In the site assessment and remediation industry the majority of the projects and costs (largest segment) involves a "conventional" approach to a "common" situation (e.g., a brownfield site). In general this includes many aspects, such as the site being a historical commercial or industrial facility, where site activities have over the years, caused impacts to the soil, groundwater and/or surface water. Impacts may have occurred over years of operation and the impacts are in "quasi" equilibrium with the environment (not getting worse rapidly or at all). (For a more complete list, see the sidebar on the opposite page.)
The conventional approach is to conduct a Phase I Environmental Site Assessment (ESA), followed by a Phase II ESA (that may involve more than one iteration). The remediation and/or site management strategy is then developed followed by the actual execution. This phased process can take months to years, which is appropriate as the impacts are not necessarily getting worse quickly. This phased approach is generally the most cost-effective. Most jurisdictions in Canada are now experienced with this type of situation and there are acts and regulations along with well-defined steps to move through this process.
How does risk from a contaminated site differ from a spill? Small drips and "spills" can be on an industrial facility and be part of normal operations; however, larger spills are catastrophic events viewed as abnormal. The BP spill in the Gulf of Mexico is an extreme example but emphasizes the point. Many spills happened on a third-party property (i.e., aren't the result of the property owner's actions). In a catastrophic release, material spreads and costs rise rapidly. A major spill requires immediate mitigation and generally requires that the polluter return the site to pre-spill conditions (or compensate the property owner for the financial impacts).
Large spills may be partly or completely covered by an insurance policy(s). This is where the insurance aspects of the spill become important.
The remediation, scientific investigations and final reporting only address the result of the spill and do not investigate or address the entire site history and/or historical impacts (unless these historical impacts are difficult to distinguish from the new spill). The polluter is responsible for their release and subsequent impacts and not anything that pre-dated the loss.
So how do insurance issues effect the remediation and why are these issues more frequently important on a spill versus a contaminated site?
Spills and insurance
The polluter (insured) on a spill is strictly liable to restore impacts to the environment from their release to pre-loss conditions, whether the polluter actually caused the release or not. The polluter is the entity against which a ministerial order can be issued and who could face fines and penalties for the spill. The insurance company may have a contract of insurance with the polluter that partially or completely covers the loss (excluding the deductible and/or sales taxes). Under this contract of insurance, there may be other issues such as policy limits or specific exclusions. As well, the insured has an obligation to mitigate the loss and minimize the cost of cleaning up the spill. The insurer may in effect take over the direction of the remediation to control, expedite rapid response and document costs, especially where the insured is inexperienced with such situations. The insurer may have some obligation to defend the insured and to recover costs (subrogation) if there is another at fault party that caused the release.
Transportation spills are very frequent and the example in the sidebar illustrates some of these spill and insurance issues. (See "Spill Example 1" sidebar)
This relatively simple and common spill scenario presented in the sidebar was resolved quickly and cost effectively with minimal confrontation. What would have happened if the excavated soil had not passed the leach test because of heavy metals impacts not related to the diesel release? What would happen in a regulatory environment where the environment ministry was applying a contaminated sites approach to this spill situation, requiring a statement from the licensed professional that all of the impacts had been investigated and/or remediated? What would have happened if the regulator had required groundwater wells to confirm that groundwater was not impacted? What would have happened if a third party was involved that actually caused the accident?
Let's look at these four questions one at a time.
Question 1: What would have happened if the excavated soil had not passed the leach test because of pre-existing heavy metals impacts not related to the diesel release?
Had this been the situation, it's likely that the outcome would have been far more confrontational, costly and not resolved quickly. The trucking firm was reasonable for removing their impacts (fresh diesel) and the costs associated. If there were other pre-existing contaminants mixed with the fresh release and the cost to remove both were the same, there's likely no additional issue or complication. For example, had there been pre-existing hydraulic oil impacts in the same soils as the fresh diesel impacts.
But, as presented, had the soils now required special and more costly removal because of the pre-existing high heavy metals concentrations, what would the property owner be entitled to? The property owner was entitled to restoration of the site to pre-loss conditions but no betterment of the situation. If the excavated soils were now disposed at a higher cost because of the high metal concentrations, who, if anyone pays the difference?
To achieve the remediation without the additional costs, in situ methods could have been used, but the soil is already excavated when the laboratory results identifying the metal concentrations were received. The industrial facility could pay the difference, but they could also make a case that there was nothing forcing them to make this expenditure until the fuel was spilled and could argue damages against the trucking firm.
Certainly there is no clear-cut answer. Satisfactory resolution would likely require compromise on both sides. This is a situation where a spill and a contaminated site collide.
Question 2: What would happen in a regulatory environment where the ministry was applying a contaminated sites approach to this spill situation, requiring a signed and stamped statement from the licensed professional that all of the impacts had been remediated?
Referring to the example presented in the sidebar, the appropriate level of remediation and investigation was conducted to return the site to pre-existing conditions and it was documented that an appropriate amount of the remediation was conducted. Having said this, there are situations where regulators in some Canadian jurisdictions require (or at least attempt to require) that the licensed professional sign and stamp statements that all existing environmental site conditions have been investigated and documented. Furthermore, there will likely be the requirement to install groundwater wells, monitor these wells over a period of time and then eventually decommission these wells.
Why should the consultant for the trucking company (or their insurer) investigate anything over and above the impacts related to their release, especially when it is likely that there are other unrelated impacts on the site? Why should groundwater be monitored when it was not encountered, and the fresh diesel impacted soils and all detectible diesel fuel related to the spill were excavated within 72 hours? What would now happen if there were low-level hydrocarbon impacts detected in the groundwater across the site?
This situation occurs in some jurisdictions in Canada. It goes back to the concept of betterment raised from Question 1 and underscores the need not only to recognize the practical and reasonable difference between a spill and a contaminated site, but the need to have appropriate legislation and regulations in place to address both but different scenarios.
What would happen if in this situation an environment ministry official ordered that the entire site be investigated for all potential environmental aspects related to that site? What would happen if such an order were challenged in civil court? To reiterate, the industrial site owner is entitled to return of the site to those conditions that pre-dated the spill of diesel from the truck (or financial compensation); they are not entitled to betterment. How a civil court would view an environment ministry attempting to order a betterment is unclear.
Question 3: What would have happened if another third party was involved, that actually caused the accident?
To better illustrate this issue another example is presented. (See the attached figure and the Spill Example 2 sidebar). The story is complicated, but the conclusion is clear.
Question 4: What often happens when the loss occurs on an open stretch of highway away from the immediate and direct observation of the third party landowner?
This situation occurs daily on Canadian highways with a wide range of outcomes. If the trucking firm is responsible they immediately notify their insurer and then notify the provincial environment ministry there has been a spill of fuel (assuming it's significant enough to be reportable under provincial requirements). A remediation of the spill should then be initiated and documented by an independent licensed professional to verify the remediation has been completed appropriately.
This responsible approach to spills also occurs on a daily basis across Canada; however, this responsible behavior is driven as much by financial risk management as by any environmental legislation and regulations. Insurance companies are initiating and cleaning up spills to eliminate future liability and make sure their files, once closed, stay closed. In the environmental arena there are requirements that spills be cleaned up, but there are not clear directions, guidelines or regulations that necessarily drive that the clean ups are being conducted, documented and reported. Situations where spills are more likely to be reported and cleaned up include but are not limited to:
• Locations where the property owners are there to observe the spills.
• Very large spills that draw the attention of the municipality, the police, the fire department, other government officials, closes the highway or the press are involved.
• Situations were there are observed surface water impacts.
In situations where the landowner is a public entity (road allowance) and the spill "flies under the radar," complete remediation and documentation can be hit and miss, causing environmental impacts to public lands that are not necessarily addressed by the polluter.
Conclusion
Spills and typical brownfield sites should be addressed using different approaches because of urgency and liability. Legislation and regulations need to be crafted and enforced to appropriately recognize these differences. In Canada, this responsibility generally falls to the provinces. The current legislation, regulations and enforcement vary greatly between provinces resulting in a widely varying range of outcomes.
A final thought on the topic of betterment in light of the BP loss in the Gulf -- How will pre-existing conditions be defined? There will be locations along the Gulf Coast where there were pre-existing impacts from past activities, but the chore of trying to differentiate these from the oil rig loss may well be impossible in some situations. HMM
Mark Samis, M.Sc., M.B.A., P.Geo, is Vice President of Operations for the Remediation Services division of Environmental Solutions in Mississauga, Ontario. Contact Mark at mesamis@esrs.info
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Typical Conditions at a Brownfield Site
• The site is a historical commercial or industrial facility, where site activities have over the years, caused impacts to the soil, groundwater and/or surface water.
• The impacts have occurred over years of operation and the impacts are in "quasi" equilibrium with the environment (not getting worse rapidly or at all).
• The site is now orphaned and/or is to be decommissioned.
• The operations are to be sold and redeveloped.
• There may or may not be off-site (third party impacts).
• The site will be remediated to specific standards, either generic or site specific.
• There will be some level of residual impacts once the site is sold and/or redeveloped.
• The residual impacts are deemed to be acceptable for the new land use.
• The seller generally expects to receive less than market value for the site.
• The purchaser is aware that the property is impaired and pays less than full market value for the property.
• The scientific investigations must address the complete site history and all possible historical activities on, and adjacent to, the property to fully define all known impairments.
• The entity that caused the impacts is the property owner.
• The property owner will pay for the remediation.
• The remediation costs are usually significant relative to the property value and a phased approach is the most cost effective and appropriate. The phased approach is possible because the impacts are not spreading.
• The property impairment is documented on title at the end of the process
(NOTE: There are other factors; this is just a partial list.)
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Spill Example 2
It is 16:30 hours on a Friday afternoon before a long-weekend. A long-haul transport truck delivering cardboard boxes to a fifty year-old industrial facility, collides with a concrete bollard in the loading/parking area. The truck releases 180 litres of fuel to the gravel parking lot surface. The truck driver immediately calls his dispatcher who calls the insurance company. In the interim the industrial facility calls a vacuum truck company that attends the site within 30 minutes and vacuums up the free product ponded on the surface of the parking lot. An estimated 50 litres of fuel is recovered leaving 130 litres unaccounted for and likely in the ground. This action temporarily stabilizes the situation so fuel will not be spread and/or rapidly end up in catch basins and surface water.
The insurer immediately dispatches a loss adjuster and a project management firm, specializing in emergency response. Both the adjuster and the project manager attend the scene within two hours of the spill and inform the trucking firm that the environment ministry needs to be notified of the spill. The ministry is notified and told that the spill is under control and not likely to impact surface water or leave the site. The ministry official does not attend the site, but issues an incident number. The adjuster attends to the physical damage to the vehicle. The project manger assesses the situation and after consultation with the adjuster schedules a remedial excavation for the following day, Saturday. The project manager takes samples of the soil in the source area as wells as some background samples of the site, which are sent to the laboratory for rush analyses. These samples are to be analyzed for benzene, toluene, ethyl benzene, xylenes, (BTEX) petroleum hydrocarbon fractions F1 to F4, PAHs and the leachate parameters required by the disposal facility to receive the waste.
The excavation proceeds on the following day and approximately 100 tonnes (180 cubic metres) of soil are stockpiled on plastic tarps and covered pending approval for landfill disposal. The excavation extended to a maximum depth of 1.8 metres below ground surface and groundwater was not encountered. By the estimation of the project manager, the fresh impacts associated with the spill have been removed, although there is black staining in the walls of the excavation that suggests pre-existing impacts. Also much of the parking area is constructed on rubble and some debris. The excavation walls are sampled and the soils are sent to the laboratory for rush analyses. The excavation is lined with plastic to accurately identify the limits of the excavation. The excavation is immediately backfilled, as the facility needs to be back in operation by Tuesday morning to prevent a potential business interruption claim by the industrial facility against the trucking company.
The results from the laboratory confirm that the impacted soil is acceptable for disposal. The source sample results are typical of fresh diesel (BTEX and F2 and F3 fractions) but there is also some heavier fraction (F4 impacts) that did not originate from the diesel release. All of the confirmatory sample results were below the laboratory detection limits for BTEX, F1, F2 and F3; however, there are detections of hydrocarbons in the F4 fraction that are not related to the spill.
(See the chart on page 10 to see the difference between fresh diesel and heavier oil.)
The project manager issues a scientific report documenting the actions taken to restore the site to pre-spill conditions, which is signed by the licensed professional overseeing the work. The activities and the sequence of events clearly differ from a traditional contaminated sites approach. There was no Phase I investigation conducted or necessary and the report does not document all environmental aspect of the site. The remediation was initiated almost immediately to minimize the migration of subsurface impacts and the potential for a business interruption claim. The industrial facility presents the loss adjuster with the bill from the vacuum truck company, which the loss adjuster audits and submits to the insurer for payment. From the trucking company and the insurance company's perspectives, the obligation to return the site to pre-spill conditions has been fulfilled and no further work is required. While a scientific report documenting the clean up is issued, it is not the same type of report or group of reports that would be issued for a contaminated sites project.
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Spill Example 3
Three transport trucks are involved in an accident on a major highway. Truck #1 is 100 per cent responsible for incident. Truck #2 is not responsible for the accident but releases 500 litres of diesel into the roadside ditch. It's raining at the time and the fuel migrates in the storm water for 150 metres, crosses under the four-lane highway through a culvert and flows into a wetland. Truck #3 releases diesel into the center median where it pools but does not migrate.
Who's responsible to remediate these spills? Is it Truck #1? If the environment ministry shows up and orders a cleanup, to whom should the orders be issued?
In this situation, the insurer for Truck #2 immediately retained a loss adjuster, contractor and consultant to remediate the fuel release from their vehicle, with the objective of restoring the impacts from their release to pre-existing conditions. The insurer did what was needed and appropriate. While this cleanup was occurring, Truck #3 was removed from the scene (to another province) and no action was taken to clean up the smaller spill from Truck #3. While the clean up from Truck #2 was progressing, an environment ministry representative arrived at the scene and suggested strongly if the team doing the remediation from the release from Truck #2 did not clean up the other spill, that an order to do so would be issued. The consultant for Truck #2 conferred with the insurance company and then informed the ministry representative that they would not touch the other spill.
Can the ministry issue an order for Truck #2 to remediate Truck #3's spill? Can the ministry order Truck #1 to clean up the spill from Truck #3? The answer is "yes" -- the ministry could issue an order against Truck #1 or Truck #2 to clean up Truck #3's release, but it's doubtful it would stand up to a legal challenge. In fact, what actually happened is after an onsite discussion with the ministry representative no order was issued, which is the correct approach. Truck #2 and Truck #3 were strictly liable for their releases, were responsible for remediating their releases and then recovering costs for the cleanup and any other damages from Truck #1, which was responsible for causing the accident.