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  • Writer's pictureFred Guerin

SCC Decision: Polluters Must Pay for Clean-up

February 4, 2019

Yesterday the SCC decided on a case that will have profound legal and environmental implications. They ruled that those who pollute have a legal obligation to clean up the mess they caused when they go bankrupt BEFORE they start handing over what is left to banks and creditors.

More specifically they told the bankrupt Redwater oil and gas company who owned 100 wells in Alberta and went bankrupt in 2015 that any assets left behind (i.e. profits from wells still operating) should not go to banks and other creditors first, but be used to pay for environmental cleanup. In so doing they overturned a lower court ruling that sided with the banks and creditors.

The fact is that up until now it has been perfectly okay for oil and gas companies to sidestep health and environmental costs that ensue when they leave--usually with pockets full of cash, despite declaring bankruptcy.

What is significant here is that this precedent will not only affect the 450,000 oil and gas wells in Alberta, but oil and gas wells across Canada. It would presumably also apply to mining companies.

When mines are abandoned or wells not capped they continue to contaminate soil, pollute groundwater and release toxins into the air. It is clear however that reclamation (returning disturbed lands to an improved state) is by no means restoration. When wells close they often make the soil infertile and water undrinkable for hundreds of years.

Indeed, from a practical perspective issuing reclamation certificates to oil and gas companies in Alberta has become rather a joke--they are issued automatically with regulators not even bothering to inspect a site after it has been 'restored'.

That should not come as a surprise to anyone. Regulators and governments are entirely captive of oil, gas and mining industries--before and after they wreak havoc to the environment. They issue drilling licences even when they know that the company will not have the money to pay for clean-up. See this piece in the Narwhal for more on the sham of 'reclamation':…/

That's a real problem. Even given yesterday's ruling that forces bankrupt companies’ to use their remaining assets to first clean up the mess they made, it will often be the case that the remaining money simply won't be enough to cover the real costs of the damage.

It is likely the big oil and gas corporations will be happy about the SCC decision because for the most part it will not affect them though it will adversely affect all those small 'upstart' oil and gas companies. However, the SCC decision clearly brings environmental concerns into relief. It says, in effect, that there are cases where profit cannot trump human and environmental health and safety.

It is undoubtedly a 'small step' for environmental health and safety; but it is 'a giant leap' forward in environmental law.

You can read about the Supreme Court's decision in this brief...

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