Should the Ontario Ministry of the Environment (MOE) be allowed to impose unfair liability on innocent landowners instead of the parties who are actually responsible? What happened to 'polluter pays' and to 'fairness'?
Fifteen years ago, in Ontario (Ministry of the Environment & Energy) v. 724597 Ontario Inc. (Appletex), [1995] O.J. No. 3713, what was then the environmental appeal board and the Divisional Court insisted that fairness is a proper and relevant criterion for the imposition of environmental liability. They therefore set aside most of an expensive cleanup order against innocent parties that had not caused the contamination of a bankrupt textile mill. Appletex was based on, and consistent with, nationwide principles on environmental liability adopted by the Canadian Council of Ministers of the Environment, meaning every Minister of the Environment in the country.
Now, however, the Environmental Review Tribunal has rejected the Appletex principles, and accepted the MOE’s argument that fairness is largely irrelevant.
Kawartha Lakes (City) v. Ontario (Ministry of the Environment) [2009] O.E.R.T.D. No. 59 began with a furnace oil spill in the basement of Wayne and Liana Gendron on Dec. 18, 2008. Allegedly, they did not report the spill. Their home insurance company, Farmers’ Mutual, retained a cleanup contractor, DL services, on Dec. 30. By then, spilled fuel had flowed through the municipal sewer system and culverts into Sturgeon Lake. The MOE issued a provincial officer’s order requiring the Gendrons to clean up the spill.
Three months later, DL Services had exhausted the insurance, but furnace oil still contaminated municipal property, such as roadways, storm drains and the lakefront.
According to the city, 'Each of the homeowner, Thompson Fuels, the homeowner’s insurance adjuster, the Ministry of the Environment and the TSSA had an opportunity to prevent the fuel oil from reaching Sturgeon Lake, greatly reducing the remediation costs and virtually eliminating the need for an order being issued against the taxpayers of the City of Kawartha Lakes.'
Provincial staff appear to have had a significant influence on how the insurance money was spent, and chose to spend none of it cleaning up municipal property.
The ministry then ordered the city to take over the cleanup of all municipal property. Adding insult to injury, the order was issued to the city in its capacity as landowner of the contaminated land under s. 157.1 of the Environmental Protection Act and not under the spill rules — s. 97. If the cleanup order had been issued under s. 97, the city would have had certain protections from liability (s. 98), a right to compensation for its costs from those responsible (s. 99) and a right to compensation from the provincial Crown (s. 101). It would also have had a clearer right to recover its costs and expenses using a cost recovery order under s. 100.1. Was it an accident that the province designed its order in a way that denied the municipality these rights and protections?
The city appealed the order. It wanted to argue that it is unfair to download the cleanup cost onto the innocent, heavily burdened municipal taxpayer. Instead, the cleanup cost should be imposed on, or at least shared by, those responsible for creating this spill and for allowing it to contaminate municipal property. The city also wished to argue that the insurance funds had been squandered.
On Nov. 20, 2009, the environmental review tribunal blocked the city from adducing evidence on these points. In essence, it ruled that allowing innocent parties to appeal orders because they don’t fairly allocate liability could make its hearings more costly and complex. This might interfere with the rapid imposition of environmental cleanup requirements. Innocent parties forced to pay environmental costs should seek their remedies, such as they may be, in the civil courts. If they are left without a remedy, that’s unfortunate, but not the tribunal’s concern. The tribunal stated:
'A detailed inquiry into fault would prejudice the ability of the Tribunal (and perhaps the Provincial Officer or Director in the first instance) to deal with environmental problems in a prompt and efficient manner...
'At the end of the day, the EPA seeks to ensure that appropriate environmental measures are carried out by one or more of those who are properly named under the relevant ordering section and who have the capacity to do the work. While it may be interesting that others could have been named or that one party contributed to a problem less than others (or in the case of innocent owners, not at all), those are not really issues that are germane to the questions before the Tribunal…
'In many ways, the Tribunal is not the ultimate decider of whether a polluter, owner, beneficiary or other responsible person ‘pays’... ultimate liability may be determined in a civil action, a court proceeding under section 99 of the EPA, an order (and possible appeal) under section 100.1 of the EPA... If the Tribunal were to significantly expand its role...determining who will ultimately pay...it is doubtful that it could do so in a ‘quick and specialised process’...'
The tribunal denied the city a stay, so the cleanup will likely be complete, at municipal expense, before the appeal hearing begins in April.
If you received a cleanup order for a neighbour’s spill, how would you pay for it? Conventional CGL insurance policies probably don’t protect innocent landowners against orders to clean up contamination that didn’t originate on their property and that they did not cause. Municipalities have more cost recovery options than other innocent owners, which is fortunate considering how often private spills contaminate municipal property.
But the bottom line message for municipalities and other innocent victims of a neighbour’s spill is simple: neither the MOE nor the tribunal will look after you. You’d better get involved early and with gusto — your money is at stake.
Dianne Saxe is an environmental law specialist and heads the environmental law boutique Saxe Law Office in Toronto.
Back
