Alberta’s energy regulator ordered to take a new approach to punishing environmental crimes

There’s been a major breakthrough in creative sentencing for environmental crimes in Alberta, with the Alberta Energy Regulator ordered to use an open-bidding process, rather than hand-selecting beneficiaries.

The creative sentencing mechanism allows judges to order penalties beyond fines when a company is found guilty of illegally polluting the environment. These penalties often include funding reclamation activities, scholarships or research projects.

Recipients of funds via creative sentences are usually selected behind closed doors by legal counsel, in a secretive system.

This was the case in 2010, after Syncrude Canada Ltd. was found guilty in the death of 1,600 ducks that landed on an oilsands tailings pond.

The University of Alberta, the Alberta Conservation Association and Keyano College were all approached privately about the prospect of receiving creative sentencing funds before being awarded $2.45 million in funding as part of Syncrude’s sentence.

But in response to a new ruling the Alberta Energy Regulator will take a different approach to creative sentencing in Syncrude’s latest conviction.

An open-bid process for new Syncrude conviction

On January 2, 2019, Syncrude was fined $2.75 million — including $950,000 in creative sentencing — for a 2015 incident in which 31 great blue herons were found decomposing in an abandoned pond that had been used for tailings waste.  

The pond, which was not in use but had not been reclaimed for several years, was situated 300 metres from a heron rookery containing 26 nests in a densely wooded area.

Details of the heron deaths in a statement of fact prepared during the course of legal charges being brought against Syncrude.

In his ruling, Judge Charles D. Gardner directed the Alberta Energy Regulator to post a request-for-proposal within seven months on the government’s purchasing website.

Proposals must improve the environment in the areas of wildlife, migratory pathways, sustainability and reclamation in Alberta.

“I like the creative sentencing approach,” said Barry Robinson, a Calgary-based lawyer with Ecojustice.

“I think the open bidding is a positive step to making the most effective use of creative sentencing dollars.”

Creative sentencing used since the ’90s

Alberta has used creative sentencing for environmental crimes extensively — at least 92 times since 1993. Environmental crimes are prosecuted by the Alberta government but in 2014, responsibility for prosecution of the energy sector was handed over to the province’s energy regulator. The AER uses creative sentencing as well.

Creative sentencing is designed to address the root cause of a crime, remediate environmental damage and put money back into the communities where the infraction occurred.  

The biggest beneficiaries to date have been Alberta’s universities and colleges, which receive funding to conduct environmental research and support scholarships. The Canadian Association of Petroleum Producers and the Alberta government have also been beneficiaries.

In his ruling, Judge Gardner specified beneficiary organizations must not have been in a conflict-of-interest relationship with Syncrude over the last 24 months.

It’s unknown if the open-bidding process will become the norm for creative sentencing under the Alberta Energy Regulator, but the January ruling sets a strong new precedent.

The court order allows the regulator to approach beneficiaries to apply for funds under the open-bid process, but recipients are required to submit a formal request.

Creative sentencing passed off as ‘corporate social responsibility’

The new ruling also stipulates resulting projects must be identified as funded by court order.

Projects funded by creative sentencing are rarely identified as resulting from an environmental conviction.

Convicted companies are often listed as ‘sponsors’ or ‘donors.’

For this reason, the new language requirement is welcome to Chilenye Nwapi, a research fellow at the Canadian Institute of Resources Law, who has critiqued creative sentencing for easily being passed off as corporate social responsibility.

He finds the new creative sentencing order “largely positive.”

“The order quite rightly ensures that Syncrude does not benefit reputationally from funding any creative sentencing project,” he said. “The order provides for transparency and accountability by requiring the [Alberta Energy Regulator] to file a report to the court describing any projects awarded together with the terms of the award.”

The court order also allows, for the first time, that for-profit organizations may be beneficiaries.

Nwapi takes issue with the court provision that the regulator “may” give preference to not-for-profit organisations in the procurement process.

“To ensure that the funds are used judiciously, the order should have mandated preferential treatment for not-for-profit organisations,” Nwapi said in an emailed statement.

How Syncrude and Friends Benefitted from ‘Creative Sentence’ in 2010 Oilsands Duck Deaths

Syncrude convicted twice for breaking same laws

Syncrude pleaded guilty in the January 2019 conviction for the 2015 deaths of 31 herons.

Court documents indicate the company failed to disclose the existence of a sump pond in its waterfowl protection plan.

The omission is troubling in light of the company’s high-profile 2010 conviction where it was found Syncrude failed to deploy bird deterrents when a storm drove birds down in 2008.

Following that 2010 conviction, the University of Alberta’s Colleen Cassady St. Clair was awarded creative sentencing funds to conduct bird-protection research.

As a part of that research Cassady St. Clair made six science-based recommendations for Syncrude to incorporate into its waterfowl protection plan and that included the documentation of all ponds in the plan area.

In 2019 Syncrude announced new measures to protect birds, including increased monitoring of water basins and improved deterrent systems.

Yet, as the 2019 conviction shows, the contaminated sump pond that led to the death of the 31 herons was not incorporated into Syncrude’s waterfowl protection plan.

“We were all aware that some ponds were not included,” Cassady St. Clair told The Narwhal. “I advocated that we needed to get all the ponds on that list.”

“It’s an unfortunate situation that’s easy to judge in hindsight,” she said, adding some of these facilities have been in operations for decades, spanning a changing regulatory environment. “It’s harder to predict these things than it is to spot them in the rear-view mirror.”

Cassady St. Clair said she is “delighted” with the open-bid process, adding it is new for Alberta but resembles what happens at the federal level.

Syncrude spent $16 million to remediate the sump pond in 2016.

“Our perspective is we’ve agreed to the fines and are saddened by what happened,” said Syncrude spokesperson Will Gibson.

– With files from Carol Linnitt