Natural Gas Facilities – Appeal of AER Decision – Denying Request for Regulatory Appeal – Leave to Appeal Granted
In Coulas v. Ferus Natural Gas Fuels Inc., 2016 ABCA 332 (the “ABCA Decision”), the ABCA considered Silvia Coulas’ application for leave to appeal an AER decision (the “AER Decision”). The AER Decision denied Coulas’ application for a regulatory appeal of the liquid natural gas (“LNG”) facility licence the AER issued to Ferus Natural Gas (“Ferus”).
The ABCA granted Ms. Coulas leave to appeal for the reasons summarized below.
Background
The ABCA summarized the relevant factual background, noting that in 2015, the AER advised Ferus that it had jurisdiction over the its LNG facility (the “Facility”) and that Ferus must apply for a licence to operate. Ferus made that application in December 2015 (the “Application”). The Application did not request any additions or modifications to the existing Facility.
Ferus did not provide Ms. Coulas with personal notice of the Application, as directed by the AER.
The ABCA noted that there was no dispute between the parties that Ms. Coulas did not view the public notice, but found out about the Application after the AER issued the licence on January 19, 2016, without a hearing.
Coulas Leave Application
Ms. Coulas applied for leave to appeal on the grounds that the AER erred in law by:
a) finding that the applicant was not an “eligible person” who was “directly and adversely affected”;
b) improperly interpreting its legislative scheme in finding that
(i) the issuance of the licence was “an administrative decision”, thereby breaching the rules of natural justice;
(ii) the Application … “complied with all requirements under the regulations” when the evidence showed otherwise;
c) finding that the applicant’s concerns were addressed and determined by the County; and thereby breached its duty to not improperly delegate authority; and
d) failing to provide adequate reasons for its refusal of the regulatory appeal request.
AER Decision Dismissing Request for Regulatory Appeal
The ABCA summarized some of the AER findings subject to appeal, including:
a) the issuance of the licence was an “administrative decision” as it did not result in any new construction, expansion, or change to the Facility;
b) the licencing was merely an application to meet the new AER approval requirements for processing facilities under the Oil and Gas Conservation Act;
c) the Facility complied with the AER regulatory requirements (including the Noise Directives);
d) there were no adverse effects as a result of the licencing and therefore “Ms. Coulas had not demonstrated that she is directly and adversely affected”; and
e) Ms Coulas had attended the County meeting in 2013 when the Ferus Facility was discussed prior to its construction, voiced her concerns and Ferus had responded to those concerns at that time.
AER/Ferus Submissions
The AER submitted that a deferential standard of review should apply, given the AER’s knowledge and expertise about the oil and gas industry and that the AER was interpreting its own legislation, regulations, and rules.
The AER submitted that the question as to whether Ms. Coulas is a person “directly and adversely affected” is a question of fact or mixed fact and law, to which no appeal lies to the ABCA under the Responsible Energy Development Act (“REDA”).
The ABCA Decision Granting Leave to Appeal
The ABCA held that Ms Coulas raised a serious and important issue that the AER may have acted unreasonably or unlawfully in issuing the licence to Ferus without holding a hearing. Specifically, the ABCA held the AER may have erred in law in finding that the level of interest of a landowner and resident within 1.5km of an operational facility was insufficient to make such an applicant “directly and adversely affected” by the licencing decision made without a hearing.
The ABCA granted leave to appeal on the questions of:
a) whether the AER erred in law in determining that the applicant was not an “eligible person” under the REDA; and
b) whether it was an error of law for the AER to conclude that the issuance of the Facility licence was merely an “administrative” decision.
The ABCA also granted leave to appeal on natural justice grounds, stating:
… it is arguable that there may be a significant natural justice flaw in a procedure that would grant the licence, and deny an appeal of same, without notice or affording a full hearing on either issue, particularly considering this applicant lives in very close proximity to the Ferus Facility …
The ABCA denied leave to appeal on the other grounds of appeal, noting that many of the issues raised on those grounds were subsumed into the natural justice and interpretation grounds of appeal for which the Court did grant leave.
