Supreme Court ruling on environmental liability could warrant NWT legislative changes

GNWT studies possible implications of Redwater ruling

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The territorial government is analyzing whether the Supreme Court of Canada’s Redwater decision, which ruled that companies facing insolvency must pay environmental liabilities before repaying creditors, could compel legislative changes in the NWT.

Frame Lake MLA Kevin O’Reilly raised questions in the legislative assembly Feb. 14 about whether the territory’s legislation lines up with the Jan. 31 SCC ruling.

The Supreme Court of Canada Redwater Decision could have impacts on territorial legislation said Frame Lake MLA Kevin O’Reilly during question period Feb. 14.  NNSL file photo

Redwater Energy planned to abandon its cleanup responsibilities for both active and inactive gas wells to the Alberta Orphan Well Association (OWA) and repay creditors $5-million.

The OWA alongside the Alberta Energy Regulator (AER) saw four provincial governments intervene in the case which overturned a lower court ruling that said trustees can ignore orders by the regulator to decommission wells.

Justice Minister Louis Sebert says he plans to personally review the case and assess its implications for the obligations and responsibilities of trustees under territorial legislation.

The lands department is working alongside the Department of Justice to develop a full analysis, said Sebert.

“This is an important case that likely will have ramifications all across Canada … it will affect all companies and also affect those that lend to companies … further analysis is needed,” he said.

O’Reilly suspects financial institutions will be “more careful” about lending, he said in an interview following the decision.

“It’s going to make investors much more careful in what they choose to invest in because they may not be able to get a return on their investment if there are outstanding regulatory requirements.”

The GNWT’s position or response to the Redwater case will require input from several departments with responsibilities related to oil and gas and financial securities, said Sue Glowach, senior communications advisor with the Department of Justice (DOJ).

The government’s position “must also consider the roles of several independent regulatory authorities,” said Glowach.

The justice department’s role will be considered privileged legal advice, she said.
Alberta includes “trustee” within its definition of “operator” in its legislation.

O’Reilly questioned whether current legislation covers off liability for trustees and if changes should be made to definitions of whether a trustee is liable for environmental requirements.

Sebert will return to the legislative assembly with information on whether territorial legislation includes trustees. If trustees were included as operators it would make a “major change in the law,” he said.

The case “may have ramifications” beyond the oil and gas industry, said Sebert.

“That’s why we’re analyzing the case at this time. If it does point to the necessity of legislative change, we would certainly have to seriously consider that, as it is a Supreme Court of Canada case.”

Updated legislative provisions on securities incoming

The lands department will see to the introduction of legislation “shortly” that includes updated provisions for securities, said Sebert.

The department has been working alongside Executive and Indigenous Affairs and the Department of Environment and Natural Resources on contaminated sites. It is also contemplating a securities tracking system for the GNWT.

Part of the assembly’s mandate is to prevent public liabilities by developing a management approach for contaminated sites and a “sound financial security system” to prevent liabilities, said O’Reilly.

The Department of Lands coordinates across the GNWT and with boards to hold securities for various environmental liabilities.

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