Environment @ Gowlings - March 2005

Edited by Katherine van Rensburg

Contents

• Expansion of Mandatory Greenhouse Gas ("GHG") Emissions Reporting

• CEPA Toxic Substances

• Replacement of CEPA's Prohibition of Certain Toxic Substances Regulations

• Proposed Amendment to Regulations Under the Canadian Environmental Assessment Act ("CEAA")

• Recommended Procedures for Information Exchange

• International Climate Change Partnerships

• What's New at the CCME

• Increased Funding for Environment

• The State of British Columbia's Forests - 2004

• ONTARIO

• Proposed Changes to the Blue Box Program Plan

• Report on Smaller, Private Drinking Water Systems

• Environmental Commissioner Recommends Change

• QUÉBEC

• Recent Amendments to the Québec Forest Act Regarding the Annual Allowable Cut

• Enforcement of Environmental Compliance in Québec

• Minister & Ministry Renamed Again

• Regulatory Negligence: the Ministry of Environment and a City Condemned by the Court of Appeal

• Lexpert Directory 2005 Recognizes Gowlings' Environmental Law Practice

• Canada and Kyoto

• Groundwater Quality Management

• Contracting Out of Water and Wastewater Services: a Changing Landscape

• Provincial Environmental Law, Regulations and Policy

• Québec's Used Oil Recovery Regulation

• Corporate Social Responsibility (CSR) - Working a Social Ethic into the Bottom Line

• GHG Trading in the North Atlantic: Linking the Canada, U.S. and European Marketplaces

• Contaminated Sites Transactions - Challenges and Sollutions

FEDERAL

Requirements for the submission of GHG emissions data were expanded on March 12, 2005 to require additional facilities to report their 2005 emission levels. GHG reporting is now mandatory for facilities emitting 100,000 metric tonnes of carbon dioxide equivalent or more of the six GHGs named under the Kyoto Protocol - carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons and perfluorocarbons. Whether a facility meets the reporting threshold is determined by a calculation that weighs each GHG emitted using total mass of emissions and the GHG's Global Warming Potential.

The deadline for submission of 2005 GHG reports is June 1, 2006. This reporting regime will remain in force until March 12, 2008.

The Minister of the Environment intends to publish the information collected on 2005 emissions. Parties wishing to keep this information confidential may apply to do so under s. 52 of the Canadian Environmental Protection Act, 1999 ("CEPA").

This is a continuation of the first phase of the Government of Canada's mandatory greenhouse gas reporting system discussed in Gowlings' March 2004 Environmental Bulletin.

CEPA Toxic Substances

Following assessments conducted by Environment Canada ("EC") and Health Canada ("HC"), substances recently added to CEPA's List of Toxic Substances include:

• Dichlorodiphenyltrichloroethane (DDT),

• 2-methoxyethanol, and

• 2-butoxyethanol.

2-ethoxyethanol was also subject to an EC and HC assessment. The conclusion of this assessment was that 2-ethoxyethanol does not pose a danger to either the environment or to human life or health in Canada and is not considered to be CEPA toxic.

For more information see:
http://www.ec.gc.ca/substances/ese/eng/PSAP/final/glyclos.cfm.

Replacement Of CEPA's Prohibition Of Certain Toxic Substances Regulations

Effective May 15, 2005, CEPA's Prohibition of Certain Toxic Substances Regulations, 2003 ("2003 Regulations") will be replaced by the Prohibition of Certain Toxic Substances Regulations, 2005 ("New Regulations"). The 2003 Regulations, which remain in force until May, prohibit the manufacture, use, sale, offer for sale or import of certain toxic substances and provide some exception for listed uses. The 2003 Regulations also provide an exclusive exemption for some circumstances involving hexachlorobenzene.

The New Regulations will also prohibit the manufacture, use, sale, offer for sale or import of certain toxic substances and will explicitly expand this exemption to "a mixture or product containing certain toxic substances." However, the New Regulations' prohibition will not apply to instances where the content of toxic substances is incidental.

The New Regulations will impose new reporting requirements related to the manufacture or import of a listed toxic substance or mixture containing a listed toxic substance in quantities greater than the New Regulations' reporting thresholds. The applicability of these New Regulations to some of the listed toxic substances will be subject to permitted uses as well as concentration limits. The New Regulations will also allow the issuance of permits for the continuation of activities that would otherwise be non-compliant. Such permits expire 12 months after they were issued but may be renewed twice for the same purpose or use of the substance.

For more information see:
http://www.ec.gc.ca/CEPARegistry/regulations/detailReg.cfm?intReg=87.

Under the current federal environmental assessment ("EA") regime, an offshore exploratory drilling project is subject to a comprehensive study EA if it is the first drilling project in an offshore region. An offshore exploratory drilling project is currently subject to a screening EA if it is proposed within a study area established in a previous comprehensive study of an offshore drilling project.

The Canadian Environmental Assessment Agency released a proposal to change the type of environmental assessment applicable to the first exploratory drilling project in an offshore area from a comprehensive study EA to a screening EA. This is proposed to be accomplished through an amendment to CEAA's Comprehensive Study List Regulations. This proposal follows an examination of environmental effects monitoring information related to offshore drilling projects undertaken by a subcommittee of the Minister of the Environment's Regulatory Advisory Committee.

Representations regarding this proposal may be submitted before April 25, 2005.

For more information see:
http://canadagazette.gc.ca/partI/2005/20050326/pdf/g1-13913.pdf page 951.

In relation to the Government of Canada's efforts to assess substances to determine whether they are CEPA toxic, s. 75 of CEPA allows the Minister of the Environment to cooperate and develop procedures to exchange information with other jurisdictions regarding substances that are specifically prohibited or substantially restricted for environmental or health reasons. Eligible jurisdictions include Canadian provinces and territories and Member countries of the Organisation for Economic Co-operation and Development (OECD).

Pursuant to this provision, Environment Canada has released a draft report for public comment indicating that the Prior Informed Consent ("PIC") procedure for information exchange, as developed under the Rotterdam Convention, "provides a solid basis for implementing section 75 procedures internationally."

The PIC procedure under the Rotterdam Convention regulates the export and import of the most hazardous pesticides and chemical products. According to PIC, a product subject to the Convention may not be exported unless the importing country has been duly informed about the nature of the product and has given its "prior informed consent."

The draft report recommends that an existing process be used to maintain Environment Canada's currency on the regulatory affairs of OECD member states as they relate to specifically prohibited and substantially restricted substances. The recommendation includes the adoption of a procedure to monitor the PIC procedure for this purpose. Since the Rotterdam Convention has not yet been signed and ratified by all OECD jurisdictions, the PIC procedure would also be supplemented by the continuation of other international information sharing activities involving Canada and other OECD jurisdictions.

Comments on the recommended procedure for information exchange between Canada and other OECD jurisdictions may be submitted until May 21, 2005.

Procedures for the exchange of information among Canadian jurisdictions have been reviewed and recommendations are forthcoming. Environment Canada is also currently investigating an approach for the review of decisions made by other jurisdictions.

For more information see:
http://www.ec.gc.ca/substances/ese/eng/sect75.cfm.

At the G8 Energy and Environment Ministerial Roundtable held in London, England on March 15-16, 2005, Canada joined both the Renewable Energy and Energy Efficiency Partnership ("REEEP") and the Methane to Markets Partnership.

REEEP is a partnership between national governments, industry and non-governmental organizations with a goal to accelerate and expand global market growth for renewable-energy and energy-efficient technologies. REEEP structures policy initiatives for clean energy markets and facilitates financing for energy projects.

The Methane to Markets Partnership is an international initiative that focuses on advancing cost-effective, near-term methane recovery and use as a clean energy source. These activities are meant to increase energy security, enhance economic growth, improve air quality, improve industrial safety, and reduce greenhouse gas emissions throughout the world. The partnership focuses on developing strategies and markets, implementing frameworks for action and removing barriers to the design of collaborative projects between countries through collaboration between developed countries, developing countries, and countries with economies in transition. The partnership also implements strong participation from the private sector.

For more information see:
http://www.ec.gc.ca/press/2005/050316_n_e.htm.

CCME held a stakeholder smog science workshop in Toronto, Ontario on March 8 & 9, 2005. Although the workshop did not involve review or consultation on policy, speakers addressed a variety of issues while providing stakeholders with a progress report on the science basis of the Canada-wide Standards for particulate matter and ozone.

For more information see:
http://www.ccme.ca/initiatives/standards.html?category_id=61.

NEWS FROM THE PROVINCES

British Columbia's Ministry of Water, Land and Air Protection recently announced a $7.8 million increase in the Ministry's 2004/05 budget. These additional funds will help the Province build on the significant progress it has made supporting habitat and wildlife protection and restoration projects across B.C.

A large portion of the increase, $6.5 million, will be used by the Habitat Conservation Trust Fund (HCTF) to manage and support its ongoing conservation efforts. These additional funds are expected to be invested in the following initiatives:

• $3.7 million for the HCTF's endowment fund which pays for the operation and maintenance of conservation lands;

• $1 million to increase the Public Conservation Assistance Fund which provides grants to community stewardship groups;

• $1.8 million to complete a multi-partnered purchase of over 4,000 hectares of critical habitats in the Kootenays known as the Hofert/Hoodoos area; and

• $1.3 to fund conservation research grants to post-secondary institutions.

This budget increase complements the $150 million committed to enhance environmental protection and land-use certainty in British Columbia through various initiatives.

For more information see:
http://www2.news.gov.bc.ca/nrm_news_releases/2005WLAP0015-000226.htm.

British Columbia's Ministry of Forests released a report on the sustainability of the province's forests on March 10, 2005. This is the first report to address the international and national sustainability indicators adopted by the Ministry to assess its forest management practices.

This first report provides statistical information on the following six indicators of sustainability: (1) ecosystem diversity, (2) protected forests, (3) timber harvest, (4) First Nations involvement, (5) law, and (6) certification. Future editions will address other indicators and provide updates on indicators discussed in previous reports. The report's framework includes a total of 24 indicators of sustainability.

The report is available online at:
http://www.for.gov.bc.ca/hfp/sof/.

ONTARIO

Upon the request of the Minister of the Environment, Waste Diversion Ontario is proposing changes to the cost containment measures in the Blue Box Program Plan to accelerate its implementation. The proposed amendments to the policies and practices for cost containment would see reasonable cost bands implemented in 2006 rather than 2008. The implementation of best practice administration costs would be also be accelerated to be reflected in stewards' fees in 2008.

Submissions addressing this proposed change may be made until April 23, 2005.

For more information see:
http://www.ene.gov.on.ca/envregistry/024659er.htm.

The Advisory Council on Drinking Water Quality and Testing Standards, established under the Safe Drinking Water Act, 2002 has recently completed its review of Ontario's Drinking-Water Systems Regulations (O.Reg. 170/03) from the perspective of small water systems.

The report discussing this review indicates that significant problems were detected in O.Reg. 170/03 as it applies to small services. The report suggests an alternative approach for such systems due to their characteristic lack of financial resources. The Advisory Council suggests that a new regulation should be drafted for small water systems that would not compromise required levels of safety contained in the basic drinking water quality standards and O.Reg. 170/03.

The Advisory Council's report will be reviewed and considered by the Minister of the Environment who is not bound to adopt the report's suggestions.

The report is available online at:
http://www.odwac.gov.on.ca/reports/020805_Reg_170_Final_Report.pdf.

On March 1, 2005, the 10-year review of Ontario's Environmental Bill of Rights culminated in the release of a Special Report to the Ontario Legislature. The report, tabled by Ontario's Environmental Commissioner, contained several recommendations for strengthening the Environmental Bill of Rights including a requirement to update Ministerial Statements of Environmental Values and a review of the purposes of the legislation to include new environmental concepts.

For more information see:
http://www.eco.on.ca/english/newsrel/05mar01.htm.

QUÉBEC

Widespread media coverage was recently given to the legislative reduction of the annual allowable cut (AAC) of forestry companies that operate in the Province of Québec. The legislative amendments flow from the recommendations contained in a report released on December 14, 2004 by the Commission on the study of public forest management in Québec, better known as the Coulombe Commission (see the link: www.commission-foret.qc.ca). In its report, the Coulombe Commission proposes that major forestry reform take place within the next few years and recommends that the first step of this reform should be the implementation of a precautionary measure, aimed at reducing the AAC by 20% between April 1st, 2005 and April 1st, 2008, pending the development of new AAC calculation methods. In light of the Coulombe Commission's recommendations, the province has recently amended Bill 71 amending the Québec Forest Act and passed it urgently at the National Assembly. Proposed amendments, in additional to the 20% AAC reduction, include a 25% AAC reduction in the James Bay Territory as well as a process for the modulation of the AAC reduction during the same period. This modulation is aimed at giving the forestry companies the leaway to implement progressively the AAC reductions, but only outside of the James Bay Territory.

For more information, read the full article on this subject written by Jean-Sébastien Clément below:

Widespread media coverage was recently given to the reduction, through legislation, of the annual allowable cut (AAC) of forestry companies that operate in the Province of Québec. The AAC is the amount of timber permitted to be cut annually in a particular area. The legislation in question flows from the recommendations contained in a report released on December 14, 2004 by the Commission on the study of public forest management in Québec, better known as the Coulombe Commission (see the link: www.commission-foret.qc.ca). In its report, the Coulombe Commission proposes that major forestry reform take place within the next few years and recommends that the first step of this reform should be the implementation of a precautionary measure, aimed at reducing the AAC by 20% between April 1st, 2005 and April 1st, 2008, pending the development of new AAC calculation methods. In light of the Coulombe Commission’s recommendations, the province has recently amended Bill 71 amending the Québec Forest Act and passed it urgently at the National Assembly. The first step proposed by the Coulombe Commission is now therefore part of the legislation. Amendments additional to the 20% AAC reduction include a 25% AAC reduction in the James Bay Territory as well as a process for the modulation of the AAC reduction during the same period. This modulation is aimed at giving the forestry companies the leaway to implement progressively the AAC reductions, but only outside of the James Bay Territory.

According to the Forest Act and the amending legislation of 2001 (S.Q. 2001, c.6), the AAC was to be calculated before April 1st, 2005 on the basis of the existing common areas, a territorial delimitation where various forestry company holders of Timber Supply and Forest Management Agreements (commonly referred to as CAAFs which is the French acronym for "Contrat d’approvisionnement et d’aménagement forestier") carry out forest management activities. It was envisaged in the 2001 amendments that, commencing April 1st, 2005, the AAC would be calculated on the basis of a new territorial delimitation, designated as Forest Management Units (FMUs). It was also envisaged in the 2001 amendments that based on the new FMUs, the next set of General Forest Management Plans would also come into force on April 1st, 2005.

In 2003, other amendments were made to the Forest Act. The main objective of the amendments was to postpone until April 1st, 2006 the date of coming into force of the next set of General Forest Management Plans and new FMUs. The 2003 amendments provided however that any decrease in the AAC calculations on the basis of the new FMUs, would come into force on April 1st, 2005 as originally planned, but on the existing common areas.

In 2004, additional amendments to the Forest Act were contemplated to further delay by one (1) year the coming into force of the new General Forest Management Plans and the new FMUs because of problems in the AAC calculation methods with respect to the senescence factor (the natural death of timber stands within forestry stocks which have come to maturity).

Bill 71 amending the Forest Act was therefore introduced on November 9, 2004 at the Québec National Assembly. At that time, it provided that the coming into force of the new FMUs and of the General Forest Management Plans would be postponed to April 1st, 2007. Bill 71 also originally included the same principle contained in the 2003 amendments, i.e. that the new AAC would apply on the existing common areas as of April 1st, 2005, but that the calculation thereof would be based on the new FMUs. Considering the tight schedule, the Bill provided that the Ministry of Natural Resources would apply a method by which the CAAF beneficiaries would be granted 50% of the annual volume indicated in their CAAF on April 1st, 2005 and that the remaining portion thereof would be granted when the AAC calculations, based on the new FMUs, would become available (presumably in the fall of 2005).

The Commission’s report however strongly criticized the AAC calculation methods, stated that these methods have resulted in overharvesting in the province and recommended a major reform in this respect, as well as a major reform of the entire Québec forestry regime.

In the short term and in order to cope with the recommendation to the effect that the methodology for the calculation of the AAC should be completely revised, the Coulombe Commission recommended that the new FMUs and the new General Forest Management Plans come into force on April 1st, 2008 instead of April 1st, 2007, as originally envisaged in Bill 71.

In accordance with the aforementioned precautionary measure recommending a 20% AAC reduction that was in line with the philosophy behind the 2003 amendments and the 2004 proposed amendments which integrated the results of the new AAC calculations based on the new FMUs, the amendments proposed by Bill 71 were thus introduced on March 21, 2005 in order to delay the coming into force of the FMUs and of the next set of General Forest Management Plans until April 1st, 2008 and to confirm the said proposed 20% AAC reduction. Bill 71 also introduces other precautionary measures for the James Bay Region, including AAC reductions of up to 25%.

The amendments also include provisions allowing CAAF beneficiaries, except for those who carry out forest management activities in the James Bay Region, to harvest in advance up to 10% of their annual volumes during 2005-2006 and 2006-2007. Accordingly, the annual volume for year 2007-2008 would be adjusted in order to ensure that the average annual volume of years 2005 to 2008 does not exceed the revised AAC calculation based on the aforementioned 20% reduction.

Bill 71 was thus urgently passed in principle, considered by a standing committee, then passed unanimously and assented to on the same day, i.e. March 22, 2005, at which time most of the provisions also came into force.

Enforcement Of Environmental Compliance In Québec

At the end of last year, Quebec adopted Bill 44, An Act to amend the Act respecting the Ministère de l'Environnement, the Environment Quality Act and other legislative provisions. Read Paul Granda's article, published in the February/March 2005 edition of HazMat Magazine, for a critical look at the new amendment and how it will affect businesses in Quebec.

The article is available online at:
http://www.hazmatmag.com/issues/ISarticle.asp?id=162210.

Minister & Ministry Renamed Again

The change in name of Québec's Minister and Ministry of the Environment to the Minister of Sustainable Development and Parks (ministre du Développement durable et des Parcs) and Ministry of Sustainable Development and Parks (ministère du Développement durable et des Parcs), reported in the February edition of Environment @ Gowlings, was short-lived. A new Order in Council was adopted on March 9, 2005 (O.C. 173-2005) to replace the previous Order in Council that also renamed the Minister and Ministry of the Environment. The Minister and his Ministry are now designated as the Minister of Sustainable Development, the Environment and Parks (ministre du Développement durable, de l'Environnement et des Parcs) and the Ministry of Sustainable Development, the Environment and Parks (ministère du Développement durable, de l'Environnement et des Parcs) respectively.

WHAT'S NEW IN THE COURTS

Québec's Court of Appeal recently released their decision in Québec (Attorney General) v. Girard. This case involved a class action initiated on behalf of a group of residents that were living in the immediate vicinity of a dry materials disposal site (the "DMS"). The plaintiffs alleged that the DMS was the source of various nuisances. The residents complained about the presence of a rat colony, strong odours of fermentation or putrefaction, and the leaching of contaminated waters. The DMS was operated by the Blackburn family under its sister companies 2944-7828 Québec inc. and Les Transports sanitaires du Fjord inc.

From 1993 to 1998, the Ministry of Environment of Québec (the "MENV") and the City of Shipshaw (the "City") carried out several inspections reporting various offences and recommending that a systematic inspections be carried-out. However, the evidence established that there was no follow-up action to address such recommendations and that the operator consistently breached provisions of the Environment Quality Act (the "Act").

As a result, the MENV cancelled the operating permit of the DMS in 1998, but provided no notice of the cancellation to the operator. Therefore, the permit remained in full force and effect. As well, in 1997, when the compliance certificate issued by the City expired, 17 months passed before the City took action to block access to the DMS.

In 2003, the Superior Court held each of the operators, the MENV and the City jointly and severally liable. The Court determined that, as between the defendants, the liability should be shared equally (i.e. one-third of the damages for each defendant). On December 16, 2004, the Court of Appeal unanimously confirmed that the Superior Court rightfully acknowledged the responsibility of the MENV and the City for their role in the surveillance of the compliance of the DMS' operation with the Act and applicable regulations. The Court of Appeal, however, changed the division of responsibility (between the defendants alone) by attributing 50% to the operator while splitting the other 50% equally between the MENV and the City.

According to the Court of Appeal, even though the MENV was fully informed of the contraventions since the beginning of the operations, it did not apply the recommendations contained in its own inspection reports in a timely manner. The Court of Appeal also mentioned that its lack of action allowed the situation to deteriorate to the critical point that led up to the class action. In this case, the Court seemed to consider the MENV's responsibility so obvious that it refrained from discussing the question of Crown immunity.

With respect to the City, the Court concluded that it should be vigilant in ensuring that environmental standards are met, since it authorized the implementation of the DMS within a residential zone. According to the Court, the City remained apathetic towards the operator's actions, which were contravening the law and which were carried out in bad faith. The City was also indifferent towards the MENV's lack of action, even though it had various means available to cease the wrongful operation. The City was therefore negligent and also engaged its responsibility.

The consequences of this decision are important, particularly since plaintiffs may now systematically add the MENV as a defendant whenever it fails to ensure compliance with the Act or to enforce the application of MENV-issued permits. The same conclusion applies also for municipalities with respect to the enforcement of any statutes or regulations under their jurisdiction, especially where a municipality has authorized an industrial project in the middle of a residential area.

WHAT'S HAPPENING

Gowlings' bench strength in environmental law has been recognized once again by Lexpert in its 2005 Directory of leading Canadian law firms and practitioners. Paul Granda, of Gowlings' Montreal office, and all four partners in the Toronto office (Harry Dahme, David Estrin, Mark Madras and Katherine van Rensburg) have been identified as leading practitioners, and Gowlings has been named as one of the two top environmental practices among full service firms in Toronto. Congratulations to all members of Gowlings' environmental team for this important recognition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.