What is O.Reg 153/04?
Ontario Regulation 153/04 is the provincial standard for the assessment and cleanup of the environmentally impacted land. Under O. Reg. 153/04, land owners can achieve liability protection from future clean-up requirements through a Ministry of the Environment, Parks and Conservation (MECP) acknowledged Record of Site Condition (RSC). In short, following the process described in O. Reg. 153/04 allows landowners to obtain an RSC, the most common standard of environmental due diligence in Ontario.
All or some of the environmental site assessment phases may be required for obtaining an RSC. O.Reg. 153/04 identifies 71 Potentially Contaminating Activities (PCAs) at sites that warrant extensive investigation prior to the approval of an RSC. An RSC is mandatory for certain property activities, such as changing land use to a more sensitive use (i.e., industrial to residential). It may also be useful in other real estate transactions like rezoning, purchase/sale agreements, and financing, depending on your site and your municipality’s requirements. PCAs include common commercial practices such as automotive repair or maintenance, dry cleaning, landfilling, manufacturing, and pesticide use, among others.
Overall, O.Reg. 153/04 describes several phases of environmental investigation and reporting;
- Phase 1 Environmental Site Assessment (ESA)
- Phase 2 ESA
- Remedial Action and Mitigation
- Record of Site Condition (RSC)
Why Follow the Process?
In the environmental consulting industry, we often hear from clients who find themselves requiring an RSC for a variety of reasons. For example, an RSC is mandatory for certain property development activities and for when the property changes to a more sensitive land use. An RSC may also be useful in other real estate transactions like rezoning, purchase/sale agreements, and financing.
Environmental liability and the requirement for an RSC affects landowners in different ways.
Change of Land Use
Under O.Reg. 153/04, an RSC is mandatory by law any time a property in Ontario changes land use to a more sensitive use. For example, an industrial property that will become residential. This is required to protect future users (who are considered more sensitive) from the previous site history.
Municipal Zoning and Permitting
Another common reason for obtaining an RSC is that a municipality (or another interested party) requires an RSC before they will allow zoning changes or issue permits for a property. Due to the shift in use, a site is required to meet more stringent criteria, so an RSC is necessary before zoning changes are approved.
Over the last few years, we have seen a sharp increase in municipalities requiring RSCs as part of their typical process, even when an RSC is not otherwise required by the regulations set out in O. Reg. 153/04. It is at the discretion of the municipality if an RSC is required, and is often applied to ensure a high standard is met in protecting the land within their jurisdiction.
Some clients find that their property financing is dependent on the site receiving an RSC. In this case, financial institutions are concerned about the environmental liability that may be present on the site. An RSC protects from specific orders regarding sites and can substantially reduce associated liabilities.
Liability Protection & Incentives
Some clients, such as municipalities and private owners, wish to have an RSC in order to protect themselves from specific environmental orders regarding a site. Municipalities may carry properties with an RSC which are in tax arrears (and have not been purchased) for one year without being considered “a person responsible” for the property. This can greatly reduce liabilities to municipalities.
Aside from protection from liability, obtaining an RSC shows a commitment toward a more sustainable future both environmentally and economically. To encourage these positive changes, municipal and provincial governments may provide incentives to their citizens for remediating brownfield properties, particularly when land use changes align with the “Places To Grow” Act. Under Community Improvement Plans. For example, municipalities may provide property tax assistance to offset site remediation costs which may be matched by the provincial government.