On October 19, the government of Quebec made the decision to “definitively renounce the extraction of hydrocarbons on its territory”. Unsurprisingly, this announcement was followed by pressure from the industry that we feel it is necessary to clarify from a legal perspective.
In its report last June, the Center québécois du droit de l’environnement (CQDE) recalled the sovereignty of the National Assembly of Quebec to put an end to hydrocarbon exploration and exploitation activities throughout its territory, without compensation, and even retroactively. Quebec has, moreover, been able to use this power on more than one occasion, notably in 2011 in the Oil and Gas Activity Restriction Act which specifies that it “does not give the right to any compensation from the State”.
Reframing the ‘expropriation’ argument
In a recent press release, a company said “that by expropriating these oil and gas companies, Quebec must respect its own legislation and pay its fair value.” However, the right to property is not an absolute right. Indeed, the possibility of limiting the right to property has been recognized on numerous occasions by the courts, in particular for the purposes of environmental protection. The Civil Code of Quebec and the Expropriation Act not being quasi-constitutional or constitutional laws, it is quite possible to adopt a more specific law which would take precedence over these general provisions.
The legislator can proceed in this way without any compensation, provided that a law is passed which clearly expresses its intention, as has already been done on other occasions. It does not violate any rule of law.
Predictability
While large investment funds are dropping out of the fossil fuel sector, the effects of climate change are on the increase and historic citizen mobilizations are taking place around the world, no one can sincerely be surprised at the decline of this industry. , while for some time many signals have been pointing to an unfavorable investment context in Quebec, or at least a clearly hazardous context.
Moreover, several companies concerned are very aware of the uncertainty regarding the exploration and exploitation of oil and gas resources in Quebec, according to the information they officially send to the financial market authorities. For example, one of them recognized in 2019 that “a significant uncertainty still persists on the future of oil exploration in Quebec”. An investment is inherently unpredictable. In fact, predictability in the world of business and regulation is an asset and not a right. The Superior Court wrote in 2014 that “no one can claim to have the assurance that there will be no legislative change, nor to enjoy an absolute guarantee of the durability of a law”.
Political choice
To get to the point, compensation is a political choice to which the legislator is not legally bound. This is why many players are calling on the government of Quebec to show political courage to include in the law the non-compensation of the companies concerned. At a time when the investment opportunities for an energy transition are more present and necessary than ever, and knowing that this same industry has already bequeathed an environmental liability that will continue to monopolize significant public funds, the question arises: Is he responsible for pouring millions of dollars in public funds into an industry that contributed so heavily to creating the climate crisis?
This is a key moment for Quebec’s credibility in climate matters.
In fact, not being as dependent on this industry as other states, the decision to ban its activities in Quebec is above all a gesture of leadership. With the eyes of the world on Quebec following this important gesture, large-scale compensation risks increasing the costs of the transition in other states that wish to follow our example. Quebec therefore now has a crucial responsibility, not only to its own taxpayers, but also to the international community that it is trying to inspire.