Environmental protection alternative measures agreement: North West Redwater Partnership
This Agreement made the 26th day of January, 2023
Between:
The attorney general of Canada
- and -
CNR (Redwater) Limited and North West Refining Inc. operating as the North West Redwater Partnership
(individually a “Party” and collectively, the “Parties”)
Environmental Protection Alternative Measures Agreement
Whereas CNR (Redwater) Limited and North West Refining Inc. operating as the North West Redwater Partnership (“NWRP”) was the subject of an investigation by Environment and Climate Change Canada (“ECCC”) into whether between January 1, 2018 and December 31, 2018 at or near the municipality of Redwater, in the Province of Alberta, NWRP did produce, import or sell a fuel that did not meet the prescribed requirements contrary to the Renewable Fuels Regulations, SOR/2010-189 (“RFR”) and section 139(1) of the Canadian Environmental Protection Act, 1999 ("CEPA, 1999");
Whereas during the time period covered by the investigation, the partners of NWRP were CNR (Redwater) Limited (“CNRR”) and North West Refining Inc. (“NWRI”) (collectively CNRR and NWRI are herein referred to as the “Defendants”);
Whereas the investigation has led to a single charge against the Defendants operating as the NWRP, as more particularly described herein (the “Charge”);
Whereas NWRI is no longer a partner of NWRP, having sold its interest to a third party in 2021;
Whereas the prosecution of the offence is not barred at law, and in the opinion of the Attorney General of Canada, there is sufficient evidence to proceed with the prosecution of the Charge;
Whereas the Attorney General of Canada is satisfied that the use of Environmental Protection Alternative Measures ("Measures") as contemplated by sections 295-309 of CEPA, 1999 to deal with the offence in this case would not be inconsistent with the purposes of CEPA, 1999;
Whereas the Defendants, having been advised of their respective legal rights to counsel and to contest the Charge, accept responsibility for the acts and/or omissions that form the basis of the Charge as described herein and fully and freely, consent to participate with NWRP in the Measures;
Whereas the Attorney General of Canada has consulted with the Minister of the Environment of Canada, and has considered the surrounding circumstances, the nature of the offence, and all other factors to be considered as prescribed by CEPA, 1999;
Whereas the Attorney General of Canada, the Defendants, and NWRP agree that a Measures Agreement is the most appropriate means of resolving the Charge;
Therefore, the Attorney General of Canada, the Defendants, and NWRP hereby enter into this Environmental Protection Alternative Measures Agreement ("Agreement") with respect to the Charge:
Section 1 - Purpose
1.1 The purpose of this Agreement is to have NWRP, on behalf of the Defendants, participate in Measures to further the goals and objectives of CEPA, 1999 and the regulations made thereunder.
Section 2 - Definitions
2.1 Subject to any specific provisions of this Agreement, terms in this Agreement shall bear the meanings set out in CEPA, 1999 and regulations made under CEPA, 1999.
2.2 In this Agreement, including the recitals, the following terms (unless the context specifically requires otherwise) shall have the following meanings:
2.2.1 “Agreement” shall mean the whole of this Agreement between the Attorney General of Canada, the Defendants and NWRP, including the recitals to this Agreement.
2.2.2 “Government” shall mean the Government of Canada, the government of any province of Canada, or any local or municipal government in Canada.
2.2.3 “Parties” shall mean the Attorney General of Canada, the Defendants and NWRP.
2.3 The division of this Agreement into articles and paragraphs, and the insertion of headings, are for convenience of reference only, and shall not affect the construction or interpretation of this Agreement.
2.4 All references to any person or entity shall be read with such changes in number and gender as the context shall require.
2.5 All dollar amounts in this Agreement are in Canadian dollars.
Section 3 - Facts
3.1 Acknowledgement of facts
3.1.1 NWRP and the Defendants do not deny participation or involvement in the acts and/or omissions giving rise to the Charges and accept responsibility for their acts and omissions as described below.
3.2 Facts
3.2.1 NWRP owns and operates a petroleum refinery (“Sturgeon Refinery”) located near Redwater, Alberta that began production in 2017. NWRP is subject to several regulations under the CEPA, 1999, including the RFR. The RFR requires primary suppliers of diesel fuel, which includes the Sturgeon Refinery, to produce renewable fuel at a volume of at least 2% of the primary supplier's total distillate pool for each compliance period (each calendar year). NWRP is a primary supplier. In addition to the renewable fuel requirements under the RFR, the Sturgeon Refinery was constructed and is operated as a "first of its kind" refinery in Canada to capture carbon dioxide emissions for enhanced oil recovery and sequestration. Since commencing operations, the Sturgeon Refinery has captured approximately 2,700,000 tonnes of carbon dioxide that would have otherwise been released into the environment.
3.2.2 Renewable fuel content in any liquid petroleum-based fuel can contribute towards meeting the required 2% renewable fuel content. These renewable fuels can be produced from any type of renewable fuel feedstock (for example corn, wheat, barley, forestry and wood waste).
3.2.3 The RFR also includes a system of tradable compliance units to assist diesel fuel producers and importers in complying with the RFR. For example, if a primary supplier does not dispense the required minimum of 2% renewable fuel content, it can purchase compliance units to make up the shortfall. A compliance unit is equal to one litre of renewable fuel. Companies can obtain compliance units through trading or purchasing from others participating in the trading system.
3.2.4 At the end of each compliance period (each calendar year), the RFR requires each primary supplier to submit an annual report to ECCC containing information regarding the volumes of the total distillate pool and renewable fuel produced, and the production, trading and purchasing of compliance units.
3.2.5 On April 25, 2019, NWRP submitted its annual report to ECCC for the 2018 compliance period, being January 1 to December 31, 2018. The annual report stated that NWRP had met the 2% renewable fuel volume requirement for the Sturgeon Refinery in accordance with section 5(2) of the RFR.
3.2.6 The RFR also requires primary suppliers to engage a third-party to conduct an audit of the records and reports required under the RFR for each compliance period. The third party audit is not required to be completed until after the annual report is provided to ECCC for the relevant compliance period.
3.2.7 The third-party auditor's report for the NWRP’s 2018 compliance period identified that there was a difference in the renewable diesel volumes metered and dispensed out of the Sturgeon Refinery and the volumes measured according to the Sturgeon Refinery’s mass balance tracking system. As a result, NWRP’s annual report to ECCC had over-reported the amount of renewable fuel dispensed from the refinery by 721,712 litres.
3.2.8 Upon becoming aware of this, NWRP undertook a further audit process and reported to ECCC.
3.2.9 NWRP’s review determined that renewable fuel meters at the truck terminal operated by a third party service provider (a separate and unrelated corporation) were reading false pulses and recording renewable fuel volumes that were not actually dispensed. NWRP did not have procedures in place to determine there was a discrepancy between the metered volumes dispensed and the volumes measured by the mass balance tracking system.
3.2.10 As a result, for the 2018 compliance period, NWRP was short 721,712 litres of renewable fuel. NWRP submitted its annual report for the 2018 compliance period in which it incorrectly stated that it had dispensed the required volume of renewable fuel.
3.2.11 Had NWRP been aware that it had not dispensed the required volume of renewable fuel before it submitted its 2018 annual report, it could have purchased 721,712 compliance units to make up the shortfall.
3.2.12 The Parties agree that market information supports a value of $0.25 per tradeable compliance unit for the 2018 compliance period. Accordingly, a shortfall of 721,712 compliance units represents a value of $180,428.
3.2.13 NWRP has since undertaken a review of its policies, procedures and training and made enhancements designed to ensure compliance with the RFR and associated obligations.
3.3 Charge
The Defendants, operating as the North West Redwater Partnership, have been charged with:
On or about April 25, 2019, at or near the municipality of Redwater, in the Province of Alberta, did negligently file a document containing false or misleading information under the RFR contrary to section 272.1(1)(h) of CEPA, 1999, and did thereby commit an offence pursuant to section 272.1 of CEPA, 1999.
Section 4 - Measures
4.1 NWRP acknowledges and agrees that it will perform the following measures within the specified time fames:
4.1.1 Pay monetary penalty in the total amount of $280,428.00 to the Receiver General of Canada in trust for the Environmental Damages Fund, Environment and Climate Change Canada on or before February 28, 2023, which amount is comprised of the following:
(i) An amount of $180,428 being equal to the amount NWRP should have paid to purchase sufficient compliance units to make up the shortfall of 721,712 compliance units for the 2018 compliance period; and
(ii) An amount of $100,000,
for the purpose of promoting the conservation or protection of the environment.
4.1.2 Within three months of the execution of this Agreement, NWRP, on its own behalf and on behalf of the Defendants shall give a presentation at the 2023 CPANS Annual Conference organized by the Air and Waste Management Association (Canadian Prairie & Northern
Section). The presentation shall include a PowerPoint slide presentation or similar visual aid (the “Slides”). The presentation shall describe the general legislative scheme for the renewable fuel compliance requirements, the facts of this case, and the essential terms of the Agreement, specifically the measures that were imposed. At least one month before the presentation date, NWRP shall submit the Slides to ECCC for review and approval. A representative of ECCC shall attend the presentation and be permitted to speak during the presentation to clarify information about CEPA, 1999 and the RFR, including as the legislation applied to this matter. NWRP shall take steps and make arrangements to have the Air & Waste Management Association (Canadian Prairies and Northern Section) post the Slides used during the presentation on its website (cpans.org).
4.1.3 NWRP shall undertake a review of its RFR compliance program as implemented following the offence to ensure that training continues to be carried out as necessary and that the protocols and controls set out in the program are being followed by NWRP personnel who have responsibilities with respect to the RFR compliance program. The review shall address the following findings and recommendations of the Internal Audit Report and Effectiveness Review completed by Rita Clark in January 2020 under the following topics set out on pages 4 and 5 of that document:
(i) Procedure 10-00-RCD-35-0001-001;
(ii) RFR training requirements;
(iii) Oversight of regulatory processes, management support;
(iv) Continuity for RFR reporting; and
(v) Managing bio-credits
(collectively, the "Findings and Recommendations").
Any costs associated with the review shall be paid by NWRP or the Defendants. A report summarizing the review, its results, and any improvements or modifications to the RFR compliance program related to the Findings and Recommendations shall be provided to ECCC within one year of the execution of this Agreement with updates provided to the Court every 90 days until the report is provided to ECCC.
4.1.4 NWRP shall conduct a review of its written policies and procedures that are designed to ensure that any metering irregularities of the type described in the report prepared by IMEC Corporation entitled Northwest Redwater Partnership Sturgeon Refinery Meter Proving and Measurement Investigation Report and dated November 7, 2018 are accounted for by NWRP. Any costs associated with the review shall be paid by NWRP or the Defendants. Upon completion of the review, NWRP shall prepare a report describing the review process and results, and attaching the applicable written policies and procedures. NWRP shall provide a copy of the report to ECCC within one year of the execution of this Agreement with updates provided to the Court every 90 days until the report is provided to ECCC.
Section 5 - Compliance schedule
5.1 NWRP and the Defendants agree that they shall comply with all of their respective obligations under this Agreement and that they will do so within the times specified in this Agreement. Where no time is specified, NWRP and the Defendants shall comply with the provision(s) applicable to them within twelve months of the date of execution of this Agreement.
Section 6 - Verifying compliance with this Agreement
6.1 The Parties agree that ECCC will supervise and monitor compliance with this Agreement.
Section 7 - Inspection and other enforcement activities
7.1 Nothing in this Agreement bars CEPA, 1999 enforcement officers and analysts from conducting inspections or investigations which they are legally authorized to conduct.
Section 8 - Reporting
8.1 NWRP agrees that it shall submit progress reports on its compliance with the measures in section 4 of this Agreement after the end of each ninety (90) day reporting period, beginning on the date of the execution of this Agreement and continuing until all of the requirements of this Agreement have been satisfied. The progress reports will be delivered to ECCC within seven (7) days of the end of a reporting period.
8.2 The Defendants acknowledge that reports relating to the administration of or compliance with this Agreement will become part of the supervision record as well as part of the compliance history of the Defendants.
8.3 All progress reports shall be signed by a duly authorized officer of NWRP.
Section 9 - Confidential confirmation
9.1 All information contained in and obtained by virtue of this Agreement is subject to the provisions of the Access to Information Act and CEPA, 1999.
9.2 Trade secrets, financial, commercial, scientific or technical information that is, and is treated as, confidential information, information the disclosure of which could reasonably be expected to result in material financial loss or gain or could reasonably be expected to prejudice the competitive position of any person, or information which could reasonably be expected to interfere with contractual or other negotiations of any person, will remain confidential and not be disclosed, except as provided for in the Access to Information Act and CEPA, 1999.
9.3 This Agreement shall be filed with the Court, as part of the Court record of the proceedings to which the public has access, in accordance with the provisions of section 300 of CEPA, 1999.
9.4 Subject to section 9.2 above, for which the Parties will follow sections 300(3) and 300(4) of CEPA, 1999, the final progress report relating to the administration of or compliance with this Agreement will be made available to the public and to the Court in accordance with sections 300(2) and 301 of CEPA, 1999. Interim progress reports will not be made available to the public under sections 300(2) and 301.
Section 10 - Reservation of rights
10.1 The Attorney General of Canada reserves the right to seek injunctive relief in the event of any violation of this Agreement.
Section 11 - Penalties
11.1 The Defendants acknowledge that a failure on the part of NWRP or the Defendants and their responsible officials to comply with any provision of this Agreement may be an offence under section 272(1)(e) of CEPA, 1999. The Defendants, NWRP, and/or their respective responsible officials may also be prosecuted on the original offences, if there is a failure on the part of NWRP or the Defendants and their responsible officials to comply with this Agreement, as section 296(5) provides that the use of Measures in respect of a person who is alleged to have committed an offence is not a bar to any proceedings against the person under CEPA, 1999.
11.2 In the event that NWRP or the Defendants and/or their responsible officials fail to comply with a provision of this Agreement, the Defendants and/or their respective responsible officials may be liable on conviction to the penalties provided for pursuant to CEPA, 1999, section 272.
Section 12 - Force majeure
12.1 For the purposes of this Agreement, an event of Force majeure is an event resulting from circumstances beyond the control of NWRP and/or the Defendants, or any entity controlled by NWRP and/or the Defendants, that results in either of them being unable, despite best efforts, to comply with any provision of this Agreement, whether absolutely or within the time set out in this Agreement.
12.2 If a Force majeure event occurs, NWRP or the Defendants, as applicable, shall notify the Attorney General of Canada and Environment Canada in writing as soon as practicable, but in any event within seven days of when NWRP or the Defendants first knew or should have known by the exercise of due diligence, that they would be unable to comply with a provision of the Agreement as a result of the event of Force majeure. The notice shall describe the nature of the event of Force majeure, the provision of the Agreement with which the Party is unable to comply, the reason why the event of Force majeure renders the Party unable to comply with that provision of the Agreement, and the anticipated length of time during which the Party will not be able to comply with that provision of the Agreement.
12.3 Should an event of Force majeure occur that a Party anticipates will prevent it from complying with a provision of the Agreement for more than thirty days after this Agreement requires compliance, the Party shall bring an application to vary in accordance with section 303 of CEPA, 1999. The application shall be made by NWRP to the Attorney General of Canada, and NWRP shall send a copy of the application to ECCC at the time the application is made.
Section 13 - Intent and interpretation of the Agreement
13.1 This Agreement constitutes the entire Agreement between the Parties. The Parties acknowledge that there are no representations between the Parties with respect to the subject matter of the Agreement other than those set out in this Agreement.
13.2 This Agreement supersedes all previous negotiations, arrangements, letters of intent, offers, proposals, representations and information conveyed, whether oral or in writing, between the Parties or their authorized representatives.
13.3 The Attorney General of Canada, the Defendants and NWRP accede to the jurisdiction of the Provincial Court of Alberta (“Court”) to hear and resolve any disputes with respect to any provision in this Agreement.
Section 14 - Severability
14.1 The provisions of this Agreement are severable. If for any reason the Defendants or NWRP is lawfully excused from performing any of the provisions of this Agreement, the balance of this Agreement shall remain in full force and effect.
Section 15 - Time of the essence
15.1 Time is of the essence in this Agreement.
Section 16 - Governing law
16.1 This Agreement shall be governed by the laws of Canada, including the provisions of CEPA, 1999 and any regulations made there under.
Section 17 - Warranty
17.1 The Parties warrant that any actions they undertake pursuant to this Agreement will be performed by persons who are competent, qualified and have the appropriate knowledge and skill.
Section 18 - Certification
18.1 The Parties certify that, to the best of its knowledge, as of the date of execution of this Agreement, there is no federal, provincial, territorial, or municipal law or order of a court or administrative tribunal that would prevent them from complying with the provisions of this Agreement.
18.2 NWRP further certifies that funds to pay for the measures required by section 4 of this Agreement will not come from financial grants or funding received as a result of loan guarantees provided by the Government of Canada. However, where the actions required by this Agreement are funded by general corporate revenues, the fact that NWRP may have received non-earmarked Government financial grants or Government loan guarantees as part of its general corporate revenues will not be a violation of this certification.
18.3 The Parties further certify that the person executing this Agreement on each of their respective behalf is an officer thereof who has been duly authorized to sign this Agreement and bind the Party.
Section 19 - Variation of Agreement
19.1 Any application to vary this Agreement shall be made in accordance with section 303 of CEPA, 1999. Should a Party apply to vary the Agreement, application shall be made to the Attorney General of Canada and the applicant shall send a copy of the application to ECCC at the same time that the application is made.
Section 20 - Termination of this Agreement
20.1 This Agreement shall terminate when the terms and conditions have been fulfilled to the satisfaction of the Attorney General of Canada or otherwise in accordance with the applicable provisions of CEPA, 1999.
Section 21 - Assignment
21.1 This Agreement shall not be assigned without the written consent of the Parties.
Section 22 - Notice
22.1 Any notice under this Agreement shall be in writing and sent by prepaid registered mail, priority post mail, or facsimile to the intended recipient at its address as set out below.
To CNRR (notice to be given to both to be effective):
CNR (Redwater) Limited
2100, 855 – 2nd Street S.W.
Calgary, AB T2P 4J8
Attention: Vice President & Corporate Secretary
Fax: (403) 517-6975- and -
Ronald M. Kruhlak, K.C.
McLennan Ross LLP
600 McLennan Ross Building
12220 Stony Plain Road
Edmonton, AB T5N 3Y4
Fax: (780) 482-9100
To NWRI:
North West Refining Inc.
Attention: Gary Lee
1100, 205 Riverfront Avenue S.W.
Calgary, AB T2P 5K4
To NWRP (notice to be given to both to be effective):
North West Redwater Partnership
Attention: Peter Duda, General Manager
PO Box 930, 56212 RR 220
Gibbons, AB T0A 1N0- and -
Brad Gilmour
Bennett Jones
4500 Bankers Hall East
855 2nd Street SW
Calgary, AB T2P 4K7
Fax: (403) 265-7219
To the Attorney General of Canada:
Public Prosecution Service of Canada
700 EPCOR Tower
10423-101 Street
Edmonton, AB T5H 0E7
Attention: Amelia K. Pask Snook
Fax: (780) 495-4915
To ECCC:
Environment and Climate Change Canada
Enforcement Branch
9250 49 Street NW
Edmonton, AB T6B 1K5
Attention: Logan Pushie, Enforcement Officer
Email: logan.pushie@ec.gc.ca
22.2 The Parties may change their respective addresses for delivery by delivering notice of change as herein provided.
22.3 Any notice sent by prepaid registered mail or priority post mail to the address set out in Section 22.1, or the address provided under Section 22.2, shall be deemed to have been given and received on the fifth (5th) business day following the mailing, except where there exists a labour strike or other postal interruption resulting in interference with normal mail delivery, in, which case the notice shall he effective on the day of actual receipt by the recipient at the said address.
22.4 Any notice sent by facsimile to the facsimile number or by email to the email address set out in Section 22.1, or the facsimile number or email address provided under Section 22.2, shall be deemed to have been given 24 hours from the facsimile or email sender’s time of the confirmation of successful transmission.
Section 23 - Waiver
23.1 No express or implied waiver by either of the Parties of any breach of this Agreement by the other party will operate as a waiver of any continuing or subsequent breach.
Section 24 - Succession
24.1 This Agreement shall be binding upon and enure to the benefit of the Parties and their respective successors and assigns, subject to Section 21.1 of this Agreement.
Section 25 - Contra proferentem not to apply
25.1 NWRP and each of the Defendants warrant that they have obtained legal advice with respect to this Agreement and waives any argument of contra proferentem as against the Attorney General of Canada in the interpretation of the Agreement by any court.
Section 26 - Signature in counterpart
26.1 This Agreement may be signed electronically in counterpart.
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