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ENVIRONMENTAL LAW CONFERENCE—2013
PAPER 4.1
Remediation Agreements: Balancing Competing
Interests
These materials were prepared by Olga Rivkin of Bull, Housser & Tupper LLP, Vancouver, BC, for the
Continuing Legal Education Society of British Columbia, November 2013.
© Olga Rivkin
4.1.1
REMEDIATION AGREEMENTS: BALANCING COMPETING
INTERESTS
I.
Introduction .................................................................................................................................1
II.
Regulatory Framework ................................................................................................................1
A. Contaminants and Applicable Standards .................................................................................................. 2
B. Investigating Contaminated Sites ............................................................................................................... 3
C. Remediating Contaminated Sites ............................................................................................................... 3
III.
Remediation Agreements ........................................................................................................... 5
A. Gas Station Investigates Adjacent Roadway ............................................................................................ 5
B. Vendor Remediates Lands .......................................................................................................................... 6
C. Tenant Remediates Lands ........................................................................................................................... 7
IV.
Working with an Environmental Consultant .............................................................................. 8
V.
Conclusion .................................................................................................................................. 9
I.
Introduction
The Environmental Management Act, S.B.C. 2003, c. 53 (the “EMA”) sets out the statutory framework for
identifying, investigating and remediating contaminated sites in BC. A site is considered contaminated if it
contains certain controlled substances in the soil, water, groundwater, or sediment. After the site is
investigated and the types and concentrations of contaminants have been identified, a contaminated site can
be remediated to numerical or risk-based standards. The method and scope of investigation and remediation
depend on a number of factors including the site-related objectives, the types and concentrations of
contaminants, the financial means of the proponent, and the available technologies.
At times, when delineating the scope and method of investigation or remediation, the proponent may also
have to address the interests of others. Consider, for example, a gas station operator who needs to access an
adjacent roadway to investigate the extent of migrated contaminants. The local authority operating the
roadway may be concerned about the disruption to traffic and, accordingly, may refuse to agree to intrusive
investigation methods. Another situation is where a vendor of real property agrees to remediate the property.
If the purchaser intends to develop the property, the remediating vendor may have to consider the
purchaser’s intentions when selecting the remediation method. As a final example, a tenant in an industrial
park remediating contamination it caused may need to consider how to accommodate the interests of the
landlord and of other tenants using the park. The landlord in this instance, may want to be notified in
advance of any work, and ensure that the work is done with minimum disruption to the business of the park.
Relying on the above hypothetical scenarios, this paper will examine how elements of the EMA regulatory
scheme translate into balancing competing interests when selecting and negotiating an investigation or a
remediation strategy.
II.
Regulatory Framework
The EMA sets out the framework for identifying, investigating and remediating contaminated land in BC. The
EMA is accompanied by a number of regulations as well as protocols, policies, technical and administrative
4.1.2
guidance documents and fact sheets published by the Ministry of Environment (the “MOE”).1 Collectively,
these enactments, protocols and policies describe, among other things, what constitutes a contaminated site in
BC, what steps may be taken to investigate such a site, and what methods of remediation may be available.
A.
Contaminants and Applicable Standards
The EMA defines the term “contaminated site” as follows2:
an area of the land in which the soil or any groundwater lying beneath it, or the water or the
underlying sediment, contains a) a hazardous waste, or (b) another prescribed substance in
quantities or concentrations exceeding prescribed risk based or numerical criteria or
standards or conditions.
Hazardous waste is defined in the Hazardous Waste Regulation, BC Reg. 63/88 (“HWR”) and includes,
among other things, biomedical waste, waste oil and waste asbestos.3 Prescribed substances and applicable
standards are set out in Schedules 4, 5, 6, 7, 10 and 11 of the Contaminated Sites Regulation, BC Reg. 375/96
(“CSR”). The standards are divided into numerical and risk-based and, further, into generic numerical, matrix
numerical, site-specific and interim. The MOE explains this division as follows:
The contaminated sites legislation and [CSR] define two general types of standards:
•
Numerical standards are acceptable concentrations of substances in soil, surface water,
groundwater, vapour and sediments.
•
Risk-based standards define acceptable risk levels from exposure to substances at sites.
To meet stakeholders’ request for flexibility the [MOE] has further developed these
[numerical standards] into five specific types of standards:
•
General numerical standard and criteria are intended to protect human health and the
environment at any site regardless of site-specific features except land water, sediment
or vapour use.
•
Matrix numerical standards separate environmental and human health protection
components. Compared with generic numerical standards, these ones [matrix
numerical] feature a more flexible matrix of soil quality standards.
•
Site-specific numerical standards are derived using models, equations, site data and
specific site features. These are [the] most flexible numerical standards and apply only
to a specific site.4
•
Director’s interim standards5 are environmental quality standards that a Director of
Waste Management has the legal power to adopt when he or she chooses to. Such
standards … must be adopted in regulation after one year.6
Typically, generic or matrix numerical standards are relied upon to assess possible contamination, and
numerical or risk-based standards are relied on to determine remediation requirements.
1
EMA, ss. 63, 63.1 and 64. This paper will refer to Protocols, Technical Guidances and Fact Sheets, all of which
can be found at the MOE website at <http://www.env.gov.bc.ca/epd/remediation>.
2
EMA, s. 39(1).
3
HWR, s. 1. See also the Ministry of Environment’s Hazardous Waste Legislation Guide,
<http://www.env.gov.bc.ca/epd/hazwaste/regs/pdf/haz_waste_leg_guide.pdf>.
4
See Protocol 2, Site Specific Numerical Soil Standards and Technical Guidance 3, Environmental Quality Standards.
5
At this time there is a Directors’ interim standard entitled “Industrial land use human health protection—intake of
contaminated soil standard for lead.” This standard is considered an addendum to matrix numerical soil standards.
6
Fact Sheet 13, Environmental Quality Standards.
4.1.3
B.
Investigating Contaminated Sites
The EMA contemplates a number of methods of investigating contamination, ranging from a non-intrusive
preliminary site investigation to an intrusive detailed site investigation.7 The duration, complexity and
intensity of investigation depends on the site, the purpose of the investigation, and the possible contaminants
of concern.8
An initial preliminary site investigation typically includes non-intrusive methods, such as a review of historic
records, visual inspection of the site, and interviews with current and former owners. It does not include
sampling of soil. A more in-depth preliminary site investigation may include intrusive methods, such as
sampling of soil, analysis of soil, and investigation of subsurface conditions. 9 A preliminary site investigation
may be sufficient in some circumstances. For example, a property vendor may conduct a preliminary site
investigation to ascertain its potential liability from contamination of property. The results of the preliminary
site investigation may be sufficient for the vendor to take steps to minimize such liabilities when entering into
a sale agreement for the property.
A detailed site investigation must be preceded by a preliminary site investigation. It must explore specific
areas, depth and degree of contamination, and consider procedures to identify substances that may cause
adverse effects. It also must evaluate the extent of hazardous waste contamination, if any. Without being
exhaustive, a detailed site investigation may include surface soil sampling, borehole soil sampling, and
excavating groundwater monitoring wells.10 A detailed site investigation is typically required to develop a
remediation plan and to conduct a risk assessment, and must provide enough information to accomplish
these tasks.
C.
Remediating Contaminated Sites
As mentioned previously, a site can be remediated to either numerical or risk-based standards.11 The
numerical standards are the standards set out in the schedules to the CSR, as discussed in part II(A) of this
paper. Risk-based standards describe a method of evaluating the potential for chemical exposure to cause
harm.12 Risk-based evaluation is performed using mathematical equations to determine at what
concentrations exposure is unacceptable to humans and the environment.
7
EMA, s. 41.
8
As a process separate to that of investigation, the MOE sets out a process for classifying contaminated sites into
high risk sites and non-high risk sites. High risk sites may require a different (likely, more time-sensitive and
responsive) investigation and remediation approach than non-high risk sites. For more information on site risk
classification, see Protocol 12, Site Risk Classification, Reclassification and Reporting, Procedure 12, Procedures for preparing
and issuing contaminated sites legal instruments and Procedure 16, Procedures for determining if a Director should require the
submission of a Site Risk Classification Report under Protocol 12, and Fact Sheet 45, Site Risk Classification.
9
CSR, s. 58 contemplates that a preliminary site investigation may proceed in two stages: a non-intrusive stage and
an intrusive stage. These can either take place concurrently or sequentially. Although each investigation is unique,
there are general steps followed in each preliminary site investigation. See Technical Guidance 10, Checklist for
Reviewing a PSI Preliminary Site Investigation for a checklist of preliminary site investigation steps. Also, for a good
discussion of preliminary site investigations see Ahab Abdel-Aziz and Nathalie Chalfour, The Canadian Brownfields
Manual, LexisNexis Canada Inc., 2004 at chapter 16.
10
See The Canadian Brownfields Manual, supra, note 9 at chapter 17. See also, Technical Guidance 1, Site Characterization
and Confirmation Testing, Technical Guidance 8, Groundwater Investigation and Characterization, Technical Guidance 4,
Vapour Investigation and Remediation and Technical Guidance 11, Checklist for Reviewing a Detailed Site Investigation.
11
CSR, s. 16.
12
The Canadian Brownfields Manual, supra, note 9 at 19-2. See also, Protocol 13, Screening Level Risk Assessment, Technical
Guidance 7, Supplemental Guidance for Risk Assessment and Fact Sheet 14, Demystifying Risk Assessment.
4.1.4
Typically, a site has been remediated in accordance with the numerical standards if, among other things:
•
the concentration of the prescribed substances in the soil is greater than or equal to the
applicable generic numerical or the lowest matrix numerical soil standards;
•
surface water or groundwater does not contain any prescribed substance with a
concentration greater than the applicable generic numerical water standards; and
•
the vapour at the site does not contain any prescribed substance with a concentration greater
than the generic numerical vapour standard for the relevant substances.13
The risk-based remediation standards are considered to be met, among other ways, if:
•
for each non-threshold carcinogenic substance,14 the calculated human lifetime cancer risk
due to exposure to that substance at the site is less than or equal to 1 in 100,000, and
•
for each substance for which a hazard index15 is calculated, the hazard index due to exposure
of a human to that substance at the site is less than or equal to 1.16
The EMA contemplates that a person remediating a site must give preference to remediation methods that
provide permanent solutions.17 That said, methods of remediation vary depending on numerous factors,
including the type of the site, the types and concentrations of contaminants, the proponents finances and
objectives, and the available technologies. At the very basic level, the proponent may have to decide whether
to proceed by removing contaminated material by excavation or pumping and then treating such material on
or off site; or whether to proceed by treating contaminants without removing them. Building on these
elements, without being exhaustive, the proponent may also have to consider more detailed aspects of the
remediation process, such as the following:
•
if contaminated materials are removed and treated off site, would these be relocated to a
licensed disposal facility (which may be costly), or to another site and, in case of the latter,
would a soil relocation agreement be required18;
13
CSR, s. 17.
14
The CSR defines the term “carcinogenic substance” to mean any chemical classified by (a) the International
Agency for Research on Cancer as a group 1 [carcinogens to humans] or group 2A [probably carcinogens to humans]
carcinogen, or (b) the United States Environmental Protection Agency as a group A [carcinogens to humans] or group
B1 [probably carcinogens to humans] carcinogen. For the list published by the IARC, see <
http://monographs.iarc.fr/ENG/Classification/index.php>. For the list published by the US EPA, see
<http://www.epa.gov/ttnatw01/toxsource/carcinogens.html>.
15
The CSR defines the term “hazard index” as the sum of hazard quotient for any substance over all exposure
pathways. The term “Hazard Quotient (HQ)” is defined as a formula of the estimated daily intake for any
substance having non-carcinogenic deleterious effects and a reference dose (being an estimate of the maximum
daily exposure level to a substance that is unlikely to produce an appreciable risk of non-carcinogenic deleterious
effects during a lifetime of exposure to that substance).
16
CSR, s. 18(3). Also, pursuant to s. 18(1) of the CSR, a person may request that the local Medical Health Officer
responsible for the area recommend alternate risk-based standards. These would be developed through a public
community-based consultation process. See, Technical Guidance 3, Environmental Quality Standard. Also,
Protocol 13, Screening Level Risk Assessment describes the process for completing a screening level risk assessment.
17
EMA, s. 56.
18
EMA, s. 55, CSR, ss. 40 to 46 and Schedules 7 and 10. See also, Administrative Guidance 7, Completing and
Submitting an Application for a Contaminated Soil Relocation Agreement, Administrative Guidance 8, Contaminated Soil
Relocation Agreement Processing Requirements for Approved Professionals, and Fact Sheet 41, Relocation of Soils from
Contaminated Sites.
4.1.5
•
if remediation includes pumping and remediation of groundwater, where would the treated
water be discharged, in what quantities and would a permit from a local authority be required
to do so19; and
•
would remediation require ongoing monitoring; for example, on sites where groundwater
quality does not improve immediately after remediation is undertaken.20
The regulatory scheme set out in the MOE is complex. It is a mix of law, policy and technical concepts, many
of which, when applied on the ground raise significant practical implications. The following part of this
paper will illustrate, by using hypothetical scenarios, how the concepts described above turn into points of
negotiation when investigation and remediation affect interests of persons other than the proponent.
III. Remediation Agreements
The scenarios below are hypothetical. They were developed to illustrate situations when the scope and
method of investigation or remediation may be limited by the following:
A.
•
adjacent property uses;
•
prospective uses of the contaminated site; and
•
concurrent uses of the contaminated site.
Gas Station Investigates Adjacent Roadway
In some instances, the scope and method of investigation and remediation may be limited by adjacent
property uses. Consider an instance where a gas station operating near a roadway requires access to the
roadway to investigate if any contaminants have migrated from the gas station site.21 In BC, most local
roadways are owned and maintained by municipalities. In our example, therefore, the gas station will have to
approach the municipality to access the roadway to conduct the intended investigation work. The
municipality will likely be concerned about the disruption to traffic that such work may cause. Accordingly,
among other things, the parties will want to consider the following:
•
what types of site investigation methods are contemplated;
•
would the road or a portion of a road be closed to traffic during the course of the
investigation; and
•
what happens if contaminants are identified.
The parties may define the scope of work broadly:
“Investigation” or “Investigate” or “Investigating” means any action to investigate the
existence, nature, location, source and extent of [contaminants] within the [defined area] in
accordance with the requirements of the [EMA], including, but not limited to, sampling of
soil, groundwater and vapour and including any action to restore the [defined area] as a
result of such investigations to the satisfaction of the [municipality], acting reasonably, to
its pre-existing condition.
19
Regional districts and municipalities often have bylaws regulating discharge into their sanitary and storm sewers.
These bylaws may restrict the types and concentrations of substances that can be discharged, and impose permitting
and fee requirements. These restrictions and requirements may impact the selected method of remediation.
20
See, Technical Guidance 8, Groundwater Investigation and Characterization.
21
This situation may arise, for example, if the gas station wishes to identify the scope of the contamination so as to
ascertain its potential risk of liability.
4.1.6
Or, narrowly:
“Investigation” or “Investigate” or “Investigating” means any action required to conduct
stage one preliminary site investigation.
From the gas station’s perspective, the narrow definition will likely be too restrictive to result in sufficient
information. But, from the municipality’s perspective, the narrow definition will ensure that there will be no
unexpected traffic disruptions. The parties may consider a middle ground, where the gas station will have
flexibility over what investigative works it can undertake and the municipality will have a way to control the
duration of these works, the nature of these works, or both.
For example, the municipality may stipulate that the investigation must be completed within one year after
commencement. It may also seek to review and approve, or comment on, any investigation plan before it is
implemented:
Prior to commencing the Investigation [a broadly defined term], [the property owner] will
submit to the [municipality] for its review and comment, a proposed plan and scope of the
Investigation. [The municipality] may retain an environmental consultant to assist it with
the review of the proposed plan of Investigation [possibly, at the cost of the property
owner]. [The municipality] will provide its comments on the proposed plan of
Investigation within 30 days of receipt of such plan. [The property owner] will consider
the comments of [the municipality] and make such revisions, if any, as [the property
owner] deems necessary, acting reasonably, to respond to [the municipality’s] comments.
Also, the parties may agree to commission a traffic management plan addressing the management of traffic
on the investigated area and nearby roads or highways during the course of the investigation as well as the
issue of traffic management and safety including the use of flag persons, signage, fencing and other traffic
control devices and a communication plan for the public, including neighboring property and business
owners. The more extensive the area subject to the investigation and the more prolonged the investigation,
the more detailed and thorough the traffic management plan would likely have to be.
Depending on the parties’ relative bargaining powers and the objective of the investigation, the parties may
agree that if contamination is found in the roadway, the gas station will remediate such contamination within
a set time. The parties may also consider other ways to address the roadway contamination in the above
scenario. For example, the parties may agree on reciprocal releases and indemnities arising from the roadway
contamination. If the gas station intends to remediate the gas station site but not the roadway, the parties
may consider installing a barrier under the roadway to prevent recontamination of the site. To a large degree,
the course of action will depend on the ability and the willingness of the parties to accommodate their
respective land uses.
B.
Vendor Remediates Lands
In some instances, the method and scope of remediation may depend on the prospective use of the site.
Consider an instance where a vendor and a purchaser of real property agree that the vendor will remediate the
property to a certain standard. In such instance, the parties would be prudent to set out the following in
advance of the remediation:
•
what are the contaminants being remediated and to what standard;
•
what method of remediation will be used; and
•
what is the goal of the remediation.
The parties may define the term “contaminants” broadly:
“Contaminants” means any pollutants, contaminants, hydrocarbon contaminants,
underground tanks, asbestos materials, hazardous, corrosive or toxic substances, hazardous
waste or waste of any kind or any other substance which is regulated, prohibited or
controlled under any Environmental Laws [usually, a defined term].
4.1.7
Or, narrowly:
“Contaminants” means the substances listed in Schedule X to the [agreed upon approval in
principle] …
The scope of the definition will, in part, be directed by where the parties are in their investigation, and how
much they know about the types and concentrations of the contaminants.22
In our example, the vendor and the purchaser would also be prudent to consider the standard of remediation:
numerical or risk-based. The distinction between numerical and risk-based standards may translate into the
substances in question being removed from the site to the extent that they exceed applicable standards, or
being left on the site and managed or monitored for their effect on human health and the environment. This
distinction may be important. Consider, as part of our scenario, if the vendor and the purchaser agree that
the vendor will remediate the lands to a residential standard and will obtain a certificate of compliance to
evidence the remediation. Let us assume that the parties do not specify the method of the remediation. The
vendor, being the remediating party, commissions a remediation plan contemplating that contaminants will
remain on the site and will be managed by placing a hard surface cap at a certain depth.
If, hypothetically, the purchaser intends to develop the site without an underground component, this method
may not affect the purchaser’s proposed development. If, however, the purchaser intends to build an
extensive underground component as part of their development, this method may result in the purchaser
incurring additional (perhaps, unexpected23) remediation expenses when they excavate the site below the hard
surface cap. In our scenario, one way that the vendor and the purchaser can avoid a disagreement is by
defining what they consider to be the acceptable completion of remediation with reference to an agreed upon
set of documents and standards:
“Completion of Remediation” means that the [environmental consultant] has completed
the remediation in accordance with the [agreed upon approval in principle] and [agreed
upon remediation plan] and that the [certificate of compliance to an agreed upon standard]
has been issued.
C.
Tenant Remediates Lands
In some instances, remediation has to be balanced with interests of third parties using the contaminated site.
We have considered a situation where a gas station investigates an active roadway. Consider a slightly
different scenario. A tenant in an industrial park has caused contamination and, pursuant to the terms of the
lease, has an obligation to remediate this contamination. The landlord and the tenant, in such instance may
want to consider a number of matters including how the remediation work will be reconciled with the use of
the land by other tenants.
Partly, this will be a similar exercise to that described in the above examples: the landlord and the tenant will
have to carefully define the duration and the scope of the work being conducted and understand the level of
disruption that this work will cause. The landlord may also require that prior to commencing any work, the
tenant provides notice to the landlord describing the activities to be performed. This will allow the landlord
to notify the other existing tenants of the types of disruption and to put in place infrastructure to
accommodate the other tenants. As part of the remediating tenant’s obligations, the landlord may insist on
the following:
22
For a discussion on allocating liability and due diligence in a sale/purchase context, for example, please refer to the
presentation and materials prepared for this course by Gary A. Letcher and Andrea C. Akelaitis.
23
The vendor and purchaser, in this example, could also account for the cost of additional remediation as part of the
valuation of the contaminated property. For a discussion on valuating contaminated property, please refer to the
presentation and materials prepared for this course by Larry Dybvig, David Perry and Graham Walker.
4.1.8
The tenant will:
(a)
take such measures as may be reasonably necessary to prevent material loss of business by
the landlord and the tenants of the landlord; and
(b)
take such measures as may be reasonably necessary to effectively prevent other occupiers or
visitors of the lands from being endangered by the tenant’s activities on the lands; …
The landlord may also insist on status reports and inspection of the work and on receiving copies of all
reports and certificates of compliance in connection with the lands. For example:
The tenant will, at the request from time to time of the landlord, provide the landlord with a detailed
summary of its progress in executing [the agreed upon remediation plan] together with true and
complete copies of any environmental reports prepared for the tenant in connection with executing the
[remediation plan].
The landlord or its authorized representative may at any time upon reasonable prior written notice to
the tenant inspect and observe remedial activities undertaken by or on behalf of the tenant in relation
to performance of the tenant’ [remediation obligation.]
This is not an exhaustive list of situations or issues that may arise when negotiating agreements about the
scope and method of the investigation and remediation. Each situation will raise its own set of challenges
and stumbling blocks. That said, in most situations, the parties will likely benefit from carefully considering
what is being remediated, to what standard and by what method. In some instances, answering these basic
questions may be the most difficult part of the negotiation.
IV. Working with an Environmental Consultant
Investigation and remediation of contaminated sites typically involves the use of environmental consultants
and contractors. Depending on the complexity and demands of any given site, a remediation and
investigation project team may consist of an accredited environmental professional and a team of technical
and non-technical remediation contractors.24
Where only one party is involved in the process, that party may retain the team of professionals as it sees fit.
Where more than one party is involved, the choice of the team of professionals and their role may vary.
To continue with the hypothetical scenarios above, if a gas station is investigating and, potentially,
remediating a portion of a roadway, a municipality operating the roadway may insist that the gas station pay
for the cost of an independent consultant to be retained by the municipality to assist it in reviewing the
proposed investigation and remediation plans.
In the landlord and tenant scenario, the landlord may find it prudent to retain an independent consultant to
oversee the work conducted by the tenant or to conduct a peer review of the tenant’s consultant’s
recommendations. Also, the landlord may require that the tenant obtain a letter from the tenant’s consultant
stipulating that the landlord may rely on the tenant’s consultant’s work.
In the scenario where the vendor agrees to remediate the site, the parties are likely to retain independent
consultants to assist them with delineating the process of the investigation and remediation. In some
circumstances, where disagreements between consultants are foreseeable, the parties may consider building
into an agreement a form of dispute resolution where a third consultant is retained to make a final
determination. For example:
24
For a discussion on how to assemble a remediation and brownfield development project team see The Canadian
Brownfields Manual, supra, note 9 at chapter 20.
4.1.9
If the parties cannot agree on the amendments to the [agreed upon remediation plan] within [X] days
of the amendment being submitted by the [vendor] to the [purchaser], the parties will retain [a third
environmental consultant] to recommend the amendment and the parties will abide by such
recommendation. The vendor and the purchaser will equally share the fees charged by [a third
environmental consultant] in connection with such recommendation.
V.
Conclusion
The process of investigating and remediating contaminated sites in BC is governed by a complex web of
legislative instruments, protocols, policies and technical guidances. When selecting an appropriate method of
investigating and remediating, the proponent has to consider a number of factors, including site-related
objectives of the work, the types and concentrations of the contaminants, and the available technologies. At
times, the proponent also has to consider interests of other parties impacted by the remediation and
investigation process.
When third parties are involved, negotiations may benefit from careful consideration of the elements of the
EMA regulatory scheme, including the following: what type of investigation is being conducted; what
contaminants are being remediated and to what standard; when will remediation be considered completed.
These elements will have on the ground implications, including determining how much disruption the work
cause, how will this disruption be addressed, and whether there will be a restriction of future development.
Defining investigation and remediation elements too broadly or too narrowly may significantly impact one or
both parties. Therefore, when approaching investigation and remediation agreements, the better the parties
can understand how the basic elements of the regulatory scheme translate into on the ground work, the better
they can determine what mechanisms will be needed to accommodate the various interests at play.