Supreme Court of Canada to hear AER appeal of Redwater abandoned wells decision

Supreme court to hear appeal of Redwater case AlbertaViews.com photo.

Since May 2016,  1,600 AER-licensed sites disclaimed by receivers with liabilities over $100 million

The Supreme Court of Canada has confirmed it will hear the expedited appeal of the Alberta Energy Regulator (AER) and Orphan Well Association on the Redwater decision, according to an AER press release.

“For the past two years, we have worked very hard at all levels of court to ensure the consequences of the Redwater decisions are fully understood,” said AER president and CEO Jim Ellis.

The Redwater decision allows receivers and trustees of insolvent oil and gas companies to disclaim unprofitable assets, permitting them to avoid the responsibility of reclaiming the land used for energy development.

“The decision has already had a significant impact in Alberta – and its consequences will go well beyond our borders to all other provinces. All Canadians are impacted by the Redwater decision,” said Ellis.

Disclaiming unprofitable sites allows creditors to avoid legislative requirements that licensees would have to follow if they were not in receivership or bankruptcy.

“The decision allows creditors to benefit at the expense of the environment and responsible companies by permitting receivers to avoid regulatory requirements that were put in place to protect the public and environment. It allows owners of industrial facilities to walk away from their environmental responsibilities,” said Ellis.

Since the Redwater decision, the Alberta government is currently reviewing the rules and policies on orphaned and abandonment, while the AER created a public registry  spotlighting delinquent companies.

Since the decision in May 2016, about 1 600 AER-licensed sites have been disclaimed by receivers with estimated liabilities of more than $100 million.

“That impact cannot be undone. But we are looking forward to presenting our arguments and are optimistic we may convince the Supreme Court to reverse the lower courts’ decisions,” concluded Ellis.

In July 2017, the AER and the Orphan Well Association filed for leave to appeal the Redwater decision to the Supreme Court of Canada.

The governments of Alberta, British Columbia, and Saskatchewan; the Farmers’ Advocate Office; and the Dene Tha’ First Nation support the application.