The Miller Thomson Foundation: Sixteen Years as a Proud Supporter of Post-Secondary Education in Canada

Teresa L. Meadows, Edmonton

Since its formation in 1995, The Miller Thomson Foundation has awarded scholarships totalling $2,550,000 to 2,550 promising students pursuing post-secondary education in Canada.

Gerald Courage, along with Gary G. Campbell, Q.C. and The Rt. Hon. John N. Turner, P.C., C.C., Q.C., Co-Chairs of the Board of Governors of The Miller Thomson Foundation, are pleased to announce the 200 recipients of the 2010 National Scholarships. Each of the students receive a $1,000.00 entrance scholarship from the Foundation to continue their studies this fall at the Canadian university or community college of their choice.

"Each of these young people has not only demonstrated academic excellence but a commitment to the well-being of their school and community," said Mr. Courage. "We believe it is important to recognize their current achievements while encouraging them to reach their full leadership potential."

The judging coordinators agree that the unique feature of The Miller Thomson Foundation National Scholarship Programme is the emphasis placed on community and school involvement as well as academic work.The programme assists exceptional students who have a clear vision of their future and are motivated to grow both personally and scholastically.

The National Scholarship Programme is a long term, ongoing initiative funded by The Miller Thomson Foundation.The purpose of the National Scholarship is to encourage and promote the attainment of higher education goals for individuals in Canada who have demonstrated a high level of academic achievement and made a positive contribution to their school and their community through extracurricular and community activities.

The 2010 National Scholarship recipients are listed on the firm’s website under MT Foundation.

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Environmental Approvals Reform in Ontario

John R. Tidball, Markham
Bryan J. Buttigieg, Toronto

In the April 2010 issue of EnviroNotes we reported on a proposal by the Ontario Ministry of the Environment to fundamentally reform the environmental approvals process in Ontario.  The reforms were included in Bill 68, the Open for Business Act, 2010, which was introduced in the Ontario Legislature in June.  Bill 68 is expected to be passed by the Legislature in September 2010.  The environmental approvals reforms are expected to be implemented beginning in September 2011.  For more information, please contact John Tidball or Bryan Buttigieg.

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Bill C-9 Changes Federal Environmental Assessment Regime

Tony Crossman, Vancouver
Luc Gratton, Montréal
Teresa L. Meadows, Edmonton
John R. Tidball, Markham

Bill C-9, the omnibus budget bill, includes provisions to amend numerous federal statutes including the Canadian Environmental Assessment Act (CEAA).  Enacted in 1992, CEAA requires environmental assessment (EA) of projects or activities which may cause significant adverse environmental effects.  The amendments to CEAA will reduce the scope of federal EAs quite significantly:

• The Infrastructure Projects Environmental Assessment Adaptation Regulations made in 2009 to exempt “routine” public infrastructure projects from EA is repealed and the exemptions are now made permanent through section 7.1(2) of the Act.  Discretion is now given to the Minister of the Environment to require a public infrastructure project to undergo EA if he or she determines it may cause significant adverse environmental effects (section 7.1(3)).
• The Canadian Environmental Assessment Agency will perform comprehensive federal EAs instead of other federal departments unless the responsible authority is either the National Energy Board or the Canadian Nuclear Safety Commission (section 11.01(1)). 
• The Minister of the Environment will have authority to “scope” federal EAs so as to limit an EA to one or more components of a project (section 15.1(1)).  This provision essentially overturns the Supreme Court of Canada decision in MiningWatch Canada v. Canada (Fisheries and Oceans) where the Court held that responsible authorities do not have statutory authority to reduce the scope of the project to less than what was proposed by the proponent.

The changes to the Act were heavily criticised by the environmental community who argued that it is undemocratic to make fundamental changes to the EA legislation through the budget process.  Environmentalists argued that changes to EA law should be publicly debated at the House of Commons Standing Committee on Environment and Sustainable Development.  The Bill passed third reading on June 8, 2010.

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Controlling Odours in Metro Vancouver: The Ability of Regulators to Impose Controls

Tony Crossman, Vancouver
Sarah D. Hansen, Vancouver

The BC Environmental Appeal Board recently decided that the District Director (pursuant to the Environmental Management Act) had gone too far when, on his own initiative, he amended an air permit held by West Coast Reduction Ltd. (“West Coast”) by placing limits on the concentration of odour as measured in “odour units” and requiring monthly odour testing and reporting to determine if those limits were being met.

West Coast’s plant now lies in a suburban Vancouver area and between 1964 and 2006, the facility had updated its odour control technology reducing the odour from an area of 12 square km to about 3 square km.  In about 2004, there was an “explosion” of complaints which coincided with a “Stop the Stink” campaign by local residents.

Shortly after the increase in complaints, the District Director amended West Coast’s air permit.  The changes included that the plant measure in “odour units” and required monthly odour testing and reporting.
 
The odour units, testing and reporting was a new initiative pursuant to a local bylaw, which although had been tried in European jurisdictions, had never been tried in Canada.

The Environmental Appeal Board found that:

1. The power to amend existing permits is not an unrestricted power.  It is limited to when it is necessary for the protection of the environment.  In this case, a reasonable person in the District Director’s position would not have felt it necessary to make the amendments.
2. Although the District Director had authority to introduce a unit of measurement established by international or foreign jurisdictions, as well as requiring testing analysis according to the standards, the use of an “odour unit” was not reasonable because there are significant weaknesses to this as a unit of measurement.  An “odour unit” is based on “smell” and has a highly objective element to it.
3. The requested closure of the plant during weekends and holidays was not feasible.  The District Director is required to balance any amendment with the role of such a plant in BC’s sustainable regime.

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Brownfields: Opportunity is Knocking in Alberta

Teresa L. Meadows, Edmonton

Co-author
Evan Schube (Summer Student)
Miller Thomson Edmonton

As brownfields are unused and unproductive contaminated lands, they present unique opportunities and challenges.  The challenges, however, are being mitigated as the regulatory environment is trending towards more favourable liability conditions, municipalities are more dedicated to finding solutions, and the private sector has created financial products to minimize risk.  Opportunity is knocking and it just may be time to open the door.

Provincial Approach

In 2009, Alberta adopted the Remediation Certificate Program (Program).  The purpose of the Program is to provide liability closure when remediation efforts successfully remediate the area to environmental standards of either the proposed land use or adjacent uses.  The Program requires an applicant to provide information including a map of the contaminated area, type and history of contamination, current and proposed land use, remediation process and records, and monitoring plan.  Upon effective cleanup, the Director will issue a remediation certificate for the area and substance disclosed in the report.  Even if the contamination has spread beyond the bounds of the remediation area, the Director may still issue a remediation certificate for the off-site area if there is a plan to monitor, prevent, or mitigate any adverse effects.  Currently, ten applications have been filed and six certificates have been issued.

The amount of time it takes for the reporting and remediation process is site specific.  It takes approximately one month for the remediation certificate to be issued after a satisfactory report has been submitted.  Environmental site assessments are usually completed within two months.  If the recommended methodology for remediation is off-site removal of the contaminated soil, the reporting period may take up the bulk of the time.  If other methods of remediation are chosen, the remediation efforts may be similar to a recently issued certificate where the cleanup took almost three years. 

Municipalities and Easing the Financial Burden

While the Province is approaching contaminated properties in a new manner, Alberta’s municipalities are moving forward with programs designed to provide a wide range of incentives to work in conjunction with Provincial legislation. 

The City of Edmonton has formed a Contaminated Gas Station Task Force.  The Task Force is charged with identifying opportunities and barriers to redevelopment and directing the City towards adopting policies that encourage redevelopment.  Although no single incentive has been, or likely will be, adopted, several are under consideration and available for negotiation.  If the incentives don’t work, Edmonton may drop the carrot and pick up a stick by increasing property taxes for abandoned and contaminated property.

An option not currently being discussed but may be negotiable is a “windfall lien.” A windfall lien occurs when the government undertakes cleanup efforts due to the owner’s unwillingness or financial inability.  The government subsequently places a lien against the property for the lesser of unreimbursed cleanup costs or increase in fair market value of the property. The windfall lien typically works for scenarios where a potential purchaser or user is interested and committed to the property. 

Windfall liens accomplish two major goals.  First, it follows the “polluter pays” principle.  Second, it maximizes the benefits for both parties while encouraging redevelopment.  For the private sector, the financial burden of redevelopment is not so daunting that abandonment becomes the only prudent course of action.  For the public sector, participation in the cleanup encourages re-use of existing properties by mitigating future liability concerns, protects the environment and public health through remediation efforts, and increases revenues through increased property and business taxes. 

The confluence of financial incentives, regulatory liability closure, and the possibility of increased taxes make it more advantageous than ever to look at brownfields as an opportunity.
 
Limitations of the Remediation Certificate Program

Perhaps the biggest limitation to the Program is that the certificate does not cover the entire property.  Remember, the certificate is issued for the substance(s) and area detailed in the application.  If contamination extends beyond the bounds of the area or substances identified, the certificate does not provide liability relief.  The accuracy and thoroughness of the environmental site assessment is fundamental to the effectiveness of liability closure.

Evaluate Environmental Site Characteristics for Suitability Before Transaction

It is possible to make the Program more applicable to the landowner at the onset of the transaction.  Site characteristics can either help mitigate or exacerbate potential environmental liabilities.  The types of chemicals used, soil characteristics, depth of the surface to the water table, proximity of the contamination to sensitive receptors, and the presence of wells are just a few factors to consider during the course of a transaction.  To understand the potential scope of remediation efforts and future liability, the lawyer should have working knowledge of the operation of the client’s business as well as an understanding of the businesses that were on the property prior to the transaction.

In addition, the adjacent land uses, current and anticipated zoning, the presence of zoning controls such as buffers, easements and reserves all have the potential to render a site more or less suitable for brownfields redevelopment.

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Canada Plans New Emission Rules for Heavy Trucks

Tony Crossman, Vancouver
Luc Gratton, Montréal
Teresa L. Meadows, Edmonton
John R. Tidball, Markham

Environment Minister Jim Prentice announced on May 21 that Canada will impose new emission standards on heavy trucks under the Canadian Environmental Protection Act, 1999.  In Canada, the transportation sector accounts for about 25 percent of total greenhouse gas emissions while heavy-duty vehicles account for about 6 per cent of the total greenhouse gas emissions.

The new regulations, a draft of which are expected imminently, would apply to new heavy-duty vehicles and engines manufactured or imported for sale in Canada, starting between the 2014 and 2018 model years, as well as, full-sized pickups, delivery vehicles, buses, freight vehicles, service trucks, garbage trucks and dump trucks. Canada will harmonize its regulations with those being developed in the Unites States.

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Ontario’s Water Opportunities and Water Conservation Act

Bryan J. Buttigieg, Toronto

On May 18, 2010 the Ontario government introduced Bill 72, Water Opportunities and Water Conservation Act. The Bill aims to encourage water conservation, strengthen sustainable municipal water planning and make Ontario a leader in developing and selling water technologies and services.

The Bill recognizes the business opportunities offered by the water technology sector.  Globally, that sector is valued at more than $400 billion while the Ontario sector generates $1.8 billion in sales annually. The Bill encourages new business opportunities in this sector of the economy while at the same time establishes mechanisms to enhance water conservation and water sustainability planning. In this way, the Bill has garnered considerable support from industry, academia and the environmental community.

Water Opportunities Act, 2010

Schedule 1 to the Bill consists of the Water Opportunities Act, 2010.  The first part of the Act sets out its purposes and gives the Minister of the Environment authority to establish targets in respect of the conservation of water and other matters the Minister considers advisable.

Water Technologies

Water Technology Acceleration Project, a corporation without share capital, is established in Part II of the Act.  Its objects are to:

• Assist in promoting the development of Ontario water and wastewater sectors by increasing their capacity to develop, test, demonstrate and commercialize innovative technologies for the treatment and management of water and wastewater, and expand their business opportunities nationally and internationally;
• Provide a forum for governments, the private sector and academia to exchange information on how to make Ontario a leader in the development and commercialization of innovative technologies for the treatment and management of water and wastewater;
• Encourage collaboration in Ontario’s water and wastewater sectors; and
• Assist in the development of certification, labelling and verification programs for water and wastewater technologies.

Bill 72 also amends the Capital Investment Plan Act, 1993 to revise the objects of the Ontario Clean Water Agency (OCWA) to include financing and promoting the development, testing, demonstration and commercialization of technologies for the treatment and management of water, wastewater and stormwater.

Water Sustainability

The Act requires certain municipal service providers to prepare, approve and submit to the Minister a municipal water sustainability plan for municipal water, wastewater and stormwater services. The government’s intention seems to be the integrated planning of water use and infrastructure at the municipal level.

The Minister may also establish performance indicators and performance targets for those services and direct that those services be evaluated relative to the applicable performance indicators and targets.
 
If targets are not met, the municipal service provider may be required to provide the Minister with information concerning its efforts to achieve the target and the reasons for its failure to do so.  The Minister may also ask the municipal service provider to amend its plan to incorporate strategies and steps to assist it in achieving the targets.

Water Conservation

Regulations may be made under the Act requiring public agencies to prepare water conservation plans, achieve water conservation targets and consider technologies and services that promote efficient use of water and reduce negative impacts on water resources when acquiring goods and services or making capital investments.

In addition, Bill 72 proposes a number of amendments to other legislation on the issue of water conservation:

• The Building Code Act, 1999 is amended to require the Minister to initiate a review of the building code with reference to standards for water conservation at 5 year intervals; 
• The Green Energy Act, 2009 is amended to add principles relating to water and water use to the principles that guide the Government of Ontario in constructing, acquiring, operating and managing government facilities; 
• The power to issue directives under the Green Energy Act, 2009 is also expanded to include directives related to water use, water conservation and the adoption of technologies and services that promote the efficient use of water and reduce negative impacts on water resources; and
• The Ontario Water Resources Act is amended to prohibit the sale or lease of appliances and products prescribed by regulation unless they meet certain efficiency standards and are labelled to confirm compliance with such standards.

Bill 72 was posted on the EBR Registry on May 18 for public review and comment.  Comments, which were to be received by July 17, are now being considered by the Ministry of the Environment.

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West Moberly First Nations v. British Columbia (Chief Inspector of Mines), 2010 BCSC 359: Delegation to Departmental Officials Failed to Satisfy the Honour of the Crown

Chantelle M. Rajotte, Vancouver
Tony Crossman, Vancouver
Sarah D. Hansen, Vancouver

In February 2010, the Supreme Court of British Columbia heard an application by West Moberly First Nations to quash three decisions of individuals appointed as statutory decision makers for the Crown:

1. A September 1, 2009 decision of the Chief Inspector of Mines with the Ministry of Energy, Mines and Petroleum Resources to issue an amendment to an existing permit pursuant to the Mines Act, R.S.B.C. 1996, c. 293, permitting First Coal Corporation to obtain a 50,000 ton bulk sample of coal from lands referred to as Goodrich Properties.
2. A September 14, 2009 decision of the Inspector of Mines to issue an amendment to an existing permit approving a 173 drill hole, and five trench advanced exploration program on the same land, also pursuant to the Mines Act.
3. An October 8, 2009 decision of the District Manager for the Ministry of Forests and Range to issue a licence to cut permitting First Coal to cut and clear up to 41 hectares of land to facilitate the advanced exploration.

West Moberly claimed that the land affected by these three decisions is territory subject to their Treaty No. 8 guaranteed traditional right to hunt caribou.

West Moberly argued that the officers of the Crown failed to consult adequately and meaningfully with them concerning their Treaty No. 8 hunting rights, and failed to reasonably accommodate their rights when they issued the permit amendments and the licence to cut.  They asked that the three decisions be declared invalid and set aside.

Mr. Justice Williamson released his decision on March 19, 2010.  He concluded that the Crown recognized that it had a duty to consult with West Moberly before issuing the two permits and the licence to cut, and that it did consult.  However, Mr. Justice Williamson was not satisfied that the consultation was meaningful in the circumstances and found that:

1. The Crown was too slow in providing West Moberly with its initial assessment of the potential adverse effects of the project upon West Moberly’s treaty rights.
2. The Crown’s failure to put in place an active plan for the protection and rehabilitation of the Burnt Pine caribou herd (after West Moberly presented a detailed report of the danger to that herd and its relationship to their treaty protected right to hunt) was ultimately a failure to reasonably accommodate West Moberly.
3. The Crown delegated its duty towards First Nations peoples to department officials, but in doing so did not give those officials the authority to consider fully the First Nations concerns, nor the power to accommodate those concerns.

Mr. Justice Williamson further concluded that the Crown’s “rationale for decision” which outlined the accommodation measures relied on by the Crown did not manifest reasonable accommodation of West Moberly First Nation’s concerns, stating that:

1. A key reason for the reduction of the Bulk Sampling program from 100,000 tons to 50,000 tons had been the current economic downturn, not accommodation.
2. First Coal’s Caribou Mitigation and Monitoring Plan was not a recovery plan for caribou.
3. The closure of an access road to the site was not implemented as part of a concerted rehabilitative plan for the threatened caribou herd. 
4. The decision to move to a less destructive method of mining was not a response to West Moberly’s concerns. 

Moreover, the Court determined that it did not matter that the Burnt Pine herd constituted only a minor part of the hunting potential for the West Moberly.  Mr. Justice Williamson relied on the 2005 decision of the Supreme Court of Canada in Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, where the Court stated that a meaningful right to hunt means a right to hunt in the First Nation’s traditional territories.  The area impacted by the First Coal project includes a portion of West Moberly’s traditional seasonal round of hunting caribou, and Mr. Justice Williamson held that it is not an accommodation to say “hunt elsewhere”. 

A key aspect of the decision is the Court’s determination that the honour of the Crown had not been satisfied by the Crown’s delegation to department officials who had not been given the authority to consider fully First Nations concerns, nor the power to accommodate those concerns.  At paragraphs 54 and 55 of the decision, Mr. Justice Williamson states that:

Further, here the Crown has delegated its duty towards First Nations peoples to departmental officials. But in so doing it has not given those officials the authority to consider fully the First Nations concerns, nor the power to accommodate those concerns. The same July 20, 2009, document which states that the Ministry of Energy, Mines and Petroleum Resources recognizes that the cumulative impacts of First Coal’s project upon West Moberly’s traditional territory have been raised by both West Moberly and the Ministry of the Environment, states that it is “beyond the scope of this project to fully assess” those impacts.

The honour of the Crown is not satisfied if the Crown delegates its responsibilities to officials who respond to First Nations’ concerns by saying the necessary assessment of proposed “taking up” of areas subject to treaty rights is beyond the scope of their authority (emphasis added).

The Court stayed the effect of the issuing of the amendment of September 14, 2009 permitting the Advanced Exploration Program and suspended the effect of the licence to cut for 90 days from the date of the decision. Mr. Justice Williamson held that the Crown, in consultation with West Moberly, should proceed expeditiously to put in place within that period a reasonable, active plan for the protection and augmentation of the Burnt Pine herd.  The Bulk Sample Program subject to the first decision was not part of the order because it had in effect been completed at the time of the decision.

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Species at Risk - Incidental Harm Agreements and Permits

Kathleen J. Kendrick, Calgary

The Species at Risk Act (SARA) came fully into force on June 1, 2004.  The goal of the Act is to prevent wildlife species from becoming extinct and to help species at risk recover.  SARA is intended to work with complementary provincial and territorial legislation to protect all wildlife species at risk everywhere in Canada.  The Act applies on federal lands, to aquatic species and to birds under the Migratory Birds Convention Act.  The Act may also apply to provincial lands if it is determined that provincial laws do not effectively protect listed species, or their residences or critical habitat (s. 34).  To date, Alberta does not have endangered species legislation.

The listing process is at the heart of the SARA.  The Act establishes the Committee on the Status of Endangered Wildlife in Canada (COSEWIC).  COSEWIC will make recommendations to government whether a species should be added to the List of Wildlife Species at Risk (List).  The List continually evolves as species are added or removed or their status changes.

Once a species is added to the List, it becomes illegal to kill, harm, harass, capture or take an individual of any extirpated, endangered or threatened species (s. 32).  It also becomes illegal to damage or destroy the residence of (i) one or more individuals of an endangered or threatened species or (ii) an extirpated species if a recovery strategy has recommended the reintroduction of that species into the wild in Canada (s. 33).  There are also prohibitions on destruction of critical habitat (s. 58).  “Residence” means a dwelling place, such as a den or nest that is occupied, or habitually occupied at any time during their life cycle.  In contrast, “critical habitat” means the habitat that is necessary for the survival or recovery of a Listed species.  Critical habitat is identified in the “recovery strategy” or “action plan” for that species.

SARA is currently undergoing a 5 year review that commenced in the spring of 2009 (s. 129).  As part of the 5 year review process, industry has raised concerns regarding the practical application of certain parts of SARA including the automatic prohibitions and section 73 of the Act.

The automatic prohibitions under the Act (including but not limited to s. 32, 33 and 58) create a conundrum for industry.  Many industrial facilities were constructed before the Act came into force (sometimes several decades ago) and may well have unavoidable incidental effects on Listed species.  As soon as a species is listed, a facility with any incidental impact on a Listed species must either shut down or be in immediate non-compliance with SARA.  Although an operator can enter an Incidental Harm Agreement, obtain an Incidental Harm Permit, or enter into a Conservation Agreement, all of these protections take time to finalize and there is nothing in the Act to address non-compliance in the interim period - which may be a considerable amount of time.

Under section 73, the Minister may enter into an “Incidental Harm Agreement” with a company, or issue an “Incidental Harm Permit” to a company.  Incidental Harm Agreements or Permits authorize oil and gas activities that affect a Listed species, any part of its critical habitat, or the residence of its individuals.  The Minister may enter an agreement or issue a permit only if:

(a) the Minister feels that affecting the species is “incidental” to carrying out the activity; and

(b) it is determined that the activity will not jeopardize the survival or recovery of the species.

Incidental harm can be distinguished from “direct” harm.  Direct harm occurs where an activity is intended to do the harm, such as hunting or fishing.

Before an Incidental Harm Agreement can be entered, or an Incidental Harm Permit granted, an applicant must have considered other reasonable alternatives, have taken all feasible measures to minimize the impact, and must substantiate that any harm caused by the activity will not jeopardize the species’ survival or recovery.

The Incidental Harm Agreement and Permit provisions raise the following issues.  Firstly, there are no current policies or guidelines that define – or even illuminate – the meaning of “all reasonable alternatives”, “best solution” and “all feasible measures”.  Secondly, and perhaps more importantly, the maximum term for agreements is 5 years and permits is 3 years - and there are no provisions for renewal of agreements or permits.  This resulting disconnect between the life of an agreement (5 years)/permit (3 years), and the life of an oil and gas project (20 or more years) raises serious concerns for the industry.  Thirdly, Incidental Harm Agreements and Permits apply to a single species only.  Oil and gas activities can be spread out over large geographical areas and may impact more than 1 species.  Far from streamlining the regulatory process, the current legislation requires proponents to apply for Incidental Harm Agreements and/or Permits for each species it may incidentally impact – which may be a number of species, depending on the development.

Although the Act provides for Incidental Harm Agreements and Permits to authorize activities affecting Listed species in any part of their residence or critical habitat, no such agreements or permits have been issued to date.  Nor have any authorizations for industrial activities been issued under s. 74 or 78 of the Act.  Practically speaking, there are no effective mechanisms under the Act for managing industrial activities.  The lack of an effective, transparent permitting process that incorporates input from industry means that critical habitat simply becomes an exclusion area for industrial activity.

It is hoped that ultimately, SARA will be amended to provide for a more efficient mechanism for authorizing resources development activities that incidentally impact species at risk or their residence or critical habitat.  Suggestions include:

• amending the Act to allow for agreements and permits that are either not restricted by an end date or that can be automatically or otherwise efficiently renewed;
• amending section 73 to create a new category of authorizations which would apply to more than 1 species and more than 1 activity and which would be applicable for long periods of time;
• developing a policy or guideline that clarifies such key terms as (1) reasonable alternatives, (2) feasible measures, (3) best solution, and (4) jeopardize the survival or recovery of a species; and
• amending the Act to exempt existing facilities from automatic prohibitions, provided they have either applied for a SARA permit, are engaged in recovery planning, or are engaged in the development of an Incidental Harm or Conservation Agreement.

It is hoped that the current 5 year review of SARA will provide an opportunity to correct some of the practical problems for industry that exist as a result of the current drafting of the Act and lack of clear policy direction.

Next issue: Listing and Recovery Planning under SARA

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Major Petroleum Spill in Johnstone Strait in Orca Sanctuary: Due Diligence Lessons for Captains and Barge Owners

Charles W. Bois, Vancouver
Tony Crossman, Vancouver
Sarah D. Hansen, Vancouver

Co-author
Christina Cook (Articled Student)
Miller Thomson Vancouver

A recently reported decision provides useful insight into the due diligence defence.

The Accident

On August 20, 2007 the “Kathy L”, a barge loaded with large logging equipment and 19,453 litres of petroleum products, was towed across the Johnstone Strait.  Part way across the Strait, the barge began to list starboard.  A crew member of the towing vessel saw the barge was taking on water and attempted to engage a water pump.  The water pump failed and the equipment began to slide towards to the crewman.  He scrambled out of the way, but his ankle was crushed in the process.  The barge continued to tilt and sank in the middle of the Johnstone Strait, within BC’s only killer whale sanctuary.  The sinking of the barge caused a major petroleum spill (20,000 litres with a 14 km long oil slick) which resulted in the barge’s owner, Leroy Trucking Ltd. (Leroy Trucking), the owner of the towing vessel, Gowlland Towing Ltd. (Gowlland Towing), and the captain of the towing vessel, Captain Strom, being charged with polluting the waters under the Canada Shipping Act, the Fisheries Act, and the Migratory Birds Convention Act.
 
The Decision

On March 29, 2010, the B.C. Provincial Court found the owner of the barge, Leroy Trucking, guilty of polluting the waters of Johnstone Strait.  Judge Saunderson found both the towing company, Gowlland Towing, and the captain of the towing vessel, Captain Strom, had exercised due diligence in their actions and were found not guilty.

The Evidence

Judge Saunderson heard from numerous expert engineers, navel surveyors, and safety inspectors, who inspected the barge after the accident.  The experts found the barge was in a sorry state of disrepair.  The experts reported there were multiple holes and cracks in the hull, damage to the internal bulkheads compromising the water tight integrity between compartments, and the barge was, overall, not seaworthy.  The experts testified it was only upon their internal inspection that they could accurately see the damage to the barge and see it was not seaworthy; one expert noted “you can’t always judge a book by its cover.”

Judge Saunderson also heard from Ronald Edward (Ted) Leroy, the owner of Leroy Trucking. Mr. Leroy testified his company purchased the barge in 2004 and he was totally unaware of the condition of the barge.  Further, the barge never underwent a marine survey to ensure it was seaworthy, and at no time did he inform the towing company that he was unaware of the condition of the barge.  

Judge Saunderson heard that on the day of the accident, an employee from Leroy Trucking loaded the barge.  Captain Strom and another crewmember were on board the barge while it was being loaded and did a general walk about to ensure the deck was in order.  Judge Saunderson heard testimony that it was not within the normal course of a captain’s walk about to inspect the barge for sea worthiness or to go below deck.  Judge Saunderson accepted these submissions. 

Guilty Verdict – Ted Leroy Trucking Ltd.

The Court found that there is an implied term in all towing contracts that the barge to be towed shall be in seaworthy condition and is fit for towage service.  In considering Mr. Leroy’s testimony that he knew nothing of the condition of the barge, Judge Saunderson found him to be at best negligent, more likely wilfully blind, and at worst lying to the Court, as to his knowledge of the barge.  Based on this finding, Judge Saunderson held Leroy Trucking guilty of all charges. 

Not Guilty Verdict – Gowlland Towing Ltd. & Captain Strom

Although the Crown argued Captain Strom had a duty to conduct a thorough investigation of the barge to ensure it was seaworthy, the Court found Captain Strom was not under a duty to inspect the barge.  Unless Captain Strom had actual notice of the condition of the barge, which he did not, he was under no obligation to inspect it for seaworthiness.  Further Captain Strom acted reasonably by instructing a crewman to monitor the barge.  He found that on the balance of probabilities, Captain Strom had exercised due diligence. 

The Crown argued Gowlland Towing should have had a system in place to ensure all barges to be towed were inspected for seaworthiness.  Citing the implied “fit to be towed” term in towing contracts, Judge Saunderson found the Crown’s argument to be contrary to the law of tug and tow, and held that Gowlland Towing had exercised due diligence.

Post Judgement

Despite being found guilty of all pollution charges, Leroy Trucking will not likely be responsible for the salvage effort and remediation of the Johnstone Strait.  Leroy Trucking, previously one of the largest logging subcontractors on Vancouver Island, went into bankruptcy in September 2008.  So far, the Province has funded the $2.5 million salvage effort.  Many are speculating that with the insolvency of Leroy Trucking, the Province, meaning the tax payers, will fund the clean up and remediation of Johnstone Strait.

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What's Happening at Miller Thomson

On June 2, Teresa Meadows chaired the Alberta Chamber of Resources Environmental Forum on Regulatory Streamlining in Edmonton.

Aaron Atcheson chaired a session at the South-Western Economic Alliance Assembly in London on June 4 on “Developments in Water Treatment Technologies”.

Aaron Atcheson chaired an Ontario Bar Association breakfast in London on June 14 entitled “When Fences are not Enough: Suing Your Neighbours on Environmental Claims”. Bryan Buttigieg was one of the speakers.

On June 23, Teresa Meadows presented her paper entitled “Up in the Air: Understanding the Effects of Emerging Climate Change Law and Policy on Your Business” at the Air and Waste Management Association’s Annual Conference and Exhibition in Calgary.

In June, Teresa Meadows’ article on Alberta’s lessons for CleanTech companies entering the carbon markets was published in the June/July issue of Solid Waste Magazine.

Tamara Farber published an article on recent changes to Ontario’s regulatory framework relating to brownfield redevelopment in the June/July 2010 issue of Canadian Consulting Engineer entitled “Developing Brownfields: Regulation Changes in Ontario have a Big Impact”.

Teresa Meadows is co-chairing the Canadian Institute Conference on Securing Approvals for Mining and Exploration Projects in Toronto from September 23-24 and will be presenting on “Overcoming Mining Cost Overruns and Back-Peddling by Properly Planning for Environmental Assessments (EAs)”.

Sandra Gogal will lead a Workshop on “Mastering Impact Benefit Agreements (IBAs): Structuring Strong Aboriginal Partnerships with Proponents and Governments for Mining and Exploration Projects” at the Canadian Institute Conference on Securing Approvals for Mining and Exploration Projects on September 23-24 in Toronto.

On October 4-5, Sandra Gogal will participate in Insight’s 9th Annual Aboriginal Law Conference in Toronto.

On October 28-30, Sandra Gogal will participate in a conference in Ottawa hosted by the Canadian Council of International Law 2010.

Aaron Atcheson will be speaking at the Canadian Wind Energy Association's Annual Conference and Trade Show in Montreal from November 1-3 on “FIT to be Tied: Ontario's Environmental Review Tribunal”, discussing the role of the ERT on appeals of Renewable Energy Approvals.

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