Alberta Court of Appeal Rules on the new “NORM” for Standing Before the Environmental Appeals Board

by Sean Parker and Kyle Trolley, Student-at-Law

Introduction

On Friday December 11, 2020, the Alberta Court of Appeal released its decision in Normtek Radiation Services Ltd v Alberta Environmental Appeal Board, 2020 ABCA 456 (“Normtek v EAB”) where it overturned a Court of Queen’s Bench judicial review ruling[1] that upheld a decision by the Environmental Appeal Board (the “Board”) where an appeal was dismissed on the basis that the appellant, Normtek Radiation Services Ltd. (“Normtek”), lacked standing as it failed to show that it was “directly affected” by the administrative decision under review.[2] This is a significant decision by the Court of Appeal as it potentially expands the test for standing before the Board to include parties who’s economic interests may be affected even if not directly tied to an environmental impact.  In addition, this decision has the potential to expand the scope of a hearing on the preliminary issue of standing before the Board; essentially requiring an analysis of the merits of an appeal if connected to an appellant’s position on how it may be “directly affected” by the decision being challenged.

Background

The appellant, Normtek, operates a specialized business that transports and disposes of naturally occurring radioactive material (“NORM”), which can accumulate as a waste product of oil and gas extraction and production operations.

Secure Energy Services Inc. (“Secure Energy”), brought an application to the Director of Alberta Environment and Parks (the “Director”) for an amended approval that would permit Secure Energy to dispose of NORM at its Pembina landfill northwest of Drayton Valley.[3] Normtek responded to Secure Energy’s application by submitting a statement of concern to the Director arguing that Secure Energy’s application was contrary to international and national guidelines, and the Director’s decision should await the development of appropriate waste classification criteria for NORM in Alberta.[4]

The Director responded to Normtek’s statement of concern advising that Normtek was outside of the environmental impact area of the proposed project and therefore, Normtek was not directly affected.[5] Secure Energy subsequently received an amendment to its approval, and Normtek appealed to the Board.

Environmental Appeal Board Decision

Under section s 91(1)(a)(i)) of the Environmental Protection and Enhancement Act[6] (the “Act”), the Board may hear an appeal by a party that is “directly affected” by the Director’s decision.[7] However, an appeal can be dismissed under section 95(5)(a)(ii) of the Act if the Board finds that the appellant does not have standing – i.e. that is not “directly affected” by the decision.

Secure Energy challenged the standing of Normtek on the basis that it was not directly affected by the Director’s decision to issue the amended landfill approval. Normtek submitted that its business was based on adhering to the international and national standards for disposal of NORM, and the negative impact of the amended approval on its business and the negative effect on the environment were inextricably intertwined.[8] By contrast, Secure Energy argued that unless a natural resource near the landfill which Normtek used was being harmed, Normtek was not directly affected and standing ought not to be granted.[9]

The Board found that Normtek’s concerns were primarily commercial or economic, and that these concerns were speculative.[10] The Board held that an impact on one’s use of a natural resource was required for standing, which must be supported by evidence.[11] Therefore, Normtek was not directly affected and did not have standing to appeal the Director’s decision. Accordingly, the Board dismissed Normtek’s appeal.

Judicial Review: Alberta Court of Queen’s Bench

Normtek sought judicial review of the Boards decision, arguing that the Board had erred in law by giving an unduly restrictive interpretation of the phrase “directly affected” in section 91(1)(a)(i) of the Act.[12] Normtek’s application was dismissed by the Court of Queen’s Bench.

The Court of Queen’s Bench upheld the Board’s finding that the for Normtek to have standing, the harm caused to it by the amended approval could not be speculative and that there must be a causal connection between the economic harm and the amended approval. Further, that even assuming a direct economic effect that was not speculative, Normtek still had to demonstrate a connection between the economic harm and an effect on the environment.[13]

The reviewing judge found that the Board had reasonably exercised its discretion to decide that Normtek was not directly affected without considering the merits of the appeal. This finding was made despite the reviewing judge noting that exploration of the merits of the appeal may support a stronger case for potential harm to the environment or human health and safety.[14]

Normtek appealed Court of Queen’s Bench decision.

Alberta Court of Appeal

The Court of Appeal disagreed with the Court of Queen’s Bench and the Board, and found that Normtek’s objection was as much regulatory concern as it was economic or commercial. Normtek had argued that the Director’s decision directly affected its interest, as an industry participant, in a regulatory regime which governed its industry in the interests of protecting the environment. The Court of Appeal held that it would be:

… hard to think of a better basis for standing before the Environmental Appeals Board than a concern about a regulatory decision which is alleged to adversely impact a party economically and which also may have implications for environmental protection, particularly when the regulatory decision permits an activity which involves the disposal of a substance of concern under the Act (i.e. radiation).[15]

The Court of Appeal reviewed a number of sections sunder the Act[16] and held that a narrow interpretation of “directly affected” to impacts on the appellant’s use of natural resources affected by the activity approved by the Director is not supported by a plain reading of s 91(1)(a)(i) of the Act.  Rather, the test is whether the appellant is “directly affected by the Director’s decision”, however that direct effect manifests itself.”[17] 

The term “adverse effect” is defined in section 1(b) of the Act as the impairment of or damage to the environment, human health, safety or property.[18] If one is adversely effected by a decision of the Director, an appellant may be directly affected and therefore have standing, regardless of their use of a natural resource impacted by the decision.[19] The Court of Appeal found that the Act does not require an impact on natural resources in order to ground standing. While such an impact could establish directly affected status, it is not a prerequisite to establishing standing where other adverse effects are alleged.[20]

The use of the term “adverse effect” in other sections of the Act, such as when a Director may amend an approval under section 70(3)(a)(i)[21], or when an environmental impact assessment for a project is necessary under section 40[22], also indicate that the restrictive interpretation by the Board was unreasonable, as the Director is obliged by the Act to consider the environmental, social, economic and cultural consequences, if any, resulting from the proposed activity, as well as issues related to human health.[23]

The Board has, in past decisions, declined to apply a formulaic test to determine standing. Instead, the Board should consider standing on a case by case basis, taking into account the varying circumstances and facts of each appeal.[24] The Court of Appeal found that the decision of the Board was unreasonable to not consider all evidence of Normatek as evidence related to its substantive claims also went to the issue of Normatek’s standing. Essentially, it is unreasonable to necessarily view standing and merit in silos as two distinct and separate issues.[25]

The directly affected issue and the substantive issues are often effectively the same.[26] The Court of Appeal further held that the issue of whether an appellant is directly affected by a proposed activity necessarily requires a consideration of the nature and merits of the appellant’s objection, especially if the basis of the appellant’s objection is the “adverse effect” of the Director’s decision on it.[27]

The Court of Appeal has remitted the matter back to the Environmental Appeals Board for further consideration of Normtek’s standing.

Conclusion

This is an important decision by the Court of Appeal as it has the potential to expand the category of parties that have standing to bring an appeal before the Board, which could result in more appeals being brought and heard by the Board. The finding that an appellant’s standing can be grounded in an impact to its economic interests, which does not need to be tied to its use of the natural resources or environment, is a departure from the test the Board has been applying for several years.

The Court of Appeal’s decision also has the potential to expand the scope of a hearing on the preliminary issue of standing before the Board. In some cases this could mean essentially having to go through an entire appeal hearing with evidence and submissions on the merits in order for the Board to decide the preliminary issue of standing. The Court of Appeal found that a preliminary issue is one that must be decided first; it does not mean that the Board is required to have a limited hearing only on that issue and not consider the merits.[28] This represents a significant shift in the Board’s practice in recent years where issues of standing were decided first as a separate matter, and a full hearing on the merits would not occur if standing was not made out. This shift is relevant to parties appearing before the Board as it could significantly increase the cost and time associated with an appeal hearing.

Essentially, the Court of Appeal may have opened the door to more and longer appeals before the Board.

Decision making on environmental issues requires a balancing of several policy and other considerations. These various and sometimes competing interests are set out in section 2 of the Act and include sustainable development, environmental protection, economic prosperity and public participation, among other things. The Court of Appeal’s decision in Normtek v EAB interprets the legislation and seeks to balance these considerations in accordance with the purpose and intent of the Act.

For more information on how this recent decision may affect you or your business, please contact Sean Parker in Edmonton, JoAnn P. Jamieson in Calgary or another member of our Energy, Environmental and Regulatory Practice Group.


[1] Normtek Radiation Services Ltd v Alberta (Environmental Appeals Board), 2018 ABQB 911.
[2] Normtek Radiation Services Ltd. v. Director, Red Deer-North Saskatchewan Region, Alberta Environment and Parks, re: Secure Energy Services Inc. (2 March 2018), Appeal No. 16-024-D (A.E.A.B.).
[3] Normtek v EAB at para 9.
[4]  Ibid, at Para 14.
[5] Ibid, at Para 19.
[6] RSA 2000, c E-12.
[7] Additional criteria may apply for an appeal to be heard by the Board that are not that are not relevant to the current discussion.
[8] Supra note 3, at Para 36.
[9] Ibid, at Para 41.
[10] Ibid, at Para 59.
[11] Ibid, at Para 60.
[12] Ibid, at Para 62.
[13] Ibid, at Para 64.
[14] Ibid, at Para 66.
[15] Supra note 3, at Para 118.
[16] For example ss. 1(b), 70(3) and 40.
[17] Supra note 3, at Para 82.
[18] Ibid, at Para 83.
[19] Ibid.
[20] Ibid, at Para 96..
[21] Section 70(3)(a)(i).
[22] Section 40.
[23] Supra note 3, at Para 85.
[24] Supra note 3, at Para 88.
[25] Ibid, at Paras 131-132.
[26] Ibid, at Para 136.
[27] Ibid, at Para 135.
[28]  Ibid, at Para 134.
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AER to Consider Honour of the Crown in Redetermination Hearing

by JoAnn P. Jamieson and Michelle Tremblay, Student-at-law

Earlier this year, the Alberta Court of Appeal released its decision in Fort McKay First Nation v Prosper Petroleum Ltd., 2020 ABCA 163 (“Prosper”) holding that the Alberta Energy Regulator (“AER”) is required to consider the honour of the Crown when determining whether the Prosper Petroleum oil sands project is in the public interest. The AER is now meeting with the parties to determine the scope of a redetermination hearing,[1] anticipated to be held in the spring, 2021.[2]

What is the “Honour of the Crown”?

Canadian courts have long held that the “honour of the Crown” is a constitutional principle that governs the relationship between the Crown and Aboriginal peoples. The ultimate purpose of the principle is to reconcile pre-existing Aboriginal interests with the assertion of Crown sovereignty dating as far back as the Royal Proclamation, 1763.

The honour of the Crown gives rise to a number of duties and obligations including:

·       a fiduciary duty when the Crown assumes discretionary control over a specific Aboriginal interest;

·       the Crown’s duty to consult when the Crown contemplates an action that will affect a claimed but unproven Aboriginal interest under section 35 of the Constitution Act, 1982;

·       a requirement that the Crown act in a way that accomplishes the intended purposes of treaty and statutory grants to Aboriginal peoples; and

·       a principle governing treaty-making and implementation, which includes honourable negotiation practices and the avoidance of sharp dealings.

To date, the honour of the Crown has generally been raised in the context of regulatory proceedings to argue that the duty to consult has been triggered and that the tribunal must take steps to adequately fulfill the duty. In Prosper, the AER was asked to consider the honour of the Crown in the context of determining whether the proposed oil sands project was in the public interest. 

Background to Prosper Case

The Fort McKay First Nation (“FMFN”) holds treaty rights to hunt, fish, and trap within the Moose Lake Area that forms part of its traditional territory. The FMFN has long been concerned about preserving its ability to exercise its Treaty 8 rights as over 70% of its traditional territory is leased for oil sands purposes.

In 2003, negotiations began between the Government of Alberta and the FMFN to obtain protection for the Moose Lake Area in order to address the cumulative effects on FMFN’s treaty rights. It was envisioned that the resulting Moose Lake Area Management Plan (“MLAMP”) would be adopted as a sub-plan under the Lower Athabasca Regional Plan (“LARP”). These negotiations were eventually put on hold while LARP was negotiated and implemented.

As part of the LARP process, FMFN sought a 10 km buffer zone around its Moose Lake Reserve, which was later rejected by the Government of Alberta. As part of a formal review of the LARP, the review committee found that the plan failed to take adequate measures to protect the FMFN’s treaty rights. This report revived the MLAMP negotiations, with Premier Prentice and Chief Boucher signing a Letter of Intent in 2015 with a commitment to expedite the completion of the MLAMP.

The AER Decision

In 2013, Prosper applied for the Rigel bitumen recovery project located within 5 kilometers of the FMFN’s Moose Lake Reserve. On May 6, 2016, the AER suspended its consideration of the application due to resumption of the MLAMP negotiations. On November 6, 2016, the AER resumed processing the application on the basis that finalization of the MLAMP remained uncertain.

In January, 2018, the AER held a public hearing to consider the application, which the FMFN fully participated in. The FMFN requested the application be denied because of its location within the 10 km buffer and because the MLAMP was still not in place.

The AER approved the Rigel project in June, 2018. In its written reasons, the AER found the project to be in the public interest when impacts to treaty rights were weighed against other social, economic and environmental rights. The AER declined to consider the MLAMP negotiations contemplating the 10 km buffer and whether the negotiations implicated the honour of the Crown for a number of reasons including that section 21 of the Responsible Energy Development Act (“REDA”) precluded it from considering the adequacy of Crown consultation.

The Court of Appeal Decision

On appeal, the majority of the Court found that the AER, as a public agency, has a general duty to apply the Constitution Act, 1982 and that this duty extends to ensuring that its decision complies with section 35, which explicitly protects and upholds Aboriginal and treaty rights. The Court reiterate the finding from Clyde River[3] wherein the Supreme Court of Canada determined that: 

                        [A] project authorization that breaches constitutionally protected aboriginal and treaty rights of Indigenous peoples cannot be in the public interest.[4]

Further, the Court found that section 21 of REDA does not carve out the AER’s jurisdiction to consider constitutional law issues, including the honour of the Crown. Section 21 of REDA reads:

The Regulator has no jurisdiction with respect to assessing the adequacy of Crown consultation associated with the rights of aboriginal peoples as recognized and affirmed under Part II of the Constitution Act. [Emphasis added.]

Accordingly, while the AER does not have jurisdiction to determine the adequacy of Crown consultation pursuant to section 21, the AER does have a broad implied jurisdiction to consider the honour of the Crown and whether or not it was engaged. In the case before it, the AER was required to address the honour of the Crown as part of its consideration of whether the Rigel project was in the public interest giving credence to the specific context of the MLAMP negotiations.

Further, the AER incorrectly determined the MLAMP to be encompassed by the larger regional plan, which would prevent the AER from taking into consideration the ongoing MLAMP negotiation process. Finally, the Court held that the AER could not defer the consideration of these issues to Cabinet as the AER is no less lawfully responsible for considering this matter than is Cabinet. 

In the result, the Court granted the appeal and held that the AER is required to consider the MLAMP process as part of its assessment of the public interest.

Additionally, Greckol JA proffered a concurring judgment that offers guidance on how the implementation of treaties engages the honour of the Crown. Greckol found that the 2015 Letter of Intent signed by Premier Prentice supporting the negotiation of the MLAMP fell within treaty implementation as it was designed to ensure fulfillment of the Crown’s obligations. The obligation here was the FMFN’s ongoing right to hunt under Treaty 8, which requires negotiation and just settlement of disputes outside the context of individual projects. This is required in order to address the cumulative effects of land development on First Nation treaty rights.

Implications of the Case

The Prosper case affirms that treaty implementation is a contemporaneous issue spanning across all Canadian jurisdictions and decision-making processes. In particular, the decision sheds light on the obligation of a tribunal to consider the honour of the Crown in its decision-making process unless expressly carved out by governing legislation.

Going forward, the AER and other tribunals must be mindful of the ways in which its obligation to uphold the Constitution Act, 1982 may impact consideration of whether an individual project is in the public interest. As such, this case may pave a new way for Indigenous groups to hold governments, and their regulatory tribunals, accountable for implementation of treaty obligations.

Should you have any questions regarding the information outlined above, please feel free to contact JoAnn P. Jamieson or Michelle Tremblay, Student-at-law. Alternatively, you can also contact any member of our Energy, Environmental and Regulatory practice group.

[1] Fort McKay First Nation, “Prosper Rigel Project and the Re-determination Hearing”, Red River Current (November 2020), online (pdf): <https://www.fortmckay.com/app/uploads/2020/11/november-2020.pdf>.

[2] Alberta Energy Regulator, “Application 1778538 Notice of Hearing – Prosper Rigel Project” (28 July 2020), online: <https://www.aer.ca/regulating-development/project-application/notices/application-1778538-hrg>.

[3] Clyde River (Hamlet) v. Petroleum Geo-Services Inc., 2017 SCC 40 (Clyde River).

[4] Ibid at 40.

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Micro-Generation in Alberta – Watt It’s All About

by Lydia Roseman and Doug Evanchuk

As people all over the world become more environmentally conscious, we anticipate more and more Albertans looking for a “greener” way of life. One of the “green” actions that immediately springs to mind is producing one’s own energy using renewable sources. Many of us have driven by a house with solar panels and thought about trying to do the same thing.

Alberta’s regulatory scheme makes this possible through special legislation geared towards “microgeneration”. Microgeneration under the Alberta regulatory scheme means the generation of electricity from renewable or alternative energy sources for one’s own use, in the amount of 5 MW or less.

Alberta has simplified the regulatory process and reduced costs for microgenerators, but it can still be fairly complex to get set-up to produce your own electricity. Below we provide more detail on what it means to be a microgenerator in Alberta then set out the steps required to become one.

Background on Alberta’s Energy Regulation

The legislative framework that enables the generation and provision of electricity in Alberta is extremely complex, involving both provincial and federal legislation and regulations. The two primary pieces of legislation in Alberta are the Electric Utilities Act[1] (the “EUA”) and the Hydro and Electric Energy Act[2] (the “HEEA”).

Under these Acts, all electricity generated in Alberta must generally be exchanged through Alberta’s Power Pool, that is it must be bought and sold on the wholesale electricity market operated by the Alberta Electric System Operator (the “AESO”). Additionally, any connection of generation systems to the interconnected electrical system requires an order from the Alberta Utilities Commission (the “AUC”), unless an exception applies.

Therefore, without any exemption, an individual installing and using a solar panel would need to apply to the AUC and sell the electricity generated to Alberta’s power pool. That would clearly be prohibitive to most individuals looking to simply make life a little greener by generating all or a portion of their own electricity.

To promote this type of green activity, Alberta has created a number of exceptions for “micro-generators” to simplify the process and make it much easier for an individual to generate and use their own electricity.

What Does it Mean to Be an Alberta Micro-Generator?

Where a unit used to generate electricity is used entirely for self-supply (i.e. the energy produced on the property is entirely consumed on the property), that unit is exempted from most of the provisions of the EUA and the HEEA. The electricity generated from that unit does not need to be exchanged through the power pool and the unit does not require approval from the AUC.

Alberta’s Micro-generation Regulation[3] (“Micro Reg”) takes things one step further; it creates a simple process for small Alberta microgenerators to self-supply and sell the excess electricity to the Alberta power pool.

The Micro Reg covers “small micro-generation” (i.e. capacity of less than 150 kW) and “large micro-generation” (i.e. capacity between 150 kW and 5 MW) for electricity produced using renewable, environmentally friendly fuel sources.

The Micro Reg is designed to allow these small renewable generating units to easily both self-supply and sell the excess back to the energy market through an interconnection to an electric distribution system. This is set up through provisions that require the owner of the electric distribution system to provide metering services and net billing to the micro-generator. Additionally, the microgenerator’s retailer or service provider is then required to act as the self-supplier’s market participant, meaning the owner of the unit will not need to negotiate and transact directly with the AESO.

The Micro Reg also greatly reduces the legislative “red tape” that a generating unit must pass through. For example, a microgenerator is not typically required to apply to the AUC to construct or operate the generating unit; instead, it simply provides notice to the owner of the electrical distribution system of its intent. The AUC only becomes involved if the owner disputes whether the unit appropriately falls under the Micro Reg.

Importantly, this Regulation also creates an exception from the requirement in section 18 of the EUA that power be exchanged through the power pool for small micro-generation entering the interconnected electric system. That is, small micro-generators do not need to exchange electricity through the Power Pool.

Becoming a Micro-Generator

Microgenerators are not required to complete an application to the AUC so long as the generating unit will not directly and adversely affect any person, will not have any adverse impact on the environment, and is constructed and operated in compliance with AUC’s Rule 12: Noise Control[4] (i.e. the unit will not exceed the maximum allowable sound level).

While the microgenerator does not need AUC approval, it is required to complete consultation with stakeholders in accordance with the AUC’s Participant Involvement Program Guidelines.[5] If the capacity of generation will be less than 1 MW, the microgenerator must simply notify occupants, residents, and landowners within the first row of surrounding properties. For microgenerators between 1 and 10 MW, the same notification is required and the AUC asks that the microgenerator consider “consultation” with those individuals, if the circumstances require. This must be done prior to submitting a micro-generation notice application.

Instead of an application to the AUC, the microgenerator submits a “micro-generation notice application” to the electric distribution system owner for approval. This application includes an electrical single-line diagram and may include other documents, as applicable.[6] If the system owner determines the microgeneration unit meets the requirements in the Micro Reg, the owner must approve the application and install a meter; if not, the owner must file a notice of dispute with the AUC and the AUC will make the ultimate decision.[7]

Once the microgeneration unit is approved, the system owner is responsible for (and pays for) the installation of the electrical meter and the collection of electricity data. The system owner will also bear the cost of connecting the generating unit to the interconnected electric system unless the cost is “extraordinary”. In that case, the system owner must file a notice of dispute with the AUC, and the microgenerator may be required to reimburse the system owner for a portion of the costs..

Microgenerators must also notify their energy retailer that they are becoming a microgenerator. The retailer then acts as the electricity market participant for the microgenerator and net bills the microgenerator. This means that any over-production of electricity, beyond that used as self-supply, will be credited to the microgenerator, any shortfall that is covered by the power pool is billed, and the net amount is either charged or reimbursed to the microgenerator.

Conclusion

While electrical regulation in Alberta is highly complex, processes for “microgenerators” are much simpler. Individuals generating small amounts of electricity for their personal use, using renewable sources, avoid complex AUC processes and interactions with the AESO. However, if the microgenerator is looking to connect its generating unit to Alberta’s electrical grid, there are still some steps that must be followed.

The microgenerator must comply with applicable AUC rules and notify neighbouring properties, the local electrical distribution system owner, and their energy retailer of their intent to become a microgenerator. Once the microgenerator has completed those processes, the “behind the scenes” work is largely conducted by the system owner and the retailer on their behalf. At that point, the microgenerator will simply reap the financial and moral rewards of contributing to a greener electrical market in Alberta.

If you have any questions about microgeneration, please do not hesitate to contact our Regulatory team. We would be more than happy to help you become a microgenerator.


[1] SA 2003, c E-5.1.

[2] RSA 2000, c H-16.

[3] Alta Reg 27/2008.

[6] Additional documents that may be required include a site plan or pictures to illustrate the micro-generation unit location, an electrical permit, an electrical inspection report, a development or building permit and environmental impact assessment documents: <https://www.auc.ab.ca/regulatory_documents/Reference/MicrogenerationNoticeSubmissionGuideline.pdf>.

[7] While a microgenerator does not require AUC approval, it must be able to demonstrate compliance with the Micro Reg and applicable AUC rules on request. Microgenerators may also still require other permits or approvals under federal or provincial legislation or municipal bylaws (for example, a municipal building permit).

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