Environmental Site Assessments: In Search of Better Conclusions

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Written by Bill Leedham, P. Geo., CESA, Down 2 Earth Environmental Services Inc.

Environmental consultants sometimes struggle with reporting their Phase One Environmental Site Assessment (ESA) findings and conclusions, especially for properties with limited available data, or where the identified environmental issues are deemed to be of low to moderate concern.

Environmental consultants are often in search of ‘Better Conclusions’. When I refer to “better conclusions”, I am talking about rational and defensible conclusions that are presented clearly and designed to meet the report objectives (as defined by regulation and client needs) and not simply stating that “no concerns were identified and no further action is needed” (which most clients would prefer).

As environmental consultants, we understand each site and report is unique and the conclusions are dependent on the available data, as interpreted by a qualified professional. The suggestions offered are by no means comprehensive or all inclusive, but are meant to generate some thoughtful discussion when writing and reviewing Phase One ESA reports.

Follow the Regulation(s)

Depending on the locale and client requirements, you could be following one of several ESA guidelines. Make sure you have conducted your ESA in accordance with the applicable and/or client-requested format, and that the content and wording of your conclusions follows the suggested or mandatory requirements. For example, CSA Z-768-01 requires ESA Conclusions to state either no evidence, or evidence of actual and/or potential contamination has been revealed.

Ontario Regulation 153/04, as amended for filing a Record of Site Condition requires, among other things, that the assessor’s conclusions specifically state whether the RSC can be filed on the basis of the Phase One alone; and whether a Phase Two ESA is required to file the RSC. Failure to include the mandatory statements with the specified wording can result in denial of the RSC application.

If the report is to be compliant with ASTM E1527-13, the conclusions must summarize all recognized environmental conditions; provide one of the ASTM-prescribed concluding statements; and include statements certifying that an Environmental Professional (EP) has conducted All Appropriate Inquires (AAI). The assessor should always be familiar with the most current ESA standards, and ensure that that the format they utilize is applicable to the Site and meets all regulatory and stakeholder objectives.

Know Your Client…. And Other Stakeholders

Phase One ESAs are conducted for a variety of reasons including transactional due diligence, mortgage financing, regulatory requirements or private/internal planning needs. The types and objectives of clients can also vary from Site owners to property buyers, sellers, or managers. Often other third parties such as banks, municipalities, government agencies or environmental regulators can have a significant impact on the content and acceptability of the report conclusions.

As an assessor you need to know in advance all the involved stakeholders, especially those that will require and expect reliance on your report in their decision making process. Different clients can tolerate varying degrees of environmental risk.

For example, a client that has owned and operated an industrial facility since first developed use, and has no plans to sell, redevelop or obtain bank financing may be comfortable with the simple identification of potential environmental concerns and decide not to undertake any further confirmatory investigations.

However, a bank financing a purchase of the same industrial property may have a lower risk tolerance, and will likely require a better understanding of the environmental issues, including Phase One ESA conclusions that clearly state whether or not a Phase Two ESA is recommended by the assessor.

To produce a valid report that assists the stakeholders in their decision making, the assessor must also know all stakeholder objectives, and understand their respective risk tolerance and required level of comfort.

About the Author

Bill Leedham is the Head Instructor and Course Developer for the Associated Environmental Site Assessors of Canada (www.aesac.ca); and the founder and President of Down 2 Earth Environmental Services Inc. You can contact Bill at [email protected].

U.S. Ecology Inc. and NRC Group agree to Merge

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US Ecology, Inc. (Nasdaq-GS: ECOL) recently announced that it has entered into a definitive merger agreement with NRC Group Holdings Corp. (NYSE American: NRCG), a company that provides comprehensive environmental, compliance and waste management services to the marine and rail transportation, general industrial and energy industries, in an all-stock transaction with an enterprise value of $966 million.

The transaction is expected to close in the fourth quarter of 2019. The transaction will create a company specializing in industrial and hazardous waste management services.

U.S. Ecology Inc. owns the Stablex hazardous treatment facility and landfill in Blainville, Quebec.

Stablex diposal cells

“The addition of NRCG’s substantial service network strengthens and expands US Ecology’s suite of environmental services,” said Jeffrey R. Feeler, President, Chief Executive Officer and Chairman of US Ecology. “This transaction will establish US Ecology as a leader in standby and emergency response services and adds a new waste vertical in oil and gas exploration and production landfill disposal to further drive waste volumes throughout the Gulf region.”

Headquartered in Great River, New York, NRC operates from over 65 offices and facilities throughout the Pacific (including Alaska and Hawaii), Southwest, Southeast, Atlantic, and Northeast regions.

As a nationally-recognized Oil Spill Removal Organization, NRCG generates a recurring, compliance-driven revenue stream, with upside from spill events and international expansion, particularly in Mexico and Canada.

NRCG is one of two leading national Oil Spill Removal Organizations (“OSRO”) that provide mandated standby emergency response for the transportation of oil products.  With more than 50 service centers, NRCG has a national service network providing emergency and spill response, light industrial services, hazardous and industrial waste management and transportation services.  From a growing base of disposal assets in the two key oil basins in the Gulf region, the Permian and the Eagle Ford, NRCG provides landfill disposal of waste from oil and gas drilling, treatment and handling of residual waste streams and rental and transportation services to support its disposal operations.

The combined company will use the US Ecology name, and its shares will continue to be listed on the Nasdaq Global Select Market under the ticker ECOL.  Jeffrey R. Feeler will continue to serve as President, Chief Executive Officer and Chairman of the Board of Directors.

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

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

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

David Sweet, MP

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

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

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

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

Proposed Ontario Rules on Excess Soil

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

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

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

Proposed changes include:

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

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

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

Quebec’s Action on Illegal Soil Dumping

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

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

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

How does After Action Review benefit HazMat training?

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Written by Steven Pike, Argon Electronics

Emergency response teams are constantly looking for ways to improve their operations.

Simulated exercises, training classes and seminars can all provide valuable insight into tactics and technologies that can be applied in real life HazMat incidents.

However unless feedback on incident response and command is recorded (and can be easily shared with personnel), a valuable learning opportunity can risk being lost.

An effective way to enhance learning outcomes is through the use of a post-incident critique or After Action Review (AAR).

An AAR is a structured means of analyzing what took place during a particular training exercise or event to identify strengths, weaknesses and areas for improvement.

As well as providing a method to scrutinize the actions that occurred, an AAR is also an opportunity to consider what could have been done differently – both by those who took part in the exercise and by those who were in charge.

The evolution of AAR

The origins of After Action Review can be found in the US military where formal AARs evolved out of the combat action debriefs that were carried out during World War Two and the Vietnam war.

The use of AAR in a military context has also been documented in the memoirs of Chinese military leader Gong Chu’s during the 1934-1938 three-year war in South China; and by Emperor Napolean’s Marshall’s and Generals in the early 19th century.

Military AARs fall into two types – formal AARs (which require detailed planning, preparation and resources) and informal AARs (which take the form of on-the-spot reviews of individual or group training performance).

Over the years, a wide variety of public health and emergency management agencies have recognized the value of AARs – using them within training programs to aid better understanding of the perspectives and expectations of all involved and to capture crucial learning that can be widely shared.

One potential challenge with any form of realistic HazMat training exercise is that much can be going on in a relatively short time-frame. When the exercise ends, participants can sometimes find that many of the events, and the associated learning opportunities, have become a “blur” in their minds.

A 2018 article in the online magazine FireEngineering.com discussed how taking a “stop-and-start” approach to full-scale HazMat training exercises can help to cement learning. By breaking up the scenario into several smaller sections with regular breaks for review, there is the opportunity to discuss what’s just happened, to explore alternative tactics, to quickly correct any misunderstandings and to enhance exercise efficiency.

In addition there is also the advantage of being able to ensure that departmental procedures and guidelines are being followed, and that they are modified when necessary.

The application of AAR in simulator detector technology

The integration of AAR capability into simulator detector technology has been shown to reveal important lessons that improve professional practice, minimize risk and enhance communication.

When we think about AAR in the context of a simulator detector, it is the technology within the device itself (rather than a human) that maintains a record of all the activity.

The simulator version of the LCD3.2 Chemical Hazard Detector (the LCD3.2e) is just one example of a device that keeps a record of all real-time trainee movement – from the initial set-up of the equipment through to the completion of the exercise.

Once the scenario has concluded, the instructor is able to easily switch the device to display a detailed (and indisputable) performance report.

AAR is a powerful and constructive way to obtain valuable knowledge that can improve processes and enhance training efficiency – be it in the form of constructive group discussion, via fact-finding exercises or by harnessing the intelligent technological capability of simulator detectors.

The process of regularly critiquing can serve as a powerful tool for understanding the impact of one’s actions and effecting change.

And by regularly comparing the “expected outcome” with what “actually happened”, adjustments and improvements can continually be made, to improve safety at both an individual and an organizational level.

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.

VelocityEHS acquires Industrial Hygiene Software company Spiramid

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VelocityEHS, a Chicago-based environment, health, safety (EHS) software company, recently announced it has acquired Spiramid, developer of the a system for managing industrial hygiene (IH). The acquisition adds Spiramid’s occupational safety & health software to the VelocityEHS’s EHS platform. The software, now called VelocityEHS Industrial Hygiene, gives organizations the capabilities to efficiently run an industrial hygiene program.

VelocityEHS is launching its new Industrial Hygiene solution at a time when IH is at an important crossroads. The need for workplace programs that anticipate and prevent workplace hazards is growing, while the number of certified industrial hygienists and investments in traditional programs has been on the decline.

“We’re
excited to launch our powerful new Industrial Hygiene product. It’s a perfect
fit for people working on the frontlines and has great synergy with our
market-leading Chemical Management capabilities. Its simple design cuts through
the complexity of IH tasks,” said Glenn Trout, president and CEO of
VelocityEHS. “While there’s no substitute for a well-trained, well-resourced
team of industrial hygienists, the reality today is that a growing number of
EHS generalists are being called upon to do sampling and run IH programs that
fall outside the scope of their training and traditional responsibilities.
Whether you’re a veteran hygienist or new to the role, we believe our new IH
solution will provide significant value.”

The software gives companies with sophisticated programs the ability to see, in one place and in real time, what’s happening across their enterprise. It gives staff hygienists new reporting tools — like dynamic risk matrices — to help them determine where and why to deploy resources, as well as to demonstrate the value of IH when talking with leadership stakeholders. For companies without a Certified Industrial Hygienist, it provides a framework for managing exposure risks and meeting a wide range of IH tasks.

“The goal of any industrial hygiene program is to help as many people in the workplace as you can. I am proud to see our IH software, which we have spent years perfecting, added to the VelocityEHS platform, which serves the industry’s largest EHS software community,” said Dave Risi, co-founder of Spiramid.

Managing
IH can require the collaboration of many stakeholders, including people
sampling in the field, IH consultants, outside laboratories, and program
managers. VelocityEHS’ Industrial Hygiene software is a central management hub,
facilitating the workflow and hand-off of responsibilities from party to party.
For instance, users can more easily plan and control all aspects of IH, from
selection of chemicals and analytical methods, to selection of laboratories and
access of sampling results, with options to share information with the right
stakeholders. The solution lets users send chain of custody forms directly to
labs and receive the analytical data electronically, inside the product,
eliminating the need for manual input and helping to avoid errors by making the
information readily accessible.

Other features include an in-product database of CAS Registry Numbers, OELs and laboratories, plus easy tools for tracking and managing of similar exposure groups (SEGs), qualitative assessments, sampling plans, medical surveillance, surveys, samples and equipment. It is the smartest and most efficient way to track a high-volume of complicated sample data and to manage risk assessments and mitigation programs.

The new IH software, together with VelocityEHS’ Chemical Management and Industrial Ergonomics solutions, provides industrial hygienists with the comprehensive resources they need to promote healthier workplaces.

Diving deep into Redwater – Supreme Court Says Trustee in Bankruptcy can’t cherry pick Environmentally Clean Assets

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Written by John Stefaniuk and Scott Birse, Thompson Dorfman Sweatman LLP

The Supreme Court of Canada released its much anticipated decision in Orphan Well Association v. Grant Thornton Limited (a case more commonly known as Redwater) on January 31, 2019. You might recall our article on the Alberta Court of Appeal’s decision in the same case.

In Redwater, the courts had to decide whether bankruptcy law trumped provincial regulatory orders issued in Alberta. Redwater Energy Corporation (Redwater) was an oil and gas developer.  It held a number of development properties under the authority of the Alberta Energy Regulator (AER).  With the slump in oil prices, Alberta Treasury Branches (ATB), Redwater’s primary lender, called its loan. ATB appointed Grant Thornton Ltd. first as receiver and subsequently as trustee in bankruptcy of the estate of Redwater under the federal Bankruptcy and Insolvency Act (BIA).

In the course of examining Redwater’s realizable assets, Grant Thornton became aware of outstanding environmental reclamation obligations that were associated with some of Redwater’s non-producing properties.  Grant Thornton decided to put the valuable, producing wells and other “clean” assets up for sale, and to walk away from the remaining assets by renouncing them under the BIA. That resulted in putting the reclamation in the lap of the Orphan Well Association (OWA), an industry-funded organization set up in Alberta to administer a fund established for the purpose of reclamation of “orphan” properties.

The AER refused to allow the transfer of the productive licences. It issued abandonment orders requiring clean-up or posting of security for clean-up costs in relation to the renounced assets. The parties headed to court to see what would become of the value that could be realized for the retained assets. Both the trial court and the Alberta Court of Appeal would have allowed Grant Thornton to leave the liabilities behind.

In the majority decision written by Wagner C.J., the Court applied a three-part test found in another Supreme Court of Canada case decided in 2012, Newfoundland and Labrador v. AbitibiBowater Inc. The majority of the Court held that the reclamation claims were not  a debt, liability or claim owing to a creditor and that they were too remote to attach a monetary value. That meant that two of the three criteria in the Abitibi test were not met. The Court therefore held that the bankruptcy did not have the effect of undoing the orders and the trustee could not cherry-pick the valuable assets while renouncing the rest.

This was a bit of a surprise to many environmental law practitioners, including most of the ones I attended a conference with just a few weeks prior to the decision.

What then, is the upshot?

Ostensibly, this is good news for provincial regulators. It is more likely that their enforcement orders will be found to continue to be binding upon corporations in bankruptcy. While it does not make receivers or trustees in bankruptcy personally responsible for rehabilitation costs, it does mean that the proceeds of sale of the valuable assets may have to be put toward satisfying those orders before any of it is available to lenders and other creditors. That means less costs potentially borne by the provinces (and their taxpayers). Predictably, lenders do not seem to garner a lot of public sympathy.

On the other hand, (assuming no changes to the BIA) the decision means that lenders and other creditors will have to pay closer attention to the borrower’s unfunded clean-up and closure costs when extending and monitoring credit. If the lender no longer has the ability to deal with valuable assets and leave the “dirty” behind, it means that credit in environmentally sensitive sectors may become tighter, reporting requirements may become more onerous, and some lenders may become skittish.

The dissenting minority decision written by Côté J. said the majority decision was not based on “polluter pays”, but instead resulted in a regime of “lender pays”.  After all, it is always open to the provinces to require permittees and licensees to post better (and more) security to fund rehabilitation costs, and to carry out better monitoring and inspections to ensure that the security is really adequate to fund clean-up. On top of that, who is in a better position to monitor environmental compliance and reclamation costs, the regulator or the bank? Surely, the regulators have better expertise and, assuming proper funding from government, better resources to carry out the work. Indeed, the regulators also wield the bigger stick – fines and penalties – whereas the most that the lender can do is either refuse to lend, lend less, or call in a loan where potential trouble is spotted. By the time that issues are obvious, the lender may choose to let things ride, so long as payments are being made, rather than force a realization that could put its security at risk. It is difficult to see how that serves environmental protection.

In some respects, the decision can be seen as a bit of a “Get out of Jail Free” card for the provinces and their resource and environmental regulators. No doubt that is the way that ATB felt about it.

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

About the Authors

John Stefaniuk engages in a broad practice with emphasis on environmental law, real estate and development law, natural resources and energy, commercial law and municipal law matters. He has particular experience in relation to contaminated sites, mining and mine rehabilitation, wind power development, natural resource development, environmental approvals and licensing, commercial real estate, leasing, financing and development, municipal approvals, taxation and assessment and business acquisitions. He appears regularly before government licensing bodies and administrative tribunals including the Manitoba Clean Environment Commission and Municipal Board, municipal councils, provincial legislative committees and in all levels of court in Manitoba and in the Federal Court in connection with environmental, resource, regulatory municipal, and property issues.

Scott Birse has a broad practice with a particular emphasis on environmental law, municipal law, real estate and development law, regulatory compliance, commercial law and related litigation. He has particular experience assisting clients in the areas of environmental liability in real estate transactions and business acquisitions, municipal planning and approvals, contaminated sites liability, environmental assessments, commercial real estate development and civil litigation. Scott has appeared before municipal tribunals, the Manitoba Court of Queen’s Bench and the Manitoba Court of Appeal. He has also advised clients with respect to municipal and environmental matters in Saskatchewan and British Columbia.

Canadian Consulting Firm acquired by UK Giant

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Novus Environmental, a 25-person specialized consulting firm with offices in Guelph ON and Calgary AB, was recently acquired by SLR, an UK-headquartered global environmental and advisory firm.

Novus will bring additional capability to SLR’s North American business in air quality, noise and vibration, and wind and climate. The Novus team will join SLR’s Canada business, which will now be 280 strong with 18 offices.

SLR began as SECOR Ltd. in 1994. Starting as a UK business, the company now operates as a global company with more than 1,100 people delivering client solutions across five regions. SLR offers a wide range of advisory and environmental consulting services.

This is SLR’s third acquisition in four months, reflecting the confidence of the company and its new investor Charterhouse Capital Partners in the market, according to Neil Penhall, SLR’s chief executive.

U.S. Opportunity: U.S. ITRC Issues RFP for 2020 Technical Projects

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The United States Interstate Technology and Regulatory Council (ITRC) recently issued a Request for Proposals (RFP) for projects that address urgent environmental issues and advance innovative technologies and processes. The proposals that are selected by the ITRC Board of Advisors will begin in January 2020.

All applicable environmental topics will be considered, but evaluation criteria will give greater weight to proposals that address the needs listed in the 2020 ITRC Priorities list, or proposals which update ITRC documents that are outdated. Existing ITRC documents can be found here.

More information about the Project Proposal Process is available here. Please follow the instructions found in the selection process and criteria document, and use the proposal template to submit your proposal.

The ITRC Board of Advisors will conduct a preliminary evaluation of all proposals received by the deadline and in the proper format. The purpose of this preliminary evaluation is to determine what needs to be clarified during the Board interview on May 23, or to determine if a proposal should not move onto the next step in the evaluation process.

The Board will use the following criteria:

  • Is the proposal consistent with ITRC’s mission, goals, and strategic planning objectives?
  • Does the proposal address regulatory or technical barriers (which includes lack of awareness or lack of educational resources) to environmental solutions?
  • Does the proposal address a need of a broad spectrum of groups/states? Is the proposed guidance and training likely to be used by a large number of people, even though the subject may not have a high level of current interest? (e.g. passive sampling, ISM, GW statistics)
  • Is the problem/subject to be addressed clearly defined?
  • Does the project have a defined and manageable scope?
  • Does the proposal have the support of at least five states to be implemented, with two state personnel (with accomplished project management skills and a working knowledge of the subject matter) as potential Team Leaders?
  • Does the proposal consider the requisite subject matter expertise within its team composition?
  • Does the project propose the development of tools which are functional, educational, and able to address the needs of a varied audience?

2020 ITRC Priorities (see the expanded list here) include water reuse, waste reduction, chemicals of emerging concern, cleanup technology, water quality, and air quality.

Proposals are due electronically to the ITRC Director ([email protected]) by Wednesday, May 10, 2019. Proposers are reminded to review the evaluation criteria and present a proposal that is technical in nature, not policy-oriented, nor a research or demonstration project. All questions should also be addressed to Patty at [email protected]

Environmental Liability Risk Faced by Directors of Dissolved Companies – Getting around the Gehring Defence

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Written by Una Rodaja, Harper Grey LLP

Once upon a time, you were a director of a company that owned a parcel of land in the Greater Vancouver area.  A dry-cleaner and an auto-repair shop operated on the property, but you were not too concerned about environmental liability.  This was the 80s after all and the rent was good!  Your tenants caused some environmental contamination, which you addressed when your company sold the site in 1990.  You dissolved your company a year later and forgot all about it.

The property is now owned by a developer who is seeking to build a residential tower on the property.  To do so, the developer is required to investigate and remediate contamination that remained on the property after your company sold it.  Standards have changed and the limited remediation your company did years ago no longer meets the applicable standards.  Your old tenants (both sole proprietorships) are long gone and the developer is seeking to hold you personally liable for the costs of remediation.  You did not personally operate on or own the property, so are you really at risk?  A recent BC Supreme Court case says you are.  Here we explain how and why.

Directors of existing corporations are “responsible persons”

Under BC’s Environmental Management Act[1], a director or officer of a company that owns or operates on, or has historically owned or operated on, a contaminated site is a “person responsible for remediation” of that site simply by virtue of their position with the company.[2]  Such directors and officers can be liable to pay reasonable costs of remediation incurred by anyone in respect of the site owned or operated on by their company, if they authorized, permitted or acquiesced to the activity that gave rise to the cost of remediation.[3]

Directors of dissolved corporations are not “responsible persons”

Although the language establishing the categories of “responsible persons” under BC law is very broad, it is not without limit.  For example, it does not include “persons” who have ceased to exist, such as dissolved corporations.  This was made clear by the BC Supreme Court in a seminal decision called Gehring[4].  The case has undoubtedly motivated many corporate dissolutions by directors and officers seeking to shield themselves from personal liability for contaminated sites owned or operated on by the companies they served.

Dissolved companies can be restored – then what?

However, in the recent decision of the BC Supreme Court in Foster v. Tundra Turbos Inc.[5], a director of a long-dissolved corporation that owned and operated on contaminated land faced exposure in an action to recover environmental remediation costs by virtue of an application to restore the company to the corporate registry.  The company in question, Tundra Turbos Inc., was incorporated in 1978, and was dissolved in 2000.  Prior to its dissolution, it had a single director, one Mr. Clarke. The Plaintiff sought to hold Mr. Clarke liable for the costs of remediation incurred in respect of the property, some 17 years after Tundra had dissolved.  The question before the court was whether it was appropriate to restore Tundra and reconstitute Mr. Clarke’s directorship to make it possible for Tundra and Mr. Clarke to be liable for the costs incurred by the Plaintiff in remediating the property owned by Tundra in the late 1980s and early 1990s.  Tundra and Mr. Clarke presented several arguments against the restoration, including that Mr. Clarke would lose the Gehring defence, a substantive right, and that Tundra’s records pertaining to its operations at the property were destroyed, given the length of time involved.  The court rejected these arguments and ordered the restoration.

In the court’s view, there was nothing inherently unfair in the fact that companies and directors may be exposed to liability under BC’s environmental legislation many years after their association with a contaminated property ended.  Further, the right of a company and its directors to avoid liabilities for which they would have been exposed but for the dissolution is not the kind of right protected by legislation.  In fact, a legitimate purpose of restoring a company is to facilitate the imposition of such liabilities.  While destruction of the dissolved company’s records may, in certain circumstances, result in the court rejecting an application to restore, in Tundra’s case there was no prejudice arising from the loss of records because it was clear, on the facts, that had Tundra not been dissolved, it would have been responsible for the costs of remediation.  If anything, the lost records caused more prejudice to the Plaintiff than Tundra’s director, Mr. Clarke, who had personal knowledge of Tundra’s activities on the site.

In addition, the fact that Mr. Clarke could potentially face personal liability even without Tundra being restored (on the basis that he personally had the right to control, was in control of or responsible for any operation on the site in question) did not have a bearing on the restoration application.  The court recognized that it was easier to hold Mr. Clarke liable if he was responsible solely by virtue of his status as director, which could only be done if the company was restored.

Implications of the Tundra Decision

The Tundra case is an important example of creative counsel work to get around the Gehringdefence.  However, notwithstanding the outcome in that case, there are arguments to be made in future cases to avoid the restoration and, ultimately, responsible persons status for the director in question.  Existence of a limitation defence and loss of evidence that would assist in the defence of the director in question, or unreasonable delay of the Plaintiff in bringing the restoration application, may well result in the application being denied.

For lawyers advancing cost recovery claims, the Tundra case is a good reminder of the need to look at dissolved corporations and their directors and officers, and the need to apply for restoration, in a timely fashion.  For those defending these claims, and restoration applications, finding prejudice, beyond the mere loss of the Gehring defence, will be key.

[1] S.B.C. 2003, c. 53 (“EMA”)

[2] EMA, ss. 39(1), 45

[3] EMA, ss. 47(5); Contaminated Sites Regulation, s. 35(4)

[4] Gehring v. Chevron Canada Ltd., 2006 BCSC 1639, para. 55

[5] Foster v. Tundra Turbos Inc., 2018 BCSC 563

About the Author

Una Rodaja is a partner in Harper Grey’s Commercial Litigation and Environmental Regulation & Disputes practice groups. Una frequently lectures on various aspects of contaminated sites law for the Pacific Business and Law Institute, BC Environmental Industry Association, the Environmental Managers Association, and the BC Continuing Legal Education Society.  She is the co-author of BC Environmental Management Legislation and Commentaryand the recipient of the 2017 Lexpert® Leading Lawyers Under 40 award. Una is recognized by the 2018 Canadian Legal Lexpert® Directory as a Leading Lawyer to Watch in the area of corporate commercial litigation and by Benchmark Canada® as a Future Litigation Star. She has also been recognized by Best Lawyers® in Canada 2019 as a “Leading Lawyer in the area of Environmental Law.

Investigation finds Contaminated Soil from Montreal is being dumped on Prime Farmland

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As reported by Marie-Maude Denis and Jacques Taschereau of CBC News, contaminated soil generated from the development of properties in Montreal is ending up on prime agriculture land.

Radio-Canada’s investigative program Enquête recently tracked demolition waste from Montreal sites to farmland in Saint-Rémi. When the investigators confronted the farmer, he claimed the material dumped on his property would be used as a foundation for a greenhouse and that it was legal.

An environmental lawyer contacted by the Radio Canada investigators disagreed with the farmer as did Quebec’s Environment Ministry. The Environment Ministry confirmed it found contaminated soil at the site last year, but it’s offered no further details about its origin, saying the matter is still under investigation.

When The Radio Canada investigators questioned the general contractor working on the site that was the source of the contaminated soil, he claimed the a subcontractor properly trucked the soil away.

Properly managed soil treatment facility

The claim of the general contractor and farmer is that the material is construction debris consisting mainly of bricks and stones and not contaminated soil. The investigators noted that the material they saw dumped on the farm included metal and concrete. According to the Environment Ministry, the kind of debris that was tracked by the investigators can’t be legally be use for the intended farmland construction.

In a similar investigation conducted by Radio Canada in 2016, investigative reporters followed trucks and observed debris being dumped in the countryside. The investigators arranged for the sampling and analysis of the soil from several farms and that found some samples to be contaminated.