12/23/2009

Dianne Saxe, environmental law specialist has agreed that her article related to this case can be reproduced and follows.
“Fairness is what justice really is.” - Justice Potter Stewart

Should fairness affect the imposition of environmental liability on municipalities? Is there no limit to the power of senior governments to download environmental liabilities on municipalities? The Ontario Ministry of the environment has long argued that fairness should not be allowed to stand in its way. Now the Environmental Review Tribunal agrees. And an English town faces ruinous liability after cleaning up a government-owned steel plant.

The Ontario case, Kawartha Lakes v. Director, began with a conventional furnace oil spill in the basement of Wayne and Liana Gendron. Their home insurance company responded, and retained DL services, a well-known cleanup contractor. By then, the spilled fuel had flowed through the municipal sewer system and culverts into Sturgeon Lake. The Ministry of environment ordered the homeowners to remediate the contamination.

Three months later, DL Services had exhausted the available insurance funds, leaving furnace oil still contaminating municipal property, such as roads, storm drains and lakefront, and the lake itself. The ministry responded by ordering the city to take over the cleanup. Adding insult to injury, the order was issued to the City in its capacity as landowner, and not under the spill cleanup rules. If the cleanup order had been issued under section 97 of the Environmental Protection Act, instead of section 157.1, the City would have had a right to compensation for its costs from those responsible and from the Crown.

The city appealed the s.157.1 Order to the Environmental Review Tribunal. It wanted to argue that it is unfair to download the cleanup cost onto the innocent, heavily burdened, municipal taxpayer. Instead, the cleanup cost should be imposed on, or at least shared by, those responsible for creating this spill and for allowing it to flow onto and remain on municipal property. The city also wished to argue that the insurance funds had been squandered.

On November 20 2009, the environmental review Tribunal blocked the city from adducing evidence on these points. In essence, it ruled that allowing innocent parties to appeal orders because they don’t fairly allocate liability could make its hearings more costly and complex. This might interfere with the rapid imposition of environmental cleanup requirements, which the ERT considers contrary to the public interest. Innocent parties forced to pay environmental costs should be left to seek their remedies, such as they may be, in the civil courts.

The City is still allowed to “appeal” the Order, but it will have to complete the cleanup, at its own expense, before it gets to the hearing.

In the English case, Corby Group Litigation v. Corby District Council, the Corby Borough Council (CBC) was held liable in negligence, nuisance, and statutory breach for allowing residents to become exposed to toxic substances during its 1980s cleanup of an old British Steel works. Corby Borough is a small, “moderately deprived” “New town”, which was economically and socially devastated by the closure of the steel works. Even today, Corby Borough has a population of only 55,000, with high unemployment, an abundance of children and old people rather than workers, and low property values. According to the 2001 Census, the proportion of the working age population with degree-level qualifications (8.5%) is the lowest of all areas in England and Wales. The health of people in Corby is generally worse than the English average, with high rates of teenage pregnancy, drinking, smoking, cancer and heart disease rates. They also have unusually high rates of congenital limb defects.

More than 25 years ago, the national government dumped the responsibility for cleaning up the steel works on this small town. British Steel, a nationalized industry, had heavily contaminated the 680 acre site with metals, (including cadmium, chromium and nickel), PAHs and dioxins. With very little experience, expertise, or resources, CBC tackled the problem by having its largely unskilled local workforce move 2,000,000 m³ of contaminated soil, by lorry, on public roads, to an empty quarry. 

Unfortunately, this dragged mud from the site onto local roads. The English High Court has now held that the resulting dust exposed pregnant women up to 4 km away to tetragens capable of causing limb deformities in their babies. According to the court, a “careful” local authority would have known in 1985 that the lorry wheels should have been washed, and the CBC is therefore liable for any resulting damages.

The decision allows 16 disabled children to move forward with cases against the CBC; they will be entitled to recover substantial compensation if they can prove that their mothers were exposed to unreasonably high levels of contaminants at the material time in their early pregnancy. Not surprisingly, additional claimants are also coming forward. The High Court decision also requires the CBC to pay more than 1,000,000 pounds in legal costs to the claimants, but does not indicate where the money is to come from. Meanwhile, British Steel has been privatized (with all profits to the national government) and is now part of Tata Steel, the second most profitable company in India.

Thus, the answer seems to be no: there is no limit to the power of senior governments to download unfair environmental liabilities on municipalities, and they are not shy to do it.

Dianne Saxe, Environmental Law Specialist, Saxe Law Office, Toronto
Wednesday, December 23, 2009