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Federal Loans for Oilfield Cleanup

Strong Conditions Necessary on any Federal Loans for Oilfield Cleanup After Alberta Passes Troubling Bill 12

The Alberta Liability Disclosure Project
Submitted

 

April 8, 2020 (CALGARY) — Public dollars must not go to Alberta’s Orphan Well Association (OWA) without strict conditions that uphold Canada’s Polluter Pays Principle, ensuring industry pays for cleanup, property taxes and landowner compensation, the Alberta Liabilities Disclosure Project (ALDP) said this morning.

The federal government is considering loans to Alberta’s OWA to create jobs cleaning up the province’s orphan wells.

ALDP raised the alarm after Alberta’s government rammed through troubling changes to the oversight and management of the OWA with Bill 12,The Liabilities Management Statutes Amendment Act under cover of the COVID-19 pandemic. The new law:

“This should be a moment to spur massive job creation in Alberta by requiring polluters to pay for cleanup of hundreds of thousands of their oil and gas wells. Instead, the government’s changes to the OWA will politicize well cleanup and could leave the rest of us paying the industry’s cleanup bill,” said Regan Boychuk, ALDP co-founder and lead researcher.

As the federal government contemplates loans to OWA to create jobs in Alberta and respond to the COVID-19 pandemic and oil price collapse, ALDP calls on the federal government to attach strict conditions to ensure that polluters, not taxpayers, pay for the cleanup.

Conditions (outlined below) include requiring the OWA to follow existing rules and collect enough from industry for its full inventory every year, make any loans short-term, and matched by support for First Nations, landowners and municipalities that are owed unpaid taxes from oil and gas companies.

“Which wells get prioritized for cleanup should be determined by independent evaluations and public health requirements, not by partisan politics. Having Cabinet drive decisions on well cleanup means the OWA could become a slush fund for the government to reward their friends and punish vocal opponents. We can’t let that happen,” stated David Swann, ALDP member and former member of Alberta’s Legislative Assembly

“If the federal government lends public funds to the OWA, with its new powers, they will tacitly weaken regulatory oversight in Alberta, and undermine Canada’s Polluter Pays Principle. The government must attach conditions to any funding to counter Bill 12’s disappointing measures,” stated ALDP co-founder  Regan Boychuk, Co-founder of ADLP.

These changes are a disaster for farmers and landowners with oil and gas leases. They give the Orphan Well Association the right to operate the still-profitable wells on our lands, without paying annual compensation to us. Anyone with an existing well, facility, or pipeline on their property should be very concerned by these changes.” — Dwight Popowich, landowner with orphan well on his land near Two Hills.

 

Proposed Conditions for federal loan to Alberta’s Orphan Well Association

  1. Require that the Orphan Well Association collect the legally-mandated, annual orphan levy to fully fund cleanup of OWA’s entire inventory every year
    By law, OWA should be collecting enough levies from industry to cover the full cost to clean up its full inventory of wells for the year — every year. It doesn’t. That could very well have meant $1 billion more for cleanup work this year alone. Allowing the OWA to collect any less than what is legally mandated amounts to an oilpatch subsidy and is leading to a troubling pattern of relying on public dollars to fund industry cleanup..
  2. Any loan to the Orphan Well Association should include a short timeline for repayment. ALDP urges a three-year timeline to minimize interest costs and maximize the chance of repayment.  Any write-off scenario would transform the loan into a subsidy to industry, undermining the Polluter Pay principle, and must be avoided.
  3. Match loan to OWA with direct investment in building Indigenous capacity
    Any Federal loan to the OWA should be matched by at least $30M to fund an Indigenous steering committee focused on education and training to launch Indigenous-owned enterprises to lead cleanup work. In this way, the OWA loan can become a vehicle to advance Indigenous entrepreneurship and UNDRIP principles.
  4. Finance landowners to reclaim wellsites on their own land
    Landowners can clean up wellsites on their own land and send the bill to the oil company. The Supreme Court said so in Smith vs. Alliance Pipeline. A $30M federal fund could help spark cleanup without landowners being out of pocket for any expenses — just like it’s supposed to be.
  5. Independent oversight of federal funds
    Neutralize Cabinet’s grasp for control by requiring an independent body of experts and public consultations to determine how best to prioritize cleanup done with federal dollars. One focus should be orphan wells with unpaid rural taxes or landowner compensation, so those debts can be swiftly paid through the orphan levy instead of by taxpayers. The federal loan ought to also include stipulations ensuring landowners are properly notified and compensated at all sites cleaned up with federal funding.

 

QUICK FACTS:

 

The Alberta Liability Disclosure Project (ALDP) is a non-partisan volunteer coalition of Alberta researchers, landowners, economists, former regulators and industry veterans focused on digging into the scale of Alberta’s unfunded oil and gas liabilities — and the employment opportunity of cleanup. 

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