Minimizing and Managing Environmental Liabilities John Georgakopoulos Partner Willms & Shier Environmental Lawyers LLP www.willmsshier.com Land & Development Conference Developing Challenged Sites: The Need for Innovative Strategies and Patience May 13, 2014
Outline • Environmental Liabilities • regulatory • civil • Minimizing and Managing Environmental Liabilities • allocate risk when purchasing contaminated properties • records of site condition • environmental insurance
ENVIRONMENTAL LIABILITIES
Environmental Condition of Property • Understand the environmental condition of the property • what contaminants are present? • do the contaminants exceed Ministry of Environment (MOE) standards? • is the contamination delineated? • is the contamination migrating off-site?
Regulatory Liability • MOE can issue orders • to current/former owner/occupier or person who had or has charge, management, and control of a property • requiring a person to investigate, remediate, prevent further migration, conduct on-going monitoring, remove waste from site, clean up spills, reimburse the MOE for their work
Regulatory Liability Cont’d • MOE can prosecute for offences under environmental statutes • offences include failing to comply with an order or contravening an Act or regulation • convictions can lead to fines and/or imprisonment
Director and Officer Liability • Statutory duties for D&Os under environmental statutes • Can be issued orders and/or prosecuted • No fault liability • “Corporate veil” does not protect
Civil Liability • Risk of lawsuits • Contamination is migrating off- site, “flow through” property, land transactions • Causes of action • common law torts – nuisance, trespass, strict liability ( Rylands v. Fletcher ), negligence • breach of contract – agreements of purchase and sale • Damages • costs to investigate, remediate, and prevent further migration, “stigma” or diminution in property value, health risks, business losses, loss of use and enjoyment, contribution and indemnity
MINIMIZING AND MANAGING ENVIRONMENTAL LIABILITIES
Allocate Risk when Purchasing Contaminated Property • Obtain full and timely disclosure • Right of access and inspection • Ensure access to property, records, employees • Seek full warranties for environmental condition • Indemnities, security, releases • Specify proposed future use of property
O. Reg. 153/04 • Record of site condition (RSC) • required by Chief Building Official to change to more sensitive land use • might be required by municipalities, lenders, purchasers
What is an RSC? • Certified by “qualified person” that property is suitable for proposed use • “Qualified person” defined by O Reg 153/04 • Filed on the Environmental Site Registry • Director has 30 days to • acknowledge RSC will be filed • give notice that RSC does not comply and cannot be filed • give notice that Director will conduct a review to determine if RSC can be filed
RSC Liability Protection • Provides protection from specified regulatory orders • No protection from civil liability • No protection where contaminants migrate off-site • MOE retains emergency order powers
Environmental Insurance • Commercial General Liability typically has pollution exclusion • D&O Liability policies typically exclude environmental matters • Insurers offer Environmental Impairment Liability policies
How to Minimize and Manage Environmental Liabilities? • Understand environmental condition of the property • Determine and understand environmental risks and liabilities • Obtain protections and allocate risks, where possible • Ensure potential environmental risks and liabilities are within your risk tolerance
Contact Information John Georgakopoulos (416) 862-4826 jgeorgakopoulos@willmsshier.com Willms & Shier Environmental Lawyers LLP www.willmsshier.com
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