Spill Cost Recovery under the Environmental Management Act
The following provides an overview of spill cost recovery from a Responsible Party (spiller/polluter) pursuant to an emergency response by the BC Ministry of Environment.
Table of Contents
Spill Cost Recovery under the Environmental Management Act
What's New?
The Ministry of Environment has changed its policy regarding the Spill Cost-Recovery Process.
We want to provide a spill cost-recovery information-and-billing process that is clear and accountable. To achieve this goal we will:
- send the party responsible for a spill an itemized accounting of the costs incurred by the ministry; and
- provide information on the bill about how to pay it, and how to enquire about it.
We will no longer send you:
- an “Advanced 21-day Notice of Spill Cost Recovery Pursuant to the Waste Management Act”; or
- a “Notice of Intent to Pursue Cost Recovery for Spill Response by the Province of British Columbia.”
Posted: September 2002
Spill Notification and the Environmental Emergency Program
The BC Ministry of Environment receives about 3,800 spill notifications a year. A spill of a toxic material is required to be reported by the Responsible Party (spiller/polluter) pursuant to the Environmental Management Act's Spill Reporting Regulation. As such, the provincial government must be prepared to receive the notification, assess the situation, and undertake field response if necessary.
The BC Ministry of Environment is the key (lead) provincial agency responsible for preparing for and responding to oil and hazardous material incidents. This key designation is under the Emergency Program Act and its Emergency Program Management Regulation. Spill response is also a mandated responsibility of the Ministry under the Ministry of Environment Act [Section 4 (i)]. Through the Environmental Emergency Management Program, the Ministry fulfills its purpose and function to “plan for, co-ordinate, implement and manage a program to protect the welfare of the public in the event of an environmental emergency or disaster." The program is comprised of seventeen Regional Environmental Emergency Response Officers that are highly trained in hazardous material response. In headquarters ( Victoria), there are two Emergency Planning Analysts and a manager for emergency planning, government liaison, policy and procedure development, and issue management. Legislation, response plans, policies and procedures, technology, response equipment and vehicles support the emergency program.
About one third of the 3,800 spill notifications require field action by the ministry's regional Environmental Emergency Response Officers (Response Officers). Field activities are directed towards protecting public safety, establishing environmental protection priorities, assisting the Responsible Party (spiller/polluter) and local government (Fire Departments), and in some instances, taking over spill management.
Spill Cost Recovery Legislation
The Environmental Management Act forms the basis for cost recovery by delineating the role of government at a spill incident and providing a legislated avenue for spill cost recovery (Section 80). The Spill Cost Recovery Regulation, promulgated on July 17, 1998, clarifies expenditures that are recoverable from any person in possession, in control, or in charge of the spilled material. This regulation is managed under the Environmental Emergency Management Program of the Ministry of Environment (Environmental Management Branch).
Rationale for Spill Cost Recovery
Cost recovery for spill response is warranted because such service provides an identifiable recipient - the Responsible Party - with direct benefits beyond those received by the general public. Furthermore, such charges promote the widely held and accepted concept of the "polluter-pay principle". Cost recovery for spills is also commensurate with the mandate of the Ministry.
Cost recovery for spill response by government provides an incentive to users of oil and hazardous materials to adopt effective spill prevention measures. It also lets industry and the public know the full social, environmental, and economic cost of spills.
Application
The Environmental Management Act's Spill Reporting Regulation (Section 3 - Further Action) stipulates that:
"where a spill occurs, the person who immediately before the spill had possession, charge or control of the spilled substance shall take all reasonable and practical action, having due regard for the safety of the public and of himself or herself, to stop, contain and minimize the effects of the spill."
Section 80 of the Environmental Management Act further stipulates that such a person(s) will be subject to cost recovery. The Spill Cost Recovery regulation outlines the criteria and mechanism for such reimbursement. For example, a field response from a Response Officer must occur before spill cost recovery can be sought and chargeable expenses are itemized in the regulation (see below).
Determining whether to Respond to a Spill
The determination of whether a Response Officer undertakes a field response is guided by the Ministry's Environmental Emergency Program's policies and procedures. Generally, only about a third of spill notifications result in a field response. Spills that are that are of low risk (e.g. inside a facility yard), known to be adequately managed by local government (e.g. fire department) and/or a competent company are not attended. A Response Officer's training, experience and local knowledge are a large part of making the decision to respond. Essentially, a Response Officer takes a "risk-based" approach to spill response as Response Officers can not attend all reported spills.
Government Roles at a Spill
The Ministry has policy and emergency response plans (e.g.  BC Marine Oil Spill Response Plan) that outline response expectations from a Responsible Party and the response role of the provincial government. A Response Officer provides clear direction to a Responsible Party on what is expected during an incident involving a spilled product under their care and control. Primarily, the Ministry provides a monitoring (auditing) role to ensure that the company's response performance is adequate and will, on occasion, augment (support) the response with provincial resources (e.g. people, equipment, technology, etc.). The latter support is based on an acceptable response strategy, industry/government co-operation and pursuant to recovery of all expenditures. This government-monitoring role includes the responsibility to establish the public safety and environmental protection priorities and to determine when a site is considered adequately cleaned. Taking over the management of an incident is a last resort action.
First Responders from local governments (Fire, Police and Ambulance), federal government agencies (Environment Canada, Fisheries and Oceans Canada) and First Nations are not subject to cost recovery, unless they were in charge or control of the spilled substance. Local governments do not have legislated authority to seek spill cost recovery. Ministry Response Officers are often called in by local Fire Departments to provide advice on oil and hazardous material response because most local governments have little or no spill response capability or expertise (see Community Hazardous Material Preparedness Survey). A Response Officer may also attend a spill managed by federal agencies (e.g. Canadian Coast Guard) whenever provincial interests are affected or additional help is requested. The Ministry can be reimbursed, via federal cost recovery avenues that are directed to the Responsible Party.
The Ministry's approaches to environmental emergencies, such as working with industry, local and federal governments during spill response, are explained within the Ministry's Environmental Emergency Program's policies and procedures.
Spill Cost Recovery Process
Cost recovery will be undertaken through the issuance of a certificate showing the amount owed to the Provincial Government. The Ministry's Environmental Emergency Program's policy and procedures guide the process. Spill cost recovery can begin as soon as a Response Officer leaves the office en route to the spill site and may also occur when a Response Officer is on-site and returning to the office. The costs may also include the time taken to complete post-incident and cost recovery documentation.
Generally, chargeable costs are closely linked to supporting the Responsible Party's response strategy. The decision whether to pursue cost recovery largely depends on the role the Response Officer takes on scene – either monitoring or augmenting the response. Generally, cost recovery is pursued if a Response Officer provides a service to the Responsible Party or to the Responsible Party’s contractor, such as advice, direction, substance sampling/analysis, or if response supplies and equipment are used.
If over the $175 minimum (see discussion below), all costs are listed to ensure they are transparent and reasonable expenditures. The specific costs under the Spill Cost Recovery Regulation are:
a) hours of field response and office activities undertaken by one or more responding government employees;
b) hourly charge of responding government employees;
c) kilometres traveled by government vehicles;
d) distance charges for use of government vehicles;
e) food and accommodation expenditures;
f) private goods and services contracted, hired, rented or purchased;
g) consulting and other professional charges;
h) rent on use of government equipment;
i) replacement, repair or cleaning of damaged or used response equipment, directly resulting from field response action undertaken;
j) research and analysis services related to post-incident evaluation, contingency plan reviews, cleanup certification and other incident follow-up activities.
The above costs are derived from existing government agreements or financial policies, such as contract standards with the B.C. Government Employees’ Union, vehicle distance charges, and accommodation and meal rates from government financial policy. Working from approved government financial policies helps ensure fairness and transparency. A Cost Recovery Certificate with the full expenditure amount is then sent to the Responsible Party. The invoiced amount becomes a debt owed to government. Monies collected from cost recovery are reallocated back to the ministry.
Overhead Cost of Responding to and Preparing for Spills
The ministry incurs a significant overhead cost in being prepared to manage environmental emergencies - both as a direct service to the Responsible Party and as a public good. The latter pertains to the cost of responding to mystery spills, providing a service to First Responders (Fire Departments, Federal Response Officers, Police), undertaking emergency notification, and emergency planning. The ministry's regional Environmental Emergency Response Officers are highly trained in hazardous material management and use expensive monitoring and field equipment, such as air quality meters and self-contained breathing apparatus. There is also the expense of training and equipping Incident Management (Response) Teams staffed by Ministry personnel to handle a major oil or hazardous material incident. The administering of spill cost recovery also incurs an expense. To defray these direct and indirect expenses, a 25 per cent overhead on the total direct expenditures is applied to the government cost of responding to a spill. In comparison, private consultants often have a 100 per cent overhead charge to direct salaries and expenditures.
Efforts to meet the "public good" requirements constitute the major cost of the Ministry's Environmental Emergency Program, such as risk assessments, planning, services to local government, and responses to mystery spills. As a result, spill cost recovery to address a "direct service" to a Responsible Party covers only a small portion of the annual expenditure for the Ministry's Environmental Emergency Program.
Minimum Spill Cost Recovery Fee
Most spill incidents resulting in a field response entail about one hour of travel and on-site assessment. Each field response also translates to time away from other work duties and follow-up administrative work. To keep administration efforts and costs to a minimum, the Spill Cost Recovery regulation has a minimum charge of $175 dollars for a field response to a spill or pollution threat. There is no 25% overhead on this amount. This minimum charge addresses the majority of spill cost recoveries. However, the Spill Cost Recovery regulation is also designed to address a major (5 to 10 year probability) spill event. Events such as an oil tanker or haz-mat railway incident can amount to millions of dollars in government expenditures just to monitor and augment a Responsible Party response. Such incidents would involve a Provincial Incident Management Team.
Transparency and Fairness
In developing the regulation it was essential that the cost recovery model and rates are perceived to be fair and reasonable by those that use, store, transport, or manufacture oil and hazardous materials, to avoid:
- a tendency not to report spills;
- a greater environmental risk due to a reluctance to participate with government responders; or
- an increase in appeals under the Environmental Management Act.
Over the last several years, the implementation of the Spill Cost Recovery regulation has been very smooth with none of the above issues arising, little to no complaints by industry, and almost full regulatory compliance.
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