Fine for oil sands residues not even close to the maximum permissible amount despite claims by the regulator

Natasha Bulowski
Reporter of the Initiative for Local Journalism
Canada’s National Observer

Alberta’s Energy Regulatory Authority could have imposed at least 26 times the fine on Imperial Oil in connection with oil sands tailings leaks at one of its northern Alberta sites, environmental law experts say.

When the Alberta Energy Regulator (AER) announced that Imperial Oil would have to pay an administrative penalty of $50,000, it stated that this was the maximum allowable base amount under the Environmental Protection and Enhancement Act.

This statement is “misleading” and “clearly false,” said Nigel Bankes, professor emeritus of law at the University of Calgary, in a telephone interview with Canada’s National Observer. Bankes is an expert in environmental and natural resources law.

The regulations state that the maximum administrative penalty for serious violations like this one is $5,000 per day. The AER used the maximum daily amount but applied it on a monthly basis, which reduced the penalty by more than 95 percent, Drew Yewchuk, a former lawyer with the University of Calgary’s Public Interest Law Clinic, told Canada’s National Observer.

“It’s extremely strange,” said Yewchuk, who compared it to staying in a hotel for 10 months and then deciding to charge you for 10 days instead.

If the penalty had been imposed per day, as the law allows, Imperial Oil would have had to pay more than $1.3 million. In the second quarter of 2024, Imperial Oil reported a profit of $1.13 billion.

Last year, it came to light that toxic waste had been seeping from Imperial Oil’s Kearl site for nine months and that downstream communities were not properly notified. It was only in February that a massive 1.3 million-gallon leak occurred for the long-term leak, which Imperial Oil first noticed in May 2022, to be made public through an environmental protection order. The AER’s investigation is ongoing; this penalty only covers the leak that began in 2022.

“Administrative penalties are carefully reviewed by the AER to ensure they are fair and proportionate to the seriousness of the violation,” an AER spokesperson wrote in an emailed statement to Canada’s National Observer. The spokesperson reiterated the statement in the press release that $50,000 is the maximum base penalty allowed under the regulation.

“It is absolutely not the maximum,” Yewchuk said.

The AER decision states that applying the daily maximum would have “led to a disproportionate response … particularly given that the actual known environmental impacts of the infringement appear to be minimal to date.”

The regulations take into account the potential for adverse impacts, not the actual impacts.

The decision further states that the $50,000 penalty is a sufficient deterrent for both Imperial Oil and the industry in general.

“This is not enough to justify a 95 percent reduction from the figures shown in the table,” Yewchuk said.

The rules state that the supervisory authority also has the option to set and collect a separate, one-off amount if the company may have gained an economic advantage by not complying with the rules. The AER has chosen not to do this.

Yewchuk said it’s rare for the regulator to impose this one-time payment for economic reasons, but nothing unusual. Earlier this year, the regulator imposed a one-time administrative penalty on Tallahassee Exploration Inc. for failing to monitor and report its methane emissions, he explained.

“The AER calculated what it would have cost them to conduct the required methane measurements,” Yewchuk explained. The result was a penalty of $191,885.

In Imperial Oil’s case, the AER could have calculated an economic disadvantage based on what it would have cost to pay enough staff to increase inspections and regular monitoring of the tailings dumps, install more monitoring wells or use better materials, Yewchuk said.

In addition, the AER charged Imperial Oil with two violations but fined it for only one. For the other incident, the regulator gave Imperial Oil some homework: The company must prepare a lessons learned report by November 1 that it can share with other oil sands operators, as well as “a plan to ensure that tailings containment and spill monitoring processes are completed.” After that, Imperial Oil must also develop a research plan to study the environmental impact of water from oil sands tailings.

“This is the work that Imperial is supposed to be doing to operate the mine,” Yewchuk said. “They’re supposed to be overseeing the whole thing. They’re supposed to be researching what to do with the tailings… ways to deal with the tailings, get rid of them, decontaminate them, stop the expansion of the tailings, and they haven’t done that.”

The 40-page decision shows that the AER had already proposed a penalty of $51,000 before receiving Imperial Oil’s comments and ultimately eliminated the additional $1,000.

“This is strange to me,” Yewchuk said.

“I would have thought they would propose a higher amount and Imperial would then convince them to back out.”

This summer, AER President Laurie Pushor announced that he would not return to office when his contract expires in April 2025.

-Advertising-