April 15, 2008

Environmental Law

Brownfield developers need to look into future to mitigate legal risks, expert says

SAUL CHERNOS

correspondent

Brownfield developers need to pay attention to new environmental rules and look well into the future in order to mitigate legal liability and risk, says an environmental law specialist.

“Any type of serious pronouncement or prediction about what governments might do is very difficult to do,” said Bryan Buttigieg, a lawyer with Miller Thomson who spoke at an industry seminar in Toronto last week.

“You don’t know what the winds of change will bring. There are pressures on politicians in so many different areas even with all the best of intentions.”

A case in point is the Clean Water Act. “It’s sitting below the surface right now, but in the next couple of years you’re going to be talking about it,” Buttigieg said, explaining that industrial sites were often located near water, for close proximity to transportation, and this raises all kinds of potential issues regarding pollution.

A recurring theme throughout the conference was that all parties involved in brownfields, whether a previous or a new property owner, a developer, a municipality, or even in some cases an arms-length party can potentially be held responsible for problems that stem from activities that were perfectly legal when they occurred a long time ago.

“Brownfields are a problem not only for current owners but also for future owners,” he explained. “Pollution tends to be invisible. The extent of contamination is hard to see and hard to measure. You’re dealing with effects that can last over a lifetime.”

Scientific understanding is also ever-changing. “What is defined as safe has, as we all know, changed over time,” Buttigieg said.

He added that the eventual sale of a property doesn’t necessarily clear previous owners or contractors or other parties from civil liability.

Though agreements of purchase can transfer the cost and risk of contamination to a purchaser, this does not apply to future claims by neighbours, regulators or other third parties.

Each jurisdiction has different rules when it comes to devising strategies to minimize risk. In Ontario, a record of site condition registers details of known contamination.

“It’s one of the few ways you have to communicate down the chain of title to future owners as to what it is you are leaving behind,” Buttigieg said.

“Disclose whatever you can, and make it available as widely as possible,” Buttigieg said.

A risk assessment costs money up-front but can be a useful tool for disclosing that a property is deemed suitable for a particular use, he said.

At a panel addressing brownfield owner issues, Ed Charlton, real estate manager for Imperial Oil, said liability concerns are a big reason owners are sometimes reluctant to sell their properties.

Older owners sometimes find themselves pursued legally when subsequent owners or other parties such as developers are no longer financially solvent or cannot be found.

“Parties with deep pockets are particularly vulnerable,” Charlton said. “It’s simply not fair.”

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