Canada: Environmental - October 2015


In Canada, the federal government has a much smaller role in environmental regulation than does the U.S. federal government. The authority to create laws dealing with the environment is shared between the provincial and federal government. Each province and territory in Canada has its own environmental protection legislation, whose statutes are the primary regulatory tools. In Ontario, the primary environmental statute is the Environmental Protection Act ("OEPA"), first enacted in 1971. Other environmental statutes in Ontario include the Ontario Water Resources Act, Safe Drinking Water Act, 2002 (and the related Clean Water Act, 2006) and the Environmental Assessment Act. Similar types of legislation are found in most provinces.

Provincial responsibility for environmental regulation is not exclusive but shared with the federal government, and to a lesser extent municipal governments. The federal government is responsible for limited interprovincial environmental legislation. For instance, the transportation of dangerous goods that occurs across provincial borders or international borders is governed by federal legislation. The federal government also takes the lead in negotiating international environmental initiatives and treaties (e.g., the Great Lakes Treaty). In addition, the federal government presides over the Canadian Environmental Protection Act ("CEPA") which, despite its name, has limited applicability beyond federal lands, toxic substances and newly proposed air emissions provisions. Municipalities, using localized health impacts as justification, are increasingly entering the environmental domain (e.g., lawn pesticides, sewer discharges, and local emissions) with by-laws that can have a significant impact on facility design, operation and development. For example, in 2008 the City of Toronto passed the Environmental Reporting and Disclosure By-law which imposes reporting requirements for a prescribed list of substances. It is important to appreciate that particular requirements vary from municipality to municipality which may be in addition to federal and provincial requirements in the same area.

Most governments have endorsed "polluter pays" and "get tough on polluters" policies. These policies have resulted in several governments amending their environmental statutes to permit the issuance of administrative penalties, or environmental tickets, for relatively minor events of non-compliance and characterizing events of non-compliance as continuing offences with each day constituting a new offence. However, even these "minor" administrative penalties can result in significant payments and may also serve as an aggravating factor in any subsequent prosecution. Most jurisdictions provide director and officer liability for certain issues of environmental non-compliance with some requiring an actual environmental harm to impose such liability. In addition, government prosecutors have indicated an increased willingness to pursue prosecutions.

Additionally, government ministries or agencies, such as the Ontario Ministry of the Environment can issue orders to persons who have management or control of property (i.e., officers and directors) to investigate, mitigate and/or remediate. A recent Director's Order issued under the OEPA has indicated an expanded prospect to attribute no-fault liability personally to directors and officers of bankrupt corporations. Prior to a determination on the merits, the Ministry of the Environment entered into a settlement agreement with the directors who paid approximately C$4.75 million in respect of the order. The extent of liability will be an issue for directors, especially where insolvency of the company is a risk.

The courts also regulate environmental matters at common law. Individuals and businesses operating in Canada may be exposed to civil liability in nuisance, negligence, and trespass, amongst other claims. The potential for class proceedings greatly increases the quantum of damages that may be available.


Canada has no single over-arching water quality protection statute administered by the federal government akin to the Clean Water Act in the United States. That being said, the federal government is responsible for the Fisheries Act which, although ostensibly directed at the regulation of Canadian fisheries, has been used increasingly in recent years by the federal Department of Fisheries and Oceans to regulate water pollution in Canadian waterways. Aside from the federal Fisheries Act and the Navigation Protection Act, each province and territory has its own water quality statute(s) which it administers through its Ministry of the Environment or Natural Resources. These statutes generally establish water quality standards, water taking/transfer limits, permitting and approval regimes and enforcement measures. The quantum and quality of water takings (ground and surface) and discharges by industry are also regulated with water transfers becoming increasingly controversial.


The federal government has air emission regulatory tools contained in the CEPA. The federal government passed a number of regulations to limit or reduce air emissions, including new regulations for heavy duty vehicles (including full-size pick-ups, semi-trucks, garbage trucks and buses) and electricity generation from coal. CEPA necessitates the reporting of emissions where the substance is listed in the National Pollutant Release Inventory substance list and the amount of the emission is in excess of the reporting threshold. The National Pollutant Release Inventory is a publicly accessible database that tracks the release, disposal and transfer of pollutants. However, provincial and territorial legislation is generally of more importance to commercial and industrial emitters in Canada. For large emitters the federal government has reporting obligations while the provinces tend to issue permits and approvals for emissions related to facilities. Ontario has incorporated several of the U.S. Environmental Protection Agency's air modeling practices into its legislation. Reporting obligations of emissions are increasingly becoming the norm as reporting thresholds are progressively lowered in preparation for emissions trading.

Several provinces are working with certain U.S. states through the Western Climate Initiative ("WCI") on emissions trading programs. However, emissions trading is not widespread in Canada, with Alberta being the first province to implement a mandatory trading scheme. In late 2011, Quebec, a WCI Partner, adopted a regulation under its Environmental Quality Act which creates a cap and trade system for greenhouse gas emissions. The requirements under this regulation are being phased in over several years. Other provinces, including Ontario, are considering greenhouse gas policies – including cap and trade and taxation. There should be significant opportunities for foreign corporations to take advantage of an underdeveloped Canadian emission trading market should Canada ultimately participate in emerging emissions trading markets. In addition, carbon taxes are used in some jurisdictions, including British Columbia.


Important to cross-border transactions, an entity cannot contract out of its regulatory liability under Canadian law, as easily as may be done in the United States. The U.S. expectation is often that a U.S. corporation that wishes to engage in business with or by a Canadian corporation can, in its agreement with the Canadian entity, insert provisions whereby the U.S. entity limits liability that may result from the Canadian operations or assets. However, Canadian law is such that a party cannot contract out of its regulatory liability for events or actions that occur in Canada. The best that can be done is to negotiate indemnities. Thus, a U.S. corporation that acquires contaminated land in Ontario one day could be subject to statutory orders and penalties to clean-up the property the next day. That being said, environmental legislation across Canada is drafted and interpreted by the courts in accordance with the "polluter-pays" principle. Accordingly, the focus of regulators and the courts should properly be on the entity responsible for the pollution, whether that entity was the immediate previous owner or a more remote owner.

Ontario is one of the provinces to have substantive and directed legislation for the remediation of contaminated lands or brownfields. The OEPA provides certain basic immunity from the Ministry of the Environment's ("MOE") orders under the OEPA (the MOE's primary enforcement tool). These include orders with respect to a once-contaminated property where prescribed remediation has been conducted and proper filings with the MOE have been made by a property owner or entity in control. What is not included in the amendments is any funding mechanism similar to Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") in the United States, meaning that the remediation of brownfields in Canada, including Ontario, remains primarily market-driven. In some instances, municipalities may work with the developer to create incentives for the remediation of brownfields through a community improvement plan and property tax incentives.


The CEPA regulates the production, manufacture, use and disposal of toxic substances, excluding pesticides which have a separate combination of federal and provincial regulation. Through this legislation, the Minister of the Environment can require samples and information with respect to a substance. In 2012, CEPA was amended to provide new penalty provisions, including mandatory minimum fines and increasing maximum fines. The federal government continues to review its classification of several substances to ensure that the proper safeguards are in place given the current state of scientific knowledge about the health and environmental impacts of the substance. Provincial legislation, such as the Toxic Reductions Act, 2009, and in some situations municipal requirements, such as in the City of Toronto, may impose similar or more restrictive standards, including the preparation of plans to reduce the use of certain toxic products.


Regulation exists at both the federal (e.g., Species at Risk Act) and provincial levels (e.g., in Ontario, the Endangered Species Act, 2007). These acts set out permitting, monitoring, reporting, and remediation requirements for activities that affect a listed species or its habitat, with considerable fines for non-compliance. Endangered species legislation can have a significant impact on the timing and costs of infrastructure development.


Canada has recognized infrastructure deficits in transportation, energy and water/sewer which necessitate large capital investments over a number of years. Ontario alone is in the process of investing over C$75 billion in electricity generation and transmission projects. Infrastructure projects usually require the completion of provincial and/or federal environmental assessment processes to ensure any potential impacts are properly mitigated. Where both processes are required there are generally rules and processes to coordinate or harmonize the requirements. A strategic approach to the environmental assessment is used to reduce opposition and NIMBYism (Not In My Back Yard) to ensure the project is completed in a timely manner. Recognizing the potential harm of inordinate delays, the federal government has recently suggested that for certain larger projects, it may explore options to speed up the environmental review process such as providing definite timelines for completion.

The Canadian Environmental Assessment Act, 2012 ("CEAA, 2012") applies to projects that involve federal lands, government financing and/or are a specific type of project designated under the regulations pursuant to CEAA, 2012. If the project is captured in the regulations, proponents are required to provide a description of their project to the Canadian Environmental Assessment Agency. The federal environmental assessment process was altered to restrict the projects subject to a federal environmental assessment and where an assessment is required, stipulated timeframes will provide proponents with certainty for getting through the process. The legislation permits the federal government to delegate an environmental assessment to another jurisdiction or substitute the process of another jurisdiction to help avoid duplication of environmental assessments for both federal and provincial governments.

Public and agency consultation is a mandatory requirement of the environmental assessment process. Consultation with First Nations usually forms a significant part of such assessments as treaty and Aboriginal rights are protected by the Canadian Constitution. Several recent court cases have provided further clarification of the consultation obligations which vary depending upon the existence and wording of the treaty or nature of the historic aboriginal claim. The traditional use of impact benefit agreements has in many cases been replaced as governments have encouraged project proponents to align or partner with First Nations as equity partners providing capital loans or grants and other monetary incentives.


The storage, transfer and disposal of hazardous and nonhazardous waste is regulated provincially and, in some circumstances, federally. Development of new waste facilities, such as landfills, can be controversial and subject to significant review and public consultation. Most governments are actively encouraging recycling and mandate industry funded stewardship programs to divert certain waste streams (e.g., paper, cardboard, electronic) from landfills. Failure to register, file and remit payments can lead to fines. Regulation of recycling and waste diversion is expected to increase.

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.

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