Copyright 2009, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Environmental Law, July 2009
Introduction
Many businesses are in the process of restructuring and, in so doing, they are shutting down and selling operating facilities. You should be aware that in Quebec, permanent cessation of certain industrial activities and changing the use of a site where such an activity has been carried on triggers environmental site assessment and clean-up obligations.
Site Assessment and Clean-Up Obligations
An environmental site assessment (ESA) must be carried out within six months of the permanent cessation of subject industrial activities (listed in a government regulation), a time period which the government can extend to 18 months if there is a possibility that activities will resume. The same is true when there is a proposal to change the use of a site where such an activity has been carried on at any time in the past. The soil and groundwater assessment report, certified by a government-accredited expert, must be forwarded to the Quebec Ministry of Sustainable Development, Environment and Parks (MSDEP) for review and comment.
If the ESA reveals the presence of contaminants in soil or groundwater on the site in excess of applicable generic criteria, the law requires that a clean-up plan be tabled with the MSDEP for approval. Such a plan may provide for contaminants to be left onsite in excess of generic criteria, subject to the following conditions:
- a deed restriction must be published against the property title;
- a risk assessment must be carried out to determine site-specific risks to human health and the environment; and,
- where a change of use is planned, a public meeting must be held to inform the community about the risk assessment.
Under the law, each municipality in Quebec must keep a list, available to the public, of all properties subject to an environmental deed restriction.
Failure to conduct an ESA, produce a clean-up plan or register an environmental deed restriction (called a "notice of contamination") can lead to fines: for individuals, ranging from C$2,000 to C$20,000 for a first offence (C$4,000 to C$40,000 for a repeat offence) and/or a prison term of up to a year; and, in the case of a corporation, fines ranging from C$6,000 to C$250,000 for a first offence (C$50,000 to C$1-million for a repeat offence).
Clean-up Orders
Since 2003, the MSDEP can issue a clean-up order against any person or municipality which, even before 2003, contaminated or allowed the contamination of a site or which, since 2003, has or has had custody of such a site in any capacity.
Orders may not be issued against persons or municipalities in the following cases:
- the person or municipality establishes that it did not know, and was not in a position to know, about contamination on the site;
- knowing of the contamination, the person or municipality establishes that it has acted in compliance with the law, including the obligation to act with prudence and diligence;
- the person or municipality establishes that the contaminants migrated onto the property from an offsite location and that a third party is responsible for the contamination.
Five such clean-up orders have been issued by the MSDEP since 2003.
Failure to comply with a clean-up order is punishable by the sanctions mentioned above. Directors and officers of a corporation who cause the corporation to refuse or to neglect to comply with an order, or who tolerate such non-compliance, can be held personally liable and face the same sanctions.
Conclusion
It is up to individual companies to determine whether they carry on an activity that makes them subject to the ESA and clean-up obligations provided under Quebec law, as the MSDEP issues no notices in this regard. It is possible to carry out a transaction without complying with these obligations. However, this can lead to charges being laid and does not rule out the possibility that, in the future, the MSDEP could issue an assessment or clean-up order against a former owner or occupant of the site. To eliminate this risk, and to avoid the possibility that failure to comply with the law causes problems in obtaining financing, it is preferable to inquire well in advance concerning environmental obligations that could be triggered by the permanent cessation or a change in the nature of your operations in Quebec.
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.