In its recent decision, Canadian National Railway Company v Ontario, the Environmental Review Tribunal (“ERT”) clarified that the power of public authorities to issue cost recovery orders under the Environmental Protection Act (“EPA”) will be interpreted through the same lens as the statute as a whole: broadly, purposively, and with a focus on polluter pays, environmental restoration and pollution prevention. The ERT will allow the Ministry of Environment and Climate Change (“MOECC”) to recover not only for costs incurred to clean-up a spill, but for costs incurred as part of its regulatory, supervisory and public relations mandates. Those costs may include additional sampling, internal costs like employee salaries, and administration costs.
Will the ERT’s findings apply equally to municipalities, who have similar powers to issue costs recovery orders under the EPA? Although municipalities may not exercise the same broad regulatory authority as the MOECC, the ERT’s statements apply equally to municipalities who may be part of a spill response as part of their public health or public relations mandate.
Canadian National Railway Company v Ontario
The MOECC issued two orders under section 99.1 of the EPA to CN arising from train derailments in northern Ontario. CN appealed the orders to the ERT.
In upholding the orders, the ERT found that section 99.1 must be interpreted in the same manner the ERT interprets the EPA generally: broadly, purposively and with a focus on polluter pays, environmental restoration and pollution prevent, as set out in Midwest Properties Ltd v Thordarson, among other cases.
Section 99.1 of the EPA allows the Director to seek reimbursement by issuing an order for payment to an owner or person having control of a pollutant that has spilled. Any reasonable costs or expenses can be the subject of the order if they were incurred to "prevent, eliminate or ameliorate any adverse effects or to restore the natural environment" or to "prevent or reduce the risk of future discharges into the natural environment". In this case, the first purpose was at issue: the prevention, elimination or amelioration of adverse effects.
While CN conducted the spill clean-up and remediation, the MOECC incurred staff salary costs, laboratory sampling costs and administration costs, which CN disputed. Given the nature and magnitude of the spills, the MOECC had a staff presence at the site and conducted additional sampling. The focus of the appeal was then whether these costs were reasonable, whether they were actually incurred and whether they related to the purpose set out in section 99.1.
The ERT’s key findings were:
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The sampling activities were not done for the purposes of directly determining how to respond to the spill, but as part of the MOECC's regulatory oversight. The sampling program provided the MOECC with information that it relied on in informing its decisions about the clean-up and with information that it could use to inform those members of the public potentially affected. As such, the sampling could be said to have the purpose of preventing future adverse effects or ameliorating existing effects and the costs were properly sought in the section 99.1 order.
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The MOECC, simply because it has in-house expertise, is not denied the costs of its employee’s salaries. Those employees could have been doing other work and as such, an “opportunity cost” was incurred. What is being done and the “reasons for doing it” are determinative, not the nature of the employment.
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The MOECC can claim costs not only for those employees supervising the spill response but for those doing “public relations” because communicating concerns to potentially affected citizens can be included in ameliorating adverse effects.
- An administration costs levy (in this case a percentage of the total costs) is appropriate.
Impact on Municipal Costs Recovery Orders
Municipalities have a similar power under section 100.1 of the EPA in respect of costs incurred by the municipality to "prevent, eliminate or ameliorate any adverse effects or to restore the natural environment". As such, much of the commentary made by the ERT in this case will impact on municipal orders. In accepting the analysis made in Kawartha Lakes (City) v Technical Stands and Safety Authority, the ERT found that the scope of s. 99.1 and s. 100.1 orders is “very similar”.
While municipalities do not play the role of environmental regulator like the MOECC, municipalities may often play a role in spill response. They may have a public health mandate (for example if human health is a concern) and may additionally have a role to play in communicating with affected citizens, even if a municipality is not directly involved in cleaning up a spill occurring in their jurisdiction.
What is now clear is that even where a municipality acts in a supervisory role to prevent, eliminate or ameliorate the adverse effects of a spill, the municipality can recover its reasonable staff costs, sampling costs and administration costs from the owner or person in control of the pollutant. The ERT has demonstrated its focus is to ensure there is a simple and straightforward process for public authorities to recover costs incurred not only in responding to spills, but also in overseeing spill clean-up and informing themselves and the public.
ABOUT THE AUTHOUR
Jessica Boily
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