Environmental Protection Review Canada
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Review of Compliance Order - May 18, 2007

In the Matter of a Review of the Environmental Protection Compliance Order issued to Custom Environmental Services Ltd., Gavin Scott and Brian Winters

Lawrence W. Olesen, Q.C., Heather Smith, Bryan & Company LLP—Counsel for Custom Environment Services Ltd, Gavin Scott and Brian Winters

Doreen Mueller, Department of Justice—Counsel for the Minister of the Environment (Environment Canada)

Murray Rankin, Q.C., Heenan Blaikie LLP—Counsel to the Chief Review Officer (Margot Priest)

Background

Custom Environmental Services Limited (CESL) is an Alberta corporation that operates from premises in Edmonton. Brian Winters is the President and Director of CESL and Gavin Scott is the General Manager. For simplicity, the applicants will be referred to as "CESL," although Mr. Winters and Mr. Scott have also requested a review. CESL is a hazardous waste management facility that receives waste, including PCBs or materials that contain PCBs. The material is offloaded and unpackaged, with the PCBs being separated from other components where possible. The non-PCB materials are sent for recycling, while the PCBs are repackaged and kept on the premises until shipped to a final destination or another destination compatible with the destruction or storage of PCBs.

Although the terms of the licenses issued to CESL are not dispositive in this matter, CESL is licensed by the Province of Alberta under the Alberta Environmental Protection and Enforcement Act (Approval No. 134-03-00 dated August 1999, as amended) for the "construction, operation and reclamation of a hazardous waste storage and hazardous recyclable storage and processing facility." CESL has been issued identification numbers by the Province of Alberta for operation as a broker of hazardous wastes. CESL also holds a British Columbia license (LT0416) to transport hazardous wastes.

The Environmental Protection Compliance Order

The dispute between Environment Canada and CESL goes back a number of years, with correspondence being provided to the Chief Review Officer dating to 1995. In essence, the issue is whether CESL is required to comply with the provisions of the Storage of PCB Material Regulations issued under the Canadian Environmental Protection Act, 1999 (CEPA 1999). CESL takes the view that it is exempt from these Regulations by virtue of the operation of subsection 3(4) of the Regulations, which states: "These Regulations do not apply in the respect of the handling, offering for transport or transporting of PCB material governed by the Transportation of Dangerous Goods Act." After considerable discussion and after providing a formal opportunity to make representations as required by CEPA 1999 (s. 237), Environment Canada issued an Environmental Protection Compliance Order on December 8, 2006.

Specifically, the Order states that the enforcement officer has reasonable grounds to believe that sections 13 and 16 of the Regulations are being violated and that these violations constitute an offence under subsection 272(1) of CEPA 1999.

Section 13 reads:

Every owner or manager of a PCB storage site shall maintain, and have available for review by an enforcement officer, a record containing the following information in respect of all PCB equipment and containers of PCB material at the PCB storage site, including every container of PCB material that is found in another container:

(a) the name-plate description, the manufacturer’s serial number, any number for the PCB material that is registered with or provided to the Department of the Environment, the quantity of any PCB liquid, PCB solid or PCB substance contained in each piece of PCB equipment and in each container and the location of the PCB equipment and the containers at the PCB storage site;

(b) in the case of PCB material received at the PCB storage site,

  1. the address or location from which the PCB material was received,
  2. the name of the individual who received the PCB material at the site,
  3. the date of receipt,
  4. the name of the carrier, and
  5. the information set out in paragraph (a) that is applicable to the PCB material, and

(c) in the case of PCB material removed from the PCB storage site,

  1. the destination of the PCB material,
  2. the name of the individual who authorized the transport of the PCB material,
  3. the date of removal,
  4. the name of the carrier, and
  5. the information set out in paragraph (a) that is applicable to the PCB material.

Paragraph 16(b) reads:

The owner or manager of a PCB storage site shall submit in writing to the Minister, care of the Regional Director of Environmental Protection, Department of the Environment, located in the same province as the PCB storage site,

(b) where the PCB material is received at or removed from a PCB storage site, a copy of the information referred to in paragraphs 13(b) and (c)

  1. on January 1 and July 1 of each year, for capacitors contained less than .5 kg of PCBs, and
  2. within 30 days after the date of receipt or removal, for any other PCB material.

The Order directs that CESL, Mr. Scott and Mr Winters:

Submit on or by Wednesday 06 June 2007, the written report(s) that contains the information required by the Regulations in regards to the removal of PCB material from the facility that will reconcile the 3931 items on the enclosed PCB inventory.

The enclosed inventory is a list of items obtained from the files of Environment Canada that dates from as long ago as 2000. According to Environment Canada, CESL has from time to time provided reports to Environment Canada regarding shipments it has received of PCB material but not of shipments sent out—hence the size of the list.

The Review

CEPA 1999 provides in section 256 that any person to whom a Compliance Order has been directed may request a review by giving notice in writing to the Chief Review Officer within 30 days. CESL requested a review on January 2007. Although the Chief Review Officer was prepared to hear the matter in February 2007, scheduling difficulties delayed the commencement of the hearing until March 25, 2007. The hearing, presided over by the Chief Review Officer, was begun by teleconference and then adjourned until April 5, when the hearing continued in Edmonton. At the close of the oral proceedings, counsel were asked to provide written argument to the Chief Review Officer on May 10, 2007, with reply argument being submitted on May 14, 2007.

The Regulatory Regime Dealing With PCBs

There is an extensive regulatory regime to deal with PCBs, which have long been identified as being potentially hazardous to human and animal health. Commercial, manufacturing and processing uses of PCBs were restricted in Canada in 1977 with the introduction of the Chlorobiphenyls Regulations1. The effect of these regulations was to bring an end to the manufacture and import of equipment containing PCBs and limiting the refilling of existing equipment with fluids containing PCBs. Since 1977, emphasis has been placed on the elimination of existing PCBs and control of their transport, storage and destruction. The regulatory regime consists of CEPA 1999 and Regulations, the Transportation of Dangerous Goods Act and Regulations, the Canada-USA Agreement on the Transboundary Movement of Hazardous Wastes, and a number of Guidelines issued by the Canadian Council of Ministers of the Environment (CCME). Complementary legislation, particularly regarding transportation and treatment or disposal, exists at the provincial level. This regime is also backed by an international regime, which in particular deals with the import and export of hazardous materials, including PCBs.

The issues raised by this Environmental Protection Compliance Order relate to the inter-relationship of two key elements of this regime: the PCB Waste Storage Regulations issued pursuant to CEPA 1999 and the Transportation of Dangerous Goods Act and Regulations. Counsel for both parties provided ample caselaw to the effect that the two pieces of legislation are intended to operate together and can be viewed as complementary. In fact, this is clear from the legislative language of subsection 3(4). The issue is which legislation governs the facts of this particular situation.

The PCB Waste Storage Regulations were the result of the gaps in the legislative regime that were highlighted by the fire in St-Basile-le-Grand in 1988, where large quantities of PCBs were being stored on a site south of the city of Montreal. The new Regulations deal with the storage of all PCB materials (PCBs, equipment and other products) that contain a PCB concentration of 50 mg/kg or more. These Regulations ensure adequate controls for PCB storage by prescribing safety, labelling and reporting requirements. In 1996 the CCME agreed to a Canada-wide ban on the landfilling of wastes that contain a concentration of PCBs in excess of 50 mg/kg. This placed an emphasis on eliminating existing PCBs by destruction.

Meaning of "Storage"

The case turns on, among other matters, the meaning of "storage," and, in particular, how much time passes when PCBs are in the possession of CESL before it can be considered that CESL is "storing" those PCBs. Similarly, the meaning of the language of subsection 3(4) of the Regulations relating to "handling, offering for transport or transporting of PCB material" and the definition of "handling" in the Transportation of Dangerous Goods Act are key elements in the determination of this case; this will be dealt with below.

The Storage of PCB Material Regulations applies to specific quantities of PCBs that are "not being used daily." There was general agreement in the hearing that the threshold with respect to quantities was met by CESL and there is no disagreement that the Regulations would apply in that respect. Environment Canada takes the view that, given that the PCBs are on the premises longer than 24 hours and that the PCBs cannot be said to be in use "daily," the Regulations should thus apply. In written argument, Environment Canada stated that: "The Storage Regulations, having been precipitated by the fire at Basile-le-Grand in 1988, focus on continuing adequate control and safe storage of PCB material on various sites (land, buildings, containers, etc.) for any period of time exceeding 24 hours, for whatever purpose." (para. 17)

CESL takes the view that the PCBs are not being stored but are on the premises in the course of transportation. At the request of the Chief Review Officer, written argument addressed the meaning of "storage," and also the question of whether storing an item requires intent, that is, whether someone must intend to store an item before it can be considered to be in storage.

Counsel for CESL provided several dictionary definitions of "store," including "to keep or store for future use; to collect and keep in reserve…in a store or warehouse for temporary safekeeping." (Shorter Oxford English Dictionary, 3rd edition) Caselaw that was provided often looked to the meaning of "storage" and “store” in the context of gun control legislation under the Criminal Code, RSC 1985, c. C-46. Since application of the criminal law requires mens rea, the courts have found that storing requires an element of intent, at least with respect to gun control legislation. The Supreme Court in R. v. Carlos [2002] SCR 35 found that there is no requirement that the accused plan a long term or permanent storage (para. 3).

I do not find that the caselaw or arguments settle the issue of whether the PCBs on the CESL site are being stored in the context of the language of the PCB Material Storage Regulations, which is regulatory legislation. Certainly it would be rare for PCBs to arrive and leave the site within a 24 hour period—indeed, it may never happen. On the other hand, I do not find that there is an intent to keep the PCB materials on site for a significant period of time. In each case, there is an intent that the materials will be sent on to another facility for destruction or to be handled in some other fashion consistent with the requirements for the management of PCBs. Because there is a waiting time at the destruction site at Swan Hills, Alberta, and because small shipments are uneconomic, several weeks may pass before specific PCB material will be sent on for destruction. In fact, the very business of CESL is to collect material containing PCBs, to separate the PCBs from recyclable material where possible, and to send on the separated material for appropriate recycling while consolidating a shipment of PCBs for destruction. Most of the customers of CESL lack the facilities to do this or recognize the economic advantages of dealing with a company that has frequent transactions with the destruction facility.

The PCBs on site at the CESL premises are thus either waiting to be separated from recyclable material, are being separated, or are being collected into an appropriately sized shipment that will be sent to a destruction facility when the facility’s schedule allows the shipment to proceed. Thus, there is no intention to store as such except for the collection into an appropriate shipment. The PCB material is packed in such a way that it can be shipped. At other times, the PCB material is either waiting for separation or is in the process of being separated. The question might then arise, does this constitute being “in use” for the purposes of the Regulations? The language is certainly intended to deal with PCBs in transformers, ballasts, etc. that continue to be actively used for their original purposes within Canada. While the importation or production of products containing PCBs has been banned for many years, there is a phasing out period until these products reach the end of their useful lives. The language, however, refers to the PCBs, not to the products that contain the PCBs. Arguably, subjecting the PCBs to chemical and physical processes to separate them from the products is "using" the PCBs.

I will return to this argument later, but first wish to deal with the question of whether the PCB material is being "handled" or is material that is "in the course of transportation" as envisioned by the Transportation of Dangerous Goods Act and thus falls under the exemption set out in the PCB Waste Storage Regulations?

Handling in the Course of Transportation

The Transportation of Dangerous Goods Act (and its provincial counterparts) is also regulatory legislation aimed at protecting the public welfare. It too should be given a broad and purposive interpretation. There is no dispute about PCBs being “dangerous goods” within the meaning of the Act. Nor is there any dispute about whether CESL is compliant with the requirements of the Act or its provincial counterparts. Indeed, evidence was given about the extensive experience of CESL personnel with the requirements of the Act. Section 2 of the Act defines "handling":

"handling" means loading, unloading, packing or unpacking dangerous goods in a means of containment for the purposes of, in the course of or following transportation and includes storing them in the course of transportation.

Transport Canada has provided guidance regarding the meaning "behind the words" with respect to "handling." (Tab 35, Exhibit 1)

Loading provides the concept of into a means of containment or onto a means of transport, unloading provides the concept of from a means of containment or transport and packing or unpacking allows for all concepts.

The definition includes the phrase "includes storing them in the course of transportation". Cleared included would be the parking of a trailer unit overnight where the cargo is not disturbed in any fashion. In a situation where material is taken off one truck and placed in a warehouse to be picked up later by several delivery vans it begins to become more difficult to determine if this is storage in the course or transportation, or storage as a warehousing function. Reference to documentation might help, e.g., has it arrived at a consignee location or is it still en route? An extreme example is the containers of PCB contaminated material at St-Basile-le-Grand which, at the time of writing, have sat in those containers for three years. The material is packed and ready for transport. Is this storage in the course of transportation? …The department recognizes that with an estimated 27 million shipments annually of dangerous goods a determination of "storage in the course of transportation" must at times be made on a case-by-case basis.

Both counsel also referred to the case of R. v. Snap-On Tools of Canada Ltd. (2001) 44 CELR (NS) 301 (at 6), where Kastner J stated: "The legislation clearly contemplates that the transportation of dangerous goods is not a finite transaction completed when the shipper parcels the item and delivers it to the carrier. It is a continuum that commences at the packing of the item and continues through to the unpacking of the item at its destination." Evidence was received that the shipping documents that accompanied PCB materials identified CESL as the destination. After dealing with the materials as described above, CESL would create new shipping documents to accompany the PCBs to the destruction facility. These documents would reflect, among other matters, the consolidation of PCB materials that would take place after the separation from recyclable materials (which would also be shipped out to recycling centres with their own appropriate shipping documents, which are likely governed by ordinary commercial practice). Consolidation is a common feature of shipping and in most cases might well come within the concept of "handling." In most instances, however, there is more happening to the PCB-contaminated materials at the CESL site than consolidation—they are being subjected to various physical and chemical processes to separate the PCBs from the other material. This goes beyond the normal concept of "handling." In fact, many of the items that were received by CESL for treatment and consolidation would no longer be described in the same way when they leave as when they arrive. This may even be reflected in the shipping documents. The new shipping documents reflect more than consolidation to create an economically feasible load that will be shipped when the destruction site’s schedule permits.

The Interaction of the Regulations and the Transportation of Dangerous Goods Act

The ambit of both pieces of legislation is broad and regulatory legislation should be given a broad and purposive interpretation. This particularly true where public health and safety are at stake. It is clear that Parliament intended to ensure that public health and safety would be protected, ideally without any gaps. There is a further clear intention and that is to limit the existence of PCBs and ensure their removal and destruction at the earliest possible point. Indeed, the Government has explored more rapid elimination of PCBs than is currently required. This objective should be given prominent attention in the purposive interpretation of the legislation.

The regulatory scheme of the Storage of PCB Material Regulations focuses on storage and on, among other matters, the government’s obtaining detailed information about the materials being stored. The compliance requirements are both feasible and proportionate if "storage" is considered to contemplate a storage site of finite size and capacity where there is little in-and-out movement of PCB material. In other words, where material is being warehoused. This is the situation that existed at St-Basile-le-Grand. Since then, however, greater emphasis has been placed on the destruction rather than the warehousing of PCB material. This should be encouraged.

I find that neither the concept of storage under the Regulations nor the "handling in the course of transportation" under the Transportation of Dangerous Goods Act fits the activities of CESL unequivocally. The PCB material is being subject to various processes and is at all times intended for shipment for destruction within a relatively short period of time. Any delay in shipment that takes place is purely incidental to this overall purpose. There is no three-year delay, as with St.-Basile-le-Grand, but neither is the material shipped out within 24 hours. There is, however, a fairly constant inflow and outflow of material—indeed, CESL would find it impracticable to carry on its major function of processing hazardous material if it were to warehouse the material for any longer than necessary to make up an economically feasible load and ship to the destruction facility in accordance with the availability of that facility. I do not find that CESL stores PCB material in the sense of warehousing it for any appreciable period of time; the intent with respect to the PCB material on site is either to process it or to ship it for destruction (following processing).

On the other hand, while consolidation of incoming shipments for re-shipment within a reasonable time given all the circumstances (which in this case include the schedule of the destruction site) is likely within the concept of "handling" material in the course of transportation, the intervention of the physical and chemical separation process stretches the concept too far. Most of the PCB material received by CESL is subject to these processes, which interrupt the shipment in a significant fashion. Although I do not find the creation of new shipping documents to be dispositive, it is consistent with this conclusion. Where the PCB material has been separated at the CESL site, however, and are consolidated and awaiting shipment to a destruction facility, the Transportation of Hazardous Goods Act should apply.

While neither piece of legislation on its face directly addresses the full range of the activities at CESL, the legislation identifies the Regulations as the fall-back regime where the Transportation of Dangerous Goods Act does not apply. Since I do not believe that PCB materials are being "stored" within the meaning of the Regulations, I must address the question of whether they are "in use"—the three choices being "in use," in "the course of transportation" or "storage." While the PCB materials are not being put to their original industrial use, they are being actively subjected to a physical or chemical process of separation. Prior to the process, they are awaiting their turn, so to speak. Following the process, the materials are consolidated in anticipation of shipment—this part of the journey may indeed be considered to be packing and handling in the course of transport and hence covered by the Transportation of Dangerous Goods Act and exempted from the operation of the Regulations.

For these reasons, I find that the Environmental Protection Compliance Order issued on December 8, 2006 to the applicants should be cancelled. I therefore am not required to consider whether it would be impossible for the applicants to comply with the full intent of the Order due to the fire at their premises in May 2005 that destroyed most of their records. I do believe, however, that it would not have been reasonable to ask the applicants to request the Swan Hills destruction facility to search their records to try to re-create the applicant’s records that had been lost.

I hereby order the Environmental Protection Compliance Order dated December 8, 2006 issued to Custom Environmental Services Ltd, Gavin Scott and Brian Winters be cancelled.

[signed]
Margot Priest
Chief Review Officer
May 18, 2007


1. The following history of the regulatory treatment of PCBs has been taken from "Consultations on PCB Waste Export and Import Regulations," January 12, 2000, CEPA Environmental Registry