Asbestos, Asbestos Everywhere: Complying with Ontario’s New Asbestos Regulations

Just when you think you have complied with your legal obligations respecting asbestos that came into effect two years ago, two new legal requirements under Ontario Regulation 278/05 came into force on November 1, 2007.

As of November 1, 2007, asbestos management programs must now include both friable and non-friable asbestos-containing material (ACM). Prior to November 1, 2007, requirements related to friable asbestos only.

The effect of this change is significant as it renders many of the existing surveys obsolete or non-compliant. Owners will now have to review and update their existing asbestos surveys and asbestos management plans to determine the presence of non-friable ACM in their buildings. Good news for consultants. Bad news for owners.

Another effect of this new legal requirement is that some tenants, employers and workers who did not have to be notified under the pre-November 1, 2007 requirements will now have to be notified with respect to non-friable asbestos.

The second new legal requirement that came into effect November 1, 2007 requires workers and supervisors involved in Type 3 operations to successfully complete an Asbestos Abatement Worker Training Program approved by the Ministry of Training, Colleges and Universities, prior to commencing the work.

Annie Thuan

 

City of Toronto Proposes New Environmental Reporting and Disclosure Program

The City of Toronto is considering a new bylaw to introduce an Environmental Reporting and Disclosure Program that will require certain businesses to report the use or release of certain prescribed chemicals to the City, on an annual basis.  The information reported to the City will be made publicly available.

Businesses with facilities that use or release any of 25 listed chemicals in amounts above specified thresholds would be affected by the proposed program.

The 25 substances listed in the consultation document are substances that the City has identified as being of concern to human health. These substances include: carbon tetrachloride, lead, nickel, polycyclic aromatic hydrocarbons, tetrachloroethylene, trichloroethylene, vinyl chloride and volatile organic compounds.

Under the proposed program, companies will be required to conduct annual reviews of their operations to determine whether the business used or released any of the 25 listed chemicals into the environment. The reporting requirement is triggered if the company's use or release of the listed chemical exceeds the substance reporting threshold set by the City.

Certain types of businesses and sources of chemicals will be exempted from the program.  Sector exemptions include residential homes, small medical facilities and accommodation and food services. Source exemptions include chemicals that exist as part of a manufactured item and are not released by using that item, chemicals that exist in the distribution, storage or retail sale of fuels and road dust.

More Details Needed to Fully Understand the Implications of the Program on Businesses

More details about the proposed bylaw and program are needed to fully understand the implications for businesses in Toronto.  For example, the consultation document does not specify whether and how the City intends to integrate the new bylaw with existing federal, provincial and municipal reporting requirements.  This new program could have the effect of unduly increasing the reporting obligations of businesses, simply because of the inability of the various levels of government to coordinate and to share data already generated from existing programs.

Secondly, the City has not decided whether the raw data submitted by each business will be made available to the public on a searchable website or, conversely, whether the City will compile the information and present it generally in a report, showing total emissions and trends.  Issues relating to trade secrets and proprietary information that may be made publicly available will also need to be addressed.

The consultation document is available at http://www.toronto.ca/health/hphe/enviro_info.htm.  The City has invited interested parties to submit their comments to the City by February 6, 2008. The Ontario Bar Association is preparing a written submission to the City and will be addressing a number of these and other related concerns.  Annie Thuan of our Toronto office is participating in that process.  Please contact her at (416) 307-4035 or [email protected] if you wish to obtain a copy of that written submission or have any other questions.

Environmental Liability in "As Is" Transactions

The recently reported case of Antorisa Investments Ltd. v. 172965 Canada Ltd. 82 O.R. (3d) 437 gives support for something real estate lawyers have been advising clients for some time. If you make no representation or warranty, give people an opportunity to inspect and test on the property and have the Purchaser take the property in an “as is” condition, a Vendor can escape liability to the Purchaser for environmental contamination on the property even if the Vendor caused it.

In 1989 Esso acquired the shares of Texaco and was ordered by the Federal Bureau of Competition Policy to dispose of a large number of properties, including a number to be sold for continued petroleum use. Because the time frame was short Esso couldn’t intrusively test all the properties so it developed an evaluation process that established which properties were most likely to be contaminated and tested them but sold the rest on an “as is” basis giving the purchasers the opportunity to do intrusive testing and with Esso remediating any problems discovered.

The provisions of the agreement were very comprehensive and had a full range of Vendor protective provisions - “as is”, advice as to the potential for contamination, no liability for environmental condition, no representations, “at purchaser’s at risk” after closing and an indemnification. Antorisa bought four properties, identified contamination on three of them, which Esso remediated but did limited testing of the fourth which was much later was discovered had been severely contaminated. It wanted the court to impose tort liability on Esso, which had, as Texaco, caused the contamination.

The court held that the terms of the agreement were clear and express enough to override any possible claim in tort and specifically supported the common law position of caveat emptor (buyer beware) in the sale of real property, absent fraud, mistake, negligent representation or a latent defect.

It should be pointed out that while the provisions of the agreement did limit Esso’s liability to Antorisa, the case was a private tort claim and Esso may well have had liabilities for orders under environmental legislation or tort claims made by third parties. Accordingly, Vendors are wise to more fully understand the environmental condition of properties they are selling, particularly if the Vendor has carried on activities that might have caused environmental contamination.

Bruce McKenna

Bill 133 – The ‘Spills Bill’

The Environmental Protection Act (“EPA”) is the principal pollution control statue in Ontario and is used along with the Ontario Water Resources Act (“OWRA”) to prosecute for unlawful discharges (“spills”) to the environment. 

Both the EPA and the OWRA define what constitutes an unlawful discharge into the environment. Both the EPA and the OWRA contain penalty provisions for any individuals or corporations causing or permitting illegal spills or discharges.  The penalties include fines and possible incarceration for those convicted.

Impact of Bill 133

Bill 133 received Royal Assent on June 9, 2005.  Bill 133 proposes significant changes to the EPA and the OWRA.  Individuals, directors and officers should be wary of these changes.  The proposed changes will make it easier for the Ministry of the Environment to penalize corporations for causing discharges and spills into the environment.  Under Bill 133 corporations could still be penalized notwithstanding that they took all reasonable care to prevent a spill or were duly diligent.

The proposed amendments to the EPA and OWRA set out in Bill 133 include:

· implementation of “Environmental Penalties” (affecting “regulated persons” only)

· increasing directors and officers liability

· prohibiting the use of a due diligence defence against the imposition of Environmental Penalties

· requiring persons charged to demonstrate that they took all reasonable care to prevent a discharge (this is a reverse onus provision under the current regime the Crown is required to prove guilt)

· increased penalties including the option of jail time for polluters

· limiting the court’s discretion in assessing fines

· implementation of spill clean up cost orders enabling municipalities and the province to recover their costs of responding to a spill without engaging in a court action

· broader definitions of pollution and impairment

· requirement for pollution prevention plans (“regulated persons” only)

Some of the key changes proposed for the EPA and OWRA are discussed below.

Environmental Penalties

Environmental Penalties can be issued against “regulated persons”, a term that will be defined in the regulations. The government has stated on several occasions that “regulated persons” will be limited to industries currently regulated under the Municipal Industrial Standards for Abatement (“MISA”). These industries include the following major industrial sectors: organic chemical; inorganic chemicals; iron and steel; electric power generation; metal casings; pulp and paper; metal mining; and industrial minerals.

Environmental Penalties of up to $100,000.00 per day can be issued against corporations responsible for unlawful discharges. The amount of penalty will depend on the seriousness of the spill, if best efforts were used to prevent the spill from occurring, the actions taken to mitigate the discharge and prevent any recurrences. The Ministry will also consider whether a company has an environmental management system in place. These penalties will be imposed by the Ministry of the Environment shortly after a spill occurs.

In addition to being responsible for an Environmental Penalty, corporations can still be prosecuted and convicted under the EPA and OWRA. This may result in more fines and possible penal sanctions being imposed on top of the Environmental Penalty.

Environmental Penalties will be imposed even where the corporation took all reasonable steps to prevent the spill. These penalties will also be imposed regardless of whether the person held an honest and reasonable belief in a mistaken set of facts that, if true, would have rendered the contravention innocent. The legislation takes away any available defence to individuals and corporations including the defences of due diligence and mistake of fact. Environmental Penalties can be appealed to the Environmental Review Tribunal (“ERT”).

The reverse onus provision means that officers and directors of a corporation charged with a spill will be required to prove that the took “all reasonable steps to prevent the spill”.

Conclusion

Bill 133 broadens the definition of what constitutes an “unlawful discharge” and causes an adverse effect under the EPA and OWRA. Currently the threshold is when a contaminant “causes or is likely to cause” an adverse effect. This threshold is considerably lower in Bill 133 to when a contaminant “may cause” an adverse effect. However, where the discharge was authorized by the EPA or OWRA, the discharge is illegal only if the discharge caused or was likely to cause and adverse effect.

The proposed new definition will greatly increase the number of unlawful discharges that occur along with the number of reportable discharges. Under the proposed amendment the release of any contaminant into the environment, regardless of whether it is actually adverse or not, may be considered a chargeable offence. We are unable to determine how this new definition will be applied and interpreted by the Ministry of the Environment.

Failing to consider the issues raised under Bill 133 could have a significant impact on a corporations operations and result in increased liability for directors and/or officers. This is because the new regulatory measures being introduced effectively eliminates the common law defences of due diligence and honest mistake.

In light of the increased liability in Bill 133 we would recommend that companies dealing directly or indirectly with any hazardous substances, solid waste, liquid industrial waste or, sanitary sewage disposal, or that are discharging to the air, ground and surface water, review their environmental risk management practices. Failing to consider the responsibilities raised under Bill 133 could have a significant impact on a corporation’s operations and could result in personal liability for directors and/or officers.

Directors and officers will need some assistance in determining the potential environmental risks and liabilities facing their industries. For example an environmental risk analysis should be conducted so that directors and officers are familiar with the nature of its operations including among others:

· historic and current solid waste and liquid waste management practices, with identification of all historic landfill and lagoon sites

· procedures for hazardous materials and wastes

· discharges to air and ground and surface water

· spill and emergency plans and training, emergency and spill response equipment and procedures

· sanitary sewage disposal

· monitoring procedures and data management.

 Paula Lombardi