Title: National Orphaned/Abandoned Mines Initiative (NAOMI)
Franšais
What's New
arrow


Rehabilitating Abandoned Mines in Canada: A Toolkit of Funding Options (October 2006).

arrow Proceedings of the Assessing Liabilities and Funding Options Workshop
-Proceedings Report
-Presentation - Day 1 a.m.
-Presentation - Day 1 p.m.
-Presentation - Day 2
Menu
arrow Table of Contents
arrow Introduction
arrow

Advisory Committee:
Mandate
Membership

arrow Task Groups:
Information Gathering
Community Involvement
Legislative and Institutional   Barriers to Collaboration
Funding Approaches
arrow Workshops:
Winnipeg Workshop
Legal and Institutional   Barriers to Collaboration   Relating to Orphaned/   Abandoned Mines Workshop
arrow Sign In - Meeting Minutes
arrow Newsletters
arrow

Reports

arrow Community Involvement Brochure (PDF)
arrow Related Links
arrow Contact Us
arrow Feedback Form
arrow Site Map
arrow Help
arrow Disclaimer
Spacer
Table of Contents > Reports > Legal and Institutional Barriers to Collaboration Relating to Orphaned/Abandoned Mines (OAMs) Abstract and Summary > Table of Contents > Introduction > Background and Workshop Review > Presentations

3 DAY 1: PRESENTATIONS



3.1 OVERVIEW OF THE LEGAL AND INSTITUTIONAL BARRIERS TO COLLABORATION


Presenter: Joseph Castrilli, Barrister and Solicitor

This presentation summarized the Report on Legal and Institutional Barriers, Liability Disincentives, and Collaborative Opportunities with respect to volunteer cleanup of abandoned mines in Canada, prepared by Mr. Castrilli for the Barriers to Collaboration Task Group in July 2002. He examined existing legislative requirements in Canada, selected other North American jurisdictions, and other countries on:

1. Regulatory or institutional barriers;
2. Liability disincentives; and
3. Collaborative opportunities

regarding voluntary abatement, remediation, and reclamation of orphaned/abandoned mine lands.

Orphaned or abandoned mine sites are generally defined as closed mines whose ownership has reverted to the Crown, either because the owner has gone out of business, or because no owner can be found. They also are described as mine sites where the owner has ceased or indefinitely suspended advanced exploration, mining, or mine production without rehabilitating the site. Throughout his presentation Mr. Castrilli noted that the problem requires both financial and legal solutions.

In general, there is no existing or proposed federal or provincial legislation in Canada regarding the subject of Good Samaritan legislation. Some existing law implicitly, though not explicitly, may have the same effect as permit blocking. There is some law, policy, and practice in existence regarding noncompliance registries and allocative versus joint and several liability. In comparison, there appear to be many more legislative measures at the federal and state level in the United States explicitly addressing several of these subjects. National legislation in the United Kingdom and state legislation in Australia is comparatively in its infancy in addressing these matters.

Generally, in regard to regulatory or institutional barriers, federal, provincial and territorial environmental and mining laws in Canada contain a number of permit, regulation, and other requirements that likely would have to be complied with by those voluntarily undertaking abandoned mine abatement, remediation, and reclamation. Existing exemption or variance authority under a number of these laws may be available to accommodate such activities, though the generality of the statutory language under many laws reviewed makes this difficult to predict with certainty.

Top

In regard to liability disincentives, federal and provincial law in Canada contains a variety of judge- made and statutory authorities that could impose quasi-criminal, civil, or administrative liability on those undertaking abandoned mine land abatement, remediation, and reclamation activities. There also are some statutory authorities, such as secured creditor and related exemptions, that might serve as precedents for exempting from liability those who volunteer to abate, remediate, and reclaim abandoned mine lands.

In regard to collaborative opportunities, a number of voluntary assessments and abandoned mine land cleanups have been completed, or are ongoing, by provincial governments in Canada. These initiatives have been undertaken without legislative reform. Other collaborative opportunities include variance authority, precedents arising from secured creditor exemptions, and related approaches.

Overall, however, the current legislative and regulatory regime in Canada is at best a patch-work, at worst indifferent to the problem. Legislators have not turned their attention to orphaned/abandoned mines to produce a principled and comprehensive solution to the problem. Both the Parliament of Canada and provincial and territorial legislatures will have to speak directly to the problem.

A short list of possible components or options for a federal and provincial legislative/regulatory approach to facilitating voluntary abandoned mine land abatement, remediation, and reclamation include:

  • Amend existing or enact new law that encourages volunteers to abate, remediate, and reclaim abandoned mine lands,
  • Exempt volunteers from being “responsible persons” under contaminated site, water pollution, or related laws as a result of carrying out “good samaritan” remediation,
  • Establish an abandoned mine reclamation “good samaritan” permit program, which would require permittees to specify reclamation plans and meet certain standards for cleanup, ensure public participation, and environment ministry oversight of cleanups,
  • Require remining operators to implement strategies that control pollutant releases and ensure that pollutant discharges during remining activities are less than the pollutant levels released from the abandoned site prior to remining,
  • Create exemptions from remediation liability at “historic mine sites”, and
  • Adopt certain collaborative opportunities under federal and provincial environmental and mining laws noted above (e.g., variance authority, secured creditor exemption precedents, etc.).


Discussion

There was substantial discussion around the definition of “volunteer”. The question was asked whether mining companies interested in remining a site are considered volunteers under pertinent Pennsylvania and Nova Scotia legislation, and whether they should be defined as volunteers if their intention is to make money. The Good Samaritan concept arises from a non-profit view, so a true volunteer is a person who is not looking to make money. This is not to say that a regime could not be developed that would go beyond volunteerism and deal with those who are looking to make a profit (perhaps hold them to a different standard than a true volunteer). It was also clarified that the statutory provisions of the Fisheries Act do apply to volunteers, but there is uncertainty how the new Metal Mining Effluent Regulations apply to volunteers.

There was also considerable discussion around whether the definition of volunteer includes government. While a government agency could be considered an organization in the context of the definition, it is not explicit with respect to government. Political subdivisions and government agencies are covered as volunteers under Good Samaritan law in Pennsylvania.

Contaminated sites exist in more than just the mining industry, and amending all existing contaminated sites laws to incorporate the volunteer concept could be a very time-consuming process. Since both provincial and federal laws could apply to volunteers, it would be necessary to review laws at both levels of government, and it may be necessary to change laws at both levels because of overlapping jurisdictions. In terms of actually amending the law, it is possible to write one law that amends all others that apply to the subject, which would be a shorter process than amending each law individually. The Uniform Law Conference of Canada, which creates uniform legislation provincially and federally, could help in this area.

There was also some discussion around the effort to establish the “before and after picture” at a site, which is necessary to ensure that cleanup activities actually improve site conditions. [Stakeholders need to be able to identify the existing and required position on a continuum from not making it worse to making it better. This requires a good understanding of conditions before, during and (when applicable) after cleanup activities.] Who pays for these assessments and over what time period is a consideration in the broader question of who pays for the entire cleanup/remediation.

There was also concern regarding “grandfathering”, whereby a statute comes into place at a given time and only applies back to a certain date (site predates the law). Many OAMs in Canada predate environmental legislation, but if Parliament and provincial legislatures decide to deal with abandoned mines, “grandfathering” will not be an issue because the sites do not have owners.

One individual, commenting on Slide 26 of Mr. Castrilli’s presentation, noted that uranium mines abandonment license regulation do apply to volunteers. It was also noted that the Deloro mine was exempted from the provincial but not the federal Environmental Assessment process. The federal government through the offices of the Canadian Nuclear Safety Commission (CNSC) has only recently commenced a screening level environmental assessment. While this information is available on the CEAA registry, it should also be placed on the CNSC web site.

Top

3.2 REVIEW OF PENNSYLVANIA’S ENVIRONMENTAL GOOD SAMARITAN ACT AND RELATED INITIATIVES

Presenter:

 

Scott Jones, Hydrogeologist, Greensburg District Mining Office, Pennsylvania
Department of Environmental Protection

After several hundred years of unregulated mining and gas and oil drilling, Pennsylvania is now faced with reclaiming thousands of hectares of abandoned mine lands, orphaned gas wells and over 3200 kilometres of degraded streams. The Environmental Good Samaritan Act (EGSA) encourages improvement of land and water by limiting the liability which could arise as a result of voluntary reclamation of abandoned mine lands (AML) and abatement of water pollution. Landowners and groups who volunteer land, material or labour at no charge or at cost can be eligible for protection under the EGSA. The EGSA does not prevent a person from being sued but allows the DEP to provide the defendant an “affirmative defense”. Proposed modifications to the EGSA include expanding the Act to include abandoned industrial sites, creating a “general permit” to streamline permitting requirements and consideration for a national-based EGSA.

Other initiatives that Pennsylvania has employed to limit liability include “discharge liability limits (DLL)” [Sub-Chapter F of the Commonwealth’s regulations] and the Government-Financed Construction Contract (GFCC) programs. Both of these programs deal more with the mining industry but have resulted in significant reclamation of AML and vast improvements in the quality of Pennsylvania’s receiving streams. The DLL are based on State and Federal Law that considers pre-existing discharges as a separate discharge category and therefore are not subject to the usual present-day effluent limits. The DLL are derived from a calculated "water quality baseline". In essence, as long as the operator does not degrade the discharge beyond baseline (there is an expectation that he/she will improve the discharge), the operator will not be held responsible for permanently treating the discharge. Furthermore, the more reclamation the operator proposes—the less stringent the baseline limits are set. A study of over 230 pre-existing discharges (later affected by remining/reclamation efforts) shows that most of the discharges have undergone significant reductions in pollutant loadings.

The State’s AML program was amended in 1999 to allow limited removal of coal during AML reclamation. Reclamation contracts are used rather than the standard mining permit system. Through a contract, the operator is not subject to the usual barrier provisions, pre-existing discharge liability, or long-term bond requirements. The GFCC sites are usually two to five hectares in size. The operator is required to complete reclamation of the entire site prior to bond release. To date, over 600 hectares of AML have been reclaimed.

Discussion

Following this presentation, the question was asked whether project applicants are required to do any consultation with public/Aboriginal groups. It was explained that, with regard to public notification, the department either advertises all details of a project in the newspaper several times over a several week period and directs all concerns to the DEP (Department of Environmental Protection) office, or contacts all downstream and adjacent landowners by certified letter. This is consistent with other requirements under environmental legislation in Pennsylvania.

Another question raised was whether there have been any lawsuits under federal acts, or whether the federal government has taken any action with regard to these reclamations. So far, the program has had the full support of the federal government, and there have been no lawsuits. It was also clarified that while the federal government is made aware of the program and how it proceeds, final federal approval for projects is not required.

Further clarification of the Government-Financed Construction Contract (GFCC) programs was requested. It was explained that GFCC is a misnomer – no government funds are expended in this program. Instead, the funding is similar to a regular surface mining application. While federal surface mining law does include some funding for abandoned mines, the state only receives a small portion. There is no relationship between the GFCC program and Good Samaritan law.

The presenter was asked to clarify “public notice” in the context of the presentation – even though the state agency is responsible for public notice, the presentation asserted that an applicant can lose their liability exemption if written or public notice of the proposed project is not provided to all landowners. It was clarified that the public notice provided by the department is based on information provided by the applicant (i.e.: the list of landowners, project details, etc.). It is the applicant’s responsibility, not the department’s, to ensure this information is compete and accurate. The same notice provisions apply to remining. The presenter noted later in the Workshop that there are two additional avenues that the Department employs to provide “public notice”. First, the Department publishes a “notice of receipt” of the application in the Commonwealth’s weekly list of legal notices called the ‘Commonwealth Bulletin’. Also, the Department informs the local municipality that an application has been received—and includes the location where the public can review a copy of the application. There was some discussion around possible courses of action where people oppose a project. Adjacent landowners who do not understand or have concerns regarding a project can contact the DEP for further explanation. In the vast majority of cases, concerns are alleviated when landowners better understand the project. Overall, there is a great deal of support and very little adverse concern regarding reclamation projects. Additional points raised by Mr. Jones during the discussion included:

  • Reclamation in lieu of penalties is available in appropriate circumstances—instead of paying a civil penalty for a past mining violation, an operator may ‘partner’ with the PADEP and offer to reclaim adjacent OAMs as long as the cost of reclamation matches or exceeds the cost of the civil penalty;
  • Partial treatment, while not ideal, is considered acceptable in appropriate circumstances, and particularly where the alternative is to do nothing; and,
  • Volunteer may apply for a grant [under several State and Federal programs] to cover costs at the same time as they apply for liability protection.

Top

3.3 REVIEW OF THE U.S. FEDERAL ABANDONED HARDROCK MINES RECLAMATION ACT OF 2002 AND RELATED INITIATIVES

Presenter: Alan Septoff, Research and Information Systems Director, Mineral Policy Centre

The Mineral Policy Centre is a non-profit environmental advocacy group dedicated to protecting communities and the environment from the impacts of (mostly) metal mining. The root of the OAM problem in the us was identified as the 1872 Mining Law, which is still in effect today and does not mention environmental protection and has no provisions for mine reclamation. There were no federal environmental mining regulations that governed mine reclamation until 1980, and these “new” rules are weak.

The problem is expansive – it is estimated that there are 500 000+ abandoned mines in the U.S., and more than half of the abandoned hardrock mines are in the west. The problem is also expensive – estimates indicate that it will cost from $32 billion to $72 billion to clean up these sites, if not more, and the problem continues to grow with mines still being abandoned today. There is no federal program in the us dedicated to abandoned hardrock mine reclamation, and what does exist is a “grab bag” of federal and state programs that are not solely focused on hardrock mine reclamation.

While everyone agrees that OAMs are a problem, there are legal/liability barriers, financial barriers, and political barriers to reclamation. A potential solution to these barriers is the proposed Udall Abandoned Mine Bill, which establishes a reclamation fee on most hardrock mining, and provides a liability waiver under the federal Clean Water Act for most government Good Samaritans. Remining is not strictly prohibited under the Udall Bill, but remining revenues must go to cleanup or a reclamation fund that will address other sites.

Prospects for the Udall Bill are uncertain. Industry is trying to eliminate the fee, and environmental groups are not entirely on board with the liability waiver, but the Bill does represent unprecedented, consistent, prolonged interest by all stakeholders.

Discussion

Clarification was requested regarding the coverage of the liability waiver. The waiver would cover all mines that were claimed under the 1872 Mining Law, which includes almost all mines west of the 100th meridian.

It was pointed out that the presentation focused on water discharge, and limiting liability for water pollution. It was asked whether the discussion could extend to adverse health impacts that exist at abandoned mine sites. However, the Udall Bill does not deal explicitly with human health impacts.

The presentation offered impressions of industry and environmental groups on the Udall Bill – the presenter was asked to discuss the government’s impressions. In Colorado where this initiative arose, there is definite support for the Udall Bill or something like it, and there is general acknowledgement outside Colorado that the issue needs to be addressed. Colorado representatives in Congress are split (democratic and republic), but if the Colorado delegation can agree on something it will have the political legs to move through Congress. However, given the environmental history of the present federal government, it could go either way.

In reference to the U.S. EPA and effluent standards based on best available technology (BAT), as well as previous discussions with Scott Jones (Pennsylvania DEP) that indicate that less stringent standards would be acceptable in certain situations, it was asked whether (a) there is any consideration of standards and level of standards in the Udall Bill, and (b) what is the role of BAT in Pennsylvania. With regard to the latter question, under the active surface mining program, companies fall under the Surface Mining Control and Reclamation Act (SMACRA) and would be required to treat to BAT (current standards). However, under other programs, the state, in working with the EPA and the federal government, has been able to say that preexisting discharges fall into a different category. As long as the entity is conducting the reclamation using best management practices approved by the department, the operator who has physically affected the preexisting discharges does not have to meet official BAT, but has to meet some “lower level” of treatment. With regard to standards in the Udall Bill, the Bill would amend the Clean Water Act and establish new standards for Good Samaritans. Clean up would occur to the maximum extent practical, which would be outlined in the permit application, approved by EPA administration or another delegate and be subject to full public notice and comment before permit approval (site by site).

A participant asked for more information on the experiences of other extractive industries in setting up funding mechanisms. The Clean Streams Initiative, which has substantial money, has been used to clean up streams and mines of various types. Superfund is running out of money, and the Bush administration will probably not renew it.

Another participant asked for clarification on what constitutes a mine site, and whether the Udall Bill required all remining revenues to go to cleanup, which does not provide an incentive for mining companies to remine and subsequently remediate. It is not clear what constitutes a mine site under the Udall Bill. With regard to the remining question, the Bill does establish an intentional disincentive by requiring that all remining revenues go onto remediation. The Udall Bill was developed in cooperation with the Mineral Policy Centre, who is not interested in facilitating mining. It is the opinion of the MPC that most abandoned hardrock mines, if they were remined, might open the door to new open-pit surface mines, and the cure might be worse that the problem.

Top

3.4 ABANDONED MINES IN THE NORTH

Presenter: Richard Arseneault, Director, Office of the Commissioner of the Environment and Sustainable Development

This presentation provided context on the roles and responsibilities of the Office of the Auditor General (OAG) and Office of the Commissioner of the Environment and Sustainable Development (CESD), as well as a review of Chapter 3 of the 2002 CESD report on abandoned mines in the North.

The OAG scrutinizes how well federal departments and agencies manage programs and services, and bases their audits on well-established “value-for-money” audit methodology. The OAG itself is also audited, both by internal and external auditors. The CESD audits the federal government’s activities to respond to environmental and sustainable development (SD) issues that are important to Canadians. The CESD holds the federal government accountable to achieve the goals outlined in its Sustainable Development Strategies (SDSs), and is the guardian of the Environmental Petitions Process.

Chapter 3 of the 2002 CESD report deals with abandoned mines in the North, which the federal government has inherited from the private sector. Hundreds of thousands of tons of highly toxic chemicals are found at these sites, some of which represent a serious threat to human health and the environment and will require perpetual care. Indian and Northern Affairs Canada (INAC) is mandated to manage these problems on behalf of the federal government. In their report, the CESD identified capacity and policy gaps at INAC that are causing delays in dealing with the problem of abandoned mines. This year alone, the CESD reports that INAC will spend $26 million to stop contaminants from escaping these sites. Most of this work is in care and maintenance as opposed to remediation, which represents a “band-aid” approach to the problem. It is possible that money from other programs, such as education and health, had to be redirected in order to make up this $26 million.

INAC conservatively estimates that long-term solutions will cost Canadian taxpayers at least $555 million. “Permanent” solutions are not being implemented because INAC does not have the necessary funds. INAC has laid out options to deal with the problems, and continues discussions with central agencies. At the time of the CESD audit, the government had no funding strategy in place to support the recent efforts of INAC. Application of the “polluter pays principle” is impossible in the case of bankrupt mining companies, which highlights the need to collect sufficient financial security while the companies are still in operation. While INAC has legal and contractual tools in place to collect financial security from companies, which is working for the new northern mines, it may not work for older northern mines still in operation.

INAC must take measures to ensure that abandoned mines in the North do not represent a threat to human health and the environment, and must take measures to ensure that currently operating and future mines do not become an additional financial burden to Canadians. The CESD points out that while good work is being done in this area, action on the ground is slow. The recent federal budget dedicated $175 million over two years to federally owned contaminated sites.

Discussion

A participant asked whether the CESD/OAG conducts compliance audits on INAC to determine whether they have done their duty to consult with Aboriginal communities. The audit did look at compliance in the context of inspections. It was also asked whether the CESD/OAG has the power to sanction or compel compliance where it is lacking. If the CESD/OAG uncovers a major situation that must be addressed immediately (cannot wait for the report to be written), they will bring the problem to senior departmental management, but they do not have the power to impose their views. Their report goes to Parliament, and Parliament can enforce actions.

A participant questioned whether, in their “value-for-dollar” audit, the CESD made recommendations about how INAC can move from care and maintenance to lasting solutions. The CESD has not looked at these options. It is up to the department to do what they can with the money they have.

One of the recommendations in the CESD report was that INAC would report publicly on results of inspection and enforcement. A participant mentioned that INAC, when questioned about this, said that it is not their policy to publicize reports containing non-compliance information. INAC has made a commitment to accept the recommendations in the CESD report, and the CESD will follow up on the results of their audit.


Top

3.5 A REVIEW OF THE ONTARIO MINING ASSOCIATION/ONTARIO MINISTRY OF NORTHERN DEVELOPMENT AND MINES INITIATIVE

Presenter:

 

John Martschuk, Director, Ontario Mining Association, and Director, Environment, Barrick Gold Corporation

In April 2000, the OMA Board passed a resolution to contact the OMNDM to see how the OMA, and member companies, could be of assistance to help the government deal with historical abandoned mine problems. The OMA wrote to OMNDM expressing this resolution, and in May the OMNDM Minister responded favourably to the proposal and suggested several options. In July 2001, OMA requested the Minister to participate in funding a partnership to rehabilitate abandoned mines, and in August the Deputy Minister agreed to provide funding for such a partnership. The OMA/OMNDM will established a Joint Advisory Committee (JAC) on Abandoned Mines. Much effort has subsequently been spent overcoming various issues/barriers related to the proposed agreement, and the OMA has also initiated discussions to obtain funding from the federal government as a potential third partner.

The purpose of the OMA/OMNDM initiative is to develop a protocol/agreement whereby OMA and OMNDM can work together to deal with historical abandoned mine problems. Such activities can enhance the rate of rehabilitation of abandoned mine hazards in Ontario and comprise an investment in image with respect to improving negative perspectives of the mining industry within the sustainable development equation. The focus is to get results on the ground, to start small, gain success and then move on to bigger issues. A demonstration project will bring many issues to the forefront, allow them to be ironed out, and hopefully result in better success with subsequent projects.

In the partnership, the OMNDM retains full ownership and responsibility for the sites, and the OMA will not work on lands where they or their members might benefit. Projects must also be meaningful from an environmental or public safety perspective, and OMA members should be rehabilitating any inactive sites that they currently own.

It was concluded that the JAC would initially propose to work only on abandoned mines located entirely on Crown land to simplify administration and permitting barriers, and clarify existing and future liability (e.g.: liability 100% Crown owned at time of project initiation). OMNDM will administer all funds that will be provided by OMA, OMNDM and any other party. With regard to financial issues, OMA members initially suggested that contributions could be in the form of cash, on-site services or technical expertise, and financial contributions would be tax deductible as “gifts to the Crown” (subject to tax ruling by CCRA and OMOF). It has been concluded that donations of cash will be easier to address than donations of in-kind goods and services.

OMA, gifting members or associates wish to be indemnified from any liabilities that might flow from projects funded through this agreement, and OMNDM concurs with this intent. Since projects will be restricted to hazards owned by the Crown or on Crown land where existing liability is 100% Crown owned, OMNDM (Crown) will indemnify gifters and participants on the advisory committee from third party liabilities provided that the gifter/advisor has not acted in bad faith, wilful misconduct, gross negligence or fraud. Indemnity can include indemnification from legal liability from other jurisdictions (e.g.: potential for charges pursuant to the Fisheries Act).

To be fully engaged in this project, OMA representatives believe that intellectual involvement in co-funded projects is necessary, but such engagement appears to be limited in scope by (a) taxation ruling – gifters cannot have control over the use of a gift; (b) indemnification – level of involvement must not affect indemnification issue; and (c) ownership.

At the time of this workshop it appears that most legal and institutional barriers to reaching agreement have been overcome. Thus it is hoped that completion of an agreement is imminent.

Discussion

There was discussion around public involvement in this process. Assuming that the MOU between the OMA and OMNDM is signed, the participatory process should start soon with discussing “where the rubber hits the road” – no projects will go forward without consultation with concerned stakeholders, including Aboriginal groups. The point was raised that once the agreement is signed, there may be little opportunity for other interested parties to influence content of the MOU, specifically with regard to decision making and the direction of various initiatives. Given the fact that this initiative is being talked about as a model to be used elsewhere, there was serious concern about the lack of public involvement to date, and it was asked whether OMNDM would consider making the MOU available to the public for comment as a draft before it is signed.

A participant also asked how much money has been put into the project by OMNDM and when, and who else was included in the process. It was clarified that while the participation of the OMNDM is formally expressed in a letter, they have not yet invested any money because there have not been any projects. In terms of who was involved in the process, the participant specifically asked for clarification on OMA representation. The OMA only represents its members, which does not reflect the entire mining industry in Ontario. It was recognized that to be ultimately successful, the initiative should engage the entire mining industry, whether they are OMA members or not.

While there was general recognition of the need for wider participation, it was pointed out that the goal of the initiative was to make progress, to get beyond discussions and see results on the ground. It was not the group’s intention to exclude anybody.

Top

3.6 LIABILITY, LEGISLATIVE AND INSTITUTIONAL BARRIERS AND OPPORTUNITIES FOR COLLABORATION: SETTING THE STAGE

Presenter: Joseph Castrilli, Barrister and Solicitor

This presentation revisited the issues with respect to legislative and institutional barriers and liability disincentives discussed during the morning session.

A legislative/institutional barrier to volunteer abatement may be a requirement under a statute/regulation that imposes an obligation on volunteers to do, not do, or to obtain something if they want to proceed (i.e.: a licence, permit, approval, or standard that applies generally to the regulated industry). A key question is whether the volunteer should meet the same or different requirements as the rest of the regulated industry? Some examples of legislative/institutional barriers are listed below:

FEDERAL

  • Licensing requirements under natural resource management laws in northern Canada
  • Regulations under the Fisheries Act
  • Pollution prevention plans under CEPA
  • EA requirements under CEAA
  • Uranium mining licensing requirements to abandon sites under NSCA

PROVINCIAL

  • Requirements for obtaining and complying with:
    • Approvals
    • Licences
    • Permits
    • Plans
    • Regulations
    • Environmental assessment obligations (under limited circumstances)

A liability disincentive to volunteer abatement may arise from the breach of common law (judge-made law) or legislative or regulatory provisions and may result in the imposition of fines, monetary compensation obligations, obligations to do or refrain from doing something, or, in extreme circumstances, imprisonment.

Discussion

Germane to this discussion is who is experiencing the barriers – Provincial crown? Federal crown? Provincial industry association? Interest associations? This depends on the definition of volunteer, which is a policy matter in dispute that needs to be discussed and resolved. Depending on the situation, it is important to identify the entities creating the barriers and which groups are adversely affected by the barriers. Once that distinction is made, it is easier to determine where collaboration might be possible. In response to a question about the expectation that reliance on the common law may not be the most efficient way to promote reform, Mr. Castrilli agreed and added that statutory reform offered the best opportunity for dealing with these issues.


Top

3.7 SITE-SPECIFIC EXPERIENCES IN CANADIAN JURISDICTIONS:
3.7.1 Experiences from the Manitoba Government

Presenter: Christine Kaszycki, Chair, OAM Advisory Committee and ADM, Manitoba Industry, Trade and Mines
  Edwin Yee, Senior Consultant, Toxic Chemicals, Manitoba Conservation


Manitoba mining legislation has a complex history, a variable liability framework, and no specific context for OAMs, all of which have resulted in confusion and an ad hoc approach to dealing with OAMs. Manitoba also faces unique interjurisdictional challenges to collaboration in sharing a mine across the Manitoba-Saskatchewan border.

The Contaminated Sites Remediation Act (CSRA) was proclaimed in May 1997 to address contaminated sites in Manitoba. Although the intention was not to apply the CSRA to mine sites, through regulation, the CSRA can apply to specific mine sites. The CSRA is founded on 13 guiding principles established by the Canadian Council of Ministers of the Environment (CCME). The most significant principles for our purposes include: polluter pays; fairness; openness, accessibility and participation; beneficiary pays; and sustainable development. These principles should be considered when developing the appropriate regulatory tools to address the issues of legislative barriers and liability.

Experience in applying the CSRA to contaminated sites in Manitoba has been positive in overcoming some of the liability issues relating to site investigation and to some extent addressing liability apportionment. Under the CSRA, the owner or occupier and not necessarily the polluter is allocated the responsibility of site investigation. This investigation determines if the site may pose a risk to human health or the environment and would require some remediation. Parties generally do not wish to undertake any investigation of contaminated sites due to the potential liability implications. The CSRA provides for an agreement between government and other parties to investigate a site with any terms, conditions or requirements that are necessary or required to determine the existence, nature or extent of the contamination of the site. The CSRA includes an apportionment process to apportion liability based on the CCME Guiding Principles. Although there has been limited experience in applying this process, a number of potential responsible parties have voluntarily cooperated in the remediation of contaminated sites in Manitoba on the basis of this process. The CSRA provides for voluntary allocation (agreement between the responsible parties), mediated allocation (a mediator is appointed to assist responsible parties in reaching an agreement), and direct allocation (apportionment by a commission). Joint and several liability has not been incorporated in the CSRA as it was the consensus of Manitoba’s stakeholders that it would hinder rather than assist in the management of contaminated sites. Factors for consideration in allocating responsibility for remediation have also been incorporated into the CSRA.

The CSRA is a risk-based approach to managing contaminated sites in Manitoba. The definitions for “contaminated sites”, “impacted” and “remediation” reflect the risk-based approach and the principles of sustainable development.

Top

3.7.2 Experiences from the Mining Sector

Presenter: Wayne Fraser, Director, Environment and Communications (Hudson Bay Mining and Smelting Co. Limited)

Hudson Bay Mining and Smelting Co. Limited (HBMS) has been in operation for 75 years and has decommissioned 15 mine sites. They plan with closure in mind, which makes it easier to deal with closure efficiently and effectively.

HBMS’s experience with OAMs has been varied. They have worked on abandoned mine sites that they did not own and have been prepared to accept cleanup liability for sites that others have assumed they owned because of the site’s proximity to HBMS property. Today, there are OAMs that HBMS knows need to be addressed immediately and would like to help clean up, but there is no way to do so without accepting legal liability. They also do not want to risk the probability of significant legal action because of their cooperation with government. HBMS feels that they should be able to work on OAMs to reduce safety, environment and human health hazards and improve aesthetics without having to accept liability. As an industry and as part of society, they would like to find a way to correct the legacy of OAMs, and feel that elimination of legislative and regulatory barriers would aid in this correction.

Discussion on Previous Two Presentations

There was discussion around the mechanism required to allow mining companies to participate in OAM cleanup. They may be willing to accept responsibility to fix a site, but not the responsibility for the site in its entirety. Orphaned mines that have not been officially abandoned by the company and are therefore not on Crown land represent a unique situation. Under the law, if the site is not on Crown land and the company has its rights in good standing, there may be no condition onsite that would give the Crown the authority to issue a directive.

Mining companies could be hired as contractors to fix the problem, and the nature of contractor work is such that the contractor does not have to accept legal liability for the entire site. While this option may not solve the OAM problem, some work to improve OAMs is better than no work at all. There was discussion around whether a letter of contract actually does save a third party from liability. In a contract, the job is scoped precisely, and a contractor works within that scope and, as long as the job is performed correctly, is not responsible for anything else. This option presumes that the government has the ability to enter the property and thereby issue the contract to do the work, or the company that owns the site has the money to pay a contractor to fix the problem. More often than not, the government does not have the authority to enter the site and commission the work, and the company who owns the property does not have the money to fix the problem.

There was also some discussion around the coverage of standards. A participant shared an experience with drinking water standards, whereby two communities (a non-Aboriginal township and a First Nations reserve) were both being impacted by contaminants from a mine, but under federal standards only the non-Aboriginal township was eligible to receive a drinking water treatment plant. The point was made that some people may be subjected to lower standards than others, so standards are not necessarily the best approach.

It was recognized that there is a larger issue that needs to be discussed, which is the extent of the role of the individual. One participant noted that individuals cannot fix the bigger problem. The main volunteers should be federal and provincial government (on federal Crown and provincial Crown land, respectively). Government needs to take the lead because they are the only ones who can afford to do so, and industry and NGOs can pitch in.

In response to a question, Mr. Yee noted that the CSRA does not apply to a site that is subject to the provisions of the Mines and Minerals Act. Mr. Yee also noted that it was his understanding that the Mines and Minerals Act applies only to operating mines.


Top

3.7.3 Experiences from the Ontario Ministry of the Environment: Remediation of Contaminated Sites and Due Diligence – The Deloro Decision

Presenter: Kenneth Jull, Beard Winter Barristers and Solicitors

The scope of responsibility for a contaminated “orphan” site was recently the subject of a detailed decision by Justice Celynne Dorval, of the Ontario Court of Justice, released on June 27, 2001, regarding the Deloro mine. Justice Dorval found that the Ministry of the Environment (“MOE”) was not guilty of privately laid charges under the Ontario Water Resources Act (“OWRA”) and the Fisheries Act. This case has significant implications for the remediation of contaminated land in the Province of Ontario.

The decision of Dorval, J. addresses the following issues:

  • When a remediator assumes management and control over contaminated property, it is immediately potentially subject to prosecution;
  • The status of the remediator on the property is a factor in assessing due diligence;
  • The defendant must show that it exercised due diligence during the period set out in the charge document, and evidence of the defendant’s actions prior to that period are only relevant to a proper understanding of the efforts during the charge period;
  • Due diligence for complex contaminated sites requires a detailed and planned approach that proceeds in accordance with industry standards;
  • The average time frame to remediate contaminated sites is 10-12 years, and more complex sites may require more than 20 years to remediate;
  • The government’s decision regarding the disbursement of public funds is not subject to judicial review; and
  • Financial context may provide background in assessing due diligence.

I. ROLE OF REMEDIATOR OF LAST RESORT

The decision strikes a balance between competing considerations in defining the role of a remediator of last resort. Justice Dorval set a high standard, designed to further environmental protection; remediators are immediately subject to prosecution upon exercising control:

The objective of [Ontario’s] Environmental Protection Act (E.P.A)., the O.W.R.A. and the Fisheries Act are similar; to protect bodies of water for both human and animal uses… .

In my view the prosecution pursuant to any of these acts is not precluded by the obligations imposed on the defendant by the E.P.A. The acts are protective of the environment. The E.P.A. provides for Director’s Orders to be issued and enforced. When a citizen or a corporation does not abide by the director’s orders, the MOE enforces them and the citizen or corporation is liable to prosecution under all three acts. When the defendant assumes management and control over an abandoned property (or over a property still operated by an owner unwilling to act) it does so in order to protect the environment from further deterioration by the refusal to remediate. It must act accordingly. To limit the applicability of the OWRA and Fisheries Act to new contamination or further contamination would essentially permit the entity who is intervening to ignore the historical problem as long as it did not add to the pollution. The remediator of last resort would have been given the authority to intervene, would be in control of the property yet could choose to act precisely in the same manner as the owner. In my view that is not an interpretation that is consistent with the common objective of the legislation.

Section 2 of the OWRA and section 3(2) of the Fisheries Act expressly set out that the acts bind the Crown. The intention of the legislation is quite clear. The intervening entity must proceed with the remediation of the property with due diligence. The entity is indeed immediately subject to prosecution for permitting discharges, which were not caused by it. The citizen who discharges a cup or even a teaspoon of contaminant without knowing its impact would be equally subject to prosecution. The status of the intervening party on the property, however, is a factor in assessing due diligence. The intervening party who is diligent would therefore not be successfully prosecuted.

This interpretation is consistent with the objective of the Acts. [emphasis added]

Top

In the absence of specific legislation exempting an entity, the above ruling potentially widens the scope of liability for both governmental entities and private remediators. Upon assumption of management and control, due diligence systems must be put into place immediately, which may ultimately be challenged in a Court. This triggers the applicability of the due diligence defence which may lead to more litigation, as private informants may argue that the remediation is not being done as fast or in as comprehensive a manner as they would like.

After the decision in Deloro, a remediator is liable to be charged for any of its activities immediately upon taking control of a property which continues to discharge contaminants. This appears to be the situation, regardless of any ownership issues.

It is some comfort that the Court comments that an intervening party who is diligent would not be successfully prosecuted. Yet, the facts in the Deloro case demonstrate the practical problem with this new approach. The remediator may have to spend substantial funds on legal and expert resources to prove that it has acted with due diligence, the onus of which is on it. Justice Dorval’s comments imply that a prosecutor will exercise judgment and not proceed with a case unless there is merit. Again, the experience at Deloro raises concerns. A report from a leading expert, stating that the MOE had exercised diligence in accordance with North American standards, was served on the prosecution before the case commenced; yet the case went forward. It is submitted that the difficulty in relying upon due diligence is the amorphous nature of the standard, which incorporates notions of reasonableness. Unlike the standard of proof beyond a reasonable doubt, reasonable people may have widely divergent views as to whether a given site is being operated with due diligence.

A concern arising from the above is whether or not the decision may cause a “chill” on remediation. Potential remediators may be deterred by the threat of quasi-criminal charges, separate and apart from any agreements negotiated with the MOE, such as lender liability agreements (such agreements pertain to civil liability and cannot in any event restrict private parties from proceeding by way of private informations).

The comments by the Court concerning private remediators are strictly obiter, as the case did not deal with private remediators. A literal reading of the reference to the treatment of a private citizen suggests that private remediators are on the same footing as a government remediator. The passage cited above refers to the immediate liability of an intervening entity to prosecution in the absence of due diligence, and is followed by a reference to the citizen who discharges even a teaspoon of contaminant as being “equally subject to prosecution”. No doubt, the existence of a lender liability agreement would be taken very seriously by the Attorney General in its decision as to whether or not it will intervene.

II. COSTS

Section 62 of Fisheries Act: Fishery (General) Regulation (SOR/93-53)

(1) Where an information is laid by a person in circumstances other than those referred to in section 60 or 61 relating to an offence under the Act, the payment of the proceeds of any penalty imposed arising from a conviction for the offence shall be made

(a) one half to the person; and
(b) one half to the Minister or, where all of the expenses incurred in the prosecution of the offence are paid by a provincial government, to that provincial government.

(2) Where an information is laid by a person in circumstances other than those referred to in section 60 or 61 relating to an offence under the Act, the payment of any proceeds of the sale of any forfeited articles arising from a conviction for the offence shall be made, net of any expenses incurred in connection with the custody and sale of the forfeited articles,

(a) one half to the person; and
(b) one half to the Minister or, where all of the expenses incurred in the prosecution of the offence are paid by a provincial government, to that provincial government.

Costs article:

Kenneth Jull, “Costs, the Charter and Regulatory Offences: The Price of Fairness”, (2002) 81 The Canadian Bar Review 646-676.

Top

Discussion

A number of questions were asked regarding the number of private prosecutions under the Fisheries Act in a year, how many are not stayed by the Crown, and the magnitude of the fines. There are no statistics available to accurately answer these questions. Sierra Legal Defense and the MOE charged the City of Kingston a few years ago, and the fine was $150 000. Sierra Legal Defense also charged the City of Hamilton, and the fine was $450 000. It was recognized that litigation is time consuming and can take important resources away from remediation and reclamation.

In the case of Deloro, some participants were concerned why the appropriate law(s) were not enforced in the first place, and how the situation escalated into a very serious problem before anybody acted. A big issue is how to enforce laws so the sites are cleaned up before they reach a Deloro magnitude, which is difficult when very few laws actually apply to OAMs.

The Deloro case demonstrates that “due diligence” is not enough to protect a volunteer from being forced to assume liability and responsibility for a site, and from having legal action taken against them. What is needed is an alternate dispute mechanism that is not as time consuming and costly as litigation. The key advice provided was to get an objective legal and scientific objective opinion before acting, and thus having a basis on which actions can be defended. Some participants were more approving of the legal process, because it is effective in putting a stop to the bad situations.

3.7.4 Experiences from the North

Presenter: Robert Lauer, Chief, Financial Analysis and Royalties Administration, Indian and Northern Affairs Canada


Abandoned mines are, by definition, sites where the environmental liabilities exceed the value of the mineral resource remaining in the ground. These sites can be divided into two categories, those with no mineral resources of any value and those where there are mineral resources of value, but this value is less than the environmental liabilities attached to the site. This presentation looked at the experience of INAC in dealing with this latter category of abandoned mine, specifically with the Faro mine in Yukon and the Giant mine in Yellowknife, NWT.

When the Giant mine was abandoned to the Crown in December 1999, INAC entered into an agreement with Miramar Mining Corporation, which owned the Con mine in Yellowknife, whereby a subsidiary of Miramar purchased the Giant mine, reopened it and shipped the mined ore to the Con mill. The Crown limited Miramar's environmental liabilities with respect to the existing state of the mine to the assets of the Giant mine and Miramar agreed to make contributions to a reclamation trust on the basis of the profits from mining Giant. This trust would be used to offset the environmental liabilities falling to the Crown at the end of the mine life.

When the Faro mine in Yukon was put into receivership in 1998, INAC and the Yukon government entered into negotiations with Cominco Ltd. towards a similar type of arrangement. Under this proposed arrangement, the property would have been conveyed to a company owned by a trust. Care and maintenance would be managed by Cominco and funded by INAC. Cominco would have had the option to bring the property back into production at its expense. Profits would have been divided between Cominco, a reclamation fund, and the repayment of the funds advanced by governments during care and maintenance. Cominco would have been a contractor to the trust company and its liability would have been limited to its own operations. An agreement was not concluded because of diminishing metal price expectations and deteriorating conditions at the site.

These cases demonstrate that legal barriers to cooperation between the Crown and the private sector in this type of situation can be overcome using the existing legal mechanisms such as indemnification, corporate limited liability and insolvency legislation.

Top

Discussion

The question was asked whether companies also have to prepare closure plans only for their part of the mining, or an overall closure plan, and how the reclamation trust fits into these plans. Miramar posted a bond that would cover their environmental impact. The roles in terms of reclamation planning were negotiated: Miramar was responsible for planning surface reclamation, and the Crown planned the underground arsenic trioxide remediation. It was asked whether there has been any legal analysis of this type of arrangement to measure the impact with some of the trade agreements (i.e.: whether the agreement would be seen as a government subsidy). Justice lawyers have looked at the agreements in this context, and have concluded that such an arrangement would not be subject to any kind of trade action.

It was asked if there is any way to determine how much a mining company such as Miramar has actually contributed to the Reclamation Security Trust beyond the initial $455 million. Contributions were made in the order of tens of millions of dollars, mostly by the sale of equipment. Only the first year of the program has been audited thus far, and Miramar lost money in their first year of operating Giantco. Next year INAC will audit the second and third years of the agreement and will know more at that point how much will be contributed.

This type of agreement focuses on mines that, once you reduce the liabilities, you have a viable operation. It is assumed that the solution to mines with no remining potential is simply cash.


2The fee structure is based on the industry-endorsed Nevada tax (per-mine fee). Each mine is examined to determine the net proceeds, which are divided by gross proceeds. If ratio is higher (mine is more efficient) mine will end up paying higher percentage of net proceeds, up to 5%. Unprofitable mines pay nothing, and mines that have gross proceeds less than
$500 000 per year also pay nothing.

3Government can contract with a private party (i.e.: industry), who will also be covered by the Good Samaritan legislation. However, it does not cover the federal government doing work on federal land.

 
Top
Franšais

Last updated: 2003-09-26

© National Orphaned/Abandoned Mines Initiative (NOAMI) 2004