The implementation of new orders by the Ontario Ministry of the Environment and Climate Change (MOECC) may create a “chilling effect” by casting the net very broadly, such that even professionals providing a service necessary to permit a site to be transferred, can be tagged with charge, management or control of a site and therefore be named as parties to an environmental compliance order.
A recently issued order suggests that the MOECC is exercising expanded jurisdiction to impose environmental liability not only on directors and officers, but also on professionals, based on the MOECC's broad interpretation of “charge, management or control” of a site.
The MOECC order in McQuiston v. Ontario (MOECC) (ERT Case No. 15-019) (McQuiston Order), breaks new ground in no fault application of orders. The order, issued under the Environmental Protection Act (EPA), named several individuals and entities regarding the spill of solvents in Fort Erie.
The EPA allows the MOECC to issue an order to a person who causes or permits discharge, including a person who owns, or owned, or has or had charge, management or control of the property. The EPA provisions have been read expansively, leading to a broad scope of liability, such that the order includes parties named with absolutely no expectation of environmental liability. For example, parties named in the order included:
- The accountant with power of attorney over the corporate property owner, and charge management and control of the property for the purpose of listing it for sale;
- Officers of the company after it ceased operations at the site (suggesting that liability is not only retrospective, but also prospective; and
- The real estate brokerage named on waste manifests as the generator and key-holder of the lock box, as well as its officers.
Significantly, if a lock box is enough to create charge, management or control, this would substantiality alter the way properties listed for sale are managed and accessed.
Environmental protection orders need to be appealed quickly (within 15 days); a stay is not automatic, and there is limited jurisdiction to order a stay, and some of the named parties failed to appeal within the time. The order also sets very quick compliance dates, rendering the right of appeal of limited utility in many cases unless a stay can be obtained. There is limited jurisdiction to grant a stay and they are sparingly granted.
The accountant applied for a stay and was relieved of compliance, provided that the numbered company complied. The accountant complained that his liability rested on the company's good faith. A compliance order creates joint and several liability to comply. If the responsible party does not have the means or does not accept the obligation to comply, any other orderee can be required to achieve full compliance. Given that other entities (such as municipalities, secured creditors, and environmental consultants) have direct statutory protection, it is questionable whether the legislation's intent is to impose environmental responsibility on professionals like accountants and real estate brokers.
The McQuiston Order signals that professionals who could be deemed to have charge, management or control of a site need to have a very high level of awareness regarding potential environmental risks, and take appropriate steps to manage the risks to avoid getting swept into the costly process. If this Order is affirmed and there is no ensuing legislative amendment, it is likely there will be a reduced willingness to get involved with contaminated sites and the resulting chilling effect. Taken to its logical extreme, impacted properties will be at risk of abandonment, reasonable commercial behaviour will be impeded, and parties may face liability without appropriate insurance coverage.