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Court Decision Stark Reminder of Risk of Breach of Administrative Law Principles

Fasken
Reading Time 5 minute read
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Global Energy Bulletin

During regulatory proceedings, applicants often have to decide whether to oppose the “standing” of other parties who wish to participate in the proceedings. There can be benefits to doing this in certain circumstances, but the recent decision in Pembina Institute v. Alberta (Environment and Sustainable Resources Development), 2013 ABQB 567 offers a chilling reminder that there can also be significant downsides to such an approach.

Background

In November 2011, Southern Pacific Resource Corp. (SPR) applied for certain approvals associated with an oil sands project on the MacKay River in northeast Alberta. Section 73 of the Alberta Environmental Protection and Enhancement Act (EPEA) and section 109 of the Alberta Water Act permit a “person” who may be “directly affected” by an application for an oil and gas extraction project to submit a Statement of Concern to the application.

Under these provisions, the Oil Sands Environmental Coalition (OSEC) submitted a Statement of Concern on SPR’s application. The OSEC is comprised of the Pembina Institute (Pembina), the Fort McMurray Environmental Association (FMEA), the Alberta Wilderness Association, and the Toxics Watch Society of Alberta. In its Statement of Concern, the OSEC asserted that it holds a recreational lease to lands downstream from SPR’s proposed project. These lands are used for camping, hiking, fishing, wildlife viewing, and swimming, and OSEC argued that SPR’s operations would directly impact its use and enjoyment of the lands. SPR opposed OSEC’s Statement of Concern.

On June 26, 2012, the designated authority under EPEA and the Water Act (the Director) advised OSEC that its submission would not be considered a Statement of Concern pursuant to EPEA or the Water Act on the basis that OSEC did not sufficiently demonstrate that it would be “directly affected” by SPR’s application. OSEC requested that the Director review this decision, but the Director refused. Pembina and FMEA then sought judicial review of the Director’s decision.

Judicial Review

On a judicial review, the decision-maker whose decision is being reviewed is required to file the record of materials that was before him or her when the decision was made. In this case, when the Director filed the record of materials that was before him, the record included a Briefing Note to the Deputy Minister of Alberta Environment on the subject “Statement of Concern Rejection of Oil Sands Environmental Coalition”. The Briefing Note outlined Alberta Environment’s policy change from accepting OSEC as a “consistent Statement of Concern filer” to opposing their participation for a variety of reasons, including because they were “less inclined to work cooperatively”.

In his decision, Justice Marceau held that, although EPEA and the Water Act emphasize the need to promote Alberta’s economic growth in an environmentally responsible manner, this does not permit the Director to reject Statements of Concern from persons or groups who voice negative opinions with respect to oil sands development. While Pembina and FMEA made various submissions that the Director erred in finding that they weren’t directly and adversely affected, in Justice Marceau’s view, the entire process was so tainted by the Briefing Note that he only needed to address its impact on the Director’s decision.

Justice Marceau found that the Director’s decision breached all four of the principles of natural justice:

  1. Fair and open procedure: Alberta Environment breached this principle by operating under an undisclosed policy document and ignoring the purposes of EPEA and the Water Act.
  2. The right to be heard: Although Pembina and FMEA were entitled to make submissions on their Statement of Concern, they were not told about the Briefing Note and consequently could not have answered to the allegations in the Briefing Note arguing against their participation.
  3. Consideration by the decision-maker tasked with the duty to decide: The reasons given by the Director were sparse and fatally flawed, as the Director clearly relied on improper and irrelevant considerations.
  4. Decisions are to be free from reasonable apprehension of bias: Justice Marceau found that one of the objects of EPEA is to give citizens as much input as reasonable into the environmental concerns that arise from proposed industrial development. This object was “hijacked” by the Briefing Note and Pembina specifically and OSEC generally were targeted by Alberta Environment’s actions.

In light of these findings, the Director’s decision to reject OSEC’s Statement of Concern was quashed. 

Implications

As indicated, applicants are often called upon to make a decision whether they will oppose another party’s standing. In some cases, this choice may seem reasonably clear. For example, if only one party is applying for standing with a tenuous connection to the proposed application. In these cases, opposing standing may present little risk and could significantly shorten the timelines associated with an application. However, Justice Marceau’s decision highlights that the calculus in other situations may be more complex. Even if a proposed party’s connection to an application is tenuous, even if there isn’t a “smoking gun” that taints the process like in Pembina,  will the decision-maker make a decision that is legally defensible. Over a recent period, 13 appeals were brought on the issue of whether a party was “directly and adversely affected” and two of these were successful. While these may seem like good odds, that may not be the case if you are an applicant where an appeal is successful; particularly if this means that a hearing process has to take place over again to allow the participation of the wrongly rejected party. In these circumstances, the perceived “benefits” of opposing standing may not be worth the risks; particularly if a hearing was going to take place in any event.

On a broader level, Justice Marceau’s decision also provides a stark reminder that, even though we may not hear about principles of “natural justice” or administrative law fairness on a regular basis, these principles continue to exist. Ultimately, the decision-makers who must decide questions of standing, and applications themselves, are statutory decision-makers who are bound by both the purposes of the statutes at issue and overarching principles of natural justice. 

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