2.8 Contaminated Sites. Introduction

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1 Introduction Figure 1 The Department of Environment is responsible for protecting, conserving and enhancing the Province s environment including controlling and managing substances and activities that may pollute the environment. A key function of controlling and managing pollution is the management of contaminated sites which is the responsibility of the Waste Management Section of the Department s Pollution Prevention Division. A contaminated site is defined by the Canadian Council of Ministers of the Environment as a location at which soils, sediments, wastes, groundwater, and surface water are contaminated by substances that are above the benchmark criteria, as determined through scientific studies, and/or pose a threat to human health or the environment. As outlined in Figure 1, the Department of Environment is responsible for the administration of provisions of the Environment Act, the Environmental Assessment Act, the Waste Material Disposal Act and the Storage and Handling of Gasoline and Associated Products Regulations. Although legislative responsibility for these Acts and Regulations remain with the Department of Environment, for administration purposes, the Department of Government Services and Lands has entered into an agreement with the Department of Environment to act as the Department s agent in an inspection and investigative capacity for some functions relating to these Acts and Regulations. In addition, the Mining Act, administered by the Department of Mines and Energy, covers the operations of mines and mills in the Province. Legislation Legislation/Regulation Purpose Responsible Department Environment Act (Note 1) Prohibits the pollution of air, water and soil. Environment Environmental Assessment Act (Note 1) Waste Materials Disposal Act (Note 1) Storage and Handling of Gasoline and Associated Products Regulations Mining Act Requires environmental assessments to determine the environmental impact of an undertaking. Ensures there is adequate management of waste material disposal sites and that proper procedures are followed for the disposal of waste material. Regulates the storage and handling of gasoline and associated products. Provides provisions for planning, developing, operating and rehabilitating and closing mining operations. Environment Environment Environment Mines and Energy Note 1: In May 2002, these Acts were replaced by the Environmental Protection Act Auditor General of Newfoundland and Labrador 67

2 Scope and Objectives The objective of the review was to determine whether contaminated sites are adequately controlled and managed. In particular, we wanted to determine: whether there is a central inventory of all contaminated sites to facilitate the periodic reporting of the nature and extent of contaminated sites in the Province, the progress of remediation efforts, and estimated future remediation costs to be incurred by Government; and whether adequate resources have been allocated for the assessment and remediation of Government s contaminated sites based on priority. Conclusions There is no central inventory for contaminated sites that are the responsibility of the Province or those that are the responsibility of private owners. The lack of a central inventory makes it more difficult for Government to determine the nature and extent of contaminated sites in the Province, the extent of progress of remediation efforts, and estimated future remediation costs to be incurred by Government. As of the date of our audit, Government had identified future remediation costs of $37.4 million; however, with the exception of the former Hope Brook Gold Mine property, this estimate does not include any amount that may be required to rehabilitate an estimated 10 other sites which are anticipated to have remediation costs but for which no formal site assessments have been performed. In addition, Government officials could not provide estimates for the remediation of the former U.S. Military bases located at West Bay and Jerry s Nose, or for fuel storage tanks and various Governmentowned buildings throughout the Province. Responsibility for contaminated sites is spread among various departments and therefore, there is no coordinated budget submission for the assessment and remediation of contaminated sites. Each department determines which contaminated sites it is responsible for and assesses the priority of funding to manage these sites against funding requirements for all other programs within its mandate. As a result, it is more difficult for government to ensure consistency in establishing and ranking priorities for the assessment and remediation of contaminated sites. 68 Auditor General of Newfoundland and Labrador

3 Findings Central Inventory of Contaminated Sites Government does not maintain a central inventory of contaminated sites. This inventory should include information on site location, property owner, the level and detail of contamination, and for Government s contaminated sites, the inventory should also include remediation costs to date, and estimated future remediation costs. Such information would be beneficial for Government for a number of reasons including the following: As a land owner, Government should ensure that all of its contaminated sites, regardless of which Department is responsible for the site, are centrally listed to ensure that the sites posing the greatest risk to public health, safety and environment are among the first to be remediated. A central inventory would provide Government with the estimated costs associated with remediating contaminated sites that are the responsibility of Government and that will likely constitute a future expenditure of the Province. Contamination of Governmentowned land may inhibit any Government plan to transfer or sell land and related operations to third parties. Therefore, information on contaminated land is essential for Government to assess the implications on the transfer or sale. A central inventory of privately owned contaminated sites would provide a means for Government to monitor the progress of site remediation by these property owners. A central inventory of contaminated sites that are privately owned would indicate the number of sites, and the nature and extent of contamination. Although remediation costs are the responsibility of the owners or occupants of these properties, provisions under various environmental legislation require these property owners to remediate the sites to the satisfaction of the Minister. If the Minister is not satisfied with the progress of remediation, Government can incur remediation costs and collect these costs from the property owner. During our review, we contacted officials of the various departments that would be responsible for or involved with contaminated sites including the Department of Environment, Department of Government Services and Lands, Department of Mines and Energy, Department of Health and Community Services, Department of Education, Department of Auditor General of Newfoundland and Labrador 69

4 Municipal and Provincial Affairs, Department of Works, Services and Transportation, Department of Forest Resources and Agrifoods, and the Department of Fisheries andaquaculture. We requested each department to provide us with a listing of contaminated sites. The results of these requests were as follows: The Department of Health and Community Services, Department of Education, Department of Municipal and Provincial Affairs, Department of Forest Resources and Agrifoods, and the Department of Fisheries and Aquaculture indicated that they were unaware of any significant contaminated sites that were the responsibilities of their respective Departments. The Department of Works, Services and Transportation indicated that it is in the process of removing fuel tanks and completing assessments and remediation of Governmentowned buildings at various locations within the province. Officials of the Department of Mines and Energy indicated that the Department has compiled a database of 101 abandoned exploration and mining properties to date. Many of these are small preconfederation mine and exploration sites. In addition to the former Hope Brook Gold Mine Property, which is anticipated to cost an estimated $20.3 million to rehabilitate, Departmental officials are of the opinion that, based on site inspections and research, approximately 10 properties are anticipated to incur environmental remediation costs. The initial work carried out at these 10 sites has focused on eliminating public safety hazards, such as surface openings, and other rehabilitative measures. Officials indicated that this work will continue at all sites in the database. Further work, such as an environmental site assessment, may be required and this will be coordinated with the Department of Environment. As no formal site assessments have been completed for these 10 sites, Government has not determined the extent of remediation efforts or costs to rehabilitate these 10 sites. The Department of Government Services and Lands indicated that it acts as the agent for the Department of Environment in an inspection and investigative capacity and informs property owners of the remediation standards which must be achieved and that all planning and costs are the responsibility of the property owner. Officials at the Department of Government Services and Lands informed us that they are still using a paper filing system to document any privately owned contaminated sites that they are 70 Auditor General of Newfoundland and Labrador

5 aware of and thus, could not provide us with a listing of the sites as the compilation of such information would be an onerous task and would result in the reduction of the Department s inspection and investigative capability. The Department of Environment indicated that each property owner has responsibility for their own property and that private property owners are not required to report any contamination to Government unless it is as a result of a hydrocarbon spill. Although the Department indicated that management of information on known contaminated sites can best be managed using a data base, the Department only has paper records and to develop a central inventory of these sites would be extremely onerous. The Department did provide us with some information on significant contaminated sites for which it has direct responsibility which is presented in Figure 2. In summary, there is no central inventory for either contaminated sites that are the responsibility of the Province or those that are the responsibility of private owners. As a result, there is no means of consolidating and reporting this information on a periodic basis. Periodic reporting of information on the Province s contaminated sites including the nature and extent of these sites, estimated costs for Government s contaminated sites, remediation plans and progress to date, and the implications of deferring action, would provide necessary and useful information. Estimated Remediation Costs of Contaminated Sites Due to a lack of consolidated information on contaminated sites, in order to determine an estimate of the costs of significant contaminated sites that are the responsibility of Government, we used the information provided to us by the Department of Environment and the Department of Mines and Energy, and reviewed all departmental expenditures and budgets for the four years ended 31 March 1999 to 31 March 2002, departmental budget for the most recent year ending 31 March 2003, and the most recently available audited financial statements for all Government organizations. The results of our review are presented in Figure 2. This Figure indicates that, in addition to the removal of PCB s and old fuel storage tanks located throughout the Province, the Government has determined that there are a number of significant contaminated sites within the Province. The costs to remediate these sites and remove the PCB s and fuel tanks is estimated by Government to be $48.1 million, with approximately $12.1 million of these costs incurred at 31 March This estimate does not include any amount that may be required to rehabilitate the estimated 10 former Auditor General of Newfoundland and Labrador 71

6 abandoned mining properties identified by Government for which no formal site assessments have been performed. In addition, Government officials could not provide a firm estimate of the total costs required for the remediation of the former U.S. Military bases located at West Bay and Jerry s Nose. As well, Government officials could not provide a firm estimate of the remediation costs for fuel storage tanks and Governmentowned buildings throughout the Province since no formal assessments have been conducted. Figure 2 Government s Contaminated Sites Estimated Remediation Costs 31 March 2002 ($ Millions) Entity/Department Estimated Total Cost Accumulated Costs Incurred to 31 March 2002 Estimated Future Costs Newfoundland and Labrador Housing HarmonAirBase Octagon Pond and Surrounding Areas Buckmaster s Circle Environment Hopedale/Northwest Point West Bay and Jerry s Nose Removal of PCB s in various locations 2.4 Unknown Unknown 0.5 Mines and Energy Former Hope Brook Gold Mine Works, Services & Transportation Fuel storage tanks and various Governmentowned buildings Unknown 1.0 Unknown Marystown Shipyard Newfoundland Hardwoods Limited Removal of stored hazardous materials Total Source: Government Departments, Departmental Budgets, Financial Management System and Audited Financial Statements 72 Auditor General of Newfoundland and Labrador

7 FundingAllocation for Contaminated Sites Each department determines which contaminated sites it is responsible for and assesses the priority of funding to manage these sites, based on criteria including life safety, environmental protection and aesthetics, against funding requirements for all other programs within its mandate. Therefore, the budget which is prepared for submission to the Legislature includes funding for a variety of sites in a number of departments but is not based on a prioritization of all contaminated sites within the Province. As a result, it is more difficult for government to ensure consistency in establishing and ranking priorities for the assessment and remediation of contaminated sites. Figure 3 Figure 3 provides information on the approved budget and actual expenditures for contaminated sites for the last two fiscal years ended 31 March 2001 and 31 March 2002, the budget for the year ended 31 March 2003, and estimated future costs. Budget and Actual Expenditures 31 March ($000's) Entity/ Department Budget 2001 Actual Variance Budget 2002 Actual Variance 2003 Budget Estimated Future Costs, including 2003 Budget NLHC HarmonAirBase Octagon Pond Buckmaster s Circle ,000 6, Environment Hopedale/Northwest Point West Bay & Jerry s Nose Removal of PCBs Block funding (278) (42) (85) (346) ,000 Unknown 500 Mines & Energy Hope Brook Gold 4, (3,673) 7,500 1,400 (6,100) 10,000 17,700 WST Fuel Tanks and various Governmentowned buildings (32) Unknown Marystown Shipyard 3,600 3,500 (100) Newfoundland Hardwoods Total 5,608 2,347 (3,261) 12,600 6,234 (6,366) 11,118 37,400 Source: Government Departments, Departmental Budgets, Financial Management System and Audited Financial Statements Auditor General of Newfoundland and Labrador 73

8 A review of Figure 3 indicates that for the years ended 31 March 2001 and 31 March 2002, although remediation funding totalling $12 million was approved for the Department of Mines and Energy for the Hope Brook Site, only $2.2 million was spent because there were unforseen delays in the process of hiring a Project Manager to oversee the management of the rehabilitation work on behalf of the Province. Therefore, for these two years Government did not make the progress on remediation of this former mine site that it had planned. In addition, of the $11.1 million approved budget for the year ended 31 March 2003, $10.0 million relates to the Hope Brook site of which at 30 November 2002 $8.9 million has been spent. Government will have to provide significant funding in the future to remediate contaminated sites. As indicated in Figure 3, Government anticipates expenditures of $37.4 million in the foreseeable future to remediate sites which have already been identified as contaminated. Recommendation Government should establish a central inventory for contaminated sites which would facilitate the identification of future remediation costs. Department s Response The Department supports the establishment of a registry. However, this has not proceeded due to resource constraints. Once a database is established, it will be relatively easy to enter new sites and new information. However, the review and collating of paper files to update the registry with older information will be very time consuming. It has been recommended that budgeting would be easier if every contaminated site were listed and its cleanup costs and health and environment impacts known. The Department of Environment agrees with this. However, the difficulty is in getting to that point. Assessment costs can in some cases approach 50% of the total cost including cleanup. Consequently, Government, in order to be fully informed, could spend a lot of funds on assessment, sometimes on sites that in the end require no cleanup. The result would be many years of large expenditures with no environmental or health improvements. Rather, the Department of Environment officials prioritize based on available knowledge and experience and proceed with assessment on those sites determined to be of most concern. As a result, prioritizing may not be ideal but real cleanup progress is made much sooner. 74 Auditor General of Newfoundland and Labrador

9 I would also note that because of the nature of contaminated sites, work does not always proceed in a defined manner. Problems and the extent of contamination is never fully understood even with extensive testing. Consequently, Department of Environment staff always leave a contingency to deal with the unexpected. This is more responsible than being found in a position of having an immediate issue and no funding to address it. As a result, sometimes at the end of the year all the allocated funds may not have been spent. Since the end of the year is winter when outside work is impossible or very expensive, and site cleanup does not lend itself to doing little bits of work, this funding sometimes cannot be used for the intended purpose. In summary, the Department of Environment agrees that management of contaminated sites could be improved; however, this is a function of available resources. However we feel that the funding provided is being used prudently, responsibly and to the best benefit of the province. Auditor General of Newfoundland and Labrador 75

10 76 Auditor General of Newfoundland and Labrador