Financial Assurance for contaminated sites

The Ontario Ministry of the Environment and Climate Change is increasingly demanding financial assurance as a condition of a Certificate of Property Use (CPU) for contaminated sites that have undergone a risk assessment, and require active risk management.

Under the Environmental Protection Act, after accepting a risk assessment the Ministry may issue a CPU to the owner of the property requiring the owner to:¹

1. Take any action that is specified in the certificate and that, in the Director’s opinion, is necessary to prevent, eliminate or ameliorate any adverse effect that has been identified in the risk assessment, including installing any equipment, monitoring any contaminant or recording or reporting information for that purpose, and/or
2. Refrain from using the property for any use specified in the certificate or from constructing any building specified in the certificate on the property.

The Ministry may require FA to ensure “the performance of any action specified in the certificate of property use.”²

Why Financial Assurance?

In 2009, the Environmental Review Tribunal chided the MOE that it wasn’t obtaining enough financial assurance from polluting businesses:

“The core purpose of a financial assurance is to ensure that the Ministry of the Environment (MOE) has sufficient resources to deal with environmental challenges arising from a site should the need present itself.

… where possible, the MOE should avoid putting itself (and hence Ontario’s taxpayers) in the position of scrambling to find sources of funds in bankruptcy proceedings to deal with situations where environmental measures need to be carried out. Proactive steps by the Director to ensure that financial assurance amounts are adequate would be the most obvious manner in which the “polluter pays” principle could be implemented properly…³

Examples of Financial Assurance in CPUs

Since then, the Ministry has required FA in a number of CPUs; others are currently posted on the Environmental Registry for comment. These cases are now building up a body of precedents. Recent examples include:

• $10,000 to “cover the costs for the performance of all actions required to be carried out under the CPU.”⁴ The CPU requires the owner to continue groundwater monitoring on a quarterly basis.
• $237,600 “to cover the cost of removal of the remediated soils that have been deposited on the Property …should the results of the groundwater monitoring program … indicate that the removal and appropriate disposal of the remediated soils left on the Property is required.”⁵
• $62,726 to cover costs of the risk management measures required under the CPU, including requirements to: construct, operate, monitor and maintain vapour management systems; implement an inspection and maintenance program to ensure the continued integrity of building floor slabs; implement indoor air monitoring; install trench plugs within all future utilities; and implement soil and groundwater management plans and a health and safety plan.⁶
• $148,172 to cover risk management measures required in the CPU, including requirements to: construct and maintain a hard cap or soil cap; implement inspection programs; install vapour management systems, indoor air quality monitoring programs and sub-slab vapour monitoring programs in any enclosed building constructed on the property; install trench plugs within all future utilities; and develop a soil and groundwater management plan and a health and safety plan.⁷
• $43,187 to cover the cost of the risk management measures required in the CPU including requirements to: maintain a hard cap or soil barrier and prepare and implement an inspection program for the barrier; carry out a groundwater monitoring program; monitor indoor air quality; install trench plugs in all future utilities; and develop a soil and groundwater management plan and health and safety plan.⁸ and
• $6,643 to cover the cost of the risk management measures identified in the CPU, including requirements to: maintain a soil cap or hard cap and inspection program for the cap; install trench plugs in all future utilities; and develop a soil and groundwater management plan and health and safety plan.⁹

It should therefore no longer be a surprise for a CPU, based on active risk management measures, to include at least a modest amount of financial assurance.

¹ EPA, s. 168.6.

² EPA, s. 132(1.1) [FA can also be required for the provision of temporary or permanent alternate water supplies to replace those that may be contaminated and measures to prevent adverse effects. We understand neither situation is relevant here].

³ Detox Environmental Ltd. v. Ontario (Director, Ministry of the Environment), 2009 CarswellOnt 8274, [2009] O.E.R.T.D. No. 67, 48 C.E.L.R. (3d) 276

⁴ CPU No. 4021-7AYR6X, issued 26 April 2009 [Regan Road CPU].

⁵ CPU No. 8000-92PJ4PC, issued 17 March 2014 [Campbell Road CPU].

⁶ Draft CPU No. 5871-9QLN43-04, not yet issued [501C Lakeshore CPU].

⁷ Draft CPU No. 5871-9QLN43-01, not yet issued [501A Lakeshore CPU].

⁸ Draft CPU No. 5871-9QLN43-02, not yet issued [501 & 505 Lakeshore CPU].

⁹ Draft CPU No. 5871-9QLN43-03, not yet issued [501B Lakeshore CPU].