Be Prepared: Understanding and Managing Municipalities’ Liability for Environmental Offences
Municipalities should be aware of liabilities under provincial and federal environmental legislation, which have the potential for very large fines, operational restrictions, and unwanted public attention. Municipalities, like corporations and individuals, can be subject to prosecution for various offences under environmental legislation. While environmental offences are generally regulatory, or “quasi-criminal” in nature, contraventions under this type of legislation are prosecuted in criminal court, and open to the public.
Jurisdiction over the environment is shared between the provinces and federal government. It is not uncommon for one incident to give rise to liability under both provincial and federal legislation. Common statues that municipalities face enforcement action under include Alberta’s Environmental Protection and Enhancement Act (“EPEA”) and the Water Act, as well as the federal Fisheries Act and the Canadian Environmental Protection Act.
The 1978 Supreme Court of Canada decision in R v Sault Ste Marie (City) (“Sault Ste Marie”) is a foundational case in relation to the prosecution of regulatory offences in Canada. Particularly apt to this discussion, Sault Ste Marie involved a municipality (the City of Sault Ste Marie) being prosecuted for an environmental offence. The City was charged under the Ontario Water Resources Commission Act when a company it had contracted with for waste management services disposed of the City’s waste within the proximity of a creek. One of the issues for the City was whether it had provided appropriate oversight of the company it had hired to deliver services the City was responsible for. In its decision, the Supreme Court articulated the category of “strict liability” regulatory offences.
Strict liability offences require the prosecution to only prove that the prohibited act occurred, however, the applicable standard of proof is beyond a reasonable doubt – a high threshold. The prosecution does not have to establish any mental component as is required for true criminal offences. Once the prosecution has proven that the prohibited act occurred, the onus shifts to the accused to prove a due diligence defence. The accused is held to the lower standard of proof – a balance of probabilities – when establishing its defence. Due diligence essentially requires the accused to prove (1) that they took all reasonable steps to prevent the contravention, but it occurred nevertheless, or (2) they operated under mistaken facts, which if true, would not have resulted in a contravention. Assessing a due diligence defence is a fact-specific exercise that will depend on various considerations and the circumstances that exist for each given matter.
Since Sault Ste Marie, many municipalities across Canada have been charged with environmental offences. Our research shows that in the last five years, Alberta municipalities have most frequently been charged with offences under the EPEA, a provincial statue. These include:
- Releasing or permitting the release of a substance into the environment, in an amount, concentration or level or at a rate of release that causes or may cause a significant adverse effect, contrary to section 109;
- Failing to report such a release, contrary to section 110;
- Releasing or permitting the release of a substance into any part of a waterworks system, contrary to section 148; and
- Improperly storing and handling pesticides, contrary to section 155.
The EPEA has the potential for significant penalties. Pursuant to section 228(1)(b), a municipality could be liable to a fine of up to $1,000,000 for releasing or permitting the release of a substance into the environment (section 109). In the case of an offence under sections 110, 148, or 155, a municipality could be liable to a fine of up to $500,000.
While the maximum penalties are reserved for only the most serious situations, large penalties have been imposed. In 2018, employees of a large City in Alberta inadvertently applied a pesticide labeled “do not use in residential areas” to a residential area along a pathway between houses leading to a large field, contrary to the EPEA. The City plead guilty and made a joint sentencing submission to pay a penalty of $165,000.
In 2019, a north-central Alberta town and nearby county were both charged with committing an offence under the EPEA for contravening terms of their regulatory approval authorized operation of the regional landfill. The approval issued under the EPEA authorized specific design plans of the landfill. The approval holder was not to deviate from the design plans without further authorization or amendment to the approval. However, steps were taken to expand the landfill by adding new cells to accommodate high volumes of incoming waste. The parties attempted to obtain the regulator’s permission but were unable to obtain an amended approval before construction began. Both the town and county were charged under the EPEA and received a combined penalty of $100,000 based on guilty pleas and a joint sentencing submission with the prosecution.
In 2020, a northern Alberta municipality was charged with an offence under the EPEA for releasing or permitting the release of a substance in the environment that caused or may cause a significant adverse effect, contrary to the EPEA section 109(2). Due to communication and procedural errors, two substances were mixed at a water treatment plant, which resulted in the production of chlorine gas. Approximately 122.78 cubic metres of chlorine gas were released from the chemical reaction which occurred over eight days. The municipality plead guilty and made a joint submission with the prosecution to pay a total penalty of $150,000 split between a fine and to fund two creative sentencing projects.
With respect to federal legislation, it is not uncommon for municipalities to be charged under the Fisheries Act. Section 34.4(1) of the Fisheries Act provides that no person shall carry on any work, undertaking or activity, other than fishing, that results in the death of fish. Section 35(1) provides that no person shall carry on any work, undertaking or activity that results in the harmful alteration, disruption, or destruction of fish habitat. The Fisheries Act carries the risk of severe penalties. An offence under sections 34.4(1) or 35(1) can result in a maximum penalty for each offence of $6,000,000 on indictment, and $4,000,000 on summary conviction. These penalties can be doubled for second or subsequent offences.
In 2019, the City of Kawartha Lakes in Ontario was charged under the Fisheries Act when a city-hired contractor carried out maintenance work on a drainage system. The work resulted in a sediment release into a fish-bearing waterway. Environment and Climate Change Canada enforcement officers investigated the incident and determined that the sediment concentrations released during the work were deleterious to fish, and that the work was undertaken without taking adequate steps to mitigate the release of sediments into the waterway. The City was ordered to pay a $75,000 fine, update their standard operating procedures for drain works, and publish a notice of the incident on their website.
In 2020, the Town of Baie Verte in Newfoundland and Labrador was charged with two offences under the Fisheries Act. The offences were related to the discharge of water containing elevated levels of chlorine from the Town's potable-water system into the Baie Verte River. The first offence concerned the release of a deleterious substance into water frequented by fish; the second, to a failure to comply with a Fisheries Act direction that ordered the Town to take action to remedy the situation or prevent future occurrences. The Town was fined $50,000 for the two offences.
In another interesting matter, an Alberta county was charged with violating the Wildlife Area Regulations, contrary to the Canada Wildlife Act. The county had conducted industrial activity in the Meanook National Wildlife Area in 2017. Trees were felled and burned, and other vegetation and soil were removed without authorization. Fencing, signage, and scientific equipment were also destroyed. This activity affected approximately 2.5 hectares of land within the National Wildlife Area, causing risk to wildlife and damage to wildlife habitat. Ultimately, the county plead guilty and was ordered to pay a penalty of $300,000 to be directed to the Government of Canada’s Environmental Damages Fund.
In addition to the potential for receiving large monetary penalties, enforcement measures by the regulators can lead to other significant and undesirable consequences that may be imposed instead of or in addition to fines. This may include cleanup orders, stop work orders, cancelation of regulatory approvals, directions to implement and improve operating practices, or publishing articles to educate other regulated parties, among other things. We have seen a number of situations where a municipality is required to stop work or shut down a facility that has the potential for severe implications on providing services to residents.
Dealing with investigations and enforcement actions is often time consuming, stressful, and expensive. Costs may include legal and expert fees, delay consequences, and significant internal time required from employees that takes away from other work and service to residents. Further, enforcement actions are generally public and are often subject to government press releases. Being prosecuted for an offence may be embarrassing for the municipality and its elected members.
Municipalities should not only be proactive and establish proper systems to reduce the likelihood of environmental harms, but also ensure that the systems are properly implemented to ensure that reasonable care has been taken to avoid the harm and if needed, provide the basis for a due diligence defence.
Furthermore, it is advisable to have a response plan in place in the event that a contravention does occur. Being prepared will assist in mitigating impacts to the environment and position the municipality to better manage the monetary and other costs that may ensue.