Environmental obligations prior to a change in land use
The prudent acquisition of a building or of land requires that certain important steps be completed, such as the due diligence of the building, including title deeds, leases and other contracts relating to the property. The due diligence can also include an environmental assessment of the land. In cases where the property is used for commercial or industrial purposes, and the prospective buyer intends to change the use of land, the environmental assessment of the land could become more than just an option.
In fact, the Environment Quality Act (“EQA”) provides that:
Any person intending to change the use of land where an industrial or commercial activity of a category designated by regulation of the Government has been carried on is required to first perform a site characterization study unless such a study is already available and a certificate of an expert referred to in section 31.65 states that the study meets the requirements of the guide prepared by the Minister under section 31.66 and is still current.
[…]
The carrying on of an activity different from the activity previously carried on, whether it is a new industrial or commercial activity of a category designated by regulation of the Government or any other activity, in particular an industrial, commercial, institutional, agricultural or residential activity, constitutes a change in the use of the land within the meaning of this section[1].
We can suppose, for example, of a real estate promoter who acquires land on which a gas station was operated to turn it into a residential project, or a future tenant who wants to rent part of a property to carry out commercial or industrial activities other than those previously carried out on the land. The person or entity wishing to make such a change of use shall first perform a site characterization study, if said commercial or industrial use is listed in the Land Protection and Rehabilitation Regulation (the “Regulation”)[2].
Once the study has been completed, it shall be transmitted to the Minister of Sustainable Development, Environment and Parks (the “Minister”), accompanied by a certificate of an expert authorized to furnish such a certificate[3]. If a tenant or a future buyer has requested this study, it shall also be transmitted to the owner of the property or the land.
If the site characterization study reveals that contaminants are present in the land in a concentration exceeding the regulatory limit values[4], a rehabilitation plan must be sent to the Minister for their approval.
This plan must “set out the measures that will be implemented to protect the quality of the environment and prevent adverse effects on the life, health, safety, welfare or comfort of human beings or on ecosystems, living species or property. The plan must also set out any measures intended to render the projected land use consistent with the condition of the land. Lastly, the plan must be accompanied by an implementation schedule and, if applicable, a plan for dismantling the facilities present on the land”[5]. It is only once the plan has been approved by the Minister that the change of use can be made.
A nuance is however brought to this obligation to obtain the site characterization study in the case where, for example, a prospective buyer or tenant has previously obtained such study from the owner of the land under the terms of the lease or the promise to purchase. If they already have this study, along with a certificate of an expert stating that the study meets the requirements of the Guide d’intervention – Protection des sols et rehabilitation des terrains contaminés and is still current, a new study will not be required. This is why it is crucial for a prospective buyer to take this study into account in the process of drafting a promise to purchase.
In conclusion, it is important to point out that failure to comply with the provisions of the EQA relating to the obligation to perform a site characterization study and, if applicable, a rehabilitation plan, can lead to significant penalties such as fines, and in more serious cases, imprisonment.
[1] Article 31.53 EQA
[2] Schedule III of the Land Protection and Rehabilitation Regulation (chapter Q-2, r.37)
[3] The list of authorized experts is on the Ministère de l’Environnement et de la Lutte contre les changements climatique’s website at : Experts habilités à délivrer des attestations (gouv.qc.ca).
[4] The limit values are listed in Schedule I and Schedule 2 of the Regulation.
[5] Article 31.54 EQA