Athabasca Chipewyan argues in its lawsuit that the Mine Financial Security Program is “grossly inadequate for achieving its intended purpose.” Suncor's base plant is pictured with upgraders in the oilsands in Fort McMurray, Alta., on June 13, 2017.JASON FRANSON/The Canadian Press
The Athabasca Chipewyan First Nation is suing Alberta, saying the province failed to address a host of fundamental flaws in its mine security program, thus undermining the eventual cleanup of oil sands sites and putting the environment at risk.
The suit, filed Tuesday at the Judicial Centre of Fort McMurray, centres on the province’s recent review of its Mine Financial Security Program. The MFSP governs how much financial security is collected from oil-sands and coal-mine owners to ensure that the companies can cover the cost of cleaning up their sites, rather than foisting the bill onto taxpayers. It is administered by the Alberta Energy Regulator (AER) using policy guidance from the Environment Ministry.
Athabasca Chipewyan argues in its lawsuit that the MFSP is “grossly inadequate for achieving its intended purpose.” The claims have not been proven in court.
The First Nation cited various reasons it believes the program is insufficient, including that the MFSP doesn’t require operators to post full security until six years before the end of mine life, even when assets risk losing value; the severe underestimation of operators’ liabilities, caused in part by its lack of clear guidance for liability estimates; the lack of consideration of how potential large-scale changes to the oil markets could cause rapid industry-wide mine shutdowns; and a dearth of incentives for progressive reclamation throughout the life of mines.
“Alberta’s failure to collect sufficient financial security creates a significant risk that oil sands mine sites will not be reclaimed or remediated in a timely manner or at all, which would permanently prevent ACFN members from exercising their rights in these areas and seriously infringe ACFN rights,” Athabasca Chipewyan wrote in its lawsuit.
The press secretary to Environment Minister Rebecca Schultz, Ryan Fournier, said in an e-mail that the government is aware of the lawsuit and will be reviewing it closely. He said changes to the MFSP “were designed to ensure mine operators provide security to cover reclamation without unfairly targeting the energy sector.”
Alberta’s environment department began a review of the MFSP in 2021, after a series of investigations by the province’s Auditor-General identified a ream of potential problems with the program.
Athabasca Chipewyan said in its lawsuit that environment officials routinely ignored the First Nation’s concerns and requests throughout the review process, often meeting its questions with “obfuscation and delay.”
It cites an occasion in May, 2022, for example, when ACFN asked why there was a $96-billion discrepancy between official MFSP liability estimates and an internal estimate by the AER that was leaked publicly in the media. Environment and AER staff “first refused to respond to the question,” then said they had no further records of the estimate, the suit claims.
“To date, ACFN has no clear and reliable estimate of the total liabilities of oil sands projects within its territories, which is essential to understanding the risks that unsecured liabilities pose to ACFN’s rights and territory,” it wrote in its suit.
Liabilities have skyrocketed by billions of dollars since 2010 – even though oil companies have added just a single dollar into the province’s cleanup coffers, according to data from the AER.
A 2015 review of the MFSP by the auditor said one of the program’s biggest issues was that the formula used to calculate the value of mines – thus, the security requirements their owners pay – was inconsistent with actual asset values. The formula also failed to take into account the impact of future price declines on the economic value of oil reserves, according to the auditor.
Six years ago, the AER held $1.46-billion in security to cover the eventual cost of mine cleanup, compared with estimated reclamation liabilities hovering just over $28-billion. Numbers released by the AER in October show that it now holds about $1.71-billion in security, compared with estimated liabilities of $57.3-billion.
So even though the estimated cost of mine cleanup has jumped more than 100 per cent since 2018, the money being held to cover the bill has grown by only 17 per cent. And in 2023, that cash came solely from coal companies, according to AER data.
That issue wasn’t addressed by changes to the MFSP, though companies will no longer be able to use off-site mine reserves as collateral to backstop reclamation responsibilities. The program changes also rejigged how some oil reserves are valued to better ensure companies can cover future cleanup costs.