Volume 12, Number 2 - November/December 2002

Well, let's see. Canada and the States are a lot alike. We know how governments down here deal with the environment. Canada must be about the same, right? Wrong.

Canada and the United States share much in common as close neighbors and allies, including a common legal heritage, excellent trade relations, and the world's longest undefended border. The two countries differ significantly, however, in the realm of environmental policy and law.

This article provides a broad overview of some of the distinctive features of Canadian governmental and legislative responses to environmental issues, with particular attention to the constitutional division of powers among the three levels of government and to some environmental concerns that are currently being debated in Canada.

The most notable of these is brownfields remediation. Legislative initiatives aimed at apportioning liability for brownfields have had the unintended effect of discouraging redevelopment of contaminated sites, a problem that the Ontario legislature has sought to address with a new piece of legislation.

The Constitution Act of 1867 is Canada's principal constitutional document. The act reads like a constitutional shopping list, allocating specific powers to either the federal or the provincial level of government.

Because the act does not specifically mention the environment (its 19th- century framers could hardly have foreseen this modern day public-policy consideration), environmental issues fall into an amorphous middle ground of "shared jurisdiction." In other words, both federal and provincial governments have responsibilities for the environment. In addition, local or municipal governments, as legislative creations of provincial governments, have the ability to regulate environmental matters through the enactment of local bylaws.

To determine which level of government has what type of authority, it is necessary to refer to the Constitution Act. While environment is not specifically mentioned, any claim of jurisdiction by any level of government must nevertheless be linked to one of the powers that the framers of the act did specifically mention. Because environmental concerns are relevant to many of these enumerated powers, the constitutional result is a mixture of overlapping responsibilities and shared jurisdiction among Canada's federal, provincial and local levels of government.

The federal government's authority over the environment is based on its constitutional responsibility for criminal law, fisheries, shipping and navigation, coastal waters outside the provinces, inter-provincial and international transportation and communication, international relations, as well as on its taxation power. Also important are Ottawa's authority over federal lands and over the activities of certain federally regulated industries. Finally, the federal government retains a residual (general) power over matters of national concern or in the case of an emergency, although this power has been narrowly defined by the courts over the years.

The federal government's main environmental protection statutes are the Canadian Environmental Assessment Act (CEAA) and the Canadian Environmental Protection Act (CEPA). These statutes, along with many others addressing more specific environmental matters, are administered by the minister of the Environment, a member of the Canadian federal cabinet. The department that the minister heads is known as "Environment Canada."

The CEAA requires federal departments, agencies and crown corporations (corporations owned by the federal government) to conduct environmental assessments for proposed projects in which the federal government is a proponent. A CEAA environmental assessment is also required if the project involves federal funding, permits or licenses.

CEPA is intended to support sustainable development through pollution prevention and the identification and elimination of toxic substances. The act is administered by Environment Canada, which acts in partnership with Health Canada (another federal department) to assess toxic substances and establish guidelines and regulations for their control.

CEPA also statutorily establishes the "precautionary principle," which states that the absence of full scientific certainty is not an acceptable reason for postponing measures intended to prevent environmental harm where there are threats of serious or irreversible damage. In addition, CEPA establishes statutory liability for directors and officers and includes provisions for an environmental registry to improve public access to environmental information.

Both the CEAA and CEPA attempt to promote public participation in environmental matters.

Although provincial authority was generally limited by the Constitution Act to matters of "local" concern, the specific powers granted to the provinces in 1867 are very significant from the point of view of 21st century environmental regulation. They include authority over provincial public lands, natural resources, local "works and undertakings," and property and civil rights within the province. The provincial power over municipal institutions is also significant in the environmental context.

All in all, the provinces are Canada's most important environmental regulators, though it should be noted that their authority is limited by the geographic restrictions of the province and by the overriding federal authority over a few environmentally significant industries, such as the nuclear power industry and the country's fisheries.

Municipal governments are also key players in environmental regulation in Canada because of the power given to them by the provinces to enact enforceable bylaws. Municipal power is somewhat limited, however, for two reasons. First, as creations of provincial governments, municipalities cannot tread on federal jurisdictional turf. Second, municipalities are subordinate to the provincial governments that created them and therefore cannot enact a bylaw that contradicts provincial legislation. This limitation makes municipalities dependent on provincial environmental objectives and initiatives.

However, a recent decision of the Supreme Court of Canada has made it easier for municipalities to "top up" provincial or federal environmental standards (that is, to make an existing federally or provincially mandated standard more stringent). The court ruled that in at least some cases, the imposition of a higher standard by a municipality will not amount to a "contradiction" of a lower standard imposed by a province or by the federal government.

Despite the limitations that apply to them, municipalities are able to enact bylaws that affect the environment across a broad spectrum within the boundaries of the provincial power. Business licensing and regulation, the regulation of water contamination, public health powers, dangerous substances powers, broad powers to promote health and safety, and planning and zoning powers are general areas of municipal authority. Planning and zoning authority are especially important for enforcing environmental regulations by allowing or denying specific proposals for land use.

The overlapping relationship between the federal, provincial and municipal governments with respect to environmental matters requires coordinated action among the various levels. The Canada-wide Accord on Environmental Harmonization is an important effort involving all three levels of government. The accord secured a commitment from all the provincial governments (with the exception of Quebec) and the territories to act in a coordinated manner to achieve better environmental results in areas where consistent national action is needed.

The accord also ensures that Canada-wide standards are being implemented in the provinces and territories. The objectives of the accord are put into action by the Canadian Council of Ministers of the Environment (CCME), a consultative body including representatives of federal, provincial and territorial governments.

Canadian environmental policy is largely driven by international and global concerns such as ozone depletion, loss of biodiversity, climate change and the concentration of persistent organic pollutants. However, there are topical areas of environmental action in Canada that reflect specific regional concerns. Although we will focus on brownfields, we will first briefly highlight two other issues — water standards and contaminated land — that have recently been the subject of intense public debate.

The controversy concerning drinking water safety grew out of a well- publicized incident of contaminated water that occurred in Ontario in 2000. As the result of E. coli contamination, seven residents of the town of Walkerton died and 2,300 others who relied on the municipal water system became sick. A provincial government inquiry into the causes of this tragedy identified a number of failures at the level of the provincial Ministry of the Environment as well as at the municipal level, where public utility workers did not properly maintain protection measures in the water safety chain.

Shortly after the events at Walkerton, the Saskatchewan city of North Battleford suffered a massive outbreak of illness resulting from the infiltration of cryptosporidium into its municipal water supply. Nearly 7,000 residents were affected. In this instance as well, poor training, loose standards and inadequate regulation at the provincial and municipal levels were identified as critical failures leading to the contamination.

Toxic substances and contaminated sites are hot political issues in several provinces. Nova Scotia's Sydney Tar Ponds have drawn significant attention from all three levels of government. The tar ponds are the accumulation of 80 years of uncontrolled discharge from a nearby coking plant and steel mill that ceased operation in the 1980s. Toxic substances from the factory poured off into a brook and collected in an estuary that flows into the harbor of the city of Sydney, creating the largest toxic waste site in North America.

The site has come under intense scrutiny from environmental groups, residents and the government because of environmental and health concerns. The residents of nearby neighborhoods fear that the tar ponds have caused significant health problems in local populations, charging that local homes have been subjected to toxic dust and contaminated ground water seepage.

We now come to brownfields, another type of urban contaminated land issue that has received considerable attention in recent years. This is particularly true of Ontario, where brownfields remediation is currently one of the most hotly debated environmental topics.

Ontario's Brownfields Advisory Panel defines "brownfields" as "derelict, dysfunctional or under-used industrial and commercial facilities where redevelopment is hampered by real or perceived environmental contamination." Such sites are typically found in larger urban centers with existing infrastructure and transportation nearby. Site remediation or cleanup involves identifying and neutralizing contaminants, followed by restoration of the site to its pre-contamination condition.

Brownfields remediation is considered a matter of property or land rights and is therefore governed by provincial and municipal enactments and regulations. The federal government plays a limited role in the vast majority of brownfields remediation in Canada, the main exception being the remediation of federally owned lands. While the brownfields issue has been addressed at the national level by the National Round Table on the Environment and the Economy (NTREE) and the CCME, the absence of a formal national brownfields strategy in Canada has produced a patchwork of legislative and regulatory responses from province to province.

The various approaches to brownfields issues reflect, among other things, the differing attitudes of the provincial governments, the specific industrial or resource situations of particular provinces, and variations in market demand for urban redeveloped property in different parts of the country.

Although some provinces have contaminated site registries, to date there are no national standards respecting registration (including for the information entered into a registry system) or governing public access to the registries. While most provinces do provide a form of site approval mechanism, risk assessment techniques, guidelines for site cleanup and other criteria have been independently established by most provinces, the federal government and the CCME.

The municipal government is the next level of intervention in the issue of brownfields remediation. Differences in planning and zoning regulations from one municipality to the next add another dimension of uncertainty to the redevelopment process.

Since brownfields sites are usually located in strategic areas such as waterfronts or downtown cores, redevelopment has many benefits. Urban intensification, minimizing urban sprawl, encouraging economic development, slowing the demand for greenfield sites and supporting sustainable development goals are only a few of the benefits that stem from the proper redevelopment of languishing brownfields. In addition, the redevelopment of existing capital investments in provincial and municipal infrastructure provide an important motivation for governments to help with brownfields redevelopment.

Despite the clear benefits of brownfields redevelopment, significant obstacles exist in the form of federal and provincial environmental legislation and marketplace demands. Uncertainties about cleanup costs, funding difficulties, a lack of data on the environmental condition of many sites, the absence of clear requirements and standards for cleanup, and the existence of orphaned sites with no identifiable responsible parties are stumbling blocks to remediation.

However, these issues are overshadowed by the ugliest remediation barrier of all: liability. To an extent, brownfields are left abandoned in Canada because of the web of environmental laws that impose a wide net of liability on owners, lenders and potentially anyone who has had management or control over a source of contamination.

Although the regulatory regime in each province is different, environmental liability is a concern across the country. The basic principles underlying liability are the "polluter pays" principle and the "beneficiary" principle (which allocates responsibility to the party who derives the benefit of the land). Additionally, some provinces have "status" liability that may make innocent property owners liable for environmental cleanup caused by third parties, including neighboring or previous owners.

Half the provinces, including Ontario and British Columbia, apply the doctrine of joint and several liability in brownfields situations. Thus one party can be forced to assume the entire cost of remediation where other responsible parties cannot be found or are unable to pay. Financially strong parties may end up facing large claims even where their participation in the contamination was small.

Another liability obstacle occurs in some provinces, such as New Bruns- wick, that apply strict or absolute liability to brownfields cases. This means, quite simply, that conviction will generally follow automatically on proof of an act of pollution, with no due diligence defense available. The harshness of these liability regimes has made it unattractive, in many cases, to own or even be connected to a contaminated site.

The liability chill has had stunning results. In Ontario, for example, it was until recently the case that a developer wishing to remediate a contaminated site was faced with the prospect of no-fault liability for the contamination. Among other things, this means that even if the pollutant had migrated from another site, the developer would still be liable for the costs of cleanup. This liability arises from its status as the owner of the property.

Liability is also unlimited, with the result that the developer could potentially lose more than the investment in the land if the contamination is extreme. This liability framework potentially destabilizes existing investment and creates serious impediments to future investment. Liability runs with the land and is retroactive so that it attaches to a party when it becomes connected to the land, regardless of the nature of the connection. This means that even lenders can be liable for cleanup costs.

Significantly, cleanup standards are not fixed by statute or regulation, although the CCME has created a set of recommended guidelines. Rather, each province sets its own standards by way of guideline or policy and may enforce them through land-use decisions by municipalities. The flexibility to change or broadly interpret these guidelines is also a destabilizing influence. Furthermore, as detection and decontamination technology improves, there is no guarantee that a site that is "clean" today will be considered clean in the future.

The liability chill not only scares off developers and lenders, but also municipalities that can be held liable for environmental contamination on property over which they assume control for tax arrears. The result is to no one's benefit: Orphaned sites with no owners and a loss in potential property tax to the municipalities.

Recognizing these difficulties, Ontario became the first province to enact legislation — the Brownfields Act, 2001 — that endeavors to contain environmental liability and facilitate brownfields remediation. (The act was motivated in part by Toronto's unsuccessful bid for the 2008 Olympic Games, which were to take place largely on derelict industrial and railway lands on the Lake Ontario waterfront adjacent to the downtown core.) Although the legislation has been enacted, it has no practical application until the accompanying regulations are created and put into force by late 2002 or early 2003.

The Brownfields Act reduces the potential liability under the provincial Environmental Protection Act (EPA) of parties involved with a contaminated site. Under the act, if a property is cleaned up to the newly established standard for the type of land use, then a record of site condition may be posted on a registry. Following site condition posting, current and subsequent owners and those with control over the site will be exempt from liability. Immunity does not extend to contamination that migrates after the site has been certified.

Concerns about lenders' liability are also addressed in the legislation. For example, secured lenders will be immune from most orders under the EPA for five years after taking control of a contaminated site. Municipalities will also be given a period in which to decide if they will force a tax sale, which in the past could result in the municipality's becoming the owner and thereby assuming liability for a site.

Additionally, municipalities will now be able to conduct investigations into a site's condition without attracting liability and will also be generally exempt from EPA orders for five years where they do assume ownership of a site. Furthermore, municipalities will now be able to encourage brownfields remediation by offering tax relief and financial assistance to developers.

This enhanced lender and municipal liability protection could be lost, however, in cases of gross negligence, wilful misconduct, or in certain situations that cause a threat of impending harm to people or the environment.

The biggest criticism of the legislation is that it does not address some substantive brownfields issues. For example, there is no protection from civil liability in the legislation and, while municipalities are able to offer financial assistance to developers, the legislation does not establish the means to fund site remediation.

Environmental law in Canada is the product of a particular constitutional history and the evolving realm of environmental protection and activism. Environmental laws require attention stretching into the future to continue to address emerging areas of environmental concern and manage their potentially stifling regulatory effects.

Ontario's new Brownfields Act takes some important first steps in the area of brownfields remediation and moves toward making urban environmental cleanup objectives more compatible with much-needed redevelopment and investment in cities.