In a March Cabinet document recently leaked to the press, the Ontario Ministry of Environment (MOE) pleaded for resources to hire at least 138 new staff to be able to properly carry out its mandate. Unfortunately, the plea fell on deaf ears: the government shelved the report, just two months before the Walkerton tragedy.

The MOE report admitted that the MOE now inspects less than 10% of pollution sources in the province each year, and pleaded for increases in their capacity for inspections and investigations. The report called for the creation of so-called SWAT teams of inspectors, which were promised by Mike Harris during the 1999 election campaign, but not created.

Although Premier Harris initially denied the report's existence, he later back peddled, and promised that the SWAT teams would be in place by the end of this summer. The teams are to consist of environmental specialists who will audit industries to ensure compliance. An environmental hotline was also established for citizens to report suspected pollution, even though there has been no shortage of such reports in the past.

2. Brownfields liability growing

Two recent Ontario cases should increase concern about the consequences of off-site contamination.

In United Canadian Malt v. Outboard Marine the Court ruled that the directors of a Canadian company, and its US parent, can be sued for contamination from the Canadian company's former property. Outboard Marine allegedly contaminated its neighbour's groundwater, forcing them to buy water for their brewery. The parent company controlled the subsidiary, stripped it of assets, and led negotiations about the contamination. Its directors, who were aware of the contamination, failed to alert the neighbour of the risk.

In Tridan Development v. Shell, the court greatly increased the damages an innocent landowner can expect for contamination. The court ordered Shell Canada Products Limited to pay more than $1,000,000 to a neighbour of one of its gas stations.

The station had had an underground spill in 1990. Shell cleaned up its own site, but argued that offsite contamination should be left to naturally degrade.

The contamination did not interfere with Tridan's business, nor were they planning to sell their property. Nevertheless, the court held that Tridan was entitled to the full cost of remediating its property, through the quickest means (excavation and offsite disposal) and to its original pristine state, not merely to MOE guidelines. The judge also awarded Tridan $350,000 (12-15% of its property value) for "stigma" that after remediation.

Tridan also claimed, and won, damages for business interruption it will suffer when the remediation occurs, and $25,000 for excess financing costs it incurred in the four extra months that it took to arrange renewal of its mortgage. In addition, it was awarded the its legal costs and ten years' prejudgment interest.

Shell is appealing. In the past, an injured property owner has not been able to demand remediation beyond applicable MOE guidelines. It is also unusual for a court to award the cost of remediation where this exceeds the loss in property value that the contamination causes. As Justice Binks gave no clear rationale for doing so in this case, Shell has a good chance in its appeal.

3. Jail Term

On June 8th, Gerrard Lee, former operations manager for Aqua-Tech Blue Ltd. (ATB), was sentenced to 90 days in jail. He had (badly) operated a waste recycling plant on Toronto's waterfront, breached its approvals, and allowed waste oil to flow into the Don River. He also pled guilty to furnishing false information to the MOE.

4. Air Pollution

In June, the Ontario Medical Association (OMA) predicted that air pollution will cost the Ontario economy over $1 billion and result in approximately 1900 deaths this year. The report was prepared using software that estimates the cost of air pollution-related illness and lost work time. It can be downloaded free from www.oma.org.

Although the province has done little to date on smog, the federal government has initiated a Corporate Smog Action Plan. It includes measures to reduce employee travel (e.g., flextime and telecommuting), the conversion of federal vehicles to natural gas, and increased energy efficiency in federal buildings.

5. Chile Roster

Although few people are aware of it, the NAFTA North American Commission for Environmental Cooperation has a twin. The Council of the Canada-Chile Commission on Environmental Cooperation recently named Dianne Saxe to its roster of experts to assess environmental disputes under the Agreement.

6. Great Party

If you weren't there, you missed a great party. On a lovely June afternoon, we hosted the Hon. Dan Newman, Minister of the Environment, in our garden. All those attending had opportunities to discuss environmental issues directly with the Minister and with the key members of his personal staff. The Minister has promised us an open door policy. Let us know if you need his help.

7. New EU Enviro. Liability Regime

The European Commission continues to take the lead in developing environmental laws and principles. The latest is a White Paper on Environmental Liability, proposing a Europe-wide directive to hold polluters accountable for environmental damage. Key aspects of the proposal include liability for traditional damage (persons, property) and environmental damage (contaminated sites, habitat, biodiversity, natural resources), strict liability, a "significant damage" threshold, and an obligation to spend compensation on restoration. Key issues include allocation of shared liability and insurability. See europa.eu.int/comm/environment/liability/.

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