Municipalities can become liable for costs associated with brownfield sites under several circumstances.
Municipality caused the contamination
A municipality may be liable for contamination that has resulted from its own past activities. For example, municipal public works or transportation yards are often contaminated due to the nature of work done on these sites. Municipalities should follow the province’s Contaminated Sites Policy Framework to assess options for the management of contaminated land they own or operate. In addition, municipalities are expected to account for and report on any financial liability associated with the cost of remediating a contaminated site, in accordance with the Public Sector Accounting Board (PSAB) Standard on Liability for Contaminated Sites
Municipality acquired contaminated land
The Environmental Protection and Enhancement Act (EPEA), section 107(1)(c)(vii), provides an exemption from liability to municipalities for lands acquired through tax forfeiture. In addition, Section 1(tt)(v) of EPEA, excludes municipalities from being the "person responsible" both in cases of tax forfeiture and where "parcel of land [is] acquired by it by decision or gift of an environmental reserve, municipal reserve, school reserve, road, utility lot or right of way under Part 17 of the Municipal Government Act, unless after the date on which the land is acquired the municipality releases on that parcel a new or additional substance into the environment that may cause, is causing or has caused an adverse effect or aggravates the adverse effect of the release of a substance into the environment on that parcel." Nevertheless, municipalities should consult with a legal expert before accepting land that may be contaminated.
When a municipality acts as a land developer -- such as for industrial parks, affordable housing or municipal buildings -- it can incur potential future liability related to the subsequent purchaser and occupants of sites if the remediation measures the municipality undertook were subsequently deemed to be inadequate or if standards change.
Municipalities are potentially liable for any negligent approvals for land use amendments, development permits and subdivisions. Impacted parties may cite that the municipality should have completed its due diligence prior to granting approvals.
Where ongoing risk management measures are imposed as a condition of planning development approvals, the municipality may incur third party civil liability for failure to inspect and endorse risk management measures in the future.
How does liability impact the private sector?
The liability associated with brownfield sites is also of concern to the private sector.
Owners of brownfield sites are often hesitant to invest in remediating the site and redeveloping it themselves as they may have due to the risk of remediation being required if standards change in the future. This is the case even if, after remediating the site, it is sold to a third party as there is currently no way to close or transfer liability for an entire site.
At the same time, developers are concerned that they will be responsible for any costs relating to contamination on a site, even though they did not have any role in causing that contamination. Even if a developer is willing to take this risk themselves, these uncertainties may pose challenges in obtaining the financial capital needed to redevelop a brownfield site. Lenders and investors, like banks, trust companies and pension funds, require a certain level of assurance that a brownfield project will succeed financially.
How can liability be addressed?
Brownfield Working Group recommendations
Solutions to address many of the issues around liability were identified in the 2012 report of the Brownfield Working Group, made up of municipal associations, industry groups and the province.
The working group’s priority recommendation was to expand Alberta’s Remediation Certificate program in line with what other provinces have done.
In 2009 the province began to issue remediation certificates, which provide regulatory liability closure for completed remediation projects; this protects a contaminated area against a future change in remediation standards related to a specific land use, i.e. residential, commercial, industrial, agricultural. In other words, a brownfield property that is being developed into a residential property will not have to meet changing standards for residential properties but would have to meet different standards if it is being turned into an industrial warehouse.
On June 1, 2018, the Government of Alberta passed the Remediation Certificate Amendment Regulation, which came into force Jan 1, 2019. One of the changes implemented in this amendment was to adopt one of the Working Group recommendations and provide the option for a Site-Based Remediation Certificate. Previously, a Remediation Certificate was only issued for the portion of a site where remediation took place in relation to a specific spill event or historical contamination. A site-based certificate closes off regulatory liability for the whole site and permits owners and developers to ascertain and quantify their liability with respect to an entire piece of property, which in turn, supports brownfield redevelopment. AUMA, as a member of the Working Group, is pleased that this change has been implemented. For more details, see the section What is AUMA doing to address brownfields?
No Further Action Certificates
Another recommendation of the Brownfield Working Group was for the province to establish a mechanism for No Further Action Certificates (NFAC) to be issued for sites where a report of site condition has been made to the province demonstrating that regulatory standards have been met and the site does not require remediation. NFACs provide liability closure based on current site conditions and standards for a specific land use (e.g. residential versus industrial).
Whereas the recommended improvements to the remediation certificate program require changes to an existing regulation, NFAC would require creation of a new regulation under EPEA.
Under the new Remediation Regulation for 2019, the province created a document called a Tier 2 Compliance Letter. To obtain any form of remediation certificate, some remediation must have actually been completed. The Tier 2 compliance letter was developed to account for site-specific conditions where human health and the environment are still protected, but no remediation would be required. However, the Tier 2 compliance letter is solely a creation of the Remediation Regulation and is not grounded in section 117 of the enabling statute, EPEA, which provides certain statutory guarantees. As a result, an area that is the subject of a Tier 2 compliance letter does not enjoy the same protections and further regulatory action could be required at a later date.
Municipal liability closure
The Brownfield Working Group also identified that further review of municipal liability was warranted. There are some general provisions in the Municipal Government Act related to the extent of a municipality’s civil liability when exercising municipal powers, and there are specific provisions in EPEA related to the extent of a municipality’s regulatory liability as a “person responsible.” However, these provisions do not specifically address a municipality’s liability for the issuance of land use, subdivision and development approvals for brownfield redevelopment. Therefore, the working group recommended that consideration should be given to extending liability exemptions in a manner parallel to liability exemption provisions for provincial regulators with respect to dealing with contamination issues.
While changes to provincial legislation may take years, there are actions municipalities can take today to limit their liability. Municipal development plans can require the assessment of land prior to approving an area structure plan, plan of subdivision or issuing a development permit, in order to demonstrate environmental due diligence.
For example, the City of Edmonton’s Municipal Development Plan requires that an environmental site assessment be provided with any development applications associated with structure plans, rezoning, and subdivision and development permits in order to ensure the site is suitable for the intended use. To support this process, the City has published an Environmental Site Assessment Guidebook.