By Gray Taylor & Patrick Monahan

Davies Ward Phillips & Vineberg LLP

A series of agreements providing for the cleanup of the former Britannia copper mine in British Columbia was announced on April 12, 2001.

The agreements involve the governments of British Columbia and Canada, as well as a number of private entities, including the Aluminum Company of America (Alcoa), the Atlantic Richfield Company (Arco), CanZinco Ltd., Ivaco Inc. and Copper Beach Estates Limited.

The Britannia mine, located approximately 50 kilometres north of Vancouver, was closed in 1974. Because the top of the mountain was removed during the mining process, water continuously flowed through the mine shafts. The water mixes with sulphide-bearing ores, resulting in acid rock drainage, which eventually flows into Howe Sound. Acid rock drainage is toxic to all aquatic life.

The cleanup plan involves the construction and operation of a treatment plant, which will collect all the water draining through the mine site and treat it before it is discharged into Howe Sound. It is expected that the treatment plant will be operated in perpetuity.

The Britannia mine site had been found to be a 'contaminated site' under B.C.'s Waste Management Act. That legislation provides that persons who are responsible for contamination at such a site are jointly and severally responsible for the costs of cleanup.

Copper Beach Estates, the current owner of the mine site, had been named as a responsible person and been ordered to clean up the site, but had failed to do so. An official in the B.C. Ministry of Environment, Lands and Parks had identified Arco, Alcoa, CanZinco and Ivaco as potentially responsible for remediation and had initiated a hearings process to determine whether they should be ordered to fund the cleanup.

Pursuant to the settlement agreement, Arco, Alcoa, CanZinco and Ivaco (or their affiliates) will contribute a total of $30 million in cash towards the remediation of the Britannia site. In return, the province has agreed to release all claims against these parties, and to comprehensively indemnify them against all past, present and future environmental liabilities respecting the site.

The fact that the B.C. government agreed to provide this release and indemnity (which is believed by the parties to be the most comprehensive ever provided by a government in Canada) was the key to the cleanup agreement.

B.C.'s Waste Management Act, while establishing a very broad definition of persons potentially responsible for remediation, fails to provide a mechanism whereby such persons can voluntarily settle claims in return for a release of liability. Such mechanisms are common in U.S. statutes dealing with remediation of contaminated sites. The indemnity agreement with the province filled this gap in the B.C. legislation, thereby making a negotiated settlement of the Britannia claims and a cleanup agreement feasible.

This experience suggests that Canadian governments drafting legislation dealing with contaminated sites should consider including a statutory mechanism for the voluntary and final settlement of claims. The advantage of such a mechanism is that it permits all parties to avoid the cost, expense and delay involved in litigation and, in the process, results in more cost-effective and timely remediation of contaminated sites.