What environmental rules apply when I buy or sell a dry cleaning business in Ontario?

This page covers Ontario only; if the shop is somewhere else, check the rules where it operates. Ontario’s environmental rules reach a dry cleaner through the land and the chemicals, and the record of site condition rules below are triggered by a change of land use, not by the sale of a business. Some of what circulates online is also out of date. The questions for a buyer or a seller are what the Environmental Protection Act and its regulations say about the property, who can still be ordered to deal with contamination, and which older rules have gone. The federal tetrachloroethylene rules also apply in Ontario and are covered in buying a dry cleaning business in Canada.

The old Dry Cleaners regulation is gone

Ontario e-Laws carries a note that O. Reg. 323/94 (Dry Cleaners), made under the Environmental Protection Act, was revoked on January 1, 2020 by O. Reg. 460/19. A guide, checklist or broker summary that tells you to comply with it describes a regulation no longer in force. This page does not say what replaced it, because that has not been confirmed from a source read for this page; ask the Ministry of the Environment, Conservation and Parks what applies to the equipment and chemicals in the shop you are looking at, and ask the seller which rules the shop has been following since 2020. The revoked regulation is still named elsewhere: O. Reg. 153/04 defines “dry cleaning equipment” by reference to it.

Dry cleaning land and a record of site condition

A record of site condition is a document an owner may submit under section 168.4 of the Act for filing in the Environmental Site Registry, with a qualified person’s certifications about environmental site assessments of the property. Under section 168.3.1(1) of the Act, subject to subsection (2), a person shall not change the use of a property from industrial or commercial use to residential or parkland use, or in a manner the regulations prescribe; subsection (2) lifts that bar only where a record of site condition has been filed in the Registry for the property and it specifies the use the property is being changed to. The trigger is a change of land use, not the sale of a business. Section 32(1) of O. Reg. 153/04 adds that a phase two environmental site assessment is required for submitting a record of site condition if the property is used, or has ever been used, in whole or in part, for the operation of dry cleaning equipment, subject to the exceptions in section 32(2) and (3). Table 2 of Schedule D to the same regulation lists the operation of dry cleaning equipment, where chemicals are used, as a potentially contaminating activity.

What a filed record changes, and what it does not

Section 168.7(1) of the Act provides that, if a record of site condition is filed under section 168.4, no order shall be issued under the sections it lists, to the persons it lists (including the person who filed it, a subsequent owner and people in occupation or control after filing), for a contaminant discharged before the certification date and present then. That protection is subject to the conditions and exceptions in section 168.7, including one that applies where the actual use differs from the use in the record. If no record has been filed, none of this protection is in play. Ask the seller whether any record of site condition exists for the premises and read it, rather than assuming one does. If the seller has none, the premises have no filed description of their condition, and that is a gap to price into your questions, not a finding that anything is wrong. If one is prepared later, the regulation’s dry cleaning provisions mean a phase two assessment would be part of that work unless an exception in section 32 applies.

A seller is not automatically outside an order after closing

Section 18(1) of the Act lets the Director order a person who owns or owned, or who has or had management or control of, an undertaking or property to take steps the section lists. The Director may do so where, under section 18(2), the Director is of the opinion on reasonable and probable grounds that the requirements are necessary or advisable to prevent or reduce the risk of a discharge of a contaminant, or to prevent, decrease or eliminate an adverse effect the subsection describes. For a seller, that wording means the end of the sale is not necessarily the end of environmental exposure. For a buyer, it means a prior operator and the current one can both appear in the Act’s language. How a purchase agreement allocates that exposure is a question for a lawyer. Whether taking over the lease, or buying only the assets, changes a buyer’s position under the Act’s wording about who owns or has management or control of a property is a question to put to that lawyer.

• Ask whether any record of site condition has been filed for the premises, and for the phase two assessment behind it
• Ask which environmental rules the seller says applies today, given that O. Reg. 323/94 was revoked in 2020
• Ask for the shop’s federal tetrachloroethylene records if perchloroethylene is or was used
• Ask whether any Ministry order, inspection or correspondence exists for the premises

Both sides can find the sale sequence in selling a laundromat or dry cleaning business in Canada.