May 22, 2006

Tembec division agrees to $750K penalty for Fisheries Act violations

In a negotiated settlement relating to charges under the federal Fisheries Act, Spruce Falls, a subsidiary of Tembec, has agreed to pay a total penalty of $750,000, including a $250,000 fine and a $500,000 payment to the Environmental Damages Fund, administered by Environment Canada. The settlement was recommended to, and ratified by, the Court of Quebec.

The case involved exceedences of allowable limits under the Fisheries Act for effluents from the company's pulp and paper complex in Temiscaming, Quebec. Following an investigation by enforcement officers from Environment Canada's Quebec region office, Spruce Falls was charged subsection 36(3) of the Act with depositing a deleterious substance (final effluent from the biological treatment system) into the Ottawa River 16 times between April 9, 2003, and December 14, 2004.

The company was also charged with twice failing to monitor final effluent from the biological treatment system. Additionally, between March 1 and June 14, 2004, Spruce Falls partially ignored an inspector's direction issued under subsection 38(6) of the Act requiring the implementation of measures to prevent further deposits of deleterious substances from occurring.

The Tembec Temiscaming site is one of the most complex industrial operations in Canada, consisting of two separate pulp mills, a paperboard mill and three chemical plants all operating at a single site. It is unique in the pulp and paper industry in that all the facilities' combined effluent streams are treated by a common system.

In addition, this effluent treatment system also processes wastewater from the town of Temiscaming. The result is a variable and complex effluent that requires carefully controlled treatment.

"Although Tembec invested several millions of dollars throughout the 1990s in the infrastructure and continuous improvement of the effluent treatment system, the results were less than expected," David Christian, senior vice-president of the company's specialty cellulose division, acknowledged.

He went on to explain that "the reported incidents are not the result of neglect, but rather stem from the complexity of the Temiscaming site's effluent system. For this reason, we basically had to develop unique approaches, technologies and know-how in order to build a more effective and efficient treatment system. The result," he stated, "is an effluent treatment system that is close to, if not unparalleled in any industry.

"The incidents relate to charges for very minor effluent discharges above allowable limits," Christian continued. "It should be noted that the effluent discharges were received by a large waterway which is at least 600 times the flow of the treated effluent. In reality, there was virtually no environmental impact on the overall stream," he added.

The Temiscaming site has been operating in full compliance with all applicable environmental regulations since December 2004. The company further reports that it has invested another $25 million to install a state-of-the-art pre-treatment system, which began operating in January.

"The new anaerobic waste treatment system that was recently commissioned is meeting our expectations," Christian said, adding, "The system will also reduce the site greenhouse gas emissions since the biogas generated by the system will displace the use of fossil fuels."

The payment to the Environmental Damages Fund will be used to promote rehabilitation projects. Local community and environmental groups will have an opportunity to submit project proposals for the funds.

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