Canada: Environmental Regulatory Liability In The Mining Sector

Mine operators across Canada let out a collective gasp on Aug. 4, 2014, after a breach of the tailings storage facility dyke at the Mount Polley mine. The next day, the B.C. Ministry of the Environment issued a Pollution Abatement Order to the Mount Polley Mine Corporation, ordering the corporation to undertake an environmental assessment and cleanup.

What will happen if a mine accident like Mount Polley occurs in Ontario? How will the Ministry of the Environment and Climate Change (MOECC) respond? It often comes as a surprise to corporate directors and officers (D&Os) that the Ontario government can and does issue orders pursuant to the Environmental Protection Act (EPA) against D&Os directly and personally for environmental investigation and remediation.


The MOECC regulates spills and discharges from mines pursuant to its powers under the EPA. Ontario's Mining Act forms the regulatory framework for mine operations, closure and rehabilitation, but the Act does not explicitly impose personal liability on D&Os. In contrast, the MOECC has the authority to target D&Os directly for environmental offences committed by the company.

That authority is not new. Numerous examples of D&O prosecutions and convictions exist in the mining, waste and industrial sectors.

What is new, however, is the MOECC's assertiveness in issuing remedial and preventive orders against D&Os. It can issue cleanup orders against any person who "has or had management or control of an undertaking or property." A "person" may include the corporation, the D&Os of that corporation, and managers and employees. The order can require costly environmental monitoring, reporting and remediation.


The MOECC's willingness to issue cleanup orders against D&O was recently highlighted in the case of Baker v MOECC. The end result: former D&Os of a bankrupt company paid $4.75 million of their own money to settle litigation.

In Baker, Northstar Aerospace (Canada) Inc., a Canadian subsidiary corporation, voluntarily remediated trichloroethylene (TCE) contamination at its Cambridge, Ontario property. Northstar encountered financial difficulty during the lengthy remediation. The MOECC issued orders requiring Northstar to continue remediation, and to post $10 million in financial assurance. Northstar later obtained creditor protection and eventually declared bankruptcy, at which time the MOECC took over the remediation due to neighbouring human health concerns.

In November 2012, the MOECC issued a new order against Northstar, its U.S. parent corporation, and 13 former D&Os (including D&Os from the U.S. parent). The order required the D&Os to continue costly groundwater monitoring and remediation. A number of the directors named were appointed after contamination took place, but MOECC took the position that Northstar's D&Os failed to set aside adequate remediation funds prior to bankruptcy.

The corporate directors appealed the order to Ontario's Environmental Review Tribunal (ERT). The ERT denied an interim stay and held that interrupting the remediation program posed serious ongoing risks to human health and the natural environment. The directors unsuccessfully appealed this decision to the Superior Court and mounting litigation and remediation costs forced Northstar's D&Os to pursue settlement.

In October 2013, 10 of Northstar's former D&Os resolved the matter by paying $4.75 million in exchange for a release from the MOECC's order.


Baker showed that MOECC's willingness to turn to D&Os for remediation funding may hinge on:

  • the significance of the pollution event
  • the degree of control of the D&Os
  • the degree of control/involvement of the corporate Parent
  • the financial (in)stability of the responsible company
  • the availability (or lack) of others to pay for remediation (e.g. insurance)

In the event of a tailings discharge in Ontario, the mine operator should expect to receive monitoring and remediation orders similar to those issued against Mount Polley Mining Corporation. Depending on the extent of its management and control, the corporate parent may be named in the order and, similar to the Mount Polley incident, D&Os may (initially) escape being named in a regulatory order.

For junior mining companies with a single operating property, an underfunded project or lacking appropriate environmental insurance, one substantial incident can throw the company into dire financial straits. In Ontario, failing to undertake remediation, or failing to set aside funds for remediation, incentivizes the MOECC to look to D&Os to make up the shortfall.

Imperial Metals recorded $67.4 million in costs, including $20.3 million incurred for response and recovery. Production at the income-generating mine has stalled. In contrast to Baker, however, Imperial Metals is weathering the storm. Imperial Metals continues to actively monitor and remediate. Importantly, the company has been able to allocate the remaining $47.1 million in future costs.

Even so, the Mount Polley story is not over: the B.C. government released its findings about the accident on Jan. 30, 2015. Further orders and prosecutions are pending.


The Mount Polley incident will spur heightened regulatory oversight of tailings storage facilities and mine operations in Canada. D&Os of mining companies active in Ontario, whether the D&Os reside in Ontario or not, need to plan for increased scrutiny of mine operations and environmental safety. D&Os would be wise to confirm whether their company offers D&O indemnification as well as a policy of D&O insurance with high coverage limits and no environmental exclusions.

Previously published in the March/April 2015 issue of CIM magazine.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions