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

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.