It's not safe for a polluter to trust a subsequent owner to
clean up contamination, even if the polluter has specifically paid
for the cleanup, and even if the new owner signs a contract
relieving the original polluter of liability. None of this will
prevent environmental regulators from ordering the original
polluter to pay for the cleanup again, according to the Ontario
Environmental Review Tribunal in Superior Fine Papers Inc. v. Director, Ministry of
The Ministry of the Environment ("MOE") issued a
cleanup order to three consecutive owners of a defunct paper mill
in Thunder Bay: Cascades Fine Papers Group Inc.
("Cascades"), its parent company, Cascades Inc., Thunder
Bay Fine Papers Inc. ("Thunder Bay Fine Papers"), and
Superior Fine Papers Inc. ("Superior"). The Order
required them, among other things, to dredge and repair a
wastewater lagoon clogged with sludge. Cascades appealed, primarily
on the ground that it had already paid for the necessary work.
When Cascades sold the mill, 14 years ago, it paid the buyer
$4.5 million to take the mill and to assume responsibility for most
of its environmental issues, except certain obligations for which
Cascades gave an Environmental Indemnity. Three months later, the
buyer went into receivership, without dealing with any of the
wastes. In 2008, Cascades paid the buyer a further $500,000 to
dredge the Lagoon, and to relieve Cascades from any further
liabilities relating to it. The buyer/ receiver took the money but
did not dredge the lagoon. In 2009, knowing of all these issues,
Superior bought the Site from the receiver. However, it ran out of
money, did not dredge the lagoon or otherwise resolve the waste
issues. The MOE order followed.
Cascades appealed, arguing that it had already paid for
remediation of the waste disposal site and the lagoon, and should
not have to pay again for the same work. If the buyer had diverted
the money that Cascades had paid expressly for environmental work,
Cascades should not be penalized. Instead, it argued, sole
responsibility should lie with Superior, which had knowingly
accepted responsibility for these issues when it bought the
The Environmental Review Tribunal flatly rejected these
arguments. In essence, they said, it was Cascades' fault (and
its lawyers?) that it had allowed its money to be used for
Regarding the argument that Cascades has already paid to
address the environmental liabilities... the fact that
Cascades has paid another person to remediate the Site, does not
relieve Cascades of its responsibilities under this
statute... in selling the Site to Thunder Bay Fine Papers,
Cascades chose to structure the sale transaction by discounting the
sale price for the Site by an estimate of the amount which would be
required to address the environmental issues on the Site.
While this may have been a prudent business decision, it
failed to include a sufficient guarantee that Cascades'
responsibilities under the EPA would be implemented by subsequent
owners. It also failed to include security provisions to
ensure that the necessary funds could only be used for these
In theory, Cascades might be able to sue Superior to recover the
double payment, but if (as Superior claims) it is impecunious, this
will offer little comfort.
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