Taxpayers on hook for N.L. mill mess: premier

Newfoundland and Labrador Premier Danny Williams conceded Wednesday that taxpayers will be responsible for dealing with an environmentally troubled newsprint mill thatthe provinceaccidentally expropriated from paper giant AbitibiBowater.

Williams made the admissionto reporters outside the house of assembly, mere minutes after he told the legislature his government is planning to head to the Supreme Court of Canada to fight a Quebec Appeal Court decision about responsibility for the costs.

"We always knew that from an environmental perspective the environmental liabilities were down the ladder on the creditor side," Williams told reporters.

"And we weren't a secured creditor, and at best we would be an unsecured creditor."

The government appears to be on the hook not just for the Grand Falls-Windsor mill, but other sites that AbitibiBowater operated through the years.

Williams was served a setback on Tuesday, when the Quebec Court of Appeal refused to hear an appeal of a lower court decision that rejected Newfoundland and Labrador's bid for secured creditor status. As such, Newfoundland and Labrador has little say while AbitibiBowater restructures its debts through bankruptcy protection.

Accidentally expropriated

Earlier this year, the government revealed it had inadvertently expropriated the Grand Falls-Windsor mill in late 2008, while it rushed a bill through the legislature to seize the company's timber and hydroelectric power rights.

Despite the expropriation error, Williams and government ministers had insisted for weeks that there would be no public liability for cleaning up AbitibiBowater's site, including a century-old mill in Grand Falls-Windsor that shut down in 2009 amid the worst of the global economic crisis.

Estimates for cleaning up AbitibiBowater's Newfoundland and Labrador assets have been pegged at more than $200 million.

Williams adopted an aggressive posture in the house of assembly, as he insisted the fight against AbitibiBowater was far from over.

"We're not going to give up," Williams told the legislature.

"We know what the bias is in the Quebec courts, but there are higher courts than that. If we have to fight them in the courts or fight them at the [Quebec energy regulator] or if I personally have to get down and go toe to toe, or roll around on the ground to fight them, we will do it.""

NDP Leader Lorraine Michael chided Williams for committing government resources to legal battles it cannot win.

"It has become clear that government is not able to control some of the biggest issues facing this province, from the AbitibiBowater assets to the Lower Churchill development," Michael told the legislature, adding that the government is "powerless to move its own agenda" because of decisions made in Quebec.

However, Williams told the reporters the government would have been stuck with environmental remediation costs, regardless of what had happened with the expropriation.

"With the assets or without the assets, given what Abitibi were doing through a restructuring or a bankruptcy, [we] would have been stuck with the liabilities by Abitibi," he said.