Environment @ Gowlings - October 18, 2011

Edited by Harry Dahme

Federal News

• Proposed Regulations for the Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity
• Residential Indoor Air Quality Guideline for Toluene
• Order Amending Schedule 3 to the Canadian Environmental Protection Act, 1999
• Proposed Guidance For Fine Particulate Matter (PM2.5) In Residential Indoor Air
• Canada's Emissions Trends
• Creation of an External Advisory Review Committee for Lessons Learned from the Fukushima Nuclear Incident
• The National Roundtable on the Environment and Economy Report - Paying the Price: The Economic Impacts of Climate Change for Canada

News From the Provinces

Ontario

• Modernization of the Environmental Approvals Process
• Draft Aboriginal Consultation Guide for Preparing a Renewable Energy Approval (REA) Application

Quebec

• Quebec's New Conservation Commitments for the Plan Nord Territory

In the Courts

What's New

Federal News

Ontario

Proposed Regulations for the Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity

The federal government has given notice of proposed Regulations for the Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity. The proposed Regulations are intended to help Canada meet its commitment to reduced greenhouse gas emissions to 17% below 2005 levels by 2020.

The Regulations will set a stringent performance standard to come into effect on July 1, 2015 for new coal-fired power plants and those that have reached their end of their useful life. The effect will be to phase-out high emitting coal-fired generation and promote a transition towards lower or non-emitting types of generation such as high efficiency natural gas, renewable energy or fossil fuel fired power with carbon capture and storage.

Under the proposed Regulations the performance standard is set at an emissions intensity level fixed at 375 tonnes of CO2/GWh. The performance standard will be applied to new and coal-fired electricity generation units. New units are units that start producing electricity commercially on or after July 1, 2015. Generally speaking, old units are defined as units that have reached their end of useful life date which is the later of 45 years from the units' commissioning dates' or the end of their power purchase agreements. Existing units that were operating before July 1, 2015 but have not reached their end of useful of life date are not directly subject to the performance standard.

As well, time limited flexibilities would be made available to ensure the integrity of the electricity system while maintaining environmental objectives of emission reductions. These flexibilities are to be available through application and are to be subject to ministerial approval.

Regulated entities would be subject to enforcement and compliance requirements and penalties under the Canadian Environmental Protection Act, 1999.

Final regulations are expected to be published in 2012.

For more information see: http://www.gazette.gc.ca/rp-pr/p1/2011/2011-08-27/html/reg1-eng.html

Residential Indoor Air Quality Guideline for Toluene

The Minister of Health has given notice pursuant to section 55(3) of the Canadian Environmental Protection Act, 1999 of a residential indoor air quality guideline for toluene. The following exposure limits are recommended:

The Guideline was developed under Canada's Regulatory Framework for Air Emissions, a national plan to develop and implement regulations and other measures to reduce air emissions. Through this process toluene was identified as an indoor air priority pollutant.

For more information see: http://www.gazette.gc.ca/rp-pr/p1/2011/2011-07-30/html/notice-avis-eng.html#d101

Order Amending Schedule 3 to the Canadian Environmental Protection Act, 1999

The federal government has announced a proposed Order Amending Schedule 3 to the Canadian Environmental Protection Act, 1999.

The proposed Order would update the Export Control List with new substances and groups of substances recently added to Annex III of the Rotterdam Convention. It also adds new substances to the Export Control List that have recently been banned or restricted in Canada under domestic controls. 

The Export Control List is a list of substances whose exports are controlled because their use in Canada is prohibited or restricted, or because Canada has accepted to control the export under the terms of an international agreement.

For more information see: http://www.gazette.gc.ca/rp-pr/p1/2011/2011-07-30/html/reg1-eng.html and http://www.gazette.gc.ca/rp-pr/p1/2011/2011-08-06/html/reg2-eng.html

Proposed Guidance For Fine Particulate Matter (PM2.5) In Residential Indoor Air

The federal government has announced a proposed guidance for fine particulate matter (PM2.5) in residential indoor air quality. 

The proposed guidance recommends that existing residential indoor air exposure limits for fine particulate matter as established by the 1987 Health Canada Exposure Guidelines for Residential Indoor Quality be rescinded as they are no longer supported by the available scientific evidence. No new numerical limits for indoor air are proposed. Rather, the proposed guidance recommends strategies to reduce exposure to indoor (PM2.5).

For more information see: http://www.gazette.gc.ca/rp-pr/p1/2011/2011-08-20/html/notice-avis-eng.html#d101

Canada's Emissions Trends

In July 2011 Environment Canada released a report on Canada's emissions trends. The report concludes that existing measures announced by the federal and provincial government will reduce greenhouse gas emissions in 2020 by about 65 Mt. This represents one quarter of the reductions in emissions needed by 2020 to reach Canada's target of 607 Mt. The report states that the Canada will develop and implement further measures to close the remaining gap.

The report also notes that global greenhouse gas emissions increased by 25% between 1990 and 2005. It also notes that Canada's share of total global emissions, like that of other developed countries, will decline in relation to the rapid emissions growth from developing countries, particularly China and India. It is noted that China had overtaken the U.S. as the world's largest overall greenhouse gas emitter by 2005, and by 2020 China's greenhouse gas emissions alone are expected to account for 27% of global emissions, up from about 20% in 2005.

The report presents the following figures to depict its findings:

For more information see: http://www.ec.gc.ca/doc/publications/cc/COM1374/ec-com1374-en-es.htm

Creation of an External Advisory Review Committee for Lessons Learned from the Fukushima Nuclear Incident

In August 2011 the Canadian Nuclear Safety Commission announced that it had established an external advisory committee to assess the organization's processes and responses in light of the lessons learned from the Fukushima nuclear incident.

The committee will review the CNSC's processes, including the immediate response to the Fukushima incident, its connections with the rest of government and international organizations and its interactions with the Canadian nuclear sector and its regulated industries. The Committee will also review the CNSC's communications with stakeholders, including governments, other nuclear regulators and the public. As well, the Committee will assess the implications on the CNSC's regulatory approaches, such as international stress tests and the International Atomic Agency action plan.

For more information see: http://nuclearsafety.gc.ca/eng/mediacentre/releases/news_release.cfm?news_release_id=389

The National Roundtable on the Environment and Economy Report - Paying the Price: The Economic Impacts of Climate Change for Canada

The National Roundtable on the Environment and Economy has released its latest report, Paying the Price: The Economic Impacts of Climate Change for Canada.

The report is the first national-level study to assess the costs of growing climate change in our country. It presents the regional impacts of climate change and assesses the cost effectiveness of adaption strategies for coastal areas, timber supply and human health.

The National Roundtable's modeling concludes that the economic impact of climate change on Canada could reach the following levels:

• 2020: $5 billion per year
• 2050: between $21 and $43 billion per year

The report concludes that Canada would benefit environmentally and economically from a post-2012 international climate arrangement which reduces emissions from all emitters, including Canada, over time. The report makes four key recommendations:

• Canada should invest in growing the country's expertise in the economics of climate change impacts and adaptation;
• Canada should cost out and model climate impacts to inform decision-makers about adapting policies and operations to climate change and allocating scarce resources to programs that help Canadians adapt;
• Canada should continue investing, generating and disseminating research to inform adaptation decision-making;
• Canada should create new data and analysis sharing partnerships with universities, private sector, governments and other expert bodies to leverage non-governmental resources for climate change adaptation.

For more information see: http://nrtee-trnee.ca/climate/climate-prosperity/the-economic-impacts-of-climate-change-for-canada/paying-the-price

News From the Provinces

Ontario

Modernization of the Environmental Approvals Process

Ontario has announced amendments of the Environmental Protection Act ("EPA") to eliminate the requirement to obtain a Certificate of Approval or Provisional Certificate of Approval and to instead require that persons engaged in prescribed activities obtain an Environmental Compliance Approval.

However, an Environmental Compliance Approval will not be required for activities prescribed by regulation as activities in respect of which a registration under the EPA is necessary. In other words, for certain low-risk matters a registration rather an approval will suffice for compliance purposes.

Similar amendments have been made to the Ontario Water Resources Act. Existing Certificates of Approval are grandfathered into the system. Activities which would have required amendments to the Certificates of Approval will now be processed as applications for Environmental Compliance Approvals.

Eligible for registration on the registry, and not requiring an Environmental Compliance Approval, will be the following:

• automotive spray paint shops
• comfort heating providers
• emergency power operations

For those requiring Environmental Compliance Approvals, an online application form and supporting online tools will be available, intended to make it easier for business to comply and to streamline the process. Features will include:

• a single electronic smart form for multiple activities
• help to fill out and submit a complete application
• confirmation to let an applicant know when its application is complete
• online tracking of approvals

The new system comes into effect October 31, 2011. It is intended to reflect a risk-based approach to environmental approvals. It is designed to allow government to focus on environmental protection as well as to make the process more effective and user-friendly for businesses.

For more information see:
www.ontla.on.ca/bills/bills-files/39_Parliament/Session2/b068.pdf
and
http://www.ene.gov.on.ca/environment/en/industry/assessment_and_approvals/modernization_of_approvals/STDPROD_075525.html

Draft Aboriginal Consultation Guide for Preparing a Renewable Energy Approval (REA) Application

The Ontario government has released its Draft Aboriginal Consultation Guide for Preparing a Renewable Energy Approval (REA) Application. The Guide is intended to assist applicants of renewable energy projects when carrying out consultation with aboriginal communities as required under the Renewable Energy Approval Regulation.

For more information see:
http://www.ebr.gov.on.ca/ERS-WEB-External/displaynoticecontent.do?noticeId=MTEzNDMw&statusId=MTY5OTgz&language=en
and
http://www.ene.gov.on.ca/environment/en/resources/STDPROD_088441.html

Quebec's New Conservation Commitments for the Plan Nord Territory

On August 12, 2011, the Minister of Sustainable Development, Environment and Parks, unveiled a document entitled: A commitment by the Government of Québec to set aside 50% of the Plan Nord territory for environmental protection, safeguarding biodiversity and promoting our natural heritage. The document is now open for public consultation.

The Minister announced major new commitments in the Plan Nord framework including:

• Ensuring that by 2020, at least 17% of the territory of the Plan Nord is set-aside for conservation purposes
• Achieving the overall objective of protecting 50% of the North by 2035

The Minister also established initial markers for environmental protection and conservation of northern biodiversity:

• By 2015, complete a network of protected areas on at least 12% of the territory of the Plan Nord;
• By 2015, complete a network of protected areas covering 12% of the area of the boreal forest blanket. This represents a major step in efforts to protect old-growth forests and the habitat of a threatened species, the woodland caribou;
• By 2020, reserve at least 5% in additional areas for conservation and non-industrial development of interest.

The Plan also addresses various types of development that do not rely on industrial activities. Following public consultation the Minister intends to table a draft bill to provide the legislative framework for implementation.

For more information see: http://www.mddep.gouv.qc.ca/communiques_en/2011/c20110812-plannord.htm

In the Courts

On October 7, 2011, the Ontario Court of Appeal released its decision in Ellen Smith v. Inco Limited, an appeal brought by Inco from a trial court decision which had found against it in a class action. This is a landmark decision for environmental litigation.

The trial judge found that soil on the properties of the class members contained nickel particles emitted from Inco's nickel refinery in Port Colborne over a six year period prior to 1985. The trial court held that beginning in 2000 concerns about the levels of nickel in the soil caused wide-spread public concern and adversely affected appreciation in the value of the properties of the class after September 30, 2000. The trial court held that Inco was liable in private nuisance and under the strict liability principle set down in the leading case of Rylands v. Fletcher. The trial judge fixed damages in the amount of $36 million.

The Ontario Court of Appeal allowed Inco's appeal, reversed the trial court decision, and dismissed the action. The Court of Appeal held that the claimants had failed to establish Inco's liability under either private nuisance or the strict liability rule in Rylands v. Fletcher. It also held, in the alternative, that the claimants had failed to establish any damages.

The Court of Appeal noted that the refinery had closed in 1984. It was not alleged that Inco operated the refinery unlawfully or negligently, and indeed it was admitted that Inco complied with all environmental and other governmental regulatory schemes applicable to the refinery.

The claim was made against Inco in relation to the environmental impacts of its operations not while it was operating and not during the period in which its nickel emissions were obviously occurring, but rather well after the refinery was closed. The claimants alleged that the damages occurred as a result of public awareness of the nickel contamination of their properties in 2000. Since then, they alleged their property values had not increased at the same rate as comparable property values in other small cities located nearby.

The claim as advanced did not claim nuisance based on alleged health effects from the nickel emissions. The claimants argued that the deposit of nickel onto their lands caused physical damage to the land, the resulting concerns affected property values, and hence the nuisance. However, the Court of Appeal found that mere chemical alteration in the content of the soil, without more, does not amount to the physical harm or damage to the property necessary for a nuisance claim. It held that a change in the chemical composition must be shown to have had some detrimental effect on the land itself or rights associated with the use of the land. The Court of Appeal found this test had not been met. There was therefore no nuisance. It held:

"Evidence that the existence of the nickel particles in the soil generated concerns about potential health risks does not, in our view, amount to evidence that the presence of the particles in the soil caused actual, substantial harm or damage to the property. The claimants failed to establish actual, substantial, physical damage to their properties as a result of the nickel particles becoming part of the soil without actual, substantial, physical harm, the nuisance claim as framed by the claimants could not succeed."

The Court of Appeal also held that the claimants had not established a case against Inco based upon the strict liability rule in Rylands v. Fletcher. It noted that the rule has been given various interpretations since it was first promulgated as a basis for strict liability. It was established to apply in the circumstance where there was an escape from a defendant's property of a substance "likely to cause mischief" as a result of a "non-natural use" of the property. As the Court of Appeal notes, later cases used words like "special", "unusual" or "extraordinary" to describe the use of the defendant's property.

The trial court judge had found that since Inco brought nickel onto its land, the refining of the nickel constituted a non-natural use of the land; Inco had brought something onto its property that was likely to cause mischief if it escaped. The trial judge had found that the emissions of nickel particles from the property constituted such an escape in the context of a non-natural property use.

The Court of Appeal rejected this analysis. It concluded that the strict liability principle applies not for "all risks associated with carrying out an activity but rather with risks associated with the accidental and unintended consequences of engaging in an activity". The Court of Appeal also held that the strict liability principle applies having regard to whether the use of the property is inappropriate to the place as opposed to the one on which an ultra-hazardous activity is taking place.

The Court of Appeal found that Inco's use of the property was not a "non-natural use" of the land. While nickel was not naturally occurring on the property, the fact that nickel was brought onto the property does not automatically trigger the strict liability principle under Rylands v. Fletcher if it escapes and causes damage.

"To decide whether use is a non-natural one, the court must have regard to the place where the use is made, the time when the use is made, and the manner of the use. Planning, legislation and other government regulations controlling where, when and how activities can be carried out, will be relevant considerations in assessing whether a particular use is a non-natural use in the sense that it is a use that is not ordinary."

The Court notes that Inco's refinery was operated in a heavily industrialized part of the City in a manner that was ordinary and usual and did not create risks beyond those incidental to industrial operations. As a result, the Court of Appeal concludes that the claimants failed to establish that Inco's operation was a non-natural use of its property.

The Court of Appeal also comments that it doubted the appropriateness of the application of the Rylands v. Fletcher rule to the intended consequence of an activity that is carried out in a reasonable manner in accordance with all applicable rules and regulations, as opposed to imposing strict liability for mishaps that occur in the course of the conduct of an unnatural or unusual activity.

Having concluded that the trial judge had erred in finding Inco liable under either the private nuisance principles or the rule in Rylands v. Fletcher, the Court of Appeal embarked upon an analysis of the claimants' damages claim, and found that damages not to have been proven. The question before the court was: "Did the disclosure from and after September 2000 of information concerning nickel contamination in the Rodney Street area and elsewhere in Port Colborne negatively affect property values in the Port Colborne area?" The Court of Appeal concluded that it did not.

The Court of Appeal also addressed an issue concerning the application of the Limitations Act to the class proceeding. The trial judge had found that "most property owners would not have been aware of the fact that nickel in the soil could affect the value of their properties prior to 1990." He therefore allowed all claimants to proceed in the class action. The Court of Appeal held that in doing so, he erred. The Court of Appeal held that discoverability is an individual issue to require individual adjudication. The limitation period does not run "from the date when the majority, even an overwhelming majority of the class members, knew or ought to have known of the material facts in issue"; it has to be applied to the knowledge or discoverability circumstances of each individual claim.

This decision is an important one. It is a significant analysis of the principles of nuisance and the strict liability principle of Rylands v. Fletcher. Moreover, it applies those principles in the modern context of industrial activity, a context in which hazardous materials, and potentially contaminating chemicals and substances, are regularly and commonly in use. The decision gives important guidance with respect to the application of these long-standing common law tort principles to modern industrial settings, including those which occur in proximity to residential land use. It should be of significant comfort to industry operating in compliance with land use approvals as well as environmental statutes, regulations and permits. This case sets the sets the bar high for those contemplating environmental class actions against industry in Ontario.

What's New

Harry Dahme, David Estrin and Mark Madras have been named as Leading Infrastructure Lawyers by Lexpert in a supplement published in the October Report on Business Magazine. The Gowlings Environmental Law National Practice Group is known for its expertise in obtaining environmental approvals and maintaining compliance with the applicable environmental laws for infrastructure projects ranging from international bridges and tunnels, to nuclear facilities, water and wastewater and road and rail. In total, sixteen lawyers from Gowlings were identified as being among the Leading Infrastructure Lawyers in Canada.

Paul Granda and David Estrin were present in Frankfurt for the meeting and conference of the International Environmental Lawyers Network September 8-10, 2011 hosted this year by the Frankfurt office of Allen & Overy at which were also present environmental law specialists from Chili, Mexico, Argentina, Brazil, the United States, the United Kingdom, Germany, France, Belgium, the Netherlands, Spain, Italy, South Africa and New Zealand. At the client conference attended by over 60 participants, Paul spoke on regulatory controls on shale gas exploration and on product stewardship regulatory obligations in Canada while David spoke on environmental litigation relative to large projects and on environmental trends in M&A and real estate transactions.

Mark Madras and Harry Dahme were presenters at the Law Society's "Six-Minute Environmental Lawyer 2011" on October 17, 2011. Mark's topic was "Deals – Compliance Issues"; Harry spoke on the subject of Brownfields.

Mark Madras will be speaking at an Ontario Bar Association, Environmental Section, seminar on November 9, 2011, on the subject of "Off the Rails: Managing Transportation Spills and Emergencies".

Paul Granda will be speaking on the new regualtory requirements in Québec relative to shale gas and petroleum exploration and production at the "Colloque Sols et Eaux Souterraines" organized by Réseau Environnement that will take place in Drummondville, Québec on November 30, 2011.

Ian Richler completed a weeklong course on nuclear law at the headquarters of the OECD Nuclear Energy Agency in October.

Harry Dahme presented a lecture on "Environmental Law Applicable to Large Infrastructure Projects" to the University of Windsor Law School.

Harry Dahme will be speaking to the 2011 Ontario Expropriation Association Fall Seminar on "Environmental Aspects of Infrastructure Projects".

Mark Madras and Jennifer Danahy will be co-presenters at Federated Press' 6th Environmental Deal-Breakers in Real Estate and Business Transactions Course, which will be held in Toronto on January 30 & 31, 2012.

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