Recent amendments to the Environmental Management Act, S.B.C. 2003, c. 53 (the "EMA") in the form of Bill 29 will broaden the scope of the "polluter pays" principle by increasing obligations of owners and operators of industrial projects for environmental cleanup.
The new requirements will come into force following the implementation of the accompanying regulatory framework. Bill 29 follows the Province's Public Interest Bonding Strategy, a project introduced by the Ministry of Environment and Climate Change Strategy that aims to ensure sufficient funds are available for the environmental costs associated with the decommissioning and closure of industrial projects in addition to supporting responsible industry production and investment. Notably, the amendments broaden the powers of the Province to order an owner or operator to provide security in relation to decommissioning and closure obligations.
The amendments also increase the reporting obligations for owners/operators of high-risk industrial projects such as chemical production, metal processing, smelting and refining, pulp and paper, municipal sewage management activities and other projects captured under statutes such as the EMA, the Mines Act, the Land Act, the Forest Act and the Environmental Assessment Act. Bill 29 additionally provides the Province with broad powers to request specified information about a facility, impose requirements pertaining to decommissioning and disclosure plans, mandate financial security and demand cost recovery of an abandoned facility.
1. The Amendments
Bill 29 introduces significant amendments to the EMA:
- The Province will have the authority and discretion to order a "responsible person" (as defined in section 98.1 of the amendments, but generally encompassing owners or operators of sites) to provide security to the Province in relation to decommissioning and closure obligations.
- The Province will have the authority to require information respecting a specified facility, as well as the property, assets and financial circumstances of the "responsible person" for the purposes of considering whether to make an order (and if so, on what terms) with respect to decommissioning and closure obligations.
- The Province will be able to order a "responsible person" to prepare a decommissioning and closure plan if there becomes a risk of pollution or contamination of land around the facility in question.
- The Province will be able to order an owner or operator of an industrial project to decommission and close the specified facility and to prepare and submit a report to the Province respecting the decommissioning and closure.
- Lastly, the Province will also have the authority to itself undertake decommissioning and closure of a facility deemed by the Province to be an abandoned facility and then seek cost recovery from an owner or operator of the facility.
2. Implications
The amendments to the EMA are consistent with the general trend across Canada to broaden the scope of application of the "polluter pays" principle. They are also in line with government efforts to ensure that taxpayers are not left holding the bag when it comes to environmental clean-ups.
For property owners / operators as well as for developers, the amendments will result in higher compliance and transaction costs as well as increased financial and liability risks associated with industrial projects. Potential purchasers may thus wish to request more recent or more detailed decommissioning reports and estimates to properly gauge their potential liability risk under the new regime.
The amendments may also prompt purchasers to rethink the timing of transactions in an effort to reduce their exposure to decommissioning and closure obligations. This may be a particularly important consideration for purchasers who are looking at facilities nearing the end of their operational life or those that have already ceased operations given the new powers to require an owner or operator to develop and submit a decommissioning and closure plan and/or to carry out decommissioning or closure. Buyers in these circumstances may accordingly be more hesitant to purchase facilities and hold property for the long-term with an intention to redevelop them in the future.
Overall, Bill 29 supports the ongoing efforts by the Province to hold owners and operators liable for environmental cleanup of industrial projects in a variety of circumstances and lessening the financial burden on the taxpayer, ultimately enhancing economic opportunities for site redevelopment.
3. Going Forward
In Spring 2024, the Ministry of the Environment and Climate Change released it's Decommissioning and Closure of Industrial Projects Intentions Paper which summarizes the policy intentions and objectives in the Public Interest Bonding Strategy and lays out the remaining phases, including preparing a regulatory framework for implementation of the amendments and the review of financial assurance mechanisms for cleanup costs.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2024
