Fact Sheet

August 2007

ENVIRONMENTAL PENALTIES

Environmental penalties are monetary penalties that can be imposed by the Ministry of the Environment when industrial facilities spill. 

Penalties of up to $100,000 per day per violation for every day a facility is in non-compliance can be assessed by ministry directors.  These are the first administrative monetary penalties to be used for environmental compliance in Ontario.
 
Environmental penalties complement the ministry’s existing abatement and enforcement toolkit, which includes education, voluntary abatement, control documents, authorizing documents and prosecution. The primary goal of environmental penalty orders as an abatement tool is to encourage quick and effective compliance.

The ministry’s response to a violation is determined in accordance with its “Compliance Policy: Applying Abatement and Enforcement Tools” (Policy F-2) May 2007. Contraventions are assessed on a case-by-case basis to determine which abatement tool is most appropriate for obtaining quick action to mitigate the effects of the contravention, achieve compliance with environmental laws and improve environmental performance in the immediate and long term. As per the ministry’s compliance policy, environmental penalties will not necessarily be issued for every contravention.

While using the court system to prosecute companies for very serious industrial spills will still be necessary in some cases, the ministry’s ability to level penalties encourages companies to make greater efforts to prevent spills, and provides additional incentives to clean them up quickly.

Legislation and Regulations

The Environmental Enforcement Statute Law Amendment Act, passed on June 9, 2005, enables the ministry to assess environmental penalties. This legislation amends the Environmental Protection Act and the Ontario Water Resources Act.
 
Regulations give the legislation force and effect by providing the framework for assessing the penalties.  The regulatory framework outlines the scope, assessment and implementation of environmental penalties, details the criteria for the use of funds raised through penalties that are designated for community environmental projects, describes the requirements for spill prevention and spill contingency plans and formalizes the requirements for notifying the ministry of a spill.

The environmental penalties regulations will be implemented in two phases.  The first phase will focus on unlawful discharges from industrial facilities to land and water and will be in effect August 1, 2007.  The second phase will broaden the scope to include non-discharge violations (i.e., administrative violations) and will be in effect December 1, 2008.  The specific contraventions subject to environmental penalties are defined in the regulations.

The regulations also specify those facilities that are subject to an environmental penalty.  Environmental penalties apply to facilities that discharge effluent directly to the surface waters of Ontario and are part of one of the nine industrial sectors found in the Municipal-Industrial Strategy for Abatement (MISA) regulations.  These sectors include petroleum, iron and steel, industrial minerals, inorganic chemicals, organic chemicals, pulp and paper, metal mining, metal casting and electric power generation facilities. 

How Penalties Work

Following a contravention from a subject facility that meets the criteria outlined in the Environmental Penalties Regulation, a director of the Ministry of the Environment may consider issuing an environmental penalty order against the non-compliant facility. Ministry staff must take a number of steps to ensure that the penalty is warranted, and that the correct procedures required to issue a penalty are followed. What follows is a description of those steps.

Assessment 

Following an incident, the ministry will assess the situation and apply its Compliance Policy to confirm the nature of the contravention. This assessment will confirm whether consideration of a penalty is warranted.  While contraventions may be immediately recognizable, their potential effects may not be.  The ministry’s initial assessment may take days to several weeks to complete, depending on the complexity of the incident.

Notice of Intention

Following its assessment, the ministry will issue a Notice of Intention to issue an Environmental Penalty Order (EP Order), if the director decides a penalty is warranted.  This notice identifies the contravention and the estimated range of the penalty based on the type of violation that occurred and the potential consequences of the violation.  This is known as the gravity component of the penalty.   Furthermore, where a director determines that a facility has acquired a monetary benefit by not complying with the law, the estimated value of that benefit will be included in the notice. 

This notice will also note the right of the facility to request a review and seek a reduction to the final penalty value based on actions taken by the facility to prevent and/or mitigate the contravention.

Review Period

A facility that has received a Notice of Intention may submit a written request within 15 days of the date of the notice that the ministry review information about the incident. To obtain a reduction in the penalty, the facility’s request must include information regarding the facts and circumstances of the incident and the actions it took before, during, and after the incident. The ministry director will consider the information provided by the facility when determining the final penalty value, including any preventive and mitigative measures undertaken by the facility for possible reductions (up to 35% of the gravity portion)   The facility may also request to meet with ministry staff to further discuss its written submissions before the EP Order is issued. 

Settlement Agreements

The facility may also ask to enter into settlement agreement negotiations with the ministry.  Settlement agreements usually result in a reduction of the penalty, but only when the facility agrees to invest in a ‘beyond compliance project’.  These types of projects include facility-based pollution prevention or pollution reduction projects that aim to yield human health or environmental benefits beyond those required by environmental laws. However, a premium will be applied to receive this reduction. Facilities would be eligible for reductions of up to 75% of the gravity penalty amount for discharge related contraventions and up to 100% for minor (i.e., administrative) contraventions.

Final settlement agreements will be posted on the Environmental Bill of Rights Registry.

Environmental Penalty Orders

If there is no request for review from the regulated person before the deadline, the director may issue the EP Order at the end of the 15-day review period, as reflected in the notice of intent.  If appropriate, the order may include multiple violations related to a single incident.

The final penalty order amount, including the gravity component and any monetary benefit, reflects information received and discussed during the review period, as well as any settlement agreement that may have been reached. 

The order must be issued after the end of the 15-day review period, but before one year has passed after the ministry became aware of the incident.

Appeals

A facility that has been issued an EP Order has the right to appeal it to the Environmental Review Tribunal within 15 days of the EP Order, unless it has agreed not to appeal as part of a settlement agreement. When an appeal is being made to the tribunal, the EP Order is stayed pending its decision.

Payment

The final EP Order states the deadline for payment of the penalty amount.  Unless the EP Order is appealed, the deadline for payment is typically within 60 days of the date of the order.

If payment is past due, the ministry may take steps to enforce payment of the penalty amount that may include filing the order in Superior Court, or refusing or suspending approvals until payment is made.

Public Reporting

By March 31 of each year, the Ministry will publish a report of environmental penalties issued in the previous year. The report will include the name of the person against whom the environmental penalty order was made; the amount of the penalty; a description of the contravention; and whether a settlement agreement was entered into in respect of the order.

Community Environment Fund

Payments collected from EP Orders will be made available to communities to support environmental remediation and restoration projects and other related activities that address damage caused by spills and pollution.

The Community Environment Fund will not be used for costs incurred by third-parties directly related to spills and their clean-up, as the law already requires all costs related to clean-up to be paid by the facilities that spill.

Disbursements from this fund are not expected until 2008/09. Additional information will be provided early next year.

Court Action

The ministry may also take facilities that are subject to EPs to court for alleged violations of environmental laws.  Issuing an environmental penalty order for a violation of the law does not exempt a facility from prosecution in the courts.

If the nature of the incident warrants, the ministry may initiate court actions after an incident.  This process may take place at the same time that the environmental penalty process is underway.

As per the Ministry’s Compliance Policy, very serious violations will be referred to the ministry’s Investigations and Enforcement Branch for possible investigation and consideration for prosecution.

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For further information:
John Steele, (416) 314-6666 Ministry of the Environment
Contact information for the general public: 416-325-4000 or 1-800-565-4923/ www.ontario.ca/environment