The sage grouse is an endangered species under the SARA and Alberta’s Wildlife Act.6 Under the Wildlife Act it is an offence to “willfully molest, disturb, ore destroy a house, nest or den” of sage grouse. The sage grouse order restricted activities on 1,672 km2 of provincial and federal Crown lands in southeastern Alberta and southwestern Saskatchewan.

A Sage Grouse (Photo Credit: Miles Tindal / Calgary Herald)

In The City of Medicine Hat et al v Canada (AG) et al,7 LGX Oil and Gas and the City of Medicine Hat, which had interests in the Manyberries oil production site that was affected by the sage grouse order, brought a judicial review and constitutional challenge of the sage grouse order at the Federal Court of Canada. The applicants successfully resisted a summary dismissal motion brought by the Crown and subsequently commenced an action at the Alberta Court of Queen’s Bench for $123.6 million in compensation (including accelerated reclamation costs) for de facto expropriation of existing oil and gas mineral rights, leases and rights-of-way. This case is ongoing. At this point, the Governor in Council has not made regulations with respect to compensation. The Crown pleads that the emergency protection order is regulatory and, in the alternative, that compensation under the SARA is discretionary. In the further alternative, the Governor in Council had chosen not to make regulations, and the emergency order did not have an “extraordinary impact” on the plaintiffs.

Another case was Groupe Maison Candiac Inc v Canada (AG).8 This case concerns the second emergency protection order made under the SARA, which protects the western chorus frog. The western chorus frog is listed on the SARA’s list of endangered species as a threatened species in the provinces of Ontario and Quebec. The emergency protection order prohibits excavation, deforestation and construction within a two km2 area in the municipalities of La Prairie, Candiac and St-Philippe, Quebec to protect the frog and its habitat. This order was the first time a SARA emergency protection order restricted development on private land.

As a result of the western frog order, Groupe Maison Candiac Inc. (“Groupe Maison”) was forced to reduce its residential development by 171 units after construction was already underway and Groupe Maison had obtained the requisite municipal and provincial approvals. Groupe Maison brought a judicial review of the emergency protection order by way of a constitutional challenge and an expropriation claim. The Federal Court dismissed the application, finding that: (1) section 4(c)(ii) of the SARA is within the federal government’s jurisdiction over criminal law; and protected by the doctrine of ancillary powers, including jurisdiction over peace, order and good governance; (2) the western chorus frog order did not amount to expropriation that required compensation; and (3) the Parliament had already provided a mechanism for compensation under the SARA that applies in “extraordinary circumstances.”

In 2017, the Minister of Environment and Climate Change received three petitions to recommend to the Governor in Council for an emergency order to protect the southern mountain woodland caribou population. The Minister conducted an Imminent Threat Assessment and, on May 4, 2018, determined that the southern mountain caribou faced imminent threats requiring intervention for recovery. An emergency protection order may be forthcoming for Alberta and British Columbia. The SARA public registry and the Canada Gazette will provide updates on this matter.

B. Polluter Pays in Expropriation of Contaminated Lands

Alberta’s Environmental Protection and Enhancement Act9 (the “EPEA”) is another environmental protection legislation that affects expropriation claims. As one of its purposes, the EPEA adopts the “polluter pays” principle to address contamination. The EPEA includes three regulatory mechanisms with respect to contamination: (1) Part 5 Division 1 concerns the release of substances generally; (2) Part 5 Division 2 concerns contaminated sites designation; and (3) Part 6 deals with conservation and reclamation. Further, the EPEA expressly acknowledges an affected person’s recourse to court through private civil claims.10 Some of the key concepts related to the three regulatory mechanisms are considered below.

Part 5 Division 1 of the EPEA deals with the release of substances into the environment. Under section 112, the person responsible for the substance has the duty to take remedial measures with respect to any release of same.11 Environmental protection orders may also be issued to the person responsible for the substance where the release is causing, has caused or may cause an adverse effect.12

The statutory definition of “person responsible” includes: (1) owner and previous owner of substance; (2) every person who has or has had charge, management or control of the substance; (3) successor, assignee, executor, administrator, receiver, receiver‑manager or trustee of (1) to (2); and (4) principal or agent of (1) to (3).13 The “person responsible’ excludes, unless they release new or additional substances: (1) a municipality in respect of land shown on its tax arrears list, or land acquired by it by dedication or gift of an environmental reserve, municipal reserve, school reserve, road, utility lot or right of way; (2) a person who investigates or tests the land for the purpose of determining the environmental condition of that parcel; and (3) the Minister responsible for the Unclaimed Personal Property and Vested Property Act, with respect to a parcel of land to which that Act applies. Thus, it appears that the notion of “person responsible” is based on one’s relationship to the substance/release only, and not based on the cause of the release.

Part 5 Division 2 of the EPEA provides for the designation of contaminated sites. Under section 129 of the EPEA, the Director may designate a site as a contaminated site and issue an environmental protection order to a person responsible for the contaminated site. The Director must consider several factors before issuing an environmental protection order for a contaminated site, including: (1) due diligence of the owner or previous owner; (2) whether the presence of the substance at the site was caused solely by the act or omission of another person, other than an employee, agent or person with whom the owner or previous owner has or had a contractual relationship; and (3) the price the owner paid for the site and the relationship between that price and the fair market value of the site had the substance not been present.14

The “person responsible for the contaminated site” means: (1) a person responsible for the substance that is in, on or under the contaminated site; (2) any other person who the Director considers caused or contributed to the release of the substance into the environment; (3) the owner of the contaminated site; (4) any previous owner of the contaminated site who was the owner at any time when the substance was in, on or under the contaminated site; (5) a successor, assignee, executor, administrator, receiver, receiver‑manager or trustee of a person referred to in any of subclauses (2) to (4); and (6) a person who acts as the principal or agent of a person referred to in any of subclauses (2) to (5). As was the case with Division 1, the definition of “person responsible for the contaminated site” again excludes municipalities and investigators. In this case, the test is based on the relationship to the substance/release and the property.

In practice, Division 2 is rarely used. Designation will only occur as a last resort when there are no other appropriate tools. There have only been five instances of designation of a contaminated site since 1993 and no environmental protection order appears to have been issued under Division 2. Division 2 offers options otherwise unavailable, including the allocation of responsibility to present and past site owners who may have contractually assumed liability for the pollution, remedial actions plans and agreements with the Director, and the apportionment of costs of remedial work among responsible parties. The Minister may also pay compensation to any person who suffers loss or damage as a direct result of the application of Part 5 Division 2.15

Environmental contamination may affect the valuation of expropriated property. Under the Expropriation Act,16compensation for expropriation is based on the market value of the expropriated land, which is in turn “the amount realized if sold in the open market by a willing seller to a willing buyer”,17 and provable damages. The determination of market value accounts for everything that is present in the site, except for the legislated exclusions found in section 45 of the Expropriation Act.

Contamination introduces issues in valuing expropriated property, given the uncertainty in liability exposure, scope, duration, risk and stigma. Below are some case law on the interaction between the expropriation of contaminated lands and the “polluter pays” principle.

In Toronto (City) v Bernardo,18 the respondent Bernardo was the registered owner of a property and permitted the corporate respondent’s scrap metal business on property rent-free by oral licence to occupy. The City of Toronto served and published notice to expropriate property. The City conducted environmental testing on property which showed contamination, and was advised that clean-up costs for property could be in range of $250,000 to $750,000. The appraised value of the property was $242,500 before taking into consideration site remediation or clean-up costs. Given the estimated cost of remediation which exceeded value of land, the City’s offer of compensation to the respondents was $1. The respondents did not request compensation hearing but refused to surrender possession. The City brought motion for order to take possession. The Ontario Supreme Court granted the City’s motion as the respondents had the opportunity to contest the City’s offer of compensation in proceedings before the Ontario Municipal Board and chose not to take any action to assert claims for compensation.

In Thompson v Alberta (Minister of Environment),19 the claimant had purchased land for the sum of $1 million. At the time of purchase, the land was not part of any property acquired by the Crown for a proposed transportation corridor. The Crown reviewed roadway plan within months of claimant’s purchase and determined that land was a necessary part of the corridor. The Crown expropriated land for $1,025,000. The claimant brought action for increased compensation. The action was allowed in part. The claimant was granted $1,120,000. The Crown’s valuation discounted the value of the property because of the unknown cost of filling or remediating a wetland (which is 50% of the property) for future residential development, which posed an economic challenge for a prospective purchaser. The Court found that the cost of remediation calculated by the Crown was based on premature assumption that land was to be developed in isolation with no possible cost sharing by adjacent developers. The Court, however, recognized that a discount must be applied for market value because of this possibility of remediation.

In Ville de Saint-Jean-sur-Richelieu c Cour du Québec,20 the subject property included a grocery store, snack-bar and a retail marina fuel distribution outlet for vessels navigating on Chambly canal, and a gas station for road vehicles. The issue before the Court was whether the costs of decontamination should be deducted from the compensation awarded for expropriation, based on the duty to remediate. It was argued that evidence demonstrated that there was a spill onto the neighbouring property, therefore the question as to cessation of activities no longer applied, and the mandatory provisions of the EQA regarding decontamination was triggered. The Tribunal Administratif du Québec (the “TAQ”) ruled that the total remediation cost of $450,000 be paid by the owner of the property, 9092-9340 Québec Inc. (“9092”) and should be deducted from its expropriation indemnity award. The value of the expropriated property, after deduction of the decontamination costs, was established as being $31,000.


Lock 9, the southern terminus of the Chambly Canal, is located in the town of St.-Jean-Sur-Richelieu.

The Court of Quebec allowed the appeal, holding that the finding of the TAQ was unreasonable and profoundly unfair. Were it not for the expropriation, 9092 could have ceased its activity at its own time, negotiated with a willing purchaser and, based upon the projects of the purchaser, negotiated the decontamination works remaining according to the circumstances. The City deprived 9092 of its right to complete the decontamination work at the time that it deemed the most suitable to its interests and subject to conditions that would have been more favourable. By forcing 9092 to assume the costs of decontamination estimated by the City engineer, the TAQ deprived the owner of the quasi-totality of the value of the expropriated property. The City brought a judicial review application which was subsequently dismissed. The Court found that the systemic analysis undertaken by the Court of Quebec highlights the significant defects and the fragility of the TAQ ruling to assign full liability to 9092 for the estimated costs of decontamination of the property.

Case law suggests that the law is not blind to the causation of the contamination when evaluating the market value of an expropriated property that has been contaminated. Liability for the remediation of contaminated land in Alberta clearly rests with “person responsible for the substance” and, in the rare case of designated contaminated sites, “person responsible for the contaminated site.” Liability for contamination does not run with the land in Alberta.

This leads to the question of what is the intent of the law in respect of a faultless landowner for the environmental depreciation of land in the expropriation context. The principles of statutory interpretation apply to deem the legislature as knowing all the law and the necessary statutory language to give effect to its intention. The EPEA and the Expropriation Act are meant to be interpreted harmoniously as a scheme in cases of expropriation involving contamination. The Expropriation Act is a remedial statute. Accordingly, it must be given a broad and liberal interpretation consistent with its purpose.

Currently, the right of a faultless landowner to recover from a “person responsible” remediation costs in civil claims (whether under the common law or the EPEA) is a chose in action. This chose in action does not appear to be considered in the calculation of market value in expropriation. In the new era of third-party litigation funding, a chose in action for remediation costs is a valuable element that may offset some or all of the discounts associated with contaminated land, even in an open market.

Footnotes

1 Species at Risk Act, SC 2002, c 29 [SARA].

2 SARA, s 80(1).

3 SARA, s 80(4)(c)(ii).

4 SARA, s 64(1).

5 SARA, s 64(2).

6 Wildlife Act, RSA 2000, c W-10.

7 The City of Medicine Hat et al v Canada (AG) et al, Federal Court of Canada File No. T-12-14. See also Federal Court of Canada, Proceeding Queries, Recorded Entries for T-12-14, online: click here.

8 Groupe Maison Candiac Inc v Canada (AG), 2018 FC 643.

9 Environmental Protection and Enhancement Act, RSA 2000, c E-12 [EPEA].

10 EPEA, ss 217, 219, 227-228.

11 EPEA, s 112.

12 EPEA, ss 113-114.

13 EPEA, s 1(tt).

14 EPEA, s 129(2).

15 EPEA, s 131.

16 Expropriation Act, RSA 2000, c E-13.

17 Expropriation Act, ss 41-42.

18 Toronto (City) v Bernardo, 2004 CanLII 5760 (ONSC).

19 Thompson v Alberta (Minister of Environment), 2006 ABQB 510.

20 Ville de Saint-Jean-sur-Richelieu c Cour du Québec, 2017 QCCS 4832.


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.

This article was first published on the BLG website. It is re-published with the permission of the author.

About the Author

Chidinma Thompson is a partner in Commercial Litigation Group at Borden Ladner Gervais LLP‘s Calgary office. She practices commercial litigation and arbitration, project approvals, environmental defence and compliance advisory. Her practice covers a broad range of sectors including oil and gas, electricity, renewable energy, municipal and land development. She has experience in regulatory hearings before the Alberta Energy Regulator and its predecessors, Alberta Utilities Commission, and the Calgary Subdivision and Development Appeal Board. She has appeared before the Alberta Provincial Court, Court of Queen’s Bench and the Court of Appeal.

Environmental Convictions & Contaminated Property: Ontario Summary for 2018

The Ontario Ministry of Environment, Conservation, and Parks (MOECP) publishes publishes an annual report on environmental penalties issued in the previous calendar year for certain land or water violations for companies subject to the Municipal Industrial Strategy for Abatement (MISA) Regulations.  Companies subject to the MISA Regulations belong to one of the nine industrial sectors found in the Effluent Monitoring and Effluent Limits (EMEL) regulations.  The summary report for 2017 was published in the Spring of 2018.

Under the MISA Regulations, environmental penalties can range from $1,000 per day for less serious violations such as failure to submit a quarterly report under the MISA Regulations  to $100,000 per day for the most serious violations, including a spill with a significant impact.

For serious offences under the Ontario Environmental Protection Act and Ontario Water Resources Act, the maximum and minimum corporate fines for each day on which the offence occurs is as follows:

  1. not less than $25,000 and not more than $6,000,000 on a first conviction;
  2. not less than $50,000 and not more than $10,000,000 on a second conviction; and
  3. not less than $100,000 and not more than $10,000,000 on each subsequent conviction.

In the past, Ontario Environment Ministry would publish a more comprehensive environmental enforcement report that covered all penalties, fines and convictions.

In a 2011 blog, Diane Saxe, Ontario’s former Environmental Commissioner and former partner at Siskinds Law Firm, wrote that  a typical year, the Ontario Environment launches about 150 to 175 prosecutions. About 75% of them are resolved by guilty pleas; about 5% are acquitted at trial; about 10% are convicted of something at trial; about 10% are withdrawn.

As the end of the calendar year approaches, the staff at Hazmat Management Magazine thought it would be useful to review some of the more significant environmental convictions related to contaminated property.  That summary can be found below.

Environmental Consultant and an Individual fined $50,000 for False RSC Incidents

In the Spring, an Ontario-based consulting firm that provides environmental, geotechnical, and hydrogeological consulting services was convicted when an employee falsified  Environment Ministry Letters of Acknowledgement to Records of Site Conditions (RSCs) for two properties.

An RSC is a statement on the environmental condition of a property and is typically a requirement by a municipality if a contaminated property is remediated and a redevelopment is proposed that involves a more sensitive land use (i.e., from industrial to residential).  The environmental consultant that performed the environmental site investigation at the site (a Phase I ESA and possibly a Phase II ESA) submits an RSC to the Environment Ministry.  The Environment Ministry issues an acknowledgement of the RSC.

The offences occurred in the Spring of 2014 and winter of 2015.  When the Consulting firm realized one of its employees had issued falsified documents related to the RSCs it immediately informed the affected owners of the related properties.  In the Fall of 2015, an owner/developer of another construction project in the Greater Toronto Area notified the ministry of concerns relating to their RSC submissions of which the consulting firm in question was involved.  At that time, the Environment Ministry commenced an audit and investigations.

The consulting firm was found guilty of one violation under the Environmental Protection Act (EPA), was fined $35,000 plus a Victim Fine Surcharge (VFS) of $8,750, and was given 30 days to pay. On the same date, former employee was found guilty of two violations under the EPA, was fined $15,000 plus a VFS of $3,750, and was given 18 months to pay.

Muskoka Cottage Owner fined $30,000 for Discharging Fuel Oil into Water Well

In the winter, a Muskoka homeowner was convicted for discharging fuel and other petroleum hydrocarbon into a water well which can impair the quality of the water. He was fined $30,000 plus a victim surcharge with 6 months to pay .

The conviction stems from an incident that occurred in the spring of 2016.  On May 16, 2016, the homeowner of a cottage on Lake of Bays poured heating fuel oil down a neighbor’s well, damaging the quality of the water in the well. The incident was referred to the Environment Ministry’s investigations and Enforcement branch, resulted in charges and one conviction through a guilty plea.

Residential Property Owner fined $3,000 for Falsely Claiming Property was Remediated

In the winter, a homeowner in Guelph was convicted of failing to apply with two provincial officers orders issued under the environmental protection act (EPA) . The homeowner was fined $3,000 plus a victim fine surcharge of $750 and was given 15 days to pay the fine .

The violation occurred in 2013 when the homeowner bought a residential property in Guelph , which earlier had been contaminated with oil fuel from a historic spill at the property . In the December of 2014, the homeowner put the residence up for sale.  The Environment Ministry subsequently received a complaint that the house was up for sale but had not been adequately remediated.

During the course of its investigations, the Environment Ministry found the previous owner had claimed the property had been remediated but discovered that no remediation had been conducted.  An Order was issued by the Environment Ministry for all documentation related to any remediation at the property to be submitted.  Despite providing an extension on a submission date, the not information was provided to the Environment Ministry.

The incident was referred to the ministry’s Investigations and Enforcement Branch, resulting in charges and the conviction against the property owner.

Fine of $30,000 for Discharging Contaminants and Illegal Operation of Waste Disposal Site

In the winter, a business located in the County of Essex and its owner was convicted of three offences under the Environmental Protection Act( EPA) and was also fined $30,000 for discharging dust that cause and was likely to cause an adverse effect, and being deposited at a property that is not allowed nor an approved waste disposal site.

A business owner in Essex County accepted 189 truckloads of  construction waste in 2014 despite the fact that property was not approved as a waste disposal site.

In 2015, the business owner was operating a farm tractor to turn soil at the site. The operation resulted in the release of plumes of dust which adversely affected nearby residents and their properties . The incident was referred to the Environment Ministry’s Investigations Branch.

 

Developer takes Alberta to appeal board over former Edmonton wood treatment plant

As reported by Global News, Cherokee Canada is fighting five enforcement orders imposed by Alberta Environment and Parks (AEP) connected to the former Domtar Wood Treatment Facility located in Edmonton.  AEP has been conducting an investigation on properties associated with the former Wood Treatment Plant. As a result of the investigation, a number of Enforcement Orders were issued to the current owners, Cherokee Canada.

Nearby residents, concerned by off-site migration of wood treatment chemicals, have been kept up-to-date of the results of the AEP investigation and subsequent enforcement actions. Contaminants from a historical wood treatment processing plant continue to exist on property formerly occupied by the Domtar Wood Treatment Plant.  This contamination, which originated prior to 1987, consists of benzene, dioxins and furans, free hydrocarbons, naphthalene, polycylic aromatic hydrocarbons (PAH) mixtures, and pyrene.

AEP stated in a news release that it issued the Enforcement Orders to ensure the responsible parties implement appropriate remedial measures and mitigate the potential risks that have been identified.  The latest Enforcement Orders require that the source of the contamination be controlled and remedial measures be implemented in specific areas of the property.

Off-site testing at lands adjacent to Cherokee Canada development (Photo Credit: CTV Edmonton)

Results of off-site testing for contamination in early 2018 found that contamination had not migrated off-site and that there are no health concerns in the surface soil of people’s properties. The off-site testing program was conducted by an independent third-party consulting firm under the direction of AEP.

Cherokee Canada, the developer has started turning the site of the old Wood Treatment Plant in northeast Edmonton into a new residential community but the current and ongoing legal proceedings have halted the project.  “It’s been very difficult because it’s effectively frozen our activities for three years now,” said John Dill, Cherokee Canada’s managing partner.  “It’s very expensive to go through this process, ” he added.

Houses have already been built in the neighbourhood but recently, the AEP questioned the safety of the soil.  AEP said third party testing at the site found chemicals dangerous to human health. The enforcement orders require Cherokee to remediate any contamination.

“The core aspect of these orders is to basically remove potentially large amounts of soil from these sites,” said Gilbert Van Nes, general counsel for the Environmental Appeals Board. “Domtar and Cherokee disagree that this is necessary.”

Both Cherokee Canada and Domtar have completed remediation efforts but AEP, through the enforcement orders, are claiming that they didn’t go far enough.

“Our approach was to take the contaminated soil, isolate it in a separate soil berm — again, a common practice in other jurisdictions — and ensure the soil was protected from exposure to other receptors, humans, animal,” Dill said.  “The disagreement is over how we can remediate this site so it’s safe for residential standards so that we can complete our residential development and restore the site that was previously contaminated to productive use.”

Three environmental experts are heading up the independent appeal board.  The board will pass its findings on to the environment minister and Shannon Phillips will make the final decision on whether construction can resume. However, a decision is not expected until December.

A map shows the former site of the Domtar creosote plant. (Photo Credit: CBC)

 

Rare Jail Sentence for Environmental Offence in Canada

On August 21, 2018, Collingwood Prime Realty Holdings Corp. and its director, Mr. Issa El-Hinn, were sentenced in the Ontario Court of Justice for offences under the Canadian Environmental Protection Act, 1999 related to contraventions of the PCB Regulations.

The charges stem from old electrical transformers and capacitors in use on the former Goodyear property at 101 Mountain Rd., which is now owned by Collingwood Prime Realty.

The property at 101 Mountain Rd., used to be a Goodyear plant. Erika Engel/CollingwoodToday

The court sentenced Mr. El-Hinn to a 45-day jail term, which will be served on weekends, for failing to comply with an environmental protection compliance order. The Court also sentenced the corporation and Mr. El-Hinn to pay a combined penalty of $420,000 to be directed to the federal Environmental Damages Fund.

On April 30, 2015, Environment and Climate Change Canada enforcement officers launched an investigation following the company’s failure to comply with an environmental protection compliance order. The investigation revealed that two electrical transformers and eight electrical capacitors contained higher-than-allowable PCB levels and that the equipment had not been sent for destruction to an authorized facility. The defendants pleaded guilty on September 26, 2017, to ten counts of contravening the PCB Regulations made pursuant to the Canadian Environmental Protection Act, 1999, and one count of failing to comply with an environmental protection compliance order.

As a result of this conviction, the company’s name will be added to the Environmental Offenders Registry.

PCBs are toxic industrial chemical substances that are harmful to aquatic ecosystems and species that feed primarily on aquatic organisms.

Earlier this year, Collingwood Fire Department successfully prosecuted Collingwood Prime Realty Holdings Corp., and its owner El Hinn for multiple fire code violations at the property at 101 Mountain Rd.

Mine fined $100,000 for not Monitoring Effluent

On August 20, 2018, Lupin Mines Incorporated was ordered in the Nunavut Court of Justice to pay $100,000 after pleading guilty to a violation under the Fisheries Act related to the Metal and Diamond Mining Effluent Regulations. Of the total penalty, $80,000 will be directed to the Environmental Damages Fund.

An investigation launched by Environment and Climate Change Canada enforcement officers revealed that Lupin Mines Incorporated did not carry out an environmental effects monitoring study within the prescribed period, contrary to the requirements of the Metal and Diamond Mining Effluent Regulations. Lupin Mines Incorporated has since completed the required study.

Owners and operators of mining companies are required by law to conduct environmental effects monitoring studies that examine the potential effects of their effluent (discharge) on fish populations and aquatic invertebrates.

As a result of this conviction, the company’s name will be added to the Environmental Offenders Registry.

Environment and Climate Change Canada is responsible for the administration and enforcement of the pollution prevention provisions of the Fisheries Act, which prohibit the deposit of deleterious substances into water frequented by fish. The Metal and Diamond Mining Effluent Regulations authorize the deposit of effluent, provided that conditions prescribed in the Regulations are observed.

Lupin Gold Mine, Nunavut

Environmental Consultant’s Disclaimer of Liability to Vendor effective against Third Party Purchaser

by Stanley D. Berger, Fogler Rubinoff

On July 23, 2018 the Court of Appeal for Newfoundland and Labrador in the case of Community Mental Health Initiative Inc. v. Summit Lounge Ltd. 2018 NLCA 42 upheld summary judgment dismissing a purchaser’s claim against two engineering companies (consultants) alleging negligence in the conduct of a Phase 1 Environmental Site Assessment performed for the vendor. The agreement between the consultants and the vendor and the final report both indicated that the assessment was prepared solely for the benefit of the vendor and that the consultants accepted no responsibility for any damages suffered by any third party. Significantly, the plaintiff-purchaser had knowledge of the disclaimer, having been provided with a copy of the final report by its real estate agent prior to the closing of the transaction. The Court of Appeal referred to the Supreme Court of Canada’s decision in Edgeworth Construction ltd. v. N.D. Lea & Associates Ltd. [1993] 3.S.C.R. 206 as well as decisions from appeal courts in Ontario Wolverine Tube (Canada) Inc. (1995) , 26 O.R. (3d) 577 and B.C., Kokanee Mortgage M.I.C. Ltd. 2018 BCCA 151 and summarized the legal principles as follows: (at par. 23) “… an express disclaimer of liability can be an effective bar against a claim by a third party who relied on work in the knowledge of the disclaimer. Permitting third parties to rely on reports which are expressly protected by a disclaimer would undermine the ability of contracting commercial parties to govern their own affairs.”

IMPLICATIONS FOR REAL ESTATE TRANSACTIONS AND ENVIRONMENTAL CONSULTANTS?

The long established principle of privity of contract i.e. that the rights and obligations in a contract apply only to the parties to the contract have been further tested by this decision. For engineering consultants, the decision highlights the importance of exacting express disclaimer clauses restricting responsibility for the reporting information to the party retaining them. For purchasers of real estate, it reinforces the necessity of obtaining indemnities from the vendor for undiscovered contamination or if that is not realistic, retaining an independent environmental consultant to verify any consulting reports given to them by the vendor.

This article was first published on the Fogler Rubinoff LLP website.

________________________________

About the Author

Mr. Stanley Berger serves as the Partner at Fogler, Rubinoff LLP. Mr. Berger joined the law firm of Fogler Rubinoff on July 4, 2013. Before joining Fogler Rubinoff, he served for 14 years as Assistant General Counsel to Ontario Power Generation Inc (OPG). In that capacity he provided legal services on licensing, environmental assessment, regulatory compliance, liability, security, decommissioning and waste management to the Nuclear Division of OPG.  Mr. Berger provided strategic legal advice and representation on aboriginal litigation and participated in First Nation settlement negotiations. Prior to joining OPG, he served as the Deputy Director of the Law Division for Prosecutions for the Ontario Ministry of Environment. In that capacity he managed the prosecution staff and helped shape prosecution policy. 

Couple admits illegally storing 4,500 tons of hazardous waste in warehouse

As reported in the St. Louis Post-Dispatch, a husband and wife recently plead guilty to a U.S. federal charge and admitted improperly transporting 4,500 tons of hazardous waste and storing it in a warehouse near St. Louis, Missouri.

The couple, both in their 60’s, pleaded guilty in U.S. District Court in St. Louis to a misdemeanor charge of placing someone in danger of death or serious bodily injury from a hazardous waste.

Green Materials LLC facility in Missouri (Photo Credit: Robert Patrick, Post Dispatch)

Their company, Missouri Green Materials LLC, Missouri Green Materials LLC stored a large quantity of spent sandblasting materials inside a warehouse located in the town of Berger, approximately 70 miles west of St. Louis. They couple admitted that they arranged for the transport and storage of the hazardous waste from Mississippi, and failed to tell both the trucking companies that hauled the waste and the personnel that unloaded it of the danger. Their storage facility was not properly permitted was not registered as a permitted hazardous waste storage or recycling facility. It is important to note that there are many waste removal services around to dispose of this for you. Firms range from Bulldog Rubbish Removal to a wide-variety of other waste removal services. (Bulldog Rubbish Removal is a great example, they maybe located in Melbourne, Australia but… with great customer reviews, these are the companies to make sure you keep an eye out for).

The sandblasting waste materials are considered to be hazardous because they contain amounts of certain metals, including cadmium, that exceed regulatory limits established by the Missouri Department of Natural Resources and the U.S. Environmental Protection Agency (U.S. EPA).

The materials were stored in a warehouse in a flood plain for more than four years. There are no indications of any release of the materials from the warehouse.

When it comes to storing products in a warehouse you need to ensure that all of the resources kept are correct under the laws of the area. It should also be kept to the correct health and safety regulations to ensure none of the workers are hurt. If everything is kept safely then it will also increase productivity. If you would like to increase productivity then you should take a look at Fishbowl Inventory.

The couple have agreed to pay $1.5 million to the U.S. EPA for the costs of dealing with the waste. They could face probation or a sentence of six months behind bars for the crime under federal sentencing guidelines.

The source of the sandblasting waste was for a site in Mississippi. An Ohio company, U.S. Technology Corp had been buried the waste. The company was repeatedly ordered by regulators to remove it.

In 2016, the U.S. EPA and U.S. Technology signed a consent agreement whereby the company agreed to remove the waste from Green Material’s facility in Missouri and test the site for soil contamination. According to prosecutors, this work was never performed.

U.S. Technology and president Raymond Williams, 71, both pleaded not guilty in the case. A hearing has been scheduled to change both pleas later in June.

Some sandblasting waste is classified as hazardous

Environmental Fine for Violation of Canada’s Regulations related to Petroleum Products Storage

Mosquito Grizzly Bear’s Head and Lean Man First Nation and band administrator, Arnold Moosomin, were recently sentenced in the Provincial Court of Saskatchewan for failing to comply with an environmental protection compliance order issued by Enforcement Officers from Environment Canada and Climate Change (the Canadian equivalent of the U.S. EPA).

Mosquito First Nation is an Assiniboine Nation located in the Eagle Hills approximately 30 kilometres south of Battleford, Saskatchewan.  It is nearly 50,000 acres in size and has approximately 1000 members.

The Court fined the Mosquito Grizzly Bear’s Head and Lean Man First Nation $100,000 and Moosomin $5,000.  The funds will be directed to the Environmental Damages Fund.

The fine was the result failing to comply with an environmental protection compliance order following an inspection to ensure compliance with the Canadian Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations.  These regulations establish technical standards for the design and installation of storage tank systems under federal jurisdiction and include requirements for operation, maintenance, removal, reporting and record-keeping.

Environmental Officers subsequently laid charges under the Canadian Environmental Protection Act, 1999 after it was determined that the First Nation and band administrator failed to comply with all of the terms of the order. The defendants were convicted following a trial.

Ontario Legal Report: Thompson Fuels Ordered To Pay Costs

Article by Paula LombardiSiskinds LLP

The case of Gendron v. Thompson Fuels, related to a home furnace oil tank that developed a leak in December 2008. The leak caused damage to the Gendron’s home and the surrounding environment, including nearby Sturgeon Lake. The City of Kawartha Lakes cleaned up the Lake.

On July 17, 2017 the court released its decision on this matter, (2017 ONSC 4009) granting judgement in favour of Gendron against Thompson Fuels. The court appropriated 60% liability to Gendron and 40% to Thompson Fuels. The parties agreed that, based on the court’s findings, Gendron’s total damages were $2,161,570, and Thompson Fuels’ portion of those costs equalled $901,747 ($864,628 plus $37,119 interest). In that decision the court found that the two remaining defendants, the Technical Standards and Safety Authority (“TSSA”) and Les Reservoirs D’Acier De Granby Inc. (“Granby”) were not liable.

Closeup of an oil slick in water with fall colors in the grass on the shore

The parties were unable to agree on costs and requested that submissions on costs be deferred until the decision on the post-trial motions was released. On March 29, 2018 the Court ordered Thompson Fuels to pay Gendron’s costs on a partial indemnity basis in the amount of $473,000.00 (2018 ONSC 2079). In arriving at this amount, the Court considered the Gendron’s contributory negligence, the costs of various post-trial motions brought by the parties, the reasonableness of Gendron’s bill of costs, and the fact that neither party had beat its offer to settle.

The Court then awarded $150,000 in costs to TSSA as against Gendron and Thompson Fuels, who had cross-claimed against TSSA. The Court further ordered Gendron and Thompson Fuels to contribute $140,000 and $10,000, respectively. The Court also ordered Gendron and Thompson Fuels to pay equal shares of TSSA’s costs of $7,500.00 for the post-trial motions. In deciding to award only partial indemnity costs, the Court found that given TSSA’s limited involvement at trial, it did not require two lawyers to attend at trial. The Court also noted that even though Gendron’s action in negligence against TSSA had failed, the trial Court had found that the TSSA had not been “a model of efficiency or clarity” in its dealings with Gendron.

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.

This article was first published on the Siskinds Law Firm web site.

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About the author

Paula Lombardi is a partner of Siskinds LLP,  and practices in the areas of environmental, municipal, regulatory and administrative law.  Prior to joining Siskinds, Paula worked as an associate at a Bay Street law firm where her practice focused on occupational health and safety, environmental and regulatory matters.

Paula recently spent two years as in-house counsel for a major privately owned US corporation, whose owner is on the Forbes 500 list, and was responsible for all Canadian legal and business issues relating to the import and export of goods, transportation of hazardous materials, remediation of contaminated sites, construction of large infrastructure projects, regulatory compliance, NAFTA matters, and preparation of environmental assessments in the US and Canada.

Paula has a great deal of experience in: providing due diligence advice; dealing with contamination issues; handling of organic chemicals and hazardous wastes; obtaining environmental approvals; obtaining planning and development approvals; providing advice to municipalities; defending environmental prosecutions; and assisting companies with environmental and regulatory compliance. Paula has appeared before numerous administrative tribunals.

Pulp Mill in British Columbia fined $900K for releasing deleterious effluent

The Mackenzie Pulp Mill Corporation recently pleaded guilty, in the Provincial Court of British Columbia, to depositing a deleterious substance into water frequented by fish, in violation of the pollution-prevention provisions of the Fisheries Act.  The company was ordered to pay a penalty of $900,000, which will be directed to the federal Environmental Damages Fund.  This funding is to be used for the conservation of fish or fish habitat in the Omineca region of British Columbia. The company was also ordered to complete an independent audit of its operations to prevent future incidents of this kind.

The offence relates to incidents in July 2014 and September 2016, when effluent discharging from the Mackenzie Pulp Mill was found to be deleterious to fish. Environment and Climate Change Canada enforcement officers investigated the incidents, and their investigation revealed that the mill’s treatment system had not properly treated the effluent before discharging it, due in part to improper management of the wastewater entering the treatment system. The effluent was deposited into Williston Lake, which is frequented by fish.

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.