|A roundup of important new legislation, regulations, government announcements and court cases that we covered in the Environmental Compliance Insider in 2012.
LAW OF THE YEAR
In May, Ontario set new rules for vertical closed loop drilling for geothermal energy systems. Geothermal installers are now required to:
CASE OF THE YEAR
Court Overturns $36 Million Award in ON Environmental Class Action Lawsuit
For 66 years, a refinery in the Port Colborne area of Ontario emitted nickel into the air. After the MOE revealed that it had found higher than expected nickel levels in a soil sample from a neighbouring property, generating negative publicity, about 7,000 property owners in the area brought a class action lawsuit against the refinery, claiming that the negative publicity harmed their property values. The Ontario Superior Court of Justice ruled for the class, ordering the refinery to pay the class members $36 million. But the Ontario Court of Appeal set aside the verdict. The appeals court ruled that the trial court didn’t properly apply the Rylands v. Fletcher rule for strict liability torts. In addition, it held that to prove nuisance, the class members had to show that they suffered actual physical injury or harm as a result of the refinery’s conduct, which they didn’t [Smith v. Inco Ltd.,  ONSC 628 (CanLII), Oct. 7, 2010]. And on April 26, 2012, the Supreme Court of Canada refused to hear an appeal of the dismissal of the class action.
First Conviction for Firing Worker for Complying with EPA
During construction of a dam, the hydraulic fluid line on an excavator burst and leaked hydraulic oil onto the ground. The construction company cleaned up the spill and put the clean-up materials into the bucket of a loader. Although the company’s health and safety supervisor oversaw the containment and clean-up of the spill, he didn’t report it to the MOE. A worker did report the spill to the MOE that night. He was then fired. The company was convicted of two violations, including firing an employee because he complied with the Environmental Protection Act—the first conviction for this offence. The court fined it $67,000 and ordered it to pay $8,000 to the fired worker as restitution for lost wages [Carica Construction Inc., Govt. News Release, May 15, 2012].
Requiring Uranium Mines to Clean up Contamination Didn’t Violate Contract
During the Cold War, mining companies were encouraged to mine uranium oxide and sell it to a Crown corporation, which then sold it to the US. But uranium mining harmed the environment, so the government required the mining companies to remediate the contamination, which they did. They then asked the government to pay for these costs. Canada refused so the companies sued, arguing that the refusal was a breach of their contract with the Crown corporation. The court dismissed the lawsuit. The implied term the government allegedly violated is inconsistent with the contract’s express terms. In addition, the government didn’t violate its duty of good faith in its performance under the contract by passing regulations requiring uranium mine operators to clean up pollution [Rio Algom Ltd. v. The Attorney General of Canada,  ONSC 550 (CanLII), Jan. 4, 2012].
Blasting Company Should’ve Reported Discharge of Flyrock
During a highway blasting operation, flyrock damaged a house and car. The blasting company reported the incident to the MOT and MOL but not the MOE. It was charged with failing to report the discharge of a contaminant that caused or was likely to cause an adverse effect. The trial court dismissed the charge. But the appeals court ruled that, under the Ontario EPA, flyrock fits the definition of “contaminant” and “adverse effect” includes property damage. And the Court of Appeal agreed. There were no policy reason for limiting the coverage of the EPA to situations in which serious adverse effects to people, animals and property can be considered only if the environment is also harmed by the same event. Here, the discharge of flyrock into the air during a blasting operation was a sufficient trigger for scrutiny under the EPA [Ontario (Minister of the Environment) v. Castonguay Blasting Ltd.,  O.J. No. 1161, March 16, 2012].
City Ordered to Clean up Damage from Oil Spill Caused by Private Party
Several hundred litres of furnace oil leaked from the basement of a privately owned
building onto property that the city owned and from which it could adversely affect a lake. The MOE ordered the private property owners to remediate the damage. But their funds ran out before remediation was complete. So the MOE ordered the city to clean up the contamination on its property and prevent discharge of the contaminant from the property. The city appealed the order, arguing that it undermined the “polluter pays” principle. The court ruled that the city had to comply. The party responsible for the spill couldn’t afford to remediate it. But if left alone, the damage to the environment would only get worse. So the MOE properly exercised its discretion in requiring the “innocent” city to remediate its own property [Corporation of the City of Kawarta Lakes. v. Director, Ministry of the Environment,  ONSC 2708 (CanLII), May 28, 2012].
Bankrupt Company Released from Remediation Obligations in MOE Orders
The MOE issued orders that would require a company to spend at least $18 million investigating and remediating contamination on properties it had since sold and no longer used. But because the company had filed for bankruptcy, it claimed it was protected from all financial claims, such as the MOE orders. The MOE argued that it was just exercising its regulatory powers, which weren’t subject to insolvency rules. However, the court didn’t buy it. When the MOE tries to force a company to spend money on prior contamination that’s unrelated to the duties of an on-going business, it’s making a financial “claim” and so must abide by the insolvency laws like any other creditor. Thus, the court released the company from all remediation obligations under the MOE orders [Re: Nortel Networks Corp.,  ONSC 1213 (CanLII), March 9, 2012].
Homeowner Had Limited Right to Records on TCE Leak
A facility leaked trichloroethylene (TCE) into neighbouring properties, contaminating the local groundwater and creating a potential health hazard from the movement of vapours from the groundwater into the basements of nearby homes. The facility’s owner hired an environmental consultant to conduct various technical studies, the results of which were submitted to the MOE. A homeowner submitted a request to the MOE for access to those reports and other records related to the leak. The MOE granted partial access, relying on the Freedom of Information and Protection of Privacy Act. The facility appealed. The Privacy Commissioner upheld the MOE’s decision and ordered it to disclose certain records and information from other homeowners whose consent it had [Re Ontario (Environment),  CanLII 33049 (ON IPC), June 13, 2012].
Insurance Didn’t Cover Costs of Complying with MOE Request
After investigating contamination on property previously owned by a company, the MOE asked the company for certain environmental information and told it to conduct an investigation of the levels of contamination. The company agreed and spent over $4 million complying. It then filed a claim with its insurer for coverage of these costs, describing them as “defence costs.” The insurer refused to pay so the company sued. The court concluded that the MOE request didn’t trigger the “duty to defend” under the company’s policy so the costs weren’t “defence costs” but compliance costs. Thus, the insurer didn’t have to pay them. And the appeals court agreed [General Electric Canada Company v. Aviva Canada, Inc.,  ONCA 525 (CanLII), Aug. 2, 2012].
Spill of Oleum Acid Costs Mining Company $150,000
Mining company workers were loading a tanker car with oleum acid when some of the liquid spilled out of the car. They failed to promptly notify the MOE of the spill. The company pleaded guilty to spilling a pollutant and failing to notify the ministry of the spill and was fined $150,000 [Vale Canada Ltd., Govt. News Release, May 28, 2012].
Company Fined $150,000 for Discharge of Contaminants into Air
A worker contacted the MOE to report the release into the air of BLE 25 and acetone from a plant, resulting in black particulate fallout in the nearby town. The company pleaded guilty to discharging contaminants into the natural environment that caused or was likely to cause an adverse effect. The court fined it $150,000 [Chemtura Canada, Govt. News Release, May 18, 2012].
Manufacturing Facility Fined $100,000 for Discharging Metal Particulate
MOE inspectors visited a manufacturing facility after getting a complaint. They noted that vehicles onsite and on adjacent properties were covered in orange metal particulate. They also found that the company’s filtration unit wasn’t working properly and was discharging particulate out of its roof stack. The facility was fined $100,000 for discharging a contaminant, namely metal particulate, causing an adverse effect [Magna Powertrain Inc. o/a MPT Precision Technologies, Govt. News Release, Sept. 17, 2012].
Ignoring MOE Order Costs Business Owner $85,000
The MOE ordered the owner of a peat extraction business to stop discharging water off-site to nearby roads and properties without ministry approval. He failed to comply with this order and was fined $85,000 [George Murtry Eng, Govt. News Release, Sept. 28, 2012].
Company & Environmental Manager Fined $81,000 for Waste Violations
The MOE inspected a waste management company’s site and found numerous violations, including processing drums of waste outside, failing to maintain accurate and up-to-date records of waste volumes and providing false information on PCB contamination of a tanker of waste solvents. The MOE issued an order requiring the company to provide a summary of the daily waste volumes remaining on the site on all operating days during the calendar year but it didn’t comply. The company and its environmental manager pleaded guilty to environmental violations and were fined $81,000 [Buckham Transport Ltd. and David Neilson, Govt. News Release, Aug. 3, 2012].
Wastewater Discharge Costs Poultry Company $60,000
A poultry company had a sewage works C of A for the treatment of wastewater that’s generated before, during and after the process of killing and washing poultry. It pumped the wastewater into a lagoon, where it was treated and aerated. The facility discharged wastewater into a creek, which was reported to the ministry by a neighbour. The company pleaded guilty to two violations of the Ontario Water Resources Act and was fined $60,000 [Wellington Poultry Ltd., Govt. News Release, Aug. 3, 2012].
Sewage Discharge Results in $60,000 Fine for Company & Director
Raw sewage was discharged from the property of a company that operates a winery, retail store and banquet hall. The cause of the discharge was a leak in a pipe of an unapproved sewage works being operated by the company. The MOE ordered the company to apply for a C of A, which it didn’t do. The company and its director were convicted of violating the Ontario Water Resources Act by failing to comply with the order. They were fined $60,000 [Hernder Farms Ltd. and Gottfried Hernder, Govt. News Release, Aug. 14, 2012].
Company & Owner Fined $60,000 for Sewage Violation
A malfunction at a municipal sewage treatment plant in an electronic circuit board caused the pumps to become inoperative. As a result, the tank reached capacity, overflowing directly to the South Nation River. The company that operated the plant and its owner were fined $60,000 for improperly operating a sewage treatment plant that resulted in a sewage overflow to a nearby river [Team Aquatic Management Inc. and Denis C. Roy, Govt. News Release, Sept. 27, 2012].
Company & Director Fined $53,000 for Ignoring MOE Order
The MOE issued a Provincial Officer’s Order to a waste disposal company and its director, requiring them to design and implement a plan to remove the waste sand pile from the site. But they didn’t remove a waste pile of 5,000 tonnes of foundry sand from the property. The court convicted the company of one violation of the Environmental Protection Act. The director pleaded guilty to a violation. The court fined both a total of $53,000 [Copper Cliff Metals & Wrecking Corp. and Tony De Pasquale, Govt. News Release, Sept. 21, 2012].
Farm Fined $36,000 for Ammonia Release
During a planting operation at a farm, a worker was driving a tractor when a tank of anhydrous ammonia shifted, causing the ammonia distribution system to rupture. Anhydrous ammonia gas was released in a vapour cloud. The neighbours in the area were forced to evacuate their homes. The farm pleaded guilty to one violation of the Environmental Protection Act and was fined $36,000 [484900 Ontario Inc. o/a Ridge Valley Farms, Govt. News Release, June 26, 2012].
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