Decision Date: November 15, 2013

Panel: Alan Andison

Keywords: Environmental Management Act – s. 104; preliminary decision; stay application; permit; contaminated soil; landfill; drinking water

The Shawnigan Residents Association (the “Association”) and the Cowichan Valley Regional District (the “Regional District”) filed separate appeals of a permit issued by the Director, Environmental Management Act (the “Director”), Ministry of Environment (the “Ministry”). The permit authorizes Cobble Hill Holdings Ltd. (the “Permit Holder”) to to discharge refuse to the ground and effluent to a stream from a contaminated soil treatment facility and landfill located near Shawnigan Lake, BC.

Specifically, the permit authorizes the Permit Holder to deposit and bury up to 100,000 tonnes of contaminated soil per year, and to discharge storm water and treated effluent to an ephemeral stream that flows into Shawnigan Creek, which eventually flows into Shawnigan Lake. The permit contains numerous conditions, including requirements for the Permit Holder to: submit further information and plans to the Director; drill two additional groundwater monitoring wells; monitor groundwater, effluent and air emissions; and, provide financial security.

The soil treatment facility, landfill facility, and the points of discharge are located on property (Lot 23) owned by the Permit Holder that is approximately five kilometres south of, and upslope from, Shawnigan Lake. Lot 23 is adjacent to the site of a rock quarry operated by South Island Aggregates Ltd. (“SIA”). The Permit Holder and SIA have some corporate directors in common.

The Shawnigan Lake watershed is a source of drinking water for approximately 12,000 people. Drinking water is extracted from both surface water and groundwater sources in the watershed, including Shawnigan Creek and Shawnigan Lake. The Regional District operates three water systems within the watershed, which serve approximately 2,700 residents.

The Association appealed the permit on several grounds, which are summarized as follows:

1. The testing and assessment of the site’s geology and hydrogeology is inadequate and incomplete.
2. The monitoring and water treatment plans are deficient.
3. The Director failed to ascertain the degree of scientific uncertainty related to the facility, and the degree of risk and consequences associated with a containment failure at the facility, and how such a failure could affect the environment and drinking water in the Shawnigan Lake watershed.
4. The Permit Holder is not a sufficiently reliable operator to entrust with this facility, and the proposed financial terms are insufficient and calculated on the wrong principle; namely, the cost to close the facility, rather than the cost to clean up the environment if there is a containment failure.

Similarly, the Regional District appealed on several grounds, which are summarized as follows:

1. The Permit fails to adequately protect human health and the environment, and the design of the facility does not adequately ensure that contaminated soil or associated effluent will not adversely impact drinking water resources or the environment.
2. The Director should have required alternative or additional tests and studies by an independent third party before issuing the Permit, because there is a divergence of professional opinion and there are uncertainties in regard to the geology and hydrogeology of the area and the risk to drinking water resources.
3. The Director failed to consider or give sufficient weight to the fact that the permitted uses of the site under the Regional District’s Zoning Bylaw do not include a contaminated site treatment facility or a landfill facility.
4. The Director failed to consider or give sufficient weight to the public interest and the concerns expressed by the public and the Regional District, including the site’s suitability for a contaminated soil treatment and landfill facility.
5. The Director erred in not requiring a report by a geotechnical engineer before the Permit was issued, confirming that the site may be used safely for a contaminated soil treatment and landfill facility, given that the site may be subject to flooding.
6. The Director failed to consider or give sufficient weight to SIA’s compliance history under the Act, and particularly, an outstanding remediation order regarding contaminated soil on the quarry site.
7. The Permit fails to ensure adequate financial security to address any damage to the environment resulting from the facility.

Subsequently, the Association and the Regional District filed separate applications requesting a stay of the Director’s decision, pending the Board’s decision on the merits of the appeals.

The Director took no position on the stay applications.

The Permit Holder opposed the stay applications.

In determining whether the stay application ought to be granted, the Board applied the three-part test set out in RJR-MacDonald Inc. v. Canada (Attorney General). With respect to the first stage of the test, the Board found that the appeals raise serious issues which were not frivolous, vexatious, or pure questions of law. Specifically, the appeals raise issues regarding the adequacy of the information that the Director relied on in determining the risk that the facility may pose to groundwater, surface water, and human health if contaminants escape from the facility. The professional reports and other technical evidence submitted by the parties in the stay applications contained conflicting professional opinions on those issues. Consequently, the Board proceeded to consider the next part of the test.

Regarding the second part of the test, the Board found that the facility may receive soils containing dioxins and furans, which are persistent in the environment and highly toxic to fish, mammals, and humans. The evidence showed a divergence of professional opinions as to whether the permit will adequately protect groundwater and surface water resources from the contamination. Further, there was inadequate evidence regarding how any harm to drinking water resources could be remedied or repaired, if contaminants escaped from the facility. While the Permit Holder is required to post financial security, there was no information regarding how much that security would be, or whether that it would be adequate to address an escape of contaminants into water supplies. It was unclear how the Permit Holder or any public agencies would address contamination of the drinking water supply if it occurred, or whether any harm to drinking water supplies could be repaired. The RJR MacDonald test states that “irreparable” harm is harm that “could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application,” and it includes cases “where a permanent loss of natural resources will be the result when a challenged activity is not enjoined”. In the circumstances, the Board concluded that contamination of drinking water resources as a result of the permitted activities would constitute harm that is irreparable in nature, and the interests of the Association and the Regional District could suffer irreparable harm unless a stay was granted.

Turning to the third part of the test, the Board weighed the potential harm to the interests of the Association and the Regional District, if a stay was denied, against any potential harm to the Permit Holder’s interests if a stay was granted. The Board found that the balance of convenience favoured granting a stay. The Board held that any inconvenience or harm to the Permit Holder’s financial interests, if a stay was granted, did not outweigh the risk of irreparable harm to water resources and human health if a stay is denied. In particular, the Permit Holder’s own submissions indicated that a stay would not prohibit the Permit Holder from receiving soil at all. Rather, the Permit Holder could continue to receive ‘clean’ soil, and even contaminated soil subject to the applicable regulatory requirements. Presumably, the Permit Holder would obtain revenue from those operations, just as it would if the permit was not subject to a stay. In addition, a stay would not prevent SIA, the Permit Holder’s sister company, from continuing to operate the quarry.

Accordingly, the stay applications were granted.