AER’s $300 Billion Ponzi Scheme Closer to Fruition? Alberta Court of Appeal favours creditors over the environment, upholds Redwater decision. Did AER set this up to create horrific legal precedent to let companies hang their toxic pollution and massive damages on the public via the impotent Orphan Well Program?

Creditors over environment: Alberta Court of Appeal upholds Redwater Energy decision, Decision could affect handling of abandoned wells across Canada by Tracy Johnson, April 24, 2017, CBC News

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In a 2-1 decision, the Alberta Court of Appeal has upheld the Redwater Energy decision that gave secured creditors priority over environmental clean-up in the case of an energy bankruptcy.

The case centred on a small energy company called Redwater Energy, which went into receivership in 201, owing $5 million to ATB Financial, a financial institution owned by the province of Alberta. At the time of its bankruptcy, Redwater had few producing oil and gas wells, as well as many more assets that were not producing and would need to be reclaimed.

Alberta energy regulations say that producing wells would have to be sold to pay the environmental clean-up costs of the non-producing wells or other assets.

Insolvency wins the day

The receiver for the insolvent company — accounting firm Grant Thornton — along with ATB Financial, instead wanted to sell the producing wells to pay off the debt to ATB and leave the non-producing wells to be cleaned up by the Orphan Well Association, which is funded by industry.

The case went to a lower court that was tasked with deciding which has priority: federal insolvency law, or provincial energy regulations. Two courts have now decided insolvency law wins the day and Grant Thornton is in the process of selling the producing assets.

This case has implications that reach far beyond one small energy company. British Columbia and Saskatchewan both participated in the appeal in support of the Alberta Energy Regulator because the case could act as a precedent in other provinces.

Costs and benefits

There are some benefits, said Kathleen Shannon, a lawyer with Field Law.

“Lenders will still feel secure in their creditor positions, so they’re likely to continue lending to the oil and gas industry. If the decision had been reversed, there would have been more hesitancy from financial institutions.”

Shannon pointed out that the the AER will have some work to do to ensure it has enough security against the environmental obligations of energy companies. It also has the option to further appeal.

“I think the fact that there’s dissent means that potentially there will be another appeal to the Supreme Court of Canada,” she said.

Alberta appeal court backs decision that favoured Redwater Energy creditors by The Canadian Press, April 24, 2017, Times Colonist

CALGARY — A court decision that gave secured creditors priority over environmental cleanup in the case of bankrupt Redwater Energy Corp. has been upheld by the Alberta Court of Appeal.

The lawsuit has been closely watched as a precedent-setting case as bankruptcies continue to afflict the oil and gas industry after more than two years of low commodity prices.

In a 2-1 decision released Monday, the appeal court upheld the ruling in favour of Grant Thornton, Redwater’s trustee in bankruptcy, and its lender, ATB Financial, who wanted to sell off its productive wells to pay creditors and leave the others for the industry-supported Orphan Well Association to remediate.

The Alberta Energy Regulator, however, argued funds from the sale of the productive wells must be used to cover cleanup expenses for the unproductive wells, a position backed by appeal interveners from the Alberta, B.C. and Saskatchewan governments as well as the Canadian Association of Petroleum Producers.

In a statement Monday night, the Alberta Energy Regulator said it is reviewing the decision and determining whether to appeal.

“While we are disappointed in the court’s decision, the AER will continue to take steps to protect the public from the environmental costs associated with suspension, abandonment and reclamation,” spokesman Ryan Bartlett said in the statement. [“Taking steps to” does not mean doing. AER has not yet protected the public from the massive environmental costs already existing in Alberta, never mind with the massive fracs to come and associated drinking water contamination because of Notley and the NDP’s lying fraud of climate action plan, and the ever expanding and polluting tarsands]

Brad Herald, chairman of the Orphan Well Association, said there have been other cases since Redwater where a receiver wants to “disclaim” an insolvent company’s liabilities.

He wouldn’t give company names, but said the trend shows the precedent-setting nature of the Redwater decision and suggests further appeal is warranted by the regulator.

“I think the potential of the dissenting opinion here can bolster the justification for resolution to the Supreme Court,” he said.

In their majority decision, two of the appeal court judges found “no errors” in the Alberta Court of Queen’s Bench ruling in May 2016 that provincial regulations are in conflict with the federal Bankruptcy and Insolvency Act and the latter takes precedence.

In a dissenting opinion, however, the third judge argued that the regulations are consistent with the act and said the appeal should be allowed.

A spokesperson for Energy Minister Marg McCuaig-Boyd said the department is analyzing the decision.

“This ruling demonstrates the need to do a thorough review of the oil and gas liability management system that we have inherited,” press secretary Mike McKinnon said in an email. “Our government is beginning this work.”

The regulator had appealed the decision because it said it could encourage more companies to enter receivership and bankruptcy to avoid obligations to clean up oil and gas well sites.

– See more at: http://www.timescolonist.com/alberta-appeal-court-backs-decision-that-favoured-redwater-energy-creditors-1.16752991#sthash.d0saCtfx.dpuf

Alberta appeal court backs decision that favoured Redwater Energy creditors by Dan Healing, Canadian Press, April 24, 2017, Calgary Herald

A court decision that gave secured creditors priority over environmental cleanup in the case of bankrupt Redwater Energy Corp. has been upheld by the Alberta Court of Appeal.

The lawsuit has been closely watched as a precedent-setting case as bankruptcies continue to afflict the oil and gas industry after more than two years of low commodity prices.

In a 2-1 decision released Monday, the appeal court upheld the ruling in favour of Grant Thornton, Redwater’s trustee in bankruptcy, and its lender, ATB Financial, who wanted to sell off its productive wells to pay creditors and leave the others for the industry-supported Orphan Well Association to remediate.

The Alberta Energy Regulator, however, argued funds from the sale of the productive wells must be used to cover cleanup expenses for the unproductive wells, a position backed by appeal interveners from the Alberta, B.C. and Saskatchewan governments as well as the Canadian Association of Petroleum Producers. [A slick facade created by AER, then supported by CAPP, BC, Alberta and Saskatchewan to hang Canadian taxpayers, country-wide, with industry’s massive toxic legacies and messes?]

Brad Herald, chairman of the Orphan Well Association, said there have been other cases since Redwater where a receiver wants to “disclaim” an insolvent company’s liabilities. [There will be infinitely many more]

He wouldn’t give company names but said the trend shows the precedent-setting nature of the Redwater decision and suggests further appeal is warranted by the regulator.

“I think the potential of the dissenting opinion here can bolster the justification for resolution to the Supreme Court,” he said. [Supreme Court of Canada appear to have a biased love-in for the AER, as evidenced by their horrific Charter-fracturing ruling in Ernst vs AER. But, money systems (banks, creditors, investors, etc) appear to be even more important to the courts than the oil and gas industry’s bought and paid for enabler, the AER.]

In their majority decision, two of the appeal court judges found “no errors” in the Alberta Court of Queen’s Bench ruling in May 2016 that provincial regulations are in conflict with the federal Bankruptcy and Insolvency Act and the latter takes precedence.

In a dissenting opinion, however, the third judge argued that the regulations are consistent with the act and said the appeal should be allowed.

A spokesperson for Energy Minister Marg McCuaig-Boyd said the department is analyzing the decision.

“This ruling demonstrates the need to do a thorough review of the oil and gas liability management system that we have inherited,” press secretary Mike McKinnon said in an email. “Our government is beginning this work.” [Two years too late! And, are these just more empty betraying NDP words, to be followed by zero action?]

The regulator had appealed the decision because it said it could encourage more companies to enter receivership and bankruptcy to avoid obligations to clean up oil and gas well sites. [It’s possible the AER initially filed the lawsuit against Redwater knowing the courts would rule that federal law trumps Alberta law (even though the Court of Queen’s Bench, Court of Appeal of Alberta and Supreme Court of Canada all ruled the opposite in Ernst vs AER – they put Alberta law above Canada’s top law in the land – the Charter of Rights and Freedoms). Nice intentional legal set up to let the oil and gas industry and every other industry in Canada, out of polluter pay principal, out of cleaning up their toxic pollution and messes, let them legally walk away from abuses to the environment and public health across the country – just wait til those bitumen and condensate pipelines everywhere rupture and spill for weeks, even longer, without notice. And just wait til companies frac every aquifer in the country, coast to coast. Companies and their enabling “regulators” like AER know there are massive environmental disasters already needing clean up, and many more ahead, that companies do not want to waste money dealing with]

[Refer also to:

2017 02 17: Brilliant! MUST LISTEN! BNN Interviews Alberta Oil Patch Consultant Brent Nimeck on Lexin and AER’s Orphan Wells: “This problem is 30 years in the making. … I would call it a Ponzi Scheme…. This is an orchestrated fraud from multiple angles: Industry, CAPP and the Alberta Energy Regulator have enabled this to happen. … Through our independent analysis and we’ve confirmed this at multiple sources within the energy regulator, the liabilities are over $300 billion. That’s what’s on the hook for Alberta taxpayers right now – $300 billion.”

Nimeck: Lexin is a close example of one of the 348 companies that are just like Lexin and that can go bankrupt at any given time. It’s a good indicator of things to come.

This problem is thirty years in the making. Industry has carefully orchestrated this. I would call it a Ponzi Scheme to keep these companies alive, to allow hundreds of thousands of wells to sit inactive. … This isn’t an accident, this has been carefully orchestrated.

This is an orchestrated fraud from multiple angles: industry, CAPP and the Alberta Energy Regulator have enabled this to happen. There’s quite a bit of evidence to support that.

Thirty million dollars a year to deal with this problem is basically like trying to pee on a forest fire trying to put it out. It’s not going to work. When the Orphan Well is unable to deal with these then the liability is going to be transferred to the taxpayers and right now the government is currently estimating the liabilities at $30 billion, but through our independent analysis and we’ve confirmed this at multiple sources within the energy regulator, the liabilities are over $300 billion.

That’s what’s on the hook for Alberta taxpayers right now – $300 billion.

BNN: That’s an enormous sum of money.

Nimeck: The long term environmental affects of this will be devastating to the province of Alberta.

2016 10 13: AER Redwater Appeal: Will the courts protect the rich, make ordinary Canadians pay for industry’s abandoned oilfield messes? Alberta Court of Appeal to decide who will pay for Redwater’s abandoned wells after bankruptcy (using the law to intentionally avoid responsibility after years of profit-taking?)

2016 09 22: Is AER vs Redwater worsening cleanup of abandoned oil and gas wells in Alberta, BC and Sasktchewan? Did AER file the lawsuit intentionally to set legal precedent and dump clean up costs on taxpayers to enhance profits for oil and gas companies?

2016 12 16: “The Alberta Model” Greedy & Gagging in Nova Scotia: Triangle Petroleum leaves taxpayers to clean up frac sites & waste pits, Gags Energy Dept

2016 05 27: “Where does the buck stop?” AER to appeal ruling on oil, gas cleanup obligations. Chief Justice Wittmann found Alberta’s oil and gas licencing regime to be unconstitutional relating to money, but not in Ernst’s “valid” constitutional claim against AER relating to drinking water contamination by oil and gas

2016 05 21: Alberta Court of Queen’s Bench Chief Justice Wittmann rules for creditors instead of clean-up when energy companies go bankrupt, Rules against Albertans, water, land and air ]

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