Regulatory Appeal – Environmental Protection Order
Background
Husky Oil Operations Limited (“Husky”) and Gibson Energy Inc. (“Gibson”) both filed requests for regulatory appeal of the environmental protection order (“EPO”) issued by the AER, Closure and Liability Branch (“C&L”).
C&L issued the EPO under sections 113 and 241 of the Environmental Protection and Enhancement Act (“EPEA”). The EPO required Husky and Gibson to take remedial action in relation to hydrocarbons released into groundwater and a surface water body at the Hardisty terminals. Husky and Gibson were also directed to submit a remediation action plan (“RAP”) for approval. Both companies disputed that they were the “persons responsible” under the order and sought to have the EPO either varied or revoked.
For the reasons summarized below, the AER dismissed the requests for regulatory appeal filed by Husky and Gibson pursuant to section 39(4) of Responsible Energy Development Act (“REDA”).
Timeline
On March 26, 2015, Gibson reported to the AER the presence of hydrocarbons in groundwater on site. On June 29, 2015, Husky filed other reports of hydrocarbons in groundwater on site to the AER. On September 14, 2015, Gibson filed other reports of hydrocarbons in groundwater on site to the AER.
On October 7, 2015, C&L directed Husky and Gibson to take steps to investigate and contain the hydrocarbons released and provide a remediation and risk management plan. On April 5, 2016, C&L confirmed that the hydrocarbons present in the groundwater on site had migrated and were discharging into a surface water body. C&L issued the EPO to Husky and Gibson on July 7, 2016, requiring them to take specific actions.
On February 15, 2018, C&L advised the hearing panel that it had cancelled the EPO effective February 14, 2018.
C&L and Husky both submitted that the cancellation of the EPO rendered these appeals moot. Gibson submitted that its appeal is not moot and that the hearing should proceed.
Regulatory Appeal Test
The REDA sets out the scope of the AER’s authority for regulatory appeals. The AER conducts regulatory appeals to review appealable decisions, as defined in section 36 of REDA. The definition includes EPOs issued under section 113 of EPEA, such as the EPO in this proceeding. Section 41(2) of REDA provides that: “in its decision on a regulatory appeal, the [AER] may confirm, vary, suspend or revoke the appealable decision.”
Section 39(4) of REDA states the AER may dismiss all or part of a request for regulatory appeal in certain circumstances, including if it considers the request to be frivolous, vexatious, or without merit, or for any other reason it considers that the request for regulatory appeal is not properly before it.
In this case, the AER had to decide whether it should dismiss the requests for regulatory appeal on the basis that the issues subject to the appeal had become moot.
Test for Mootness
The AER explained that the Supreme Court of Canada (“Supreme Court”) established a two-step analysis for mootness in Borowski v. Canada (AG)[1]. Under the first step, the decision maker must determine whether the required “tangible and concrete dispute” before it has disappeared and if the issues have become academic. If the decision maker determines that this has occurred, it must then apply the second step.
The second step involves applying three criteria to decide whether the decision maker should exercise its discretion to hear the case. The decision maker must consider the extent to which each of the following criteria are present and the weight to be given to each. The criteria are:
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the requirement for an adversarial context;
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the concern for judicial economy; and
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the proper role of the adjudicative branch.
Application of First Step: “Tangible and Concrete Dispute”
The AER panel found that the first part of the mootness analysis had been met; that is, the “tangible and concrete dispute” of these appeals had disappeared, making the issues academic.
The AER determined that because the EPO had been cancelled, there was no longer an appealable decision for it to consider. The issuance of an EPO under EPEA was an appealable decision according to section 36(a) of REDA, but the AER found that a cancellation of an EPO was not. The AER panel found that to grant the request would be beyond the scope of its authority under section 41(2) of REDA because there was no longer an appealable decision, namely the EPO, to confirm, vary, suspend, or revoke.
The AER noted Husky’s submission that the cancellation of the EPO rendered the regulatory appeals moot and the proceeding should be concluded. Gibson did not object to Husky’s regulatory appeal being concluded as moot. Given these submissions, the AER decided it was not necessary to apply the second step of the mootness analysis to Husky’s regulatory appeal, but it would do so for Gibson’s regulatory appeal.
Application of Second Step of Mootness Test
The AER panel had to consider the extent to which each of the following criteria was present and weigh the relative significance of each in determining whether to exercise its discretion to proceed with Gibson’s regulatory appeal:
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Was there still an adversarial context to this case?
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Does the determination of a now-academic issue outweigh concerns about judicial economy?
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Might the panel exceed its adjudicative role in proceeding to decide this case?
Adversarial Context
Gibson’s regulatory appeal sought to have the EPO revoked on the basis that Gibson was not a “person responsible” for the hydrocarbons present in the groundwater and surface water body. The cancellation of the EPO, which effectively granted the relief sought by Gibson’s regulatory appeal, had also eliminated the dispute between Gibson and C&L in relation to the EPO.
Judicial Economy
In setting this criterion in Borowski v. Canada (AG), the Supreme Court identified three factors to consider:
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Would deciding the case have some practical effect on the parties’ rights, regardless that the decision would not determine the controversy that gave rise to the action?
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Is the case one of a recurring nature but brief duration that raises an important question that might otherwise evade review? Is there an issue to be decided of public importance where resolution is in the public interest?
The AER found that the above factors did not support the AER exercising its discretion to decide Gibson’s appeal, based on the following:
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Proceeding with Gibson’s regulatory appeal would not have had a practical effect on the parties’ rights, since:
(i) the cancellation of the EPO effectively granted the relief that Gibson sought; and
(ii) there was no further relief that the AER panel would have authority to grant.
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Gibson’s regulatory appeal of the EPO did not fit the description of a case of a recurring nature and brief duration that might otherwise evade review by a hearing panel.
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The question of whether Gibson was properly a “person responsible” under the cancelled EPO was not an issue of public importance. The AER found that there was not significant uncertainty in the law in relation to the application of “person responsible” to EPOs under section 113 of EPEA, noting that the Alberta Environmental Appeals Board and Alberta Court of Queen’s Bench had dealt with that issue in a number of decisions.
Adjudicative Role of AER Panel
The AER found that it would not be appropriate for it to rule on the issue of “person responsible” for the purpose of assisting Gibson in other proceedings.
Gibson acknowledged in its submission that it sought to have this issue decided to assist it with determining liability for remediation costs. The AER considered that the EPEA was clear regarding financial liability related to EPOs and the scope of “person responsible” under such orders. The AER noted allocation of financial liability for remediation costs is a private dispute that is not within the scope of regulatory appeals; it can be dealt with through the civil court system.
Summary
The panel found that the regulatory appeals of both Husky and Gibson were moot because the EPO was cancelled. There was no longer an appealable decision before the panel and no remedies under REDA that authorized the panel to grant these regulatory appeals. The AER stated that the proper venue for any dispute about allocation of financial liability for remediation costs is the civil court system, not the regulatory appeal process under REDA.
