Transport Canada amends TDGR – Marine Requirements and other miscellaneous changes

As reported by the Compliance Center, the December 13, 2017 edition of the Canada Gazette II contains the expected rewrite of Part 11 “Marine” requirements of the Transportation of Dangerous Goods Regulations (TDGR). In addition, there are related changes in other parts, as well as some unrelated miscellaneous changes in other areas.

Marine Amendment

The most wide-reaching change, although perhaps of relatively minor significance to the general regulated community, is the replacement of the term “ship” with “vessel”. This, among other changes, is to update the TDGR to current Canada Shipping Act (CSA, and related regulations) terminology. Many aspects of Part 11 related to the CSA had not been updated since 2008.

Note: Interestingly, the referenced definition of “vessel” in the CSA includes all “means of propulsion”:
http://laws-lois.justice.gc.ca/eng/acts/C-10.15/page-1.html#h-2

This differs from the TDGR definitions for road and rail vehicles which expressly exclude “muscle power” as a means of propulsion. 

Other definition changes include elimination of the reference to “short run ferry”, previously defined in TDGR Part 1.3 as operating between points “not more than 3 km apart”. TDGR 1.30 special case exemption now refers only to “Ferry,” but describes within the exemption that it’s applicable to operating between two points “not more than 5 km apart.

The definition of an “inland voyage” now cites the CSA Cargo, Fumigation and Tackle regulations (CFTR):
http://laws-lois.justice.gc.ca/eng/regulations/SOR-2007-128/index.html

; which, in turn, defer to the Vessel Certificate regulations (VCR):
http://laws-lois.justice.gc.ca/eng/regulations/SOR-2007-31/

Other aspects of dangerous goods vessel shipment are also found in these CSA regulations.

One more definition that’s been changed to a citation is the one for a roll-on/roll-off (ro-ro) ship. The vessel is still referred to as a “ship”- since the definition cites the IMDG Code. For those without ready access to the IMDG, the current Ed. 38-16 version reads, in Chapter 1.2 (s. 1.2.1 Definitions):

“…Ro-ro ship (roll-on/roll-off ship) means a ship which has one or more decks, either closed or open, not normally subdivided in any way and generally running the entire length of the ship, carrying goods which are normally loaded and unloaded in a horizontal direction.”

Additional requirements now apply also to ferries regarding passenger vessel limitations, location of shipping documents and incident reporting.

Vessel Restrictions & Exemptions

Schedule 1 Column 8 restrictions regarding carrying DG on passenger vessels is further clarified by TDGR Part 1 sections 1.6 and new special case 1.10.

Gasoline and propane now have a Part 1 special case exemption 1.30.1 to facilitate fuel deliveries and reduce the need for equivalency certificates.

UN3156 is also now permitted in 25 L quantities on passenger vessels.

Mercurous chloride (calomel) is no longer included in the s. 1.46 special case exemption list.

The requirement to mark the flash point on packages with Class 3 contents (s. 4.13) has been removed as it was never an IMDG requirement.

IMDG v. TDGR

Additionally, the often-confusing reference to “Home Trade Voyages” in determining the applicability of the IMDG Code, versus the “standard” TDGR extension of ground requirements, has been replaced by a direct, simplified explanation. Voyages where the vessel (oops – I almost said ship!) is within 120 nautical miles – i.e. 222 km- from shore are considered non-IMDG unless the vessel travels south of the ports of New York or Portland, Oregon, or to another foreign destination. Thus, vessel transport of dangerous goods to St. Pierre and Miquelon (territories of France), despite being within 20 km or so from Newfoundland, require compliance with IMDG.

Inland (mostly “fresh water”) voyages between Canada and other countries – e.g. Great Lakes or rivers to the US – remain excluded from mandatory IMDG compliance. Conversely, vessels registered in Canada but transporting between two foreign destinations, remain under IMDG requirements.

Other Amendments

Changes not directly related to Part 11 topics include correction of some typographical and miscellaneous errors in the TDGR or website html information.

Examples include re-entering the PG II information for UN1790, UN2734 on the website; editing SP 159 to clarify that the new Class 9 Lithium Battery label illustration is only used for labels and not used for placarding purposes – standard Class 9 placards are used (as is the case in air, ocean and US 49 CFR); and updating ICAO references in Part 12.

The Table in 5.16 has been repealed due to the updates in the referenced CSA standards.

Transition:

The changes are effective as of the December 13th CG II publication date and have a transition period of 6 months for mandatory implementation. The CGII document which includes a discussion of the changes in the RIAS (Regulatory Impact Analysis Statement) is found at:

http://canadagazette.gc.ca/rp-pr/p2/2017/2017-12-13/html/sor-dors253-eng.html

 

Nearly $3 million awarded for R&D of Marine Oil Spill Response Technology by Canadian Federal Government

The Canadian federal government recently announced investments of $2.89 million for four projects to enhance marine incident prevention and responsiveness along Canada’s ocean coastlines.

Centre for Cold Ocean Resources Engineering (C-CORE)

Through its Oil Spill Response Science (OSRS) program, the federal government provided $991,500 to C-CORE, a St. John’s-based research and development company, to increase the efficiency of existing mechanical oil recovery systems for heavy oil products in harsh, cold environments.  The government of Newfoundland and Labrador will also provide $428,500 to the project.

“This project leverages C-CORE’s expertise in analytical modelling, computer simulation and large-scale physical tests to assess and optimize technology performance in harsh environments,” Mark MacLeod, C-CORE president and chief executive officer, said in a statement.

Lab-scale test apparatus for oil recovery

The main intermediate outcome of this project consists of an improved oil spill collection and separation system that can be integrated in an efficient response technique including a specially designed vessel.  The system will be based on the established concepts and proven technologies for recovery of heavy oil spills from sea water in cold and ice prone ocean environments.

The long-term outcome of the project will include specialized vessels with the required detection, storage, and spill removal systems, tested and proven in the real life conditions.

Project partners with C-CORE include Elastec, Eastern Canada Response Corporation Ltd. (ECRC), and InnovatechNL.

University of Toronto

A further $400,000 will go to a University of Toronto project that will develop a sorbent-based direct oil collector (called In-Situ Foam Filtration System or ISFFS) for use in oil spills.  This system will be capable of directly reclaiming the dissolved, emulsified, dispersed, and free oil from marine spill sites.  To meet this objective, the development of advanced functional foams (sorbents), implementing a bench-top system, and design and optimization of in-situ filtration process as a proof-of-concept will be undertaken.

The ISFF will directly collect the oil from the spill site by pumping through oil sorbent bed, which serves as the filtration media.  For this type of foam, there is no need for high oil-sorption capacity thus, functionalizing the foam with toxic and expensive elements can be avoided along with minimizing material costs.  Moreover, the in-situ filtration will make the oil sorption process continuous, simplifies oil collection, making oil spill response quicker and more cost effective.

Project partners include Tetra Tech, Polaris Applied Sciences Inc., Dr. Foam Canada, Gracious Living Innovations Inc., and ShawCor Ltd.

University of Alberta’s Advanced Water Research Lab

The OSRS program will be contributing $600,000 towards a $1.65 million project be undertaken at the University of Alberta.  The project involves the development of an on-board membrane based hybrid oil/water separation system.  If successfully developed, the system will significantly increase the capacity of recovery vessels that physically collect oil spilled at sea, thereby reducing the cost and spill response time for cleanup.  The technology can be directly and easily incorporated into existing rapid deployment spill clean-up systems mounted on ships or barges.  It would be ready to commercialize for manufacturers of existing oil spill clean-up tankers, making the research easy to implement for large or small-scale spills and for potential use in future high-risk areas of development.

BC Research Inc.

Finally, the federal OSRS program committed $925,000 to BC Research Inc., a company with a broad experience in chemical product development, to further develop a hybrid spill-treating agent (STA) that will help slow or prevent the spread of an oil slick on water.

If the R&D project is successful, a hybrid STA will be commercially available that can be used to combat marine oil spills at large scale.  The hybrid STA would have both gelling and herding properties, to prevent or slow down the spreading of an oil slick by rendering it into a thickened (gelled) state, as well as to use it as a herding agent, to facilitate either controlled burn or skimming operations.

Current oil recovery rates for spills on water are estimated to be in the range of 10-20%.  With current STAs, there are few options to prevent or slow down weathering processes, including spreading and dispersion. Delaying the spreading and weathering process would potentially facilitate cleanup and improve the degree/rate of oil removed.

Project partners include NORAM Engineers and Constructors and the University of British Columbia.

Volunteers cleaning Ambleside Beach in West Vancouver, 1973. (Source: John Denniston)

Brownfield Redevelopment in Western New York

As reported in the Buffalo Law Journal/Buffalo Business First, Gov. Andrew Cuomo designated four Brownfield Opportunity Areas in Buffalo last month, providing another tool for area stakeholders to have the areas developed.

He designated areas in South Buffalo, the Buffalo Harbor, the Buffalo river corridor and the Tonawanda Street corridor.

“These designations will equip Buffalo officials with tools and resources needed to carry out their vision of community revitalization and help turn these blighted properties back into economic engines,” he said. “This is one more reason why Buffalo remains a city on the move.”

Before the designation, the city had to submit plans for the areas, said Michael Hecker, senior associate at Hodgson Russ. “The goal is to find these areas and figure out a way for the state to work with them to help them with long-term planning on how to redevelop the sites.”

It’s a three-step grant process to determine how to revitalize a brownfield area, Hecker said.

“The first step is a pre-nomination study,” he said. “The second is step is nomination and the third is implementation strategy.”

South Buffalo Brownfield Opportunity Area (Credit: Buffalo Urban Development Corporation)

In the pre-nomination phase, a municipality and associated groups look at an area that may have an issue and explore ways to revitalize the area. In the nomination process, funding sources are considered, as well as market trends. And in the third step, implementation of the plan is identified and there’s a thorough accounting of funding sources.

“It’s a wholesome package that the state has developed as a basis to spur economic development,” Hecker said.

The three steps are completed through the New York State Department of State. Once the governor designates a brownfield opportunity area, various programs can lead to more state benefits.

“If you do your redevelopment project through a BOA, there are additional tax credits available,” Hecker said.

“It’s basically the governor recognizing that these areas have spent the time and focus on an economic redevelopment strategy and they should qualify for additional credits to spur redevelopment in these areas.”

He said the designations fit in with the city’s Green Code under Mayor Byron Brown.

“(BOAs) are a central component of our city’s Green Code initiative and my administration’s place-based economic development strategy,” Brown said in a statement.

“The State’s approval of the BOAs, created by the city of Buffalo with significant public input, places Buffalo at the forefront of brownfield redevelopment nationally and will further enhance Buffalo’s ability to compete for investment, bringing new life to even more neighborhoods by making use of underutilized properties that create jobs for city residents.”

Some of the areas will need to go through remediation in order to be redeveloped, according to Hecker. For instance, the South Buffalo Brownfield Opportunity Area, which consists of approximately 1,968 acres in an area that was once heavily industrialized by the steel industry, has sites that will require remediation.

Plans for that site include a nine-hole golf course, indoor and outdoor recreation and expansion of the Tifft Nature Preserve.

The Buffalo River Corridor Brownfield Opportunity Area also has long-standing contamination issues. It’s made up of 1,050 acres in the Old First Ward, containing 58 possible brownfield sites.

“One of the main areas of that project is restoration and enhancement of the environmental quality of the river and enhancing waterfront access,” Hecker said.

“Buffalo is lucky in the fact that it has an unbelievable natural resource with water access. Over the last 10 to 15 years, you’ve definitely seen an enhanced focus on trying to leverage that natural resource to be an economic driver. I think the city, to its credit, has done a very good job of doing that. This is just another option for them to utilize that program to benefit it.”

The Buffalo Harbor Brownfield Opportunity Area is 1,045 acres, with six brownfield sites. The area includes waterfront space at both the Inner and Outer harbors.

Assemblyman Sean Ryan said BOA designation will help with future waterfront development.

“Investing in environmental remediation prepares our communities for revitalization and renewed economic activity,” Ryan said. “Contaminated sites along our waterfront have made progress difficult over the years.”

The Tonawanda Street Corridor Brownfield Opportunity Area is 650 acres containing 46 potential brownfield sites. Plans include reconstruction of the Scajaquada Expressway and restoration of Scajaquada Creek.

Hecker said the designated areas represent places where longtime residents can see the potential benefit to redevelopment.

“One of the interesting things to me about these projects is that they really are fully integrated community projects,” he said.

Brownfield funding is available at the federal level through the Environmental Protection Agency, as well, Hecker said.

While the Trump administration has pared back the EPA, Administrator Scott Pruitt has said that brownfields would remain a priority to the agency.

“There hasn’t been any change in that area,” Hecker said.

Pruitt is focused on shifting the responsibility for contaminated sites to states, Hecker said.

“(Pruitt) wants states to work together with the federal government in a limited capacity to manage these things on their own,” he said.

“From a standpoint of economic development, especially with President Trump’s focus on infrastructure, I don’t think this is going to be a major issue unless there are further cuts in the budget. That remains to be seen.”

Canadian Government to spend $80 million to Study Oil Spills

Building on the announcements of $3 million in funding for R&D on oil spill response technology, the federal government recently announced it is spending $80-million on oil spill research on preventing spills as well as their effect on the marine environment.

There will be $45.5-million set up for a research program that will foster collaboration among researchers in Canada and around the world, with $10-million a year to bring scientists together to study how oil spills behave, how to clean and contain them and how to minimize environmental damage. 

The Centre for Offshore Oil, Gas and Energy Research in Halifax will also get some of the $16.8-million in funding for new scientists and specialized equipment.  It will support oil spill research to better understand how oil degrades in different conditions.

Another $17.7-million will be used to fund research and development of enhanced ocean computer models of winds, waves and currents to allow responders to better track spills.

The funds are part of the $1.5-billion Oceans Protection Plan, which is aimed at developing a marine safety system.

 

RFPs for Spill Response Equipment by Canadian Coast Guard

The Canadian Coast Guard is soliciting bids for new spill response equipment for use on its marine vessels.  The equipment will be used to contain and remove oil and other contaminants from the water in the case of a spill.

The RFPs can be found at the following web sites:

All interested suppliers may submit a bid which is open to companies from Canada, the United States, and other countries that are part of various trade agreements with Canada.

The competitive procurement strategy will be based on lowest bid meeting the technical specifications.

This will be the first equipment acquired under the Environmental Response Equipment Modernization initiative of the Oceans Protection Plan.  The equipment will include curtain booms, high-speed sweep systems, and small, portable multi-cassette skimmers.

The Environmental Response Equipment Modernization initiative will bring the Coast Guard in line with and beyond current standards regarding environmental spill response and take advantage of innovations and advancements in technology.

Char Technologies Ltd. Announces Acquisition of the Altech Group

CHAR Technologies Ltd. (“CHAR”) (YES:TSXV) recently announced that it has closed the acquisition of  the Altech Group (“Altech”), which is comprised of  Altech Environmental Consulting Ltd. and Altech Technologies Systems Inc.  Altech provides solutions to environmental engineering challenges.  Founded in 1986, Altech has 12 employees and a diverse and stable client base.  CHAR acquired all issued equity in both Altech Environmental Consulting Ltd., and Altech Technology Systems Inc.  Altech shareholders received 4,523,810 in common shares of CHAR as well as $150,000 in cash.

Bill White, Chairman of CHAR stated that, “The acquisition of the Altech Group adds over 30 years of experience in environmental technologies and professional engineering consulting” and that “Altech provides CHAR with a growth catalyst to move much of our engineering design in-house, while at the same time allows us to greatly expand our technology solutions offering for industrial clean air and clean water.”

CHAR brings the shareholders of Altech a succession plan and an opportunity to realize value at an optimal time.  According to Alexander Keen, Founder and CEO of Altech, “CHAR brings an exciting future for Altech. Our joint efforts going forward will bring tremendous opportunities”.

The new joint enterprise plans to commercialize a new cleantech solid fuel branded “CleanFyre”.  This product is a GHG neutral coal replacement, generically referred to as biocoal.  CleanFyre will allow large industrial customers the ability to greatly reduce their GHG emissions without significant capital expenditures.  According to Andrew White, CEO of CHAR, “CleanFyre will leverage both Altech’s experience and expertise, and CHAR’s platform pyrolysis technology, the same technology used to create SulfaCHAR, to create a solution with strong market pull and significant growth opportunity.”

About CHAR

CHAR is in the business of producing a proprietary activated charcoal like material (“SulfaCHAR”), which can be used to removed hydrogen sulfide from various gas streams (focusing on methane-rich and odorous air).  The SulfaCHAR, once used for the gas cleaning application, has further use as a sulfur-enriched biochar for agricultural purposes (saleable soil amendment product).

About Altech Group

Altech is a full-service engineering and consulting firm providing energy, environmental, and health and safety services to clients.  Altech specializes in corporate management systems, energy and environmental audits and assessments, contaminated site investigation and remediation, health & safety management, training, and industrial hygiene.  Established in 1986, Altechemploys multi-disciplinary professionals including energy and environmental engineers, scientists, hydrogeologists, geologists, and technicians committed to providing our clients the highest quality service and integrated solutions for business and the environment.

Spencer EM Consulting forms Strategic Alliance with Flood Barrier America

Spencer Emergency Management Consulting is recently announced it has formed a strategic alliance with Flood Barrier America, Inc..  Combining experts in flood risk assessment with a suite of world class flood response capabilities in order to provide total solution to clients.

Spencer Emergency Management Consulting is focused on the strategic integration of emergency management concepts towards an outcome of resilience within a community, business or government.

Flood Barrier America, Inc. (FBA) provides high quality and practical flood resilience products, services and solutions. FBA does research and collaborates with affiliates and partners that protect against the growing global problem of flooding.

Flood Barrier provided by FBA

 

 

Canada: Courts Struggle to Mix Bankruptcy and Environmental Law – SCC To Hear Redwater Appeal

Article by John GeorgakopoulosGiselle Davidian and Serin Remedios

Willms & Shier Environmental Lawyers LLP

The Supreme Court of Canada (SCC) granted leave to hear the appeal of Orphan Well Association v Grant Thornton Limited.1 The SCC will reconsider whether trustees and receivers in bankruptcy must remediate wells in priority to the claims of secured creditors.

In April 2017, the Alberta Court of Appeal released its decision in Redwater.2 The Court found that the Government of Alberta’s environmental orders for oil well remediation did not have priority over secured creditors in bankruptcy proceedings.

In upholding the lower court’s decision, set out in our previous update, the Court of Appeal added to the “untidy intersection” between bankruptcy proceedings and provincial environmental law. Both Courts concluded that receivers and trustees were permitted to renounce an insolvent debtor’s interest in its licensed assets while selling valuable licensed assets to maximize recovery for secured creditors.

The decision, as it stands, allows receivers and trustees in bankruptcy to disclaim unprofitable assets and not be required to fulfill certain environmental obligations associated with those disclaimed assets.

Recap

The case revolves around the assets of a junior, insolvent oil and gas producer, Redwater Energy Corporation (Redwater).

Orphan Oil Well

When Redwater’s primary secured creditor began enforcement proceedings under the Bankruptcy and Insolvency Act (BIA), Grant Thornton Limited (GTL) was appointed as receiver and trustee.3 Several of Redwater’s oil wells had costs of remediation exceeding the value of the wells. GTL took control of only 20 of 127 Redwater’s assets and disclaimed the oil wells that had onerous environmental abandonment costs.

Alberta oil and gas legislation requires licensees, including trustees, to comply with “end-of-life” rules for oil wells. Where no one is financially capable of remediating and abandoning a well, the well is designated an “orphan well” under Alberta’s Oil and Gas Conservation Act (OGCA).4/em>

The Alberta Energy Regulator (AER) ordered GTL to remediate the disclaimed oil wells before distributing funds to creditors. When GTL indicated that it did not intend to remediate the wells, AER and the Orphan Well Association (OWA) brought applications asking the court to void GTL’s disclaimer of the non-producing wells and order GTL to comply with AER’s orders. AER argued that Redwater’s insolvency and bankruptcy did not affect Redwater’s environmental obligations and that GTL was legally required to discharge those obligations before paying Redwater’s creditors.

GTL brought a cross-application challenging the constitutionality of AER’s stance on GTL’s environmental obligations and seeking approval of the sale of Redwater’s valuable wells.

At issue was whether AER’s orders were provable claims in bankruptcy and therefore subject to bankruptcy proceedings. If AER’s orders were subject to bankruptcy proceedings, other creditor’s claims would take priority. The practical outcome being that the corporation would likely have no means of satisfying its environmental obligations after settling its obligations to other creditors. The cost of remediating the orphan wells would then fall on the Government of Alberta.

As we previously reported, Alberta Court of Queen’s Bench concluded that the applicable sections of the OGCA and Pipeline Act (PA) frustrate the federal purpose of the BIA of managing the winding up of insolvent corporations and settling the priority of claims against them. Based on the doctrine of paramountcy, the OGCA and PA were inoperable to the extent that they conflicted with section 14.06 of the BIA. This section of the BIA exempts a receiver or trustee from personal liability, allowing a trustee and receiver to disclaim assets, and prescribes the priority of environmental remediation costs.

OWRA and AER appealed the decision.

Court of Appeal Decision

The Court of Appeal upheld the lower court decision. The key issue on appeal was the priority and treatment of environmental claims in bankruptcy, and whether environmental claims were provable claims under section 14.06 of the BIA.

Priority and Treatment of Environmental Claims in Bankruptcy

The Court found that the BIA was amended in 1997 to specifically address environmental claims. The BIA now incorporates environmental claims into the general bankruptcy process, rather than exempting them. Following the test set out in Newfoundland and Labrador v AbitibiBowater Inc., the Alberta Court of Appeal found that AER’s orders were subject to bankruptcy proceedings.5 By refusing to permit the transfer of Redwater’s valuable assets unless funds were set aside for remediation, AER reduced the environmental obligations to “sufficiently certain” monetary claims. Accordingly, AER cannot indirectly interfere with the value of assets in a bankruptcy by placing financial preconditions on the transfer of AER licences.

Constitutional Law Issue

The Court of Appeal held that there was an operational conflict between federal and provincial regimes. The Court found that the provincial regulatory scheme frustrated the purposes of the BIA, which include determining the priority of claims against insolvent corporations. The practical outcome being that GTL did not have to comply with AER’s remediation obligations prior to settling claims of secured creditors.

Nortel and Northstar

The dissenting opinion briefly considered the two leading cases in Ontario on environmental claims in bankruptcy and insolvency: Nortel Networks Corporation (Re) and Northstar Aerospace Inc. (Re).6 In Nortel, the Court found that some of the Ministry of the Environment’s (MOE, as it then was) orders had priority over creditor claims, but in Northstar, the Court found that the MOE’s orders did not have priority.

Implications

The practical implications of Redwater may be far reaching not only for the worlds of bankruptcy & insolvency and oil & gas, but also for the world of director and officer liability.

Will we see more Alberta provincial environmental orders aimed at former directors and officers? In Northstar, after the Court found the MOE’s orders did not have super priority in insolvency proceedings, the MOE issued a remediation order personally against the former directors and officers.7

We will look to the SCC to provide clarity on this important, albeit untidy, area of law.

Footnotes

1 2017 ABCA 124 [Redwater].

2 Ibid.

3 RSC 1985, c B-3 [BIA].

4 Redwater at para 21; Oil and Gas Conservation Act RSA 2000, c O-6, s 70 [OGCA].

5 2012 SCC 67.

6 Nortel Networks Corporation (Re), 2013 ONCA 599 [Nortel]; Northstar Aerospace Inc. (Re), 2013 ONCA 600 [Northstar].

7 Northstar Aerospace, Inc. (Re), 2012 ONSC 4423. Subsequently, on November 14, 2012, the MOE issued a Director’s Order against the former directors and officers personally.

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.

__________________________________

About the authors

John Georgakopoulos resolves complex environmental legal issues for clients, uniquely drawing on his technical knowledge as a former senior environmental scientist with the Ontario Ministry of the Environment and Climate Change. John is called to the bars of Ontario and Alberta.

Giselle Davidian is an associate lawyer practicing in the areas of environmental law, environmental litigation, energy and natural resource law and Aboriginal law.  Giselle draws upon her technical knowledge as a former environmental scientist at a consulting engineering firm to help clients meet their goals.  Giselle is fluent in French and Armenian and has a working knowledge of Italian.  Giselle is called to the bar of Ontario.

Serin Remedios is an associate lawyer practicing environmental litigation as well as environmental, Aboriginal, northern and energy law.  Serin’s past experience in environmental science helps her understand clients’ problems and assist them in meeting their goals.  Serin is called to the bar in Ontario.

This article was first published in the Willms & Shier Environmental Lawyers LLP website.

New Leaching Environmental Assessment Framework (LEAF) Methods

The Leaching Environmental Assessment Framework (LEAF) is a leaching evaluation system, which consists of four leaching methods, data management tools, and scenario assessment approaches designed to work individually or to be integrated to provide a description of the release of inorganic constituents of potential concern (COPCs) for a wide range of solid materials. The LEAF methods have been designed to consider the effect of key environmental conditions and waste properties on leaching. The LEAF “How-To” Guide describes how the LEAF method results can be used to develop screening level assessments of constituent release or to develop more accurate estimates of release in specific use or disposal scenarios.

LEAF Methods and “How-To” Guide

Method 1313 is designed to evaluate the partitioning of constituents between liquid and solid phases at or near equilibrium conditions over a wide range of pH values. The method consists of 9-10 parallel batch extractions of solid material at various target pH values.

Method 1314 is a percolation column test designed to evaluate constituent releases from solid materials as a function of cumulative liquid-to-solid ratio. The method consists of a column packed with granular material with moderate compaction. Eluent is pumped up through the column to minimize air entrainment and preferential flow.

LEAF Method 1314

Method 1315 is a semi-dynamic tank leaching procedure used to determine the rate of mass transport from either monolithic materials (e.g., concrete materials, bricks, tiles) or compacted granular materials (e.g., soils, sediments, fly ash) as a function of time using deionized water as the leaching solution. The method consists of leaching a sample in a bath with periodic renewal of the leaching solution at specified cumulative leaching times.

Method 1316 is an equilibrium-based leaching test intended to provide eluate solutions over a range of liquid-to-solid ratios. This method consists of five parallel batch extractions of a particle-size-reduced solid material in reagent water over a range of liquid-to-solid ratios. At the end of the contact interval, the liquid and solid phases are separated for constituent analysis.

The purpose of the LEAF “How-To” Guide is to provide an understanding of the Leaching Environmental Assessment Framework to facilitate its broader use in environmental assessment. The guide provides background on the LEAF methods, how to perform the methods, and how to understand the method results. It also provides guidance on the application of LEAF to assess leaching potential of COPCs from solid waste materials for beneficial use, disposal, treatment, and remediation applications. In addition, the guide addresses frequently asked questions about the four LEAF methods, data management and reporting using freely-available software, and potential applications of the LEAF approach.

SW-846 Update VI – Phase III will be available for public comment until January 31, 2018. Comments can be submitted using the EPA Docket, ID# EPA-HQ-OLEM-2017-0210.

For questions about Update VI to SW-846 or submitting public comments, or to sign up for the SW-846 mailing list, please contact orcrSW846@epa.gov.

Environmental Insurance in Canada

By Indrani Nadarajah

Environmental insurance policies are now widely available in Canada. While there are problems with wordings in many of those policies, the portfolio is evolving with more targeted products becoming available to address the changing liability landscape.  Meanwhile, a parliamentary review of the Canadian Environmental Protection Act has just been completed, confirming that the country’s main pollution laws are outdated, and the courts have been leaning towards a more generous interpretation of current legislation in order to better protect the environment.  Environmental activism is not affecting the insurance portfolio yet as actions thus far have been targeted at prospective projects, but as stakes rise, this may change.

Environmental insurance has been available in this country for a while, with insurers relying on foreign policy wordings without necessarily ensuring their offerings cohere with the Canadian regulatory environment, explains Carl Spensieri, Vice President, Environmental Insurance at Berkley Canada.

“Most of the policies currently available in the Canadian marketplace originate from parent companies based in the US or Europe, where environmental regulations are much tougher.  It doesn’t always make commercial sense for the overseas-based insurers to tailor their wordings specifically to the market here, given that the size of the environmental insurance portfolio in Canada is only about $150 million, about 10 times smaller than the estimated $1.5-$2 billion market in the US,” Spensieri explains.

A complicating factor for the environmental portfolio is that unlike many developed jurisdictions, Canada is not regulated by prescriptive environmental standards. Rather, there are guidelines. (There are, however, exceptions such as when a former industrial site is to be converted to residential use. In these situations, requirements are very explicit.)

It is this difference that creates a misalignment between policy wordings and cover intent, Spensieri explains. The guidelines that stand in lieu for regulation, rather than allowing for greater latitude during cleanup, often pose problems for both the insured and the insurer when a claim is made.

For example, a policy may state that the insurer will foot the cost of cleaning up a polluted site to the standard “as required by law,” but what happens when the law is silent on the matter?

The claim is often denied, which then forces the insured to petition a regulatory authority to issue a cleanup order.  Canadian regulators, however, are very hesitant to offer specific advice or issue orders.  “In Canada, we have the underlying philosophy of the polluter pays principle.  But if the property you pollute is your own, there is rarely any requirement to remediate,” Spensieri points out.  A regulator, however, will take action (including issuing an order) if the pollution seeps or affects a neighbouring property not owned by the polluter, or a public natural resource.

This lack of clarity has served to dampen the environmental insurance market, with some insurers electing to only offer policies which respond to cleanup when legally required.

David V. Tupper, a partner at Blake, Cassels & Graydon LLP in Calgary, notes that the courts have yet to give clear direction in an area which affects commercial and general liability (CGL) policies. CGL policies have a 120-hour provision within which the insured has to report the pollution to the insurer.  Only then can the provision for cover be triggered.  However, whether the 120-hour provision is an absolute requirement has not been clarified by the courts, with no resolution of this matter in terms of reported decisions, says Tupper.

 EVOLVING PORTFOLIO

According to Tupper, there are three broad developments in environmental liability insurance that have occurred over the last five years.

  1. Environmental impairment liability policies (EIL)

EIL policies cover third party exposures for the manufacturing or servicing industries. They cover first party cleanup expenses and pollution from waste material, as well as third party cleanup expenses, bodily injury and property damage arising from a pollution event.

“EIL policies are usually not tied to sudden accidental release of pollutants, but most do provide broad coverage for businesses after extensive due diligence by the insurers,” says Tupper.  “EIL policies also have strict limits.”  Such policies tend to focus on non-legacy, light hazard, and fixed site exposures.  They typically avoid known contamination conditions.

Strategic Underwriting Managers for example, bills its EIL policy as an endorsement that is meant to address the gap created by the pollution exclusion in CGL policies.

  1. D&O insurance and environmental liability

The second development in environmental insurance arose out of a recent case in Ontario.

The decision in Baker et al. v. Director, Ministry of the Environment cast a pall over Canadian boardrooms when the former directors and officers of Northstar Aerospace, Inc. and its parent, Northstar Aerospace (Canada) Inc., were held personally liable by the Ontario Ministry of the Environment (MOE) for contamination at the insolvent company’s former manufacturing and processing facility in Cambridge, Ontario.

Northstar Aerospace Facility, Cambridge, Ontario (Photo Credit: Richard Vivian, Cambridge Times Staff )

The environmental contamination arose from the migration of trichloroethylene from the site to nearby residential properties.  Northstar began a voluntary remediation of the site in 2005 but after it began to encounter financial difficulties, the MOE issued a remediation order in March 2012 to secure continued performance of the work. Following the sale of substantially all the company’s operating assets (other than the site) in July 2012 under the Companies’ Creditors Arrangement Act (CCAA), no personnel or resources were left to continue the work.  Due to human health concerns, the MOE took the extraordinary step in August 2012 of undertaking the remediation work itself.

When the stay of proceedings under the CCAA expired in October 2012, the MOE issued a remediation order against certain directors and officers of the company.  The directors and officers appealed to the Ontario Environmental Review Tribunal, pointing out that some of them were not on the board when the contamination occurred and they had had no specific responsibility for environmental matters.  The MOE counter- argued, pointing out that the directors and officers had allowed the company to file for CCAA protection and stop remediation activities, which therefore made them responsible for remediation under the Ontario Environmental Protection Act.  The ERT agreed with the MOE’s argument and ordered the directors and officers to foot the bill so that remediation work could continue until the appeal process was completed. The directors and officers were forced to pay approximately $800,000 for the interim work and subsequently reached a settlement with the MOE, where eight of the individuals paid a total of $4.75 million.

“It’s not surprising that this case created a significant concern among directors and officers that they would be pursued for environmental cleanup,” says Tupper.  “And what’s happened in the last few years – a focus on D&O insurance and the environmental provision.”

Some D&O policies have been revamped to include environmental cover.  For example, last September, RSA Insurance introduced a policy called “Ironclad,” which the company describes as a comprehensive Side A DIC (Difference in Conditions) insurance policy to bridge the gap between “unavailable corporate indemnification, an unresponsive or exhausted underlying D&O policy, and the directors’ and officers’ personal assets.”  But there are questions about the level of protection that would actually be offered, warns Tupper.

  1. New entrants in the marketplace

There is no doubt that notwithstanding certain shortcomings outlined above, the environmental insurance portfolio is evolving with new entrants in the marketplace differentiating themselves.

Berkley Canada, for example, offers expedited cleanup in its environmental policies, a feature which it says is unique in Canada.  Expedited cleanup not only ensures that an insured can file a claim for cleanup, but also ensures the cleanup method used is fast and efficient, rather than the most cost-effective.  This enhancement helps minimize project delays, says Carl Spensieri.

The company is also specifically targeting public private partnership consortiums involved in major infrastructure projects in Canada.  Berkley’s environmental policies target companies undertaking such projects by covering not only cleanup of pollution caused by the contractor’s work, but also the financial cost when pollution is discovered on the owner’s site.

“Today, risk is more complex than ever before.  As such an insured should always undertake the appropriate level of due diligence and ensure they are engaging the appropriate underwriting and broking expertise when purchasing environmental insurance,” Spensieri warns.

Over the summer, Beazley, a provider of specialist environmental liability insurance launched its local environmental coverage in Canada, focusing on fixed site and operational liability risks.

“Key target industries are the manufacturing, industrial, real estate, hospital and educational sectors,” notes a company statement.

CANADIAN LEGAL INTERPRETATION BROADENING?

In 2013, the Supreme Court of Canada held that environmental laws may be interpreted broadly, even when no obvious damage to the environment was discerned, in order to better protect the public.

In Castonguay Blasting v Ontario, a company, Castonguay Blasting, conducted a blasting operation when it was working on a highway-widening project in Eastern Ontario.  The blast damaged a nearby home and vehicle with fly-rock from the blast-site, but the natural environment was not harmed.  However, Castonguay was charged and convicted for failing to report the incident to the environment ministry under Ontario’s Environmental Protection Act.

Castonuay Blasting,a drilling and blasting contractor, has more than 40 years of experience in the quarry sector

Castonguay Blasting, which was granted leave to appeal to the Supreme Court of Canada, argued that the EPA does not apply if the natural environment is not also harmed.  A unanimous Supreme Court, however, disagreed with Castonguay’s position.

Justice Rosalie Abella, writing for the seven-member Court, held that the EPA is entitled to a generous interpretation to ensure that it can properly respond to a wide variety of environmentally harmful scenarios so as to protect the public.  “The statute places both the obligation to investigate and the decision about what further steps are necessary with the Ministry and not the discharger,” she affirmed.

In a separate case, however, the British Columbia Court of Appeal confirmed the application of the environmental exclusion provision in CGL policies.

In Precision Plating Ltd. v. Axa Pacific Insurance Company, 2015 BCCA 277, the BC Court of Appeal held that the insurer had no duty to defend the insured for claims alleging property loss arising from the escape of toxic chemicals.

The insured, Precision Plating, had leased a space within a multi-tenanted commercial strata building and stored vats filled with toxic chemicals used in its electroplating business.  In 2011, a fire broke out on the insured’s premises, activating the sprinkler system.  The water caused the toxic chemicals in the vats to overflow and seep into neighbouring units.  The insured applied for a declaration that the insurer had a duty to defend these claims, which Axa disputed.

At issue was the interpretation of the pollution exclusion clause in the CGL policy.

Precision’s CGL policy stated that insurance does not apply to “Bodily Injury, Personal Injury or Property Damage caused by, contributed to by, or arising out of the actual, alleged or threatened discharge, emission, dispersal, seepage, leakage, migration, release or escape at any time of Pollutants.”

The trial judge determined that a literal interpretation of the pollution exclusion clause would lead to a result that was inconsistent with the insured’s “reasonable expectations” of coverage, especially since the main purpose of the insurance policy was to indemnify against liability for fire damage.

On appeal, Axa contended that the unambiguous terms of the pollution exclusion in the policy state clearly that any liability created because of property damage caused by the “seepage or leakage, migration, release, or escape of a pollutant is expressly excluded from coverage.”  The Appeal Court upheld Axa’s reading, noting that the CGL policy “does not cover a claim where liability associated with the release of pollutants is alleged, whether as a sole or concurrent cause.”

On January 14, 2016, the Supreme Court of Canada dismissed, with costs, the application for leave to appeal the decision of the BC Court of Appeal.

ENVIRONMENTAL ACTIVISM AND INSURANCE PORTFOLIOS

TransMountain Expansion Project

Based on media coverage, it would appear that environmental activism is getting noisier and, in some cases, becoming quite effective in changing the course of projects and the direction of business investments.

In a recent BNN TV interview, ‎managing director and head of portfolio strategy at CIBC World Markets, Ian de Verteuil, said that analysts calculate that about $25 billion of global energy money has left Canada this year, primarily because of the negative reputation that Canada’s oil sands have in Europe.

In March 2017, Royal Dutch Shell and Houston-based Marathon Oil sold their stake in the Athabasca Oil Sands Project for $12.7 billion to Canadian Natural Resources. Then, in the same month, ConocoPhillips sold its $6.8 billion stake in Cenovus Energy, in order to exit the oil sands.

Global players have a relatively small part of their production output tied to Canadan oil sands but de Verteuil said  European management would regularly be confronted by persistent questioning from a certain segment of shareholders.  For many, the trouble that oilsands was causing them was just not worth their while.  “This exit boils down primarily to environmental concerns,” de Verteuil said.

Blake’s Tupper notes that thus far, environmental activism has not impacted the environmental insurance portfolio because the actions are directed at prospective projects.

Map of proposed Trans Mountain Pipeline Expansion Configuration (Credit: NRCAN)

An example is the highly contentious TransMountain Expansion Project (TMEP), which was approved by the Federal Government in November 2016. TMEP is currently facing 18 court challenges.  Most recently, Reuters reports that more than 100 environmental activists are practising seaborne drills to disrupt construction, slated to begin in September.  Analysts Credit Suisse even acknowledged in an investment note that, “British Columbia’s political changes translate into a difficult path for TMEP,” after the British Columbia government applied for intervener status in court challenges against the pipeline expansion.  The province’s former Liberal government had issued an environmental certificate for the project earlier this year, but Premier John Horgan successfully campaigned in the spring provincial election on doing everything possible stop it.

Kinder Morgan Canada, however, says it remains committed to expanding its TransMountain Pipeline, and says it expects to have the project in service by the end of 2019.  It reportedly has approximately $4-billion in financial capacity to clean up a pipeline spill — $750-million in spill liability insurance and $3.2 billion in equity (cash reserves and cash flow.)

This is an excerpt from the September 2017 CIP Society trends paper, Environmental Insurance. You can read the full paper online at https://www.insuranceinstitute.ca/en/cipsociety/information-services/advantage-monthly/0917-environmental-insurance

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About the Author

Indrani Nadarajah is a business and insurance writer with extensive international experience. She is also an experienced health writer, who enjoys writing on the latest medical developments as well as health economics issues.  She has co-authored papers with researchers from the University of Toronto that have been published in prestigious journal including the Journal of the American Society of Information Science and Technology (JASIST).  She has previous been the editor of Thomson Reuters Australia for nine years and the news editor at Reed Business Information.  Indrani has a Master’s degree in Library and Information Science and a M.A. in Literature from the National University in Singapore.