Red Deer, AB— On February 15, 2018, the Supreme Court of Canada will hear the case, Orphan Well Association, et al. v. Grant Thornton Limited, et al., also known as the Redwater Appeal. The case involves the bankruptcy trustee of an oil company, Redwater Energy Corp. that disclaimed Redwater’s old, non-producing and orphan wells as a way to increase the returns to creditors by avoiding liability for the costs of abandonment. Abandonment involves properly sealing the wells and remediating the land where they are situated. The trustee, Grant Thornton Limited, ignored Alberta Energy Regulator’s abandonment and remediation orders, arguing that the federal Bankruptcy and Insolvency Act takes precedence over Alberta’s environmental regulations. The Alberta Court of Queen’s Bench agreed with Grant Thornton.
The Alberta Energy Regulator is appealing the decision to the Supreme Court of Canada. If left to stand, the Alberta Court’s decision could encourage companies to use bankruptcy as a strategy to avoid responsibility for environmental damage caused by their operations. The cost of dealing with the orphaned wells and other defunct resource company operations would then fall upon the public, landowners, and future generations.
The National Farmers Union filed an affidavit in support of Action Surface Rights’ Alliance (ASRA) being an intervener speaking for farmers in the Redwater Appeal case. In their factum, ASRA states: “Law requiring abandonment is in place to protect land and the individuals who live on it. That land that does not belong to any of a debtor’s stakeholders. Law requiring remediation and reclamation of land is there to serve the interest of individual landowners, and its application should not be subject to the whims of a receiver or trustee.”
“We are very concerned about the implications of this case, because as farmers, we cannot refuse access to an oil company if it decides it wants to drill for the minerals that lie below our land,” said Doug Scott, NFU Regional Coordinator for Alberta. “If the banks and finance companies get their way, the oil companies will be able to just walk away from the messes they make and we will be left with contaminated soil, weeds, spilled fluids, and unproductive, permanently damaged soil.”
“The NFU has been vocal about the impacts of oil company activities on farmland and on the livelihoods of farmers for many years,” said Glenn Norman, NFU Region 7 (Alberta) Board member. “This case is vitally important to farmers across Canada. We support the efforts by all who are working to uphold the “polluter pay” principle at the Supreme Court. We are grateful that ASRA was willing to get involved and speak up for farmers.”
“Instead of letting resource companies extract all they can, and then walking away if and when the costs rise above the returns, companies carrying out non-farming activities on farmland should be required to put up a bond to cover remediation costs as a condition of their leases,” said Jan Slomp, NFU 1st Vice President (Policy). “This should be a legal requirement in every province so the landowner is not left with polluted soil and clean-up expenses.”
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For more information:
Glenn Norman, NFU Region 7 (Alberta) Board member: (403) 227-2253
Doug Scott, NFU Region 7 (Alberta) Co-ordinator: (780) 358-2376 or (780) 650-1336
Jan Slomp, NFU 1st Vice President (Policy): (250) 898-8223 or (403) 704-4364
Supreme Court Case Information: Case #37627 Orphan Well Association, et al. v. Grant Thornton Limited, et al.
Listen to the hearing via webcast.