The issues and potential liabilities for environmental matters continue to be important for businesses in Canada, whether for daily operations or new projects. Environmental legislation (statutes and regulations) in Canada is enforced by three levels of government: federal, provincial/territorial and municipal.
As in most jurisdictions around the world, it is an offence to discharge contaminants into the natural environment, and there are reporting obligations that must be complied with when certain discharges or spills occur. Approvals are typically required for activities capable of impacting the environment. It is an offence to cause or permit an unlawful discharge, fail to report in a timely manner, fail to obtain a required approval, or not comply with its terms. Offences can result in significant fines and penalties against companies as well as individuals. Projects can require the assessment of potential environmental impacts, particularly if there is government involvement.
Federal & provincial legislation
Under the Canadian Environmental Protection Act, 1999, the federal government can regulate substances in Canada. This includes imposing requirements for substances that are new to Canada and substances that are considered to be toxic, reporting information relating to the emission of pollutants into the environment, and the interprovincial and international movement of hazardous waste and recyclable materials. There is also federal legislation related to impacts on fish, the protection of species at risk and migratory birds.
Notably, the Canadian Environmental Assessment Act was overhauled in 2012. It now focuses on significant projects that are designated as requiring a legislative assessment, attempts to eliminate duplication between federal and provincial assessments, and imposes timelines for the completion of assessments.
Each province (and territory) has environmental protection legislation. For the most part, provincial legislation has the greatest day-to-day impact on businesses.
Typically, provincial legislation imposes requirements to obtain approvals for air or water discharges, and regulates contaminated sites (see below) and matters related to waste (creation, management and disposal). There are many new and emerging initiatives across Canada related to the recovery/reuse of waste materials by producers and importers (e.g. stewardship of recyclables, including electronics, etc).
Environmental legislation can impose significant penalties for infractions. Enforcement varies across the country, and within each province. In Ontario, maximum penalties can be as high as CAD10 million per day, and prison sentences are available. Minimum penalties can be imposed in certain cases. Some jurisdictions have introduced administrative penalties. There are also provisions that impose positive duties on officers and directors to take reasonable care to ensure their company complies with environmental law. In Québec, new provisions can impose personal liability on officers and directors who are presumed to have committed an offence when the company has committed an offence, unless the officer or director can prove that he or she exercised due diligence and took all necessary precautions to prevent the offence.
Municipalities derive their jurisdiction from provincial governments. On the environmental front, in addition to planning, municipalities have traditionally regulated matters such as noise and sewers. Municipalities looking to expand their powers in this area have introduced by-laws, for example, that require businesses to report their use of toxic substances (community "right-to-know").
Contaminated property and brownfield opportunities
Provincial legislation, for the most part, regulates contaminated property, including the investigation and remediation of suspected or known contamination. This can involve orders that require work to be done. The provinces have adopted criteria that are used to assess contamination. Some of the criteria are in legislation, while others are guidelines without the force of law on their own. Risk assessment continues to gain acceptance for addressing contamination.
There are live issues related to who is responsible for historic contamination, and these cases increasingly go beyond "polluter pays" to include prior and current owners and persons with control of the property. This is an evolving area, as are the cases related to civil liability and class actions for contamination. In 2012, the Ontario Ministry of the Environment ordered the former directors of a company to take over the investigation and remediation of a contaminated property that had been managed by the company before it went bankrupt. The orders have been appealed, and this will be an important case to watch.
The Constitution Act, 1982 protects the aboriginal and treaty rights of aboriginal peoples. The duty to consult and, if appropriate, accommodate, arises when the federal or provincial government has knowledge of aboriginal or treaty rights or traditional uses of land that may be impacted by contemplated governmental action. The Crown's duty to consult exists independently from any statutory obligation or any regulatory process. The scope of consultation depends upon the right and nature of the potential impact.
Existing climate change legislation includes federal and provincial greenhouse gas (GHG) reporting. Legislation requiring reductions in GHG emissions is less common, and compliance-based emissions trading exists only in Alberta. Alberta has implemented a GHG management system that incorporates obligations for large emitters to reduce emissions intensity, and provides trading in excess reductions and the use of and ability to trade offsets.
Although Canadian legislation does not expressly require the implementation of sustainability strategies, directors and officers of Canadian companies are required to act in the best interests of the corporations they serve. This encourages (and arguably requires) business leaders to think broadly about the opportunities and risks their companies face. Many Canadian investors and lenders have come to expect that companies demonstrate a strong and clear commitment to environmental sustainability.