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Regulatory framework and policy

Domestic legislation

What is the primary environmental legislation in your jurisdiction?

Canada is a federation comprising one federal and 10 provincial governments. The Constitution assigns jurisdiction over various matters to either the federal government or the provincial governments.  Jurisdiction over environmental matters is considered to be an area of shared jurisdiction, although it is primarily within the provinces’ constitutional ambit.

The primary federal environmental legislation is the Environmental Protection Act 1999. The federal government is also responsible for three northern territories, each of which has enacted some form of environmental legislation.

The primary provincial laws are:

  • the British Columbia Environmental Management Act;
  • the Alberta Environmental Protection and Enhancement Act;
  • the Saskatchewan Environmental Management and Protection Act;
  • the Manitoba Environment Act;
  • the Ontario Environmental Protection Act;
  • the Quebec Environment Quality Act;
  • the New Brunswick Clean Environment Act;
  • the Nova Scotia Environment Act;
  • the Prince Edward Island Environmental Protection Act; and
  • the Newfoundland and Labrador Environmental Protection Act.

International agreements

Is your jurisdiction a signatory to any international environmental agreements/commitments?

Canada is a signatory to a wide range of international environmental agreements, including:

  • the United Nations Framework Convention on Climate Change; and
  • the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal.

Unlike the United States, Canada has ratified the Paris Agreement. Canada is also a party to a number of bilateral agreements with the United States, including:

  • the Great Lakes Water Quality Agreement; and
  • the Agreement between the Government of Canada and the Government of the United States concerning the Transboundary Movement of Hazardous Waste.

Regulators

Which government bodies regulate compliance with environmental legislation and what is the extent of their powers?

The main federal regulator is Environment and Climate Change Canada. Some aspects of environmental protection at the federal level are regulated by Fisheries and Oceans Canada and Transport Canada.

The primary provincial regulators are:

  • the British Columbia Ministry of the Environment;
  • Alberta Environment and Parks;
  • the Saskatchewan Ministry of Environment;
  • the Manitoba Department of Conservation and Water Stewardship;
  • the Ontario Ministry of the Environment and Climate Change;
  • the Quebec Ministry of Sustainable Development, Environment and the Fight Against Climate Change;
  • the New Brunswick Department of Environment and Local Government;
  • Nova Scotia Environment;
  • the Prince Edward Island Department of Environment, Labour and Justice; and
  • the Newfoundland and Labrador Department of Environment and Conservation.

Environmental regulators in all jurisdictions have broad powers to enforce compliance with environmental legislation and permit certain activities, such as discharges to the air, water or ground.

Policy

How would you describe current government policy on environmental regulation and how does it compare on an international scale?

Government policy on environmental regulation can generally be described as active in all jurisdictions, especially with respect to climate change. On an international scale, Canada would be considered to have a comprehensive and rigorous environmental regulatory regime.

Permits

Activities subject to permit

Which activities require an environmental permit and how are they classified for such purposes?

Environmental permitting is primarily conducted at the provincial level, although the federal government regulates through a permitting regime the international and interprovincial movement of dangerous goods and hazardous wastes, as well as certain activities exclusively within its jurisdiction (eg, activities in Arctic waters and nuclear energy). All provinces have created permitting regimes covering a wide range of activities, including:

  • water taking;
  • potable water treatment and distribution;
  • wastewater treatment;
  • discharges to the air and water;
  • species at risk; and
  • waste management. 

All permits have the force of law and compliance with their terms and conditions is typically a focus for regulators.

Issuing authority

Which authority issues permits?

The issuing authorities are typically:

  • Environment and Climate Change Canada;
  • the British Columbia Ministry of the Environment;
  • Alberta Environment and Parks;
  • the Saskatchewan Ministry of Environment;
  • the Manitoba Department of Conservation and Water Stewardship;
  • the Ontario Ministry of the Environment and Climate Change;
  • the Quebec Ministry of Sustainable Development, Environment and the Fight Against Climate Change;
  • the New Brunswick Department of Environment and Local Government;
  • Nova Scotia Environment;
  • the Prince Edward Island Department of Environment, Labour and Justice; and
  • the Newfoundland and Labrador Department of Environment and Conservation.

However, each jurisdiction has specialised permitting authorities.

Requirements

What are the procedural and documentary requirements to obtain a permit?

Procedural and documentary requirements range widely across jurisdictions. Most federal and provincial regulators are moving towards e-filing regimes.

Fees

Do any permit fees apply?

Yes, typically, there are fees associated with permit applications.

Validity period and renewal

What is the validity period for permits and how can they be renewed?

Each jurisdiction is different with regard to the validity period of permits. Some jurisdictions (eg, Ontario) impose no time limit on many types of environmental permit.

Transferral

Can permits be transferred? If so, what procedure applies?

Typically, permits can be transferred. In many cases, only notice of a sale or assignment is required, but there are circumstances where pre-approval is required.

Appeal

Are permit decisions subject to appeal? If so, what procedure applies?

Typically, permit decisions may be appealed to specialised independent environmental tribunals, which are governed by the principles of natural justice and procedural fairness.

Non-compliance

What are the consequences of violating permit rules and decisions?

Non-compliance with a permit may lead to:

  • prosecution;
  • the imposition of an administrative order requiring corrective action; or
  • the permit’s suspension or cancellation.

Environmental impact assessments

Projects subject to assessment

What projects require a preliminary environmental impact assessment?

The federal government and all provinces have created environmental impact assessment (EIA) regimes. The application of EIA legislation to specific projects varies widely among jurisdictions. At the federal level, an EIA is required only for designated projects – primarily, large projects in the resource sector, such as pipelines and mines. In some provinces, an EIA is required only for government-sponsored or funded projects.

Scope of assessment

What environmental factors and risks fall within the scope of the impact assessment report?

Typically, the environmental factors to be assessed include natural, social, cultural and economic impacts. The scope of an EIA report is usually fixed at a preliminary stage of the process.

Assessor

Who conducts assessments?

Applicants usually conduct assessments, although there are some regimes where a government agency must do so.

Publication

Are the results of impact assessments publicly available?

Yes.

Challenge

Can the results of an impact assessment be contested? If so, what procedure applies?

Typically, results can be contested before specialised tribunals and hearing panels. The Canadian courts have also shown a willingness to judicially review EIA decisions.

Soil pollution

Liability

What regime governs liability for soil pollution (including the allocation, transfer and limitation of liability)?

Soil pollution is regulated at the provincial level in Canada. Each provincial regulatory regime includes provisions dealing with the remediation of contaminated property. Provincial regulatory regimes other than Saskatchewan do not deal specifically with the transfer of environmental liabilities, although each regulator has authority to issue administrative orders to require remediation of soil pollution. The allocation, transfer and limitation of liability for soil pollution is largely dealt with as a matter of contract in Canada.

Due diligence

What environmental due diligence measures are recommended before concluding land transactions?

Most purchase agreements require the full disclosure of environmental studies and reports. It is common to recommend phase one and two environmental site assessments if the perceived environmental risks justify the expenditure. Specific government inquiries may also be recommended.

Remediation

What remediation and clean-up measures are typically applied and how can remediation costs be recovered?

Remediation measures for soil pollution typically include:

  • excavation and removal;
  • excavation and on-site treatment; and
  • in-situ remediation using microbial agents or oxidants.

Cost factors typically favour excavation and removal. Remediation costs may be recovered only through civil actions against those responsible.

Air pollution

Regulation

How are air emissions regulated? What air quality standards and emission limits apply?

Air emissions are regulated by provincial environmental regulators – typically through a combination of statutory prohibitions against the discharge to air of anything that may cause an adverse effect – and permits. Air quality standards and associated emission limits vary from province to province, although there is a high level of interprovincial cooperation and collaboration in the standards-setting process.

Non-compliance

What are the consequences of non-compliance with air emissions regulations?

Consequences range from prosecution to administrative compliance orders.

Water pollution

Regulation

What rules govern the discharge of wastewater and the protection of water resources?

The federal government regulates the protection of international waters and fisheries. The federal Fisheries Act contains a general prohibition against the deposit of harmful substances into water frequented by fish, which has wide application across Canada.

At the provincial level, most environmental protection statutes prohibit the discharge of anything that may impair water quality. Provincial environmental regulators also typically issue wastewater discharge permits that contain discharge standards. Municipal governments also typically regulate the quality and quantity of wastewater discharged to sewers.

Non-compliance

What are the consequences of non-compliance with water pollution regulations?

Consequences range from prosecution to the issue of administrative compliance orders.

Waste and hazardous substances

Definition

How is ‘waste’ defined in your jurisdiction?

Waste management regulation is primarily a provincial responsibility in Canada. ‘Waste’ is defined differently in every province, but typically encompasses anything that is no longer of use to the generator.  The provincial waste management regimes include a complex array of designations and exemptions that are used to more clearly define the breadth of the regulatory scope.

Waste handling

What rules and procedures govern the handling of waste, with particular respect to:

(a) Storage?

The storage of non-hazardous solid waste on the site of the generator is typically exempt from regulation. Storage of waste at any other location usually requires some form of permit from the provincial regulator.

(b) Transport?

The transport of waste is primarily regulated by the provinces. In some provinces, such as Ontario, waste transportation is the subject of permitting. In other provinces, such as Quebec, it is not. 

The federal government regulates the interprovincial and international transport of hazardous waste. International movements are subject to the requirements of the Basel Convention or the Agreement between the Government of Canada and the Government of the United States concerning the Transboundary Movement of Hazardous Waste, which require pre-notification and approval by the originating and receiving countries pursuant to the Export and Import of Hazardous Waste and Hazardous Recyclable Materials Regulations.

(c) Disposal?

Waste disposal is primarily regulated by the provinces through the permitting of individual sites, although some provinces have adopted landfill standards by regulation. Waste disposal permits are typically subject to rigorous and comprehensive terms and conditions. 

(d) Recycling/reuse?

Most Canadian provinces mandate some form of waste diversion through legislation and have adopted waste stewardship requirements that impose costs on the producers of products. Most provinces have specific stewardship requirements for:

  • consumer recyclables (eg, paper, glass or plastics);
  • used tyres;
  • e-waste;
  • used oil and
  • special wastes.

These programmes are mostly delegated to producers or industry groups that represent producers of the same materials, although enforcement remains the provincial regulators’ responsibility.

Liability

What is the extent of a waste producer’s liability after transferral of waste (eg, to a waste disposal agent)?

Generally speaking, liability is transferred when waste is transferred as long as the transferee holds a valid permit from the provincial regulator.

Waste recovery

Are waste producers bound by any waste recovery obligations?

Provinces impose different forms of recovery obligations on specific waste producers. For example, some provinces, such as Ontario, require parties that produce waste in the construction sector to prepare and implement waste diversion plans and source separate specific construction and demolition waste facilities to enhance recyclability.

Waste disposal agents

How are the business activities of waste disposal agents/landfill operators regulated?

The activities of parties engaged in the business of waste management are typically regulated by way of a permit. The provincial permitting regimes focus on environmental issues. Provinces do not typically regulate business practices, although laws of general application apply to businesses in the waste sector. The federal Competition Tribunal may need to approve corporate transactions in the waste industry, depending on their size.

Hazardous substances

What special rules, regulations and safeguards apply to the handling and disposal of hazardous materials?

Each provincial regulator has enacted special rules and regulations that govern the handling and disposal of hazardous materials. Rules and regulations have largely been harmonised across the country, apart from in Quebec. Producers of hazardous materials are usually required to both:

  • register with the provincial regulator; and
  • only transfer hazardous materials with a defined movement document or waste manifest.  

Most provinces have special rules relating to asbestos, polychlorinated biphenyls and refrigerants.

The federal government also regulates the interprovincial and international transport of hazardous materials. International movements are subject to the requirements of the Basel Convention or the Agreement between the Government of Canada and the Government of the United States concerning the Transboundary Movement of Hazardous Waste, which require pre-notification and approval by the originating and receiving countries pursuant to the Export and Import of Hazardous Waste and Hazardous Recyclable Materials Regulations.

Chemical and product regulation

Regulation

What environmental regulations and procedures apply to the production, transportation and sale of chemicals and other products?

The production, transportation and sale of chemicals and other products is a matter of shared jurisdiction between the federal and provincial governments. The federal government regulates the production and import of certain substances under the Environmental Protection Act 1999’s toxic substances provisions and a series of regulations governing the assessment and classification of new substances. Other chemicals are regulated at the federal level under the Pest Control Products Act. The transportation of chemicals is regulated under the federal Transportation of Dangerous Goods Act and Regulations and similar legislation at the provincial level (depending on whether the transport is intra or extra-provincial). The provinces regulate certain aspects of the sale of chemicals and other products.

Liability

Types of liability

What types of liability can arise for environmental damage (eg, administrative, civil, criminal)?

Environmental damage can create regulatory liability and civil liability in Canada. 

Environmental regulators may impose requirements to investigate and repair damage through the issuance of environmental orders of various types. This almost always occurs at the provincial level.   Some provinces have created an administrative monetary penalty regime whereby an order is issued in relation to environmental damage and the orderee must pay a monetary penalty rather than undertake remediation of the damage. 

Provincial environmental regulators may also impose liability through the prosecution of those violating environmental statutes. This liability is considered to be quasi-criminal. Penalties can include imprisonment in extreme cases, but mostly involve fines. The fine structure in most jurisdictions allows fines in the millions of Canadian dollars to be imposed by the courts on conviction. There have been many examples over the past decade of multi-million dollar penalties following convictions for the breach of environmental laws.

Private redress for environmental damage may also be pursued through the civil courts in Canada on the basis of common law causes of action, including:

  • nuisance;
  • trespass;
  • strict liability;
  • negligence; and
  • the infringement of riparian rights.

Directors’ and officers’ liability

Can directors and officers be held personally liable for company environmental offences? If so, can liability be limited through insurance coverage and/or contractual indemnities?

Directors and officers can be held personally liable for their company’s environmental offences in all Canadian jurisdictions. Liability is typically imposed by way of a statutory duty imposed on directors and officers to take all reasonable care to avoid non-compliance. Directors and officers may also be named personally in administrative orders or as defendants in civil actions.

The liability of directors and officers to civil claims is typically limited by insurance. The utility of an insurance policy to cover a director or officer’s exposure to an administrative order or prosecution is a function of the coverage and varies widely. The exposure of directors and officers to prosecution can be mitigated by the implementation at the board level of appropriate procedures that can be used to establish the existence of all reasonable care. This commonly takes the form of the adoption of a formal corporate environmental policy and an environmental management system.

Liability for authorised activity

Can environmental liability arise even in the course of authorised activities (eg, operations subject to environmental permits)?

Environmental liability can arise in the course of authorised activities. Under Canadian law, the defence of statutory authorisation is typically not available to justify non-compliance with a legislative requirement when the activity is otherwise allowed by permit. It is becoming common to see language in permits that requires compliance with legislative requirements. 

Defences

What defences are available to environmental offenders?

The primary defence is that of due diligence. Under Canadian law, the prosecution must prove the actus reus (ie, guilty act) of the offence beyond a reasonable doubt. The defendant may then try to prove on a balance of probabilities that it took all reasonable care (or due diligence) to prevent the commission of the offence. A second branch of the due diligence defence is the defence of a reasonable mistake of fact. A defendant is entitled to try to prove on a balance of probabilities that it reasonably believed in a mistaken set of facts that, if true, would have resulted in compliance.

Other defences available to environmental offenders include:

  • an officially induced error, where the defendant can prove that it relied on incorrect legal advice from a government official;
  • an act of God; and
  • compulsion.

Liability in share sale/asset purchase

What rules govern the transfer of environmental liability in share sales and asset purchases?

In a share sale, the buyer typically inherits all of the seller’s environmental liabilities – both civil and regulatory. In an asset sale, the buyer does not typically inherit any civil liability from the seller, although fact situations do exist where a buyer assumes civil liability for contaminated land. The buyer in an asset sale may become exposed to an environmental order simply by virtue of taking possession of contaminated property. There are a variety of legal mechanisms available to transfer or leave behind environmental liability in any transaction. Other than good indemnities from solid indemnitors, most have no impact on liability associated with an administrative order post-closing.

What environmental due diligence measures are recommended before concluding share sales/asset purchases?

Buyers are typically recommended to:

  • review available environmental records;
  • search available environmental databases;
  • make targeted government enquiries;
  • review environmental permits; and
  • review any existing environmental studies and reports. 

An environmental site assessment is usually recommended. This commences with a phase one assessment to identify any areas of potential environmental concern and continues with a phase two assessment if potentially unacceptable risks are identified. If the target entity is highly regulated, an environmental compliance audit may be recommended. If interior environmental issues are known or identified during due diligence, a building condition assessment may be recommended.

Lender liability

Can lenders be held liable for environmental offences?

It is not typical for lenders to be held liable for environmental contamination, unless the lender has exercised its security interest by taking possession of a contaminated property. Unless it has committed an environmental offence itself, a lender is not prosecuted for any environmental offence committed by its borrower.

Reporting and disclosure obligations

Required reporting

Under what circumstances must environmental damage be reported to the authorities?

All Canadian environmental regulators require the reporting of spills and discharges that occur outside the normal course of business, typically immediately on knowledge. The existence of subsurface contamination discovered during the course of construction or an environmental investigation is reportable in some provinces.

Publication

Is information on environmental damage/compliance available in a public register?

Practices vary among the provinces. Most provinces have some form of online registry used to post information about a number of environmental matters, but they are typically not used to disseminate information on environmental damage or compliance. Such information can typically be obtained via requests under freedom of information legislation. Searchable online databases are maintained by the federal government and some provinces for emissions data, especially in relation to greenhouse gases.

Audits

Are regular environmental audits required?

No Canadian jurisdiction requires regular environmental audits. Audits are common, but are typically undertaken for internal corporate or customer due diligence purposes.

Disclosure

What environmental disclosures are required in sales transactions?

While disclosure of all available environmental reports and other information is common in all purchase agreements, there is no legal requirement to disclose anything to the buyer and a transaction may be structured on an ‘as is, where is’ basis. This is subject to common law restrictions on:

  • misrepresentation;
  • deceit; and
  • the concealment of latent defects. 

Insurance

Coverage

What types of environmental insurance are available and what do they cover?

The following types of environmental insurance are available:

  • pollution legal liability insurance, which covers new environmental conditions and may be broad enough to cover pre-existing conditions;
  • cost cap insurance, which covers environmental remediation where the concern is cost uncertainty;  
  • environmental errors and omissions insurance, which is available to environmental consultants and remediation contractors; and
  • directors' and officers' insurance, which covers exposure to environmental civil claims and may cover administrative orders and prosecution.

Is environmental insurance mandatory and/or commonly purchased?

Environmental insurance is mandatory only under specific statutory schemes. For example, in Ontario, an engineer signing off on an environmental remediation must carry errors and omissions insurance of C$1 million. Insurance may also be required as a condition of an environmental permit.

Pollution legal liability insurance and directors’ and officers’ insurance are commonly purchased.  Cost cap insurance, which is expensive and becoming harder to obtain, is relatively uncommon. 

Tax

Taxes

What environmental taxes are levied in your jurisdiction?

Environmental taxes have historically been uncommon in Canada. However, in accordance with the Pan-Canadian Framework on Clean Growth and Climate Change, all Canadian jurisdictions have or will shortly implement carbon pricing that is at least as stringent as the new national benchmark of C$10 per tonne of carbon in 2018, rising by C$10 a year to reach $50 per tonne in 2022. Provincial and territorial governments may choose to tax carbon emissions directly or implement a cap and trade system. 

Climate change issues

Emissions, renewables and efficiency

What regulations, targets and/or incentive schemes are in place to:

(a) Reduce greenhouse gas emissions?

Canada is committed by international agreement to reduce greenhouse gas emissions by 30% by 2030. The federal government and all provinces are working cooperatively to implement a wide variety of regulations and incentive schemes to meet this target. Under the Pan-Canadian Framework on Clean Growth and Climate Change, all provinces are moving to create carbon tax or cap and trade regimes. The provinces of Ontario and Quebec have joined the Western Climate Initiative and now participate with California in the world’s second-largest carbon market. The federal government is proceeding with regulatory amendments to phase out the use of hydrofluorcarbons.

(b) Promote renewable energy/energy efficiency?

Every government in Canada has implemented measures to promote renewable energy and energy efficiency. There are a wide variety of incentive schemes, including:

  • home energy audit assistance;
  • home renovation grants; and
  • electric vehicle rebates.

Biodiversity conservation

Regulations

What regulations are in place to protect biodiversity and natural areas?

The protection of biodiversity and natural areas is primarily under the jurisdiction of provincial governments, although the federal government has adopted species at risk legislation. All provinces have legislated in this area, in a variety of ways. Most provinces have passed species at risk legislation that is consistent with the federal legislation. Many provinces have adopted regulatory controls over specific areas, watersheds or bioregions, where protection is desired.