Ontario Environmental Law — EPA, Spills Liability, and the ERT

Environmental Protection Act — Overview

The Environmental Protection Act RSO 1990 c E.19 (EPA) is Ontario's principal environmental statute. It prohibits the discharge of a contaminant into the natural environment that causes or is likely to cause an adverse effect (s.14 — the general prohibition). An "adverse effect" is broadly defined in s.1 to include impairment of the quality of the natural environment, injury or damage to property, harm to human health, loss of enjoyment of normal use of property, and interference with normal conduct of business.

The EPA is administered by the Ministry of the Environment, Conservation and Parks (MECP). The Environmental Commissioner of Ontario reviews and reports on the government's environmental activities. The Environmental Review Tribunal (ERT) is the independent adjudicative body that hears appeals from MECP decisions under the EPA and related statutes.

Environmental Approvals and Environmental Compliance Approvals

Under the EPA, certain activities require an Environmental Compliance Approval (ECA) from MECP before they may be undertaken. ECAs were formerly known as Certificates of Approval (C of As). Activities requiring ECAs include the construction and operation of: industrial sources of air emissions; sewage works; waste management systems; and noise-generating operations. The ECA sets out terms and conditions for the approval, including monitoring, reporting, and mitigation requirements.

Appeals of ECA decisions go to the Environmental Review Tribunal. The ERT applies a standard of review in its enabling statute: under EPA s.145.2.1, the ERT may consider whether engaging in the activity is in the public interest having regard to the purposes of the EPA. This is a broader review than the typical administrative law reasonableness standard for most adjudicative bodies.

Spills Liability — EPA ss.92-99

The EPA's spills provisions (Part X, ss.92-99) create strict liability for the costs of cleaning up a spill of a pollutant into the natural environment. A "spill" is a discharge of a pollutant into the natural environment that is abnormal in quality or quantity in light of all the circumstances of the discharge (s.91(1)). The spill reporting obligations in s.92 require the owner and person in control of the pollutant to report the spill immediately to MECP and to take all reasonable steps to prevent, eliminate, and ameliorate the adverse effects.

EPA s.99 imposes liability for clean-up costs on: (1) the owner of the pollutant that was spilled; (2) the person who had charge, management, or control of the pollutant immediately before the spill; and (3) persons who had charge, management, or control of the undertaking or activity that caused the spill. The court may also make orders against persons who had charge, management, or control of the land from which the spill occurred.

Strict liability means that the owner and responsible persons are liable for clean-up costs even if they were not negligent and even if the spill was caused by a third party or an act of God — subject to the due diligence defence and force majeure under the Act. R v Bata Industries Ltd (1992) 7 OR (3d) 615 (Prov Ct) is the leading Ontario case on director/officer liability under the EPA — it established the due diligence framework for corporate officers.

Director and Officer Liability

EPA s.194 provides that directors and officers of a corporation may be personally liable for offences under the EPA committed by the corporation if they directed, authorized, assented to, acquiesced in, or participated in the contravention. The due diligence defence is available — a director or officer is not liable if they took all reasonable care to prevent the contravention.

R v Bata Industries (above) identified the minimum standard of care for corporate officers: (1) the director must establish that the corporate structure provided for compliance with the EPA and that the system was working; (2) the director must ensure that there were regular reports and updates on environmental matters; (3) the director must ensure that corrective action was taken when environmental problems were identified; and (4) the director cannot claim ignorance of the corporation's activities as a defence.

Ontario courts have consistently held that the due diligence defence requires active steps — not mere paper compliance. Directors and officers of companies with environmental obligations must demonstrate genuine engagement with environmental compliance programs.

Ontario Water Resources Act

The Ontario Water Resources Act RSO 1990 c O.40 (OWRA) prohibits the discharge of material into any water that may impair water quality (s.30). OWRA s.30A imposes strict liability for costs of remediation of water quality impairment caused by a discharge, similar to the EPA spills regime. Permits to Take Water (PTTWs) are required for taking water from a natural source above prescribed thresholds (generally 50,000 litres per day) under OWRA s.34.

Species at Risk and Protected Areas

The Endangered Species Act SO 2007 c 6 (ESA) protects species at risk and their habitats in Ontario. The ESA prohibits killing, harming, harassing, capturing, taking, and possessing listed threatened and endangered species (s.9), and prohibits damaging or destroying the habitat of threatened and endangered species (s.10). Permits may be obtained from MECP for activities that would otherwise contravene the ESA, subject to conditions including mitigation, monitoring, and offsetting.

Federal environmental assessment requirements under the Impact Assessment Act SC 2019 c 28 apply to "designated projects" with potential adverse effects on federal areas of jurisdiction. The Impact Assessment Act replaced the Canadian Environmental Assessment Act 2012 and was significantly revised following the Supreme Court of Canada's decision in Reference re Impact Assessment Act 2023 SCC 23, which found parts of the Act unconstitutional as exceeding federal jurisdiction.

Environmental Due Diligence in Real Estate

Environmental due diligence is critical in Ontario commercial real estate transactions. Phase I Environmental Site Assessment (ESA) — following CSA Z768-01 standards — identifies recognized environmental conditions (RECs) on a property through records review and site inspection. A Phase II ESA involves soil and groundwater sampling to confirm contamination. Where contamination is found, a Record of Site Condition (RSC) may be required before a change in property use to a more sensitive land use (under Environmental Protection Act O.Reg. 153/04).

Purchasers of commercial and industrial properties in Ontario should ensure that environmental conditions are addressed in purchase agreements, that representations and warranties address environmental compliance, and that indemnification provisions allocate known environmental liabilities appropriately. The EPA's retroactive liability provisions mean that current owners may be liable for contamination caused by historical operations.