Natural Resource Damages: After the Canfor decision

1. Natural Resource Damages:After the Canfor decision NEERLS Pre-DOJ Day September 29, 2005 Tony Crossman Miller Thomson LLP

2. To say the law on this question is unsettled is vastly to understate the situation. The parties in this lawsuit, and we ourselves, have ventured far into unchartered waters. We do not think plaintiffs could reasonably have been expected to anticipate where this journey would take us.” US District court of Appeal in SS Zoe Colocotroni, 628 F. 2d 652 (1st Cir. 1980) at p687

3. Canadian history of environmental damage claims • Nestucca • Oil spill in US waters affecting Canadian resources • Birds and fish affected • Claim in US • Settlement • Fund established for restoration and enviro. projects

4. The Canadian experience- The Ship Sun Diamond • Federal crown sought to recover its cleanup costs to mitigate an oil spill in Vancouver harbour • Damages awarded for the water cleanup in addition to costs to clean up Crown owned beach and foreshore • Reference to the parens patriae principle

5. US natural resource damage claims • CERCLA • OPA, 1990 • response to Exxon Valdez • Parens patriae • Public trust

6. Canfor decision • BC Crown sued for fire damage to forest • 1,500 hectares • Cost of fire fighting and restoration of forest • Loss of stumpage revenue from harvestable trees • Loss of non-harvestable trees set aside for environmental reasons in sensitive areas

7. Canfor decision • Province did not plead or lead evidence as to “environmental damage” at trial - only claimed commercial loss • SCC: Province only able to recover cost of fire fighting and restoration • Did not plead environmental damage claim • Did not lead evidence as to environmental loss

8. Crown’s basis for a claim • Parens patriae • Protector/ guardian of the environment • Public trust • Trustee of the environment • Land owner • Legal owner of land

9. Government can claim for environmental damage “…there is no legal barrier to the Crown suing for compensation as well as injunctive relief in a proper case on account of public nuisance, or negligence causing environmental damage to public lands, and perhaps other torts such as trespass, but there are clearly important and novel policy questions raised by such actions.” “…[T]here is no reason to neglect the potential of the common law, if developed in a principled and incremental fashion, to assist in the realization of the fundamental value of environmental protection.” Canfor decision implications

10. Implications • Possible expansion of the public nuisance doctrine • can be used not only for injunctive relief but also for compensation • Possible acceptance of the public trust doctrine in Canada

11. CL Causes of Action • Public nuisance - yes • Negligence - yes • Trespass - perhaps • Private nuisance - ? • Strict liability - ? • A new tort ??

12. SCC recognised that these findings had potentially broader implications Role of guardian of the environment may also carry with it fiduciary-like duties over the environment “[T]here are clearly important and novel policy questions raised by such actions. These include the Crown’s potential liability for inactivity in the face of threats to the environment, the existence or non-existence of enforceable fiduciary duties owed to the public by the Crown in that regard…” Implications

13. Statutory causes of action ? • CEPA • Fisheries Act • BC Environmental Management Act

14. Valuing environmental damage SCC noted that BC’s factum identified at least 3 components of environmental loss that could be measured: • Use value – associated with the benefits that flow from direct use of the natural environment • Passive use of existence value – associated with the benefits that flow from eihter indirect enjoyment or the preservation of the environment • Inherent value – the value the ecosystem has beyond its usefulness to humans Methods for quantifying the value:   market valuation, restoration or replacement cost, contingent valuation, behavioural use valuation

15. Valuing damage to natural resources SCC:   Crown's claim for an "environmental premium” of 20% of commercial value is arbitrary and simplistic The challenges of proving a claim: • expensive • time-consuming • complex (baseline, causation, impacts from other causes, etc)

16. Who should be able to claim? • Federal crown • Provincial crown • Municipalities • “…the municipality is, in a broad sense, a trustee of the environment for the benefit of the residents in the area of the road allowance and, indeed, for the citizens of the community at large.” (Scarborough v. REF Homes Ltd quoted by Binnie J in Canfor) • First Nations

17. Should we have a statutory cause of action? • Rely on CL causes of action • Rely on existing statutory causes of action • Create a new statutory cause of action • What should this look like?

18. How should we value environmental damage? US experience • CERCLA regulation – a formula • Many different methods • Evidence is very costly to gather • No accepted method – battle of the experts

19. “Man has lost the capacity to foresee and to forestall. He will end by destroying the earth.” Albert Schweitzer

20. Case study