Greens launch NAFTA action on Canada oil sands

OTTAWA (Reuters) - Environmental groups launched a complaint against Canada under the North American Free Trade Agreement on Wednesday, saying the country has failed to enforce anti-pollution rules governing its vast oil sands.

In the latest move in a long-running campaign to highlight the impact of oil sands development, the submission by Environmental Defense Canada, Natural Resources Defense Council and three citizens charges that toxic tailings ponds are being allowed to leak and contaminate ground water.

The ponds store residual oil, heavy metals and other byproducts of oil sands processing in the western province of Alberta. They are subject to environmental provisions under the federal Fisheries Act, the groups said.

"The federal government keeps saying it wants better environmental management in the tar sands, yet it is failing to enforce laws already on the books that could make this happen," Matt Price, policy director with Environmental Defense Canada, said in a statement.

Tailings ponds came to symbolize the battle between green groups and the oil sands industry in 2008, when 1,600 ducks were killed when they landed on one at Syncrude Canada Ltd's operation. Syncrude faces federal and provincial charges over the incident and the case is now being tried.

Meanwhile, people in a small settlement on Lake Athabasca, downstream from the massive energy projects in northern Alberta, suffer unusually high rates of cancers, but provincial health officials have been reluctant to tie that to water contamination from the oil sands.

One of the three citizens behind the submission lives in that community, Fort Chipewyan, Alberta.

Oil sands developers have countered the green groups with their own communications push, one they expanded last week. They say their environmental standards are high and they are making strides in improving performance.

EDC and NRDC said their NAFTA submission documents cases where tailings leakage has reached surface waters as well the region's ground water.

NAFTA's environmental side-body must first accept the submission. If they do, it would investigate in a process that could take up to three years. Ultimately, it could levy financial penalties.

"Should one of the parties -- that's Mexico, Canada or the U.S. -- feel that there's a systematic failure on the part of the government to enforce (environmental regulations), the parties can bring a motion for those kinds of financial penalties," Price told reporters.

(Reporting by Louise Egan and Jeffrey Jones; editing by Rob Wilson)