Canada: Amendments To Ontario's Record Of Site Condition Regulation O. Reg. 153/04

The long anticipated amendments to Ontario Regulation 153/04 were quietly filed on December 29, 2009. Ontario Regulation 511/09 was published on E-Laws on December 30, 2009 and will be published in the Ontario Gazette on January 16, 2010.

The comment period for the draft amendments to O. Reg. 153/04 ended on February 10, 2009. Since that date the Ontario Ministry of the Environment has been evaluating the numerous comments received. While there was much speculation on the final form of the amendments, and the date upon which the amendments were to come into effect, the filing of the amendments in on December 29, 2009 comes as somewhat of a surprise.

The amendments are both administrative and substantive. While a limited number of the administrative amendments to O. Reg. 153/04 are now in force as a result of the filing of O. Reg. 511/09, the balance of the amendments come into force and effect on three separate dates, being July 1, 2010, July 1, 2011 or the later of July 1, 2011 and the date the further amendments to the Environmental Protection Act related to Records of Site Condition come into force. The anticipated date of coming into force of these amendments to the Act is July 1, 2011. For the purposes of this summary, we assume that the majority of the amendments to O. Reg. 1253/04 will come into force on July 1, 2011.

The amendments which are now in force are largely administrative. For example, Section 21 of O. Reg. 153/04 has been revoked and the substituted language clarifies that in the case where a Record of Site Condition (RSC) has been filed on the Registry in relation to a property certifying that the property meets the applicable stratified site condition standards for prescribed contaminants, the person who owns or occupies or has charge, management or control of the property shall ensure that the surface and subsurface soil continue to meet those standards. Section 48 of O. Reg. 153/04 has been amended to clarify that if two or more samples of soil or sediment are taken from sampling points at the same sampling location at the same depth on a RSC property, compositing of the samples to be analysed for volatile contaminants will not be permitted for the purpose of establishing an average of the sampling results in order to meet the applicable standards. Section 49 has also been amended to clarify that for purpose of meeting the applicable potable groundwater site condition standards for petroleum hydrocarbons, a qualified person must determine "that there is no indication of objectionable petroleum hydrocarbon odour and taste associated with the ground water.".

The new transition Section 21.1 has been added to Part V, Records of Site Condition. This transition section comes into force on July 1, 2010.

Provided that the owner of a property in respect of which a RSC is being submitted has filed the appropriate form of notice before January 1, 2011, there is a three year transition period for the filing of a RSC for the property where a risk assessment has previously been submitted, or where the owner certifies that action has been commenced on the RSC property to reduce the concentration of the relevant contaminants to the current Soil, Ground Water and Sediment Standards for Use Under Part XV.1 of the Environmental Protection Act, March 9, 2004. Provided that a notice of receipt has been received from the MOE in these circumstances prior to January 1, 2013, the current Standards or the site specific standards established by the approved risk assessment will apply.

For the purposes of this summary, it is assumed that the balance of the proposed amendments will come into force on July 1, 2011 although, as noted above a substantial number of amendments are to come into force on the later of July 1, 2011 and the date upon which certain sections of the Schedules to the Budget Measures and Interim Appropriations Act, 2007 come into force. The relevant sections of the Schedules to the Budget Measures and Interim Appropriations Act, 2007 contain amendments to the Environmental Protection Act and the Ontario Water Resources Act pertaining to Records of Site Condition.

The amendments which will come into force on July 1, 2011 include the following:

• the Soil, Ground Water and Sediment Standards for Use Under Part XV.1 of the Environmental Protection Act, July 27, 2009 will become the relevant Standards, replacing the current Standards;
• the requirements for a Phase I Environmental Site Assessment as specified in Schedule D to O. Reg. 511/09 will come into force. The requirements include the requirement determine whether or not to view records for properties located within 250 metres from the boundary of the Phase I property. Schedule D specifies the records to be reviewed, who is to be interviewed for the purpose of obtaining information regarding the Phase I property, the questions to be asked during the interviews, the details of the site reconnaissance be conducted and the form of the evaluation to be completed by the qualified person. Further O. Reg. 511/09 specifies the mandatory requirements for Phase I ESA reports;
• for Phase I properties upon which the specified Potentially Contaminating Activities identified in Table 2 to Schedule D are or were conducted, the Phase I property becomes "an enhanced investigation property" and the Phase I is to include information on those previous uses. The "potentially contaminating activities" include many manufacturing or industrial operations. Included are obvious candidates such as dry cleaning (where chemical are used), fuel storage and dispensing, but also included are such activities a photographic processing which have a limited potential for the discharge of contaminants of concern;
• significant changes will be made to Phase II Environmental Site Assessments. A Phase II Environmental Site Assessment will be required to be conducted if during the Phase I ESA of the property a "potentially contaminating activity" is identified as being conducted or having been conducted on the property; and
• the requirements for a Phase II ESA are set out in Schedule E. The responsibilities of the qualified person with respect the conducting of the Phase II are specified. Key changes to the Phase II ESA include the requirement to use the conceptual site model developed in accordance with the Phase I ESA for the purpose of determining the scope of the investigation. Specific requirements are set out for conducting the site investigation, including the requirement that any contamination exceeding the applicable site condition standard be delineated laterally and vertically. Direction is provided as to sampling locations and sampling points, collecting, handling and analysing samples, selecting samples for analysis, measuring groundwater levels and determining direction of groundwater flow and documentation of the field investigation. The qualified person will be required to prepare a Phase II conceptual site model of the Phase II property. The Regulation stipulates what is to be included in the conceptual site model. Similar to the Phase I ESA, the Regulation also establishes mandatory requirements for Phase II Environmental Site Assessment Reports. In previous consultations, the Ministry of the Environment acknowledged the substantial increase is cost associated with the requirements for the enhanced Phase I and II Environmental Site Assessments. While it is acknowledged that there is value in the additional work that is required, the increased cost is something that may give rise to significant concerns of the part of owners of Phase I and Phase II properties.

Other changes which will come into force on July 1, 2011 include:

• clarification as to constitutes "commercial use", "community use", "industrial use", "parkland use" and "residential use" in order to provide for consistency with the Building Code;
• "Owner" has been redefined so as to include a beneficial owner of property;
• a conflict of interest section has been introduced to prohibit qualified persons from conducting a Phase I or II ESA or completing the RSC on property if the qualified person or that person's employer holds a direct or indirect interest;
• the requirement to retain and store reports relating to the Phase II ESA for a period of seven years will come into effect;
• the definition of "area of natural significance" has been amended to expand the scope of properties included and the site condition standards for environmentally sensitive areas will apply to properties within an area of natural significance, adjacent to an area of natural significance or where the property lies within 30 metres of area of natural significance. Previously Ontario Regulation 153/04 provided only that these standards apply where the property is adjacent to a water body or is within 30 metres of a water body; and
• the use of the Modified Generic Risk Assessment Model (Tier 2 Model) will be permitted, possibly facilitating the filing of a RSC where a risk assessment approach is being employed.

In summary, there is an 18 month period within which there will be the opportunity to become familiar with the requirements for a Phase I and II Environmental Site Assessments, the use of the Tier 2 Model and during which it is possible to assess the impact of the new Standards. Although the new Standards may not apply for the purpose of filing a RSC on a property it can be expected that notwithstanding the fact that the new Standards do not come into effect until July 1, 2011, the new Standards will be used in commercial transactions well in advance of that date.

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