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Attention to Brownfield Issues

Many members of the pulp and paper sector are seeking a clean exit from some of their surplus properties. It can be a way to generate some cash for refurbishing other operations, and also a way to limit legal liabilities that may be implied by the properties’ historic use. In the case of properties that involve soil, groundwater, sediments or surface water that has been impacted, cleaning up may be a prerequisite to making that clean exit.

Properties where the brownfield issues have been dealt with, or are in process, provide a much greater comfort level to prospective purchasers than do those where there may be unpleasant underground surprises. Pulp and paper properties generally involve three main types of issues when it comes to demolition or decommissioning:

The first category involves issues that are common to just about all properties. One of these issues is asbestos. Used enthusiastically for decades in a wide range of building materials ranging from floor tiles to roofing tiles until its adverse health effects were discovered, most buildings constructed before about 1980 contain some asbestos. Other common issues can involve the mercury found in lighting fixtures, and possibly PCBs used in electrical transformers.

A second category of issues stems from the industrial nature of pulp and paper plants, and can involve spilled diesel fuel, bunker oil and other hydrocarbons. In times when there was less awareness of environmental issues, some vehicle maintenance yards were not as careful as they could have been about disposing of these liquids properly.

The third category involves issues related specifically to pulp and paper. This includes wood-chip and other wood-waste disposal sites, where tannins and lignins may have seeped into the groundwater. The mills’ locations beside watercourses may mean that the impacts find their way into surface water. Some pulp and paper plant sites have lagoons of waste materials that must be managed. While liquor from Kraft mills is now well-managed through recycling, this was not always the practice, and liquor containing chemicals that can potentially impact the environment may have been released.

Promising developments

To help understand the improvements in remediation technology and how members of the sector can use them to clean up their property portfolios, here is some background on the topic.

In the 1970s and 1980s, there were few rules or regulations regarding brownfield development. However in 1978, Love Canal (a residential suburb near Niagara Falls, NY, part of which was found to have been built on top of a chemical waste dump) pushed the issue into the headlines — and into the law courts. The political and regulatory fallout from Love Canal was felt well beyond the United States and even beyond the continent. This impact included initiatives from the Canadian Council of Ministers of the Environment, which led to federal criteria for Canada.

By the mid-1990s, many bankers could tell horror stories about providing financing for property deals where the properties turned out to be contaminated. The bank ended up owning the contaminated properties, along with the liability and bills for remediation costs. Soon, many banks refused to provide financing for properties where there was even a hint of possible contamination.

Over the past decade, a number of trends have made financial institutions more willing to look at contaminated properties as potentially good investments with real, but manageable risks. These include:

* better remediation technologies (more reliable, less expensive, and faster acting technologies have opened up new possibilities, as discussed later in this article);

* regulatory and legal developments have put more certainty in place regarding who is liable for remediation (and to what extent);

* new municipal and provincial planning limit suburban sprawl, while planning policies encourage densification and infill development through the promotion of tax forgiveness or grants;

* social trends (e.g. more acceptance of a downtown lifestyle for homeowners wanting to avoid a grueling daily commute means urban properties are increasingly desirable as residential zones);

* supply and demand consideration. In many cities, non-brownfield properties have already been developed, so the demand for prime urban locations means the weeds growing on the other side of the fence are looking a little greener.

Recently, headlines about brownfield development have centered on large-scale, government-sponsored projects such as Pacific Place in Vancouver, the Toronto waterfront, the LeBreton Flats in Ottawa, and the Lachine Canal area of Montreal.

However, private-sector properties are also receiving significant attention, and this has the potential to include pulp and paper plants.

While pulp and paper plants have their own unique remediation challenges as described above, they do have one shining advantage: because of the operations need for water, they are generally located along waterfronts. Today’s push for “lifestyle” development means that many individuals, including retirees, will pay a premium for a waterfront location, making pulp and paper plant sites potentially attractive to developers.

While many of these properties are located in relatively remote areas, some are on prime urban locations with good potential for residential, commercial or other industrial development. For companies that have well-located properties in their portfolio, their sale can help finance the exit from properties in less-desirable locations.

Remediation options

Particularly over the past decade, remediation technologies have progressed from the laboratory, to bench test, to pilot test, to full-scale commercialization. What was experimental a decade ago is now seen as not only reliable, but also as cost-competitive with the option of simply trucking the contaminated soil to a landfill. Recent developments include:

Better dig-and-dump methodologies

Data from boreholes and test pits can help determine the extent of contamination, including how deep it extends. In some cases, the contamination can be dealt with during the course of normal construction — such as in the digging necessary for a parking garage under a planned multi-storey tower. The contaminated material makes its way off the property in dump trucks. However, even if the problem is ostensibly solved, there is the question whether it was solved at a competitive cost. Isolating the most contaminated soil means that uncontaminated soil can be disposed of for a lower fee.

Contamination isolation

Pre-construction analysis by specialists can help accurately delineate the contamination. One response might be to use a physical barrier underground to isolate the “infected” section of a property.

Alternatively, by changing the planned use of an impacted area such as paving it over for a roadway or parking lot rather than using it for a purpose such as housing would result in a remediation cost saving. In such cases, higher allowable concentrations for standards would be applied, which would lead to less volume of material requiring remediation.

Nanoscale iron

Nanoscale iron treatments can be effective on volatile organic compounds (VOCs) such as perchloroethylene and trichloroethylene, which are common industrial solvents. Applied in-situ through injection wells, the catalysts are able to break down these materials without adverse byproducts, typically without requiring soil removal. Remedial timeframes can be reduced to months instead of years when compared to traditional techniques.

Chemical oxidation

Chemical oxidation is the in-situ treatment of contaminants in soil or groundwater via the injection of an oxidizing agent that chemically breaks down the contaminant to naturally occurring substances.
A wide variety of oxidants, including hydrogen peroxide and potassium permanganate, is commercially available, allowing this method to be effective on VOCs and fuel products.

Other methods

Other methods include pump-and-treat, in which contaminated groundwater is pumped out of the soil from wells for treatment. Another is bio-remediation, which involves the use of bacteria to break down contaminants.

Emerging trends in brownfield redevelopment

New trends for brownfield redevelopment are also having an impact on the potential for properties to see new life.

Looking past the contamination issues

Members of the pulp and paper sector need to understand some of the considerations being made by potential purchasers, to make the transaction as smooth as possible. One consideration is that successful brownfield development goes well beyond the contamination itself.

Increasingly, brownfield projects run into trouble because of conventional planning and development issues, such as making sure the roadway near the development can support the increased traffic flow, or that adequate water main and sewer hookups are available. In one recent instance, after a successful brownfield cleanup, a planned 20-storey tower had to be reduced to 10-storey due to floodplain issues. On the other hand, condo units on a successfully remediated site could still turn out to be difficult to sell if the development is in an area without local stores, restaurants, or schools.

As remediation technologies become quicker, more dependable and cost-effective, successful development hinges more and more on dealing not so much with issues of contamination, but rather the normal business issues of construction.

Expanding roles for consultants

As the challenges associated with brownfield development become broader, there is also an expansion in the role of environmental consultants. These professionals are concerned with much more than the parts per million concentrations of a contaminant and/or exactly delineating the extent of an underground plume. While these issues continue to be important, teams of consultants are able to add value by ensuring their recommendations are in line with sound constructability principles and the business issues and processes of development.

Likewise, lawyers and financiers involved in property development are becoming savvier about contaminated soil issues. While some lawyers previously might have advised a developer client to avoid contaminated sites entirely due to liability issues, they are now less inclined to immediately refuse any attempts for brownfield development. In this, lawyers are supported by a growing body of law around contaminated sites. For example, regulations in Ontario — Regulation 153 of the Environmental Protection Act — can provide protection for a party buying a property already contaminated.

Risk-based approach

Traditional brownfield remediation regulations have been based on conservative assumptions. For example, in considering a brownfield’s effects on children in a residential development, the regulators’ assumption might be made that children would be playing outside in direct contact with contaminated soil. Likewise, in an office development, it might be assumed workers are on the premises around the clock and all the vapour given off by the soil can enter the building, when this was in fact far from a realistic scenario. These generic criteria, put in place by regulators doing their best to keep the public safe, are being increasingly seen as too stringent to be broadly applicable as well as denying opportunities for development of desirable locations.

Risk-based evaluation with a team of qualified professionals possibly including toxicologists, hydrogeologists, biologists and engineers, is a growing trend that permits the use of more realistic assumptions that consider the planned use of the site. In many cases, this means that regulators accept higher numbers for exposure that reflect actual site conditions. When applied conscientiously and responsibly, many regulators accept risk-based methodologies. Additionally, there are encouraging signs that banks will be more willing to fund developments based on risk.

Insurance coverage

Recently, there has been a growth of a new crop of risk management tools from insurance companies. For example, policies are now available that cover a developer when the expected clean-up cost rises from $50,000 to $300,000. This acknowledges the risks associated with any brownfield development, and that unpleasant surprises may be discovered when the backhoe reaches a certain level (e.g. an underground storage tank previously unknown).

Sustainable future

Due to the prevalence of sites with contaminated soil and water, there is a strong market for improved remediation technologies, and this is an active area of scientific development. Only a few years ago, properties that would have taken five to 10 years to become construction-ready (missing the business cycle in the process), can now be brought to readiness in one or two years. Many technologies currently in the laboratory will move to real-world commercialization, meaning a former “wallflower” pulp and paper property deemed too costly or liability-laden to develop, becomes a potential winner.

Berend Velderman, P.Geo. is a Principal at Golder Associates Ltd., a member of Golder’s Global Brownfields and Global Waterfronts teams, as well as Golder’s Canadian Leader for the Manufacturing Client Market Sector. Berend has more than 17 years of experience in contaminant hydrogeology and contaminated site management. Contact: tel. 613.592.9600; bvelderman@golder.com.

Jeanette M. Southwood, M.A.Sc., P.Eng., is an Associate and Senior Risk Assessment and Risk Management Specialist with Golder Associates Ltd. She leads Golder’s Global and Canadian Brownfields teams and is also a member of Golder’s Global Waterfronts team. Jeanette has over 17 years of experience managing and participating in numerous contaminated sites and brownfields projects, undertaking and participating in strategy development, action plans, exposure and risk assessments, and environmental site assessments as well as environmental database and information system development for government, commercial, and industrial clients. Contact: 613.592.9600; jsouthwood@golder.com.

Sean Capstick, P.Eng., is a Senior Air Quality Specialist at Golder Associates Ltd., and can be reached at 905.567.4444; scapstick@golder.com.

Forestry industry’s high-tech, high-paying jobs at risk

Ottawa, ON — The Canadian dollar is continuing its record-setting rise, bolting beyond parity with the U.S. dollar. The Forest Products Association of Canada (FPAC) has called on the federal government and the Bank of Canada to take action in order to mitigate the damage occurring in Canada’s manufacturing sector due to the rising dollar.

The Canadian dollar has risen as much as 25% in the last year and more than 60% over the last five years. The rising dollar makes Canadian products harder to price competitively in a global economy. The forestry sector, which exports over $40 billion of wood, paper and pulp annually to external markets, is particularly vulnerable because all the major inputs into these products, such as fibre, energy and labour, are sourced in Canada, and therefore priced in Canadian dollars.

“Canada’s forest products industry employs over 340,000 Canadian in high-wage, high-tech, high productivity jobs. In fact, one study estimated that average forestry wages and benefits approached $70,000 annually — big city salaries found in rural communities,” said Avrim Lazar, president and CEO of FPAC. “The industry today is the backbone of the rural economy, accounting for 3% of Canada’s GDP — larger than oil and gas, mi
ning and auto manufacturing. More needs to be done to ensure that these jobs remain in Canada.”

“As industry adapts and improves its efficiency and productivity to help mitigate the impact of the rising dollar, governments have an equal responsibility to adjust in the face of a shifting global economy,” Lazar noted. “Rapid action by governments in such areas as tax reform, mergers policy and a more competitive rail transport sector can also play an important role in enabling industry renewal and in assisting the forest sector to adapt to a higher Canadian dollar.”