Canada: Guide To Doing Business In Canada: Environmental Protection

Last Updated: November 9 2016
Article by Gowling WLG

Most Read Contributor in Canada, October 2018

Environmental protection

Canada is an expansive country with a substantial industrial base, plentiful natural resources, extensive bodies of water and significant coastal, Arctic, forested and agricultural regions. As such it faces a wide range of potential environmental issues.

Canada's Constitution Act, 1867 divides legislative power between the federal Parliament and the provincial legislatures.

While the Act sets out many specific areas of jurisdiction, it does not explicitly dictate who has the power to create environmental laws. As a result, Canadian courts have decided that this power is shared between the two levels of government.

The government is able to enact environmental law if it falls under one of the powers listed in the Constitution Act, 1867. For example, federal environmental laws are often enacted under the federal Parliament's jurisdiction to legislate criminal law, fisheries, and peace, order and good government. Provincial environmental laws are generally premised on the provincial power to legislate property and civil rights, and on matters of a purely local nature.

Municipal governments also play a role in Canadian environmental law, but to a much lesser extent. As municipal jurisdiction is not addressed in the Constitution Act, 1867, it is instead defined by each province's governing statute for matters concerning local government.

In addition to government-created law, environmental obligations and liabilities may be incurred pursuant to contract, common law and civil law.

1. Federal environmental laws

a. Canadian Environmental Protection Act, 1999

The Canadian Environmental Protection Act, 1999 (CEPA) is Canada's primary environmental regulatory statute. It establishes the federal authority to regulate a broad range of environmental concerns, ranging from toxic substances to environmental emergencies.

  1.  Toxic substances

    Any substance listed in Schedule 1 of CEPA is classified as toxic and is subject to a series of specific controls. In particular, requests for samples or information on the substance can be issued by the minister of the environment. CEPA also outlines procedures for substances that are newly introduced to Canada. It is prohibited to import or manufacture quantities of any substance not listed on the Domestic Substances List above a certain volume, until that substance can be properly assessed by Environment and Climate Change Canada and Health Canada. Additionally, CEPA imposes a duty to report and a duty to take remedial action on persons who own or are in control of a spilled toxic substance. Anyone who contributes to the release of a toxic substance may also be subject to the same duties. Under CEPA, the minister of the environment is given authority to issue orders in the case of an environmental emergency.
  2. Enforcement

    A variety of enforcement powers are provided for under CEPA. Any person in breach of the Act's provisions may face monetary penalties or, in certain cases, imprisonment. Officers and directors may be subject to prosecution if they authorize, assent to or acquiesce in the commission of an offence, or if they fail to take all reasonable measures to ensure compliance. However, alternatives to the standard prosecution process may be available through Environmental Protection Alternative Measures agreements.

    In June 2012, key provisions of the Environmental Enforcement Act came into force, amending CEPA's sentencing and penalty provisions, and a host of other federal environmental legislation. Most notably, the new penalty provisions introduced mandatory minimum fines and dramatically increased maximum fines. Further, as a result of the changes, minimum and maximum fines are now doubled for subsequent convictions. A conviction is deemed to be a subsequent conviction if the offender was previously convicted of a substantially similar offence under any federal or provincial environmental or wildlife protection act. Under the new regime, smaller corporations are subject to lower fines than large-revenue corporations.
  3. Emissions

    The National Pollutant Release Inventory (NPRI) — as authorized by CEPA — makes the reporting of emissions mandatory where the amount of emissions is equal to, or in excess of, the reporting threshold, and where one or more of the substances emitted is included in the NPRI Substances List. Any facility required to report its emissions must submit a detailed account to Environment and Climate Change Canada. This information is made accessible to the public.

b. Canadian Environmental Assessment Act, 2012

The Canadian Environmental Assessment Act, 2012 (CEAA) replaced the former Canadian Environmental Assessment Act. Under the new Act, projects cannot be required to undergo a federal environmental assessment unless they are specifically designated under the regulations or by the minister of the environment. This differs from the former Act, under which many types of projects — even very small ones — could require an environmental assessment if they involved federal government funding or required certain federal regulatory approvals.

The Regulations Designating Physical Activities apply to projects ranging from transmission lines to industrial facilities, depending on if the project is located in a wildlife area or migratory bird sanctuary, and require the proponents of selected projects to submit a project description for screening by the Canadian Environmental Assessment Agency (the Agency). After a proposal has been submitted, the Agency has 45 days to determine if a federal environmental assessment is required. If the project falls under the auspices of the National Energy Board or the Canadian Nuclear Safety Commission, an environmental assessment is automatically triggered and no preliminary screening is conducted by the Agency.

Some projects may be subject to both CEAA and provincial environmental assessment legislation — as discussed later under "provincial environmental laws." If the minister of the environment is satisfied that the substantive requirements of CEAA can be accomplished through a provincial assessment process, they may substitute the provincial process for the CEAA process. For major projects that engage both CEAA and provincial environmental assessment legislation, a joint federal-provincial review panel may be established.

A project will be permitted to proceed only when the minister, or other applicable decision-maker, is satisfied that the project is not likely to cause significant adverse environmental effects — or, if such effects are likely, the governor in council then determines that they are"justified in the circumstances." Once the decision is made, a decision statement is issued, which sets out the conditions with which the proponent must comply. Failure to comply with the conditions is an offence under CEAA and can result in fines or an injunction.

c. Fisheries Act

The Fisheries Act contains provisions to ensure the conservation and protection of fish and fish habitats essential to sustaining commercial, recreational and Indigenous fisheries. It prohibits the deposit of deleterious substances into water frequented by fish. It also prohibits carrying out work that results in "serious harm to fish that are part of a commercial, recreational or Indigenous fishery, or to fish that support such a fishery," unless the work is authorized by a permit or the regulations.

Under the Fisheries Act, the federal government exercises certain regulatory authority over water pollution and water quality. A number of sector-specific regulations have been made under the Fisheries Act that establish effluent standards and impose monitoring and reporting requirements. For example, there are separate regulations directed at the mining industry, the pulp and paper industry, and large wastewater systems.

d. Transportation of Dangerous Goods Act, 1992

The shipping, handling and transportation of dangerous goods are regulated by the Transportation of Dangerous Goods Act, 1992 (TDGA), as well as provincial statutes. The TDGA creates a complete and comprehensive system of regulation. All provinces have directly adopted an identical regime with respect to intra-provincial transportation.

Nine classes of "dangerous goods," ranging from organisms to explosives, are defined in a schedule to the Act. The Act also addresses issues such as labelling requirements and emergencies, and provides a full suite of enforcement measures. Additional specific and detailed requirements can be found in the Transportation of Dangerous Goods Regulations.

e. Other federal legislation

In Canada, special-purpose legislation applies to the approval of fertilizers, pesticides, and food and drugs. The sale, manufacture, distribution, import or export of substances may be prohibited if they are not otherwise approved under the applicable legislation.

f. Review of federal legislation

In June 2016, the Canadian government launched a review of federal environmental assessment and regulatory processes, including reviews of CEAA, the Fisheries Act, the Navigation Protection Act and the National Energy Board Act. The Canadian government is also currently conducting a separate review of CEPA, which began in March 2016.

2. Provincial environmental laws

Environmental laws and their enforcement vary from province to province. Matters under provincial jurisdiction notably include:

  • Air emissions
  • Water and wastewater treatment and discharges
  • Water withdrawals
  • Waste management
  • The release of contaminants, including issues relating to contaminated lands and brownfield redevelopment
  • Pesticide use
  • Underground and above-ground storage tanks
  • Hazardous materials and residual hazardous materials management
  • The transportation of dangerous substances

Provincial environmental laws prohibit the discharge of pollutants into the environment, but the definitions of a "pollutant," a "contaminant" and the "environment" vary across the provinces.

A new emission source or facility that may impact the environment typically requires an environmental approval, which may be subject to strict conditions. Existing sources of emissions may also be subject to further controls through the issuance of administrative orders.

Canada's three federal territories, the Northwest Territories, Yukon and Nunavut, are not specifically empowered by the Constitution Act, 1867. Their legislative powers are derived from the powers granted to them by the federal government through enabling legislation. For this reason, environmental law in the three territories is generally similar to federal environmental law.

a. Environmental assessment

Several provinces also have environmental assessment laws, the details of which vary from province to province. In Ontario, environmental assessment legislation primarily applies to public sector undertakings. However, significant private sector undertakings may be required to undergo a comprehensive environmental assessment in order to identify and evaluate the need for the undertaking, the alternatives to the undertaking, and alternative methods of accomplishing the undertaking.

In Québec, environmental assessment processes have been applied in the north of the province since 1975 — with the James Bay and Northern Québec Agreement — and in the south since 1980. The Environment Quality Act sets out a rigorous process to assess the impacts of major projects on communities and the environment. Different regimes apply depending on whether any part of the project takes place on territory subject to the James Bay and Northern Québec Agreement and the Northeastern Québec Agreement, and where the process involves an active participation of the Indigenous communities living there (e.g. Crees, Inuit and Naskapis). In southern Québec, the process also favours the participation and consultation of the public through an environmental public hearing board called the Bureau d'audiences publiques sur l'environnement (BAPE).

Under Alberta and British Columbia laws, environmental assessments for a wide range of public and private sector proposals are required. These laws tend to target larger natural resource projects exceeding prescribed operational or other criteria.

Given Canada's division of constitutional powers, many proposals will trigger both provincial and federal environmental assessment requirements. This dual jurisdiction is commonly addressed by provincial and federal laws intended to harmonize environmental assessments and, when possible, facilitate the substitution of a federal environmental assessment for a provincial assessment and vice versa.

A fundamental feature of both provincial and federal environmental assessments is the consideration of constitutionally entrenched Indigenous and treaty rights. These rights differ in many ways from those exercisable by the public at large. In many environmental assessments, Indigenous groups rely on judicial principles governing consultation with Indigenous communities, Indigenous consent respecting lands subject to Indigenous rights (including land title), and criteria governing justifiable government infringement of such rights. In certain jurisdictions, specific environmental processes have been entrenched in constitutionally protected agreements negotiated between the federal and provincial governments, and Indigenous groups — such as the James Bay and Northern Québec Agreement.

b. Environmental enforcement

A breach of provincial environmental laws may be enforced through voluntary abatement measures, administrative orders, administrative fines or prosecutions. For example, in Ontario, which introduced stiff provincial penalties for major environmental offences in 2000, a repeat corporate offender may face a fine of up to $10 million for each day the offence occurs or continues. A repeat individual offender may face up to $6 million per day, plus five years less a day in prison. There may also be a forfeiture of profits gained through non-compliance and liability for cleanup costs, as well as a series of other remedies. Similarly, other provincial regimes — such as those in Québec — can rely on strong enforcement measures to sanction non-compliance of environmental laws and regulations within their jurisdiction, which include specific provisions with respect to directors' and officers' liability.

c. Contaminated sites

For land development, property sales and other decisions, provincial laws governing contaminated sites tend to be central considerations. Most provinces apply site investigation and remediation guidelines developed through various inter-provincial efforts. British Columbia's Environmental Management Act differs from many other provinces in three respects:

Relying less on regulators' broad discretion to apply guidelines, the Act prescribes legally binding standards for contamination (in part per million terms), investigation methodologies and remediation.

Remediation approvals are informed largely by recommendations by private sector "approved professionals."

The Act further enhances plaintiff remediation cost recovery remedies by establishing a cause of action that supplements common law remedies (and thus is analogous to the United States' Superfund law).

In Québec, the land protection and rehabilitation regime, introduced by Bill 72, entered into force in 2003. It requires mandatory site characterization study and rehabilitation work for certain events or activities, such as a change in use of land in certain circumstances and the cessation of designated activities. The process promotes transparency by requiring the publication of contamination, decontamination and use restriction notices in the land register. Municipalities are also required to maintain a list of contaminated sites within their borders.

The regime in Québec relies on qualified experts to certify the site assessment reports that are required under the Environment Quality Act. The Land Protection and Rehabilitation Regulation determines the limit values for a range of contaminants, and defines the types of industrial activities contemplated by the regulation. It also establishes the conditions under which groundwater quality must be monitored downstream of the lands where some of those activities take place.

The information about the existence of contaminated sites is made public through various means. In Québec, the province publishes an inventory containing information on sites that have been contaminated by industrial and commercial activities, or accidental spills, and have been brought to the authorities' attention.

d. Climate change

Climate change is a significant and current law reform issue in most Canadian provinces. Different approaches have been implemented and others are being carefully considered. 

British Columbia began legislating greenhouse gas (GHG) emissions in 2007 and in 2008 introduced a carbon tax, which applies to the purchase or use of fossil fuel in the province. This was followed by low-carbon fuel standards implemented in 2010, and legislation to manage GHG emissions in the liquefied natural gas industry. More recently, British Columbia has created a Climate Leadership Team, which seeks to establish a more stringent GHG emissions reduction target, increase carbon tax, include the social cost of carbon in its environmental assessment process and develop a low carbon transportation strategy.

Regulations adopted in Québec established a cap-and-trade system to regulate GHG emissions and meet the Québec government's GHG reduction targets. On January 1, 2013, the regulatory regime added compliance obligations for certain Québec emitters to offset their reported GHG emissions with allowances. Allowances can be acquired at inter-jurisdictional auctions, government reserve sales and from other participants in cap-and-trade programs that have excess to allowances for sale. In the case of industrial emitters other than fuel distributors, allowances are also allocated by the government at no charge, but on a declining basis. Emissions can also be offset by credits from certain government-recognized GHG reduction projects that have been validated in accordance with the protocols set by the regulations. Cap-and-trade in Québec is harmonized with the California regime, and is intended to be linked with similar cap-and-trade regimes adopted by other Canadian and U.S. jurisdictions that are members of the Western Climate Initiative.

In May 2016, the Ontario government passed legislation establishing a cap-and-trade program. Cap-and-trade in Ontario is ultimately intended to be linked with similar cap-and-trade regimes adopted by other member jurisdictions in the Western Climate Initiative. The first four-year compliance period begins on January 1, 2017. Subsequent compliance periods will be three years in duration. Corporations that emit 25,000 tonnes or more of GHGs are required to participate. Participants will only be able to emit the amount of GHGs permitted by their emission allowances. As in Québec, free allowances will be available to mandatory participants, but the number of available free allowances will decrease over time. In fall 2016, the provincial government is expected to release a draft carbon offset regulation detailing eligible carbon offset protocols. It is also expected that, beginning in 2017, cap-and-trade participants will be able to use offset credits in place of emission allowances up to a set limit.

In 2016, Alberta developed a new strategy on climate change based on recommendations put forward by the Climate Change Advisory Panel. The final strategy will focus on four keys areas:

Phasing out emissions from coal-generated electricity and developing more renewable energy

Implementing a new carbon price on GHG emissions

Legislating an oil sands emission limit

Employing a new methane emission reduction plan

3. Municipal measures

Municipalities may regulate activities through legislation, including sewer-use bylaws, noise bylaws and property-standards bylaws. In addition, municipalities in Ontario and Québec integrate environmental approvals with planning approvals.

Some municipalities require comprehensive environmental site investigations and public notification prior to issuing certain permits. For example, before issuing a planning approval or building permit, a municipality may require verification of contamination for the subject property, and may impose a remedial plan plus financial assurance as conditions of approval. In Québec, a municipality cannot issue a construction permit or approve a subdivision of land where the land in question is listed in the municipal registry of contaminated lands — unless the project or subdivision is consistent with an approved rehabilitation plan.

4. Common law and civil law

Common law causes of action relating to environmental matters include nuisance, negligence, strict liability and trespass. Although judicial decisions may vary, the common law principles generally apply to every common law jurisdiction in Canada. In Québec, which is a civil law jurisdiction, contractual and extra-contractual disputes are governed by the Civil Code of Québec. Additional opportunities for litigation exist through class-action legislation in specific provinces and through specific provisions within certain provincial legislation.

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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