Bankrupt companies should not get a free pass on cleaning up contaminated sites, say Ecojustice lawyers

OTTAWA – An Ecojustice lawyer will be at the Supreme Court of Canada tomorrow to argue bankrupt energy companies cannot be permitted to walk away from unprofitable oil and gas wells without cleaning them up first.

“We have long said that corporations have an obligation to remediate environmental contamination,” said Adrian Scotchmer, Ecojustice lawyer. “This includes instances in which corporations are undergoing insolvency proceedings.”

The case before the Supreme Court of Canada, filed by the Alberta Energy Regulator and the Orphan Well Association, challenges a lower court ruling that determined the Redwater Energy Corporation’s bankruptcy trustees are free to pick and choose from among the company’s assets and can ignore an Alberta Energy Regulator order to decommission the unproductive oil and gas wells.

This would leave responsibility for site clean-up to the Orphan Well Association — an industry-funded organization that manages the abandonment and remediation of orphan wells.

“With the number of inactive wells in Alberta at an all-time high, now is not the time to signal to energy companies that they can turn their backs on unprofitable sites when they go belly-up,” said Barry Robinson, an Ecojustice lawyer who has worked on inactive well issues for almost 10 years. “We believe that the law should be interpreted in a manner that prevents more companies from using insolvency proceedings to avoid their responsibility to remediate contaminated sites and leave landowners and taxpayers on the hook.”

In the last 20 years, the number of inactive wells in Alberta has tripled. It is estimated that the province has more than 80,000 inactive oil and gas wells that have yet to be properly cleaned up and de-commissioned. These sites can contaminate the surrounding land, creating a toxic burden for landowners, the environment and taxpayers.

“The outcome of this case will determine if companies that benefitted from oil and gas operations will be held to account and compelled to clean up their messes,” said Robinson. “And it raises the question: If a corporation does not have the financial capacity to remediate the harm they cause to the environment, then should they really be in that business in the first place?”