Over the past 10 years, Ontario's Ministry of the Environment (MOE) has embarked on a campaign to overhaul brownfield legislation. The "key challenge" according to the MOE, is "to encourage the revitalization of brownfield properties and surrounding communities while protecting health and the environment."
The ministry attempted to accomplish that objective last year by proposing a number of amendments to Ontario Regulation 153/04 that, if adopted, will have a substantial impact on those involved in brownfield remediation projects and, quite frankly, just about anyone else involved in land development in the Province.
Brownfields are abandoned or underused industrial or commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. While the expression can be applied to both land and buildings, the object for both is the same: remediate and reclaim the property so that it can be put to better use.
Not surprisingly, the remediation of brownfields is an increasingly important subject, since brownfields can impede revitalization and intensification efforts in urban areas. Unfortunately, while everyone agrees that remediation of brownfields is desirable, the MOE's proposed amendments will not only result in more sites being considered contaminated, but will also make the remediation of those sites costly and difficult.
Central to the MOE's proposed amendments are "updates" to the generic standards that have been employed in Ontario since 1996. The MOE's generic standards essentially set out the measure of what is deemed acceptable in terms of soil, sediment and groundwater contamination. While the changes will result in the lowering of some groundwater and soil measurements, the generic standards will become more stringent for the most commonly encountered toxins. That change will mean that owners and developers will have to reassess their holdings to ensure that previously compliant properties are not suddenly considered off side.
Just as problematic for a developer is whether the "updates" will result in fewer properties being able to "fit" within the generic standards. Previously in Ontario, a site that met the generic standards would be considered suitably remediated and available for use. If the generic standards are modified to be so stringent that its criteria are largely unattainable, developers seeking to remediate their sites will have little choice but to fall back on a risk assessment (RA) process. Traditionally, however, the RA method has been viewed as an expensive, time-consuming and uncertain means of achieving remediated status.
To address this concern, the MOE proposes to introduce a modified generic risk assessment. Under that model, the MOE would enable a "qualified person for risk assessment" to modify some of the variables used in generic standards such as some of the soil and geophysical characteristics specific to an individual site. In addition, the proposed amendments would enable owners and developers to employ simple risk management measures designed by the MOE for use within the modified generic risk assessment.
In exchange for the less onerous risk management measures, a developer would have to obtain a Certificate of Property Use (CPU) from the MOE that would be registered on title. Thereafter, the property would be restricted to those uses which are considered consistent with the risk management measures employed in the remediation.
While the modified generic risk assessment might not be available in all situations, it does appear to strike some balance between the need to make the generic standards attainable and making remediation too costly. Some caution, however, that the modified risk assessment process will be of little use to the majority of brownfield sites. In those cases, critics charge that owners will be faced with unappealing choice of submitting to a comprehensive risk assessment or electing not to remediate the property at all.
Furthermore, even where the modified generic risk assessment process might be considered, if a CPU restricting the property's use is to be registered against title, the value of that property could be adversely affected.
The result is that development of brownfields will likely become more expensive, while the use of the lands may become more restricted, which factors will have a direct effect on developers' ability to obtain financing for the development. Lenders will need to be satisfied that the risk assessment results are acceptable to them, and will also need to be satisfied that the restrictions on use will have no adverse effect on the intended development, or on the value of the property (which of course directly impacts on the lender's security).
In view of these concerns, the MOE has yet to announce an implementation date for the proposed amendments and is currently seeking expressions of interest from brownfield property developers to participate in a joint study of the effect of the amendments. The results of that study may impact the final draft of the proposed amendments.
Christy Allen is a lawyer with Nelligan O'Brien Payne LLP in Ottawa and is a member of its environmental law practice group. This article was also co-authored by Joseph Griffiths.
[This article is reprinted with permission and first appeared in the June 2009 issue of The Lawyers Weekly.]