In June, an Alberta oil company was convicted of violating both federal and Alberta environmental law in the deaths of hundreds of birds that landed on its tailing pond. Today, the court sentenced the company to pay $3 million in fines and creative sentences!
Waterfowl died after landing on an Alberta oil company’s tailing pond containing hazardous substances, including bitumen. The company was convicted of violations under federal and Alberta environmental law for failing to store a hazardous substance so that it didn’t come into contact with animals. The court rejected the company’s due diligence defence, ruling that it failed to take all reasonable steps to prevent waterfowl from contacting the hazardous substances [R. v. Syncrude Canada Ltd.,  ABPC 229 (CanLII), June 25, 2010].
Court’s Due Diligence Explanation
The question of whether a defendant exercised due diligence gets answered one case at a time on the basis of the specific facts involved. But what all due diligence cases have in common are the factors the courts look at to evaluate a company’s due diligence defence. All of these factors played a role in the Syncrude case, including:
Gravity of the effect. The more severe the potential harm from non-compliance, the greater the efforts a company must make to prevent it. The court said that severe contamination with bitumen has deadly consequences for waterfowl and even relatively mild contamination can have serious long-term adverse consequences.
Complexity of compliance. Experts at the trial testified that deterring birds from the tailings pond is complex, requiring a high level of expertise. For example, the pond in question was the size of about 640 football fields and located under major migratory flyways. The court concluded that the company needed expertise to effectively manage the risk to wildlife. But the team that was overseeing the bird deterrence program had no formal training in managing wildlife.
Preventive system. The company had planned to implement a system to deter birds using sound cannons and human effigies starting April 1, depending on the weather and arrival of birds. But when the birds landed on the pond on April 28, the sound cannons hadn’t yet been deployed on the pond’s perimeter. In addition, the company didn’t have enough cannons to space them 240 metres apart as called for by its plan.
Alternative solutions. The court found that there was “no real industry standard for bird deterrence.” But it noted that oversight of the bird deterrence system by people with appropriate training, more comprehensive written procedures and earlier implementation of the system were “reasonable and feasible alternatives” to the company’s approach.
Foreseeability. The company argued that the incident was unforeseeable because unusual weather conditions prevented it from deploying its bird deterrence system earlier. But the court wasn’t swayed. Adverse weather in early April isn’t uncommon. Plus, bad weather makes it more likely that birds will land. So the company should have anticipated that bad weather might occur and deployed the deterrence system earlier.
Bottom line: The court concluded that the company didn’t establish a proper system to ensure that wildlife wouldn’t be contaminated in the tailings pond or take reasonable steps to ensure the effective operation of that system.
The sentence the court imposed today consists of:
- $300,000 fine for the federal violation—the maximum fine possible
- $500,000 fine for the Alberta violation—also the maximum
- $1.3 million to be held in trust by the University of Alberta for the Avian Protection Research Study
- $900,000 to purchase lands in the Golden Ranches Conservation Area near Edmonton.
As the court in Syncrude said, companies aren’t required to show that they took all possible steps to avoid liability or to “achieve a standard of perfection or show superhuman efforts”—whether complying with environmental or OHS laws. They are, however, required to prove that they have proper EHS systems and that they took all reasonable steps to ensure the effective operation of these systems. And based on the sentence in this case, failing to take such steps can really cost the company.
Click here to learn about some of the due diligence traps your company should avoid so it doesn’t get hit with millions of dollars in fines and other penalties. And make sure to read the cases in this year’s Due Diligence scorecard to see how other companies fared in recent safety prosecutions.