Hamilton Member of Parliament calls for RCMP investigation of illegal soil dumping

A Canadian Member of Parliament, David Sweet, wants the Royal Canadian Mounted Police (RCMP) to investigate alleged illegal soil dumping in Flamborough, near the City of Hamilton.

According to Mr. Sweet, a Conservative MP representing the federal riding of Flamborough-Glanbrook, the matter of illegal dumping requires the immediate attention of the federal government and the RCMP.

David Sweet, MP

In a open letter to federal Minister of Public Safety, Ralph Goodale, and the federal Minister of Organized Crime Reduction, Bill Blair, the Flamborough-Glanbrook MPP claims that there is illegal dumping of soil at a garden supply store in his riding because of “alleged links to organized crime and related illegal activities.”

“This matter requires the immediate attention of the government and the RCMP,” he said in a letter to Bill Blair, federal minister of organized crime reduction, and Ralph Goodale, public safety minister. 

The garden supply store has faced numerous environmental fines over the years. This includes in 2008, when it was fined $50,000 after it pleaded guilty to violations under the Ontario Environmental Protection Act and the Ontario Water Resources Act. The company was violating several conditions, including not monitoring its wells. 

Recent scrutiny, however, has focused on the dumping of excess soil there. Neighbours say trucks arrive day and night and dump dirt there. Hamilton authorities say there’s an ongoing issue across the city with trucks dumping untested soil from GTHA developments on rural properties. 

Proposed Ontario Rules on Excess Soil

Ontario is proposing changes to the excess soil management and brownfields redevelopment regime.

The changes are designed to “make it safer and easier for more excess soil to be reused locally…while continuing to ensure strong environmental protection” and to “clarify rules and remove unnecessary barriers to redevelopment and revitalization of historically contaminated lands…while protecting human health and the environment.

The changes will include the development of a new excess soil regulation supported by amendments to existing regulations including O. Reg. 347 and O. Reg. 153/04 made under the Environmental Protection Act supports key changes to excess soil management.

Proposed changes include:

  • clarifying that excess soil is not a waste if appropriately and directly reused;
  • development of flexible, risk-based reuse excess soil standards and soil characterization rules to provide greater clarity of environmental protection;
  • removal of waste-related approvals for low risk soil management activities;
  • improving safe and appropriate reuse of excess soil by requiring testing, tracking and registration of soil movements for larger and riskier generating and receiving sites;
  • flexibility for soil reuse through a Beneficial Reuse Assessment Tool to develop site specific standards;
  • landfill restrictions on deposit of clean soil (unless needed for cover).

From an environmental perspective, the proposal’s call for some regulatory key points are quite beneficial. Registering and tracking the excess soil movement from excavation source to receiving site or facility will minimize illegal dumping. Transporting and illegal dumping of the excess soils is a source of concern because excavated soil is a source of trapped Greenhouse Gases (GHG). 

The proposal is posted for comment on the Environment Registry until May 31, 2019. To read the full proposal, click here.

Quebec’s Action on Illegal Soil Dumping

The Quebec Government recently announcement that it will adopt the regulation that will include the implementation of a system in which the movement of contaminated soil will be tracked in real time. Under the tracking system, the site owner, project manager, regulator, carrier, and receiving site, and other stakeholders will be able to know where contaminated soil is being shipped from, where it’s going, its quantity and what routes will be used to transport it.

Contaminated soil will be tracked in real time, starting from its excavation, through a global positioning system. The system, Traces Québec, is already in place in Montreal as part of a pilot project.

The Quebec government also intends to increase he number of inspections on receiving sites. Furthermore, fines will be increased for those taking part in illegal dumping — from $350 to $3 million depending on the gravity of the offence, the type of soil and if they are repeat offenders, among other criteria.

What are the pros and cons of simulators for radiation safety training?

Written by Steven Pike, Argon Electronics

Electronic radiation simulators provide trainees with realistic first-hand experience of handling detector equipment that is identical to that which they will use in the field.

But while the use of simulator detectors can offer significant advantages for both student and instructor, as with any form of training method there may be some compromises.

In this blog post we explore some of the pros and the cons of radiation safety training using simulator detectors.

The Pros

Practicality

Ionizing radiation is a powerful, invisible force – which can make creating realistic scenarios a challenge.

By incorporating the use of simulator detectors into training exercises students have the opportunity to both understand and ‘trust’ the values displayed on their instruments.

In doing so they can also develop an understanding of the relationship between the measurements on their survey meter and their own personal dose readings as well as the effects of time, distance and shielding.

Safety

Safe and environmentally friendly radiation training systems can be used in a variety of scenarios – whether indoors, outdoors in confined areas or in public spaces.

With simulators incurring zero safety risk there are no Health & Safety restrictions – and the administrative burden for instructors is vastly reduced.

Immersion

Simulator detectors offer the opportunity for a truly authentic and immersive training experience.

Scenarios can be planned to replicate all the crucial elements of real-life incidents, which in turn exposes trainees to the psychological challenges they may well encounter in high-stress incidents.

Repeatability

With the use of simulators, radiation training exercises can be quickly and easily set up – and repeated as many times as required.

Outcomes

Powerful after action review (AAR) ensures that trainees have followed clearly set out procedures and that they understand when mistakes have been made.

Efficiency

Using simulators can provide some significant time-saving advantages for training exercises.

The costly and time-consuming administrative effort normally associated with the transport, deployment and safe handling of radionuclides is completely removed – and the need to secure specialist facilities where ionizing radiation sources is no longer an issue.

The cons

With any form of training, some compromises will inevitably have to be accepted. The key, however, is to find the happy medium between the optimum training outcome and what is practical and achievable.

Dynamic ranges

The dynamic ranges associated with radiation readings are extremely large, which can contribute to challenges in implementing simulations.

Instructor intensiveness

Simulation training can also be very instructor-intensive – with the trainer finding that too much of their attention is focused on creating the “effect” for their student and not enough on observing the student’s actions.

In these cases, alternative techniques which involve the temporary placement of a means to simulate the presence of radioactivity may be more practical – selection of the ideal simulation equipment is essential.

Shielding

It is the simulation of the effects of shielding where there is the potential for the greatest compromise.

The reality is that safe alternatives won’t be subjected to the same degree of attenuation (or reduction in force) as actual ionizing radiation.

But new technology now means that shielding can be represented to a realistic enough level to enable students to appreciate its importance for protection.

Instructors will of course need to clarify the differences, where appropriate, for the lesson being delivered – and these are likely to vary depending upon the operational responsibilities of the trainees.

While training with simulator detectors has both advantages and limitations, there is no doubt that it is an effective method of ensuring successful training outcomes while at the same time maintaining the safety of student and instructor.


About the Author

Steven Pike is the Founder and Managing Director of Argon Electronics, a leader in the development and manufacture of Chemical, Biological, Radiological and Nuclear (CBRN) and hazardous material (HazMat) detector simulators. He is interested in liaising with CBRN professionals and detector manufacturers to develop training simulators as well as CBRN trainers and exercise planners to enhance their capability and improve the quality of CBRN and Hazmat training.

Using Block Chain Technology to Track Hazardous Materials

There is increasing focus on the utilization of Blockchain technology to track hazardous materials and hazardous waste. Blockchain technology allows for a system where records can be stored, facts can be verified by anyone, and security is guaranteed. The software that would power such a system is called a “blockchain”.

Blockchains store information across a network of computers making them both decentralized and distributed. This means no central company or person owns the system and that everyone can use it and help run it. This makes it extremely difficult for any one person to take down the network or corrupt it. This is why it’s so beneficial for so many industries to use blockchain software, such as blockchain technology in real estate.

In essence, a blockchain is a super-secure digital ledger, where transactions records are kept chronologically and publicly. According to experts, the technology would also make it easier to track shipments of hazardous materials and waste. It could even help with regulatory compliance.


The management of hazardous materials/waste through blockchain would result in more open and coordinated movement among generators, transporters, users, and and recyclers. It would also enable the government to more efficiently and openly regulate hazardous materials movement and hazardous waste management. The imbalance between the organized and unorganized sectors would shrink and lead to increased transparency throughout the process.

Tracking Waste Using Blockchain Technology

The technology that powers cryptocurrencies like bitcoin are slowly making way into hazardous materials transportation and hazardous waste management.

As reported in Hacker Noon, Jody Cleworth, the CEO of Marine Transport International said, “The shipping of recovered materials is necessarily heavily regulated, and we’ve had a real impact in simplifying the process while remaining compliant.” Marine Transport International is a New Jersey-based freight forwarder. The company just completed a successful blockchain pilot. This pilot created a common tracking system linking up recycling suppliers, port operators, and ocean carriers.

Phil Rudoni, Chief Tech Officer at Rubicon said that “A big issue the waste industry faces is the lack of accountability for the end destination of recycled material. Rubicon is an Atlanta-based tech startup that provides cloud-based recycling and waste services.

It has always been a challenge to track hazardous materials and waste. With blockchain, it is believed that it would be much easier. It wouldn’t be so difficult to design a system where hazardous materials could be tagged with scannable Quick Response or QR-Codes (two-dimensional barcode) and then tracked at each step of the recycling supply chain. The tracking could be done by the generator, regulator, receiver, the general public, and any other interested person.

Examples of blockchain technology in waste management

The Several waste initiatives have seen the potential of incorporating blockchain technology. One if such initiative is the Plastic Bank, a global recycling venture founded in Vancouver by David Katz and Shaun Frankson. Its main aim is to reduce plastic waste in developing countries like Haiti, Peru, Colombia, and the Philippines. It has plans to extend it’s territory this year.

The Plastic Bank initiative pays people who bring plastic rubbish to bank recycling centers. One payment option is the use of blockchain-secured digital tokens. The tokens can be used to purchase things like food or phone-charging units in any store using the Plastic Bank app.

The plastic brought into the Plastic Bank is bought by companies and recycled into new consumer products. This system is more attractive because blockchain’s transparency means all parties can see and monitor where their effort and/or investment goes.

How the SCC Decision in Redwater Case could Change the Role of Environmental Orders in Ontario Insolvency Proceedings

by Erin D Farrell, Jessica Bioly and Haddon Murray, Gowlings

1. Introduction

The potential conflict between federal insolvency law and provincial environmental law that came to a head in Orphan Well Association v Grant Thornton Ltd (“Redwater“) was settled by the Supreme Court of Canada (the “SCC“) on January 31, 2019 in a split 5-2 decision.[1] Specifically, Redwater addresses whether environmental orders are binding on an insolvent estate, or if a trustee can disclaim unprofitable lands subject to the environmental orders, treating the regulator as an unsecured creditor.

In a contested decision, the SCC considered a test it had previously established to determine whether a regulatory order was enforceable against the debtor’s estate as opposed to merely constituting a provable claim in the bankruptcy (the “Abitibi  Test“, described below). If a regulatory order was found to meet theAbitibi Test and therefore found to be a claim provable in bankruptcy, then it would be stayed and treated as any other unsecured debt. The SCC in Redwater determined that the Abitibi Test had been interpreted too broadly by the lower courts, therefore narrowing the circumstances where such an order would be reduced to a claim provable in bankruptcy. The majority of the SCC in Redwater significantly expanded the circumstances in which costly end-of-life environmental or other regulatory orders will effectively trump secured and other creditors in an insolvency. The SCC further held that the regulator should not be characterized as acting as a “creditor” in this case where the regulator sought to enforce an insolvent company’s end of life obligations and consequently does not have a claim provable in bankruptcy.

In arriving at its decision, the SCC held that there was no conflict between the applicable provisions of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (“BIA“) [2] and Alberta’s environmental regulatory statutes that would trigger the doctrine of federal paramountcy. The SCC overturned the decisions of both the Alberta Court of Queen’s Bench[3] and the majority of the Alberta Court of Appeal,[4] both of which held that there was a conflict between the applicable federal and provincial acts that found that provincial environmental law, to the extent that it created a practical super‑priority in favour of the regulator, to be inoperative.

The Attorney General of Ontario intervened in the case and supported the Alberta regulator’s position that its environmental orders should continue to operate in bankruptcy. Although Ontario’s submissions focused on its provincial oil and gas industry, all corporations that could be subject to regulatory orders, including owners and operators of contaminated lands, may be affected.

The decision will have serious consequences for creditors, many of whom are innocent suppliers and investors, but will be left paying for environmental remediation.

2. Background

Redwater Energy Corporation (“REC“) was an oil and gas company operating in Alberta. The Alberta oil and gas industry is regulated by the Alberta Energy Regulator (“AER“). The AER regulates the oil and gas industry by issuing licenses for each oil and gas well or pipeline, and then by imposing on each licensee conditions that control all aspects of the operation, disposition and eventual shutting-in of the licensed property.[5] It issues licenses, approvals, permits, orders, decisions and directions pursuant to authority derived from statutes such as the Oil and Gas Conservation Act (“OGCA“) and the Pipeline Act (“PA“).[6]

In Alberta non-producing wells do not need to be “abandoned”[7] (plugged) and reclaimed[8] (remediated) within any set timeframe.[9] The many non-producing wells often sit for years or even decades.[10] They are also commonly transferred to subsequent licensees, who may or may not be sufficiently capitalized to perform their end‑of‑life obligations. Like many oil and gas companies ceasing operations, REC held licenses for both non-producing oil and gas wells.

In the Redwater case, REC became insolvent and was put into receivership by its senior secured creditor, ATB Financial. Upon learning of REC’s receivership, the AER took view that:

  1. it was not a creditor;
  2. environmental obligations were not “claims provable in bankruptcy”, and that accordingly the environmental obligations of REC were unaffected by the insolvency proceedings;
  3. the receiver was legally obliged to discharge REC’s environmental obligations “prior to distributing any funds . . . to creditors, secured or otherwise”; and
  4. it would not approve any transfers of REC’s (valuable) oil and gas assets unless it was satisfied that both the transferor and transferee would be in a position to fulfill all environmental obligations and the proceeds of sale were paid to the AER as security for the end‑of‑life obligations.

At the time of the receivership, REC had both producing and non-producing wells. The receiver concluded that the cost of the end-of-life obligations for the non-producing wells would likely exceed the sale proceeds of the producing wells. As such, the receiver renounced or disclaimed the non-producing wells pursuant to s. 14.06(4) of the BIA, taking possession and control of only the productive wells. Nonetheless, the AER issued orders requiring REC to abandon and reclaim, “for environmental and public safety reasons”, the non-producing assets that the receiver had renounced.[11] Subsequently, REC was assigned to bankruptcy and the receiver was appointed as the bankruptcy trustee. The trustee took the position that, as a result of the disclaimer, it had no obligation to comply with the AER’s orders in relation to the renounced wells and attempted to maximize recovery for creditors through sale of the profitable wells.

The AER, along with the Orphan Well Association, a non-profit organization operating under authority delegated by the AER,[12] sought a declaration that the trustee’s disclaimer was void, and an order compelling compliance by the trustee with the abandonment and remediation orders issued by the AER. The AER’s position was, in essence, that the environmental orders were regulatory in nature and continued to bind the trustee during the bankruptcy notwithstanding the consequences this may have for the bankrupt’s creditors. The trustee brought a cross-application for approval of the sale of assets, and a ruling on the constitutionality of the AER’s position.

The main constitutional issue was whether the AER’s abandonment orders and certain provisions of Alberta’s applicable environmental legislation conflicted with the federal BIA – which would result in certain provisions of the provincial environmental legislation being held in abeyance and the BIA overriding.

In order to answer this question, the SCC considered the following issues:

  1. whether disclaiming property under s. 14.06(4)(b)(ii) of the BIA has the effect of removing the obligation to comply with the order from the bankrupt estate, or simply eliminating the trustee’s personal liability in respect of the order; and
  2. whether environmental orders are provable claims in an insolvency proceeding. If they are, then the environmental order is treated like any other claim in the proceeding – the order is stayed and it generally ranks as an unsecured claim (except for certain statutory security interests). The alternative is that the environmental order is considered as a regulatory obligation that continues to be enforceable during the insolvency proceeding and consequently, effectively has priority over all other claims and, in the case of a restructuring, continues after the restructuring.[13]

The trustee in Redwater argued that (a) while the estate would continue to be liable for the end‑of‑life obligations associated with disclaimed property, the trustee would not be obliged to perform them, and (b) the environmental orders were properly characterized as provable claims and the regulator was attempting to defeat the priority scheme set out in the BIA. For both of these reasons the trustee argued that the provincial statutes that gave rise to the environmental orders conflicted with the federal BIA, and accordingly the federal law was paramount.

3. The Abitibi Test

The characterization of environmental obligations as provable claims has previously been considered by the Supreme Court of Canada. In Newfoundland and Labrador v. AbitibiBowater Inc., (“AbitibiBowater“)the SCC considered whether certain orders issued under Newfoundland’s Environmental Protection Actwere “claims” for the purpose of the CCAA.[14] The SCC established a three-part test for whether a regulatory obligation is a provable claim in an insolvency proceeding:[15]

  1. there must be a debt, liability or obligation to a creditor,
  2. it must be incurred before the debtor’s bankruptcy, and
  3. it must be possible to attach a monetary value to the debt, liability or obligation.

Meeting the test would mean that a regulatory order would be stayed and treated the same as other unsecured debts.

The Abitibi Test has been applied by the Ontario Court of Appeal in Nortel Networks Corp. (Re),[16](Nortel) and Northstar Aerospace, Inc. (Re) (“Northstar“)[17]. Both cases concerned clean-up orders for legacy contaminated sites owned by insolvent corporations.

In Nortel, the Ministry of the Environment (“Ministry“)[18] issued remediation orders after the corporation’s CCAA filing. These orders dealt with a number of properties and would have required certain of the debtor companies (referred to collectively as “Nortel“) to expend approximately $18 million to remediate the properties. Nortel brought a motion before the CCAA judge seeking a declaration that the Ministry orders were monetary in nature and thus, were stayed by the CCAA proceedings, meaning it could cease complying with the orders. It also sought a declaration that the Ministry’s claims had to be dealt with as part of the CCAA. The Ontario Court of Appeal found that the key issue was the third branch of the Abitibi Test; specifically, the Court of Appeal held that in order for a monetary value to be attached to the debt, it had to be sufficiently certain that the Ministry would perform the remediation work itself and then have a claim for indemnification against Nortel. With the exception of one property, the Court of Appeal found it was not sufficiently certain the Ministry would perform the remediation itself and thus, the claim was not stayed and the regulatory orders had to be complied with, depleting assets from the estate that would otherwise be paid to Nortel’s creditors.

By contrast, in Northstar, the Ontario Court of Appeal found it was sufficiently certain that the Ministry would perform the remediation work itself, given that the Ministry had already taken steps towards conducting the remediation itself, there was no funding available to the debtor or the trustee to do remediation work, and there were no other parties who could be required to perform the work. Consequently, the Ministry’s order was found to be a provable claim that was stayed by the insolvency proceeding – to be determined and paid in the same manner as all other creditors of the estate. Subsequently, the Ministry chose to pursue Northstar’s directors and officers personally.

4. Judicial History

Court of Queen’s Bench of Alberta

In his May 19, 2016 decision (the “Chambers Decision“), Chief Justice Wittmann of the Alberta Court Queen’s Bench found that there was a conflict between the provincial and federal laws. Specifically, he found that requiring a trustee to comply with abandonment orders issued pursuant to provincial legislation in relation to renounced licensed assets triggered the doctrine of federal paramountcy as there was an operational conflict between s. 14.06(4) of BIA and the provincial law. The obligation to comply with the AER orders required payment of, or the posting of security for, the abandonment costs to the AER in priority to all others, including secured creditors. This frustrated the primary purposes of the BIA, as its distribution scheme would be upset.

Chief Justice Wittman stated that it was conceded by the OWA and AER that the first and second branches of the Abitibi Test were met.[19] However, the AER argued that the fact that there were monetary consequences to its orders was not determinative of the third branch of the test.[20] Chief Justice Wittman disagreed and found that there was no funding for the receiver to carry out the work, the receiver was not in possession of the renounced properties and therefore could not carry out the work, and that there were no other parties who could be required to carry out the work. Further, he found either the AER or OWA would probably carry out the work, and therefore that, although not expressed in monetary terms, the AER orders were “intrinsically financial,”[21] and sufficiently certain.[22] If the regulator’s actions indicate that, in substance, it is asserting a provable claim within the meaning of federal legislation, then that claim can be subjected to the insolvency process.[23]

Alberta Court of Appeal

The majority of the Court of Appeal (consisting of the Honourable Mr. Justice Frans Slatter and the Honourable Madam Justice Frederica Schutz) affirmed the Chambers Decision. In considering the constitutional issues, the Alberta Court of Appeal stated that under the principle of cooperative federalism, the court will first attempt to interpret and apply the two provisions in harmony with each other, and only if that fails will paramountcy be invoked.[24] However, the majority found that the regulatory orders of the AER were in operational conflict with section 14.06 of the BIA and that the underlying sections of the OGCA and PA frustrated the federal purpose of the BIA in managing the winding up of insolvent corporations.

The majority held that a trustee is entitled to abandon or renounce oil and gas assets encumbered with environmental obligations and that the AER’s demand for security for remediation diverted value from the bankrupt estate. This was reason enough to classify the claims of the AER as financial in nature, thereby making it a “creditor” whose claims are subject to the priorities prescribed by the BIA.

As it did for the Chambers hearing, AER conceded that the first two branches of the Abitibi Test were met: an obligation existed to the AER as a creditor, and the obligation had arisen prior to the conclusion of the insolvency.[25] Therefore the only real issue was the third branch.

In finding that the regulator’s orders constituted a claim provable in bankruptcy, the majority applied the Abitibi Test and found that the effect of the abandonment orders was to elevate the priority of environmental claims and upset “the priorities of the BIA.”

The majority found that AER’s claims met the test for a provable claim in s. 14.06 of the BIA and did not have higher or special “super priority” over the claims of secured creditors. Under the proper interpretation of the BIA, the AER could not insist that substantial parts of the bankrupt estate be set aside in satisfaction of the environmental claims in super priority over the claims of secured creditors.

In her dissent, The Honourable Madam Justice Sheilah Martin, prior to her elevation to the Supreme Court of Canada, disagreed with the majority, found no conflict between the legislation, and noted that the environment was an area that called for “co-operative federalism.”[26] Justice Martin noted that that the “cradle to grave” approach to regulation now stopped at “insolvency,” moving the “polluter pays” policy to a “third party pays” system. Justice Martin found that license obligations are public duties, not debts owed to the regulator. Abandonment and reclamation are necessary for public health and safety, reducing the environmental impact of drilling activities, and ensuring private landowners are not left with unused and potentially unsafe well sites on their land.

Ultimately, Justice Martin held that there was no conflict between the legislative schemes and that both schemes could continue to co-exist. In examining the third branch of the Abitibi Test, Justice Martin distinguished the nature of the remedial work being performed in Redwater from AbitibiBowaterNorteland Northstar:[27]

…. During the course of its operations, various contaminants spilled on the lands owned by Abitibi and the government issued orders and tried to have those lands transferred to the government through legislation. As the Supreme Court noted, when such conditions arise, “regulatory bodies sometimes have to perform remediation work”. The decisions of the Ontario Court of Appeal in Nortel and Northstar Aerospace Inc., Re, 2013 ONCA 600, 234 A.C.W.S. (3d) 642 (Ont. C.A.), both decided after Abitibi, also dealt with the same type of industrial contamination on land owned by the debtors, and the same kind of clean-up order. Contrast that with the licensing and regulatory regime here. The abandonment obligations are not an unknown or unexpected event; all parties involved know these obligations will arise at the end of the life of the well.

Given the foregoing, Justice Martin found that the third branch of the Abitibi Test had not been made out as there was insufficient certainty that remediation work would be done or that a claim for reimbursement would be made.

In significant contrast to the majority justices and Chief Justice Wittman in the Chambers Decisions, Justice Martin also held that the first branch of the Abitibi Test had also not been met because the regulatory body was not a creditor of the insolvent company.[28] Quoting Laycraft CJA in Northern Badger,[29] Justice Martin held that the cost of abandoning licensed wells “was one of the expenses, inherent in the nature of the properties themselves, taken over for management by the Receiver,” and that the cost was not owed to the regulator, or to the province.

5. The Supreme Court of Canada Decision

The SCC decision was released January 31, 2019. The SCC, split 5:2 in favour of granting the regulator’s appeal. The intervenors supporting the AER and OWA in its arguments included Greenpeace, Ecojustice and the Attorney General of Ontario, among others. The majority decision, penned by Chief Justice Wagner, found:

  • the regulator’s use of its statutory powers did not create a conflict with the BIA so as to trigger the doctrine of federal paramountcy;
  • section 14.06(4) of the BIA permits a trustee to avoid any personal liability in respect of environmental obligations for a property it has disclaimed, however those obligations remain a liability of the insolvent estate; and
  • not all environmental obligations enforced by a regulator will be claims provable in bankruptcy. Further, the regulator’s orders in this case were not claims provable in bankruptcy, and the priority scheme in the BIA was not upended. Thus, no conflict was caused by the trustee’s status as a licensee under Alberta legislation. Alberta’s regulatory regime can coexist with and apply alongside the BIA.

The majority of the SCC also reframed its own Abitibi Test to determine whether a regulator’s action amounts to a claim provable in bankruptcy with respect to the first and third branches of the test.

The first branch of the test requires that there must be a debt, liability or obligation to a “creditor”. The SCC agreed with the regulator and Martin JA and held that the Court of Queen’s Bench and Alberta Court of Appeal (as well as the Ontario Court of Appeal in Nortel) had incorrectly, and overly broadly, interpreted the circumstances in which a regulator will be considered a creditor. The majority rejected the concessions made by the regulator on the creditor issue at the lower courts, noting that “concessions of law are not binding.” In Nortel and Northstar the courts applied the Abitibi Test to find that the first branch of the test was always made out when a regulator exercises its statutory enforcement powers against a debtor. The SCC found that where the regulator acts in a bona fide regulatory capacity in the public interest and for the public good, and is not seeking a pecuniary benefit, it is acting in a regulatory capacity rather than as a creditor. Echoing Justice Martin’s statement, the SCC held that where the public is the beneficiary of the enforcement action (and not the government’s coffers as in AbitibiBowater), the first branch of the test will not be made out. Rather, in Redwater the majority found that the orders were made in the public interest and for the public good. Therefore the regulator was not a creditor of REC as the public was the beneficiary of the environmental obligations. The majority rejected the trustee’s argument that the first “creditor” branch of the Abitibi Test would be satisfied whenever a regulator exercises its enforcement powers against a debtor. The majority instead agreed with the submissions of Ontario that the creditor part of the test would be meaningless if it were not possible for the test to turn on whether a regulator is a creditor of the bankrupt.[30]

The Supreme Court went on to discuss the third branch of the Abitibi Test, or the “sufficiently certain” branch. The majority noted that the regulatory end-of-life obligations did not directly require REC to make a payment to the regulator, but rather obliged REC to “do something”.[31] The majority rejected the characterization of the orders as “intrinsically financial” applied by the majority of the Alberta Court of Appeal, finding that this application would be too broad. This would result in a provable claim being established even where the existence of a monetary claim in bankruptcy was merely speculative.[32] The third branch of the test was the focus of the courts analysis in Nortel and Northstar. The Supreme Court confirmed the approach of the Ontario Court of Appeal in Nortel, finding that ongoing environmental remediation obligations may be reduced to monetary claims only where: (i) the regulator has performed the remediation work and advanced a claim for reimbursement, or (ii) it is sufficiently certain that the province will do the work and seek reimbursement. The Supreme Court stated that Northstar could be distinguished, because in that case the Ministry had already stepped in to conduct the remediation.

In a detailed dissent that is sure to be cited in future cases, Justices Moldaver and Côté found that both an operational conflict and frustration of purpose existed between the provincial legislation and the federal BIA, and thus invoked the doctrine of federal paramountcy. Consistent with the lower court decisions, the dissenting judges found that Alberta’s statutory regime does not recognize the disclaimers by trustees of assets as lawful by virtue of the fact that receivers and trustees are treated by regulators as licensees who cannot disclaim assets. The minority was of the view that, because of the unavoidable conflict the provincial legislation should be held inoperative to the extent that it does not recognize the legal effect of the trustee’s disclaimers. The minority also applied the Abitibi Test and found that, as in the AbitibiBowatercase itself, the regulator was a creditor and “most environmental regulatory bodies can be creditors…and that government entities cannot systematically evade the priority requirements of federal bankruptcy legislation under the guise of enforcing public duties.”[33]

6. Implications for Ontario

Insolvency Proceedings

The Redwater decision has significantly expanded the circumstances in which an environmental order, or any regulatory enforcement action for that matter, will not be provable in an insolvency proceeding. The decision will impact companies with environment liabilities in the following ways:

  • There may be a chilling effect on the availability of financing in industries where environmental liabilities are likely, because secured creditors will take a backseat to environmental liabilities. Lenders may expand environmental due diligence requirements and increasingly demand stricter covenants from businesses regarding the state of environmental liabilities. We may also see a decrease in the number of lenders offering debtor-in-possession loans to fund the insolvency proceedings and ongoing operations of an insolvent company. While these loans were traditionally provided a super-priority charge against the assets of the debtor, it is possible that such a charge would also take a backseat to environmental liabilities.
  • Professionals may begin to demand indemnities for the payment of their fees from creditors before agreeing to insolvency mandates. While trustees are protected from personal liability under subsections 14.06(2) and (4) of the BIA, where environmental liabilities exceed the value of the estate, it is possible, although not clear, that insolvency professionals might not be paid.
  • It may become more challenging to retain key employees during the insolvency period. When a company enters insolvency proceedings it is often important to keep certain key employees working through the insolvency period in order to maximize value and ensure the debtor can be sold as a going concern. In order to retain these employees, it is common in restructuring proceedings (and occasionally in receiverships) to obtain a super-priority charge for a bonus payment plan for key employees (referred to as a KERP) provided they continue to work through the insolvency period. As with the above charges, the ability to retain key employees is brought into question by the possibility that all those funds will be spent complying with environmental orders.

Industries with the Potential for Environmental Liabilities

Anxiety among lenders in Alberta’s oil and gas industry, where the number of non-producing wells is rapidly escalating, could signal rapid market decline. If lenders, given the uncertainty, are unwilling to provide additional credit, many more wells may end up in the orphan system, with fewer industry participants contributing to the fund. Many commentators have noted that as a result of the Redwaterdecision, companies with potential significant environmental liabilities may have difficulty finding new capital or restructuring.

In Ontario, the operator of a well that is no longer producing should plug the well within 12 months after it is taken out of use,[34] and return the well site to its original condition no later than 6 months from the plugging date.[35] There is no such requirement in Alberta, despite proposed legislation. In many industries in Ontario, closure, reclamation and anticipated end-of life remediation obligations are also secured by financial assurance (usually through a letter of credit). For example, mining operations with closure plans or landfills that might require remediation and monitoring upon closure would normally be subject to financial assurance requirements by the regulator. Consequently, even if the business were to become insolvent, the environmental obligations would be secured by financial assurance. In those cases, assuming that the financial assurance numbers accurately capture the risk, lender anxiety should be reduced.  

Contaminated Sites and Brownfield Development

In Ontario, owners and those in management or control (including former owners or those previously in management or control) of an environmentally contaminated or brownfield site, as well as persons who caused or permitted a discharge of a contaminant, may be subject to regulatory orders for both on and off-site work (including investigation, delineation, and in some cases, remediation). The characterization of such environmental orders was litigated in Northstar and Nortel, which involved Ontario properties subject to Ministry orders that were owned or previously owned by insolvent companies.

The outcome of Nortel would likely be the same under the new Redwater decisionThe Supreme Court in Redwater cites the Northstar case in support of the proposition that where the Ministry steps in to conduct remediation, the third branch of the Abitibi Test is made out. However, it is possible that the Supreme Court’s approach to the first branch of the Abitibi Test could mean that in certain circumstances, even where the Ministry has demonstrated that it will conduct the remediation itself, the Ministry is still considered a bona fide regulator and thus, the order would not be a provable claim.

Unless there is legislative change, it is clear that the Redwater decision will have implications on the way that regulatory “clean-up” orders are treated during an insolvency, particularly in cases where the facts fall somewhere between Nortel and Northstar. We expect the Ministry (and other environmental stakeholders) will take the position that, except in unusual circumstances, regulatory orders are not stayed during insolvency and must be complied with before the distribution of the insolvent corporation’s assets to other creditors. Where an insolvent estate does not have significant assets, environmental costs may mean there is nothing left for creditors.

In some cases, the decision may be welcome news to stakeholders such as directors and officers of insolvent companies, other persons who may also be obliged to address the contamination and neighbouring property owners because they will not have to bear the burden of the clean-up. In Northstar,for example, the Ministry pursued the directors and officers personally after the remediation obligations of the company were found to rank alongside the claims of unsecured creditors. For creditors, however, the Redwater decision may reinforce the recent trend in environmental law of displacing polluter pays for “third-party pays”, particularly when that third party has deep pockets.

For corporations that own or operate a number of brownfield properties or have significant historical environmental liability for previous industrial activities, the insolvency calculus may change. Creditors, even secured creditors, are less likely to see full recovery in cases where there is environmental contamination the Ministry wants addressed.

The Redwater decision confirms that the Ministry will not be seen as a creditor where it acts in a regulatory role. However, the Supreme Court’s comments demonstrate that even post-Redwater, if the Ministry steps in to do the work itself, then it becomes a creditor and its order will be relegated to a claim provable in bankruptcy. This leaves the Ministry in a difficult position when requiring clean-up work from a company that may become insolvent. If the risk to human health or the environment is so significant that the Ministry must step in to do the work, the Ministry may prejudice its position in the insolvency. If the Ministry does not take steps to do the work and the corporation becomes insolvent, the estate will have to fund the remediation. This creates a potentially perverse incentive where allowing the risk to remain for the interim ultimately improves the Ministry’s position.

Environmental Receivers

The implications of the Redwater decision will encourage creative solutions to deal with remediation during insolvency proceedings. One such solution is the appointment of an environmental receiver, such as the one used in the Outboard Marine insolvency. In that case, an environmental receiver (an environmental consulting firm) was appointed by the court to manage the fund for remediation and to conduct the Ministry-ordered clean-up during the insolvency process. The receivership order authorized the environmental receiver to implement environmental remediation activities, to retain consultants, to apply for permits, licenses and approvals as may be required, to receive funds from the disbursement receiver, and to disburse funds to pay approved environmental remediation costs. There may be other situations where it would be “just or convenient”[36] to appoint an environmental receiver to address irreparable harm or imminent danger to health, safety, private and public property, wildlife, natural resources and compliance with environmental laws caused by ongoing and historical contamination of source sites.[37]

Appointing an environmental receiver, along with a regular disbursement receiver, to manage remediation in tandem with winding up may also help to balance environmental obligations and creditors. Such a creative solution may only be appropriate when sufficient assets exist and the efficiency or certainty gained will merit the extra administration costs. However, there may be tension between the insolvency process, which has among its goals an expeditious resolution, and environmental remediation, which may require many years of investigation or delineation work before a remedial approach can be pursued.

7. Conclusion

At first glance the Redwater case appears to be good news from both an environmental and cooperative federalism perspective. However, in addition to the lender and insolvency uncertainty in the oil and gas industry noted by many commentators, the Redwater decision may complicate insolvency proceedings in any industry with an inherent environmental impact. While Ontario’s smaller oil and gas extraction industry is regulated differently and may not face the same pressures as the industry in Alberta, the Redwater decision will have legal, economic and environmental implications on owners and users of potentially contaminated property, those helping them wind down operations, and other stakeholders.


[1] Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5 (“Redwater SCC“) Note that, while this article concerns the impact of the Redwater decision on industrial operations in Ontario, our colleagues in Alberta have written about the impact of the decision from their perspective as counsel for the trustee/respondent on the appeal.

[2] Although Redwater was a bankruptcy and accordingly, the court analyzed the case under the BIA, analogous issues arise with respect to restructurings under the Companies’ Creditors Arrangement Act, RCS 1985, c C-36 (“CCAA”). This paper will refer to “insolvency proceedings” generally as proceedings instituted under either act. Note that this relationship is not perfect as there are different purposes for the CCAA as compared to the BIA and accordingly, it is possible that a court would reach a different conclusion with respect to paramountcy under the “frustrating the purpose of the act” branch of the paramountcy test. However, the courts have generally interpreted the statutes harmoniously.

[3] Redwater Energy Corporation (Re) 2016 ABQB 278 (“Chambers Decision“)

[4] Orphan Well Association v Grant Thornton Limited 2017 ABCA 124 (“Redwater ABCA“)

[5] Redwater ABCA at para 11.

[6] Redwater ABCA at paras 11 and 124.

[7] SCC Decision at para 16: Abandonment” refers to “the permanent dismantlement of a well or facility in the manner prescribed by the regulations or rules” made by the Regulator (OGCA, s. 1(1)(a)). Specifically, the abandonment of a well has been defined as “the process of sealing a hole which has been drilled for oil or gas, at the end of its useful life, to render it environmentally safe” (Panamericana de Bienes y Servicios S.A. v. Northern Badger Oil & Gas Ltd., 1991 ABCA 181, 81 Alta. L.R. (2d) 45 (“Northern Badger“), at para. 2). The abandonment of a pipeline refers to its “permanent deactivation . . . in the manner prescribed by the rules” (Pipeline Act, s. 1(1)(a)).

[8] “Reclamation” includes “the removal of equipment or buildings”, “the decontamination of buildings . . . land or water”, and the “stabilization, contouring, maintenance, conditioning or reconstruction of the surface of the land” (EPEA, s. 1(ddd))

[9] See for the following Globe and Mail articles for a discussion of attempts in Western Canada at introducing timelines for cleanup of dormant oil and gas wells: December 13, 2018 “B.C. to be first among western provinces to tackle inactive wells” by Jeff Lewis; and November 30, 2018 “B.C. joins Alberta in pledge to impose cleanup timelines on oil, gas wells” by Jeff Lewis and Renata D’aliesio

[10] As the AG of Ontario noted in its submissions, in Ontario the operator of a non-producing oil or gas well is expected to plug the well (abandon in Alberta) within 12 months after it is taken out of use. [O. Reg. 245/97: Exploration, Drilling and Production under the Oil, Gas and Salt Resources Act, R.S.O. 1990, c. P.12 “O.Reg. 245/97“), s. 19; Oil, Gas and Salt Resources of Ontario, Provincial Operating Standards (“Provincial Standards“), ss. 11.01-11.14.] Operators are also required to return the well site to its original condition no later than 6 months from the plugging date. [Provincial Standards, s. 11.13]. In practice this does not always happen.

[11] Redwater ABCA at para 6.

[12] The Orphan Well Association is funded by a levy imposed by the AER, security deposits that licensees have been required to post, and some limited government funding. ABCA decision at para 22.

[13] In a bankruptcy (or liquidating CCAA), the amount available to regulatory obligations that are in substance provable claims is subject to their priority ranking. Generally, these obligations will be unsecured except to the extent they are secured by a specific charge under section 14.06(7) of the BIA. Previously any regulatory or environmental obligations that were not provable in bankruptcy may continue to exist in theory, but typically the burden of those obligations essentially fell on the government. Accordingly, there is an increased incentive for the regulator to extract whatever value it can from the bankrupt estate during its administration

[14] Newfoundland and Labrador v. AbitibiBowater Inc., [2012] 3 SCR 443, 2012 SCC 67 (“AbitibiBowater“)

[15] Chambers Decision at para 139 citing Newfoundland and Labrador v. AbitibiBowater Inc. 2012 SCC 67.

[16] Nortel Networks Corp. (Re), 2013 ONCA 599 (CanLII), leave to appeal to SCC refused, 35642 (17 April 2014) (“Nortel“)

[17] Northstar Aerospace, Inc. (Re), 2013 ONCA 600 (CanLII) (“Northstar“)

[18] Now knowns as the Ministry of Environment, Conservation and Parks.

[19] Chambers Decision at para 164.

[20] Chambers Decision at para 164.

[21] Chambers Decision at para 173.

[22] Chambers Decision at para 173.

[23] Chambers Decision at para 177.

[24]Redwater ABCA at para 24.

[25] Redwater ABCA para 73.

[26] Redwater ABCA Martin dissent at para 107

[27] Redwater ABCA dissent at paras 178-179

[28] Redwater ABCA dissent at para 185

[29] Panamericana de Bienes y Servicios S.A. v. Northern Badger Oil & Gas Ltd., 1991 ABCA 181, 81 Alta. L.R. (2d) 45, 117 A.R. 44 (Alta. C.A.), leave to appeal denied [1992] 1 S.C.R. (S.C.C.)

[30] Redwater SCC at para 124

[31] Redwater SCC at para 139

[32] Redwater SCC at para 146

[33] Redwater SCC at para 236, citing Deschamps J. in AbitibiBowater at para 27.

[34] O.Reg. 245/97, s. 19; Provincial Standards, ss. 11.01-11.14

[35] Provincial Standards, s. 11.13

[36] See Courts of Justice Act, s. 101 provides that “a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just or convenient to do so.”

[37] Sherry A Kettle “The Creative Receivership” 2016 Annual Review of Insolvency Law 18


NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.


This article is republished with the permission of the authors. It was first published on the Gowling WLG website.

About the Authors

Erin Farrell is a partner in Gowling WLG’s Toronto office, practising in the firm’s advocacy department. Her practice focuses on a variety of commercial litigation matters, including class actions, product and professional liability, environmental law and municipal liability. Erin represents professionals in both civil and administrative matters, and has defended a number of Canadian and foreign clients in the pharmaceutical, medical device and manufacturing sectors in litigation. She also has extensive experience in the banking sector, advising clients on a range of litigation matters, including a variety of motions and injunctions.

Jessica Boily is an associate in Gowling WLG’s Toronto office, practising in Environmental Law. Jessica works with clients to navigate and resolve complex disputes, including advocating for clients in appeals of environmental orders and civil litigation involving contaminated sites. She guides clients through regulatory inspections and investigations, including defending clients charged with federal, provincial and municipal environmental and regulatory offences. Jessica regularly appears before the Environmental Review Tribunal and all levels of courts in Ontario on motions, applications, trials, hearings, appeals and judicial reviews. She also advocates for her clients in mediations and arbitrations. 

Haddon Murray is an associate lawyer in Gowling WLG’s Toronto office, practising in the areas of restructuring and insolvency and corporate commercial litigation. Haddon represents corporations and their directors on claims ranging from standard litigation to complex restructurings. He has experience appearing before the Ontario Superior Court of Justice – Commercial List, as well as the Ontario Court of Appeal.

City of Brantford gets loan for completed brownfield project

As reported by Susan Gamble in the Brantford Expositor, The City of Brantford, Ontario is securing a $4.6 million load to cover the expenses related to the remediation of the Sydenham Pearl Brownfield Site.

The site has already been remediated. City Councillors recently voted in favour of the $4.6 million debenture from the Ontario Infrastructure and Lands Corporation with a 20-year interest rate of 3.4 per cent. The agreement will mean the city repays the loan at a rate of $322,878 a year.

The debenture was approved, along with the project, in 2012 and the remediation at the site is complete, but the money has to be returned to the city’s capital project fund, which has been fronting the money.

Joelle Daniels, the city’s director of finance, explained to the Brantford Expositor that the city had been able to finance the costs of the project over the last six years from working capital since the cash flow was available.

“Typically we have an interim balance and that allows us to not issue the debenture until we know the final cost of the project. We wouldn’t have wanted to borrow the money up front and then carry the interest longer.”

The city has about a dozen outstanding debentures, most of them with the Ontario Infrastructure Lands Corporation but others through the Federation of Canadian Municipalities or regular lending institutions.

The Sydenham-Pearl Brownfield Site is a 6 acre property that had most recently owned by two industrial companies, namely Domtar and Crown Electric, which is surrounded by residential properties, a public playground, a vacant school property, and a rail line.


Crown Electric Manufacturing 17 Sydenham Street
Image Source: (City of Brantford Records Department)

Prior to remediation, soil testing and groundwater testing had shown high levels of industrial chemicals, including but not limited to trichloroethylene and its breakdown products, ethylbenzene and vinyl chloride. 

As is the case with many brownfields, the Sydenham-Pearl Brownfield site has its history rooted in industrial purposes.  The properties have changed hands many times over the course of several decades, and have survived many changes in environmental policies.  Policies including the disposal of hazardous waste and even what chemicals are considered to be hazardous in the first place.

The remediation took 8 weeks to complete and included: the removal of underground storage tanks; excavation and offsite disposal of petroleum hydrocarbons in soil; and in situ soil mixing to break down volatile organic compounds in soil and groundwater.

With remediation activities complete, Phase 3 soil capping and berm construction began. Installation of the soil cap was a requirement of the Ontario Environment Ministry in accordance with the Risk Assessment completed for these properties. Milestone Environmental Contracting completed soil capping and berm construction.

Work at the Sydenham Pearl Brownfield Remediation project was completed in 2017 with required certificates received from the province last spring. The city is currently finishing off sampling and monitoring of the site as required by the Ministry of Environment Conservation and Parks.

The project, which took in 17 and 22 Sydenham, involved removing more than 3,000 cubic metres of contaminated soil to a provincial landfill.

Formerly the site of Crown Electric and Domtar, which made roofing materials, the site was an eyesore, inhabited by squatters and an invitation for fires.

Large fires in 2001 and 2004 meant the city spent hundreds of thousands of dollars to level buildings and clear the area. The properties were seized for tax sales and a remediation plan was created.

Milestone Environmental Contracting spent $2.4 million of the budget on the remediation and another $2.2 million was set aside for the greening process and contingency funding.

Top Environmental Clean Up Projects throughout Canada

by David Nguyen, Staff Writer

1. The Randle Reef Contaminated Sediment Remediation Project – Hamilton, Ontario

Cost: $138.9 million

Contaminant: polycyclic aromatic hydrocarbons (PAHs), heavy metals

Approximately 60 hectares in size and containing 695 000 cubic metres of sediment contaminated with polycyclic aromatic hydrocarbons (PAHs) and heavy metals, the Randle Reef restoration project is three decades in the making. The pollution stems from various industries in the area including coal gasification, petroleum refining, steel making, municipal waste, sewage and overland drainage.1

Slated to be completed in three stages, the first stage involved the completion of a double steel sheet-piled walled engineered containment facility (ECF) around the most contaminated sediments, with stage 2 consists of dredging of the contaminated sediments into the ECF. Stage 3 will involve dewatering of the sediments in the ECF and treating the wastewater to discharge back into the lake, and the sediments will be capped with 60 cm of sand and silt enriched with organic carbon. This cap will both the isolate the contaminated sediments from the environment and form a foundation or future port structures. The ECF will be capped with layers of several material, including various sizes of aggregate, geo-textile and geo-grid, wickdrains, and asphalt and or concrete. This isolates the contaminants and provides a foundation for future port structures.

The project is expected to be completed by 2022 and cost $138.9 million. The Hamilton Port Authority will take over monitoring, maintenance, and development responsibilities of the facility for its expected 200-year life span. It is expected to provide $151 in economic benefits between job creation, business development, and tourism.

The Canada–United States Great Lakes Water Quality Agreement listed Hamilton harbour (which contains Randle Reef) as one of 43 Areas of Concern on the Great Lakes. Only 7 have been removed, 3 of which were in Canada.

2. Port Hope Area Initiative – Port Hope, Ontario

Cost: $1.28 billion

Contaminant: low-level radioactive waste (LLRW), industrial waste

The town of Port Hope, Ontario has about 1.2 million cubic metres of historic LLRW across various sites in the area. The soils and materials contain radium-226, uranium, arsenic, and other contaminants resulting from the refining process of radium and uranium between 1933 and 1988. Additional industrial waste containing metals, hydrocarbons, and dried sewage and sludge with copper and polychlorinated biphenyl (PCBs) will also be contained at the new facility.

The material was spread across town as the tailings were given away for free to be used as fill material for backyards and building foundations. An estimated 800 properties are affected, but the low-level radiation poses little risk to humans. The Port Hope Area Initiative will cost $1.28 billion and will include monitoring before, during, and after the construction of a long term management waste facility (LTMWF).

The LTWMF will be an aboveground engineered storage mound on the site of an existing LLRW management facility to safely store and isolate the contaminated soil and material, as well as other industrial waste from the surrounding area. The existing waste will also be excavated and relocated to the engineered mound. Leachate collection system, monitoring wells, and sensors in the cover and baseliner will be used to evaluate the effectiveness of the storage mound, allowing for long term monitoring of the waste.

The facility also contains a wastewater treatment plant that will treat surface water and groundwater during construction of the facility, as well as the leachate after the completion of the storage mound. The plant utilizes a two stage process of chemical precipitation and clarification (stage 1) and reverse osmosis (stage 2) to treat the water to meet the Canadian Nuclear Safety Commission requirements for water discharged to Lake Ontario.

3. Marwell Tar Pit – Whitehorse, Yukon Territory

Cost: $6.8 million

Contaminant: petroleum hydrocarbons (PHCs), heavy metals

This $6.8 million project funded by the governments of Canada and Yukon will remediate the Marwell Tar Pit in Whitehorse, which contain 27 000 cubic metres of soil and groundwater contaminated with hydrocarbons, such as benz[a]anthracene and heavy and light extractable petroleum hydrocarbons and naphthalene, and heavy metals such as manganese. Some of the tar has also migrated from the site.

Contamination began during the Second World War, when a crude oil refinery operated for less than one year before closing and being dismantled. The sludge from the bottom of dismantled storage tanks (the “tar”) was deposited in a tank berm, and over time other industries and businesses added other liquid waste to the tar pit. In the 1960s the pit was capped with gravel, and in 1998 declared a “Designated Contaminated Site.”

The project consists of three phases: preliminary activities, remedial activities, and post-remedial activities. The preliminary phase consisted of consolidating and reviewing existing information and completing addition site assessment.

The second phase of remedial activities began in July 2018 and involves implementing a remedial action plan. Contaminated soil segregated and heated through thermal conduction, which vaporizes the contaminants, then the vapours are destroyed by burning. Regular testing is done to ensure air quality standards are met. The main emissions from the site are carbon dioxide and water vapour. Remediated soil is used to backfill the areas of excavation. This phase is expected to be completed in 2019-2020.

The final phase will involve the monitoring of the site to demonstrate the remediation work has met government standards. This phase is planned to last four years. The project began in 2011 and is expected to be completed in 2020-2021.

4. Boat Harbour – Nova Scotia

Cost: approx.$133 million

Contaminant: PHCs, PAHs, heavy metals, dioxins and furans

The provinces largest contaminated site, Boar Harbour, is the wastewater lagoon for the local pulp mill in Abercrombie Point, as well as the discharge point for a former chemical supplier in the area. Prior to 1967, Boat Harbour was a saltwater tidal estuary covering 142 hectares, but a dam built in 1972 separated Boat Harbour from the ocean, and it is now a freshwater lake due to the receiving treated wastewater from the mill since the 1967.

The wastewater effluent contains contaminants including dioxins and furans, PAHs, PHCs, and heavy metals such as cadmium, mercury, and zinc. In 2015, the government of Nova Scotia passed The Boat Harbour Act, which ordered that Boat Harbour cease as the discharge point for the pulp mill’s treated wastewater in 2020, which allows time to build a new wastewater treatment facility and time to plan the remediation of Boat Harbour.

The estimated cost of the cleanup is $133 million, which does not include the cost of the new treatment facility. The goal is to return the harbour to its original state as a tidal estuary. The project is currently in the planning stages and updates can be found at https://novascotia.ca/boatharbour/.

5. Faro Mine – Faro, Yukon

Cost: projected$450 million

Contaminant: waste rock leachate and tailings

Faro Mine was once the largest open-pit lead-zinc mine in the world, and now contains about 70 million tonnes of tailings and 320 million tonnes of waste rock, which can potentially leach heavy metals and acids into the environment. The mine covers 25 square kilometres, and is located near the town of Faro in south-central Yukon, on the traditional territory of three Kasha First Nations – the Ross River Dena Council, Liard First Nation and Kaska Dena Council. Downstream of the mine are the Selkirk First Nation.

The Government of Canada funds the project, as well as leads the maintenance, site monitoring, consultation, and remediation planning process. The Government of Yukon, First Nations, the Town of Faro, and other stakeholders are also responsible for the project and are consulted regularly to provide input.

The entire project is expected to take about 40 years, with main construction activities to be completed by 2022, followed by about 25 years of remediation. The remediation project includes upgrading dams to ensure tailings stay in place, re-sloping waste rock piles, installing engineered soil covers over the tailings and waste rock, upgrading stream diversions, upgrading contaminant water collection and treatment systems.

6. Sylvia Grinnell River Dump – Iqaluit, Nunavut

Cost: $5.4 million

Contaminant: PHCs, polychlorinated biphenyls (PCBs), pesticides

Transport Canada awarded a contract of over $5.4 million in 2017 for a cleanup of a historic dump along the mouth of Sylvia Grinnell River in Iqaluit, Nunavut. The dump contains metal debris from old vehicles and appliances, fuel barrels, and other toxic waste from a U.S. air base, and is a site for modern day rogue dumping for items like car batteries. This has resulted in petroleum hydrocarbons, polychlorinated biphenyls (PCBs), pesticides, and other hazardous substances being identified in the area.

The Iqaluit airfield was founded in Frobisher Bay by the U.S. military during World War 2 as a rest point for planes flying to Europe. During the Cold War, the bay was used as part of the Distant Early Warning (DEW) Line stations across the north to detect bombers from the Soviet Union. When the DEW was replaces by the North Warning System in the 1980s, these stations were abandoned and the contaminants and toxic waste left behind. Twenty-one of these stations were remediated by the U.S. Department of National Defence at a cost of about $575 in 2014.

The Sylvia Grinnell River remediation project is part of the Federal government’s responsibility to remediate land around the airfield that was transferred to the Government of Nunavut in the 1990s.The contract was awarded in August 2017 and was completed in October. The remaining nontoxic is sealed in a new landfill and will be monitored until 2020.

7. Greenwich-Mohawk Brownfield – Brantford, Ontario

Cost: $40.78 million

Contaminant: PHC, PAC, heavy metals, vinyl chloride

The City of Brantford have completed a cleanup project of 148 000 cubic metres of contaminated soil at the Greenwich-Mohawk brownfield site. The area was historically the location of various farming manufacturing industries that shut down, leaving behind contaminants like PHC, PAC, heavy metals like lead, xylene, and vinyl chloride.

Cleanup began in 2015, and consisted coarse grain screening, skimming, air sparging, and recycling of 120 000 litres of oil from the groundwater, using biopiles to treat contaminated soil onsite with 73% of it being reused and the rest requiring off site disposal.

Barriers were also installed to prevent future contamination from an adjacent rail line property, as well as to contain heavy-end hydrocarbons discovered during the cleanup that could not be removed due to the release odorous vapours throughout the neighbourhood. The 20 hectare site took two years to clean and costed only $40.78 million of the allocated $42.8 million between the all levels of government, as well as the Federation of Canadian Municipalities Green Municipal Fund.

8. Rock Bay Remediation Project – Victoria, British Columbia

Cost: $60 million

Contaminant: PAHs, hydrocarbons, metals

Located near downtown Victoria and within the traditional territories of the Esquimalt Nation and Songhees Nation, the project entailed remediating 1.73 hectares of contaminated upland soils and 2.02 hectares of contaminated harbour sediments. The site was the location of a former coal gasification facility from the 1860s to the 1950s, producing waste products like coal tar (containing PAHs), metals, and other hydrocarbons, which have impacted both the sediments and groundwater at the site.

Remediation occurred in three stages. From 2004 to 2006, the first two stages involving the remediation of 50 300 tonnes of hazardous waste soils, 74 100 tonnes of non-hazardous waste soils, and 78 500 tonnes of contaminated soils above commercial land use levels. In 2009, 250 tonnes of hazardous waste were dredged from two sediment hotspots at the head of Rock Bay. About 7 million litres of hydrocarbon and metal impacted groundwater have been treated or disposed of, and an onsite wastewater treatment plant was used to return treated wastewater to the harbour.

Construction for the final stage occurred between 2014 to 2016 and involved:

  • installing shoring along the property boundaries to remove up to 8 metres deep of contaminated soils,
  • installing a temporary coffer dams
  • draining the bay to remove the sediments in dry conditions, and
  • temporary diverting two storm water outfalls around the work area.

Stage three removed 78 000 tonnes of contaminated and 15 000 tonnes of non-contaminated sediment that were disposed of/ destroyed at offsite facilities.

Final post-remediation monitoring was completed in January 2017, with post-construction monitoring for 5 years required as part of the habitat restoration plan to ensure the marine habitat is functioning properly and a portion of the site will be sold to the Esquimalt Nation and Songhees Nation.

9. Bushell Public Port Facility Remediation Project – Black Bay (Lake Athabasca), Saskatchewan

Cost: $2 million

Contaminant: Bunker C fuel oil

 Built in 1951 and operated until the mid-1980s, the Bushell Public Port Facility consist of two lots covering 3.1 hectares with both upland and water lots. The facility supplied goods and services to the local mines, and petroleum products to the local communities of Bushell and Uranium City. Historical activities like unloading, storing, and loading fuel oil, as well as a large spill in the 1980s resulted in the contaminated soil, blast rock, and bedrock in Black Bay that have also extended beyond the waterlot boundaries.

The remediation work occurred between 2005 to 2007, and involved excavation of soil and blast rock, as well as blasting and removing bedrock where oil had entered through cracks and fissures.

Initial remediation plans were to crush and treat the contaminated material by low temperature thermal desorption, which incinerates the materials to burn off the oil residue. However, opportunities for sustainable reuse of the contaminated material came in the use of the contaminated crush rock for resurfacing of the Uranium City Airport. This costed $1.75 million less than the incineration plan, and saved the airport project nearly 1 million litres of diesel fuel. The crush was also used by the Saskatchewan Research Council in the reclamation of the Cold War Legacy Uranium Mine and Mill Sites. A long term monitoring event is planned for 2018.

10. Thunder Bay North Harbour – Thunder Bay, Ontario

Cost: estimated at upwards to $50 million

Contaminant: Paper sludge containing mercury and other contaminants

 While all of the projects discussed so far have either been completed or are currently in progress, in Thunder Bay, the plans to clean up the 400 000 cubic metres of mercury contaminated pulp and fibre have been stalled since 2014 due to no organization or government designated to spearhead the cleanup.

While the water lot is owned by Transport Canada, administration of the site is the responsibility of the Thunder Bay Port Authority, and while Transport Canada has told CBC that leading the cleanup is up to the port, the port authority was informed by Transport Canada that the authority should only act in an advisory role. Environmental Canada has participated in efforts to advance the planning of the remediation work, but is also not taking the lead in the project either. Further complications are that the industries responsible for the pollution no longer exist.

Industrial activities over 90 years have resulted in the mercury contamination, which range in concentrations between 2 to 11 ppm on surface sediments to 21 ppm at depth. The thickness ranges from 40 to 380 centimetres and is about 22 hectares in size. Suggested solutions in 2014 include dredging the sediment and transferring it to the Mission Bay Confined Disposal Facility, capping it, or building a new containment structure. As of October 2018, a steering committee lead by Environment Canada, Transport Canada, Ontario’s environmental ministry and the Thunder Bay Port Authority, along with local government, Indigenous groups, and other stakeholders met to evaluate the remediation options, as well as work out who will lead the remediation.

New Year, New Environmental Rules: Alberta’s Revised Remediation Rules Take Effect in 2019

by Dufferin Harper and Lindsey Mosher, Blake, Cassels & Graydon LLP

On January 1, 2019, significant amendments to Alberta’s Remediation Certificate Regulation came into force. These include:

  • Renaming the regulation the Remediation Regulation
  • Creating a site-based remediation certificate
  • Creating a new reporting requirement for impacts
  • Defaulting to the application of Tier 1 rather than Tier 2 Guidelines
  • Issuing a Tier 2 compliance letter
  • Establishing a new mandatory remedial measures timeline

As discussed in more detail below, many of the amendments address long-standing concerns within the existing remediation certification process. However, in several instances they also introduce new areas of regulatory uncertainty.

SITE-BASED REMEDIATION CERTIFICATE

One of the primary concerns with the existing regime is that it is too limited in scope. Although it provides for remediation certificates to be issued for specific areas of land impacted by a contaminant release, it does not enable a property owner to obtain regulatory signoff for a complete site as opposed to only an area of a site.

In response to that concern, the Remediation Regulation introduces a new type of remediation certificate applicable to a complete site, which is referred to as a “site-based remediation certificate”. A site-based remediation certificate confirms that all contaminants and areas of potential concern both on and off site have been addressed and necessarily involves the submission of more extensive documentation than what is required for a limited remediation certificate.  To assist in the application process, the Alberta government is expected to develop and release a new application form and guide for a site-based remediation certificate application prior to January 2019.

NEW REPORTING REQUIREMENT

A person responsible for a release currently has a statutory obligation to report the release. In addition to this existing obligation, the Remediation Regulation imposes an additional obligation to report any new information about the “impact” of a released substance. Neither of the terms “new information”, nor “impact”, are defined in the Remediation Regulation, and it remains to be seen what additional guidance, if any, will be provided to clarify the scope of the additional obligation. Until that occurs, or until the courts clarify the scope of the obligation, uncertainty will likely prevail.

APPLICATION OF TIER 1 VERSUS TIER 2 GUIDELINES

Under the current Remediation Certificate Regulation, a person applying for a remediation certificate may elect to apply either generic Tier 1 Soil and Groundwater Remediation Guidelines (Tier 1 Guidelines) or site -specific Tier 2 Soil and Groundwater Remediation Guidelines (Tier 2 Guidelines).

The Remediation Regulation removes this discretionary election. Instead, the Tier 1 Guidelines will always be the default remediation standard. Regulatory approval will be required to remediate to Tier 2 Guidelines.

TIER 2 COMPLIANCE LETTER

Another major concern (and criticism) of the existing regime involves the situation where contaminant levels exceed Tier 1 Guidelines but not Tier 2 Guidelines. In such a situation, if the Tier 2 Guidelines are applied, the affected area will not require remediation. Notwithstanding the levels exceed Tier 1 Guidelines and would otherwise require remediation but for the application of the Tier 2 Guidelines, the regulator’s position is that, since there has been no “remediation”, it is unable to issue a “remediation certificate”.  The Remediation Regulation addresses this situation, albeit indirectly.  Rather than amending the scenarios under which a remediation certificate can be issued to account for the above situation, the Remediation Regulation introduces a hybrid type of approval, described as a “Tier 2 compliance letter”. Such a letter will be issued by the regulator when it is satisfied the area or the site meets Tier 2 Guidelines and therefore does not need to be remediated. The difficulty with such a hybrid approach is that it is unclear what type of legal protection a “Tier 2 compliance letter” provides. For example, a remediation certificate currently provides protection against a subsequent environmental protection order being issued for the same contaminant and area. A Tier 2 compliance letter provides no similar protection.  Furthermore, no reference to a Tier 2 compliance letter is set out in Environmental Protection and Enhancement Act and its legal significance is therefore unknown.

NEW REMEDIAL MEASURES TIMELINE

The Remediation Regulation introduces a mandatory timeline for remedial measures for all releases reported after January 1, 2019. If remediation cannot be completed to the satisfaction of the regulator within the following two years, a remedial action plan acceptable to the regulator must be submitted in accordance with the requirements of the Remediation Regulation.

The timeline is not mandatory for the complete remediation of a release. Rather, it is a timeline for the submission of a remedial action plan that will describe what further remedial activities will occur in the future. As such, it appears to be nothing more than an administrative requirement as opposed to an actual remedial efficiency requirement.

NEXT STEPS

The Remediation Regulation came into force as of January 1, 2019, and all releases now must comply with its provisions. Releases reported before January 1, 2019 continue to be regulated in accordance with the old regime under the Remediation Certificate Regulation.

This article was first published on the Blakes Business Class website. It is republished with the permission of the authors and Blakes. Copyright of this article remains with Blakes.


About the Authors

Dufferin (Duff) Harper practices in the areas of environmental law, commercial litigation and regulatory law. He routinely acts for clients on environmental due diligence and liability issues, especially as they pertain to brownfield redevelopment and transportation of dangerous goods. On the corporate side, he specializes in crafting complicated environmental agreements that allocate environmental risks and address remediation requirements. He also advises clients on greenhouse gas matters including the purchase and sale of greenhouse gas emissions credits, offset credits and other environmental attributes.

Duff has acted as lead counsel in several litigation cases involving contaminated sites, both on behalf of contaminated property owners and parties who were allegedly responsible for the contamination. On the regulatory front, he has appeared before numerous levels of courts and assessment tribunals, including tribunals constituted pursuant to the Canadian Environmental Assessment Act (CEAA) ), the National Energy Board (NEB) and numerous provincial regulators.

Duff also provides strategic regulatory compliance and environmental impact assessment advice to industrial clients, such as conventional oil and gas companies, mining companies, companies operating in the oil sands, and liquefied natural gas proponents.

Lindsey Mosher’s practice focuses on energy regulation, as well as environmental and administrative law. She has experience in a broad range of regulatory matters, including regulatory compliance issues, regulatory approvals and hearings, and corporate matters.

Prior to joining Blakes, Lindsey obtained industry experience working in the legal department of a large Canadian oil and gas company, Alberta’s utilities regulator and a large Canadian telecommunications company.

Lindsey has appeared before Alberta’s utilities regulator, the Provincial Court of Alberta and the Court of Appeal of Alberta.

Canada: Environmental Issues In Expropriation

Article by Chidinma Thompson, Borden Ladner Gervais LLP

A. Indirect Expropriation through Environmental Regulation

Claims for indirect expropriation may arise through environmental regulatory regimes. Where legislative schemes operate to interfere with existing property rights, such interference may constitute de facto, or indirect, expropriation. One example of a legislative regime that has been the subject of indirect expropriation claims is the federal Species at Risk Act1 (the “SARA”). Under the SARA, the Governor in Council is empowered to make emergency orders to provide for the protection of certain wildlife species.2 The emergency protection order may extend not only to Crown land, but also private property.3 The SARA provides for a limited compensation scheme. The Minister may provide for reasonable compensation for losses suffered “as a result of any extraordinary impact of the application of” the emergency protection order.4 The Governor in Council may make regulations with respect to the procedures to be followed and the methods to be used to determine the compensation.5

The sage grouse order exemplifies how a SARA emergency protection order may give rise to an expropriation claim. The sage grouse order was the first emergency protection order to be issued under section 80 of the SARA. It was issued to protect the greater sage grouse population in Alberta and Saskatchewan, and came into force on February 18, 2014. The sage grouse is an endangered species under the SARA and Alberta’s Wildlife Act.6 Under the Wildlife Act it is an offence to “willfully molest, disturb, ore destroy a house, nest or den” of sage grouse. The sage grouse order restricted activities on 1,672 km2 of provincial and federal Crown lands in southeastern Alberta and southwestern Saskatchewan.

A Sage Grouse (Photo Credit: Miles Tindal / Calgary Herald)

In The City of Medicine Hat et al v Canada (AG) et al,7 LGX Oil and Gas and the City of Medicine Hat, which had interests in the Manyberries oil production site that was affected by the sage grouse order, brought a judicial review and constitutional challenge of the sage grouse order at the Federal Court of Canada. The applicants successfully resisted a summary dismissal motion brought by the Crown and subsequently commenced an action at the Alberta Court of Queen’s Bench for $123.6 million in compensation (including accelerated reclamation costs) for de facto expropriation of existing oil and gas mineral rights, leases and rights-of-way. This case is ongoing. At this point, the Governor in Council has not made regulations with respect to compensation. The Crown pleads that the emergency protection order is regulatory and, in the alternative, that compensation under the SARA is discretionary. In the further alternative, the Governor in Council had chosen not to make regulations, and the emergency order did not have an “extraordinary impact” on the plaintiffs.

Another case was Groupe Maison Candiac Inc v Canada (AG).8 This case concerns the second emergency protection order made under the SARA, which protects the western chorus frog. The western chorus frog is listed on the SARA’s list of endangered species as a threatened species in the provinces of Ontario and Quebec. The emergency protection order prohibits excavation, deforestation and construction within a two km2 area in the municipalities of La Prairie, Candiac and St-Philippe, Quebec to protect the frog and its habitat. This order was the first time a SARA emergency protection order restricted development on private land.

As a result of the western frog order, Groupe Maison Candiac Inc. (“Groupe Maison”) was forced to reduce its residential development by 171 units after construction was already underway and Groupe Maison had obtained the requisite municipal and provincial approvals. Groupe Maison brought a judicial review of the emergency protection order by way of a constitutional challenge and an expropriation claim. The Federal Court dismissed the application, finding that: (1) section 4(c)(ii) of the SARA is within the federal government’s jurisdiction over criminal law; and protected by the doctrine of ancillary powers, including jurisdiction over peace, order and good governance; (2) the western chorus frog order did not amount to expropriation that required compensation; and (3) the Parliament had already provided a mechanism for compensation under the SARA that applies in “extraordinary circumstances.”

In 2017, the Minister of Environment and Climate Change received three petitions to recommend to the Governor in Council for an emergency order to protect the southern mountain woodland caribou population. The Minister conducted an Imminent Threat Assessment and, on May 4, 2018, determined that the southern mountain caribou faced imminent threats requiring intervention for recovery. An emergency protection order may be forthcoming for Alberta and British Columbia. The SARA public registry and the Canada Gazette will provide updates on this matter.

B. Polluter Pays in Expropriation of Contaminated Lands

Alberta’s Environmental Protection and Enhancement Act9 (the “EPEA”) is another environmental protection legislation that affects expropriation claims. As one of its purposes, the EPEA adopts the “polluter pays” principle to address contamination. The EPEA includes three regulatory mechanisms with respect to contamination: (1) Part 5 Division 1 concerns the release of substances generally; (2) Part 5 Division 2 concerns contaminated sites designation; and (3) Part 6 deals with conservation and reclamation. Further, the EPEA expressly acknowledges an affected person’s recourse to court through private civil claims.10 Some of the key concepts related to the three regulatory mechanisms are considered below.

Part 5 Division 1 of the EPEA deals with the release of substances into the environment. Under section 112, the person responsible for the substance has the duty to take remedial measures with respect to any release of same.11 Environmental protection orders may also be issued to the person responsible for the substance where the release is causing, has caused or may cause an adverse effect.12

The statutory definition of “person responsible” includes: (1) owner and previous owner of substance; (2) every person who has or has had charge, management or control of the substance; (3) successor, assignee, executor, administrator, receiver, receiver‑manager or trustee of (1) to (2); and (4) principal or agent of (1) to (3).13 The “person responsible’ excludes, unless they release new or additional substances: (1) a municipality in respect of land shown on its tax arrears list, or land acquired by it by dedication or gift of an environmental reserve, municipal reserve, school reserve, road, utility lot or right of way; (2) a person who investigates or tests the land for the purpose of determining the environmental condition of that parcel; and (3) the Minister responsible for the Unclaimed Personal Property and Vested Property Act, with respect to a parcel of land to which that Act applies. Thus, it appears that the notion of “person responsible” is based on one’s relationship to the substance/release only, and not based on the cause of the release.

Part 5 Division 2 of the EPEA provides for the designation of contaminated sites. Under section 129 of the EPEA, the Director may designate a site as a contaminated site and issue an environmental protection order to a person responsible for the contaminated site. The Director must consider several factors before issuing an environmental protection order for a contaminated site, including: (1) due diligence of the owner or previous owner; (2) whether the presence of the substance at the site was caused solely by the act or omission of another person, other than an employee, agent or person with whom the owner or previous owner has or had a contractual relationship; and (3) the price the owner paid for the site and the relationship between that price and the fair market value of the site had the substance not been present.14

The “person responsible for the contaminated site” means: (1) a person responsible for the substance that is in, on or under the contaminated site; (2) any other person who the Director considers caused or contributed to the release of the substance into the environment; (3) the owner of the contaminated site; (4) any previous owner of the contaminated site who was the owner at any time when the substance was in, on or under the contaminated site; (5) a successor, assignee, executor, administrator, receiver, receiver‑manager or trustee of a person referred to in any of subclauses (2) to (4); and (6) a person who acts as the principal or agent of a person referred to in any of subclauses (2) to (5). As was the case with Division 1, the definition of “person responsible for the contaminated site” again excludes municipalities and investigators. In this case, the test is based on the relationship to the substance/release and the property.

In practice, Division 2 is rarely used. Designation will only occur as a last resort when there are no other appropriate tools. There have only been five instances of designation of a contaminated site since 1993 and no environmental protection order appears to have been issued under Division 2. Division 2 offers options otherwise unavailable, including the allocation of responsibility to present and past site owners who may have contractually assumed liability for the pollution, remedial actions plans and agreements with the Director, and the apportionment of costs of remedial work among responsible parties. The Minister may also pay compensation to any person who suffers loss or damage as a direct result of the application of Part 5 Division 2.15

Environmental contamination may affect the valuation of expropriated property. Under the Expropriation Act,16compensation for expropriation is based on the market value of the expropriated land, which is in turn “the amount realized if sold in the open market by a willing seller to a willing buyer”,17 and provable damages. The determination of market value accounts for everything that is present in the site, except for the legislated exclusions found in section 45 of the Expropriation Act.

Contamination introduces issues in valuing expropriated property, given the uncertainty in liability exposure, scope, duration, risk and stigma. Below are some case law on the interaction between the expropriation of contaminated lands and the “polluter pays” principle.

In Toronto (City) v Bernardo,18 the respondent Bernardo was the registered owner of a property and permitted the corporate respondent’s scrap metal business on property rent-free by oral licence to occupy. The City of Toronto served and published notice to expropriate property. The City conducted environmental testing on property which showed contamination, and was advised that clean-up costs for property could be in range of $250,000 to $750,000. The appraised value of the property was $242,500 before taking into consideration site remediation or clean-up costs. Given the estimated cost of remediation which exceeded value of land, the City’s offer of compensation to the respondents was $1. The respondents did not request compensation hearing but refused to surrender possession. The City brought motion for order to take possession. The Ontario Supreme Court granted the City’s motion as the respondents had the opportunity to contest the City’s offer of compensation in proceedings before the Ontario Municipal Board and chose not to take any action to assert claims for compensation.

In Thompson v Alberta (Minister of Environment),19 the claimant had purchased land for the sum of $1 million. At the time of purchase, the land was not part of any property acquired by the Crown for a proposed transportation corridor. The Crown reviewed roadway plan within months of claimant’s purchase and determined that land was a necessary part of the corridor. The Crown expropriated land for $1,025,000. The claimant brought action for increased compensation. The action was allowed in part. The claimant was granted $1,120,000. The Crown’s valuation discounted the value of the property because of the unknown cost of filling or remediating a wetland (which is 50% of the property) for future residential development, which posed an economic challenge for a prospective purchaser. The Court found that the cost of remediation calculated by the Crown was based on premature assumption that land was to be developed in isolation with no possible cost sharing by adjacent developers. The Court, however, recognized that a discount must be applied for market value because of this possibility of remediation.

In Ville de Saint-Jean-sur-Richelieu c Cour du Québec,20 the subject property included a grocery store, snack-bar and a retail marina fuel distribution outlet for vessels navigating on Chambly canal, and a gas station for road vehicles. The issue before the Court was whether the costs of decontamination should be deducted from the compensation awarded for expropriation, based on the duty to remediate. It was argued that evidence demonstrated that there was a spill onto the neighbouring property, therefore the question as to cessation of activities no longer applied, and the mandatory provisions of the EQA regarding decontamination was triggered. The Tribunal Administratif du Québec (the “TAQ”) ruled that the total remediation cost of $450,000 be paid by the owner of the property, 9092-9340 Québec Inc. (“9092”) and should be deducted from its expropriation indemnity award. The value of the expropriated property, after deduction of the decontamination costs, was established as being $31,000.


Lock 9, the southern terminus of the Chambly Canal, is located in the town of St.-Jean-Sur-Richelieu.

The Court of Quebec allowed the appeal, holding that the finding of the TAQ was unreasonable and profoundly unfair. Were it not for the expropriation, 9092 could have ceased its activity at its own time, negotiated with a willing purchaser and, based upon the projects of the purchaser, negotiated the decontamination works remaining according to the circumstances. The City deprived 9092 of its right to complete the decontamination work at the time that it deemed the most suitable to its interests and subject to conditions that would have been more favourable. By forcing 9092 to assume the costs of decontamination estimated by the City engineer, the TAQ deprived the owner of the quasi-totality of the value of the expropriated property. The City brought a judicial review application which was subsequently dismissed. The Court found that the systemic analysis undertaken by the Court of Quebec highlights the significant defects and the fragility of the TAQ ruling to assign full liability to 9092 for the estimated costs of decontamination of the property.

Case law suggests that the law is not blind to the causation of the contamination when evaluating the market value of an expropriated property that has been contaminated. Liability for the remediation of contaminated land in Alberta clearly rests with “person responsible for the substance” and, in the rare case of designated contaminated sites, “person responsible for the contaminated site.” Liability for contamination does not run with the land in Alberta.

This leads to the question of what is the intent of the law in respect of a faultless landowner for the environmental depreciation of land in the expropriation context. The principles of statutory interpretation apply to deem the legislature as knowing all the law and the necessary statutory language to give effect to its intention. The EPEA and the Expropriation Act are meant to be interpreted harmoniously as a scheme in cases of expropriation involving contamination. The Expropriation Act is a remedial statute. Accordingly, it must be given a broad and liberal interpretation consistent with its purpose.

Currently, the right of a faultless landowner to recover from a “person responsible” remediation costs in civil claims (whether under the common law or the EPEA) is a chose in action. This chose in action does not appear to be considered in the calculation of market value in expropriation. In the new era of third-party litigation funding, a chose in action for remediation costs is a valuable element that may offset some or all of the discounts associated with contaminated land, even in an open market.

Footnotes

1 Species at Risk Act, SC 2002, c 29 [SARA].

2 SARA, s 80(1).

3 SARA, s 80(4)(c)(ii).

4 SARA, s 64(1).

5 SARA, s 64(2).

6 Wildlife Act, RSA 2000, c W-10.

7 The City of Medicine Hat et al v Canada (AG) et al, Federal Court of Canada File No. T-12-14. See also Federal Court of Canada, Proceeding Queries, Recorded Entries for T-12-14, online: click here.

8 Groupe Maison Candiac Inc v Canada (AG), 2018 FC 643.

9 Environmental Protection and Enhancement Act, RSA 2000, c E-12 [EPEA].

10 EPEA, ss 217, 219, 227-228.

11 EPEA, s 112.

12 EPEA, ss 113-114.

13 EPEA, s 1(tt).

14 EPEA, s 129(2).

15 EPEA, s 131.

16 Expropriation Act, RSA 2000, c E-13.

17 Expropriation Act, ss 41-42.

18 Toronto (City) v Bernardo, 2004 CanLII 5760 (ONSC).

19 Thompson v Alberta (Minister of Environment), 2006 ABQB 510.

20 Ville de Saint-Jean-sur-Richelieu c Cour du Québec, 2017 QCCS 4832.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

This article was first published on the BLG website. It is re-published with the permission of the author.

About the Author

Chidinma Thompson is a partner in Commercial Litigation Group at Borden Ladner Gervais LLP‘s Calgary office. She practices commercial litigation and arbitration, project approvals, environmental defence and compliance advisory. Her practice covers a broad range of sectors including oil and gas, electricity, renewable energy, municipal and land development. She has experience in regulatory hearings before the Alberta Energy Regulator and its predecessors, Alberta Utilities Commission, and the Calgary Subdivision and Development Appeal Board. She has appeared before the Alberta Provincial Court, Court of Queen’s Bench and the Court of Appeal.

Financing Soil Remediation: Exploring the use of financing instruments to blend public and private capital

The International Institute for Sustainable Development (IISD) recently released a report entitled Financing Soil Remediation: Exploring the use of financing instruments to blend public and private capital.

The report makes the statement that governments around the world are looking at opportunities to attract private capital participation in both land remediation and its productive use and redevelopment thereafter. The business case is intrinsically the value capture in the increase in retail price of land and related business opportunities once the remediation is complete. However, where land value capture is lower and related revenue streams remain uncertain, the case for private capital participation is much less compelling. Governments, in this case, have to fund the remediation through public budgets and thereafter seek opportunities to partner with private counter-parties to use the land as “fit for purpose.”

The IISD report presents 17 case studies on a variety of financing instruments that blend public and private capital. Each case study includes a short discussion on the extent to which each instrument could be used to finance the remediation of contaminated soil. The case studies in thereport demonstrate a variety of financing strategies, from index-linked bonds to savings accounts and from peer-to-peer lending platforms to debt-for-nature swaps.

This report is a part of a series of outputs of a four-year project, Financing Models for Soil Remediation. The overall objective of the project is to harness the full range of green finance approaches and vehicles to manage the associated risk and fund the remediation of contaminated soils.

The series of reports focuses on the financial vehicles available to attract investment to environmental rehabilitation of degraded land and the financial reforms needed to make these vehicles a viable and desirable means of investing in land rehabilitation. The IISD draws on best practices worldwide in funding environmental rehabilitation, with a special focus on the design and use of financial mechanisms to attract private investors, share the risk and offer a clear benefit for the rehabilitated land. If you would like to make some investments, with regards to personal investment then you may want to check out some mutual funds.

Several lessons emerge from these case studies described in the report in the context of financing the remediation of contaminated land, including the following:

  1. As with all financial arrangements, the risk appetite of different investors has to match the risk profile of
    the investment. It is difficult to crowd in private and institutional investors when projects remain below
    investment grade.
  2. Money follows a good deal. When legal, technological, revenue and other risks are understood and are
    transparent, feasible ways to reduce these uncertainties can be planned and financing strategies can be
    worked upon.
  3. When there is reasonable certainty that the value of the land will increase after remediation and will
    subsequently generate stable and predictable revenues, there is a strong case for blending public and
    private financing.
  4. When, on the other hand, projects have less attractive revenue potential, governments have to step in to
    finance the remediation, or at least a larger part of it.

About the IISD

The International Institute for Sustainable Development (IISD), headquartered in Winnipeg, Manitoba, is an independent think tank championing sustainable solutions to 21st–century problems. The mission of the IISD is to promote human development and environmental sustainability. IISD focuses on research, analysis, and knowledge products that support sound policy making.

When Oil and Water Mix: Understanding the Environmental Impacts of Fracking

Dan Soeder, director of the Energy Resources Initiative  at the South Dakota School of Mines & Technology, has co-authored the cover article titled “When oil and water mix: Understanding the environmental impacts of shale development,” in the recent issue of GSA Today, a magazine published by the Geological Society of America.

The article explores what is known and not known about the environmental risks of fracking with the intent of fostering informed discussions within the geoscience community on the topic of hydraulic fracturing, says Soeder. Soeder’s co-author is Douglas B. Kent of the United States Geological Survey.

In this paper, Soeder and Kent bridge the gap in consensus regarding fracking, providing current information about the environmental impacts of shale development. The article is open access and adheres to science and policy, presenting a complicated and controversial topic in a manner more easily understood by the lay person.

“Geoscientists from dinosaur experts to the people studying the surface of Mars are often asked by the public to weigh-in with their opinions on fracking. We wanted the broader geoscience community to be aware of what is known and not known about the impacts of this technology on air, water, ecosystems and human health.  A great deal has been learned in the past decade, but there are still critical unknowns where we don’t yet have answers,” Soeder says.

Development of shale gas and tight oil, or unconventional oil and gas (UOG), has dramatically increased domestic energy production in the United States and Canada.  UOG resources are typically developed through the use of hydraulic fracturing, which creates high-permeability flow paths into large volumes of tight rocks to provide a means for hydrocarbons to move to a wellbore. This process uses significant volumes of water, sand, and chemicals, raising concerns about risks to the environment and to human health.

In the article, Soeder and Kent address the various potential impacts of fracking and how those impacts are being addressed.  Risks to air include releases of methane, carbon dioxide, volatile organic compounds, and particulate matter. Water-resource risks include excessive withdrawals, stray gas in drinking-water aquifers, and surface spills of fluids or chemicals. Landscapes can be significantly altered by the infrastructure installed to support large drilling platforms and associated equipment. Exposure routes, fate and transport, and toxicology of chemicals used in the hydraulic fracturing process are poorly understood, as are the potential effects on terrestrial and aquatic ecosystems and human health.

Schematic diagram illustrating unconventional oil and gas (UOG) development activities relevant to research on human-health and environmental impacts (not to scale): well-pad construction (1); drilling (2); completion/stimulation (3, 4); production of natural gas (5) and oil (6) with well casings designed to protect drinking-water aquifers; ultimate closure (plug and abandon), illustrating legacy well with leaking casing (7); wastewater disposal (8); induced seismicity (9); landscape disturbance (10); and potential for transport pathways from deep to shallow formations (11). Also represented are water supply wells in shallow and deep aquifers (12). Photographs by Dan Soeder.