Marshall says high court’s decision brings fight over cleanup costs with AbitibiBowater to an end

The Canadian Press and The Telegram
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Tom Marshall — Telegram file photo

The province’s Attorney General Tom Marshall said today a Supreme Court of Canada ruling that dismisses Newfoundland’s attempt to force insolvent newsprint giant AbitibiBowater Inc. to pay for environmental cleanup at sites in the province is the end of the issue.

 "We're obviously disappointed but we have to accept the decision," Marshall told reporters today.

He said "thank God" the province had expropriated the assets in Grand Falls-Windsor.

Marshall said the decision has equated the province's rights in protecting the environment with creditor rights.

The province lost its bid at the country’s highest court to get Abitibi to pay the at least $100 million cleanup of the mill site in the central Newfoundland town and other various sites the company was involved with in the province over the years.

Environment Minister Tom Hedderson said cleanup funds will have to come from future provincial budgets.

Liberal Leader Dwight Ball said his party is disappointed but not surprised by the decision.

Ball said the province should not have expropriated the mill, because it got an environmental bill it did not want.

"We did not want this mill. We wanted the forestry and the water rights," he said.

NDP Leader Lorraine Michael says the whole ordeal is unfortunate.

"It's unfortunate for the people of the province," she said.

Michael said she regrets not putting the brakes on during the original expropriation vote in the House of Assembly.

She blamed the mistake on the urgency attached to the vote by then Premier Danny Williams' government.



 • • •

(Earlier story from The Canadian Press).


High court says province can’t force insolvent company to clean contamination

By Mike Blanchfield


OTTAWA — The Supreme Court of Canada has ruled against the government of Newfoundland and Labrador in its effort to force insolvent newsprint giant AbitibiBowater Inc. to pay for an environmental cleanup.

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.

The court’s 7-2 ruling was greeted with disappointment by the environmental group that intervened in the case.

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 (TSX:RFP), 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 between $50 million and $100 million.

They include a defunct Grand Falls-Windsor paper mill in central Newfoundland that the province expropriated in December 2008.

The Quebec Court of Appeal earlier refused to hear the province’s appeal against the Montreal-based company.

A spokesman for the company said it 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.

Writing for the majority, Justice Marie Deschamps, now retired, said allowing the province to operate outside the bankruptcy law regime would be akin to asking all other creditors to pay the province.

The ruling acknowledged the “polluter pay” principle but said in this case it did not give the province any special status that would move it ahead of other creditors.

“In the insolvency context, the province’s position would result not only in a super-priority, but in the acceptance of a ’third party-pay’ principle in place of the polluter-pay principle,” Deschamps wrote.

“Nor does subjecting the orders to the insolvency process amount to issuing a licence to pollute, since insolvency proceedings do not concern the debtor’s future conduct. A debtor that is reorganized must comply with all environmental regulations going forward in the same way as any other person.”

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 clean-ups 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.

“They will find it much more difficult to issue an order to remediate if companies will simply anticipate being able to argue that they should get in line with the rest of the creditors.”

The province rushed through legislation to seize Abitibi timber and water rights, along with a hydroelectric power station, after the failing company announced it was closing the Grand Falls-Windsor mill.

The federal government subsequently agreed to pay AbitibiBowater $130 million to settle a claim under the North American Free Trade Agreement.

Remediation orders will have to be issued and acted upon well before a company goes under, Amos said.

“This decision demonstrates clearly that federal insolvency laws require significant reform so that they don’t serve to protect companies and investors at the expense of taxpayers and regulators. The Companies’ Creditors Arrangement Act must be amended by Parliament so that taxpayers aren’t left holding the bag when companies go insolvent.”

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.

“No matter what risks are at issue, reorganization made necessary by insolvency is hardly ever a deliberate choice. When the risks materialize, the dire costs are borne by almost all stake holders,” Deschamps wrote.

“To subject orders to the claims process is not to invite corporations to restructure in order to rid themselves of their environmental liabilities.”


Organizations: Supreme Court of Canada, AbitibiBowater Inc., Resolute Forest Products TSX Friends of the Earth North American Free Trade Agreement.Remediation

Geographic location: Newfoundland and Labrador, Abitibi, Alberta Ontario British Columbia Canada

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Recent comments

  • Don II
    December 09, 2012 - 14:33

    The Government of Newfoundland wanted to take the water and forestry rights and the electrical generating plant owned by Abitibi and it wanted to take those assets from Abitibi on the cheap through expropriation instead of buying the assets for full market value. The Government of Newfoundland and the Union did absolutely nothing to keep Abitibi in business. When the economy fell apart in 2008, the Government of Newfoundland pounced on a financially weak Abitibi like a cold hearted banker foreclosing on a sick widow. The Government of Newfoundland acted in greed and haste and ended up expropriating the environmentally polluted pulp mill by mistake. The Government of Newfoundland by expropriating Abitibi breached the NAFTA and cost the Harper Government $300 million to settle the case with Abitibi. The Government of Newfoundland got what it deserved which was a worthless pulp and paper mill, a bunch of unemployed mill workers, a $100 million plus environmental cleanup, a losing case in the Supreme Court of Canada, a huge legal bill and a reputation in international business circles as a ruthless, power mad, dictatorial Government that cannot be trusted! The opposition parties, while somewhat remorseful now, went along with this travesty in 2008 and ran as fast as they could to the House of Assembly on Premier Danny Williams orders to vote in favor of ripping off Abitibi! The only thing that Abitibi is guilty of is wanting to obtain top dollar on the market for its assets before being ripped off by the Government of Newfoundland. Abitibi got expropriated before it could put the For Sale sign in the window. It appears that politicians in Newfoundland and Labrador have no ethics, no moral compass and fail to understand that treating business in such a petty and vindictive manner will have long lasting negative repercussions for the future development of Newfoundland and Labrador. The word is out on Wall and Bay Streets, if the Government of Newfoundland ever finds itself in dire financial straits it can no longer expect anyone in international finance to bail it out. What goes around comes around!

  • Mel
    December 08, 2012 - 14:27

    During restructuring under the Companies’ Creditors Arrangement Act, the Court must distribute the available assets in a fair way, knowing that virually everybody will not be totally satisfied. What the Government wanted to do in this case was jump to the top of the line and grab some money first. The Government's position is this whole mess is absurd. First, they expropriate the generating stations and contrary to the law, they do not pay for what they expropriated. This is equivalent to stealing. Then, the Government turns around and wants the Company to better the lands that were stolen from them! An analogy for the lay person is "having your car stolen, then when the thieves notice the tires are worn, they install a new set of tires and send you the bill"

  • Harold
    December 08, 2012 - 09:58

    it's sad when a company, any company, can come into your backyard, make a mess and then leave the mess for you and/or your grandchildren to cleanup. it just goes to show that we the people have no rights. this is not just about AbitibiBowater Inc.

  • P F Murphy
    December 08, 2012 - 07:11

    They made this mistake with Danny Williams in charge and it's going to cost only 100 million dollars. Now they have Dunderdale and Kennedy who wouldn't let experts question the Muskrat Falls deal in the House because Kathy and Jerome don't understand it and aren't competent to explain or defend it. I mean what could go wrong and it's only a $7.4 billion deal that a majority want passed because their ears are tired or they're salivating to make a fast buck from the cascade of fumbled contracts that will come out of it. It's like being at sea in the Titanic. It's a wonderful ride for the first while, but not so good when reality hits home. Sail on, sail on!

  • MallRat
    December 08, 2012 - 06:45

    We all have to suck this one up! This is what we get for electing all persons of all parties, who put themselves forward in public life as politicians but don't have a Sweet Clue about the legal ramifications of actions that could affect every man, woman and child on this island. Even the elected officials who were once Lawyers prior to taking up residence at the Confederation Building, if they were actually any good at Law or at least making any money, they would never have jumped the Law ship into public life.... Unless you were Danny Billions of course!

  • Kev
    December 07, 2012 - 21:00

    These people are not fit to hold office. Time to clean house.

  • david
    December 07, 2012 - 14:49

    he "St. Danny" era should, by now, be known in truth as the era 'of spiteful, childish pranks and complete lack of anything constructive being achieved...except for what the oil companies provided. And until the Muskrat Falls debacle plays itself out as a bankrupting and ruinous event, this Abitibi episode is the most notable bag of flaming dog poop at every Newfoundlaner's front door. Thanks Danny, and all your mindless minions who continue to stroke your gigantic ego.

  • Maurice E. Adams
    December 07, 2012 - 14:24

    The same kind of 'urgency' that is now being attached to Muskrat Falls.

  • former resident of grandfalls-windsor
    December 07, 2012 - 14:15

    end of the issue for who mr. minister ? for you and the rest of your overpayed mha friends who made fools out of the people of newfoundland/labrador for propriating the resources and the mill in the first place. the taxpayer are now on the hook for the cleanup. what an embarrassment this government as become to my home province.