$850,000 in fines for Suncor

Carol Christian, April 2, 2009, Fort McMurray Today -- Suncor Energy was handed fines totalling $850,000 yesterday in provincial court after pleading guilty to two separate cases of environmental infractions dating back to 2005.

The fines translates into $175,000 for its culpability in the release of partially treated sewage into the Athabasca River by a subcontractor in 2005 and 2006, and $675,000 for two charges of hydrogen sulphide (H2S) emissions exceeding approved limits in 2007 at its Firebag site. Suncor has until June 30 to pay the fines, which also form part of creative sentencing projects that will benefit three post-secondary schools, including Fort McMurray's own Keyano College.

“We’re not really focused on the size of the penalty. It's not about the penalty for non-compliance. It's about compliance, and that's where the focus is now, where it should be and where it will be,” Suncor spokesman Brad Bellows told media following the two trials. Each trial, the first court appearance for Suncor, had an agreed statement of facts and joint submissions on sentencing.

With both Crown attorneys, Susan McRory and Peter Roginski, commending Suncor on its co-operation with both investigations and acceptance of its responsibility in the infractions, Bellows said it's reflective of the kind of organization Suncor is.

“It's where we want to be. Although this is a bit of a dark day for Suncor, I think that if there is a silver lining, it's in that some of the creative sentencing can help us share our experience with these situations,” he added.

Commenting on Suncor's co-operation in the case, McRory, the Crown in the sewage case, said, “It's not so much about us. It's not about our jobs and making them easier or not, it speaks to the quality of the corporate accused.”

“And this is what the judge said. The co-operation is a mitigating factor.”

Roginski, the Crown on the H2S charges, shared McRory's views, adding there was self-reporting by the company, which lived up to its obligation under environmental legislation by co-operating with the investigation.

Noting the H2S-related fine was “very substantial,” coming in at two-thirds of the possible $1 million, Bellows added there is a renewed commitment on Suncor's part to be more vigilant in its environmental stewardship, in regards to the activities of its contractors and subcontractors.

“Steps have fairly long since been taken on that. You need to remember that these charges actually date back to several years ago. They're still a disappointment today but we have put in the measures to make sure we do have better oversight of our environmental management systems and we will always look to continue to improve them.”

When reviewing the facts in the sewage release case in court, McRory noted Suncor's co-operation and work to get to the bottom of the case, and by doing so, opening itself up for further inquiries and possibly further incriminating evidence.

She said it wasn't a “crime of commission but a crime of omission.” McRory said Compass received a larger fine because it was “closer to the fire.” According to the agreed statement of facts, Suncor had hired Compass to operate its Millennium waste water treatment plant. Compass then contracted the plant's operation to R&D McCabe by 2002. Alberta Environment discovered that McCabe had falsified laboratory results for three months in 2005 and four months in 2006. The alteration of the results, in all but one case, hid violations of the limits for total suspended solids. Compass had no knowledge of the falsification, and culpability is based on its failure to investigate and properly supervise McCabe. Similarly, according to the statement, Suncor had no knowledge of the falsification, and culpability is based on a failure to investigate the competency of Compass and thereafter, in failing to properly supervise that contractor.

McRory maintained there are two lessons to learn from this prosecution: the importance of taking responsibility for contractors and subcontractors, and that companies opening up to investigations to solve problems is a “good thing, not a bad thing.”

Ron Kruhlak, Suncor counsel, said Suncor has responded “very seriously” to the charge and is taking steps to ensure it never happens again.

In a past story, Bellows previously told Today the subcontractor "was dismissed as soon as we became aware of potential issues" and replaced by another utility company. In addition, according to McRory, Suncor continues trucking sewage to another facility for proper disposal.

In rendering his approval of the sentencing submissions, Judge J.R. Jacques said, “There has been a whole acknowledgement of the responsibility of the two corporate accused, steps have been taken to address the problem, and guilty pleas have been entered which certainly relieved the public of the necessity of conducting what would undoubtedly have been a very extensive trial.”

That being the case, the joint submission, said Jacques, “strikes me as correct and appropriate.” Compass received a higher fine of $225,000. Out of the $400,000 total fine for this offence between Suncor and Compass, $300,000 forms part of a creative sentencing project to the Alberta Water and Waste Water Operators Association for updating operator training course materials, funding a new scholarship and subsidizing operator training courses and seminars to help train future operators to prevent such a release of sewage from ever happening again.

R&D McCabe pleaded guilty in March to six charges: two counts each of wilfully providing false and misleading information, wilfully failing to report under the approval and non-wilfully approving approval limits. The company is due back in court May 22 for sentencing. McRory later informed media McCabe is “facing many more charges. He's also facing wilful charges and … personally, potentially, facing a jail term.”

The Crown's case against Suncor for excessive H2S emission dates back to incidents in 2007, incidents that were partially blamed on a lack of communication between groups working at Firebag. Or as Roginski called it a failed “meeting of the minds.”

The statement of facts on the case stated that when Firebag was constructed, the vapour recovery units were not installed on the produced (to be recycled) water tanks. Because they weren't installed, emissions were allowed to escape. About two years after the December 2003 startup, Suncor started experiencing odour problems as a result of H2S emissions. Once the problem was discovered, Suncor reported it to Alberta Environment and immediately undertook remediations and enhancements to its emission control measures.

Roginski explained there were three major reasons for the $675,000 fine, allocated equally between the two charges of excessive H2S emissions: the nature of the contraventions and their potential effect on the integrity of the regulatory system; the need for the penalty to be a substantial deterrent; and Suncor’s history of compliance history. Roginski said there has to be some way to differentiate corporations that come before the court with no record.

Of the $675,000, $315,000 is to go towards a creative sentence project with the Haskayne School of Business at the University of Calgary for a project to be conducted by the International Resources industries and Sustainability Centre (IRIS). For this project a set of research, teaching and outreach activities are to be designed to develop “organizational learning” from the environmental violation and other recent violations. It is to include a two-day forum in Calgary to engage managers, regulators and non-government organizations in a conversation about learning from this and other violations and global best practices for environmental compliance.

In addition, $75,000 is to go into the scholarship program at Keyano College for students in the environmental and conservation science program.

Roginski said Suncor's willing participation in the IRIS program represents a “significant mea culpa” for the company.

“The order is going to require substantial amount of co-operation on the part of Suncor with the researchers at the University of Calgary,” he told Today after the trial. “They're going to have to allow their employees to be interviewed by those researchers and they're going to allow others to learn from their non-compliance from any failures in their systems so I think that's pretty extraordinary.”