Millions of Dollars in Federal Pollution Fines Sit Unused in Conservation Fund: Audit

Minister of Environment and Climate Change Steven Guilbeault rises during question period in the House of Commons on Oct. 21, 2022. The Canadian Press/Adrian Wyld

Millions of dollars collected by the federal government through fines levied on big polluters have sat unused in a conservation fund intended to be used for environmental initiatives, a recent audit found.

The Environmental Damages Fund (EDF), managed by Environment and Climate Change (ECCC) Minister Steven Guilbeault’s department, was established in 1995 to use funds from environmental fines for “projects that support restoration of damage to the natural environment and wildlife conservation.”

Since 2014, the fund has amassed nearly $250 million, but only $108.8 million has been used on conservation projects, according to an ECCC report titled “Evaluation of Environmental Damages Fund Evaluation,” as first reported by Blacklock’s Reporter.

“Program capacity has not kept pace with the growth in the number and value of awards that are directed to the program,” auditors wrote in the report.

“As a result, the timing between awards received and funds disbursed has been growing. The program’s annual closing balance is steadily increasing.”

The report also said the fund is managed by such a small number of ECCC employees that it has created “an unnecessary administrative burden,” especially since money coming into the fund has increased greatly over the past 10 years.

“The revenue from awards and thus, the funds available for disbursement, have increased significantly in the last 10 years,” it said.

The largest fine contributing to the fund came from Volkswagen in January 2020 after its breach of the Environmental Protection Act. It was worth nearly $197 million.

“The unprecedented size of the fine created unique demands on the program during the evaluation period,” the report read. “Overall, there has been a significant increase in the number and the amount of awards.”

Shortly after the fine was levied against Volkswagen, then-Parliamentary secretary to the Environment Minister Peter Schiefke told the House of Commons that the funds would be used “to pay for projects that focus on improving Canada’s environment.”

Fund Use Questioned

MPs on the Commons Standing Committee on Environment and Sustainable Development last year questioned federal bureaucrats about the usage of the EDF.

“I'd like to know who determines where the money paid into this fund goes,” said Bloc Québécois MP Monique Pauzé on Feb. 22, 2021. “Do you have a plan to determine if this money is going to one area rather than another?”

Anne-Marie Pelletier, ECCC’s chief enforcement officer, said the money would be used toward “climate change impacts.”

“Every time a fund is allocated to this pool, there has to be a set of criteria that meet Environment and Climate Change Canada’s objectives. It’s all under that chapeau. In this instance, it’s about air quality and climate change,” Pelletier said.

Pelletier also told the committee that the fund works “very well.”

“The public prosecutor makes a recommendation, but it is still through the courts that these recommendations are made. The decisions are made by the courts and they’re working very well,” she said.