February 7, 2005

Top court upholds polluter-pays principle in BC Hydro case

In an unexpectedly quick decision, the Supreme Court of Canada has upheld the polluter-pays principle and confirmed that corporate amalgamations will not be sufficient to exempt a company from liability for historic contamination.

The case began in 1998 when the British Columbia government issued a remediation order to several owners and operators of a contaminated site at the mouth of the Fraser River, near Vancouver. BC's Waste Management Act authorizes the province to issue cleanup orders to "persons responsible" for contaminating land, including businesses that brought toxic substances to the property. Although the province ordered several parties to pay for the cleanup of the site in 1998, the order failed to include BC Hydro, even though its predecessor, the BC Electric Company, delivered coal tar to the site between 1920 and 1957, likely contributing to the contamination of the site.

Sierra Legal intervened in the case on behalf of Friends of the Earth Canada, Georgia Strait Alliance, T Buck Suzuki Environmental Foundation and West Coast Environmental Law. The groups argued that the Court should uphold the polluter-pays principle and send a strong message to polluters that they will be held accountable for their share of clean-up costs.

Two of the named parties challenged the province's failure to hold BC Hydro responsible for the contamination, first at the BC Environmental Appeal Board and then in the courts. The Appeal Board found that BC Hydro was a responsible party, as did the BC Supreme Court, but the BC Court of Appeal held that the 1965 BC Hydro amalgamation agreement, which was affirmed through provincial legislation, had the effect of rendering BC Hydro immune from BC Electric's liabilities.

The groups then took their case to the Supreme Court of Canada, which rejected the BC Court of Appeal's decision.

While BC Hydro has a policy of paying for remediation of past contamination for which it is responsible, the utility maintains that it was not responsible in this case, as it did not own or carry out operations on the site during the period when the contamination occurred. A roofing plant previously operated at the site.

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