Montreal, Quebec, Canada 11 December 2012 -- The Supreme Court has decided a case between the government of Newfoundland and Labrador and Abitibi-Consolidated (now operating as Resolute Forest Products), in favor of the pulp and paper company. The case concerned environmental clean-up costs for the Windsor-Grand Falls mill in Newfoundland, which Abitibi closed in 2009. The Newfoundland government expropriated the mill and other Abitibi assets in the province.

Abitibi later entered creditor protection under the Companies’ Creditors Arrangement Act (CCAA).

The Supreme Court ruled in early November that the environmental protection orders issued by the province to Abitibi cannot be enforced as regulatory orders. The court found that the financial liability to clean up the sites can only be dealt with by the CCAA process, granting this liability the same status as other creditor claims.

The court’s decision notes that subjecting environmental orders to the claims process does not extinguish environmental obligations, “it simply ensures that the province’s claim will be paid in accordance with insolvency legislation.”

“We are pleased with the decision released from the Supreme Court of Canada today,” Seth Kursman of Resolute Forest Products, told CBC News.

The Newfoundland government was not as pleased with the news. “Regardless of the ownership, our Environmental Protection Act states that the person responsible at the time the contaminant is released into the environment is responsible for the cleanup of the site. The province issued orders for cleanup against all sites, including the mill. However, because the company went into creditor protection, it has shielded itself from enforcement of those orders, as the Supreme Court of Canada ruled today,” said Thomas Marshall, Attorney General for Newfoundland.

According to CBC News, “the justices wrote that full compliance with such cleanup orders that are found to be monetary in nature would shift the costs of remediation to third-party creditors.” They concluded that such a shift would deviate from the polluter-pay principle.