Auditor General: Ontario Must Manage its Contaminated Sites

On December 2, the Auditor General released her 2015 report. This year’s report included a chapter on management of contaminated sites. In all, there are almost 800 contaminated sites owned by Ontario, of which 288 have recorded liabilities, estimated at $1.792 billion dollars. Her report follows last year’s report of the Parliamentary Budget Officer who concluded the federal government has underestimated the cost of cleaning up contaminated sites under its jurisdiction by at least $2 billion.

The Auditor’s report has an excellent overview of the regulatory environment related to contaminated sites, and made seven key observations and recommendations:

1. The government should designate a central unit or ministry group with overall responsibility for managing contaminated sites to ensure sites are identified, assessed, and liabilities determined; as part of this, the Inter-ministerial Contaminated Sites Assistant Deputy Ministers’ Steering Committee should be reconvened until such a team is established; the government responded that it will accept this recommendation;
2. A centralized database inventory of all sites should be developed and the public should have access to this information; the government responded that it has the intent to implement an enterprise-wide central inventory of contaminated sites in 2016; also, it is currently disclosing financial information on contaminated sites in accordance with Public Sector Accounting Standards;
3. Stakeholder ministries should finalize the risk prioritization model and ensure that ministries use it to assess all remediation funding proposals; approval of the tool and adoption by ministries is expected in the current fiscal period;
4. To ensure ministries are sufficiently resourced to remediate high-risk sites, stakeholder ministries should co-ordinate the development of a long-term plan for remediating the sites, and this plan should include both an annual and long-term funding strategy; and they should periodically report to the Treasury Board on their progress; the government responded that with an enterprise-wide inventory and prioritization system in place, they will be able to better manage risk prioritization and funding strategy decisions;
5. The government must ensure that its liability estimate is reasonably and consistently calculated – the Office of the Provincial Controller Division should provide formal guidance to ministries on how to account for and measure these liabilities; the government responded that it will undertake to work with ministries in 2015/2016 and to work with the Internal Audit Division and Office of the Auditor General to enhance accounting guidance;
6. Improve documentation regarding site liability estimates and periodically review sites classified as low risk to ensure that the classification remains valid; the government responded that it will continue to refine and improve upon the quality of its documentation and will regularly review the information, which will serve as input into both risk management and the Public Accounts process;
7. All liability estimates should be reviewed annually, and once established, the central unit or ministry group should provide the ministries with guidance for carrying out the annual review; the government agreed it will include a requirement for ministries to regularly update site information, noting “consideration will be given by the centralized oversight body and the ministries to the appropriate triggers and/or timelines to initiate more in-depth site assessments or liability estimates such as changes in technology, site conditions, or changes in environmental standards”;

Lastly, the Auditor noted that the proper management of financial assurance through the Ministry of Northern Development and Mines and the Ministry of Environment and Climate Change is important: a poorly run program means taxpayers ultimately have to bear the cost of remediating these sites. These programs require financial assurance from mines or private waste facilities (or otherwise, in accordance with relevant legislation and the Financial Assurance Guideline).

The Auditor’s report this year on Mines and Minerals noted weaknesses in the financial security program for mine operators, particularly inadequate financial security for future mine remediation costs. This can create significant taxpayer contingent liability for short-falls related to mining operations closures.

The management of contaminated sites is a significant problem and issue for both private actors and the government. We applaud the Auditor’s report, and shortly will be providing our report on a recent important decision of the Ontario Court of Appeal regarding contaminated land liability by polluting neighbours.

(Note: This article was originally published on www.envirolaw.com)