3 Feb 09 Trusts
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Contaminated Sites forFiduciaries
Dianne Saxe, Ph.D. in Law
Saxe Law Office
February 3, 2009
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February 3, 2009 Dianne Saxe 2
Overview How clean is “clean”? Who’s responsible? What can you do with a contaminated site?
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February 3, 2009 Dianne Saxe 3
How Clean is Clean? Background Generic
Potable / Non-Potable Land Use Stratified
Risk Assessment
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February 3, 2009 Dianne Saxe 4
Generic Soil, Sediment, Water Potable / Non-Potable Land Use
Residential / Industrial / Agricultural / etc. Stratified
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February 3, 2009 Dianne Saxe 5
Which Generic? Reg. 153/04: Soil, Ground Water and
Sediment Standards for Use Under PartXV.1 of the Environmental Protection Act,March 9, 2004 / Oct. 1, 2004
Guideline for Use at Contaminated Sites inOntario (1994 to 2004)
Next?
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February 3, 2009 Dianne Saxe 6
1: Background / Sensitive2: Full Depth, potable3: Full Depth, non-potable4 / 5:Stratified potable / non-potable6: Soil Extract and Groundwater
(whether shallow soil)
Tables
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February 3, 2009 Dianne Saxe 7
Risk Assessment MOE review and acceptance Slow Unpredictable Expensive Financial Assurance
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February 3, 2009 Dianne Saxe 8
How do you know if it’s clean? Record of Site Condition
Date? Phase I / II? Environmental Site Registry
Certificate of Property Use Other documents?
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February 3, 2009 Dianne Saxe 9
Who says it’s clean? Qualified Person
Insurance Regulators? Can you rely on what they say?
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February 3, 2009 Dianne Saxe 10
Will it stay clean? When the standards change? When contaminants degrade? When contaminants migrate?
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February 3, 2009 Dianne Saxe 11
Are MOE standards enough? Tridan v. Shell Impact on value What is “pristine”?
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If it’s not clean Hazardous to occupants / neighbours? S. 14 Cleanup obligations (spills) Change of land use Building permits Impact on value
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February 3, 2009 Dianne Saxe 13
Overview How clean is “clean”? Who’s responsible?
Orders Protections from orders
What can you do with a contaminated site?
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MOE Orders Environmental Protection Act
Also OWRA, TSSA, CWA, SDWA, etc. Stop orders, Control orders Preventive orders, Cleanup orders Orders to Pay
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February 3, 2009 Dianne Saxe 15
Orders: Liability Bomb No fault No limitation period No cost limit No fairness limit Retrospectivity Uncontrolled MOE discretion
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Who can be ordered? Owns or owned or has or had management
or control of an undertaking or property,s. 18, 97, 157.1
Has or had charge, management, control ofsource of contaminant, s. 7, 8, 14
Has or had charge and control of land,building or waste, s. 43
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= Anyone with “control” Past or present Includes non-polluters:
Owner, occupant Officers, directors Anyone in possession Receivers, trustees Individual / corporate
Control without possession?
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Protection from Orders? Record of Site Condition (RSC) Bankruptcy and Insolvency Act Environmental Protection Act, protection
for fiduciaries S.168.23 to 168.26 Reg. 298/02
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How much protection from an RSC? No MOE signoff No protection during cleanup No protection against civil suits No protection against prosecution or EPs
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Reopeners where Contaminant moves off-site RSC based on false / misleading
information Certificate of Property Use or s.18 risk
management order contravened Danger to health or safety
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February 3, 2009 Dianne Saxe 21
Other weaknesses of RSCs: The invalidators:
Change of use False information Migration across the property line
What if the property line moves? Improvements in detection technology?
How risky is it to submit past RSCs?
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What isn’t control? S. 168.26 EPA Some commercially reasonable acts of secured
creditor ≠ control: Investigate conditions Reduce contamination NOT Secure site Pay taxes, insurance Respond to emergencies
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Order against fiduciary No personal liability unless gross
negligence, willful misconduct; Must exhaust estate, except administration
costs S. 168.23 EPA
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Fiduciaries’ Duty to Report S. 168.24 EPA Danger to health and safety As a result of discharge or presence of
contaminant Report to SAC w/in 24 hours
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S. 168.25 EPA Fiduciary must turn over environmental
reports on request
Access to Environmental Reports
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February 3, 2009 Dianne Saxe 26
Overview How clean is “clean”? Who’s responsible? What can you do with a contaminated
site
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February 3, 2009 Dianne Saxe 27
What can you do with aContaminated Site Clean it Abandon it Sell it
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February 3, 2009 Dianne Saxe 28
Clean it? Dig and dump Land farming In situ:
Chemical oxidation Bioremediation Air sparge, etc.
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Contaminants are different The big three:
Petroleum Heavy metals Chlorinated solvents
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Not everything can be cleaned Engineers are optimists
Cost Time Result
Lawyers must be pessimists Who is wrong more often?
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February 3, 2009 Dianne Saxe 31
Risk it away For deep pockets with lots of time Risk management plan /CPU Impact on mortgage ability How to enforce CPU conditions? Who maintains documents / FA if
subdivided?
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Abandon it? Note short deadlines in BIA, EPA Don’t miss the deadline
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Sell it? Agreement of Purchase and Sale
Disclosure Warranty / reliance Deceit Latent / Patent Defect
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Agreement of Purchase & Sale Identify Risks
ESA, inspection Allocate Known Risks Allocate Unknown Risks
Insurance? Escrow? Price?
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Vendor must Truthfully answer questions Obligation to disclose?
latent defects buried tanks danger v. value
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Will it come back to bite you? Will the cleanup work? Will the buyer be solvent? Will more contamination be found? Did anything go wrong on your watch?
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The Consultant Qualified Person? Does she know what she’s doing? Insurance
What does it cover? When does coverage expire? Are there current / future claims against her? Claims-made policies
Proving negligence
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The retainer letter Limitations on liability Legal right to rely on the report Quality of the work / benchmarks Changes in scope
Trusting a Consultant
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February 3, 2009 Dianne Saxe 39
Conclusions Contaminated sites still risky, technical,
cost extra time and money Rules and numbers keep changing Some protection for very careful fiduciaries Sometimes they’re worth it.
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Questions?SAXE LAW OFFICE248 Russell Hill Road
Toronto, Ontario M4V 2T2Tel: 416 - 962 - 5882Fax: 416 - 962 - 8817
Email: [email protected]