Decision Date: May 12, 2017

Panel: Alan Andison

Keywords: Constitutional Questions Act – s. 8; Constitution Act 1867 – s. 91(1A); Environmental Management Act – s. 31; preliminary decision; permit; air emissions; constitutional question; federal land; division of powers; doctrine of paramountcy; interjurisdictional immunity

Harvest Fraser Richmond Organics Ltd. (“Harvest”) operates a composting and bioenergy facility on federally-owned land near Richmond, BC. The Vancouver Fraser Port Authority (the “Port Authority”) leases the land to Harvest on behalf of the federal Crown, pursuant to the Port Authority’s powers under the Canada Marine Act and its Letters Patent.

The composting facility began in 1993 as a smaller operation. In 2010, following an environmental review, the Port Authority issued a permit authorizing Harvest to commence construction of an anaerobic digester and biogas plant, subject to various requirements. In 2011, Natural Resources Canada (“NRC”) approved funding assistance for the anaerobic digester and biogas plant following a screening process under the Canadian Environmental Assessment Act (“CEAA”). In its proposals to the Port Authority and NRC, Harvest proposed that the facility would process up to 27,000 tonnes per year of mixed food and commercial waste to produce compost and biogas. In the reports issued following the environmental review and the screening process, the potential environmental impacts of air emissions, including odours, from the facility were discussed, and it was noted that Harvest planned to obtain an air emissions permit from the Greater Vancouver Regional District (“Metro Vancouver”).

In 2012, Harvest applied to Metro Vancouver for an air emissions permit for the facility. In 2013, the District Director for Metro Vancouver issued an air quality permit to Harvest under the Environmental Management Act (the “Act”) and Bylaw No. 1028, 2008 (the “Bylaw”), authorizing Harvest to discharge air contaminants from the facility. The Act provides Metro Vancouver with the authority to regulate air emissions within its region, and the Bylaw was enacted pursuant to that authority. Section 5 of the Bylaw prohibits a person from discharging air contaminants in the course of conducting an industry, trade or business unless the discharge is conducted strictly in accordance with the terms and conditions of a valid and subsisting permit.

In September 2016, following a public consultation process, the District Director issued a renewed air quality permit to Harvest. The renewed permit included a number of new conditions and requirements, including a condition that the District Director may order the facility to stop receiving food waste if he determined that malodourous impacts from the facility exceeded a threshold (the “Sniff Test”) set out in the permit. By that time, the facility was processing between 200,000 and 250,000 tonnes of organic matter per year, and Metro Vancouver had received a large number of complaints from the public regarding odours from the facility.

23 appeals against the permit were filed by individuals residing in Richmond or surrounding municipalities, who asserted that odours from the facility adversely affect the environment and their health, and/or interfere with their ability to enjoy breathing fresh air where they live, work, recreate, etc. In addition, Harvest appealed the permit on several grounds, including that the Sniff Test and other aspects of the permit were arbitrary, vague, unreasonable, and/or punitive. Harvest also challenged the District Director’s jurisdiction to regulate air emissions from the facility given that it is located on federal land.

After the appeals were filed, Harvest served notice of a constitutional question pursuant to the Constitutional Questions Act. Harvest challenged the application of the Bylaw and the Act to the facility on the basis that the permitting scheme under the Act and the Bylaw impedes upon the use and development of federal lands, which falls within the exclusive jurisdiction granted to the Parliament of Canada under section 91(1A) of the Constitution Act, 1867. Harvest argued that the doctrines of interjurisdictional immunity and paramountcy prevented the application of the permitting scheme to the facility. The Board granted party status to the Attorney General of British Columbia for the purpose of making submissions on the constitutional question. The Attorney General of Canada declined to participate.

Under the doctrine of paramountcy, when federal and provincial legislation conflict, the federal legislation is paramount and renders the provincial legislation inoperative. Harvest argued that the permitting scheme under the Act and the Bylaw was inoperative, because the lease granted by the Port Authority pursuant to its powers under the Canada Marine Act and its Letters Patent, as well as federal approvals for the facility following the Port Authority’s environmental review and/or NRC’s screening process under the CEAA, provided Harvest with the statutory authority to operate the facility on the federal lands. Harvest also argued that the Canadian Environmental Protection Act (“CEPA”) regulates air emissions and applies to federal lands. Harvest argued that no legal vacuum would be created by finding the provincial scheme inapplicable to it, since the facility is subject to CEPA and meets all ambient air objectives set out in the Canadian Ambient Air Quality Standards.

Under the doctrine of interjurisdictional immunity, there need not be conflicting federal and provincial legislation; rather, there is provincial legislation that impairs a core legislative power that is within the exclusive jurisdiction of the Parliament of Canada. Harvest argued that the Act and the Bylaw were inoperative in relation to the facility, to the extent that they impaired the core of the exclusive federal power over the use and development of federal lands under section 91(1A) of the Constitution Act, 1867.

First, the Board considered whether the doctrine of interjurisdictional immunity prevented the application of the Act and/or the Bylaw to regulate the discharge of air contaminants from the facility, to the extent that those laws interfered with the federal power over the use and development of federal lands. The Board relied on the test from Canadian Western Bank v. Alberta, 2007 SCC 22, by first analyzing the “pith and substance” of the relevant legislation, noting that the dominant purpose of the legislation is decisive, and that the incidental effects of the legislation will not disturb the constitutionality of an otherwise valid law. The Board found that the pith and substance of the Canada Marine Act and the Port Authority’s Letters Patent, which are a form of subordinate legislation, is the management of federal public property as well as shipping and navigation, and that the Port Authority’s statutory powers and activities include the management, leasing or licensing of the federally-owned land.

In contrast, the Board held that the dominant purpose and effect of the Actand Bylaw was to regulate the discharge of waste, including air contaminants, into the environment within the province. The Board also held that environmental regulation is a subject matter in which both federal and provincial authorities have a compelling interest, and where effective regulation requires cooperation between federal and provincial authorities. Air contaminants emitted on federal lands may travel great distances from their source and may have adverse effects on surrounding areas. Given that the Act and Bylaw are environmental legislation aimed at regulating and controlling air emissions that may be harmful to human health and the environment, they were clearly enacted in furtherance of the public interest. The Board concluded that there was no judicial precedent for the application of the interjurisdictional immunity doctrine to the subject matter at hand, and the incidental effects of the provincial permitting scheme did not constitute an impermissible encroachment on the federal power over the use and development of federal lands.

Next, the Board considered whether the Act and/or the Bylaw triggered the doctrine of paramountcy, such that they are invalid to the extent that they create an operational conflict with, or frustrate the purpose of, valid federal legislation. The Board held that the Act and the Bylaw did not give a provincial or municipal agency the discretion to prevent a composting and bioenergy facility from being built on federal land, and they did not deprive the Port Authority of its power to make a final decision regarding the leasing, use or development of port lands. The Act and the Bylaw merely regulate and control the air contaminants emitted from the facility. The Canada Marine Act and CEAA do not regulate air emissions, and the Port Authority’s approval expressly contemplated that Harvest would seek a permit from Metro Vancouver which would regulate air emissions from the facility. Although CEPA regulates some air pollutants in some circumstances, it does not provide a complete code for the regulation of air emissions in Canada, and Harvest failed to identify what particular aspect of the Act or the Bylaw allegedly conflicted with CEPA. Moreover, the Canadian Ambient Air Quality Standards are merely guidelines and are not legally binding.

In summary, the Board concluded that the application of the Act and the Bylaw to the facility did not impede upon the use and development of federal lands under the exclusive jurisdiction granted to Parliament under section 91(1A) of the Constitution Act, 1867.