Polluter Pays: Newfoundland and Labrador v. AbitibiBowater Inc.

Filed in Environmental justice by on December 6, 2012
AbitibiBowater mill in Grand Falls-Windsor, Newfoundland and Labrador. Photo: William Munoz. Creative Commons Attribution 2.0 Generic (CC BY 2.0) license.

AbitibiBowater mill in Grand Falls-Windsor, Newfoundland and Labrador. Photo: William Munoz. Creative Commons Attribution 2.0 Generic (CC BY 2.0) license.

On December 7, the Supreme Court of Canada is expected to announce a decision on the case of Newfoundland and Labrador v. AbitibiBowater Inc. et al (now known as Resolute Forest Products).

This ground-breaking legal case represents the first time Canada’s insolvency law has dealt with the polluter pays principle — in this case, for historic contamination by AbitibiBowater’s mining, shipping and pulp and paper operations in Newfoundland and Labrador. The company filed for insolvency protection in 2008, leaving a toxic legacy of heavy metals and other hazardous chemicals.

AbitibiBowater’s sites in Newfoundland and Labrador. OpenStreetMap, Creative Commons CC BY-SA 2.0 license.

AbitibiBowater’s sites in Newfoundland and Labrador. OpenStreetMap, Creative Commons CC BY-SA 2.0 license.

Friends of the Earth, represented by Ecojustice, intervened to argue that insolvent corporations must fulfill their environmental obligations and not pass the full cost of environmental cleanups on to taxpayers.

The polluter pays principle is among the most important environmental law concepts in Canada. It is the basic idea behind clean-up orders, penalties and cost recovery decisions. Implementing polluter pays involves polluters taking responsibility for remedying contamination for which they are responsible and imposes on them the direct and immediate costs of pollution.

As pioneers advocating for this principle to be put into practice, Friends of the Earth represented by legal counsel at Ecojustice, intervened in one of the earliest, precedent-setting polluter pay cases in Canada — Imperial Oil Ltd v. Quebec (Minister of the Environment) — in 2003.

Chronology

Key dates in the lead up to the December 7, 2012 decision by the Supreme Court of Canada

Date Event
December 4, 2008

AbitibiBowater announces that it will close its paper mill in Grand Falls-Windsor at the end of March 2009.1

1 “AbitibiBowater may take legal action over N.L. expropriation of assets,” CBC News, December 17, 2008.

December 16, 2008

Newfoundland and Labrador legislature passes legislation to expropriate AbitibiBowater’s assets. The legislation allows AbitibiBowater to continue operating the mill in Grand Falls-Windsor until the end of March, 2009.2

Abitibi-Consolidated’s timber licenses and water use rights were cancelled, and these rights reverted to the Crown. The Act also expropriated the company’s land, assets, and easements, including transmission lines, poles and associated facilities. Assets that were expropriated included the Millertown Dam, Bishop’s Falls Power House, Buchans Dam, Goodyears Dam, Grand Falls Power Plant, and control structures. The Act included a provision addressing the company’s environmental contamination: “Nothing in this Act affects the liability of Abitibi-Consolidated related to undertakings made by it in relation to environmental remediation.” 3

2 “AbitibiBowater may take legal action over N.L. expropriation of assets,” CBC News, December 17, 2008.

3 Abitibi-Consolidated Rights and Assets Act, December 16, 2008.

December 19, 2008

AbitibiBowater sends a letter to Premier Danny Williams, warning that it will file a trade complaint if the province proceeds with the expropriation of its assets.4

4 “Abitibi says Newfoundland expropriation illegal,” Reuters, December 19, 2008.

March 28, 2009

AbitibiBowater shuts its Grand Falls-Windsor paper mill, and 800 workers lose their jobs.5

5 “AbitibiBowater workers finish final shifts at N.L. paper mill,” CBC News, March 27, 2009.

April 16, 2009

AbitibiBowater files for bankruptcy protection under Chapter 11 of U.S. bankruptcy legislation in a Delaware court. The company says it will file for bankruptcy protection in a Canadian court the following day.6

6 “AbitibiBowater files for bankruptcy protection,” CBC News, April 16, 2009.

February 25, 2010

AbitibiBowater files a complaint under Chapter 11 of the North American Free Trade Agreement (NAFTA) over the expropriation of its Newfoundland assets by the provincial government. It seeks $500 million in compensation, alleging that the expropriation was unfair and discriminatory.7

7 Bertrand Marotte, “AbitibiBowater fights Danny Williams with NAFTA challenge,“ Globe and Mail, February 25, 2010.

August 24, 2010

NAFTA settlement announced. The federal government will pay a $130-million settlement, and AbitibiBowater will withdraw its claim under the North American Free Trade Agreement (NAFTA).8 9

8 Daniel MacEachern, “Feds to pay AbitibiBowater $130M over expropriation,” The Telegram, August 25, 2010.

9 “Feds to pay AbitibiBowater $130 million over Newfoundland expropriation,” Toronto Star/Canadian Press, August 24, 2010.

November 25, 2010

The Supreme Court of Canada agrees to hear Newfoundland and Labrador’s appeal of a ruling that favoured AbitibiBowater. The province wants AbitibiBowater to pay for the environmental cleanup costs at five sites.10

10 “AbitibiBowater appeal heads to Supreme Court,” CBC News, November 25, 2010.

November 16, 2011

Friends of the Earth, represented by Ecojustice, appears before the Supreme Court of Canada to argue that insolvent corporations cannot shift the cost of cleaning up environmental contamination to the taxpayer.11 12 13

11 “Friends of the Earth, Ecojustice ask Supreme Court to respect polluter pays principle,” Friends of the Earth Canada/Ecojustice, November 16, 2011.

12 Webcast of the hearing on November 16, 2011, Supreme Court of Canada.

13 Supreme Court of Canada case information: Factums.

December 7, 2012

The Supreme Court of Canada will deliver its judgment in the appeal in the case of Her Majesty the Queen in Right of the Province of Newfoundland and Labrador v. AbitibiBowater Inc. et al.14

14 “Judgment to be Rendered in Appeal,” Supreme Court of Canada, December 3, 2012.

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