Canada: Oil Spill Liability – Kawartha Lakes Continues

By Donna Shier, Partner and Certified Environmental Law Specialist, Joanna Vince, Senior Associate and Raeya Jackiw, Student-at-Law, Willms & Shier

Background

In the most recent decision in the ongoing Kawartha Lakes saga, the Superior Court of Justice found homeowner Mr. Wayne Gendron partly responsible for an oil spill that destroyed his lakeside property.  The Court also found Mr. Gendron’s fuel distributor liable for a portion of the costs.  This decision serves to warn homeowners that a distributor’s delivery of fuel does not mean that their tanks are safe. It also cautions fuel distributors that they may be liable for spills brought about by a homeowner’s negligence.

The Facts

Thompson Fuels (“Thompson”) supplied 700 liters of fuel oil to two tanks in Mr. Gendron’s basement.  Mr. Gendron had installed the fuel tanks himself without proper shut off valves, contrary to industry standards.

During a period of financial difficulty, Mr. Gendron filled these fuel tanks with less expensive stove oil.  The stove oil introduced water and microbes into the tanks, causing the tanks to corrode.  When Thomspon delivered the fuel oil one of the tanks leaked, spilling approximately 600 liters.

In the hours following the fuel delivery Mr. Gendron tried to manage the spill on his own by collecting what he believed to be all of the leaking oil in Tupperware containers.  Approximately 24 hours later, Mr. Gendron called Thompson to complain that it had not delivered his entire shipment of fuel oil – he was short about 600 liters.  Mr. Gendron never called to report the spill to the MOECC’s Spills Action Centre hotline.

The fuel oil migrated under Mr. Gendron’s house, through the City of Kawartha Lake’s drainage system, and into nearby Sturgeon Lake. The Ontario Ministry of the Environment and Climate Change (MOECC) ordered Mr. Gendron and his wife to “ameliorate the adverse effects caused by the discharge of the furnace oil” and “restore the natural environment… to the extent practicable.”  Mr. Gendron began remediation of the contamination of his property and the contamination of Sturgeon Lake.

Early remediation efforts were complicated by the frozen lake and soil. Mr. Gendron’s personal insurance was rapidly exhausted.  His insurer eventually refused to fund further off-site remediation of Sturgeon Lake.

The remediation efforts cost nearly $2 million  and required the demolition of Mr. Gendron’s home.

Sturgeon Lake, Kawatha Lakes Region, Ontario

The City’s MOECC Order

The MOECC ordered the City of Kawartha Lakes to clean up any fuel oil remaining in the City’s culverts and sewers that could re-contaminate Sturgeon Lake.  The City appealed the order first to the Environmental Review Tribunal, then to the Divisional Court, and ultimately to the Ontario Court of Appeal, losing each time. (See our previous article on the Court of Appeal’s decision here.)

Environmental Protection Act Claims

Using its powers under the Ontario Environmental Protection Act (“EPA”), s. 100.1 the City ordered compensation for its remediation costs from Mr. Gendron, Thompson and the Technical Standards and Safety Authority (“TSSA”).  Mr. Gendron, Thompson and the TSSA appealed the order to the Environmental Review Tribunal.  Thompson and the TSSA settled with the City and withdrew their appeals.  Mr. Gendron’s appeal was unsuccessful and he was required to pay more than $300,000 of the City’s costs.  Mr. Gendron then brought a claim for contribution and indemnity against Thompson under EPA, s. 100.1(6).  In this most recent case, the Court found that Mr. Gendron could not make out his EPA claim because ownership and control of the fuel oil had transferred to him when the fuel oil was delivered to him by Thompson.  Mr. Gendron’s claim for contribution under the EPA was dismissed.

About the Authors

Donna Shier, Partner & Certified Environmental Law Specialist.  With almost 40 distinguished years of experience practicing environmental law, Donna Shier is one of Canada’s leading environmental counsel to major industrial corporations. Donna is also frequently called upon by corporate, commercial and real estate lawyers to assist their clients with environmental legal issues, and provides environmental law expertise to external litigation counsel. Donna is a qualified mediator and is an accredited member of the ADR Institute of Canada. Donna is called to the bar of Ontario.

Joanna Vince, Senior Associate.  Joanna Vince has significant expertise representing a wide range of clients with environmental issues, civil claims and prosecutions, orders and appeals. Joanna was admitted to the bar of Ontario in 2011.  Joanna has a B.Sc. (Hons., High Distinction) in biology and environmental science, and a Certificate in Environmental Studies. Joanna’s knowledge of and commitment to environmental issues was recognized by the University of Toronto, which awarded her the Arthur and Sonia Labatt Fellowship and the Douglas Pimlott Scholarship. Also at the University of Toronto, Joanna assisted with preparing academic papers and books as a research assistant on wind power, carbon taxes and climate change.

Raeya Jackiw, Student-at-Law.  Prior to articling at Willms & Shier, Raeya was a summer student at the firm and conducted legal research on issues in environmental, aboriginal, energy, constitutional, administrative, contract, tort, and civil procedure law. She has a Juris Doctor, Certificate in Environmental Law from the University of Toronto, a Masters Degree in Environmental Science from the University of Guelph, and a Bachelor’s Degree in Environmental Science from Queen’s University.

This article was originally published on the Wilms & Shier website.

Environmental Opportunity for Women-owned Small Business Firms in the U.S.

Federal Business Opportunities, FBO-5787, Solicitation W912P917R0055, 2017

The U.S. Army Corps of Engineers has issued a solicitation that is earmarked  for woman-owned small business (WOSB) firms.  The U.S. Army Corps of Engineers, St. Louis District, plans to seek firms for environmental remediation construction efforts that include remedial design, remedial action, and remedial excavations of contaminated material at pre-determined depths; HTRW manifesting; utility relocation; water management; engineering support; and construction support.  The anticipated work lies within the geographic boundaries of the Mississippi Valley Division and U.S. EPA Regions 5 and 7.  Solicitation W912P9-17-R-0055 will be an RFP for lowest-price technically acceptable proposals. Contract duration is five years. The NAICS code for the work is 541620 (Environmental Consulting Services), with an SBA size standard of $15M.  Release of the solicitation is anticipated on FedBizOpps on or about October 9, 2017. For more information, visit https://www.fbo.gov/notices/106dd6fa43c17c865b58b8f17de28425

In-Situ Remediation of Tetrachloroethylene and its Intermediates in Groundwater

Researchers from Tianjin University in China recently released results from a study that showed the results of the use of an anaerobic/aerobic permeable reactive barrier at removing tetrachloroethylene (also known as “perc”) and its intermediates in groundwater.

The anaerobic/aerobic permeable reactive barrier (PRB) system that was tested consisted of four different functional layers and was designed to remediate PCE-contaminated groundwater.  The first (oxygen capture) layer maintained the dissolved oxygen (DO) concentration at <1.35 mg/L in influent supplied to the second (anaerobic) layer.  The third (oxygen-releasing) layer maintained DO concentration at >11.3 mg/L within influent supplied to the fourth (aerobic) layer.  Results show that 99% of PCE was removed, mostly within the second (anaerobic) layer.  The toxic by-products TCE, DCE, and VC were further degraded by 98, 90, and 92%, respectively, in layer 4 (aerobic). The anaerobic/aerobic PRB thus could control both PCE and its degradation by-products.

Photo Credit: US EPA

Tetrachloroethylene is a manufactured chemical that is widely used for dry cleaning of fabrics and for metal-degreasing. It is also used to make other chemicals and is used in some consumer products.

Tetrachloroethylene is present in the subsurface at contaminated sites, often as a result of its inappropriate disposal and release from dry-cleaning and degreasing facilities or landfills.

Ontario’s $25.8 Million in Funding Available For Low Carbon Innovations

The government of the province of Ontario, Canada recently announced $25.8 million has been allocated to the Low Carbon Innovation Fund (LCIF) as a part of the province’s Climate Change Action Plan.  The funding will be used to support emerging, innovative technologies in areas such as alternative energy generation and conservation, new biofuels or bio-products, next-generation transportation or novel carbon capture and usage technologies.  Innovative remediation projects that can prove to be low-carbon innovations will be considered for funding.

Funding is available either from:

  • The Technology Demonstration stream, which aims to support the development and commercialization of innovative low carbon technologies through testing in real-world settings; or
  • The Technology Validation stream, which aims to fund proof-of-concept or prototype projects from eligible Ontario companies or academic organizations to help them get to market faster.

To be eligible for LCIF, projects must be conducted in Ontario and must show significant potential to reduce greenhouse gas emissions in Ontario.  Ontario’s Climate Change Action Plan is key to its achievement of its goal of cutting greenhouse gas pollution to 15 percent below 1990 levels by 2020, 37 percent below by 2030, and 80 percent below by 2050.

The deadline for the first round of funding was September 24th, 2017.  Notification on successful applications will be announced later this month.

Potential $9 million incentive to Developer for Clean-up and Develop Brownfield Site in Ottawa

As reported by the CBC, Ottawa city staff are proposing to offer a developer more than $9 million in incentives to build a multi-use building with three residential towers across from the future Bayview Station light rail station, approximately 2 kilometers (one mile) west of Parliament Hill.

TIP Albert GP Inc. owns the property at 900 Albert St. at the corner of Albert and City Centre Avenue, and is proposing a building that would have 1,632 residential units as well as retail and office space.

The site, a one-time rail yard and later a storage yard and snow disposal site, is eligible for the city’s brownfields rehabilitation grant program.  Under the program, developers can apply to have municipal development charges and soil remediation costs reduced, up to about half the expected cost of the cleanup.

City staff are recommending a grant not exceeding $8,255,397 over a maximum of 10 years, according to a report tabled in advance of next week’s finance and economic development committee meeting.

The property is also along the path of city sanitary and storm sewers, and for the development to go forward, the builder will have to move that infrastructure to an adjacent city property.

While the developer would pay for that work to be done, the city would have to release their eight easements on the property.

While normally the city would get market value from a developer for giving up those easements — an estimated $920,000 — city staff are proposing waiving that policy to make the project happen.

Somerset Ward Coun. Catherine McKenney, in a comment appended to the report, wrote that while she supported the brownfield grant, she couldn’t support waiving the encroachment fee, calling it “premature.”

“As this application is still under negotiation I believe it would be more prudent to measure the total monetary value to be waived against measurable features of the proposed development in its final form as ultimately presented to committee and council,” she wrote.

McKenney said such features would include affordable housing and contributions to active transportation networks like cycling and walking paths.

The development is not the only project being considered for a grant at next week’s committee meeting.

City staff are also proposing a grant of up to $2,320,420 over a maximum of 10 years to Colonnade Development Inc. to build a hotel near the Department of National Defence headquarters.

That grant, for the property at 300 Moodie Dr., would come from the Bells Corners Community Improvement Plan, which aims to encourage development in the area.

It would provide what would amount to a 75 per cent property tax break after the property is developed. If the development doesn’t happen, no grant would be paid.

Colonnade is proposing a restaurant with a drive-thru and a six-storey, 124-room hotel. Right now, the site is home to a Salvation Army thrift store, an automotive repair garage and auto parts distributor.

The finance and economic development committee will consider both proposals.

One Proposal for Development of 900 Albert Street, Ottawa

U.S. EPA Funding for Small Business Innovation Research

The United States Environmental Protection Agency (U.S. EPA) is pre-soliciting companies interested in bidding on $100,000 grants under the Agency’s Small Business Innovation Research (SBIR) Program.  Under the program, the U.S. EPA will award about 12 firm-fixed-price contracts of $100,000 each under during FY 2018 to small businesses that propose winning research proposals.

The U.S. EPA has identified six topic areas of priority for feasibility-related research or R&D efforts including removal of PFOA/PFOS from drinking water, removal of PFOA/PFOS from wastewater, and remediation of PFAS-contaminated soil and sediment.

The anticipated release date of the solicitation is October 17, 2017, with proposals likely due December 7, 2017.  The U.S. EPA will grant the awards June 30, 2018, each with a 6-month period of performance.  For more information, see http://www.epa.gov/sbir/sbir-funding-opportunities.

CERCLA Trumps As-Is Sales

By Steven L. Hoch, Attorney, Clark Hill

A federal court in Alaska assessed responsibility against the City of Fairbanks (City) for remediation costs found necessary to clean up property it previously owned.  The court concluded that the City should have mitigated the problem or at least warned the purchaser about the contamination, even though the property was sold “As-Is”.  Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) liability is assessed without reference to cause.  Further, the court said that numerous courts have held that CERCLA liability cannot be defeated by contract, unless specifically and clearly addressed in the contract language.

In Gavora, Inc. v. City of Fairbanks , Case No. 4:15–cv-00015-SLG, BL 256894 (D. Alaska July 25, 2017), the City owned two parcels of land and Gavora held leasehold on one of the parcels. For a considerable length of time, a dry cleaning business operated in the shopping center located on their parcel.  Eventually, the contamination drew the attention of the State of Alaska, who told the City about the contamination and that they suspected the contamination migrated from that parcel to the other.  While the State did not verify the findings, the district court found it clear that the City knew or should have known that the first parcel was also contaminated.

Fairbanks Mall – Satellite Image showing borehole and monitoring well locations as well as PCE contamination levels

The City sold the first parcel to Gavora on an “As-Is, Where-Is” basis.  This sale occurred 10 years after the City first learned of the contamination on the second parcel.  When the purchase took place, Gavora did not perform its own environmental assessment.  Five years later, contamination was discovered on the first parcel owned by Gavora.  Lacking options, Gavora remediated the parcel and sued the City of Fairbanks for contribution.

Even though the sale was “As-Is”, the court nevertheless held the seller liable. Further, the court allocated 55% of the costs to the City and 45% of the costs to the current owner. The court rationalized that this allocation was appropriate because (1) the city knew or should have known of the contamination, yet failed to inform the purchaser; (2) the current owner made substantial corrective action efforts upon learning of the problem whereas the City took no action, and (3) it would be inequitable to hold the current owner responsible for contamination occurring prior to its master lease, but the court could not “effectively apportion the contamination”, but (4) the current owner would obtain a greater benefit than the prior owner from the remediation.

In the final analysis this case affirms that “As-Is” does not exculpate a seller from CERCLA liability, and that not disclosing contamination even when it did not make any representation to the contrary. As this was a district court opinion, it does not have significant legal value, but should not be dismissed out of hand when confronting similar issues.

 

This article was first published on the Clark Hill website.

_________________

About the author

Steven Hoch has over 40 years of experience with both federal and state environmental laws and regulations in the context of permitting, regulatory proceedings, litigation, enforcement actions, water supply, public policy formation, and advice.  His work includes contamination of land and ground and surface water.  Steven has critical experience in the areas of environmental law and the federal and state Safe Drinking Water Acts, Title 23, water supply, and the mechanics of water distribution.  His experience also extends to groundwater modeling and water quality testing.  He also has significant experience in hazardous substances and waste handling practices, remediation, soil erosion, and claims of toxic exposures

Steven has in-depth experience working with numerous public water systems throughout the state.  He has also established a sterling reputation for his work with the Regional Water Quality Control Boards, the Department of Toxic Substance Control, and the United States Environmental Protection Agency both in the administrative and litigation.  His clients range from the country’s largest municipal water agency to individuals selling or buying contaminated sites.

Steven often takes primary roles in many environmental trials, and has served as liaison counsel for groups or parties at the request of fellow counsel.  He has been involved in several landmark cases, including acting as PG&E’s counsel in the case made famous by the movie Erin Brockovich.

 

U.S. EPA Evaluates Hurricane Harvey impact on U.S. Superfund Sites in Texas

In a September 8th update, the U.S. Environmental Protection Agency (U.S. EPA) and the Texas Commission of Environmental Quality (TCEQ) stated that the two agencies continue to get updates about the status of specific Superfund sites from the parties responsible for ongoing cleanup of the sites.  The TCEQ has completed the assessment of all 17 state Superfund sites in the area affected by Hurricane Harvey.  The two agencies reported that there were no major issues noted.  The TCEQ will continue to monitor sites to ensure no further action is needed in regards to the storm.

The U.S. EPA completed site assessments at all 43 Superfund sites affected by the storm.  Of these sites, two (San Jacinto and U.S. Oil Recovery) require additional assessment efforts.  Assessments of these sites will take several more days to complete.

Harris County, Texas Superfund Sites Map

 

The San Jacinto Waste Pits site has a temporary armored cap designed to prevent migration of hazardous material.  The U.S. EPA remedial manager is onsite and overseeing the assessment.  Crews continue to survey portions of the cap that are submerged.  There are some areas where rock has been displaced and the liner is exposed.  The potential responsible party has mobilized heavy equipment and is placing rock on different places on the armored cap to repair the defensive surface. The liner is in place and functional so we don’t have any indication that the underlying waste materials have been exposed. If we find a breach in the exposed liner, we direct the responsible party to collect samples to determine if any materials have been released. Also, the EPA has dive teams to survey the cap underwater if needed.

Work to improve conditions after the storm has continued at the U.S. Oil Recovery site to address flood water from the storm.  Nine vacuum truckloads of approximately 45,000 gallons of storm water were removed and shipped offsite for disposal.  No sheen or odor was observed in the overflowing water, and an additional tank is being used to maintain freeboard to keep water on-site.  The U.S. EPA has directed potential responsible parties or has independently started collecting samples at the 43 Superfund sites to further confirm any impacts from the storm.  The total number of Superfund sites increased from 41 to 43 with the addition of Rapides Parish, Louisiana and Waller County, Texas as disaster declared areas.  Sampling efforts of all 43 sites is expected to be completed early next week with sample results will be available soon.

Victoria, B.C. faces Major Bill to Clean up Contaminated Park

As reported in Victoria News, Laurel Point Park is contaminated and the City of Victoria is looking at a potential $5-million bill to clean it up.

The City will spend up to $350,000 to confirm the degree of contamination and create a remediation plan.

The park, located along the David Foster Harbour Pathway next to property owned by Transport Canada, is contaminated with high levels of metal and petroleum hydrocarbons in the soil and groundwater, according to a staff report presented to council last week. Chemical discharges from nearby property likely contaminated the aquatic environment, water and the soil because of area’s industrial past, the report stated.

Laurel Point Park, Victoria, B.C.

For now, there is little risk to the public.  Counsellor Chris Coleman said the contamination is capped and secured, as long as it is left alone.

“If there was (a risk to the public), then we would close the park,” he said.

“It’s the sort of thing that we’ve seen in the past, when there was leeching from the Hartland Road landfill,” Coleman added. “It went into the groundwater … it then caused an algal bloom in the Butchart Gardens. That’s what you’re trying to control for here.”

The park, and the surrounding lands on the Laurel Point peninsula, were burial grounds for the Songhees people prior to 1885, after which it was used by various industrial facilities, including paint factories, machine shops, and for processing coal and oil.

Victoria council approved the next stage of SLR Consulting’s environmental investigation using money from the environmental remediation funds in city’s financial plan for 2017.

The next step in the process is a risk assessment, with an estimated cost of up to $150,000. It will take an additional $50,000 for the remediation plan, and up to $5 million to put the plan into action.

The surrounding land owned by Transport Canada will also have to be excavated and disposed off-site, according to preliminary reports.

Tribunal gives Ontario Environment Ministry Broad Preventative Powers over Migrating Contamination

by Stanley D. Berger

On September 1, 2017, the Ontario Environmental Review Tribunal in the matter of Hamilton Beach Brands Canada Inc. et al. v. the Director, Ministry of the Environment and Climate Change made a preliminary ruling that the Director had jurisdiction to make an order under s.18 of the Environmental Protection Act (EPA) requiring a person who owns or owned, or has or had management or control of a contaminated undertaking or property to delineate contamination that had already migrated to off-site properties. The property in question, formerly a small-appliance manufacturing business, was contaminated and the various contaminants were of concern to the Ministry, having migrated to other Picton residential, commercial and institutional properties where they might be entering nearby buildings by vapour intrusion. Section 18 of the EPA provides that the Director may make orders preventing, decreasing or eliminating an adverse effect that may result from the discharge of a contaminant from the undertaking or the presence or discharge of a contaminant in, on or under the property. The Director’s Order was challenged on three grounds:

  1. The adverse effect the Director could address was limited to a future event or circumstance (given that s.18 is prospective and preventative);
  2. The adverse effect had to relate to the potential off-site migration of a contaminant that was on an orderee’s property at the time the order was made;
  3. The order could require work only on site but not off-site, to address the risk of an adverse effect.

The Tribunal rejected all three arguments, reasoning that adverse effects resulting from contamination were frequently ongoing rather than static, with no clear line between existing and future effects. The Tribunal looked to the purpose of the EPA which was to protect and conserve the natural environment and found the orderees’ arguments were inconsistent with this purpose. Contamination and adverse effects were not constrained by property boundaries and therefore it was immaterial whether the contaminant was on the orderee’s property at the time the order was made. Finally, the list of requirements that could be ordered under s.18(1) EPA included off-site work. _________________

About the Author

Mr. Berger has practiced regulatory law for 36 years. He is a partner at Fogler Rubinoff LLP. He is certified by the Law Society of Upper Canada as a specialist in Environmental Law. He represents nuclear operators and suppliers in regulatory and environmental matters and in the negotiation of risk clauses in supply contracts and government indemnity agreements.He has prosecuted and defended environmental , occupational health and safety and criminal charges . He represents clients on access to information appeals before Ontario’s Freedom of Information Commission. He has also represented First Nations seeking equity partnerships in renewable energy projects. He started as an Assistant Crown Attorney in Toronto (1981), became the Deputy Director for Legal Services /Prosecutions at the Ministry of the Environment (1991) and Assistant General Counsel at Ontario Power Generation Inc.(1998-2012) During his 14 years at OPG, Mr. Berger won the President’s Award for his legal contribution to the Joint Review Panel environmental assessment and licensing hearing into the Nuclear New Build Project for Clarington . He won a Power Within Award for his legal support of the Hosting Agreement with local municipalities for the project to create a long term deep geologic repository for low and intermediate nuclear waste in Tiverton, Ontario.