Halifax Regional Municipality is suing three companies for damages related to a spill of 200,000 litres of diesel fuel at the Burnside transit garage that has so far cost the city $2.6 million in cleanup and related costs.
The lawsuit filed Monday names Redden Petroleum Enterprises, A & L Concrete Forming, and AMEC Foster Wheeler America Limited.
The suit provides the most detailed account of the fuel spill to date, outlining a chain of errors that led to the spill.
The new aboveground tanks
In 2008, Redden Petroleum was awarded a tender to install two new aboveground diesel tanks at the garage, which were to replace two 30-year-old underground tanks. That tender award was for $349,141.14.
Both the old tanks and the new tanks fed two dispensing stations at the garage, which are used to fuel buses. The old tanks fed the dispensing stations via two transfer pumps.
According to the lawsuit, the city wanted to be able to continue to use the old underground tanks as a temporary backup while the aboveground tanks were being commissioned. Redden CEO Stephen Redden told HRM Contract Supervisor Daniel Power that the company could build such a system, and so Redden and Power entered into an “oral contract” to do so. Redden then installed a quarter-turn ball valve on each dispensing station, such that the valve served as a “cross-connection” that could be turned to allow fuel to flow from either the aboveground tanks or the underground tanks.
This was the first link in the chain of errors.
The quarter-turn valves, claims the suit, “violated, or were contrary to, good engineering practice and/or applicable legislation, regulations and/or codes.”
HRM, says the suit, “was unaware of how Redden had performed the Cross-connection as Redden did not produce any drawings or schematics as to how the Cross-connection was done.”
Reached by the Halifax Examiner late Monday afternoon, Stephen Redden said he didn’t yet know about the lawsuit, but he did say he installed the aboveground tanks at the transit garage.
Asked if he installed a quarter-turn valve so Metro Transit could switch between the underground tanks and the new aboveground tanks, Redden replied, “possibly.” He declined to comment further.
Removing the underground tanks
In December 2012, A & L was awarded a $32,800 contract to remove the old underground diesel tanks. The lawsuit points to these requirements of the contract:
2.0 (d) Removal of UST [underground storage tanks] and effected piping will be conducted in accordance with Nova Scotia Department of Environment Regulations.
2.0 (f) Removal and disposal of transfer pumps, affected piping, wiring and items associated.
4.0 Warranty
– All workmanship is to be warrantied for a period of 5 years from date of acceptance.
As alleged in the lawsuit, A & L removed the tanks and transfer pumps on January 17 and 18, 2013.
The removal of the tanks came with the second link in the chain of errors. While A & L removed the tanks, it merely cut off the lines leading from them, alleges the suit, and “it failed to trace or identify the origin and terminus of the lines. . . . Such tracing would have identified that the lines or piping from the USTs were connected to the existing fuel dispensing system, and that the failure to remove or cap said lines or piping could result in a leak or other fuel loss from the fuel dispensing system.”
And associated with that failure to cap the lines came the third link in the chain of error. HRM hired the engineering firm AMEC to supervise the removal of the underground tanks. The Halifax Examiner asked the city the dollar value of the AMEC retainer, but as of Monday that figure could not be provided.
AMEC should have seen that A & L had not capped off the pipes from the underground fuel tanks, and should have warned the city that this presented a future threat, says the suit.
As the underground tanks were being removed, AMEC found evidence that the tanks had in the past leaked fuel oil, and so “the scope of AMEC’s retainer was enlarged to encompass consulting services to determine the extent of the petroleum hydrocarbon contamination.”
AMEC drilled boreholes around the Burnside property to test for diesel and found evidence of historic, not recent, spills. All the soil around the underground tanks was removed and replaced with clean fill.
The fuel spill
According to the CBC, a car dealership on Windmill Road, about a kilometre away from the transit garage, first noticed diesel oil in a ditch on its property on April 9, 2014. According to the city’s lawsuit, Halifax Water notified the city the same day that the diesel fuel had been found in the ditch.
The next day, April 10, 2014, the city hired AMEC to capture the spilt fuel and identify the source of it. Over the next few days, AMEC began drilling boreholes and testing wells along the ditch, and “it initially focused its investigation on identifying another property as source of the contamination,” says the lawsuit.
It wasn’t until May 20, 2014 that AMEC re-excavated the site of the old underground tanks at the transit garage, and fresh diesel oil was found at that site the next day.
The city immediately called Stephen Redden, who had installed the aboveground tanks. He arrived at the transit garage and “discovered that the Valve on one of the fuel dispensing systems was in the open position.”
The quarter-turn valve had apparently been mistakenly opened at least partially. Perhaps a worker inadvertedly bumped or turned the valve — the lawsuit notes that Redden had “failed to provide any express warning about the Valve and/or any indication of the Valve’s function that would be clearly visible and understood by any person having proximity to said valve, such as by placing warning signs around the Valve, painting the Valve and the pipe to which it was connected a different colour than the other surrounding pipes, or other measures to draw attention to the Valve and clearly indicate what its function was.”
In any event, however the valve was opened — probably around December 2013, fuel from the aboveground tanks that were feeding the dispensing station slipped through the open valve and into the old uncapped pipe that once led from the underground tanks. The fuel travelled through the pipe and ultimately ended up in the ditch.
There’s a fourth link in the chain of error that’s not mentioned in the lawsuit: then-city auditor general Larry Munroe found that “40,000 – 50,000 litres [of fuel] or more per month” had been leaking from the transit garage without detection because “Halifax Transit failed to identify large variances [in fuel usage] by not using a physical inventory reconciliation.”
What about insurance?
The city is in a court battle with the Zurich, Royal Sun Alliance, and Arch insurance companies to recover the costs of the cleanup, says city spokesperson Brendan Elliott in an email to the Halifax Examiner:
There was a judicial decision in the case, whereby the insurers’ motion to convert the application to an action was dismissed with costs to the municipality. The municipality is proceeding by application rather than a full blown action to save time and expense and the insurers were resisting that. To be clear, it was the municipality that was successful as it was the insurers’ motion to convert the application to an action that was dismissed with costs to the municipality. Some media reports had it reversed.
Even if the city prevails in court against the insurance companies, the payout would be limited to $1 million, and so the lawsuit was filed against Redden, A & L, and AMEC to recover the rest of the $2.6 million spent on cleaning up the fuel spill. The lawsuit was filed Monday because “the limitation period for commencing proceedings against the contractors expires in September,” said Elliott.