Province loses bid to force Abitibi to clean up contamination, Supreme Court of Canada ruled 7-2 against government

Province loses bid to force Abitibi to clean up contamination, Supreme Court of Canada ruled 7-2 against government by Barb Sweet, December 8, 2012, The Advertiser
The Supreme Court of Canada has ruled against the government in its effort to force insolvent newsprint giant AbitibiBowater Inc. to pay for an environmental cleanup. “Thank God we expropriated. “If we hadn’t expropriated, the company still would have gone into double-C double-A protection or into bankruptcy protection, and we would have been left with nothing but the contaminated assets,” Marshall said. “By expropriation, we got the valuable assets — the power plant, the water rights, the valuable timber and we got the land that wasn’t contaminated.” … The province wanted the top court to decide whether a debtor’s statutory duty to remove environmental contamination is extinguished under Companies’ Creditors Arrangement Act.

The company, now operating as Resolute Forest Products, had filed for protection under the act in 2009. The province wanted to force the company to clean up five contaminated sites, estimated to cost at least $100 million. They include the defunct Grand Falls-Windsor paper mill that the province mistakenly expropriated in December 2008. The government only meant to take the water and timber rights from the company, and associated hydroelectric dams, but in the rush to pass legislation through the House of Assembly, the government accidentally took the mill property as well. The precedent set by the high court decision could put the province on the hook for billions in the future when faced with situations of other insolvent industries, Marshall acknowledged. “What it’s done, it’s taken the environmental orders which are issued by a regulatory agency to protect the public and has equated that with the ordinary claims of creditors,” Marshall said.  … The high court acknowledged the so-called “polluter pay” principle, but ruled it wasn’t enough to give the province the victory it has now failed to achieve in three levels of court. “Our argument all along was we weren’t seeking money. We, under the Environmental Protection Act, had issued a number of orders,” Marshall said. “We were not seeking money, but ordering Abitibi to clean up its mess.” Environment Minister Tom Hedderson said the province will have to look to future budgets to come up with the cash for the cleanup. He said there’s no chance now of recovering any cleanup money. Hedderson gave no timeline on the job, but noted the work that has already begun in nearby Buchans as addressing health risks. … “We should not have expropriated the mill. That was a mistake,” Ball said. “We got an environmental liability here we don’t want.”

“We were led to believe by (then premier Danny) Williams the bankruptcy was imminent and taking the action with regard to the water rights and the power rights, etcetera, would be extremely important for the province. We all acted under the urgency he was pushing as premier.” Michael also said the lesson of rushed decisions should be heeded when it comes to the Muskrat Falls project. The Quebec Court of Appeal earlier refused to hear the province’s appeal against the Montreal-based company. A spokesman said the company was pleased with the decision. “The decision of the Supreme Court speaks for itself,” said Seth Kursman. The Supreme Court ruled against the province, essentially telling it that it had to get in line with other creditors.

The case has been politically charged and attracted attention from the governments of Alberta, Ontario and British Columbia as well the environmental groups, which were all granted intervener status. “This case is a loss for the environment,” said Beatrice Olivastri, the head of Friends of the Earth Canada. The ruling will ultimately have a negative effect on the ability of provinces to deal with polluters, she said. Olivastri predicted the provinces will have to ensure companies “have enough money in the pot” to pay future cleanups at the time they grant licences for new projects. Ecojustice lawyer William Amos, who represented Friends of the Earth, said the high court missed a chance to infuse insolvency law with the polluter-pay principle. “And ultimately, unless the federal government goes about amending federal insolvency law, taxpayers may end up on the hook for significant environmental liabilities because provinces will be in a much more difficult situation,” he said.

The federal government subsequently agreed to pay AbitibiBowater $130 million to settle a claim under the North American Free Trade Agreement. … Amos said corporations often use bankruptcy as a strategic move to restructure debt, and not necessarily purely because of financial crisis. The Supreme Court addressed that point in its ruling, and disagreed. … “To subject orders to the claims process is not to invite corporations to restructure in order to rid themselves of their environmental liabilities.”

High court says Newfoundland cant force insolvent firm to clean contamination by Mike Blanchfield and Sue Bailey, December 07, 2012, GlobalTV BC
The Supreme Court of Canada has ruled against the government of Newfoundland and Labrador in its effort to force insolvent newsprint giant AbitibiBowater Inc. pay for an environmental cleanup. The Grand Falls-Windsor plant was one of five contaminated sites the province wanted cleaned up. Newfoundland and Labrador called on the Harper government Friday to change corporate bankruptcy laws after it lost a major environmental appeal before the Supreme Court of Canada. The province failed in its bid to force the newsprint giant, formerly known as AbitibiBowater Inc., to pay for an environmental cleanup, as the Supreme Court sided with the company in a 7-2 ruling. The province’s attorney general called for legislative changes after Friday’s ruling, which acknowledged the so-called “polluter pay” principle. But that wasn’t enough to give the province the legal victory that eluded it Friday for the third time.

This entry was posted in Other Lawsuits. Bookmark the permalink.