U.S. EPA Issues the Latest Revision to the Risk Management Program (RMP) Chemical Release Rules

Written by Pillsbury Winthrop Shaw Pittman LLP

The United States Environmental Protection Agency’s (U.S. EPA’s) revised Risk Management Rules, designed to reduce the risk of the accidental release of hazardous chemicals, have been published in the Federal Register.  The citation to this action is 84 FR 69834 (December 19, 2019).  The rule is effective on December 19, 2019, but also provides for some staggered compliance dates for emergency response exercises and updating certain risk management plan provisions.  These revisions were triggered by EPA’s review of several petitions for reconsideration of EPA’s January 13, 2017 amendments to the rules set forth in 1996 at 40 CFR Part 68, which implemented the chemical accident preventions provisions required by Section 112 (r)  of the Clean Air Act.  Many of the 2017 requirements have been rescinded by this action.

On November 21, 2019, the U.S. EPA released a pre-publication copy of its Reconsideration of the revised Risk Management Program (RMP) Rules. In an accompanying statement, the agency noted that it has taken steps to “modify and improve” the existing rule to remove burdensome, costly and unnecessary requirements while maintaining appropriate protection (against accidental chemical releases) and ensuring responders have access to all of the necessary safety information. This action was taken in response to U.S. EPA’s January 13, 2017 revisions that significantly expanded the chemical release prevention provisions the existing RMP rules in the wake of the disastrous chemical plant explosion in West, Texas. The Reconsideration will take effect upon its publication in the Federal Register.

Background
As recounted by the D. C. Circuit in its August 2018 decision in the case of Air Alliance Houston, et al. v. EPA, in 1990, the Congress amended the Clean Air Act to force the regulation of hazardous air pollutants (see 42 USC Section 7412). An initial list of these hazardous air pollutants was also published, at Section 7412 (b). Section 112(r) (codified at 42 USC Section 7412 (r)), authorized the U.S. EPA to develop a regulatory program to prevent or minimize the consequences of a release of a listed chemical from a covered stationary source. The U.S. EPA was directed to propose and promulgate release prevention, detection, and correction requirements applicable to stationary sources (such as plants) that store or manage these regulated substances in amounts determined to be above regulated threshold quantities. The U.S. EPA promulgated these rules in 1996 (see 61 FR 31668). The rules, located at 40 CFR Part 68, contain several separate subparts devoted to hazard assessments, prevention programs, emergency response, accidental release prevention, the development and registration of a Risk Management Plan, and making certain information regarding the release publicly available.  The U.S. EPA notes that over 12.000 RMP plans have been filed with the agency.

In response to the catastrophe in at the West Plant, the U.S. EPA issued substantial amendments to these rules, covering accident prevention (expanding post-accident investigations, more rigorous safety audits, and enhanced safety training), revised emergency response requirements, and enhanced public information disclosure requirements. (See 82 FR 4594 (January 13, 2017).) However, the new administration at the U.S. EPA, following the submission of several petitions for reconsideration of these revised rules, issued a “Delay Rule” on June 14, 2017, which would have extended the effective date of the January 2107 rules until February 19, 2019. On August 17, 2018, the Delay Rule was rejected and vacated by the D.C. Circuit in the aforementioned Air Alliance case (see 906 F. 3d 1049 (DC Circuit 2018)), which had the effect of making the hotly contested January 2017 RMP revisions immediately effective.

Reconsidering the January 2017 Revision
On May 30, 2018, the U.S. EPA issued a notice of proposed rulemaking (see 83 FR 24850) to reconsider the reinstated RMP revisions and amendments, and the agency has now decided the issues raised in this rulemaking. Basically, it appears that the U.S. EPA is returning the rules to their pre-January 2017 stage and format. Over the years, these rules have been amended with some frequency, and the agency argues that these actions have all been discretionary once it finalized the basic 1996 version. Accordingly, it is acting well within its discretion to revise and rescind large portions of the 2017 amendments. Obviously, this is a complex regulatory program, but here are some highlights. The 2017 revisions to the Risk Management Program have been rescinded regarding safer technologies and alternatives analysis, third-party audits, incident investigations, and information availability. The U.S. EPA is also modifying regulations relating to local emergency coordination, emergency response exercises, compliance dates and public meetings. In addition, “this action rescinds almost all the requirements added in 2017 to accident prevention program provisions,” including again third-party audits. No longer will incident investigations be required to include a “root cause analysis,” or to consider a “near miss” that never resulted in an accidental release. The emergency response amendments are modified to allow facilities to share only that technical information necessary to implement the local emergency response plan. The agency and many commenters were concerned that the earlier rule risked the exposure of national security information. However, some of the 2107 changes to required public meetings have been retained. Finally, the U.S. EPA will establish new compliance dates to reflect these actions.

In the preamble, the U.S. EPA recognizes that the spate of recent chemical plant incidents has created concerns with these topsy-turvy regulatory proceedings. The agency points out that in several well publicized cases, these rules would not even have been applicable because the chemical release at issue was not a substance listed as a hazardous air pollutant in the statute or the implementing regulation, or in threshold quantities. Also, in the West fire and explosion, the Bureau of Alcohol, Tobacco Firearms and Explosives (ATF) believes that the cause was not an accident, but a deliberate act. Finally, the U.S. EPA argues that it is unfair to burden all covered plants with a complicated and costly regulatory program when it is clear to the agency that only a handful of chemical plants are the source of the great majority of complaints.

What’s Next?
With revised Risk Management Rules now published in the Federal Register, these actions will likely be subject to another judicial challenge. The U.S. EPA has made a strong case that it is acting well within its statutory authority and consistent with the Administrative Procedure Act. However, the challenges will be serious and substantial.

This article has been republished with the permission of the author.  It was first posted on the Pillsbury Winthrop Shaw Pittman LLP website.


About the Author

Anthony B. Cavender provides guidance and counseling relating to enforcement and compliance.  He has represented clients in Superfund matters, and in RCRA and Clean Water Act enforcement proceedings.  He is a Senior Counsel in the firm’s Houston office and a member of the Environmental & Natural Resources practice section. His practice focuses on the Clean Water Act, the Resource Conservation and Recovery Act and Superfund. Before joining Pillsbury, Anthony was a member of the legal department of Pennzoil Co., specializing in these areas as well as general corporate legal matters. He served on various energy industry committees and trade associations.

Supreme Court of Canada finds two forest-product companies must pay for remedial work

Written by Peter Brady and Claire Seaborn, McCarthy Tétrault

On December 6, 2019, the Supreme Court of Canada (“SCC”) found in R v Resolute FP Canada Inc., 2019 SCC 60 (“Resolute”) that two forest-product companies, Resolute and Weyerhaeuser, are on the hook to pay for remedial work at a waste site in Northwestern Ontario.

Resolute and Weyerhaeuser are successors of the companies that abandoned the waste site decades ago. They sought to rely on an indemnity agreement from 1985 between the Government of Ontario and their predecessor companies to argue that they were not responsible for the site’s monitoring and maintenance.

The decision was split 4-3. The majority of judges found that the indemnity agreement did not protect the companies from the province’s remediation order. As a result, Resolute and Weyerhaeuser, and not the provincial government, were found to be responsible for the costs of compliance.

History of industrial activity, contamination and adverse health effects at the site

The history of this case dates back to the 1960s when a pulp and paper mill operated in Dryden, Ontario. The mill bleached paper using a process that involved mercury, which was dumped into the nearby English and Wabigoon rivers. The mercury waste flowed downstream, which resulted in harm to health of some local residents (including members of the Grassy Narrows and Islington First Nations) the closure of a commercial fishery and damage to the region’s tourism industry.[1]

In the mid-1970s, a company called Great Lakes Forest Products was interested in buying the properties where the pulp and paper mill were located from its owner, Reed Ltd. In an effort to ensure the mill remained operational and provided local jobs, the Government of Ontario entered into an indemnity agreement with Great Lakes Forest Products in 1979. Under the indemnity agreement, Great Lakes Forest Products agreed to spend $200 million to expand and upgrade the mill, and the Government of Ontario agreed to cover the costs of past pollution above $15 million.[2]

Meanwhile, the Grassy Narrows and Islington First Nations commenced litigation regarding the mercury contamination in 1977 that ended with a settlement in 1985. When the settlement was reached, the Government of Ontario granted a new 1985 indemnity agreement to Reed Ltd., Great Lakes Forest Products Limited and their successors and assigns for the mercury contamination.[3]

Ontario Ministry of the Environment issues a remediation order in 2011

Twenty-six years later, on August 25, 2011, Ontario’s Ministry of the Environment issued a remediation order for environmental monitoring and maintenance at the waste site where the mill had operated in Dryden, Ontario (“Remediation Order”).[4]

The Remediation Order was issued as a “Director’s Order” under what is now s. 18 of Ontario’s Environmental Protection Act, and imposed three main obligations:

  1. to repair certain site erosion, perform specific groundwater and surface water testing, and file annual reports containing specified information;
  2. deliver to the Ministry of the Environment the sum of $273,063 as financial assurance in respect of the waste disposal site; and
  3. to “take all reasonable measures to ensure that any discharge of a contaminant to the natural environment is prevented and any adverse effect that may result from such a discharge is dealt with according to all legal requirements.”[5]

The property’s ownership had changed several times in that period. The Remediation Order was issued to two former owners of the property: Bowater (which later became Resolute) and Weyerhaeuser.

Weyerhaeuser and Resolute successful in courts below

In May 2013, Weyerhaeuser sought a declaration from the Superior Court of Justice that the 1985 indemnity agreement required the Government of Ontario to compensate for all of the costs of complying with the Remediation Order.[6] Resolute intervened. Ontario submitted that it was not responsible for compliance costs.

All three parties moved for summary judgment. The motions judge held that the 1985 indemnity agreement applied to the Remediation Order and granted summary judgement in favour of Weyerhaeuser and Resolute.[7] Ontario appealed.

The Ontario Court of Appeal agreed that the 1985 indemnity agreement applied to the Remediation Order; however, it applied that decision only to Weyerhaeuser and found that Resolute had assigned its benefit under the agreement.[8]

SCC decision: the 1985 indemnity agreement does not cover the Remediation Order

By a narrow margin of 4-3, SCC overturned the courts below and found that the 1985 indemnity agreement did not apply to Remediation Order, thereby leaving Resolute and Weyerhaeuser on the hook to pay for remediation costs.

The majority’s key findings include:

  • The 1985 agreement only provided an indemnity for claims brought by “third parties.” The provincial government was a party to the 1985 agreement, and therefore cannot be considered a third party.
  • The 1985 agreement was intended to cover only “pollution claims” (a term defined in the agreement). The Remediation Order is not a “pollution claim” since it requires monitoring and maintenance to prevent more pollution, and is not intended to stop ongoing pollution.[9]
  • The 1985 agreement must be considered in the context of prior indemnities and the settlement with Grassy Narrows and Islington First Nations. This context indicates that the 1985 indemnity agreement should apply more narrowly and was not intended to provide protection against the costs of regulatory compliance.[10]

While the “polluter-pays principle” is not referenced explicitly in the decision, the SCC has interpreted the 1985 indemnity agreement in such a way as to hold successor companies liable for past environmental contamination, as opposed to requiring the provincial government to foot the bill.

Parallels to the recent decisions in Orphan Wells and HBBC

The Resolute decision comes less than a year after the SCC released its decision in Orphan Well Association v Grant Thornton Limited, 2019 SCC 5 (“Orphan Wells”), another case in which a successor entity was liable for historic environmental cleanup costs.

In Orphan Wells, the SCC held a bankrupt energy company’s estate liable for abandonment and reclamation obligations for certain old oil and gas wells. These environmental responsibilities were found to take priority over obligations to pay back creditors in the case of insolvency or bankruptcy. Like in Resolute, the SCC in Orphan Wells overturned the appellate court below and reached a decision ensuring that taxpayers were not left paying for environmental remediation.

Please refer to the article, “Redwater – SCC Delivers the Final Word”, for an in-depth summary and analysis of the Orphan Wells decision.

The issue of ongoing regulatory liability for contamination for “non polluters” and/or successor companies was also front and center in the Hamilton Beach Brands Canada, Inc.  v Ontario (Ministry of the Environment and Climate Change), 2018 ONSC 5010 (“HBBC”).

In HBBC the Ontario Ministry of Environment issued an Order to three parties to take steps to delineate and monitor (with the potential for future remediation) ground water contamination that had migrated from an industrial property to surrounding commercial, residential and municipal lands. The contamination had occurred decades early through actions of a prior lessee of the property. The Orderees were a corporate successor of a prior owner of the property, the current owner and the current Lessee of the property.

The Ontario Environmental Review Tribunal (“ERT”) dismissed the appeal of the Order, rejecting the argument that the Order under s. 18 of the Ontario’s Environmental Protection Act could not apply to off site contamination that was not caused by the Orderees.[11] The Ontario Divisional Court, on Review, upheld the ERT decision holding that there is no geographical constraint limiting orders to the source property of the contamination.[12] Leave to appeal to the Ontario Court of Appeal was sought and refused.[13]

What comes next

The Resolute decision has not quite ended the series of legal disputes that have plagued this Dryden, Ontario site for decades, but has provided clarity on how the 1985 indemnity agreement ought to be interpreted.

In a statement, Resolute indicated that it would continue its monitoring of the site and posting of financial assurance while an appeal of the Remediation Order proceeds to the ERT.

We can help

Our team at McCarthy Tétrault has experience navigating the legal and regulatory uncertainties that arise in environmental matters. If you would like more information on these developments and their potential impact on your business, we can help. Please contact Peter Brady or Claire Seaborn with any questions or for assistance.

[1] R v Resolute FP Canada Inc., 2019 SCC 60 at para 4.

[2] R v Resolute FP Canada Inc., 2019 SCC 60 at para 9.

[3] R v Resolute FP Canada Inc., 2019 SCC 60 at para 13.

[4] R v Resolute FP Canada Inc., 2019 SCC 60 at para 20.

[5] R v Resolute FP Canada Inc., 2019 SCC 60 at para 20.

[6] R v Resolute FP Canada Inc., 2019 SCC 60 at para 22.

[7] Weyerhaeuser Company Limited v Ontario (Attorney General), 2016 ONSC 4652.

[8] Weyerhaeuser Company Limited v. Ontario (Attorney General), 2017 ONCA 1007. Note that in dissent, Justice Laskin had found that the 1985 indemnity agreement only applied to claims brought by third parties, and not regulatory claims by governments.

[9] R v Resolute FP Canada Inc., 2019 SCC 60 at para 14-28.

[10] R v Resolute FP Canada Inc., 2019 SCC 60 at para 30.

[11] Hamilton Beach Brands Canada Inc. v. Ontario (Environment and Climate Change), ERT Case No. 17-025.

[12] Hamilton Beach Brands Canada, Inc. v Ontario (Ministry of the Environment and Climate Change), 2018 ONSC 5010.

[13] The Ontario Court of Appeal refused leave on December 12, 2018: http://www.ontariocourts.ca/coa/en/leave/2018.htm#refused.

This article has been republished with the permission of the authors.  It was first published on the McCarthy Tétrault ‘s website.


About the Authors

Peter Brady  is a partner in McCarthy Tétrault ‘s Litigation and Mining Groups and co-head of the firm’s National Environmental, Regulatory & Aboriginal Group. He regularly advises and represents clients in all legal aspects of regulatory litigation, with particular emphasis in the areas of environmental law, occupational health & safety law, mining law, and extractive industry projects. Peter also has significant experience in anti-corruption compliance, investigations, and due diligence for transactions involving Canada, Indonesia, China, the USA, and Africa.

Claire Seaborn’s litigation practice focuses on commercial disputes, public law and regulatory matters. She draws from her experience in the public and private sectors in Canada, the United States and the United Kingdom. Claire’s involvement in high-profile and high-stakes files has sharpened her ability to advocate for her clients and provide sound legal advice.

What is the difference between external & internal radiation exposure?

Written by Steven Pike, Argon Electronics

Radiological incidents where there is the potential for the release of ionising radiation can occur in a wide variety of scenarios – be it a fire in an industrial facility, a transportation accident that involves radioactive materials or the deliberate use of a radiological dispersal device (RDD).

Any accident or incident that involves a radiological hazard can place significant operational demands on first response teams as well as placing those personnel at risk of exposure to potentially dangerous levels of ionising radiation.

Radiation exposure refers to any situation in which the body is in the presence of radiation.

In order to keep radiation doses at a level that is low as reasonably achievable (ALARA) it is vital that first responders both minimise the time that they spend in affected areas and that they maximise the distance between themselves and the radiation source.

When we consider the concept of radiation exposure it is important to bear in mind not just the type of radiation that is being emitted, but also the route by which that radiation enters the body.

A commonly held image of radiation is that it emanates from a source device and strikes the outside of the body – in what’s known as external exposure.

However the radioactive material from radiation also has the ability to deposit its energy in our internal organs through the process of ingestion, injection, absorption or inhalation – what is termed internal exposure.

What is external radiation exposure?

External radiation exposure occurs when part or all the body is exposed to a penetrating radiation field from an external source. In some cases this radiation will be absorbed by the body, while in others it may pass straight through.

Any source outside of the body that emits ionising radiation can pose an external radiation exposure hazard – be it in the form of a beta source, neutron source or gamma source.

How extensive this hazard is depends on the amount of exposure received, the duration of the exposure, the energy of the emitted radiation and the total amount of radioactive material that is present.

All ionising radiation sources produce an external radiation field, however some radiation fields are so so small that they pose no radiation risk at all – for example in the case of low and moderate energy beta radiation emitters such as Tritium (H-3), Nickel-63 (Ni-63) or Phosphorus 33 (P-33).

Other sources of ionising radiation – such as the gamma sources Caesium-137 (Cs-137) and Cobalt-60 (Co-60) – are able to produce much more powerful external radiation fields, so care must be taken to shield the source and monitor exposure.

What is internal radiation exposure?

Internal radiation exposure occurs when a radioactive material is released into the environment in the form of a solid, liquid or gas.

It is then able to enter the body through the route of ingestion through the digestive tract, inhalation into the respiratory airways, percutaneous absorption through the skin or penetration via contamination from a wound.

Radioactive materials that are incorporated into the body will emit radiation as they decay. In addition, that individual will continue to be exposed to radiation until such time as those radioactive materials have been excreted in the form of either urine or faeces.

Specific radioactive materials have a tendency to target specific organs depending on their unique chemical properties.

The radioactive isotope strontium, for example, shares similar properties with calcium, which means it tends to accumulate in calcium-rich areas of the body such as bones.

Radioactive caesium shares properties that are similar to potassium, which means it tends to distribute throughout the body.

Radio-iodine, meanwhile, tends to concentrate in the thyroid gland in the same manner as non-radioactive iodine (and the effects of which were evidenced after the Chernobyl nuclear accident where there was a marked increase in the number of thyroid cancer cases among children.)

Any exposure to ionising radiation in the context of a radiological emergency – and even if it is only for short periods of time – can increase the chance of both short-term and long-term health impacts for first responders.

In any situation where there is deemed to be a radiation hazard it will be crucial to ensure that emergency personnel are sufficiently trained in managing the risks, that they are adequately equipped and that they are appropriately protected.


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.

Urgent Canadian Action is needed on PFAS — the Forever Chemicals

Written by Bev Thorpe and Fe de Leon for the Canadian Environmental Law Association

The class of chemicals called PFAS (Per- and Polyfluoroalkyl Substances) are often referred to as ‘the forever chemicals’ because they are highly persistent in the environment and will take hundreds if not thousands of years to disappear from the soil and groundwater where they accumulate.  The Netflix film, The Devil We Know, and the newly released film, Dark Waters, have brought these chemicals to popular awareness.  As we now know, two substances in this chemical class – PFOS and PFOS – are the focus of multi-million dollar lawsuits due to the cover up of data demonstrating health impacts such as increased cholesterol, kidney cancer, testicular cancer, low birth rates, thyroid disease, and weakened immunity.  Over 99% of all Canadians tested by Health Canada’s biomonitoring surveys, have PFOA and PFOS in their blood and other organs including communities in the far north.  Producers of PFOS and PFOA voluntarily stopped production in 2002 resulting in a slight decrease of these two PFAS in sampled populations, but other PFAS are now turning up in Canadians. Yet the Canadian regulatory response to this crisis is lacking urgency and transparent communication with impacted communities.

PFAS is widely present because  for over sixty years these chemicals have been used as stain, oil and water repellant chemicals in  clothing, carpets, grease-proof paper, ski wax, cookware and cosmetics and also widely used in firefighting foam and other industrial applications.  Their widespread use raises the question why it took so long to highlight the risk to human health and wildlife and why regulatory response has been so slow.  This is partly because scientists lacked the analytical capability to measure these chemicals in the environment until recently.  At the same time, PFAS, as with thousands of chemicals were historically allowed on the market with no toxicological screening requirements.  Even today, most new  PFAS, which industry is now switching to as replacements for PFOA and PFOS, lack full toxicological data yet they remain unregulated and on the market.

In Canada most uses for PFOS were prohibited in 2016 aside from exemptions for specific uses.  In 2012, the federal government concluded that PFOA was an ecological concern. But Health Canada maintains that PFOS and PFOA are not a concern for human health at current levels of exposure.  Most recently in June 2019 Transport Canada allowed airports to use PFAS-free firefighting foam, which shows a more precautionary approach as it targets the whole class of PFAS, but this is only a start.  There are over 5,000 PFAS in use and they are just as persistent in the environment as PFOS and PFOA, with many known to be highly mobile in rivers, lakes and groundwater.  None of these are restricted in Canada.

For Canadian adults, our main exposure to PFAS is via household dust, ingestion of food and air – in fact studies of air in Vancouver homes found levels of PFAS were twenty times higher than air outside the homes due to PFAS inside the homes.  Children, infants and toddlers are most at risk from PFAS exposure due to hand-to-mouth contact with PFAS treated products.  In addition, Canadian research has demonstrated PFAS in the leachate and air of landfill sites, due to the amount of PFAS in the clothing, carpets and consumer goods that have been discarded into landfills over the years and which are now leaching these chemicals into the environment.  PFAS are found in the air and effluent from wastewater treatment sites as well as in the sewage sludge which can be spread on land.

If this situation seems worrying, it is.  We lack full transparency of where contamination sites are in Canada and full accountability for who is responsible for the cleanup. Remediation is expensive and technically challenging which may partly explain such inaction.  The region downstream of Hamilton airport has still not been cleaned up eight years after high levels of PFAS contamination were discovered.  The extent of contamination in Canada is difficult to know, unlike the disclosure afforded to US citizens by many US state regulatory bodies.  The use of PFAS in firefighting foam at military bases, airports and refineries is increasingly acknowledged to be a common source of  water contamination but public information is absent on site specific monitoring data or even if groundwater wells are being monitored.  In December 2018 Health Canada released Canadian Drinking Water Guidelines for PFOS and PFOA which are substantially weaker than US based guidelines and to date British Columbia is the only Canadian province to establish provincial drinking water regulations.

We urgently need to see federal and provincial governments take action to phase out the entire class of PFAS in consumer and industrial use; strengthen Canadian drinking water standards to be more protective of children’s health and radically increase public right to know about the presence of PFAS in consumer products, local drinking water, and discharges into our communities. Tackling these forever chemicals requires an informed and coordinated public response which has sadly been lacking to date.

This article has been republished with the permission of the authors.  It was first published on the CELA website.


About the Authors

Bev Thorpe is an environmental consultant and principle author of CELA’s reports on PFAS.  Bev works with advocacy networks, companies and governments to advance an economy without the harm of hazardous chemicals.  She is a long time member of the Coming Clean network in the USA and she works with European and Asian networks.

Fe de Leon is a researcher with the Canadian Environmental Law Association (CELA) and has worked extensively on toxic substances particularly in the Great Lakes Basin, on the federal chemicals management plan and on international efforts to address persistent toxic substances through the Stockholm Convention on Persistent Organic Pollutants, the Great Lakes Quality Agreement, and a global treaty to address mercury.

Mind the GAP: Excluded Pollution Conditions in Environmental Insurance Policies

Written by Carl Spensieri, Vice President, Environment, Berkley Canada

BACKGROUND

Your Company excavates and transports contaminated soils on a redevelopment project. Being an experienced contractor, you implement several best management practices to reduce the amount of dust and odour you generate while doing this work. Further, you even implement a truck inspection and washing process to reduce soil tracking on nearby streets by way of truck traffic. In short, you are a good Contractor!

Unfortunately, your work still generates some dust and odours and neighbouring property owners complain to the municipality and the environmental regulator when they find dust on their cars and lawns.

MIND THE GAP

Despite your best management practices, the Owner of the redevelopment project receives a statement of claim from the nearby property owners. In addition, the Owner is issued a fine by the environmental regulator for allowing contaminants (dust) and odour to escape into the environment. The Owner, in turn, issues a demand letter requesting that you pay for defence costs and the environmental fine.

Thankfully, you buy a Contractor Pollution Liability (CPL) policy.  Can you identify the GAP?  The majority of CPL policies sold in Canada do not cover this exposure!

THE DETAILS

In general, CPL policies define POLLUTION CONDITION to mean:

the discharge, release or escape of any solid, liquid, gaseous or thermal irritant or contaminant, …, into or on land, any structure on land, the atmosphere or any watercourse or body of water, including groundwater.

Do you think dust and odour fall within this definition? While the above noted definition is very broad, the majority of CPL Policies sold in Canada introduce the following restriction:

 …provided such discharge, release or escape is unexpected and unintended …

Given all the actions taken the by the Contractor to manage the dust and odour risk, it is not possible to suggest the dust and odours generated while excavating and transporting are unexpected and unintended. This results in no cover being afforded for this claim.

THE SOLUTION

The solution is simple. Ensure your CPL policy does not include this restriction. When buying CPL insurance in Canada it is important to understand not all policies are created equal. Failing to recognize this GAP could cost you and your clients!


About the Author

Carl is a licensed professional engineer in the Province of Ontario with 20 years of experience in environmental liability assessment, management and insurance. He is a business leader focused on driving profitable growth through innovative specialty insurance solutions.  He is considered a positive business disruptor that seeks to deliver the best outcomes for his clients. Berkley Canada is a specialty insurance carrier.

 

Penalty Creep: What is going on with Environmental Fines Across Canada?

Written by Aaron AtchesonBryan SmitsDanielle ParryJulia Zanetti, Miller Thomson

In July of this year, a fine of $2.7 million was levied against Kirby Offshore Marine Operating LLC following its guilty plea for violations of the Fisheries Act involving a spill of diesel fuel and lubricants near Edge Reef in British Columbia.[1] Approximately 107,552 litres of diesel fuel and 2,240 litres of lubricants were released into the waters, both of which substances are considered to be detrimental to fish and migratory birds under the Fisheries Act. The nearly $3 million fine represents the largest fine that has ever been imposed following one single spill incident of a deleterious substance into water frequented by fish.[2]

The news of this massive fine raises a broader question: are the fines now being handed out for environmental offenses rising faster than inflation? And if so, to what end? Our review of penalty levels in Canada looks at the legislative changes in the minimum and maximum environmental fines, and whether these changes in the law are actually having any real effects on the quantum of fines environmental offenders are receiving. The recent Kirby headline of its $2.7 million fine suggests they are. And finally, is there any indication that these larger fines are changing behaviour?

Up, up, up: The Recent Pattern in Environmental Fine Laws

Ushering in the legislative shift at the federal level was the new Environmental Enforcement Act (EEA) enacted by the Conservative government in 2009. This legislation introduced a new fine regime that establishes mandatory minimum fines for individuals and corporations, as well as higher maximum fines for a new category of “designated offences”. The maximum fine for an individual convicted of a designated offence, upon indictment, became $1 million, with a mandatory minimum fine of $15,000. For corporations, the jump was even larger: a corporation can be subject to a fine of $6 million and a mandatory minimum fine of $500,000 for these offences.[3] Further, upon second and subsequent offences for a “substantially similar” offence falling under the EEA, all fines are automatically doubled.[4]

This pattern of handing out much higher fines for corporations than those for individual offenders is a recent phenomenon not confined to the federal regime. Under Ontario’s Environmental Protection Act (EPA), there are similarly substantial differences between fines charged to corporations and those charged to individuals. For instance, individuals charged with an offence under the EPA are subject to a maximum fine of $50,000 upon first conviction and $100,000 upon subsequent conviction,[5] whereas a corporation charged with the same offence would be subject to a maximum fine of $250,000 upon first conviction and $500,000 upon subsequent conviction.[6] Under Alberta’s Environmental Protection and Enhancement Act, corporations are subject to fines 10 times those for individuals for the same offences: with a maximum of $100,000 for individuals and $1 million for corporations.[7]

Under Ontario’s EPA, the large majority of increases to maximum fines were enacted in 2005 under a provincial Liberal government. The maximum fine levels were almost doubled in 2005, and are now very significant amounts.[8] Even more dramatic has been the introduction of mandatory minimum fines for certain enumerated offences listed under subsection 187(3) of the Act.[9] For these specific offences, prior to 2005, individuals convicted would be subject, upon first conviction, to a maximum fine of $50,000 and upon subsequent conviction, a maximum fine of $100,000.[10] Following the 2005 changes, an individual is subject to not only a maximum fine of $4 million but also a mandatory minimum fine of $5,000.[11] This combination of maximum and minimum continues for second and subsequent convictions, resulting in an individual subsequently convicted of one of these offences facing a maximum fine of $6 million, and a mandatory minimum fine of $20,000.[12]

The provincial trend of increasing the maximum fines associated with environmental offences is not confined to Ontario and Alberta. The equivalent provincial legislation in Quebec, the Environment Quality Act[13], underwent a fivefold increase in its minimum and maximum fines in 2011.[14]

The introduction of these mandatory minimums is noteworthy, as it essentially removes judicial discretion in ordering a lower fine in appropriate circumstances; this contributes to the overall move towards higher fines. These substantial fines on the books signify a larger trend in the increasingly punitive way environmental offences are being enforced and penalized.

Application – Are these changes translating into higher average fines?

The recent pattern towards increased legislated maximum fines in and of itself is largely unsurprising, given the appeal of appearing “tough on environmental offences” in today’s political arena. But has this tough legislative stance actually had any bearing on the average fine being doled out to environmental offenders?

The short answer is that across Canada, in the past 2-3 years specifically, the data shows that regulators have been handing out stricter fines mirroring their tougher legislation, both in the frequency of fines being given for convictions and in the quantum of those fines on average.

While historically in Canada, environmental fines were used sparingly as enforcement tools to ensure environmental compliance compared to other jurisdictions, this approach underwent a dramatic shift in 2014.[15] As mentioned above, one significant aspect of this has been the introduction of mandatory minimums. This results in larger average fines, as judges no longer have the ability to order fines below applicable levels.

Further, the value of “large” fines (meaning, over $75,000) issued across Canada between 1991 and 2009 totalled an average of $1.4 million per year.[16] This has shot up to $3.9 million on average in 2015 to an average of $32.2 million in 2017.[17] While the total quantum of large fines and penalties has decreased to $15.7 million in 2018, the apparent “drop” in aggregate fines is based on one large fine having been levied in 2017 (see footnote)[18]. Excepting out this one fine, the trend has continued, as evidenced by an increase in the number of large fines and penalties issued, which has increased from 28 to 34 in 2018.[19] Compared against 2014, the total amount of fines issued in 2017 has increased by nearly $10 million.[20] Virtually all Canadian jurisdictions increased the amount of large fines issued in 2017 compared to 2016.[21]

Noteworthy Trends and Particularities

Although there has been a relatively consistent increase across Canada, there are a few regional particularities to take note of, including a regional divide from east to west regarding the focus of enforcement efforts. Western provinces have shown a commitment to cracking down specifically on water-related offences, while central and eastern Canada appear to target their large fines primarily on air matters.

The three provinces which have been the most consistent users of fines to enforce compliance with environmental laws are Ontario, British Columbia, and Alberta.[22] In particular, Ontario has always been one of the most active jurisdictions in terms of enforcement of environmental laws by way of fines; of the total $26 million worth of environmental fines issued by both provincial and federal governments from 1991 until 2010, a whopping $14 million was collected in Ontario alone.[23] Ontario continues to lead the pack when it comes to the current trend of heftier fines in recent years, as it has undergone a 63% increase each year in average fine amount and its total fine amount has increased by almost $10 million in 2017 compared with 2014.[24]

Although all jurisdictions have contributed to this pattern of increasing fines, the most significant increases to happen in recent years have been in Saskatchewan, Quebec, and Alberta.[25] Quebec has had a dramatic increase in large fines, issuing over $9 million in fines in 2017, accounting for 29% of the total fines issued in Canada that year.[26] This spike in environmental fines by Quebec has been an extremely recent phenomenon, as Quebec issued zero “large” fines in 2015.[27] As well, a newcomer to the top 5 list of fine issuers in Canada is Saskatchewan, which levied $2.6 million in fines for environmental offences in 2017.[28]

There is also a regional divide between west and central/east Canada in their fine-issuing patterns whereby western provinces including B.C., Alberta, and Saskatchewan appear to be focusing their enforcement measures on water-related environmental offences,[29] provinces in central/eastern Canada, including the big fine issuers of Ontario and Quebec, appear to be utilizing environmental fines more to target air-related offences.[30] However, there appears to be a decrease in 2018 in the number of air-related fines compared to past years, while the “other” category is on the rise from 4% in 2017 to 33% in 2018. As well, water offences have become more of a nationally recognized enforcement priority across the country, now accounting for almost half of all large fines issued in Canada in 2018.[31]

Effects on Behaviour?

So, while it has been established that there is an intention to increase environmental fines through changes in legislation, and that such increases have actually happened, are these efforts changing behaviour? The answer appears to be yes, to a degree. Even though there is some discussion about the effectiveness of increased regulatory penalties on the levels of pollution, and the likelihood of materially contaminating events occurring,[32] there is a general consensus that a stringent deterrence regime incorporating significant fines is at least an element of an effective environmental harm reduction strategy.[33]

It will be interesting to observe developments unfold as regulators continue to implement and enforce these new, stricter environmental fine regimes on the books. Currently, the bottom line seems to be that environmental offenders, whether corporate or individual, wherever located across Canada, can expect to be met with heavier-handed treatment of the law. And, so long as the regulatory authorities provide direction on how to comply and to reduce risk, and have a record of enforcing the laws in place, it is likely to contribute to reducing contaminating activities in jurisdictions across Canada.


[1] “Use and Environmental Management of Natural Resources in Canada”, Dragun Corporation Environmental Advisors”, https://www.dragun.ca/environmental-management-of-raw-and-refined-natural-resources/.

[2] Ibid.

[3] Government of Canada, Fine Regime Under the Environmental Enforcement Act (14 June 2017), online: https://www.canada.ca/en/environment-climate-change/services/environmental-enforcement/acts-regulations/about-act/fine-regime.html.

[4] Ibid.

[5] Environmental Protection Act, R.S.O. 1990, c. E.19 at s. 187(1) [EPA].

[6] Ibid at s.187(2).

[7]Environmental Protection and Enhancement Act, R.S.A. 2000, c. E.12 at s.228(1) [EPEA].

[8] For instance, whereas prior to 2005 the maximum fine for an individual upon first conviction was $20,000 and upon subsequent conviction was $50,000, now, upon first conviction, an individual is subject to a maximum fine of $50,000 and upon subsequent conviction, a maximum fine of $100,000. (Ibid at s. 187(1).)

[9] Includes offences related to liquid industrial or hazardous waste; discharge of contaminants; and failing to comply with a term or condition of an environmental compliance approval, or other license or permit under this Act in relation to contaminant discharges (EPA, supra note 5 at s.187(3)).

[10] Ibid at s. 187(5).

[11] Ibid.

[12] Ibid.

[13] Environment Quality Act, CQLR c Q-2 [Environment Quality Act].

[14] Before this shift, individuals convicted of certain offences including the release of containments were subject to a mandatory minimum fine of $2,000 and maximum of $20,000; this is contrasted with the current version of the Act which features mandatory minimum fine of $10,000 and a maximum of $1 million for individuals convicted of the same offences. (Ibid at s. 115.32)

[15] Ibid at p. 2.

[16] Ibid.

[17] Ibid at pp. 2-3.

[18] Note: The 2018 Berkley Canada Report shows that the quantum of Canada’s large environmental fines and penalties has been creeping up from 2014 until 2017 with what appears to be a sudden drop in 2018. However, it is important to note that this apparent decrease in 2018 is due in large part to a landmark case in 2017 wherein Volkswagen was fined $15 million as part of its settlement deal with the Competition Bureau of Canada, the most costly environmental fine ever given in Canada, for conducting misleading environmental marketing of certain diesel vehicles. Although this fine is noteworthy, it can alternatively be characterized as a Competition Act matter as opposed to a true environmental matter. Setting aside the Volkswagen fine, there was only a difference in total quantum of large fines handed out in 2017 compared to 2018 of $1.5 million. Additionally, the total number of large fines levied increased from 27 in 2017 to 34 in 2018. As a whole, the established pattern of Canada undergoing an overall increase in large environmental fines has continued into 2018.

[19] Berkley Canada White Paper, “Environmental Fines and Penalties Report, 2018 Update Report”, Berkley Canada White Paper (March 2019), at p. 4 [Berkley White Paper, 2018].

[20] Berkley Canada White Paper, “Environmental Fines and Penalties Report, 2017 Update” Berkley Canada White Paper (March 2018), at p. 6 [Berkley Canada White Paper, 2017].

[21] Ibid at p. 5.

[22] Ibid at p. 4.

[23] Nimonik, “Environmental Fines in Canada, 1990-2009” at p. 2 [Nimonik: Environmental Fines].

[24] Berkley Canada White Paper, 2017 supra note 19 at p. 5.

[25] Ibid at p. 5.

[26] Ibid at p. 4.

[27] Ibid at p.5

[28] Ibid at p 5.

[29] Some of the most noteworthy cases in recent years including offences and fines of $2.2 million for offences arising from logging operations and the improper construction of road and stream crossings in B.C., (“Canada: Logging Companies Fined $2.2 Million Under the Fisheries Act”, at: http://www.mondaq.com/canada/x/576972/Environmental+Law/Logging+companies+fined+22+million+under+the+Fisheries+Act.) $172,000 for a pipeline leak in Alberta (“Alberta Energy Regulator fines Murphy Oil $172,500 for 2015 Pipeline Spill”, at: https://calgaryherald.com/business/energy/alberta-energy-regulator-fines-murphy-oil-172500-for-pipeline-spill) $3.5 million for a wastewater leak from a dam failure in Alberta (“Coal Mine Fined $4.5 Million for 2013 spill that contaminated Athabasca River”, at: https://www.cbc.ca/news/canada/edmonton/obed-mountain-mine-fine-athabasca-spill-1.4154792.), and $1.4 million for the discharge of effluent into water frequented by fish in violation of the Fisheries Act in B.C. (“B.C. Coal Mine Company Teck Fined $1.4 Million for Polluting B.C. River, at: https://thenarwhal.ca/b-c-coal-mine-company-teck-fined-1-4-million-polluting-b-c-river/.).

[30] For example, handing out fines for offences such as fines of $175,000 for releasing incinerator ash into the environment in Ontario (“Toronto Company fined $175,000 for Environmental Protection Act Violations” at: https://news.ontario.ca/ene/en/2017/02/toronto-company-fined-175000-for-environmental-protection-act-violations.html.) $265,000 for selling of aerosol products containing ozone-depleting substances in Ontario (“Fastenal Canada fined $265K for selling aerosols with banned HCFCs” at: https://www.cbc.ca/news/canada/kitchener-waterloo/kitchener-fastenal-fined-environment-hydrochlorofluorocarbons-1.4289116.), and $765,000 for the release of PCBs into the environment and the failure to notify in Quebec (“The Hudson Bay Company located in Montreal fined $765,000 for a large release of polychlorinated biphenyls into the environment”, at: https://www.newswire.ca/news-releases/the-hudson-bay-company-located-in-montreal-fined-765-000-for-a-large-release-of-polychlorinated-biphenyls-into-the-environment-606054136.html.).

[31] Berkley Canada White Paper, 2018 supra note 18 at p. 5.

This miscellaneous ”other” category of fines which shot up in 2018 includes a $2.75 million fine arising from the death of migratory birds and a $1.25 million penalty arising from the importing of fuel in violation of the Renewable Fuel Regulation.

[32] Neil Gunningham, Enforcing Environmental Regulation, Journal of Environmental Law, Volume 23, Issue 2, July 2011, Pages 169–201, https://doi.org/10.1093/jel/eqr006 [Gunningham, Enforcing Environmental Regulation].

[33] Gunningham, Enforcing Environmental Regulation, supra note 31 at p. 186.

Bryan C. Williamson, Do Environmental Regulations Really Work?, The Regulatory Review, November 2016, https://www.theregreview.org/2016/11/24/williamson-do-environmental-regulations-really-work/.

Will Amos, Federal government’s enforcement of environmental laws is weak, Ecojustice Blog, December 2011, https://www.ecojustice.ca/federal-governments-enforcement-of-environmental-laws-is-weak-report/.

Joseph Castrilli, Canada’s main environmental law isn’t working, Canadian Environmental Law Association, August 2016, https://www.cela.ca/blog/2016-08-22/canadas-main-environmental-law-isnt-working.

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

This article has been republished under general permission of Miller Thomson.  It was first published on the Miller Thomson website.

EPA Finalizes Universal Waste Rule for Hazardous Aerosol Can Wastes, Streamlining Requirements for Their Management

Written by Aaron H. Goldberg, Principal, Beveridge & Diamond

On November 15, 2019, the Administrator of the U.S. Environmental Protection Agency (EPA) signed a final rule to classify and regulate hazardous aerosol can wastes as “universal wastes” under the federal Resource Conservation and Recovery Act (RCRA) hazardous waste rules. Once the rule becomes effective, hazardous aerosol can wastes will be subject to substantially reduced requirements for collection and transport, in order to facilitate and encourage environmentally sound recycling or disposal. However, the ultimate recycling and disposal facilities will remain subject to essentially the same requirements as currently apply. As discussed below, even though the final rule is largely consistent with existing requirements for other universal wastes, and even though EPA has finalized the proposal with only limited changes, there are several aspects of the rule that warrant special attention.

The final rule builds on existing universal waste requirements for other ubiquitous hazardous wastes, such as batteries, lamps, mercury-containing equipment, and certain pesticides. See generally 40 C.F.R. Part 273. Among other things, the aerosol can wastes will no longer have to be labeled as hazardous wastes (although they will be subject to reduced marking requirements), they may be stored for up to one year or even longer in some cases (rather than just 90 days for large quantity generators), they may be transported offsite without a hazardous waste transporter or hazardous waste manifest, and collection facilities not engaged in treatment or disposal will not have to be permitted as hazardous waste storage facilities. In addition, only large handlers of universal wastes (e.g., facilities that accumulate 5000 kg or more of total universal wastes at any time) will be required to notify EPA and track shipments of the hazardous aerosol can wastes. Aerosol can wastes generated by households and Very Small Quantity Generators (VSQGs) meeting applicable requirements will remain exempt from the RCRA regulations. However, all aerosol wastes will remain subject to applicable requirements under the U.S. Department of Transportation (DOT) Hazardous Materials Regulations (HMR) (although under those rules, if aerosol cans are classified as universal wastes, they will not be subject to the enhanced DOT requirements that normally apply to RCRA hazardous wastes). See 49 C.F.R. § 171.8 (defining “hazardous wastes” for purposes of the HMR as materials subject to federal hazardous waste manifest requirements).

Several key aspects of the final rule are discussed below. We note that the discussion here is based solely on the pre-publication version of the final rule and preamble. It is possible (though unlikely) that there may be some substantive changes in the rule when it is published in the Federal Register. In addition, EPA’s Response-to-Comments document and economic assessment for the rule (neither of which are currently publicly available) may provide a further gloss on some of the issues addressed here.

Definition of Aerosol Can

The proposed rule would have limited the definition of “aerosol cans” subject to the rule to containers that use gas to “aerate and dispense any material … in the form of a spray or foam.” In this way, the proposal would have excluded cans that dispense products without aeration (e.g., shaving gels) and cans that release only gas (e.g., spray dusters or aerosol horns). In response to comments, EPA modified the definition in the final rule so that it is more inclusive and consistent with DOT rules. Under the final rule, cans that dispense products without aeration will be eligible for management as universal wastes. However, gas-only products will be excluded. DOT is currently considering a petition to revise its definition to include these products, consistent with international rules for dangerous goods transport. See Petition of the Consumer Specialty Products Association, et al. to DOT (September 28, 2017). Unfortunately, the preamble to EPA’s final rule does not mention this petition, and it is unclear if the Agency would amend the definition in the universal waste rule if/when DOT changes its definition.

Status of Aerosol Cans with Evidence of Leakage/Damage

The proposed rule would have excluded from the scope of the universal waste rule any aerosol cans that “show evidence of leakage, spillage, or damage that could cause leakage under reasonably foreseeable conditions.” Commenters expressed concern that this proposed limitation was highly ambiguous, could effectively eviscerate the rule and was unnecessary from an environmental perspective (since EPA could simply require more protective packaging for leaking aerosol cans). In the final rule, the Agency agreed with the commenters and added new provisions specifying that “[u]niversal waste aerosol cans that show evidence of leakage must be packaged in a separate closed container or overpacked with absorbents, or immediately punctured and drained.” EPA also modified the definition of aerosol can so that it no longer requires that cans be “intact” to be classified as universal wastes.

Status of Empty Aerosol Cans

The final rule, like the proposed rule, excludes aerosol cans that meet the regulatory definition of an empty container. This exclusion raises a number of issues, as discussed below:

  • Commenters on the proposed rule asked EPA for clarification about when aerosol cans are properly deemed empty. They noted that it is unclear how the regulatory definition of empty and related Agency guidance applies to aerosol cans. EPA largely side-stepped this issue in the final rule. It merely restated the regulations and guidance and said that further clarifications or modifications to the relevant rules were outside the scope of the rulemaking.
  • Commenters raised questions about the relationship of the exclusion for empty cans with past EPA statements that such cans may sometimes exhibit the characteristic of reactivity. See EPA, RCRA Hotline Report (September 1987) (RCRA Online #13027) (“Irrespective of the lack of contained waste, [empty] aerosol cans would be a RCRA hazardous waste [to the extent] they demonstrate the hazardous characteristic of reactivity”). Neither the final rule nor the preamble addresses this issue.
  • The proposal left open the question as to whether empty cans could voluntarily be managed as universal wastes. In the preamble to the final rule, EPA clarified that empty cans may be managed as universal wastes, even though they do not have to be.

Other Issues Related to the Applicability of RCRA to Aerosol Cans

Commenters on the proposed rule asked EPA for guidance on several fundamental issues associated with the applicability of RCRA to aerosol cans in the first instance. For example, they requested guidance on the extent (if any) to which aerosol cans destined for recycling are properly classified as solid wastes (and thus potentially hazardous wastes). The commenters also asked the Agency for guidance about when (if ever) waste aerosol cans (empty or non-empty) might be classified as reactive hazardous wastes, and (as noted above) when aerosols cans qualify as empty. However, the final rule and preamble are essentially silent on these issues. Moreover, even though EPA had previously committed to providing such guidance as part of its 2016 strategy for addressing the applicability of RCRA to the retail sector, the preamble to the final rule states that “EPA has [now] completed all commitments made in the Retail Strategy,” which suggests that the guidance may not be forthcoming. See EPA, “Strategy for Addressing the Retail Sector under the Resource Conservation and Recovery Act’s Regulatory Framework” (September 12, 2016) at 6 (“EPA is developing a guide on how to recycle aerosol cans under the existing Subtitle C recycling exclusions”).

Allowance of Certain Processing Activities by Handlers

The final rule allows handlers of universal waste aerosol cans to perform certain limited activities, “as long as each individual aerosol can is not breached and remains intact”:

  • Sorting aerosol cans by type.
  • Mixing intact cans in one container.
  • Removing actuators to reduce the risk of accidental release.

Although there may be some uncertainty, it appears that these activities may only be performed with intact containers, even though (as noted above) EPA has modified the definition of aerosol can to eliminate the “intact” requirement. For these purposes, it appears that a can with a removed (or possibly missing) actuator would still be viewed as intact, assuming the integrity of the can has not otherwise been compromised.

Special Rules for Puncturing and Draining of Aerosol Cans

Even though puncturing and draining of hazardous aerosol cans is currently exempt from RCRA regulation if performed as part of a recycling process, the final rule imposes new requirements for puncturing and draining by handlers of universal waste aerosol cans (whether they are processing their own aerosol can wastes or those generated by others). For example, these activities will have to be performed using a device (commercial or “homemade”) that is specifically designed to do so in a safe manner that effectively contains residual contents and emissions. The handler will have to develop and follow written procedures to ensure proper operation of the equipment (including segregating incompatible wastes and preventing fires/releases) and to respond to any spills or releases, and it will have to ensure relevant employees are adequately trained. The contents drained from the aerosol cans will have to be “immediately” transferred to a tank or container meeting applicable hazardous waste generator requirements (e.g., the requirements for 90-day accumulation units or satellite accumulation units). A hazardous waste determination will have to be performed on the drained contents, and the materials will have to be managed accordingly. The drained cans will have to be recycled, and since they will be eligible for the RCRA exemption for recycled scrap metal, they will not have to be subjected to a hazardous waste determination. EPA notes that all of these activities must be conducted in compliance with all applicable federal, state, and local laws and regulations related to solid or hazardous wastes, as well as occupational safety and health.

Adoption by the States

EPA states that the final rule is “less stringent than the current federal program” and thus “states … will not have to adopt the universal waste regulations for aerosol cans.” However, as noted above, the new rules for puncturing and draining are more stringent than current rules (because those activities are currently exempt from regulation if performed as part of a recycling process), which casts doubt on the Agency’s claim that the final rule (in its entirety) is less stringent.

Shipments Between States

Despite requests from commenters for EPA to address this issue, the final rule and preamble are silent on the requirements that will apply to aerosol cans shipped from, to, or through states that do not adopt (or have not yet adopted) a universal waste rule for aerosols. In prior universal waste rules for other wastes, EPA has claimed that, in such circumstances, the waste would have to be transported in the non-universal-waste states by a hazardous waste transporter and with a hazardous waste manifest. See, e.g., 64 Fed. Reg. 36,466, 34,483 (July 6, 1999) (universal waste rule for lamps) (“[if] a [federal universal waste is] transported across a State in which it is subject to the full hazardous waste regulations … [t]ransport through the State must be conducted by a hazardous waste transporter and must be accompanied by a manifest”); 70 Fed. Reg. 45,508, 45,517 (August 5, 2005) (universal waste rule for mercury-containing equipment) (same). However, there appears to be a strong argument under the Hazardous Materials Transportation Act (HMTA) that state rules requiring a manifest are preempted if (as would be the case here) federal law does not require a manifest. See, e.g., Letter from Michael Shapiro, Director, Office of Solid Waste, EPA, to Richard J. Barlow, Chair, Northeast Waste Management Officials’ Association (June 11, 1996) (RCRA Online #14135) (“[although] preemption authorities are [generally] quite foreign to RCRA … they are introduced into the transporter area by the statutory directive in RCRA to maintain consistency with the DOT framework”); 49 Fed. Reg. 10,490, 10,492 (March 20, 1984) (federal law “prohibit[s] States from requiring separate State manifests or other information to accompany waste shipments”); id. at 10,494 (“States are not precluded from setting up another system of forms . . . as long as the system does not interfere with the actual shipment of waste [and] transporters [are] not . . . required to carry these forms”). Similar arguments may apply with respect to state requirements to use a hazardous waste transporter for a federally designated universal waste.

Next Steps

The final rule is expected to be published in the Federal Register in the next few weeks and will become effective at the federal level six months later, or approximately in early June 2020. The rule will not become effective in most states unless and until they act to adopt the rule, which (as discussed above) EPA says they will not be required to do (on the ground that the rule is less stringent than existing requirements). However, because several states have previously classified hazardous aerosol can wastes as universal wastes (e.g., California, Colorado, Utah, New Mexico, and Ohio) and another is poised to do the same (i.e., Minnesota), it can be reasonably expected that virtually all states will eventually follow EPA’s lead on this issue (possibly with some variations).

For more information about the final rule and its potential implications, please contact Aaron Goldberg or any other members of our Waste and Recycling practice group.

This article has been republished with permission of the author.  It was first published on the Beveridge & Diamond website.  


 

About the Author

Aaron applies his encyclopedic knowledge of hazardous waste regulatory law to help companies comply under federal and state laws—throughout all 50 states—and abroad.

He holds an advanced degree in chemistry, has extensive training in economics, and is a former U.S. Environmental Protection Agency consultant. His unique, multidisciplinary background—law, science, economics, and government—informs nearly every aspect of his work and makes him a useful bridge between attorneys, engineers, business managers, consultants, and regulators.

Aaron has focused on hazardous waste issues since the beginning of the federal regulatory program in 1980. With this historical experience, he offers clients comprehensive regulatory counsel on hazardous waste matters, including compliance strategy, advocacy, rulemaking challenges, end-of-life product management, permits, variances, and enforcement action response. His clients consist of companies and trade associations in the chemicals, electronics, recycling, petroleum, pharmaceuticals, retail, steel, and mining industries.

Serving ‘Rough Justice’: Assessing Remediation Costs And Liability Allocation Pursuant To The British Columbia Environmental Management Act

Written by Menka Sull and Samuel Kim, Alexander Holburn Law Firm

The British Columbia Environmental Management Act, S.B.C. 2003, c. 53, and the Contaminated Sites Regulation, B.C. Reg. 375(96) (CSR), provide the framework for identifying, remediating, and determining responsibility for the remediation of contaminated sites in British Columbia.

There has been relatively little case law considering the EMA; however, a recent BC Supreme Court decision provides an instructive analysis of cost recovery actions. In doing so, Jansen Industries 2010 Ltd. v. Victory Motors (Abbotsford) Ltd., 2019 BCSC 1621 shed light on two key issues: (1) What costs are recoverable as part of remediation costs under the EMA, and (2) How will liability for the remediation be allocated among those considered to be “responsible persons” for contamination?

Factual Background

Between 2009 and 2010, two properties located in Abbotsford – the Jansen site and the Victory Motors site – were discovered to have been contaminated by leaking underground gasoline storage tanks (“USTs”). The contamination originated from the Victory Motors site which was used as a gas station from World War II to 1994.

Example of the leaking underground storage tank

Jansen Industries 2010 Ltd. (“Jansen”) and Victory Motors (Abbotsford) Inc. (“Victory Motors”), the respective owners of the two sites, each brought actions against Actton Super-Save Gas Stations Ltd. (“Super-Save”), which operated the gas station from 1982 to 1992. Chevron Canada Limited (“Chevron”) and Shell Canada Limited (“Shell”) were also previous operators on the site; however, they were released from the action before trial as they settled with the plaintiffs.

Before trial, plaintiffs carried out the required remediation to obtain certificates of compliance for the respective sites pursuant to section 53(3) of the EMA. It was agreed that Jansen was not a responsible party, so the main issues pertained to the scope of the recoverable remediation costs, and allocation of liability amongst the other entities, including Victory Motors, Super-Save, Chevron, and Shell.

Recoverable Remediation Costs

The parties agreed that the amount of $395,706 paid to an engineering consulting company to obtain certificates of compliance for the two sites were properly remediation costs.

In his reasons for judgment, Mr. Justice Sewell held a number of remediation costs claimed by the plaintiffs were not recoverable pursuant to the EMA given the facts of this case, including:

  1. Legal fees incurred in seeking contribution from other responsible parties;
  2. Loss of rental income with respect to a building on the Victory Motors site while remediation was undertaken; and
  3. Costs to defend an action for remediation of contaminants originating on the Victory Motors site.

Although these remediation costs were recoverable in principle, Justice Sewell held that the plaintiff failed to tender adequate evidence regarding these claims.

Stigma Damages

The plaintiffs also sought stigma damages against Super-Save on the basis that residual contamination decreased the value of the sites. Super-Save argued, and the Court agreed, that stigma damages cannot be recovered as remediation costs under the EMA. Only the cost of bringing a site into compliance with the requirements of the EMA were held to be recoverable in a cost recovery action, which, in this case, was the cost of obtaining the certificates of compliance for the sites. Any claim exceeding this cost would have to be recovered in tort, after showing that a property owner was precluded from making optimal use of that property.

Allocation of Fault

Justice Sewell then turned to allocating liability amongst Victory Motors, Super-Save, Chevron, and Shell, having regard to the factors set out in section 35(2) of the CSR.

Price Paid for the Property

Justice Sewell considered the proposition that a party should not be able to recover the full costs of remediation if the remediation increased the value of the property by an amount in excess of those costs.

Here, the facts were complicated. The current owners of Victory Motors struck a bargain when they bought out all of its shares from the previous owner in 2012. The building on the Victory Motors site was then renovated and leased out to high quality tenants. The Court declined to treat the purchase price of the shares as a de facto purchase price of the property. Therefore, the profits realized from purchase of the Victory Motors shares did not form a basis to modify the allocation of remediation costs.

Due Diligence, Amount of Contaminants, and Relative Degree of Involvement

There was little evidence before Justice Sewell that any of the responsible persons exercised due diligence on the sites. Super-Save’s ten-year operation did not have an adequate inspection regime to detect small leaks, which were found to be enough to place significant amounts of contaminants in the soil over time. Meanwhile, from 1994 to 2012, Victory Motors did not exercise any due diligence at all, despite knowing that the gasoline infrastructure had remained in place. As Chevron and Shell were no longer parties to the action, no evidence was tendered regarding their exercise of due diligence.

The Court also considered the relative periods of operation, the volumes and toxicity of gasoline sold, and the installation and use of USTs by each of the responsible parties.

Remedial Measures Implemented and Paid for by any Responsible Party

The only remedial measures were the costs to obtain the certificate of compliance, which involved decommissioning the infrastructure and pumping out the remaining USTs.

Any Other Factor Relevant to a Fair and Just Allocation

Here, Justice Sewell took into account the circumstances under which ownership of Victory Motors changed hands in 2012. As Victory Motors received the benefit of remediation costs while being a significant contributor to the contamination, a significant portion of the remediation costs was allocated to it. The Court held that Victory Motors ought to have known about the environmental consequences of allowing disused gasoline infrastructure to remain on the property for nearly two decades.

The lengthy period of time that had passed since the likes of Chevron and Shell operated on the site militated toward a lower allocation of responsibility relative to the parties of the litigation. However, the allocation of liability reflected that a Chevron-installed UST was only decommissioned in 2012.

In the end, responsibility for the majority of the remediation costs was shouldered by Victory Motors and Super-Save.

Takeaways

This decision is important for a number of reasons.

First, it highlights the importance of establishing a sufficient evidentiary basis for claiming remediation costs under the EMA. The costs sought by the plaintiffs were denied not because the categories of costs were inherently unrecoverable as remediation costs, but because the evidence did not adequately support the claims.

The decision also clearly identifies remediation costs under the EMA and stigma damages as occupying distinct territories, with differing rationales and legal tests.

Finally, this decision highlights the practical difficulties in litigating over the relative contributions to a site’s contamination over several decades. The courts may only be able to administer “rough justice”, with all the uncertainty it entails.

This article has been republished with the permission of the authors.  It was first published on Alexander Holburn’s website.


About the Authors

Menka Sull is a member of the firm’s Construction + Engineering, Insurance, Administrative Law and Environmental Practices. Her practice is litigation-focused and includes a variety of areas of law including contractual disputes, construction litigation, environmental contamination, occupiers’ liability claims and professional negligence and disciplinary matters. Within her professional liability practice, Menka specializes in representing the interests of engineers, architects and lawyers in litigation arising out of professional activities.

Samual Kim is a student at the firm.  He has a B.Sc. from the University of the Toronto and a Juris Doctor degree from the University of Victoria.

What are the safety risks when transporting radioactive materials?

Written by Stephen Pike, Argon Electronics

Radioactive materials have a wide variety of applications within the fields of medicine, power generation, manufacturing and the military – and just as with any other product, there are times when these materials may need to be moved from one location to another.

In the US, the Environmental Protection Agency (EPA) estimates that there are around three million shipments of radioactive materials to, from or within the US every year.  In the UK meanwhile, Public Health England (PHE) has reported that somewhere in the region of half a million packages containing radioactive materials are transported to, from or within the UK annually.

Regulation of transport of radioactive materials

Ensuring the safety and security of the transport of radioactive material – whether be it by road, rail, air or sea – is understandably a major priority and one that is highly regulated, depending upon the type, and the quantity, of radioactivity that is being transported.

Materials that are deemed to be low in radioactivity may be able to be shipped with no, or very few, controls.

Materials that are considered to be highly radioactive will be subject to controlled routes, segregation, additional security and specialist packaging and labelling measures.

The UK’s Office for Nuclear Regulation (ONR) has a primary role to play in advising on the safe and secure transportation of radioactive substances across a wide of sectors – from the movement of decommissioned nuclear reactors or the carriage of irradiated nuclear fuel to the shipping of medical radio-pharmaceuticals, or the transport of sealed radioactive sources used within the construction or oil industries.

What constitutes a radiation transport event?

The normal transport of radioactive materials can result in transport workers (and sometimes even members of the public) being exposed to small radiation doses.

The strict regulatory conditions of transport however are designed to minimise these exposures.

Accidents and incidents can occur for a variety of reasons – from seemingly minor administrative errors, to problems arising from insufficient packaging, mishaps that occur during loading or unloading of consignments or the theft or loss of a radioactive material being carried.

When such events do occur there is the risk of radiological consequences not just for those transport workers in the immediate vicinity but for emergency responders, HazMat personnel and the wider public.

According to the Radioactive Materials Transport Event Database (RAMTED) there were a total of 16 accidents or incidents involving the transport of radiological materials in the UK in 2012.

These included the receipt of a flask from a nuclear power station where one of the lid-chock locking bolts was found to be loose; the failure of lifting equipment when removing a type 30B uranium hexafluoride cylinder from its protective shipping packaging; and an incident involving the stealing of pipes and plates from a scrap meal facility that were found to have traces of orphan radioactive sources.

Public Health England differentiates radiation transport events into one of the five following categories:

  1. A transport accident (TA) – which is defined as any event that occurs during the carriage of a consignment of radioactive material and that prevents either the consignment, or the vehicle itself, from being able to complete its journey.
  2. A transport incident (TI) – comprising any form of event, other than an accident, that may have occurred prior to or during the carriage of the consignment and that may have resulted in the loss or damage of the consignment or the unforeseen exposure of transport workers or members of the public.
  3. A handling accident (HA) – encompassing any accident that occurs during the loading, shipping, storing or unloading of a consignment of radioactive material and that results in damage to the consignment.
  4. A handling incident (HI) – defined as any handling event, other than an accident, that may occur during the loading, shipping , storing or unloading of the radioactive consignment.
  5. Contamination (C) – defined an an event where radioactive contamination is found on the surface of a package or where the conveyance of a radioactive material is found to be in excess of the regulatory limit.

The role of radiation safety training

When formulating a radiation training strategy, it is vital that personnel are adequately trained to handle the hazards and the risks associated with incidents involving radioactive materials.

Radiation safety training and development programmes should ideally provide personnel with both the knowledge they need and the practical skills that they will rely on in order to carry out their duties safely and effectively.

While most radiation detection equipment is relatively easy to use, the key lies in ensuring that trainees understand the significance of the readings that they get, that they can recognise the implications of changes in units of measurement and that they have the opportunity to train in as life-like a setting as possible.


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.

Greener Cleanup Metrics

The United States Environmental Protect Agency (U.S. EPA) “Principles for Greener Cleanups” provide a foundation for planning and implementing cleanups that protect human health and the environment while minimizing the environmental footprint of cleanup activities.

The U.S. EPA has developed 14 greener cleanup metrics that may be used to quantify specific portions of the footprint, such as the amounts of refined materials, public water or diesel fuel that are used or the amount of wastewater and hazardous waste that is generated.

 

Category Metric Unit of Measure
Materials
Refined materials used or conserved tons
Unrefined materials used or conserved tons
Waste Hazardous waste generated or avoided tons
Non-hazardous waste generated or avoided tons
Water Public water used or conserved million gallons
Groundwater used or conserved million gallons
Wastewater generated or avoided million gallons
Other water used or conserved million gallons
Energy Grid electricity used or conserved megawatt hours
Diesel used or conserved for equipment gallons
Diesel used or conserved for transportation gallons
Gasoline used or conserved for equipment gallons
Gasoline used or conserved for transportation gallons
Other energy used or conserved (variable)

The metrics provide an optional means for regulators, private industry and other cleanup partners to collect and track site-specific footprint information across multiple sites in a uniform and transparent manner. On a site-specific level, use of the metrics can help decision makers prioritize and select best management practices (BMPs) that could be implemented to minimize the footprint. The metrics may be applied to any type of site cleanup, including ones conducted through Superfund, RCRA or brownfield regulatory programs or voluntary initiatives.

Due to wide variations in cleanup project scopes and regional or local priorities, environmental footprints associated with other core elements of a greener cleanup may be quantified through additional metrics chosen by project stakeholders. Parties interested in quantifying a cleanup project’s environmental footprint at a more detailed level may use EPA’s Spreadsheets for Environmental Footprint Analysis (SEFA).

Questions about the Greener Cleanup Metrics may be forwarded to: Carlos Pachon, EPA/Office of Land and Emergency Management, or Hilary Thornton, EPA/Region 4.