Remediation Certificates – Creating New Opportunities For Redeveloping Property With an Environmental “Past”?

August 26, 2010

In Alberta, the absence of express brownfields  redevelopment legislation has meant that some owners of contaminated property concerned with unpredictable and on-going liability have resorted to simply walking away, leaving abandoned sites and literal brown fields. However, with the introduction of a new regulatory approach to such sites, there may be an increased opportunity to pursue more economical and socially responsible options.  Provincial regulations are trending towards more favourable liability conditions, many municipalities are newly dedicated to finding solutions and the increasing availability of insurance products specifically tailored to minimize risk exposure and expand financing options, are creating a more positive climate for the remediation and redevelopment of Alberta’s contaminated properties.
The purpose of Alberta’s recently adopted Remediation Certificate Program (“Program”) is to provide liability clarity and closure when remediation efforts clean up contaminated property.  The Program requires an applicant to provide information necessary to assess the extent of contamination and the resulting clean up, including a map of the contaminated area, past and future land use, contamination characteristics, and remediation efforts.  Upon review of the required information, if Alberta Environment is satisfied as to the clean up conducted, a remediation certificate for the area and substance(s) cleaned up is issued.  The legal effect of the certificate is that on-going liability for the past contamination ceases and the certificate prevents Alberta Environment from pursuing future regulatory action related to the past contamination  when more stringent clean up standards come into force after the remediation.
In addition to changes at the Provincial level, some municipalities are also evaluating various incentives to encourage brownfield development.  The non-financial incentives include streamlining the approval process for entitlements and building permits. Given the increasing complexity and extended timelines that are often associated with municipal approvals, the promise of a shortened, more streamlined process can be a significant incentive.  Some municipalities are also willing to permit interim uses of contaminated lands, often with a view to ensuring that efforts to remediate the contamination continue during the interim use.
The financial incentives being offered by some municipalities include partnering with developers to apply for access to the Federation of Canadian Municipalities (“FCM”) Green Municipal Funds, providing grants for environmental assessments, waiving permit fees, and providing tax credits or deferrals.  If these incentives are insufficient, municipalities also have the option of “dropping the carrot and picking up a stick” by altering property tax valuations to make abandoning contaminated property more expensive. 

Whatever form the incentive(s) take, select municipalities in Alberta appear to be more willing than ever to minimize or eliminate the financial gap between developing greenfields and brownfields.  However, as a single approach has not yet been adopted, the flexibility and willingness of a specific municipality to encourage development of brownfield in any given case remains an open question.  What is becoming clear is that a wider range of options are becoming increasingly available.
Although the regulatory and financial environment is becoming more favourable and opportunities are being created as a result, landowners and developers also need to be aware of some of the limitations on redevelopment that still remain.  Perhaps the biggest limitation to the Program is that the certificate does not encompass the entire property.  Remember, the certificate is issued for, and limited to, the substance(s) and area detailed in the application.  If contamination extends beyond the bounds of the area or additional substances are identified, the certificate does not provide liability relief.  Suffice it to say, the effectiveness of the certificate depends directly on the accuracy and thoroughness of the environmental site assessment and reporting that supports the application for the certificate.
In addition to Provincial and municipal efforts to promote development of contaminated property, a variety of insurance products are also becoming available to minimize exposure.  Some of the insurance products available include capping of remediation costs and protection from future liability for a period of up to ten years. Greater availability and affordability of these insurance products add to the ability of landowners to undertake redevelopment, while better managing the on-going risk of future liability posed by these sites.

In conclusion, it is hoped that the Remediation Certificate Program becomes an effective tool for managing and reducing liability associated with a site’s environmental “past”. We are mindful that the Program and municipal initiatives are still in their infancy. With only a few certificates issued in Alberta to date, there are still many lessons yet to be learned about the efficiency and efficacy of the Program. Nonetheless, it does appear that the confluence of recent developments with Provincial regulatory tools, municipal incentives, and insurance products make it an opportune time to consider whether remediation and redevelopment of contaminated property is becoming a more appealing option than was previously the case. 


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