CONTENTS

• ENVIRONMENTAL PENALTY BILL SHOCKS REGULATED COMMUNITY:
  • Absolute Liability Penalties
  • What About the Charter?
  • Director/Officer Liability
  • Bill Has Many Sharp Teeth
• ENGAGEMENTS OF NOTE

ENVIRONMENTAL PENALTY BILL SHOCKS REGULATED COMMUNITY

Ontario's MOE has threatened to strengthen its environmental enforcement arsenal by increasing spill penalties, broadening director and officer liability, and making it harder for companies and municipalities to defend charges and fines. Proposed new legislation will introduce Environmental Penalties (EP) that will impose absolute liability on those "responsible for spills that damage the environment and compromise the health of Ontarians."

Premier Dalton McGuinty insists that Bill 133 would ensure polluters immediately face consequences for their actions. An EP and associated order could be imposed by a Ministry official within days of a spill. "Our message to polluters is simple," says McGuinty, "You spill, you pay." The stated objective is to encourage companies "to make greater efforts in preventing spills and (to provide) additional incentives to clean them up quickly."

Absolute Liability Penalties

Bill 133 would put polluters on the hook for EPs of up to $100K per day, even if they "took all reasonable steps to prevent the contravention and even if, at the time of the contravention, the person had an honest and reasonable belief in a mistaken set of facts that, if true, would have rendered the contravention innocent." In other words due diligence would not be a defence to an EP-spillers would be absolutely liable. Due diligence is a defence to strict liability offences-the standard applied to most criminal and regulatory charges.

For serious spills, polluters could be liable to prosecution in addition to a costly EP. This double jeopardy was not a feature of the former Administrative Monetary Penalty (AMP) regime that EPs will replace. Under that scheme, the province intended to forego prosecution in order to efficiently collect penalties and encourage polluters to consent to compliance orders. Now, it seems Ontario wants it both ways: a heavy administrative fine, potentially followed by punitive prosecution.

The EP penalties collected would not be used to remediate the specific spill. The money would go into a special purpose fund to be used "to compensate persons who suffered losses as a result of a spill of a pollutant, to provide financial assistance to persons who undertake environmental remediation projects, and for other purposes prescribed by the regulations."

What About the Charter?

Although the potential EP fines are high (up to $20K per day for an individual and $100K per day for a company), it is unlikely that the courts will rule that the EP regime will offend the Charter. The Ontario Court of Appeal last year decided that absolute liability penalties in Ontario do not violate Charter guarantees of security of the person. In the Transport Robert decision the Court ruled that offences with money-only penalties (no possibility of jail) do not offend section 7 of the Charter (security of the person). The Supreme Court of Canada denied leave to appeal this decision. That is consistent with other SCC decisions that have upheld absolute liability administrative penalties for regulatory offences.

It is less clear whether the potential double jeopardy of an EP plus a prosecution would trigger the Kienapple principle that prevents multiple charges for the same offence.

Director / Officer Liability

The potential liability of directors and officers will be expanded, and the burden of proving due diligence is shifted, under both the EPA and the OWRA. Currently, a director or officer of a company has a duty to take reasonable care to prevent any unlawful discharge. Bill 133 extends the due diligence duty to prevent any breach of the Act, regulations, or any approvals, permits or orders. When charged, a director or officer will have the onus of proving that he or she took "all reasonable care" to prevent the contravention.

Bill Has Many Sharp Teeth

The legislation proposes to lower the threshold for laying charges or making orders. Currently the threshold is when a contaminant causes "or is likely to cause" an adverse effect. Bill 133 would change that to "may cause".

MOE officials and municipalities will be able to issue orders to recover "reasonable costs and expenses" incurred in responding to spill incidents.

Other key features of Bill 133 include:

• sharp increase in maximum fines for offences, plus mandatory minimum fines for discharge/spill offences;
• tough "deemed impairment" water pollution definition in OWRA;
• expanded list of offences that will carry stiffer fines;
• new "aggravating factors" that a judge must consider when sentencing a convicted offender;
• broader powers to make clean-up and preventative orders;
• broader rights of property access for MOE staff.

ENGAGEMENTS OF NOTE

Marc McAree will speak on Liability on the Environmental Front: Are You Exposed? at the Canadian Institute Construction Superconference, on November 29, 2004.
Donna Shier will speak on Rescuing the Problem Deal: Contaminated Real Estate at the Law Society of Upper Canada Continuing Legal Education, on December 8, 2004.