SYNCRUDE SENTENCING: $3 MILLION FOR WATERFOWL FATALITIES
By David Farmer and Matti Lemmens
In the July issue of the Environmental Law News, we reported that Syncrude Canada Ltd. (Syncrude) was found guilty on June 25, 2010 under both federal and provincial charges in connection with the deaths of 1,606 waterfowl. The ducks were killed by toxicity in April 2008 when they landed on Syncrude's Aurora tailings pond (Aurora Pond). Syncrude was found guilty of failing to store a hazardous substance in a manner that ensured that it did not come into contact with any animals, contrary to s. 155 of the provincial Environmental Protection and Enhancement Act (Alberta) (EPEA), and of depositing a substance harmful to migratory birds in an area frequented by migratory birds, contrary to s. 5.1(1) of the federal Migratory Birds Convention Act (Canada) (MBCA).
Syncrude initially indicated it would appeal the decision; however, Syncrude changed counsel and commenced sentencing negotiations with the Crown. On October 22, 2010, the Alberta Provincial Court issued its sentence, accepting the arrangements struck between Syncrude and the Crown under which Syncrude agreed to a total penalty of $3,000,000 (the Sentence). There will be no appeal by Syncrude as a result of the negotiated sentence.
The Sentence is comprised of both fines and additional penalties, taking into consideration s. 16 of the MBCA and s. 234 of the EPEA. These "creative sentencing" provisions authorize both penalties and statutory fines. A sentencing order issued pursuant to either of these provisions will consider the nature of the offence and the circumstances surrounding its commission to determine what additional penalties might be appropriate for creative sentencing purposes, so that the penalties are still consistent with the purpose of the statutes. Typically, additional penalties are used to fund education and environmental protection programs.
Syncrude was sentenced to the maximum fine allowable under the MBCA ($300,000 on summary conviction) and under the EPEA ($500,000), for a total of $800,000. A $250,000 portion of the EPEA penalty will be used to create an educational program at Keyano College in Fort McMurray, Alberta teaching bird protection and monitoring. The program will be integrated with aboriginal training programs at the College.
The additional penalties under the MBCA and EPEA totalled $2,200,000. $1,300,000 of the penalties will be paid to the University of Alberta for funding the Research on Avian Protection Project, and $900,000 will go to the Alberta Conservation Association to acquire land for the Golden Ranches Waterfowl Habitat Project. All of the projects feature monitoring and accountability measures.
The Court accepted the joint submission of Syncrude and the Crown as sufficiently addressing the applicable sentencing principles; however, the Court did not issue reasons analyzing the proposal and the Sentence. Because of the absence of judicial reasons, the Sentence may have less precedential value in future application to other cases. The Sentence demonstrates, however, that in addition to the maximum penalties, a Court in appropriate circumstances may impose additional penalties depending upon the nature and the surrounding circumstances of the offence.
Another recent application of s. 5.1(1) of the MBCA within the energy context occurred on November 19, 2010 when Harvest Operations Corp. (Harvest) was sentenced under the provision after approximately 300 birds died from contact with 14,500 litres of crude oil. The oil was released from a sealed oil well in southern Alberta, near Suffield, in September 2008, creating small pools in natural indents in the land to which the birds were attracted.
An Energy Resources Conservation Board (ERCB) investigation revealed that the wellhead was installed improperly and the bridge plug had leaked. Harvest had not complied with ERCB regulations requiring either the abandonment or suspension of the well. Nevertheless, Harvest had reported the release of the oil immediately upon its discovery and took action to prevent further harm to migratory birds, including an extensive clean-up of the site. Harvest pled guilty to the charge, and was fined $125,000, well below the maximum fine of $300,000. The creative sentencing provisions employed in the Syncrude sentencing were not employed in this subsequent decision, and there was no consideration of the Syncrude sentence.
Neither Syncrude's nor Harvest's sentences reflect amendments contained in federal Bill C-16, which will toughen enforcement and penalty provisions in the MBCA and eight other environmental statutes administered by Environment Canada and Parks Canada. Bill C-16 received Royal Assent on June 18, 2009, but the relevant provisions are not yet in force. These much tougher enforcement provisions will see a "large company" (defined as $5,000,000 in annual gross revenue) facing a potential maximum fine under the MBCA of $4,000,000 (summary conviction) to $6,000,000 (indictable offence), with a minimum fine of $100,000 (summary) to $500,000 (indictment), as well as the additional penalties available under the creative sentencing provisions in the MBCA and used with Syncrude.
ENVIRONMENTAL ENFORCEMENT ACT (BILL C-16) IN FORCE IN STAGES
By William K. McNaughton
Federal Bill C-16, the Environmental Enforcement Act, mentioned in the article above and which received Royal Assent on June 18, 2009, is now coming into force in stages.
On December 10, 2010 the new penalty regime for significantly higher maximum fines, mandatory minimum fines, and different maximum and minimum fines for individuals, small corporations and large corporations, came into force for five of the nine statutes it covers: the Antarctic Environmental Protection Act; the Canada National Marine Conservation Areas Act; the Canada National Parks Act; the International River Improvements Act; and the Saguenay-St. Lawrence Marine Park Act. For these statutes, and for the Canadian Environmental Protection Act (CEPA), December 10, 2010 was also the date that the new provisions dealing with the purposes and principles of sentencing in environmental cases, aggravating factors on sentencing that a court must take into account, and application of all fines to the federal Environmental Damages Fund came into force (applicable to the existing penalties under CEPA).
The new penalty regime for the remaining statutes will come into force over time: for the Canadian Environmental Protection Act the necessary regulations are expected to be out for public comment in spring 2011 and the full regime in place shortly thereafter; for the Migratory Birds Convention Act, the Canada Wildlife Act, and the Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act, new regulations and the coordination with the new federal administrative monetary penalty scheme means the new penalty regime is not expected to be in force until the middle of 2012.
The federal administrative monetary penalty scheme (tickets for environmental offences) is also delayed until mid 2012. Although the Environmental Violations Administrative Monetary Penalties Act is now in force as of December 10, 2010, it is not operational as the regulations and the infrastructure to run the scheme have not yet been developed.
Full details on these new environmental enforce measures are found in the Spring 2009 edition of the Borden Ladner Gervais Environmental Law News.
CROWN TO BE OWNER OF PORE SPACE AND LIABLE IN RESPECT OF CARBON CAPTURE AND STORAGE PROJECTS
By Michael Massicotte and Katherine Murphy
In 2008 the Government of Alberta committed $2 billion to large scale carbon capture and storage (CCS) projects. CCS is a process that captures carbon dioxide emissions from large industrial emitters and stores them in geological formations several kilometres below the earth's surface. To assist in facilitating the implementation of this technology, on November 1, 2010, Bill 24: Carbon Capture and Storage Statutes Amendment Act was introduced and given first reading in the Alberta Legislature. Alberta is the first jurisdiction in Canada to consider comprehensive legislation to regulate CCS projects.
When Bill 24 was introduced, Energy Minister Ron Liepert identified the following three objectives it was intended to address:
- To clarify the ownership of pore space in Alberta;
- To create a scheme whereby the Province accepts long-term liability for injected carbon dioxide; and
- To create a stewardship fund, financed by CCS operators, which will be used for remedial and ongoing monitoring costs associated with CCS.
Notably, Bill 24 proposes to introduce a provision to the Mines and Minerals Act which declares that the pore space below the surface of all land in Alberta, other than land owned by the Federal Crown as of the date that the provision comes into force, to be the property of the Crown in right of Alberta. This declaration would apply regardless of whether the Mines and Minerals Act or an agreement issued under the Mines and Minerals Act grants rights in respect of a subsurface reservoir or in respect of minerals occupying a subsurface reservoir.
In accordance with Bill 24, the Alberta Government would take over the permanent liability related to the injected carbon dioxide once the CCS operator has collected data substantiating that the stored carbon dioxide is "contained".
The CCS operator will be responsible for any mitigation work during the operation until a closure certificate has been issued by the Province. CCS operators will also pay into a post-closure stewardship fund (in an unspecified amount) to be managed by the Alberta Government. The fund will cover ongoing monitoring and any remedial work required.
Energy Minister Liepert commented that the captured CO2 would be used to enhance oil recovery which was expected to double Alberta's conventional oil recovery. According to a News Release issued by the Government of Alberta on November 1, 2010, the Alberta Carbon Capture and Storage Development Council estimates that carbon captured and used in enhanced oil recovery to increase production from depleting conventional reservoirs could produce an additional 1.4 billion barrels of oil, generating up to $25 billion in provincial royalties and taxes.
Bill 24 proposes significant amendments not only to the Mines and Minerals Act, but to numerous other statutes as well, including the Energy Resources Conservation Act and the Oil and Gas Conservation Act.
BLG will be monitoring the progress of Bill 24 as it proceeds through the legislative process.
FAR REACHING LIABILITY IN HAZARDOUS WASTE DISPOSAL
By Luke Dineley
In a recent decision by the British Columbia Supreme Court, Enviro West Inc. v. Copper Mountain Mining Corp (2010 BCSC 1443), a waste oil collection company was awarded $766,033 in damages when the transformer it was hired to drain oil from contained a high level of Polychlorinated Biphenyl (PCB). The owner of the transformer and all the companies down the contractual chain were found liable for the damages suffered by the contractor.
The plaintiff waste oil company, Enviro West Inc., was hired by Boundary Electric (1985) Ltd. to drain the oil from a transformer owned by Copper Mountain Mining Corp. Copper Mountain was restarting a mining operation and had hired Canyon Electric to perform a restructuring of the mine's electrical system. Canyon Electric subcontracted part of the work to Boundary Electric, including the removal of the transformer, who in turn subcontracted with Enviro West to remove the oil in the transformer.
Boundary Electric and Enviro West were not licensed to handle hazardous waste and did not know the level of PCBs in the oil was above the regulatory level. The other parties were aware the transformer contained PCBs. Enviro West collected the PCB laden oil from the transformer, mixed it with the waste oil in its truck and transported the oil to a storage tank at Enviro West's holding facility. As a result, approximately 91,000 litres of oil were contaminated with PCBs. Once it became aware of the PCB contamination, Enviro West disposed of the contaminated oil, remediated its facility and brought the action to recover its costs.
The court held that all the parties were liable to Enviro West. Copper Mountain failed to take any steps to ensure the PCB waste in its possession was handled properly, such as providing information on the nature of the oil and its risks. If they had, Enviro West would never have collected the oil and suffered the resulting damage. Canyon Electric failed to advise Boundary Electric that the transformer contained PCB laden oil or that it did not know the PCB content of the transformer. Boundary Electric failed to test the oil in the transformer and failed to inform Enviro West that it had not verified the PCB content of the oil.
Each of the defendants were found negligent and each defendants' negligence materially contributed to the plaintiff's loss. As a result, all the defendants were held liable.
This case demonstrates the diligence and care that must be taken when dealing with hazardous waste. All efforts must be made to ensure that hazardous waste is handled properly and safely and all parties are fully informed of the nature of the waste.
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