In June 2005, Bill 133 (the Environmental Enforcement Statute Law Amendment Act, 2005) became law, imposing a new environmental penalties  ("EP") regime as well as various other measures to encourage spills prevention.  The Ministry of the Environment ("MOE") recently posted draft regulations and guidance documents to support implementation of EPs.  The EP regime will allow the MOE to impose penalties if a regulated person causes an unlawful discharge into land or water or commits other specified violations. 

While the McGuinty government initially indicated that EPs would only target industrial facilities subject to the Municipal/Industrial Strategy for Abatement regulations, the draft regulations expand this group to include any industry discharging effluent to surface water or private sewage works if such industry is in the organic chemical manufacturing, inorganic chemical, industrial minerals, electric power generation, pulp and paper, petroleum, metal casting, iron and steel manufacturing or metal mining sectors.  Under the draft regulations, as of May 1, 2007, EPs could be issued for unlawful discharges and failure to notify of such discharges.  By December 1, 2008, EPs could be issued for less serious infractions.

The draft regulations require that the amount of the penalty reflect the gravity of the violation and any monetary benefit gained by such non-compliance.  In considering the gravity component of the EP, the MOE will consult a matrix to determine the range from which the amount will be identified but the regulations provide for significant discretion in determining the exact penalty.  For example, a spill of a toxic substance could result in a gravity component of a penalty of as little as $15,000 (where the impact was localized, the facility has an excellent compliance history and took immediate steps to correct the violation) but a spill of the same substance could lead to the maximum penalty of $100,000 for each day of the violation if there was harm, injury and an adverse effect from the spill and the facility has a poor compliance history and delayed corrective action.

The subject facility can seek a reduction of the gravity component amount of up to 30 per cent for steps taken to prevent or mitigate the violation and its impacts.  In addition, a five per cent reduction will be granted to recognize an appropriate environmental management system ("EMS") that was in place at the time of the violation.  The draft regulations prescribe the requirements of such an EMS, including the obligation to evaluate the facility's compliance and have senior management review the EMS annually.  We note that while an EMS is voluntary, facilities subject to the proposed EP regime are obliged to prepare a spill prevention and contingency plan.  Such spill plans may allow for exemptions from the broad spill reporting obligation introduced under Bill 133 (that is, the obligation to report a spilled pollutant is no longer limited to circumstances where the spill caused or is likely to cause an adverse effect).

A settlement agreement may also be negotiated for a reduction of up to 75 per cent of the gravity component of the EP.  Under such a settlement agreement, the company would be required to take steps "beyond compliance" to prevent, eliminate or reduce the discharge of a contaminant.  The company would be required to make an investment of at least $3 for each $1 reduction in the EP amount.

The MOE is seeking comments on the draft regulations and guidance documents by January 12, 2007.

The foregoing is a summary of a recent development in environmental law.  If you would like additional information about this or any other environmental law topic, please contact Sarah Powell or Alexandria Pike in the Toronto office at (416) 863-0900.  With respect to Québec environmental law, please contact Michel Pelletier in the Montréal office at (514) 841-6400.

Davies Ward Phillips & Vineberg LLP, with over 235 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients .

The information and comments contained herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstances.  For particular applications of the law to specific situations, the reader should seek professional advice.