A City of Toronto program could serve as a model: Industrial companies can get significant deductions on their municipal water rates, but if their wastewater has unacceptably high levels of contaminants, the special water rates can be, and are, cut off.

Miller, as well as two former Ontario environment ministers, told the Star change is needed, that government officials in charge of handing out taxpayer dollars should first be required to scrutinize a company’s environmental record to determine if any conditions should be attached to the money.

The ArcelorMittal Dofasco plant in Hamilton violated a key environmental standard for four straight years. In a written statement, the company said it has spent hundreds of millions on its operations since 2010, including repairs to improve the “efficiency and environmental performance” of its plants. Lucas Oleniuk/Toronto Star

ArcelorMittal said in a statement that it continues to significantly invest in repairs, maintenance and upgrades that have lessened the plant’s emissions, improved fuel efficiency and energy consumption, and that show its “corporate commitment to continuous improvement in every aspect of its operating procedures and performance.” It said that it is “dedicated to operating within the regulations.”

If a company continues to violate the wastewater standards even after getting booted from the special water rate, the city may take the offending industrial plant to court. “A company can be fined. We have done that,” Di Gironimo said.

“We cannot just pollute our environment because there is absolutely a cost to that, financially and with our health,” he said.

Di Gironimo said the program is about balancing economic interests with the city’s desire to be an environmentally friendly place that people want to live.

Each one will have to prove it’s in compliance for 12 months before it can re-qualify for the special rate.

Of the 96 industrial companies that qualified for the discounted pricing last year, five got the boot because they did not follow the rules. Those five companies lost a combined total of $2.2 million in savings.

The special water price is a strong incentive for industrial companies, some with annual water bills north of a million dollars, said Lou Di Gironimo, Toronto water department’s general manager.

If the discharged wastewater is non-compliant with the municipal standards, and the company’s too slow to fix the problem, the city will rescind the special water rate.

But to get the special price, companies must, among other things, make sure the wastewater they send to Toronto’s sewage treatment plant does not contain unacceptably high levels of contaminants.

In an effort to keep jobs in the city, Toronto offers certain industrial companies a discounted water rate — 30 per cent off the standard amount paid by regular homeowners.

A carrot-and-stick approach by Toronto’s water department could serve as a model for governments giving hefty payouts to companies that violate environmental standards.

“If you separate environmental compliance from government largesse, you are cultivating contempt for environmental regulations,” Miller said.

While the provincial government says it has been putting environmental compliance clauses in funding agreements for a decade, it could not provide one instance where public funds were stopped or clawed back.

The Ontario government told the Star it will now be looking at measures that would ensure one ministry is not handing companies money while another ministry is trying to rein in their polluting.

“We anticipate improved communication could complement the already strong rules we have in place to prevent persistent environmental problems and make polluters pay,” said a spokesperson for Brad Duguid, Minister of Economic Development and Growth.

The factories in this story make products Canadians rely on — from oil and cement to the steel used to make cars and the pulp needed for paper and diapers. They employ thousands of workers in small towns and cities nationwide. Their success matters to politicians, their constituents and the economy.

Company managers and spokespeople say they react promptly when there is a pollution problem and have invested millions upon millions of dollars on improving their facilities while trying to achieve compliance. Many of the firms tout themselves as stewards of the environment.

At oil producer Suncor, where $354 million in public funds has flowed, there have been hundreds of spills and other environmental violations since 2012 — including an emission of potentially toxic hydrogen sulfide, at nearly 10 times the limit — at Canadian facilities from the Alberta oil sands to its operations off the coast of Newfoundland.

Suncor has received $354 million in public money since 2010 — public money the company says has mostly gone toward increasing biofuel and wind energy production in Canada. The company has also had hundreds of spills and other environmental violations at Canadian facilities from the Alberta oil sands to its operations off the coast of Newfoundland. Jason Franson/The Canadian Press

Suncor said that while its violations are “unacceptable,” public money it received helped the company increase biofuel and wind energy production in Canada.

On Canada’s east coast, New Brunswick-based Irving Pulp and Paper was convicted in 1998 and again in 2010 after pleading guilty to violating the federal Fisheries Act. The fines totaled $125,000, and the company landed in a federal Environment Offenders Registry. The 1998 conviction stemmed from an incident where about 15,000 gallons of green liquor — a pulp production byproduct — discharged into the Saint John River. The company is before the courts on new charges that the mill once again violated the Fisheries Act. Irving has pleaded not guilty.

Irving said the company has worked hard to meet and surpass environmental regulations. A spokesperson pointed to the mill’s solid waste reductions, energy efficiency and the tens of millions of dollars spent by the company on numerous environmental initiatives, including efforts to reduce air emissions.

Both companies received vastly more from governments than they paid in pollution fines.

The public money is most often given to companies as interest-free loans, subsidies intended to make the plants more competitive or environmentally friendly, electricity rebates, payments for services and research grants.

In some cases, polluters have taken their rural host communities to tribunals and court to win corporate tax breaks, draining money from towns’ education funds and other essential services.

Pulp and paper company Domtar, which had 1,800 pollution violations in Ontario from 2011 to the end of 2014, challenged tax assessments, arguing its mills in Dryden and Espanola were valued too high. The cash-strapped towns in the north had to give up huge refunds. Dryden had to pay back nearly $7 million to South Carolina-based Domtar, a company with $5 billion in annual sales. And just this year, the city of Prince Albert, Sask., settled a property valuation dispute with Domtar, resulting in $2.25 million that had been earmarked as education funds going back to the company.

“If a company is going to have its hand out, then the public has a reasonable expectation that it should behave in the public interest.” Gord Miller Former Ontario Environmental Commissioner

A Domtar spokesperson stressed the money was not a tax break but a refund for overpayment of tax that the company was obligated to seek. “A publicly traded company must always operate in the best interest of its shareholders.”

In Ontario, where subsidized plants have routinely violated pollution standards, companies self-report when they exceed a limit. The Star found that government’s most common response is to either assess the situation and conclude the problem was already resolved by the company, or leave it to the company to fix voluntarily.

Environmental advocacy groups say it’s rare for regulators to fine or prosecute these companies, especially in industry-heavy Ontario. Some citizens, tired of waiting for government enforcement, take it upon themselves to collect evidence and file complaints in an effort to hold companies accountable for their pollution.

That these firms repeatedly soared past pollution limits with little punishment reveals the conundrum regulators face when trying to protect the environment:

How tough do you get on environment violators when they are also large employers operating in towns and cities that depend on them for jobs and a tax base to fund schools and other essential services?

In Terrace Bay, Ont., the mayor, who also worked at the pulp and paper mill for 38 years, understands this tension better than most.

This plant in Terrace Bay, Ont., is the main employer in the community. The town’s mayor estimates that it accounts for about half of the town’s tax base. The mill, which emits about 30 chemicals, has the most violations of any factory in Ontario. David Bruser/Toronto Star

In this town of 2,000 people east of Thunder Bay, the mill is the main employer. It is also an emitter of about 30 chemicals, including nitrogen oxides and sulphur dioxide, which can contribute to smog, as well as benzene, a toxin that poses a risk to human health because in large or chronic doses it may cause serious diseases. The mill also has the most violations of any factory in Ontario, the Star found.

Jody Davis, the mayor of Terrace Bay, Ont., worked at the pulp and paper mill for 38 years. He acknowledges that the mill has pollution problems, but he says the plant is also the “economic driver” in the town. Courtesy of Jody Davis

“Truth be known, it was particularly bad last year — the emissions from the mill. People were complaining,” said Mayor Jody Davis, who once worked at the plant as an electrician.

From 2011 through 2014 the mill surpassed provincial pollution limits nearly 2,500 times, Ontario data show. Many of these violations were of odor limits on total reduced sulfur, a chemical blend that makes the air near pulp mills stink like rotten eggs. The mill also violated a dirty smokestack regulation more than 300 times in 2014.

Since 2010, the company has been fined a total of $324,000 for numerous environmental violations, including one case where the company pleaded guilty to seven water pollution offences and paid a $250,000 fine in 2015. During the same time as this pollution streak, the factory owners had received a $113-million bonanza of public cash, including a grant to get green.

The Star left messages with company managers by phone, email and then in-person at the mill, and received no response.

“The mill is the economic driver here,” said Mayor Davis, adding that it accounts for about half of the town’s tax base.

“It’s not like Toronto where you can shut down a business. The impact here would be devastating. The air quality … is a problem that they’re working on. I would hope if there’s any stalling (at the mill) that the government is gently persuading them instead of bold action.”

Across the country, laws and industrial operating permits regulate what factories belch into the air and the wastewater effluent they pour into rivers and lakes.

“Pollutants may have adverse effects on humans and the environment, such as possibly contributing to cancer development,” said University of Toronto chemical engineering professor Charles Jia. “Limits on them are important, and it is justifiable and straight-forward to say there are possible adverse effects as a result of violating a standard.”

While Jia and other scientists agree pollution is potentially harmful, even at low but sustained levels, they also agree that to try to trace dangerous air pollution to certain factories is difficult as there can be multiple sources of dirty air, not just industry.

“The mill is the economic driver here. It’s not like Toronto where you can shut down a business. The impact here would be devastating.” Jody Davis Terrace Bay mayor

What is generally known is that pollution is a big, costly problem.

Smog led to $36 billion in healthcare and other costs in 2015 and more than 7,700 deaths in Canada were attributed to various components of smog, according to a recent report by the International Institute for Sustainable Development.

One of those components — fine particulate matter, made up of small particles that are about 30 times smaller than a hair follicle and can burrow deep into lungs — comes from, among other sources, auto emissions and industries, including pulp and paper. It also contributes to an estimated 560 new lung cancer cases each year, Public Health Ontario has reported. Hamilton had the highest fine particulate matter concentration in the province in 2014, according to Cancer Care Ontario.

Tracking this inhalable particulate matter to individual factories is tough for another reason: While certain smokestack pollutants like sulphur dioxide and nitrogen oxides may become fine particulate matter, it is only after they leave the smokestack and undergo chemical reactions in the atmosphere, said experts at the University of Toronto and provincial public health agencies.

Most of the plants the Star reviewed for this investigation emit both sulphur dioxide and nitrogen oxides — a total of thousands of tons of them each year, according to federal Environment and Climate Change Canada records.

Visit these firms’ websites and a theme emerges. Most believe in “sustainability” and trumpet their environmental stewardship.

Cascades Canada says on its website that it is “Green by Nature.” In Ontario, this maker of recycled packaging and tissue products had 785 violations over four years, all of them at the firm’s beleaguered and dirty mill in Trenton, Ont.

Vice president Hugo D’Amours said that when Cascades bought the Trenton mill it was one of the oldest in Canada. Though “Cascades inherited a difficult environmental situation with the Trenton mill,” a shutdown would have meant 150 lost jobs, he said. He added that the mill was an “exceptional situation” that was not reflective of the company’s overall environmental performance, and that staff worked hard to fix the problem.

“Protecting the environment through sustainable development has always been at the core of our business model,” D’Amours said. “Cascades’ track record is not perfect but we certainly are a leader in our industry.”

Many of the companies said they have spent millions of their own and the public’s money on updated equipment and conservation efforts that have benefitted the communities in which they operate.

Suncor, a crude oil and diesel fuel producer that has had hundreds of spills and environmental violations since 2012, told the Star that the $354 million it got from the public purse went toward projects intended to develop renewable energy or reduce the company’s “carbon footprint.” The funds included $135 million that went toward biofuel production at the company’s ethanol plant near Sarnia. Ethanol is a cleaner burning, renewable resource, Suncor said. The company also said that $40 million more went toward wind power projects.

Suncor says it has used $135 million of public money on biofuel production at its ethanol plant near Sarnia, Ont., along with $40 million for wind power projects. Craig Glober for the Toronto Star

“Climate change is one of the biggest challenges of our time and as a company we will do our part – looking at ways we can reduce emissions while providing the energy the world needs.”

A few companies — like Peter Kiewit Infrastructure Co., which got $1.4 million from Ontario’s transportation ministry, promotes its “environmental stewardship,” and in 2012 released e coli into the environment at 8,500 times the permitted limit — refused to comment. Escherichia coli, also known as e coli, is a bacteria that is not always dangerous. The company had a total of 68 Ontario industrial wastewater violations, most of them in 2012 and 2013.

Meanwhile, a food ingredient manufacturer that had hundreds of industrial wastewater pollution violations at a plant in Port Colborne, Ont., refused to disclose why it got $1 million in public provincial funds, citing a “confidentiality” agreement. The province told the Star the money was to help the company buy equipment that will “boost productivity” and create jobs at another of the firm’s facilities.

One of the subsidies that repeat polluters have received in abundance is an electricity rebate given to big electricity-consuming plants in northern Ontario. The provincial government says the money is handed out so that forestry, mining and steel companies — “cornerstones of the Northern Ontario economy” — can stay competitive and keep jobs. Each eligible firm is required to develop and implement an energy management plan in an effort to become more energy efficient.

Mining company Glencore has received $59 million in these rebates and said the program has resulted in electricity consumption reductions at all its sites. In 2013, Glencore acquired mining firm Xstrata, which had taken in at least $20 million in electricity rebates.

Together, the companies have run afoul of more than 10 different environmental standards.