Environmental law and practice in Canada: overview

A Q&A guide to environment law in Canada. This Q&A provides a high level overview of environment law in Canada and looks at key practical issues including emissions to air and water, environmental impact assessments, waste, contaminated land, and environmental issues in transactions. In addition, answers to questions can be compared across a number of jurisdictions to assist in the management of cross-border transactions (see Country Q&A Tool).

This Q&A is part of the global guide to environment. For a full list of jurisdictional Q&As visit www.practicallaw.com/environment-guide.

Contents

Environmental regulatory framework

1. What are the key pieces of environmental legislation and the regulatory authorities?

Environmental laws are enacted in Canada by the federal government, ten provincial governments and three northern territorial governments. Municipal governments, under authority delegated by provincial or territorial legislatures, also legislate locally in specific environmental areas such as noise and sewer use. While the Canadian Constitution assigns different areas of responsibility to the federal parliament and the provincial legislatures, federal and provincial environmental regulatory regimes frequently overlap. Environmental protection falls primarily under the jurisdiction of the provinces, which have similar but not identical regulatory requirements. However, the federal government does exercise jurisdiction in specific areas.

The key federal laws relating to protection of the environment are:

  • Canadian Environmental Protection Act 1999 (CEPA).

  • Fisheries Act.

  • Transportation of Dangerous Goods Act 1992 (TDGA).

  • Species at Risk Act (SARA).

  • Migratory Birds Convention Act 1994.

  • Nuclear Safety and Control Act (NSCA).

  • Canadian Environmental Assessment Act (CEAA).

The primary federal regulatory authority is Environment Canada. Other important regulators in specific areas include Fisheries and Oceans Canada, Transport Canada and the Canadian Nuclear Safety Commission.

Each province and territory has enacted laws to protect the environment. In some areas, such as transportation of dangerous goods and species at risk, provincial legislation tracks the relevant federal legislation. Each province has enacted some form of primary environmental protection law and has created a key environmental regulator:

  • In British Columbia, the principal environmental statute is the Environmental Management Act, administered by the British Columbia Ministry of the Environment.

  • In Alberta, the Environmental Protection and Enhancement Act is administered by Alberta Environment and Sustainable Resource Development.

  • In Saskatchewan, the Environmental Management and Protection Act is the primary environmental law. The primary environmental regulator is the Saskatchewan Ministry of Environment.

  • In Manitoba, the Environment Act is administered by the Manitoba Department of Conservation and Water Stewardship.

  • In Ontario, the Environmental Protection Act and the Ontario Water Resources Act are administered by the Ontario Ministry of the Environment and Climate Change.

  • In Québec, the principal environmental statute is the Environment Quality Act, administered by the Ministry of Sustainable Development, Environment, and the Fight Against Climate Change.

  • In New Brunswick, the New Brunswick Department of Environment and Local Government administers the Clean Air Act and the Clean Environment Act.

  • In Nova Scotia, the Environment Act is administered by the Nova Scotia Department of Environment.

  • In Prince Edward Island, the Department of Environment, Labour and Justice is responsible for the administration of the Environmental Protection Act.

  • In Newfoundland and Labrador, the Environmental Protection Act is administered by the Department of Environment and Conservation.

While no two provincial regulatory regimes are identical, all provinces regulate the discharge of contaminants to the natural environment with a combination of objective standards and quantitative standards.

All provinces maintain some form of licensing system for discharges to air, water and land, which typically impose site-specific requirements on activities that have the potential to affect the natural environment.

In addition to the federal CEAA regime, most provinces and territories maintain an environmental assessment regime of some form.

Many Canadian provinces have adopted climate change action plans and are now actively regulating carbon emissions.

 

Regulatory enforcement

2. To what extent are environmental requirements enforced by regulators?

The federal government and all provinces maintain compliance regimes that authorise the issuance of various types of orders, and the prosecution of environmental offenders. Most environmental regulators in Canada have appointed dedicated investigation and enforcement officers, with powers similar to those granted to police officers. For example, officers are commonly granted broad powers of entry, as well as specific powers to conduct environmental testing, examine and take documents and make reasonable inquiries. Enforcement officers are usually given the authority to seek judicial authorisation to exercise their powers in circumstances where consent cannot be obtained.

The level of environmental regulatory enforcement varies from jurisdiction to jurisdiction, depending on political will, available resources and public demand. The Ontario Ministry of the Environment and Climate Change is the most active regulator in terms of enforcement.

 

Environmental NGOs

3. To what extent are environmental non-governmental organisations (NGOs) and other pressure groups active?

There are a number of very active Canadian environmental NGOs, whose influence is significant in a number of areas. Most NGOs are active in lobbying for changes to environmental laws and regulations. Some NGOs engage in direct action to draw attention to environmental issues. Some NGOs, such as Ecojustice and the Canadian Environmental Law Association maintain a complement of staff legal counsel to intervene in significant environmental cases.

 

Environmental permits

4. Is there an integrated permitting regime or are there separate environmental regimes for different types of emission? Can companies apply for a single environmental permit for all activities on a site or do they have to apply for separate permits?

Integrated/separate permitting regime

Most emissions permitting occurs at the provincial level of government. Each province maintains a unique environmental permitting regime. In some cases, there are different regimes for discharges to air, land and water. Some provinces permit a more integrated approach with multimedia approvals. Even in cases where there are different approval regimes, it is common to deal with the same regulator.

Single/separate permits

In some provinces, such as Ontario, it is now legally possible to apply for a single environmental permit for most activities on a site.

 
5. What is the framework for the integrated permitting regime?

Permits and regulator

In Ontario, a typical industrial facility may require an environmental compliance approval (ECA) to discharge contaminants into the air and an ECA to discharge into surface water. In some cases, a facility will require an ECA for waste management activities. All of these ECAs are issued by the Ontario Ministry of the Environment and Climate Change and may be combined into a multimedia ECA. Note that if the wastewater discharge is to a municipal sewer, an ECA will not be required, but it may be necessary to attain a municipal permit, which cannot be combined in the multimedia approval.

Length of permit

The practice varies across Canada. In Ontario, the vast majority of ECAs are not time-limited. There is a trend towards the issuance of ECAs with limited operational flexibility, which allow the ECA holder to make modifications within a defined envelope. The limited operational flexibility conditions typically must be renewed every five years.

Restrictions on transfer

The practice varies across Canada. In Ontario, an ECA can typically be transferred, subject to a requirement to notify the Ministry of the Environment and Climate Change, while a permit to take water is not transferable.

Penalties

Penalties for non-compliance with environmental permits differ across the various jurisdictions, with fines ranging up to CAN$500,000 per day. Fines may be increased equal to the amount of the monetary benefit which results from non-compliance, and a compliance order may be issued as part of sentencing. Penalties imposed under environmental statutes are considered to be quasi-criminal or regulatory, and do not cover civil damages.

 

Water pollution

6. What is the regulatory regime for water pollution (whether part of an integrated regime or separate)?

Permits and regulator

While the federal and provincial governments share jurisdiction over water, most wastewater discharge permits are issued by provincial environmental regulators (see Question 1). For example, in Ontario, a discharge of wastewater to a surface water body requires an environmental compliance approval under the Ontario Water Resources Act. Municipal wastewater treatment plants require provincial permits for discharge of treated effluent to surface water, and in turn impose requirements on upstream sewer dischargers. Under the federal Fisheries Act, an authorisation may be required for certain discharges to water that may have a harmful effect on fish.

Prohibited activities

All Canadian environmental statutes prohibit certain types of activities. Federally, the Fisheries Act prohibits the deposit of harmful substances in water frequented by fish, the CEPA prohibits the disposal at sea of wastes and other substances without a permit, and the Arctic Waters Pollution Prevention Act prohibits the deposit of waste of any type in Arctic waters.

Provincially, environmental protection statutes typically contain broad prohibitions against the discharge of anything into water that may impair the quality of that water. Officers and directors in most Canadian jurisdictions have a positive obligation to take reasonable steps to ensure compliance.

Clean-up/compensation

All Canadian environmental regulators have the ability to require a polluter to clean up water pollution, typically through some form of administrative order. Some jurisdictions have created a regime of administrative monetary penalties, in which a polluter can be ordered to pay monetary compensation for water pollution.

Penalties

Penalties for non-compliance are specific to the jurisdiction, but tend to be similar across the country. Penalties range up to CAN$10 million for corporate polluters and five years' imprisonment for individuals. Actual penalties are considerably lower, and imprisonment is rare. Severe penalties are reserved for blatant and repeated non-compliance. Penalties imposed under environmental statutes are considered to be quasi-criminal or regulatory, and do not cover civil damages.

 

Air pollution

7. What is the regulatory regime for air pollution (whether part of an integrated regime or separate)?

Permits and regulator

Air discharge permits are issued by provincial environmental regulators (see Question 1). For example, in Ontario, a discharge of anything into the air that may cause a defined adverse effect requires an environmental compliance approval issued by the Ministry of the Environment and Climate Change under the Environmental Protection Act. In British Columbia, the authority to issue air discharge permits has been delegated to some large municipal governments, such as Greater Vancouver.

Prohibited activities

All Canadian environmental statutes prohibit certain types of activities. Provincial environmental protection statutes typically contain broad prohibitions against the discharge of anything into the air that may cause an adverse effect. Officers and directors in most Canadian jurisdictions have a positive obligation to take reasonable steps to ensure compliance.

Clean-up/compensation

All Canadian environmental regulators have the ability to require a polluter to control air pollution, typically through some form of administrative order. Some jurisdictions have created a regime of administrative monetary penalties, in which a polluter can be ordered to pay monetary compensation for air pollution.

Penalties

Penalties for non-compliance are specific to the jurisdiction, but tend to be similar across the country. Penalties range as high as CAN$10 million for corporate polluters and five years' imprisonment for individuals. Actual penalties are considerably lower, and imprisonment is rare. Severe penalties are reserved for blatant and repeated non-compliance. Penalties imposed under environmental statutes are considered to be quasi-criminal or regulatory, and do not cover civil damages.

 

Climate change, renewable energy and energy efficiency

8. Are there any national targets or legal requirements for reducing greenhouse gas emissions, increasing the use of renewable energy (such as wind power) and/or increasing energy efficiency (for example in buildings and appliances)? Is there a national strategy on climate change, renewable energy and/or energy efficiency?

Under the Copenhagen Accord, Canada committed to reducing its greenhouse gas (GHG) emissions by 17% from 2005 levels by 2020, to 611 megatonnes of carbon dioxide equivalent. At the 2016 Paris climate conference (COP 21), the new federal Liberal government formally recognised the necessity of transitioning to a low-carbon, climate resilient economy, and committed to reducing GHG emissions by 30% from 2005 levels by 2030.

It is generally accepted that a true "national plan" to deal with GHG emissions is only possible through a concerted joint federal-provincial initiative. The new federal government has started discussions with the provinces to develop and implement a national climate change action plan, but it is not yet clear whether it will be possible to reach a consensus on the key issues, particularly carbon pricing. The federal government has signalled its willingness to use its constitutional authority, in the event that consensus cannot be achieved, to set a floor price for carbon, leaving the provinces free to regulate by way of cap and trade, carbon taxes or any other means.

The federal government has also been following a sector by sector regulatory approach to reduce GHG emissions in areas where it has clear constitutional authority. To date, regulatory steps have been taken in the transportation and electricity sectors. The federal government is also moving forward with regulatory controls on hydrofluorocarbons.

Most Canadian provinces have also taken steps to legislate reductions in GHG emissions, and have imposed requirements to report GHG emissions on an annual basis. British Columbia has implemented a carbon tax of CAN$30 per tonne. The former Alberta government imposed intensity-based carbon emission limits for large emitters and established a limited carbon trading regime. The new government in Alberta is developing a new climate change strategy and has already implemented a new carbon levy on fuels (CAN$20 per tonne rising to CAN$30 per tonne in 2018), adopted regulatory requirements that will cap GHG emissions from oil sands at 100 million tonnes per year and announced plans to phase out coal-fired power plants. Manitoba is committed to implementing a cap and trade regime for large emitters and is currently examining a range of alternative carbon pricing alternatives. Québec imposes a form of carbon tax on the bulk sale of fuels, and has established a cap and trade system for large emitters through its membership in the Western Climate Initiative. Ontario has also now established a cap and trade regime for large emitters, which will become fully operational in 2018, and will join with Québec and California in a carbon market.

Further changes are anticipated in the regulation of GHG emissions in Canada. All levels of government have implemented measures to encourage renewable energy development and energy efficiency, although generally speaking there are no legal requirements.

 
9. Is your jurisdiction party to the United Nations Framework Convention on Climate Change (UNFCCC) and/or the Kyoto Protocol? How have the requirements under those international agreements been implemented?

Canada remains a party to the UNFCCC but, despite ratifying it in 2006, the Canadian government formally withdrew from the Kyoto Protocol in 2011.

 
10. What, if any, emissions/carbon trading schemes operate in your jurisdiction?

Canada has not established a national emissions trading scheme. The governments of Alberta, Québec and Ontario have established cap and trade systems, and some other provinces are exploring the alternative (see Question 8).

 

Environmental impact assessments

11. Are there any requirements to carry out environmental impact assessments (EIAs) for certain types of projects?

Scope

The federal government and all provincial governments have established EIA requirements for certain projects. The scope of the requirements vary from jurisdiction to jurisdiction. The Canadian Environmental Assessment Act (CEAA) only applies to designated projects, which tend to be major resource-based projects such as mines, pipelines and nuclear facilities. The scope of a federal environmental assessment is limited to environmental issues within federal jurisdiction, such as fisheries. Provincial EIA requirements vary widely, but generally cover a broader range of projects. In Ontario, environmental assessment legislation applies to all government projects, but only to designated private sector projects, which over the years have tended to be limited to the area of waste management.

Permits and regulator

A project subject to CEAA may only proceed following a positive decision by the federal government, and the issuance of any number of other permits and approvals from different regulatory agencies at both the federal and provincial levels of government. EIAs under CEAA are carried out by the Canadian Environmental Assessment Agency, the Canadian Nuclear Safety Commission and the National Energy Board. This scenario is similar in a provincial EIA, although actual assessments may be formally carried out by the project proponent, and approval authority may be vested in a dedicated regulatory agency.

Penalties

The maximum penalty for non-compliance with CEAA is CAN$400,000. Penalties in provincial EIA legislation vary. In Ontario, for example, the maximum penalty is CAN$25,000 per day. Penalties imposed under EIA statutes are considered to be quasi-criminal or regulatory, and do not cover civil damages.

 

Waste

12. What is the regulatory regime for waste?

Permits and regulator

Regulation of waste management activities falls under provincial jurisdiction, except for waste management on federal lands or First Nation lands. The federal government also regulates the import and export of hazardous waste.

Generally speaking, at the provincial level "waste" is defined broadly and any activities involving the collection, transportation, processing or disposal of waste may only be undertaken in accordance with a provincial permit, licence or approval issued by the provincial environmental regulator.

Prohibited activities

Hazardous waste may not be imported to, or exported from, Canada except in accordance with a permit issued under the federal Export and Import of Hazardous Wastes and Hazardous Recyclable Materials Regulations.

As a general rule, any activity involving the management of hazardous or non-hazardous waste is prohibited except in accordance with a permit, licence or approval issued by a provincial environmental regulatory authority, unless the activity has been specifically exempted.

Operator criteria

Waste management regulatory schemes in Canada do not tend to include specific operator criteria, although most provincial regulators will take into account the capability of the applicant to engage in the waste management activity in an environmentally responsible fashion. Some jurisdictions, such as Ontario, specifically allow the issuing authority to consider the past conduct of the applicant. Most jurisdictions require some form of financial assurance to secure the obligations of private sector waste management operators.

Special rules for certain waste

Every province has special rules governing the management of hazardous and liquid industrial wastes. These rules are generally harmonised across the country, with the exception of Québec. Typically, a generator of hazardous or liquid industrial waste is required to register with the provincial regulator and only transfer waste under the authority of a waste manifest. Most provincial jurisdictions also have special rules for the management of PCB wastes and refrigerant wastes. Most provincial jurisdictions also have special rules to encourage the reduction, re-use and recycling of waste, and most have established stewardship programs for specific recyclable materials such as tires and electrical equipment.

Penalties

Penalties for non-compliance with legislated waste management requirements range widely across jurisdictions in Canada, and can be as high as CAN$10 million for an offence involving hazardous waste. Some provinces impose minimum fines of, for example, CAN$25,000 for a first conviction. Penalties imposed under environmental statutes are considered to be quasi-criminal or regulatory, and do not cover civil damages.

 

Asbestos

13. What is the regulatory regime for asbestos?

Asbestos is regulated both federally and provincially. The federal government classifies asbestos as a toxic substance and regulates asbestos mining under the Asbestos Mines and Mills Release Regulations. Provincial governments regulate existing asbestos in buildings under occupational health and safety regulations and disposal of asbestos waste under waste management regulations.

Prohibited activities

The release of exhaust gases from asbestos mining or milling operations with a concentration greater than two asbestos fibres per cubic centimetre is prohibited under the Asbestos Mines and Mills Release Regulations. The use of asbestos in building materials in Canada is prohibited.

Removal of asbestos from buildings is prohibited except in strict compliance with provincial occupational health and safety regulations. Landfilling of asbestos waste in non-hazardous waste landfills is prohibited except in strict conformity with special rules.

Main obligations

Under provincial occupational health and safety legislation, the removal of asbestos is strictly regulated in accordance with risk-based rules. Most of the provincial regulatory regimes include requirements to notify workers, those tendering on projects and provincial labour regulators of the presence or potential presence of asbestos in a building. Obligations are typically imposed on owners of property.

Permits and regulator

Some provincial labour regulators require permits for asbestos removal operations. Asbestos may only be landfilled in accordance with a landfill approval.

Penalties

Penalties for non-compliance range widely across jurisdictions in Canada. For example, the maximum fine for contravention of the Occupational Health and Safety Act in Ontario is CAN$500,000. Penalties imposed under environmental and occupational health and safety statutes are considered to be quasi-criminal or regulatory, and do not cover civil damages.

 

Contaminated land

14. What is the regulatory regime for contaminated land?

Regulator and legislation

Some provinces, such as Ontario, Saskatchewan and British Columbia, have established specific regulatory regimes for the assessment and remediation of contaminated land. Other provinces deal with contaminated land on a more informal basis. All general federal and provincial environmental legislation empowers the relevant regulator to order the assessment and clean-up of contaminated land.

Investigation and clean-up

The circumstances under which a regulator can require investigation and remediation of contaminated land vary from jurisdiction to jurisdiction in Canada. British Columbia maintains the most prescriptive regime, imposing registration requirements triggered by the identification of contaminated land. In Ontario, changes in property use from an industrial or commercial use to residential or parkland use triggers the mandatory application of detailed site investigation and remediation requirements. While site condition standards that are protective of human health and the environment have been developed and adopted both federally and provincially, exceeding generic standards is not typically a trigger for investigation on its own. In many cases, provincial regulators require evidence of off-site impacts before ordering the assessment and/or remediation of contaminated land.

Penalties

Penalties for non-compliance with investigation and remediation orders range widely across jurisdictions in Canada.

 
15. Who is liable for the clean-up of contaminated land? Can this be excluded?

Liable party

Under provincial environmental laws, liability for the clean-up of contaminated land is typically imposed on current and previous owners and occupiers. In some cases, liability may be imposed upon producers of the substances that cause the contamination. Civil liability for contaminated land is typically imposed at common law on the polluter, but may in some cases be imposed on innocent owners or occupants who have not taken steps to control off-site migration. While civil courts will typically apportion liability based on fault when there are multiple liable parties, administrative orders issued by regulatory bodies commonly impose joint and several liability on all potentially liable parties. Some provinces, such as Ontario, maintain a special fund to pay for the clean-up of contaminated land where no financially solvent liable party can be located, although it can be very difficult to access such a fund.

Owner/occupier liability

An owner or occupier who has not caused contamination can be held liable for the investigation and clean-up of contamination on their land in many Canadian jurisdictions.

Previous owner/occupier liability

Previous owners or occupiers can be liable for contamination they caused in the past.

Limitation of liability

There are no limits on regulatory liability. From a civil liability perspective, a party may seek to limit its liability through the use of contractual releases and indemnities, and through the sale of land on an "as is, where is" basis (where the buyer knowingly takes the land in a contaminated state and assumes all of the risks associated with the contamination, sometimes to the extent of indemnifying the seller for future environmental claims).

Voluntary clean-up programme

Many provincial governments enable municipalities to establish tax increment funding (TIF) regimes to assist with the redevelopment of brownfield properties. Typically, the value of the incremental increase in municipal taxes resulting from the redevelopment is rebated to the owner over a fixed period of years to assist with paying off funds spent to clean up the property. Financing may therefore be available from conventional lenders on the strength of committed future TIF rebates.

 
16. Can a lender incur liability for contaminated land and is it common for a lender to incur liability? What steps do lenders commonly take to minimise liability?

Lender liability

Under provincial environmental laws, a lender can only typically incur liability for contaminated land if it takes possession of the land or is otherwise directly responsible for the contamination. It is uncommon for lenders to incur liability.

Minimising liability

Most commonly, lenders minimise liability by not going into possession of contaminated land. Some provinces, such as Ontario, have specific legislative provisions by which a lender can deal with contaminated land without assuming liability for historic environmental contamination.

 
17. Can an individual bring legal action against a polluter, owner or occupier?

In all Canadian jurisdictions, an individual can commence a legal action against a polluter, owner or occupier for damages related to pollution. Most actions are based in nuisance, trespass, negligence and strict liability. In some provinces, such as Ontario, a plaintiff may also claim relief on the basis of a statutory cause of action.

 

Hydraulic fracturing

18. Is fracking being pursued or considered in your jurisdiction? If so, please describe the regulatory framework that applies to manage environmental risks.

Consenting and environmental impact assessment

Hydraulic fracturing associated with conventional oil and gas reserves has been pursued in Alberta since the 1950s. Fracking is one of a number of ways in which the recovery of oil and gas can be enhanced in mature oil and gas fields, extending the life of older wells. The activity is now regulated by the Alberta Energy Regulator (AER). The environmental risks of hydraulic fracturing are managed by the AER through a licensing regime, which can include preparation of a pre-disturbance assessment and conservation and reclamation plans. The AER has imposed seismic monitoring and reporting requirements in one area of Alberta as a result of public concerns.

Other issues

There is considerable interest in hydraulic fracturing for non-conventional reserves, such as shale gas, in some of Canada's eastern provinces, specifically Québec, New Brunswick and Nova Scotia. However, Québec has imposed a moratorium on fracking activities, and the government of New Brunswick has proposed legislation that would ban high-volume hydraulic fracturing for onshore oil and gas. In New Brunswick, there is considerable controversy associated with fracking activities, which are proceeding under conventional oil and gas exploration licences.

 

Environmental liability and asset/share transfers

19. In what circumstances can a buyer inherit pre-acquisition environmental liability in an asset sale/the sale of a company (share sale)?

Asset sale

In an asset sale, a buyer typically does not inherit pre-acquisition statutory liabilities, although a buyer may take over an ongoing situation of regulatory non-compliance and become liable. As an owner of contaminated land, a buyer may be liable to be issued a remediation order even if the contamination was inherited.

A buyer of assets may in some circumstances inherit civil liability for pre-existing environmental conditions, especially in relation to contaminated land.

Share sale

In a share sale, a buyer inherits all environmental liabilities of sellers, including regulatory liabilities and civil liabilities.

 
20. In what circumstances can a seller retain environmental liability after an asset sale/a share sale?

Asset sale

In an asset sale, a seller typically remains liable for pre-closing regulatory non-compliance. Subject to the existence of a contractual indemnity, a seller typically retains civil liability for contaminated land post-closing.

Share sale

In a share sale, a seller does not typically retain any environmental liabilities, which are those of the corporate entity and not the selling shareholder(s).

 
21. Does a seller have to disclose environmental information to the buyer in an asset sale/a share sale?

Asset sale

There is no legal requirement to disclose environmental information to the buyer in an asset sale, subject to common law rules on deceit, misrepresentation and latent defects. Full disclosure of environmental information is a common feature in Canadian asset purchase agreements.

Share sale

Similarly, there is no legal requirement to disclose environmental information to the buyer in a share sale, but full disclosure of environmental information is common in Canadian share purchase agreements.

 
22. Is environmental due diligence common in an asset sale/a share sale?

Scope

Environmental due diligence is the norm in asset sales and share sales in Canada. Areas typically covered include records review, government enquiries, database searches, environmental approvals review and review of existing environmental site assessments. In some cases, a Phase One or Phase Two environmental site assessment (ESA) will be undertaken as part of due diligence. Due diligence on climate change and sustainability issues so far uncommon in Canada.

Types of assessment

A Phase One ESA may be undertaken to identify potential areas of environmental concern. A Phase Two ESA may be undertaken if there is known or suspected environmental contamination. On occasion, a buyer will undertake an environmental compliance audit and/or a building condition assessment.

Environmental consultants

Environmental consultants are typically employed to undertake Phase One and Two ESAs and environmental compliance audits. The contractual terms of a consultant's retainer should deal specifically with limitations on liability, confidentiality, reliance by the buyer, seller or other parties and ownership of materials.

 
23. Are environmental warranties and indemnities usually given and what issues do they usually cover in an asset sale/a share sale?

Asset sale

Environmental representations and warranties are commonly given by sellers in Canadian asset sales. Environmental indemnities are not as common, but may be given by either buyer or seller and are very specific to the transaction and the relative bargaining power of the parties. In an "as is, where is" transaction, where the buyer knowingly takes the land in a contaminated state and assumes all of the risks associated with the contamination, the buyer may on occasion indemnify the seller.

The scope of environmental representations and warranties varies depending on the nature of the transaction and the negotiating position of each of the parties. Typical environmental representations and warranties include:

  • Compliance with environmental laws.

  • No legal proceedings related to environmental issues.

  • No underground storage tanks or other specified hazards.

  • Existence of, and compliance with, all necessary environmental approvals.

  • No hazardous substances on the property or in soil and groundwater.

Share sale

Environmental representations and warranties are also commonly given in Canadian share sales. Environmental indemnities are somewhat more commonly given by the seller than is the case in asset sales.

The scope of environmental representations and warranties varies depending on the nature of the transaction and the negotiating position of each of the parties. Typical environmental representations and warranties include:

  • Compliance with environmental laws.

  • No legal proceedings related to environmental issues.

  • No underground storage tanks or other specified hazards.

  • Existence of, and compliance with, all necessary environmental approvals.

  • No hazardous substances on the property or in soil and groundwater.

 
24. Are there usually limits on environmental warranties and indemnities?

Environmental representations and warranties are commonly qualified by knowledge, materiality and scheduled carve-outs. Indemnities are commonly time-limited and total exposure is capped in most cases.

 

Reporting and auditing

25. Do regulators keep public registers of environmental information? What is the procedure for a third party to search those registers?

Public registers

Environmental regulators in the federal and provincial governments maintain various public registries of environmental information, including environmental permits and contaminated land. Many Canadian jurisdictions have implemented an environmental registry tool, where proposals for environmental regulations, policies and instruments are posted for public comment. In many Canadian provinces, it is possible to search online for registered generators of hazardous waste.

Third party procedures

Most public registers of environmental information in Canada are available on the internet. Environmental information may also be obtained through freedom of information requests in all Canadian jurisdictions.

 
26. Do companies have to carry out environmental auditing? Do companies have to report information to the regulators and the public about environmental performance?

Environmental auditing

No Canadian jurisdictions have imposed mandatory environmental auditing requirements.

Reporting requirements

A company may be required to report information to regulators about environmental performance in accordance with specific conditions of an environmental approval. On occasion, an environmental approval will require that such information be available for review by the public or be posted on the company website. Companies are required to report emissions information annually to the federal government for the National Pollutant Release Inventory (NPRI). Some provinces require parallel reporting of emissions release information. Emissions reporting information is available to the public.

 
27. Do companies have to report information to the regulators and the public about environmental incidents (such as water pollution and soil contamination)?

Most environmental protection statutes in Canada contain mandatory provisions for reporting of spills and other discharges that are out of the normal course of events to the environmental regulators, and in some cases to the local municipalities. Public reporting of environmental incidents is not a common requirement.

 
28. What powers do environmental regulators have to access a company?

Environmental regulators have very broad statutory powers of access. In addition, permission for access is a common condition of environmental approvals in Canada.

Typically, an environmental inspector or investigator may, without warrant or court order, and at any reasonable time:

  • Enter property.

  • Make excavations.

  • Take samples.

  • Conduct tests.

  • Examine and make copies of records.

  • Take photographs or video recordings.

  • Require production of documents or data.

  • Make reasonable enquiries.

If the purpose of the access is to investigate non-compliance for the purpose of prosecuting, Canadian courts have restricted the powers of entry and it may be necessary for the investigator to obtain a search warrant.

 
29. What obligations are there on companies to report on environmental issues in their annual corporate reports?

There are no legislated mandatory requirements for environmental reporting in annual corporate reports, although the practice is very common in Canada.

 

Environmental insurance

30. What types of insurance cover are available for environmental damage or liability and what risks are usually covered? How easy is it to obtain environmental insurance and is it common in practice?

Types of insurance and risk

Canadian insurers offer a range of products to cover environmental risks:

  • Pollution legal liability coverage is commonly available for new environmental conditions, and may cover unknown pre-existing conditions.

  • Cost cap insurance for environmental remediation projects may be available, although expensive and somewhat difficult to obtain.

  • Environmental consultants and remediation contractors can obtain pollution liability insurance and errors and omissions coverage.

  • Directors' and officers' insurance may cover environmental risks.

Obtaining insurance

Pollution legal liability coverage is relatively easy to obtain. It is more difficult to obtain some of the other forms of environmental insurance. The cost of premiums may be prohibitive, and will typically include the cost incurred by the insurer to retain an environmental consultant to investigate the risk.

 

Environmental tax

31. What are the main environmental taxes in your jurisdiction?

Environmental taxes are uncommon in Canada. The Province of British Columbia has imposed a carbon tax (see Question 8).

Tax liability

British Columbia imposes a carbon tax on all consumers of fossil fuels, with some exceptions for specified industries.

Tax rates

Rates for the British Columbia carbon tax vary by type of fuel. Current rates range from 2.94 cents to 11.01 cents per litre. The gasoline tax rate is presently 6.67 cents per litre.

 

Reform

32. What proposals are there for significant reform (changes) of environmental law in your jurisdiction?

The new federal Liberal government is currently revisiting significant reforms to the Fisheries Act and the Canadian Environmental Assessment Act made by the previous Conservative government, and may or may not elect to legislate in the area of climate change (see Question 8). Most provinces are actively pursuing a variety of environmental law reform initiatives, particularly in relation to climate change and product stewardship. In Ontario, in addition to climate change initiatives, the government is currently transitioning to a new product stewardship regime following passage of the Waste Free Ontario Act, 2016.

 

The regulatory authorities

Environment Canada

Main activities. Administers federal environmental legislation and is the main weather service in Canada. Includes Canadian Wildlife Service.

W www.ec.gc.ca

Fisheries and Oceans Canada

Main activities. Responsible for the administration of the Fisheries Act.

W www.dfo-mpo.gc.ca

British Columbia Ministry of the Environment

Main activities. Administers the BC's parks and protected areas, and monitors and enforces compliance with provincial environmental laws and regulations.

W www.gov.bc/env

Alberta Environment and Sustainable Resource Development

Main activities. Responsible for provincial environmental laws and regulations.

W www.esrd.alberta.ca

Saskatchewan Ministry of Environment

Main activities. Responsible for provincial environmental laws and regulations.

W www.environment.gov.sk.ca

Manitoba Department of Conservation and Water Stewardship

Main activities. Responsible for provincial environmental laws and regulations.

W www.gov.mb.ca/conservation

Ontario Ministry of the Environment and Climate Change

Main activities. Responsible for provincial environmental laws and regulations.

W www.ontario.ca/ministry-environment

Québec Ministry of Sustainable Development, Environment, Wildlife and Parks

Main activities. Responsible for provincial environmental laws and regulations.

W www.mddelcc.gouv.qc.ca

New Brunswick Department of Environment and Local Government

Main activities. Responsible for provincial environmental laws and regulations.

W www.gnb.ca/environment

Prince Edward Island Department of Environment, Labour and Justice

Main activities. Responsible for provincial environmental laws and regulations.

W www.gov.pe.ca/environment

Nova Scotia Environment

Main activities. Responsible for provincial environmental laws and regulations.

W www.novascotia.ca/nse

Newfoundland and Labrador Department of Environment and Conservation

Main activities. Responsible for the protection and enhancement of the environment, and management of the province's wildlife, inland fish, water and parks.

W www.env.gov.nl.ca



Online resources

W www.canlii.org

Description. Canlii contains statutes and regulations from all Canadian jurisdictions

W http://Canada.justice.gc.ca

Description. Contains federal laws and regulations in English and French. Administered by the Department of Justice.



Contributor profiles

John Tidball, Partner (Markham, Ontario)

Miller Thomson LLP

T +905 415 6710
F +905 415 6777
E jtidball@millerthomson.com
W www.millerthomson.com

Professional qualifications. Ontario, 1983; Nunavut, 2003; certified by the Law Society of Upper Canada as a specialist in environmental law

Areas of practice. Environmental compliance; environmental approvals and assessment; due diligence; nuclear power; waste management; contaminated land.

Bryan Buttigieg, Partner (Toronto, Ontario)

Miller Thomson LLP

T +416 595 8172
F +416 595 8695
E bbuttigieg@millerthomson.com
W www.millerthomson.com

Professional qualifications. Ontario, 1989; certified by the Law Society of Upper Canada as a specialist in environmental law

Areas of practice. Environmental compliance; environmental litigation; due diligence; contaminated land; brownfield redevelopment.

Tamara Farber, Partner (Toronto, Ontario)

Miller Thomson LLP

T +416 595 8520
F +416 595 8695
E tfarber@millerthomson.com
W www.millerthomson.com

Professional qualifications. Ontario, 1995; certified by the Law Society of Upper Canada as a specialist in environmental law

Areas of practice. Environmental litigation; due diligence; contaminated land; brownfield redevelopment.

Luc Gratton, Partner (Montreal, Québec)

Miller Thomson LLP

T +514 871 5482
F +514 875 4308
E lgratton@millerthomson.com
W www.millerthomson.com

Professional qualifications. Québec, 1975

Areas of practice. Environmental law; municipal law; administrative law.

Sarah Hansen, Partner (Vancouver, British Columbia)

Miller Thomson LLP

T +604 643 1273
F +604 643 1200
E shansen@millerthomson.com
W www.millerthomson.com

Professional qualifications. British Columbia, 2005; Alberta, 2000; Yukon, 2010

Areas of practice. Environmental compliance; environmental approvals; due diligence; energy law; climate change.


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