What environmental liabilities come with buying a business?

Environmental liability in a business purchase attaches to land and to operations. Which orders can reach you therefore turns on provincial law and on what you take over: the property, the running operation, or only equipment and contracts.

What the exposure looks like

Three kinds of exposure are worth separating. The first is a discharge from the operation itself, such as a spill that has to be reported. The second is contamination already in, on or under the property, whether or not this business caused it. The third is an order or approval already on file against the seller.

How Ontario’s law reaches a buyer

Ontario’s Environmental Protection Act is a useful example. Section 17 lets the Director order a person who causes or permits a discharge to repair or prevent the damage. Section 18 lets the Director, who must hold the opinion on reasonable and probable grounds that the steps are necessary or advisable, order a person who owns or owned, or has or had management or control of, an undertaking or property to take preventive steps such as monitoring, studying and reporting, or developing plans, in relation to a contaminant that may be discharged from the undertaking or that is present in, on or under the property. Section 19 makes an existing order binding on any other successor or assignee of the person to whom it was directed.

Other provinces run their own programs

British Columbia’s Environmental Management Act and Contaminated Sites Regulation set the framework for identifying, investigating and remediating a site. New Brunswick’s program covers release, notification, site assessment, remediation, monitoring and closure under its Clean Environment Act. Saskatchewan follows a risk-based process of notification, assessment, corrective action and a notice of site condition. Who can be pursued, and for what, is set by each province’s own statute.

Asking what is on file

Some provinces will tell you what they hold. Newfoundland and Labrador’s Impacted Sites Management Section searches its files for property owners and purchasers and for their consultants, lawyers and realtors. Ask the relevant ministry whether a similar service exists, and ask the seller for every order, approval and site report. For the checks themselves, see what environmental checks you need before buying.