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1995 May Report of the Auditor General of Canada

Assistant Auditor General: Robert R. Lalonde
Responsible Auditors: Wayne Cluskey and Cameron Young

Main Points

2.2 Comprehensive and consistent information on the number and characteristics of contaminated sites in Canada is not available. This information is essential for estimating clean-up costs and planning action on high-risk sites.

2.3 As of 31 March 1995, only 11 of 48 high-risk contaminated sites identified for remediation under the National Contaminated Sites Remediation Program had been fully remediated under federal-provincial agreements. In 1995-96, Environment Canada plans to continue the clean-up of up to 13 of the remaining 37 sites, which are in various stages of remediation. Several sites still pose risks to human health and the environment.

2.4 The Department has not proposed amendments to the Canadian Environmental Protection Act (1988) or developed regulations under the Act that could help ensure adequate control of environmental risks associated with federal facilities and lands, including the clean-up of federal contaminated sites. However, it has provided an analysis of the issues and options available to the House of Commons Standing Committee on Environment and Sustainable Development, which is currently reviewing the Act.

2.5 The Department did not meet a requirement to report to Cabinet by late 1992 on the clean-up of federal sites and the adequacy of funds for this purpose. Preliminary studies indicate that the clean-up will probably cost at least $2 billion, but better information is needed on the number and characteristics of sites. In addition, none of the potential liabilities have been disclosed in the Notes to the Financial Statements and in the Notes to the Annual Financial Report of the Government of Canada.

2.6 Furthermore, the Department has not provided Parliament with adequate information through its Part IIIs of the Estimates on actual costs incurred by the National Contaminated Sites Remediation Program, on Program results, on significant constraints to achievement of Program objectives, or on Program funds used for other purposes. However, the Department has made a significant contribution to annual reports on the Program by the Canadian Council of Ministers of the Environment.

2.7 The use of polychlorinated biphenyls (PCBs) and the storage and destruction of federal PCB wastes are controlled under the regulations of the Canadian Environmental Protection Act to minimize risks to human health and the environment. In 1990, the Green Plan called for destruction of all federal PCBs by 1996. However, the federal PCB Destruction Program, which had been in effect since 1988, ended on 31 March 1995. Moreover, lack of public approval is delaying the process of siting destruction facilities, and equipment containing PCBs remains in service. Therefore, the risks of accidents and the costs of storage will continue into 1996 and beyond.

2.8 On 31 March 1995, Environment Canada terminated its leadership role in the management of PCB destruction, without devising a plan to guide federal departments to further consolidate PCB wastes, reduce their volume and develop action plans for their destruction. This could seriously impede the government's ability to ensure safe and cost-effective storage and timely destruction of federal PCB wastes.

Introduction

Background

2.11 Federal and provincial roles in waste management . The provincial and municipal governments have the prime responsibility for the collection, treatment and disposal or release of all kinds of waste, except for radioactive wastes. Because of their powers over land-use planning, except on federal lands, the provinces control the siting and operation of storage and transfer facilities for hazardous materials and disposal facilities for wastes. Provincial powers extend to the clean-up of contaminated sites and the approval of remediated sites for industrial, agricultural or housing purposes.

2.12 The federal government has responsibility for federal lands, and its departments and agencies are responsible for the reduction and management of their own wastes, including radioactive wastes, and the clean-up of their own contaminated sites. The federal Code of Environmental Stewardship (1991) provides general guidelines to departments and agencies for "putting the federal house in order".

2.13 Public attitudes. In 1993, the Canadian Council of Ministers of the Environment (CCME), the major intergovernmental forum for discussion and joint action on environmental issues, found that when rating environmental problems, Canadians rank hazardous waste second only to ozone depletion. However, in spite of the priority given to hazardous waste, the proposed solutions to waste disposal problems have not always been acceptable to the public.

2.14 Impacts of waste generation. The cost of collecting and disposing of waste in Canada has risen steadily over the past decade and is now estimated by Environment Canada to exceed $4.5 billion annually. This cost has been offset, to some extent, by reducing the kinds and amounts of waste produced and sent for disposal. The resulting economic and environmental benefits include reductions in spending on clean-up of contaminated sites, more efficient use of energy and raw materials, improved competitiveness and fewer health and environmental problems associated with smog, the ozone layer and global warming.

2.15 The legacy of the production and mishandling of wastes haunts present and future generations. Current landfills are filling up, and siting new ones is becoming increasingly difficult and costly. Contaminated sites resulting from past disposal practices and accidental spills and leaks exist in many communities across Canada. However, no one knows the number of sites, the extent and severity of the contamination, or the total liability for clean-up costs. Now and for many decades to come, we will need to closely manage our wastes and lands contaminated by wastes because of the danger to our health and the environment.

Audit Scope and Approach

2.17 Our audit did not address the management of the wastes of individual departments or their progress in assessing and cleaning up their own contaminated sites. The Office will address federal government-wide waste management and contaminated site clean-up efforts in a future audit.

Audit Objectives

Audit Criteria

• clearly defined roles and responsibilities for administering the programs relating to contaminated site remediation, PCB treatment and destruction, and ocean disposal;
• adequate priorities, plans, procedures and information to fulfil its roles and responsibilities and to support its expenditures on the programs; and
• procedures in place to measure progress on the attainment of the program objectives and to report to Cabinet and Parliament on the costs and results of expenditures and activities against plans, on any constraints to the achievement of the program objectives and on any outstanding liabilities associated with these programs.

Observations and Recommendations

The Clean-up of Contaminated Sites

The need for a national remediation program was recognized

2.21 In April 1989, the Council reached an agreement-in-principle to establish the $250 million federal-provincial National Contaminated Sites Remediation Program to clean up high-risk orphan sites. This five-year Program, which began in 1989-90, was funded equally by the two levels of government. The objectives of the Program are to ensure the clean-up of all contaminated land sites in Canada, to promote the development of the Canadian environmental technology industry and to clean up federal sites. The federal half of Program funding is supplemented by an extra $25 million for cleaning up federal contaminated sites.

Management strategies to clean up Canadian contaminated sites were developed

2.23 Implementing bilateral agreements. Between November 1990 and September 1993, bilateral agreements to govern funding for the clean-up of high-risk orphan sites and related technology development were signed by the federal government, all provinces and both territories. The agreements define a "high-risk" contaminated site as a location that Canada and the provinces agree poses an existing or imminent threat to human health or the environment. When the Department accepts a clean-up project on the basis of information provided by the province and its own criteria, it negotiates a workplan, reviews progress claims and reimburses the province for 50 percent of eligible costs incurred.

2.24 Establishing eligibility of proposed clean-up projects . The Canadian Council of Ministers of the Environment established Interim Environmental Quality Criteria and the National Classification System (NCS) for the assessment and clean-up of sites. The Criteria set the standards against which the extent of contamination is defined and provide the benchmarks for clean-up goals. These Criteria were gathered from existing provincial criteria and are considered "interim" in that they have not yet been scientifically validated. The NCS is used to assess the risks to the environment and human health and to set priorities for further action, such as characterization, risk assessment or clean-up. The NCS considers the nature of the contaminants, the means or pathways by which the contaminants could enter the food chain and the extent to which humans and sensitive environments are exposed to and affected by contamination. The use of the National Classification System was mandatory for funding under the National Contaminated Sites Remediation Program.

2.25 Defining the need for new clean-up technologies . When the National Contaminated Sites Remediation Program was approved, there was a shortage of cost-effective technologies to treat and remove contaminants from soils and sediments. The objectives of the Development and Demonstration of Site Remediation Technology (DESRT) component of the Program are to promote and accelerate the development and commercialization of innovative technologies that deal with the characterization, assessment, remediation and monitoring of contaminated sites.

2.26 Under DESRT, projects submitted on an unsolicited basis by the private sector for joint federal-provincial review and approval were supposed to have the potential for wide application at contaminated sites across Canada or relate to a serious problem at one site. Therefore, in March 1992, the Department conducted a study of the needs for remediation technologies as a basis for setting priorities for project approval. The results provided a preliminary screening tool for the suitability of proposed projects.

2.27 Getting the federal house in order. The federal sites component of the National Contaminated Sites Remediation Program (NCSRP) was approved to clean up sites for which the federal government was the owner or responsible polluter. The primary focus of the component was to assess federal sites using the National Classification System. This approach was designed to encourage departments to assess sites in a consistent manner. Assessment costs were shared between the departments involved and the NCSRP. Departments were expected to fully fund the clean-up of their own contaminated sites. However, the costs of cleaning up federal orphan sites were shared with Environment Canada under the NCSRP. Environment Canada defines a federal orphan site as a site where a party other than a federal department or agency is responsible for contamination of federal land, but is unknown, unwilling or financially unable to carry out the remediation. Crown corporations were not eligible for funding under the NCSRP.

An adequate legislative framework is not yet in place

2.29 In January 1993, the Department analyzed the provincial and federal legislative frameworks against five criteria established in 1991 by the Canadian Council of Ministers of the Environment and forwarded the results to the provinces for their action. Subsequently, in March 1993, a CCME multistakeholder Liability Task Group proposed 13 principles for effective legislation governing the remediation of contaminated sites, in which the "polluter pays" principle was paramount. The Department indicates that provincial legislative frameworks for the clean-up of contaminated sites are currently being developed or, where already in place, are in the process of being strengthened to reflect these principles. However, the Department has not done an analysis since January 1993 on which to base this claim.

2.30 The Canadian Environmental Protection Act provides authority to undertake emergency measures to address any danger to human health or the environment resulting from the release of toxic substances. However, this authority applies to parties who owned substances at or before the time of their initial release into the environment. Also, the list of toxic substances under the Act is not exhaustive and may not include the types of contaminants found at existing contaminated sites. Two departmental studies indicate that it is unclear whether or not the Act can be applied to ensure clean-up of contamination resulting from long-term leaching or historical releases of contaminants. As well, one of the studies pointed out deficiencies in the Act's provisions to recover government expenditures on the clean-up of sites contaminated by other parties.

2.31 Legislative framework for controlling contamination on federal lands. In spite of the intent of the federal Code of Environmental Stewardship to put the federal house in order, there still are no regulations under the Act that the Department could apply to ensure the clean-up of federal contaminated sites. The Department says that it is planning to issue CEPA guidelines in the near future on the management of federal underground and aboveground fuel storage tanks, which are common sources of contamination. As guidelines, however, may not legally enforceable. Therefore, the Department's legislative framework for dealing with federal lands is not comparable to the frameworks that the provinces use for dealing with non-federal lands. The Department has provided an analysis of the Act and options for changes to the House of Commons Standing Committee on Environment and Sustainable Development. The Committee is currently reviewing the Act and will be reporting later in the year.

The nature and extent of the contaminated site problem has not been fully defined

2.33 In March 1992, the Department studied the nature of contamination in Canada to determine requirements for new remediation technologies. One of the conclusions of this study was that existing inventories of contaminated sites probably under-represented the incidents of subsurface contamination from active and inactive industrial activities and municipal landfills that received industrial waste.

2.34 In December 1993, the Department developed summary information on all known contaminated sites for the CCME Liability Task Group, which was reviewing the need for an orphan site fund beyond the scheduled end of the NCSRP. The information provided showed that, as of that date, there were approximately 4,500 contaminated sites in Canada, one third of which had already been cleaned up. However, this information is generally recognized as being incomplete.

2.35 Estimates of clean-up costs for Canada's contaminated sites vary widely. Estimates reported in the media of total clean-up costs for Canada range between $5 billion and $20 billion. However, the basis of these estimates was not provided. The national cost of remediating contamination caused by leaking underground storage tanks alone was estimated in a study done for the Department in January 1994 to be as high as $5.9 billion. This liability was based on an estimated 40,000 leaking underground storage tanks in Canada. However, two factors are missing that would be essential in any estimate of the total liability for cleaning up Canada's contaminated sites - a complete and consistent national inventory and an assessment of contaminated sites.

2.36 The inventory of contaminated federal sites is not complete. The Department has developed an inventory of federal contaminated sites from existing records of spills and data supplied by government departments. As at 31 January 1995, the departmental inventory listed approximately 1,200 potentially contaminated federal sites. This inventory, however, is incomplete. For example, one of the Department's regions identified 25 percent more federal sites with potential sources of contamination than were listed for this region in the federal inventory.

2.37 The Department should develop adequate information, including an inventory, on all national and federal contaminated sites so that related health and environmental risks and clean-up costs can be determined and reported to Parliament.

2.38 Costs for clean-up of federal contaminated sites could be significant. In June 1993, the Department undertook a survey of 53 departments, agencies and Crown corporations as the basis for a planned report to Cabinet on the adequacy of the fund to clean up federal sites. Based on the 46 responses received, the study estimated that there were 2,000 to 3,000 potentially contaminated federal sites, of which 500 to 1,000 would require remediation. The projected cost of assessing and remediating these sites was a minimum of $1 billion. However, this estimate did not include figures for the Department of National Defence (DND) lands, Indian Reserve lands or vacant Crown lands in the Yukon and Northwest Territories. Our 1994 Report noted that the estimated cost of cleaning up DND's contaminated sites alone and ensuring compliance with environmental authorities was over $700 million.

2.39 It is unlikely that leaking underground storage tanks were included in Environment Canada's June 1993 survey. The 1994 study on storage tanks referred to earlier estimated that clean-up of this source of contamination on federal lands alone could be approximately $294 million. This was based on an estimated 2,000 leaking federal tanks and an average clean-up cost of $147,000 per site. The total potential clean-up cost for federal contaminated sites therefore is probably at least $2 billion. None of this potential liability has been disclosed in the Notes to the Financial Statements and in the Notes to the Annual Financial Report of the Government of Canada.

2.40 The Government of Canada should disclose in the Notes to the Financial Statements and in the Notes to the Annual Financial Report those potential federal liabilities related to contaminated site clean-up that it can determine and reasonably estimate.

Treasury Board Secretariat's response: The government is aware that generally accepted accounting principles, as issued by the Canadian Institute of Chartered Accountants, call for recognizing environmental and site restoration costs and liabilities in financial statements. While some forecasts of costs may be available within the Government of Canada for the clean-up of specific items such as radioactive waste and site contamination, this is not the case for other environmental liabilities that the government is committed to address. The cost to the government of all these commitments is not determinable at this time, and until reasonable estimates of these costs can be made, the government should not change its accounting policies to record partial costs. The determination of these costs, which are subject to and dependent upon evolving public policy, legislation and regulation, is currently under study. Where feasible, the note disclosure in the government's summary financial statement for fiscal year 1994-1995 will be enhanced to include those potential liabilities that can be determined and reasonably estimated.

There has been some progress in dealing with the contaminated site problem

2.42 Total clean-up costs are unclear. The Department had estimated that 11 of the 48 orphan site remediation projects under way would be completed, according to the approved work plans, by 31 March 1995. The Department also made plans to continue working on up to another 13 of the remaining projects over the following year under its sunsetting strategy, as outlined in 2.60. However, this does not mean that the 24 sites will be fully remediated by 31 March 1996 or that there will not be ongoing costs for monitoring and maintaining the sites after this date. Work on the remaining 24 orphan sites will depend on provincial funding outside the National Contaminated Sites Remediation Program. Three of these remaining sites are large, and each will likely cost tens of millions of dollars to clean up.

2.43 Liability for clean-up will continue. Remediation strategies that contain the wastes on-site to prevent off-site migration of contaminants were used on several of the orphan sites. While risks to health and impacts to the environment may be reduced, containment strategies require long-term institutional controls, such as restricted access, ongoing treatment, maintenance and monitoring. In fact, the sites may eventually have to be remediated again as containment structures deteriorate over time. The costs of these controls will likely be borne by future generations. In addition, waste from some orphan sites was deposited in hazardous waste management facilities. These facilities already require long-term institutional controls and will eventually have to be properly decommissioned. It is evident that much work will be necessary in the years to come to complete the clean-up of known high-risk orphan sites in Canada.

2.44 The Department should raise with the Canadian Council of Ministers of the Environment the need for a national action plan to complete the clean-up of all remaining high-risk orphan sites in Canada as soon as possible.

2.45 Activity on potentially contaminated federal sites. The Department approved funding under the Program for the assessment of 326 federal sites held by seven government departments and one federal agency. As at 31 January 1995, about 90 percent of the assessments had been completed. These assessments show that approximately half of the sites require immediate action or are likely to require remedial action in the near future. Other departments are responsible for providing further funding for any clean-up of these sites. Environment Canada's inventory indicates that only 326 of approximately 1,200 identified potential federal contaminated sites had been assessed by the end of the Program.

2.46 Up to 31 March 1995 the Department had also approved funding for the remediation of 18 federal orphan sites. Six of the 18 sites will likely require further work. However, there is no longer any funding for federal sites through the National Contaminated Sites Remediation Program.

2.47 Remediation technology development. By 1 September 1994, 45 projects had been approved under the Development and Demonstration of Site Remediation Technology component of the Program at a total federal cost of approximately $11 million. Approximately 90 percent of these projects deal with soil remediation, a major concern at contaminated sites. Approved projects relate to the field-scale demonstration of technologies, evaluation of the performance of technologies, and the development of methodologies and databases. This approach is consistent with program priorities and identified needs. DESRT-funded technologies were tested at 6 orphan sites. One of these technologies was subsequently used in the remediation process for some of the contamination. The other 5 technologies either showed inconclusive results or had not yet advanced to a commercial stage of development. ( See photographs )

2.48 As of 31 January 1995, 14 projects were complete and technical reports were produced. Another 11 projects were to be completed by 31 March 1995. The remaining 20 projects will continue until 31 March 1997, but only 3 of these will require federal funding beyond 31 March 1995. The Department plans to assess technical reports arising from the remaining projects when they become available, and as resources permit. We saw no evidence that the Department plans to assess the impact that DESRT projects have had on the remediation industry or the impact it will have on the government's recently announced Strategy for the Canadian Environmental Industry.

2.49 The Department should evaluate the Development and Demonstration of Site Remediation Technology program as soon as possible and should incorporate the results into the government's Strategy for the Canadian Environmental Industry.

2.50 Development of scientific tools. The Department considers the development of a number of scientific tools as an important output of the NCSRP. Since 1991, development of a total of 12 scientific reference documents, methodologies and guidelines has been initiated by the Department to fill a requirement for these tools. One of the tools developed is an ecological risk assessment methodology for contaminated soils. To date, this methodology has been applied to validate half of the clean-up criteria listed in the Interim Environmental Quality Criteria mentioned in paragraph 2.24. The Department anticipates that these new clean-up criteria will be published in the 1995-96 fiscal year and will provide objective standards that can be applied to the clean-up of contaminated sites. This may help resolve a long-standing issue - "How clean is clean?"

2.51 The Department should assess the scientific tools developed by the National Contaminated Sites Remediation Program and modify them as required to encourage their broad application.

Measuring and reporting results could be improved

2.53 Use of program funds. To date, provinces have been slow to take up federal funds allocated to orphan sites. We were advised that this could be attributed partly to the nature of clean-up activities and partly to the lack of provincial funds to match the federal funds. Considerable time and effort may be required to identify and establish the source of contamination for each site, obtain the necessary environmental orders, perform the site assessments and determine a remediation strategy. For example, assessment and tests began in 1986 at Ville Mercier, Quebec, an orphan site with extensive groundwater contamination, and a remediation strategy is only now under public review. Remediation of a site can also be a long process. In the case of another orphan site involving groundwater contamination, a PCB waste transfer facility in Smithville, Ontario, remediation has been going on since 1985. ( See photographs )

2.54 Parliament not fully informed on reallocation of NCSRP funds. The Department has to date spent approximately $86.3 million, including approximately $12 million for program administration, out of the total $145.6 million approved for its portion of the National Contaminated Sites Remediation Program. The Department plans to spend $8 million in 1995-96. Of the remaining $51.3 million approximately: $13.7 million was used to offset general budget cuts in other programs; $14 million lapsed; and $23.6 million was used in 1994-95 to fund other programs, including Phase II of the Great Lakes Action Plan and the North American Waterfowl Management Program. Parliament has not been fully informed about this reallocation of NCSRP funds.

2.55 The Department should inform Parliament through its Part III of the Estimates of significant changes to the funding levels of major programs.

2.56 Potential for cost recovery. The bilateral agreements with the provinces provide for the recovery of NCSRP clean-up costs from the current or new owners of remediated sites. The provinces are responsible for ensuring that a mechanism is in place to recover clean-up costs. The Department has not estimated any amounts potentially recoverable.

2.57 The Department should ensure that federal expenditures on contaminated site clean-ups will be recovered where applicable.

2.58 Measuring and reporting progress. The Department has developed a methodology to measure the extent to which orphan sites have been cleaned up. The Department plans to use this methodology, after appropriate testing, to conduct "post-project" assessments on completed remediation projects in the 1995-96 fiscal year. These assessments will include an analysis of federal liability.

2.59 Cabinet and Parliament were not fully informed about federal liability for clean-up costs. When the National Contaminated Sites Remediation Program was approved in 1989, Cabinet required that Environment Canada, in collaboration with other participating government departments, report at the end of three years on the progress and the adequacy of funds for cleaning up federal sites. The 1993 study (see paragraph 2.37) indicated that there is significant federal liability for clean-up. However, the report to Cabinet was not produced. We have seen no evidence that either Cabinet or Parliament was ever fully apprised of the extent of federal liability for clean-up or the level of funding required.

The National Contaminated Sites Remediation Program is sunsetting, but the need for clean-up continues

2.61 Clean-up liability has not been resolved. There are few legal precedents covering the determination of liability for contamination of lands. Furthermore, despite some progress in strengthening provincial legislative frameworks as referred to in paragraph 2.29, evidence indicates that the issue of environmental liability for clean-up is far from resolved. For example, lenders are seeking amendments to the Bankruptcy and Insolvency Act that would provide protection for trustees and receivers from liability for costs of environmental clean-up. We were advised by the Department that there were significant differences of opinion among stakeholders on some of the CCME's 13 principles for effective contaminated site remediation legislation. One such difference concerns the principle of "joint and several liability", which allows governments to pursue any one of the parties that have responsibility for a contaminated site for the cost of clean-up. An alternative involves the concept of an "orphan share", which refers to a portion of the liability for contamination that has become the responsibility of governments. Acceptance of the orphan share concept would necessitate an ongoing orphan fund to pay for clean-up costs that can not be assigned to a responsible party. We understand that the CCME has discontinued discussions with industry, banking and environmental stakeholders on this topic. It seems unlikely, therefore, that national consensus on joint and several liability for clean-up will be obtained in the near future. The question "Who pays?" is a complex societal issue that is far from being resolved.

2.62 The Department should continue its analysis of provincial government and private sector activity in the identification and clean-up of contaminated sites as a basis for determining the adequacy of the national legislative framework.

2.63 The need for further action on federal sites. No plan was created for a cost-shared program for federal sites beyond 31 March 1995, because the $25 million originally allocated for this component was expended on federal site assessments and clean-ups, the development of scientific tools and program administration. We noted that Environment Canada plans to continue to offer its technical expertise and advice on contaminated sites to other government departments after the National Contaminated Sites Remediation Program ends. As noted earlier, a number of federal sites remain to be assessed and remediated. Currently, Treasury Board policy requires departments to assess sites only when they are subject to sale, transfer or change in use. This means that the most highly contaminated federal sites may not be cleaned up. Such an omission would impact negatively the government's promise in the Green Plan to lead by example.

2.64 The Department should consider the need for an action plan to complete the assessment and remediation of all federal contaminated sites.

The Storage and Destruction of PCBs

Policy and strategic direction are in place

2.66 After the fire in Saint-Basile-le-Grand, Quebec, in 1988, the federal government introduced an Interim Order under the new Canadian Environmental Protection Act (CEPA), which replaced the Environmental Contaminants Act , to control the storage of PCB wastes. At that time, the government announced its federal PCB Destruction Program. This program included the Department of National Defence's expenditure of $6 million for a mobile incinerator at Goose Bay, Labrador, to destroy its PCBs and $15 million for Environment Canada to locate, construct and operate a second mobile incinerator unit on a federal site. Furthermore, under the Program, Environment Canada was to co-ordinate the destruction of low-level PCB-contaminated material in the federal inventory within one year.

2.67 In October 1989, the CCME announced a joint federal-provincial framework that involved phasing out the use of PCBs; shifting the emphasis from storage to destruction; establishing destruction sites based on community acceptance; and destroying PCBs within Canadian borders. Furthermore, the Minister of Environment accepted the recommendation of the Canadian Environmental Advisory Council in 1989 that the siting process be designed around the concerns of the public. In addition, the Green Plan (1990) confirmed the federal government's PCB Destruction Program commitment with a 1996 deadline for the complete destruction of federal PCB wastes.

2.68 Environment Canada's role in the management of PCBs. The Department provides the federal voice at CCME and federal leadership in the development and implementation of federal-provincial initiatives to regulate the use of PCBs and the storage and destruction of PCB wastes. The Department also spearheads the federal part of the national initiative by co-ordinating the activities of federal owners of PCBs and providing advice at both headquarters and regional levels on the storage, transportation and treatment of PCB wastes.

The PCB Management Program encompasses an inventory, a legislative framework and a timetable for destruction

2.70 At the national level, annual PCB destruction has been significant. Between 1988 and 1993, over 78,400 tonnes were incinerated or treated. A large volume of PCB waste, however, remains in storage, and more will be added as equipment containing PCBs, such as transformers, comes out of service. This means that PCB-related health and environmental risks remain. ( See photographs )

2.71 The regulatory framework. The Canadian Environmental Protection Act authorizes the Department to regulate all aspects of the life cycle of toxic substances, including PCBs. This is accomplished for PCBs through the Federal Mobile PCB Treatment and Destruction Regulations (1990); PCB Waste Export Regulations (1990); Chlorobiphenyl (PCBs in use) Regulations (1991); and Storage of PCB Material Regulations (1992). New regulations that have been proposed to replace the Chlorobiphenyl Regulations in 1995 will require reporting on in-use equipment containing PCBs and phasing out by 1997 of this equipment in sensitive locations, such as schools and hospitals. National enforcement statistics for the period 1991-92 to 1994-95 are shown in Exhibit 2.3 .

2.72 The Department has arrangements with provinces to ensure a uniform national approach to the enforcement of PCB regulations. For example, it has agreements with Nova Scotia and Newfoundland to co-operate on the administration of PCB storage regulations. However, the Department has not yet signed any agreements with provinces, as provided for in CEPA, that would recognize the equivalency of federal and provincial PCB regulations. Until such equivalency agreements are finalized, the potential exists for federal-provincial overlap in both regulation and enforcement.

The PCB Destruction Program has stalled

2.74 Progress on destruction of PCB wastes. There are two approved methods for the destruction of PCB wastes - thermal (high-temperature incineration) for high concentrations of PCBs (over 40 percent) and chemical (decontamination) for lower PCB concentrations. The incineration of 33,618 tonnes of high-level PCB wastes in Canada has occurred to date at four sites: the only permanent incineration facility at Swan Hills, Alberta; the temporary DND facility at Goose Bay, Labrador; the Ontario government's temporary facility at Smithville, Ontario; and a temporary facility in Baie-Comeau, Quebec. Since 1983, low-level PCBs have been and continue to be successfully treated across Canada. ( See photographs )

2.75 The Federal PCB Destruction Program. The Department controls the $15 million funding for the Federal PCB Destruction Program and allocates funds to its regions to carry out site selection processes for mobile incinerators. These funds were to be used for site selection, environmental assessment, public information and consultation, and commissioning, operation and decommissioning of additional mobile destruction sites in Canada. Over $3.6 million of these funds, allocated as shown in Exhibit 2.4 and Exhibit 2.5 , were used by the regions for the site selection process. Efforts were focussed in Atlantic Canada, Quebec and Ontario. However, only in the latter province does the process still have some likelihood of success. In view of this, the Department advised us that it is now considering the use of the facility at Swan Hills, Alberta for the destruction of federal high-level PCB wastes.

2.76 Atlantic Canada. One site in Nova Scotia and one in New Brunswick were selected, and both were subjected to an environmental assessment. The Independent Review Committee conducted public hearings in its review of the assessment. The Committee concluded that while both sites were acceptable on technical grounds, they were unacceptable to the communities affected. As a result, the site selection process has been terminated.

2.77 Quebec. The aggregation of federal and provincial wastes was proposed to make a destruction facility more cost-effective. Three sites were originally selected by the Province - Saint-Basile-le-Grand, Baie-Comeau and Shawinigan - for the destruction of federal and provincial PCB wastes. Attention was ultimately focussed on the Shawinigan location. However, public hearings concluded that although the site was technically suitable, it was not acceptable to the public. Quebec has stated its intention to proceed on its own to destroy some of its inventory, beginning in Baie-Comeau, at a projected cost of $30 million.

2.78 London, Ontario. Two candidate sites in London were identified. In the final phase of the selection process, the host communities for each site will be asked to indicate their support for the site(s) in a public vote this spring.

The PCB Destruction Program is sunsetting without a comprehensive plan for the future

2.80 Progress is being made. Even if the siting process has been unsuccessful, it has yielded positive results. The PCB Destruction Program provided for an interdepartmental focus for action on PCBs beyond the enforcement of CEPA regulations, that is, to co-ordinate federal activities, exchange information and promote action. The Department's regional offices promoted site selection activities, encouraged federal action to consolidate PCB wastes into larger storage sites and promoted their volume reduction. As a result, the number of federal sites has decreased from 593 in 1991 to the present 495. While consolidation of wastes is occurring, even more could be done. For example, the portion of federal PCB wastes (97 tonnes) that are presently stored in 237 small sites, each requiring full compliance with the PCB storage regulations, could be further concentrated.

2.81 Studies of destruction options (for example, use of the Swan Hills permanent facility or the possible use of facilities in the United States) and associated costs and risk assessments of transportation of PCB wastes have been made by the regional offices. Nevertheless, there is a real danger that this momentum will be lost without the Department's continued co-ordination of the federal effort.

2.82 The Department should continue to assist federal departments to treat low-level PCB contaminated mineral oils; consolidate PCB wastes into larger storage sites that can be better managed; and reduce the volume of waste to be destroyed by removing PCBs and recycling usable components.

Next steps required are an evaluation of achievements and provision for continued leadership

2.84 In view of continuing public concern about the siting of PCB destruction facilities, the Department should report to Parliament on progress made to date on PCB destruction, providing a realistic assessment of the risks associated with long-term storage and the costs and time needed to destroy the total federal inventory.

2.85 Management of PCBs is costl y. Continuing federal storage, consolidation and destruction activities will require significant financial commitments by departments. While we have been able to gather only limited data on these costs ( Exhibit 2.6 ), the Department's studies have given some indication of their magnitude. For example, to transport the 1,326 tonnes of federal PCB waste in Quebec (approximately 23 percent of the federal inventory) to the facility at Swan Hills, Alberta and destroy it would cost approximately $4 million.

2.86 The Department should continue its leadership and co-ordinating role in assisting departments to dispose of their PCB wastes in a safe and cost-effective manner.

The Management of Ocean Disposal

2.88 Between 1983 and 1993, Environment Canada issued an average of 176 permits annually for disposal at approved ocean sites ( Exhibit 2.7 ). Types of material approved for disposal over that period were dredged material, fish waste, excavation material and construction rubble, vessels and scrap metal. However, the number of permits issued for fish waste is declining, likely as a result of a moratorium on cod and capelin fishing in Atlantic Canada. National enforcement statistics for the period 1991-92 to 1994-95 are shown in Exhibit 2.3 .

2.89 In our 1990 Report, we stated our satisfaction with the Department's 1989 evaluation of its ocean disposal program and concurred with the criticism in the evaluation report of the scientific support to the program. In 1991, under the Green Plan, the Department responded by developing the six-year $10 million Ocean Dumping Control Action Plan to improve regulations, develop new disposal site monitoring guidelines and reduce persistent plastics in our coastal waters. The implementation of this Action Plan is on schedule.

Conclusion

To date, the Department has not conducted an analysis of the potential consequences to present and future generations of terminating the National Contaminated Sites Remediation Program and the PCB Destruction Program. Such information would be important to Parliament in assessing any request for funds for dealing with the legacy of hazardous wastes.

Department's response: Both the National Contaminated Sites Remediation and PCB Destruction programs were partnership initiatives aimed at stimulating action by others, namely, the provinces, other federal government departments, and industry. There were many successes (e.g. in providing a catalyst to the remediation industry sector) and significant contributions that will continue to have a positive effect on these issues: development of inventories, scientific tools, technology and the legislative frameworks in most provinces. In carrying out these programs, we have learned that it is difficult to set initial targets when the results depend on actions taken through federal-provincial partnerships and when public consultation and social values are essential elements in choosing a site for PCB destruction facilities.

Although these programs have been sunsetted, the Department will continue to play an active role in encouraging action and monitoring progress, as resources permit. The Department will reallocate $7.8 million from its 1995-96 A-Base to assist the provinces in completing the remediation of selected high-priority outstanding orphan sites. Work will continue, on a priority basis, with other government departments to transfer PCBs and destroy them at the Swan Hills Facility in Alberta.

Audit Team

Janet Baltes
Mike Brosseau
Bruce Carroll
David Harris
Jacques Leduc
Gisèle Petit-Clerc
Geoffrey Robins
Asif Siddiqui
Gregory Springate
Mary-Louise Sutherland

For further information, please contact Wayne Cluskey or Cameron Young, the responsible auditors.