MUNICIPAL AND PLANNING LAW REPORTS 46 M.P.L.R. (2d)

MUNICIPAL LIABILITY for CONTAMINATED LAND

Anthony E. Fleming

Under a philosophy of local responsibility for local environmental impacts, Ontario municipalities are becoming responsible for an increasing range of environmental protection issues. Municipalities have responsibility for septic system approvals and enforcement, and will soon have jurisdiction to pass by-laws regulating waste management, nuisances, noise, odours, dust, and vibrations. Municipalities already face the pressure of downloading in the area of contaminated land. Planning Act provisions and provincial policy statements create an obligation on municipalities to address public health and safety issues that arise when contaminated lands are redeveloped. The duty of care imposed upon municipalities means that whenever municipalities establish or implement policies to govern the redevelopment of contaminated lands, liability in negligence may arise. In this article municipal liability where contaminated lands are redeveloped will be examined, as will the impact of the Ontario Ministry of Environment's Guideline for Use at Contaminated Sites in Ontario.

Municipal Liability

Should a municipality require decommissioning of contaminated sites, and if so, to what extent? The Planning Act directs municipalities to exercise their planning powers to protect the public health and safety1 and to have regard to a provincial policy that contaminated sites should be restored to ensure that the proposed use will not cause an adverse effect.2 Municipalities have the authority to develop by-laws requiring that contaminated sites be restored before redevelopment.3

The Ontario Ministry of Environment (MOE) has developed the Guideline for Use at Contaminated Sites in Ontario, February 1997 (the guideline), to assist proponents who decide to remediate contaminated lands. The guideline makes numerous references to the role of the municipality in restoring contaminated sites before redevelopment.4

It is clear from the guideline that, although permissive, the burden for forcing the issue of contaminated site remediation in Ontario has now been effectively placed on municipalities. The obligations under the guideline, Planning Act, and Provincial Policy Statement, in combination with the established case law regarding liability for building inspections,5 create a legal duty of care to protect the health and safety of persons relying on municipal approval for land redevelopment. To discharge their obligation to protect public health and safety, municipalities must establish some policy to govern redevelopment of contaminated lands.

Liabilities that may arise from such exercises will soon be framed by s. 331.3 of the Better Local Government Act (Bill 86), which provides:

Section 331.3 essentially codifies the body of case law relating to regulatory negligence. True policy decisions are immune from negligence claims and only operational actions are subject to negligence claims. The distinction between operational and policy decisions is, however, difficult to discern. In general, policy decisions involve planning, allocating resources, and balancing factors such as efficiency or thrift and greater discretion, and operational decisions involve implementation of policy, especially when criteria exist against which conduct may be measured.6 Section 331.3 is designed to give municipalities more freedom to make policy and govern without concern for liability in tort.

Contaminated Lands Policy

To discharge effectively its obligations to protect public health and safety, a municipality must, at a minimum, make a concerted effort to consider how contaminated lands will be addressed as part of planning approvals and develop policies consistent with fiscal and human resources to discharge its duty to protect public health and safety and prevent adverse effects.7 A failure to consider whether contaminated land policies are necessary or appropriate will not be immune from negligence claims.8 It is unlikely that such a failure will be characterized as a good faith exercise of discretion within the definition of immune policy decisions under s. 331.3. Only when considerations of budgets, balancing competing interests, and other traditional indicies of a policy decision form the bases of a decision is it likely that such decisions will be immunized. The initial consideration and decision respecting contaminated lands policy is critical with respect to limiting the scope of municipal liability.

To protect public health and safety, a municipality must be able to identify potentially contaminated sites. To determine whether a site is contaminated, a municipality may establish a list of potentially contaminated properties, list types of past property uses that might have led to the contamination of the property, or identify general geographic areas within the municipality where contamination is likely. For sites identified as contaminated, the municipality must determine which land use planning controls are appropriate to identify and mitigate potential risks to human health or safety posed by redevelopment. Effective land use controls can limit the uses of sites to ensure that the proposed use is compatible with levels of contamination and ensure that any change in use is similarly compatible.

Once policies respecting contaminated lands are in place, the municipality must turn its attention to implementation. Implementation of policy is the area of greatest exposure to liability. Implementation is typically characterized as an operational aspect of municipal governance and will therefore not be immune under s. 331.3.9 A municipality may utilize zoning by-laws, holding provisions and site plan approvals to implement contaminated lands policies. A municipality also has the authority under s. 34(1)¶3 of the Planning Act to establish by-laws to regulate redevelopment of contaminated lands. Developing by-laws to restrict the use of contaminated property provides the municipality with an additional avenue of control through building permits. In the absence of a "law" prohibiting development on contaminated sites, a building permit cannot be withheld simply because a property is contaminated. Non-compliance with the guideline is not a violation of a "law," and therefore a building permit must be issued despite the presence of contamination. Using its by-law powers, a municipality can require site restoration before issuing a building permit, thereby increasing its control over the redevelopment of contaminated lands. The best defence against claims that a municipality was negligent in its implementation of planning approvals, as in most cases of negligence, is to ensure that each employee and official involved in the planning process is aware of contaminated lands policies and is trained in all necessary procedures.

To what extent a municipality should become involved in the site restoration process has tremendous implications with respect to negligent implementation of contaminated lands policies. The municipality must balance its obligations to protect the health and safety of the public with issues of liability and concerns over becoming a guarantor of a site remediation process over which it exercises no direct control.

The framework for contaminated lands remediation in Ontario begins with the Environmental Protection Act (EPA). The EPA grants the MOE statutory authority to order the clean-up of contaminated lands.10 In practical terms, the MOE will not generally order the clean- up of property unless the contamination poses a potential risk to human health or is migrating off site. Under most circumstances owners are generally responsible for conducting site remediation, usually at the request of neighbours, lenders, or the municipality. Although not mandatory, the guideline has been developed to create uniform clean-up criteria and processes to govern contaminated land remediation across the province. The guideline consists of land use categories and a series of criteria for allowable concentrations of contaminants in soil and groundwater for each category. Proponents may choose to remediate to background levels (similar to those found in uncontaminated parkland and agricultural land) to the generic criteria (designed. to prevent adverse effects from contaminants), or they may conduct a risk assessment and develop site-specific criteria.

Municipal reliance on remediation standards as established in the guideline should be sufficient to .discharge a municipality's obligation to protect public health and safety and to prevent adverse effects. The term "adverse effect" is used in the Provincial Policy Statement and is defined in the EPA. "Adverse effect" includes such impacts as impairment of the quality of the natural environment for any use that can be made of it: injury or damage to property, animal, or plant life; harm or material discomfort to any person; and impairment of the safety of any person.11 The remediation criteria developed in the guideline were designed to "provide protection of human health. . . from potential adverse effects associated with existing or future exposure to contaminated soil, sediment and groundwater."12 The use of guideline criteria and the Provincial Policy Statement therefore complement each other. The guideline itself advocates using the criteria- established therein to trigger the exercise of municipal land use approval mechanisms to restore contaminated land.13 Both the Provincial Policy Statement and the guideline implicitly direct municipalities to make use of the clean-up criteria provided in the guideline. It is highly unlikely, given this structure, that a decision to rely on the provincial guideline criteria could be challenged as negligent.

Most potential claims in negligence are likely to arise not in establishing clean-up standards, but in ensuring that remediation has occurred and is acceptable. Three options are available to a municipality to verify whether remediation has occurred: rely on the developer to complete the necessary work; require a record of site condition (RSC) as set out in the guideline; or require an RSC and then look behind the RSC to assess whether it is acceptable. The acceptability of the various options will depend on how the decision is reached and whether the decision can be characterized as one of policy according to s. 331.3. What must be balanced is the reasonableness of relying on the developer or RSC and the potential liability of taking responsibility for verifying remediation efforts.

Unlike under the previous decommissioning guidelines, the MOE will no longer advise proponents of the suitability of their remediation plan and will not issue a "sign off" letter indicating that the MOE has reviewed the process and is satisfied with the clean-up. Now that ministerial "sign-off" for remediation is no longer available, municipalities must look to consultants and landowners for assurances that lands have been properly remediated.

The RSC provided for in the guideline is a summary of the remediation process and sworn affidavits from the landowner and consultant who performed the clean-up. The affidavits confirm the clean-up process and allow those who may acquire an interest in the property to rely on the RSC.

The RSCs that have been submitted thus far have not proved to be very accurate. In a recent sampling of seven sites by the MOE in a random audit, six did not meet the clean-up criteria established in the guideline.14 Given that situation, municipalities may legitimately question how they can verify compliance with contaminated lands policies without assuming the potentially onerous burden of reviewing and approving the RSC.

Mere reliance on a developer, in the absence of an RSC, may be insufficient to discharge the duty of care owed by a municipality in certain circumstances. In the absence of compelling policy reasons, not requiring an RSC could be considered a failure to supervise even minimally the remediation. To protect the public health and safety, it seems to be reasonable for a municipality to require a developer to prepare an RSC. Requiring an RSC is an important indicator that the municipality is taking reasonable steps to ensure the protection of individuals who might rely on its approvals.

To what extent an RSC should be relied upon is more difficult to answer. A policy of reviewing an RSC for more than compliance on the face of the record may expose the municipality to increased liability and may transform the municipality into a guarantor of the adequacy of the remediation process. When a municipality decides to review an RSC for accuracy and compliance with the guideline, it must ensure that it has the human, technical, and financial resources necessary to perform that function without negligence. A policy of internally reviewing RSCs may increase exposure to liability as such an activity may be categorized as "operational" and would therefore have to be performed without negligence.

Municipalities would be better advised to require the developer to submit an independent third-party peer review of its RSC as a condition of submitting planning applications. Peer reviews provide added comfort that an RSC is accurate while transferring the onus for preparation and the expense on to the developer. The uncertainty of what is and is not a policy decision is quite apparent in this .circumstance. It is not clear whether hiring a consultant to conduct peer reviews on behalf of the municipality would be considered a policy or operational decision. If the consultant could he characterized as exercising an inspection function akin to a building inspector, it is likely that the activity would be considered operational. A decision to require peer reviews to be conducted by the developer is most likely a policy decision. The distinction is a fine one. The operative consideration is the level of control over implementation. Implementing a policy is an operational action and must be performed without negligence. A decision to require the developer to submit a peer review, if made on the basis of good faith and with due regard to traditional policy considerations, should be regarded as a policy decision regarding how best to structure municipal affairs.

Conclusion

The municipality has a legal duty to protect public health and safety from hazards associated with the redevelopment of contaminated lands. In exercising its planning approval authority, the municipality has a duty to have regard for the public interest in remediating contaminated lands. At a minimum, municipalities should have a policy in place to identify potentially contaminated lands and require compliance with the guideline as a condition of planning approvals. Further safeguards must be determined on a case by case basis depending on what level of comfort and liability a municipality is prepared to accept. Any decisions to limit how contaminated lands policies are implemented should be discussed and recorded, especially with respect to what factors were considered and how decisions regarding implementation measures were reached. In the area of implementation, municipalities must ensure that all persons responsible for implementing contaminated lands policies are fully aware of policies and their implications, and they should receive training in how to process applications.

The guideline can be an invaluable resource to municipalities struggling with how best to protect the public health and safety .with respect to contaminated lands. Although the guideline may increase the obligations imposed upon municipalities, it also contains provisions that, implemented properly, can minimize potential municipal liability.

1. Planning Act, R.S.O. 1990, c.P. 13, s. 2 (re-en. S.O. 1994, c.23, s.5; am. S.O. 1996, c.4, s.2)
   
2. S. 3.2.2, Provincial Policy Statement, in effect May 22, 1996
   
3. Planning Act, s. 34(1)3
   
4. S. 9 (excerpts)
   
5. Municipalities have been held liable for the negligence of building inspectors who failed to prevent homes from being built on former landfill sites. See Petrie v. Groome (1991), 4 M.P.L.R. (2d) 182, 45 C.L.R. 132 (B.C.S.C.) [additional reasons at (1991), 45 C.L.R. 132 at 152 (B.C.S.C.)]; Hartnett v. Wailea Construction Ltd. (1989(, 43 M.P.L.R. 298, 3 R.P.R. (2d) 311, 33 C.L.R. 244 (B.C.S.C.); see also Manolakos v. Gohmann, (sub nom. Rothfield v. Manolakos) [1989] 2 S.C.R. 1259, 63 D.L.R. (4th) 449, 41 B.C.L.R. (2d) 374, 1 C.C.L.T. (2d) 233, 46 M.P.L.R. 217, [1990] 1 W.W.R. 408, (sub nom. Manolakos v. Vernon (City)) 102 N.R. 249; Hospitality Investments Ltd. v. Everett Lord Building Construction Ltd. [1996] 3 S.C.R. 605, 182 N.B.R. (2d) 157, 463 A.P.R. 157, 203 N.R. 252, 36 M.P.L.R. (2d) 271; H. David et al. Thompson Rogers on Municipal Liability (Aurora, Ont.: Canada Law Book, 1996) at 70-84.
   
6. Oosthoek v. Thunder Bay (City) (1996), 34 M.P.L.R. (2d) 81, 29 C.L.R. (2d) 157, 30 O.R. (3d) 323, 21 C.E.L.R. (N.S.) 77, 139 D.L.R. (4th) 611, 93 O.A.C. 131 (C.A.) [leave to appeal to S.C.C. refused (1997), 104 O.A.C. 240 (note)]; Swinamer v. Nova Scotia (Attorney General), 19 C.C.L.T. (2d) 233, 20 Admin. L.R. (2d) 39, 112 D.L.R. (4th) 18, 129 N.S.R. (2d) 321, 362 A.P.R. 321, [1994] 1 S.C.R. 445, 2 M.V.T. (3d) 80, 163 N.R. 291; Brown v. British Columbia (Minister of Transportation & Highways), [1994] 4 W.W.R. 194, 20 Admin. L.R. (2d) 1, 89 B.C.L.R. (2d) 1, 19 C.C.L.T. (2d) 268, [1994] 1 S.C.R. 420, 42 B.C.A.C. 1, 67 W.A.C. 1, 2 M.V.T. (3d) 43, 164 N.R. 161, 112 D.L.R. (4th) 1; Just v. British Columbia, 1 C.C.L.T. (2d) 1, [1989] 2 S.C.R. 1228, 18 M.V.T. (2d) 1, [1990] 1 W.W.R. 385, 41 B.C.L.R. (2d) 350, 103 N.R. 1, 64 D.L.R. (4th) 689, 41 Admin. L.R. 161, [1990] R.R.A. 140; Nielsen v. Kamloops (City), [1984] 5 W.W.R. 1, [1984] 2 S.C.R. 2, 10 D.L.R. (4th) 641, 54 N.R. 1, 11 Admin. L.R. 1, 29 C.C.L.T. 97; Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492, [1977] 2 W.L.R. 1024 (H.L.); SEE ALSO David, note 6, at 10-20
   
7. The municipality must exercise reasonably its responsibility to protect public health and safety, which includes considering, at a minimum, whether or to what extent to exercise its authority. See Kamloops, supra.
   
8. Oosthoek, supra
   
9. Brown, supra, at 15-16 D.L.R.
   
10. Environmental Protection Act, R.S.O. 1990, c.E. 19, s.17
    
11. EPA, s. 1(1)
    
12. Guideline for Use at Contaminated Sites in Ontario (Ontario Ministry of Environment, February 1997) at 6; see also Rationale for the Development and Application of Generic Soil, Groundwater and Sediment Criteria for Use at Contaminated Sites in Ontario.
    
13. Guideline, s. 9
    
14. See the MOE website for copies of the audit protocol and results.
    

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