Cleanup bills? No problem — become insolvent

Peter Jackson
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Even those who strongly supported Danny Williams’ tenure as premier have to admit that on at least one or two occasions, he perhaps failed to look before he leapt.

That certainly applies to the AbitibiBowater expropriation in 2008.

There were clear mistakes — like the unintended expropriation of the Grand Falls mill property itself — and then there were the less predictable ones, such as the fact that civil, national and international judiciaries would almost single-mindedly see the province’s action as anything other than protecting the people’s interests.

Few could be so naïve as to think legal challenges were unlikely. But the zero batting average that has so far materialized demonstrates as much a gross legislative imbalance in favour of corporate rights as it does sloppy tactics on the part of the province.

The latest smackdown came last week from the Supreme Court of Canada, which essentially upheld Abitibi’s right to shirk its responsibility to clean up the environmental mess it left behind in this province.

It was the final avenue of appeal for the province after a Quebec judge earlier dismissed cleanup orders as little more than a money grab, and relegated them to mere creditor status under bankruptcy protection laws.

I’ve read the latest decision, and it really does boil down to this

one question: were the province’s cleanup orders really just a veiled demand for monetary compensation?

Personally, I find it incredible that this should be the issue.

When a creditor makes a claim against an insolvent company, there is little motive considered other than that creditor’s financial interests. No one cares what the creditor does or doesn’t do with any money he exacts.

On the other hand, a province that demands environmental cleanup is not solely concerned with the financial bottom line. Whether or not money is moved around from one coffer to another, the end result is that the cleanup is done and that the polluter pays for it.

But let’s just take the money argument on its face.

In other words, a province seeking money for something as vital as environmental remediation has no more status than a lender looking to claw back its investment. This, according to the judges, is how the law works.

The appeal courts (Quebec and Canada) both accepted the original judge’s view that monetary reimbursement was the only foreseeable outcome of the cleanup orders.

That view led Supreme Court Justice Bev McLachlan and one other judge to dissent from the majority opinion.

McLachlan disagreed with her colleagues’ assumption that monetary amounts were implicit in the orders.

Here’s part of what she wrote:

“On one of the properties, the (environment) minister did emergency remedial work and put other work out to tender. These costs can be claimed in the (insolvency) proceedings. However, with respect to the other properties, on the evidence before us, the minister has neither done the clean-up work, nor is it sufficiently certain that he or she will do so. The Province of Newfoundland and Labrador (the “Province”) retained a number of options, including requiring Abitibi to perform the remediation if it successfully emerged from the … restructuring.”

In other words, even the premise that this is a money grab is suspect.

The original Quebec judge used the unique nature of the expropriation to question the province’s motives.

In particular, he noted that a senior minister admitted remediation bills would be used to defray compensation claims from Abitibi.

But how is mitigating compensation the same as a money grab? If anything, it’s plugging a money drain.

McLachlan found legal precedence to suggest “regulatory duties owed to the public are not ‘claims’ under the Bankruptcy and Insolvency Act.”

In other words, those orders could still be in effect today, now that Abitibi is viable again.

By law, however, they can’t, because they’ve been ruled monetary and therefore dissolved along with other claims.

Some argue the province should have had the foresight to order these cleanups before the company became insolvent.

Perhaps it would have been just as wise to wait till the company emerged from its financial woes.

Peter Jackson is The Telegram’s commentary editor.


Twitter @pjackson_NL

Organizations: AbitibiBowater, Supreme Court of Canada, Province of Newfoundland and Labrador

Geographic location: Abitibi, Quebec, Grand Falls Canada

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Recent comments

  • Government Protected
    December 13, 2012 - 08:27

    What gives government members immunity? if these actions were taken in the corporate world, those responsible would be held accountable...even if it takes years later in the courts; see the Hickman Group and Myles Leger law suits as recent examples. But, contamination in this province has been ongoing for years by various industries, corporate entities and foreign nations, with little or no recourse to the polluter; NL & Labrador have been used as a dumping ground for generations at our taxpayers' expense.

  • Scott Free
    December 13, 2012 - 07:39

    The Danny Damage Era will plague our province for generations to come; for all it's monumental boondoggles and Dunderblasts, the death of democracy will be our biggest downfall.

  • Corporate Psycho
    December 12, 2012 - 21:17

    One or two occasions? The history books will not remember Mr. Williams fondly. Lest we forget. It all comes out in the wash.

  • david
    December 12, 2012 - 11:41

    Danny Williams was a malignant cancer to Newfoundland. He screwed up everything he decided to touch, including the Abitibi mess, federal government relations, general political accountability, this now-unstoppable Muskrat Falls debacle, and the former perception of Newfoundlanders as a generous, kind-hearted people. We won't come to that conclusion in our lifetimes ---- far too many mindless minions still around for that to happen ---- but history will.

  • mr. scrooge
    December 12, 2012 - 09:05

    taxpayers are on the hook for the cleanup, not some useless overpayed polticians who made fools out of the taxpayers in the first place. anyone with a brain knew that expropriating resources from a company in bankrupcy protection was bad news. when danny said jump, the puppets said how high, including the liberals and ndp. WHEN WILL THEY DO THE DECENT THING AND RESIGN, AND OPOLIGIZE TO THE PEOPLE OF CENTRAL ?

  • Ed Hollett
    December 12, 2012 - 07:59

    Had the provincial government not been seizing hydro-electric assets solely for the benefit of Nalcor, had it not further engaged in an abusive process subsequent to the discovery that it had expropriated the mill contrary to its own scheme other words had the provincial government been acting to protect the public interest in the environment purely and simply, then the provincial government would not have had the problem in the SCC case it did. You claim Danny made a mistake in this case because he missed "the fact that civil, national and international judiciaries would almost single-mindedly see the province’s action as anything other than protecting the people’s interests." That was a huge mistake in this. You nailed it. Williams pushed this and no one challenged him or tried to stop him even though there were enormous, obvious problems with the government's scheme from the outset. What's missing from your comment is the observation that this expropriation and the government's subsequent actions WERE anything but about protecting the people's interest. The courts haven't missed it. Seven of the nine wise souls on the SCC couldn't mistake it. What's truly amazing is how many people in this province were blind to the obvious. What's even more amazing is how many of them are still blind to the obvious after four years and a ton of information we didn't have in 2008.

  • Cold Future
    December 12, 2012 - 07:20

    The expropriation was a major blunder and ill conceived. The only expropriation required was to cover the water, mineral, forests and lands rights. The mill and sites were a disaster still with the company and the province would still be a creditor but for the blunder. The hydro plants were just as well left with the bankruptsy. The only purchasers for the electricity were the government and Nf Light and Power. The money paid double to the unions will never be recovered.The cost of go it alone and the fighting newfoundlander is high and the taxpayer bears the brunt every time.

  • Maurice E. Adams
    December 12, 2012 - 07:10

    And with that kind of track record, we are about to take on billions in Muskrat Falls debt and thereby put the very ownership and/or control of the Muskrat Falls Generation Falls Facility, the Labrador (Churchill) Transmission Link, and the Labrador Island Link at risk?