Commission on the Reform of Ontario's Public Services

Move towards prevention and a polluter-pay principle for contaminated sites
Under the Environmental Protection Act (EPA), the province has the “right to compensation”
for loss or damage incurred as a direct result of a spill, and for all reasonable costs and
expenses incurred for a cleanup. This can be difficult when the owner of a contaminated site is
insolvent, no longer exists, or lacks sufficient funds to pay for the cleanup. This can occur
when property ownership reverts to the Crown, which in effect transfers the responsibility for
cleanup back to the province.
The province can take legal action to ensure the polluter pays for damages or property
ownership can revert to the province, with the responsibility to clean up. While financial
assurance measures exist under the EPA, they do not require companies to take into account
the entire cost of cleaning up a site.
As committed to in the 2011 Ontario Budget, the Ministries of the Environment, Natural
Resources, Northern Development and Mines (MNDM), and Infrastructure are currently
undertaking an enterprise-wide review of contaminated sites, with the goal of consolidating
environmental cleanup activities across the province. The review is expected to include
options for a new governance model, financial management and implementation.
The MOE uses Financial Assurance (FA) as an instrument to reduce the financial risk to the
province resulting from environmental contamination. Currently, the ministry holds
approximately $37 million in cash in addition to other non-cash forms of assurance such as
letters of credit and bonds. 12 The FA requirement applies only to select sites and industrial
sectors, addressing a small portion of the overall risk exposure. The existing legislation 13 does
not provide an effective policy framework for a robust FA program covering all relevant
industrial sectors. Proponents of advanced exploration and mine production projects are
required to provide FA for the costs of eventual site rehabilitation under the Mining Act.
At present, MNDM holds $33 million of FA in cash, in addition to other non-cash forms,
pursuant to projected rehabilitation costs for mine closure plans. 14
One example of a successful program is the Superfund, a U.S. Environmental Protection
Agency program with federal authority to clean up uncontrolled hazardous waste sites and
respond to oil and chemical spills. Funding is provided by the respective industries — primarily
the chemical and petroleum industries. Since the start of the program in 1980, the Superfund
has paid for the cleanup of thousands of hazardous sites and oil and chemical spills.
12 Ministry of the Environment financial records.
13 Namely, the Environmental Protection Act and Ontario Water Resources Act.
14 Public Accounts of Ontario 2010–11, p. 4-8.
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