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Ontario Statistics on Environmental Fines and Penalties


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April 17, 2017 by John Nicholson

Berkley Canada recently published a white paper that provides information on environmental fines and penalties in Ontario for 2016.

In the report, it states that historical evidence shows that fines and penalties have been used sparingly in Canada when compared to Europe or the USA. In notes that in late 2014, Canada’s use of fines and penalties changed dramatically. That year, Environment Canada imposed its largest penalty to date, a $7.5 million fine against Bloom Lake General Partners (a subsidiary of Cliffs Natural Resources) for breaches of the Fisheries Act and Metal Mining Effluent Regulations.

Berkley, an insurance company, notes that that landmark decision attracted significant attention within the environmental and legal community.  The result was a very quick move by industry to limit risk through the use of environmental insurance.

The report is intended to provide readers with additional context regarding how fines and penalties are being used by Canadian regulators post 2014.  To that end, we note the following facts:

1.     Between 1991 and 2009 the average quantum of fines and penalties issued by all federal and provincial regulators in Canada was $1.4 million per year.

2.     Between 1991 and 2009 Ontario issued a total of $14.7 million in fines and penalties (average of $816,667 per year).

3.     In the years 2014 and 2015 Ontario issued a total of $2.9 and $3.2 million in fines and penalties, respectively.

4.     17 large (> $75,000) fines and penalties were issued by all federal and provincial regulators in Canada in 2015. The 17 fines and penalties totalled $3,836,750.

5.     Based on the number of fines and penalties issued in 2015, Ontario was the most active jurisdiction, followed by Alberta and British Columbia.

Examining large (> $75,000) fines and penalties by Province for 2015, Berkley Canada noted the following:

Ontario: $2,418,750 in fines (focus: air emissions such as dust, smoke and chemicals)

Alberta: $745,000 in fines (focus: Fisheries Act)

British Columbia: $540,000 in fines (focus: Fisheries Act)

Newfoundland: $100,000 in fines (focus: waste management)

Ontario saw a 10% increase in the total value of fines and penalties issued in 2015 versus 2014.  Comparing this to the average yearly fines and penalties issued between 1991 and 2009, Ontario saw an increase of 290% in 2015 versus the long term historical average.

In 2015, the value to large fines and penalties outside of Ontario also increased, exceeding historical averages by some $2.4 million.

In the view of Berkley Canada, Canadian regulators are making greater use of fines and penalties than at any other time in the past.  As such, Berkley Canada is of the opinion that this risk should continue to be of particular focus to companies operating in Canada.  Environmental managers and committees should continue to monitor, evaluate and look for ways to improve operations so as to reduce the risk of incurring an environmental fine or penalty.  Lastly, insurance brokers and risk managers should examine the use of environmental insurance as a backstop to a company’s environmental management system.

With regards to environmental insurance, Berkley Canada notes that it is important to understand that carriers make use of a non-compliance or wrongful act exclusion.  This exclusion precludes cover when a pollution condition is caused by an Insured’s wilful action or non-compliance.  As an example: an Insured elects not to operate an emission control device that is required per its air emission permit. The resulting pollution condition (discharge of a contaminant above the applicable regulatory standard) would be excluded from cover via the non-compliance or wilful act exclusion as the Insured deliberately elected not to operate the needed engineering control.

Berkley Canada states in the report that while it should not be surprising that an insurance carrier would exclude loss arising out of a deliberately caused pollution event, the carrier’s intent is quite different when it comes to covering fines and penalties that result from an accidental (as opposed to deliberate) event.  Insurance Carriers offering fines and penalties coverage do intend to insure fortuitous events causing pollution that result in the imposition of fines and penalties.

An insurer’s coverage response is determined on a case by case basis, after careful review of both the particular facts and circumstances of a claim and the insurance policy terms and conditions. The table on the following page summarizes actual recent loss scenarios. We have included a column to help illustrate when fines and penalties cover may be afforded.

Berkley Canada notes in its report that they are not aware of what, if any, insurance coverage was available in these scenarios, but were simply noting the likelihood the facts describe a fortuitous event, and the potential coverage response based on a policy providing fines and penalties cover.


John Nicholson

John Nicholson

John is a cleantech and environmental expert with over 25 years of experience. He is a registered professional engineer and has a Masters degree in environmental engineering.
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