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Sharp Increase of Disposal Costs Expected

Since December of 1995, the establishment or expansion of a sanitary landfill site, of a dry materials disposal site and of a solid waste incinerator are prohibited in Quebec, unless the Quebec Government feels that one is required in a given situation.

The expansion of sanitary landfill sites has been granted, for example, when it was expected that the capacity of sanitary landfill sites in the Montreal region would no longer be sufficient.

Since 1993, these projects are subject to the statutory environmental assessment procedure by specific legislation. The Quebec Government can exempt a project from this procedure on the basis that prompt action is necessary to address a situation.

This regime was intended to be temporary and to be replaced upon the comprehensive review of regulatory standards applicable to the elimination of residual materials.

Ten years later, in May of 2005, the Quebec Government has adopted the new Regulation respecting the Landfilling and Incineration of Residual Materials (the "Regulation").

This Regulation will come into force on January 19, 2006 concurrently with the following instruments that modify this regime.

A second regulation was adopted last May, which includes these projects in the categories of projects that are subject to the statutory environmental assessment procedures.

The modification of this regime is completed by draft legislation, Bill 107, which was introduced before the Quebec National Assembly in May 2005. This Bill revokes the current legislation on solid waste elimination sites, thereby removing the prohibition to enlarge or establish disposal sites and subjecting these projects to the standard environmental assessment procedure. Bill 107 also maintains certain powers of the Environment Minister to impose special conditions on these projects.

Each of these modifications will be in effect on January 19, 2006.

The Regulation imposes more stringent requirements on siting, monitoring and environmental performance of disposal sites. For example, it provides for mandatory collection and destruction of biogas and for greater control over groundwater quality.

The Regulation prohibits the creation and the expansion of construction and demolition debris landfill sites. Materials that would have been accepted at theses facilities will gradually need to be disposed of at more expensive engineered landfill sites.

Existing disposal sites are granted a three-year transition period to comply with the new rules. No later than July 19, 2008, thirty months following the coming into force of the Regulation, the operator of an existing site will be required to send a notice to the Environment Minister of his intent to permanently cease operations prior to the three-year period or of his intent to continue operations. In the latter case, the operator will be required to send a report certified by an expert that the site is in compliance with the new regulatory standards.

Compliance with more stringent standards, possible closure of existing sites within the next three years and reduced options to dispose of residual materials in less engineered sites are expected to increase the costs associated with the elimination of residual materials.

Elimination/disposal costs are also expected to be driven up by the imposition of an additional regulatory duty, that could be as high as $10 per tonne, on the landfilling of residual materials and contaminated soils. Draft regulation* to this effect was published in November of 2004 but has not yet been adopted.

One might have expected that the removal of the statutory prohibition to open new disposal sites or expend existing ones would have opened the market and resulted in more competitive prices, however, the regulatory context in which this restriction has been removed is likely to have the reverse effect.

* Regulation Respecting Charges Payable for the Elimination of Residual Materials and Contaminated Soils.