[acn-l] DOFASCO Voluntary Environmental Agreement: An Analysis (fwd)

Rob Huntley (rob at acn.ca)
Fri, 22 May 1998 20:57:15 -0400 (EDT)

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This is a forwarded message.
Please direct and/or copy correspondence to the original source.
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---------- Forwarded message ----------
Date: Fri, 22 May 1998 13:15:10 -0300
From: "Gary Gallon, Canadian Institute for Business & Environment"
<cibe at web.net>
Subject: DOFASCO Voluntary Environmental Agreement: An Analysis

THE GALLON ENVIRONMENT LETTER

Canadian Institute for Business and the Environment
Institut Canadien du Commerce et de l'environnement
506 Victoria Ave., Montreal, Quebec H3Y 2R5
Ph. (514) 3690230, Fax (514) 3693282
Email: cibe at web.net
Vol. 2, No. 10, May 22, 1998

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SPECIAL REPORT

ANALYSIS OF DOFASCO STEEL VOLUNTARY AGREEMENT

Dofasco Inc. signed an Environmental Management Agreement with
Environment Canada (EC) and the Ontario Ministry of the Environment
(MOE) which allows the company to pursue voluntary environmental
measures (VEM). The agreement, signed November 3, 1997 runs eight
years to December 31, 2005, and is designed to allow Dofasco to voluntarily
achieve the requirements of both the federal and provincial laws governing
all aspects of the environment including water, air, and soil pollution. The
agreement gives Dofasco flexibility in time, management systems, and financing
to
meet its environmental obligations. The agreement states that it is designed,
"for the parties to effectively manage their resources and to meet the common
objective of taking reasonable efforts to protect and enhance the
environment".
Dofasco, or Dominion Foundries and Steel, Ltd., was incorporated
in Canada May 15, 1917, in Hamilton, Ontario. Dofasco is one of Canada's
largest integrated steelmakers. Raw steel production in 1995 totaled
2,876,000 tons of which 2,740,000 tons were produced in Canadian steel mills.
Dofasco produces about 17.4% of Canada's total steel. Dofasco also owns
50% of a steel minimill in Gallatin County, Kentucky. Dofasco produces
flat rolled steel, galvanized steel, tinplate and chromium coated steels in
coils, cut lengths and strip, and tubular steel. The voluntary agreement
could
work well, if Dofasco can use it to meet and exceed all of its environmental
obligations currently required by regulation and Certificates of Approval
under current environmental law.

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POTENTIALLY GOOD MEASURES

Effective voluntary environmental measures (VEM's) are an important
tool in helping governments and industry achieve environmental
improvements. Here is a quick analysis of this new VEM for Dofasco.
The voluntary measure has the potential to provide a number of benefits
to environmental protection. First, it set targets that are more ambitious
than the current regulations and Certificates of Approval. For example,
the VEM set a target of 80 per cent reduction from 1993 levels by the
year 2000, versus the Environment Canada Strategic Option Process
(SOP) guidelines of 71 per cent by 2005. According to Lynda Lukasik,
"this is a noteworthy commitment given that Dofasco is presently the
largest single source of benzene emissions in the Great Lakes." Also,
under the VEM, Dofasco commits to reducing PAH's by 50 per cent by
2000, whereas the Environment Canada SOP guide is 44 per cent. (See
"Dofasco Deal Cuts Pollution and Controls", by Lynda Lukasik,
"Alternatives" magazine, Spring 1998, Vol. 24, No. 2, University
of Waterloo).

The voluntary agreement also provides for flexibility and consolidation
of the many environmental Certificates of Approval under the Ontario
Environmental Protection Act. This will reduce red tape and cost. It will
allow Dofasco to make the changes as and when it replaces aging
equipment in a manner not disruptive to capital investment patterns.

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SOME SPECIFIC QUESTIONS

There are a number of issues critical to the success of the Dofasco
voluntary agreement. For example,

Greenhouse Gas Emissions.

The agreement states that: "Dofasco will use all reasonable efforts
to meet a 1% average annual improvement in specific energy consumption
from 1990 levels by the end of the year 2000, in order to support
Canada's goal of stabilization of carbon dioxide ("CO2")
emissions at 1990 levels." (Para. 2.4) However, one month after this
agreement was signed Canada went to Kyoto and committed this nation to
a 6 per cent reduction. Does the voluntary agreement signed by Dofasco
protect it from new national policies, programs, and regulations that may
require industry and therefore Dofasco to make larger cuts than defined in
the VEM?

Nox:

The VEM states that: "Dofasco will use all reasonable efforts to reduce
the amount of nitrogen oxide emissions per tonne of steel shipped from 1990
levels. Dofasco will use all reasonable efforts to meet the draft National
NOx
Emission Guidelines for Commercial/Industrial Boilers and Heaters as
proposed by CCME." (Para. 2.6) Here there are no specific commitment to
targets and timetables and there are no defined rewards for attainment or
consequences for nonattainment. Some environment groups warn about the use
of the term using "reasonable efforts", as possibly allowing the company to
do much less than the draft National NOx Emission Guidelines require.

Particulates:

The VEM states that: "Dofasco will work with Federal and Provincial
authorities and the scientific community to assess options for
managing the release of inhalable/ respirable particulates. In this
regard, in April of 1997 Dofasco approved a $200,000 five­year
contribution to fund two research fellowships at the Centre for
Atmospheric Chemistry at York University".(para. 2.8) Dofasco also
commits to: "provide EC and the MOE an annual inventory of total
emissions of particulate" (para.2.9). Here, there appears to be no
reduction targets or timetables established for particular reduction.

Toxic Sediments:

"Dofasco, EC and the MOEE will use all reasonable efforts to address
the contaminated sediments in its boat slip" (para. 3.4). Here Dofasco
is not required to clean up, but instead commits to "address" the toxic
sediment in the boat slip. Given that Hamilton Harbour is one of the
the 42 Toxic Hotspots in the Great Lakes identified by the International
Joint Commission to be cleaned up through the "Remedial Action Plan"
(RAP) process, this action appears to be insufficient.

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DOFASCO AGREEMENT RAISES OTHER QUESTIONS

o The Dofasco Environmental Management Agreement states that,
"in most cases the targets have been established to exceed existing
federal and provincial laws and guidelines." While this admirable,
the targets are soft — they don't have to be met. They are not bound
by law, nor are they tied to remedial action established by government,
in the event the targets and timetables are not met. True, Dofasco states
that it "intends to continue to meet any Federal and Provincial legislative
or regulatory requirements". The operative word here, is "intend". The word
is unclear since it does not mean that the company "will" meet the
requirements.

o The agreement states that Dofasco "understands that EC and the MOEE could
override this Environmental Management Agreement through the application
of legislation and regulation". Both the federal and the provincial
governments

have divested themselves of substantial financial resources to the point that
there is a question as to whether they could actually muster the personnel
and
resources to respond in the event they are required.

o The question is raised, does the voluntary agreement make the company
immune to the federal and provincial environmental laws as a result of
signing
the agreement and undertaking "reasonable efforts". Does the company have a
case for due diligence before the courts, if it doesn't meet the commitments
set
out in the Agreement, or does not comply with subsequent environmental
legislation (e.g., climate change)?

o Do such voluntary measures create an economic disadvantage for the other
companies in the same sector that do not have the benefits of the same
voluntary
environmental agreement? Do they create an uneven playing field for companies
in the same sector? Is there a need to apply the VEM immediately and equally
amongst companies in the same sector?

o Does the development and application of hundreds, maybe thousands, of
voluntary measures for individuals companies across Canada add substantially
to the cost of pollution reduction? When properly done, VEMs require public
participation, monitoring and verification of emissions, investigation and
and determination of compliance, and enforcement in the event the VEM is
not working. Initial indications point to voluntary measures being as
expensive
to apply as environmental regulations. The cost of VEM's could be higher
than regulations if the VEMs fail and regulation has to be ultimately
applied.

o In a time of growing urgency to reduce pollution, it appears that VEM's
like the one signed with Dofasco slow down clean up. For example, how quickly
will Dofasco clean up PM10 particulates? How quickly will it clean up some
parts of the severely contaminated harbour.

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NEED TO MEASURE DOFASCO VEM TO THE NEW DIRECTIONS GROUP (NDG)PRINCIPLES

A group of 27 senior corporate executives from the Canadian resource,
chemical and energy industries (including Dofasco), along with
representatives
from environmental organizations and academia, agreed January 12, 1998
to a new set of principles, entitled: "Criteria and Principles for
the Use of Voluntary or NonRegulatory Initiatives to Achieve
Environmental Policy Objectives". Calling itself the "New Directions
Group (NDG), the signatures included major Canadian companies like
Dofasco, Dow Chemical, TransAlta Corp., Noranda, and Dofasco for industry;
and, World Wildlife Fund Canada, Friends of the Earth, the Canadian Nature
Federation, and Pollution Probe.

NDG set out five (5) criteria and eight (8) principles. For example, the
state that VEMs must be transparent in design and operation; must have
measurable
objectives and milestones; must have rewards for good performance and have
consequences for not meeting performance objectives; must have performance
based flexibility and innovation; must have monitoring and reporting
requirements including mechanisms for verifying performance; and
must include the public in the development, implementation and monitoring
of the VEM.. For a copy of the VEM Principles contact Paul Griss:
email: pgriss at ns.expertcanmore.net.

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POTENTIAL GAPS BETWEEN PRINCIPLES AND DOFASCO VEM

There are some possible gaps between the Dofasco voluntary agreement
and the principles, principles which Dofasco helped create. For example,
Principle 1 states the VEM should be "developed and implemented in a
participatory manner that enables the interested and affected parties to
contribute equitably". Yet Lynda Lukasik reported that, "the Dofasco
agreement was negotiated behind closed doors and its annual progress
will also be reviewed behind closed doors by the partners to the agreement
alone. This has happened in spite of public demands that some sort of
community stakeholder group be set up to monitor agreement progress
independently." ("Alternatives" 24:2, Spring 1998, p. 9)

Principle 4. states that a credible VEM will "clearly specify the rewards
for good performance and the consequences of not meeting performance
objectives". That is not clear in the VEM agreement between Dofasco,
Environment Canada and the Ontario Ministry of the Environment (MOE).
The rewards should be better stated. But particularly, the consequences of
not meeting performance objectives should be better spelled out, since it is
not clear that Environment Canada or MOE have the resources or will power
to shift into action in the event the voluntary measure falls short.

You can find the full Environmental Management Agreement at Dofasco's
website
<http://www.dofasco.ca/environment/environment.html>http://www.dofasco.ca/en
vironment/environment.html

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IPSCO, ALBERTA CHALLENGES ENVIRONMENT CANADA'S NPRI

A U.S. based company operating in Alberta is challenging Canada's
National Pollution Release Inventory (NPRI), even though the company
is already complying with the similar U.S. Toxic Release Inventory (TRI).
IPSCO, the International Piping Services Co., headquartered in Illinois,
specialize in repairing and replacing oil and natural gas piping. Using
Canada's Constitution, apparently IPSCO in Alberta had its lawyers
initiate a challenge the constitutionality of Environment Canada requiring
companies to report their pollution emissions and waste transfers to the
public through the Canadian NPRI.. This is in spite of the fact that IPSCO
is complying with the tougher and broader (more chemicals) U.S.
reporting requirements under TRI. Currently, IPSCO is holding its formal
legal challenge in abeyance. Still the looming legal action hangs over the
head of Environment Canada which is trying to undertake appropriate actions
to protect public health. IPSCO website is
<http://www.hottaps.com/index.htm>http://www.hottaps.com/index.htm .
The NPRI website is
<http://www.ec.gc.ca/pdb/npri.html>http://www.ec.gc.ca/pdb/npri.html.

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Copyright (c) 1998 Canadian Institute for
Business and the Environment, Montreal
All rights reserved.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Gary Gallon
President
Canadian Institute for Business and the Environment
506 Victoria Ave.
Montreal, Quebec H3Y 2R5
Ph. (514) 369-0230, Fax (514) 369-3282
email: cibe at web.net