Cost Awards and Funding for Environmental Hearings in Alberta

On March 18, 2021, Partner Sean Parker and Associate Anna Fitz presented a webinar on obtaining costs awards at environmental tribunals, how tribunals award costs, and what sort of factors they consider. This article discusses the key points raised during the webinar (which can also be viewed here[1]) as well as recent developments that have since taken place.

The basis for awarding costs by an environmental tribunal is often different from costs awarded by a court. Courts generally follow the “loser pays” principle, which means that the party who is unsuccessful in court generally must pay a portion of the successful party’s legal costs.

On the other hand, environmental tribunals often take a different approach, considering the public interest component of tribunals’ mandates. Environmental proceedings often involve the weighing of various competing interests and policy considerations. These proceedings often do not produce judicial “winners” and “losers”, per se.

Furthermore, tribunals’ discretion to award costs is dependent upon the statute that gives them their power. For example, if a statute is silent on costs, the tribunal may have no authority to award costs at all. This underscores the importance of considering specific tribunals’ legislation and practices on awarding costs. The following discussion looks at the practices of the main tribunals that conduct hearings on environmental matters in Alberta.

Alberta Energy Regulator (“AER”)

  • Responsible Energy Development Act, SA 2012, c R-17.3

    –      s. 3 establishes the AER

  • Alberta Energy Regulator Rules of Practice, Alta Reg 99/2013

    –      s. 58.1 lists considerations for awarding costs

    The AER is responsible for the development of energy projects such as oil, oil sands, natural gas, and coal. This includes allocating and conserving water resources, managing public lands, and protecting the environment in relation to those projects. It shares responsibility with Alberta Environment and Parks (“AEP”) over the environment and specified environmental legislation. The AER’s Rules of Practice provide a detailed list of factors it considers regarding costs.

    The purpose of a cost award from the AER is about encouraging participation as much as it is about indemnification. The overarching consideration is whether the costs are reasonable and necessarily related to the hearing in question. As noted in a 2018 article analyzing past AER decisions, the AER is most likely to refuse costs for a scientist or engineer’s contributions on the grounds that these professionals failed to provide a meaningful contribution[2]. The most common reason for reducing a lawyer’s fee, on the other hand, is that the lawyer spent too long preparing.

    Public Lands Appeal Board (“PLAB”)

  • Public Lands Act, RSA 2000, c P-40
  • Public Lands Administration Regulation, Alta Reg 187/2011

    –      s. 232(1) addresses costs and factors the panel considers when awarding costs (or declining to do so)

    The PLAB’s function is to hear appeals regarding decisions by AEP directors on the use of public lands; for example, the issuance or denial of surface dispositions on Crown land. The PLAB has discretion and can award all, none, or partial costs.

    The PLAB applies the starting point that each party is responsible for its own costs. It will consider awarding costs when the amounts claimed are directly and primarily related to the preparation and presentation of the party’s submission for the hearing.

    The Public Lands Act prevents parties from recovering costs against the Crown. While this has drawbacks, parties can also use this provision to their advantage in the context of stay applications (a stay generally freezes an order pending the outcome of the appeal, when the PLAB will vary, confirm, or reverse the director’s decision). For example, in the King decision,[3] the Director of Regional Compliance issued the company an administrative penalty for allegedly subleasing two Miscellaneous Leases on public land without authorization. The company appealed this decision and requested a stay of the administrative penalty. The Board noted that if the Company was ultimately successful its appeal, it could still not recover costs against the director. On this basis, the Board concluded the company would suffer irreparable harm if it did not receive a stay. Relying on this line of authority could be useful to parties seeking to postpone paying a fine until the appeal has been decided.  

    Environmental Appeals Board (“EAB”)

  • Environmental Protection and Enhancement Act, RSA 2000, c E-12

    –      s. 96 jurisdiction to award costs

  • Environmental Appeal Board Regulation, Alta Reg 114/1993

    –      ss. 18 and 20 factors to consider

  • Rules of Practice

    –      R. 33 describes the Board’s approach to costs

    The Environmental Appeals Board is an independent board that allows Albertans to appeal various decisions made by AEP, such as issuing industrial approvals, water licences, reclamation certificates, administrative penalties, enforcement orders, and environmental protection orders. The EAB’s starting point is that parties must bear their own costs. Costs must be directly and primarily related to preparation for and presentation at the hearing, and a key factor is a party’s contribution to the hearing.

    The EAB has had some interesting new developments recently. For example, in Cherokee Canada Inc. et al v. Director, Regional Compliance, the EAB considered a cost application following the successful appeal of an AEP compliance director’s decision to issue a series of enforcement orders against a brownfield developer and a prior owner of the former industrial site[4]. In its cost decision, the EAB found that the Director’s behaviour in the course of the appeal was improper and sufficiently egregious that it awarded the first costs award against the Director in the EAB’s history. The cost award was also precedent-setting as the total amount, in excess of $1,500,000, was by far the largest ever issued by the EAB.

    More recently, on March 31, 2021, the Court of King's Bench released its decision in Brookman v Environment and Parks (Director), 2021 ABQB 249, a judicial review that challenged the EAB’s general approach to costs, and in particular the starting point that parties bear their own costs, among other things. The Court upheld the EAB’s general approach, or “foundational principle”, to costs and found as follows at paragraph 30:

    While the advantages of consistency cannot overtake the requirement of reasonableness in either the decision-making process or the decision, in identifying and applying a starting point to its review of costs, the Board did not improperly fetter its discretion. The Reconsideration Panel considered other factors relevant to an award of costs including the level of involvement of counsel in the hearing process, the contributions of the Applicants, and whether the Applicants’ contributions detracted from the focus of the appeal. The Reconsideration Panel’s approach to the exercise of its discretion was framed by the governing legislation and fairly accounted for the policy considerations that bear on an award of costs. It acknowledged the need to create a cost environment that encourages participation, that neither rewards nor punishes participation, that deters vexatious participation, and that recognizes the value of relevant contribution. I see no basis in the reasoning to conclude that the foundational principle articulated by the Board, in theory or as applied, unduly constrained the decision-making process, or that the Reconsideration Panel did not remain live to the possibility of awarding costs if the circumstances merited.

    Another interesting EAB matter is the recent Court of Appeal Normtek decision, which has the potential to expand the parties who can seek standing to bring an appeal before the EAB. The potential for increased parties also brings the potential for increased costs. For further information on the Normtek decision, please view our previous blog post here.

    Surface Rights Board

  • Surface Rights Act, RSA 2000, c S-24

    –      s. 39 addresses costs

    The Surface Rights Board helps landowners, occupants and operators resolve surface access and compensation disputes. While companies have a right to access their resources for development, landowners must also be compensated. Board panels have a degree of discretion “so long as costs are incurred in or incidental to proceedings and necessary criteria are met.” Costs must be reasonable, and directly and necessarily related to the proceedings[5]. While the Surface Rights Board does sometimes award interim costs, in one decision it commented that it lacks the statutory discretion to award advance costs.

    The Surface Rights Board’s practice is different than many other tribunals in that it will almost always award costs to a landowner, even if not successful in the proceedings. The policy consideration underlying this approach is that the landowners are forced into the process; they have no option to deny the company access to the resources underlying their lands. In addition, there is often a disparity in the means available to an individual landowner as compared to a large resource development (often oil and gas) company. Accordingly, parties can assume that at least some costs will be awarded to a landowner in proceedings before the Surface Rights Board.

    Natural Resources Conservation Board (“NRCB”)

  • Natural Resources Conservation Board Act, RSA 2000, c N-3
  • Rules of Practice of the Natural Resources Conservation Board Regulation, Alta Reg 77/2005

    –      ss. 25, 28

    The NRCB is responsible for reviews of proposed major natural resource projects under the Natural Resources Conservation Board Act, and for the regulation of confined feeding operations in Alberta under the Agricultural Operation Practices Act. The legislation states the Board “may” award costs or intervenor funding, providing it with broad discretion when awarding costs.

    Alberta Utilities Commission (“AUC”)

        • Alberta Utilities Commission Act, SA 2007, c A-37.2

    –      s. 21, costs of proceedings

    –      s. 22, local intervenor costs

    The AUC regulates Alberta’s investor-owned electric, gas, water utilities, and certain municipally-owned electric utilities to ensure that customers receive safe and reliable service at just and reasonable rates. The Commission is empowered to award costs, but it is not required to do so. The Commission has its own scale of costs which it applies when awarding costs, though parties can request additional costs for particularly complex matters.

    Unlike some other tribunals discussed above, the AUC also has an intervenor funding model that it regularly applies. Intervenor funding is different than a cost award. Intervenor funding is a mechanism where interested parties may apply to the tribunal for funding to participate in the proceedings. Intervenor funding is often (but not always) made available from public funds. Cost awards on the other hand are typically sought at the end of a hearing (however, sometimes they can be sought on an interim basis during the proceedings) and generally to be paid by one party to another.

    The AUC’s practice of granting intervenor funding is different than the approach used by some other tribunals, such as the EAB and PLAB, at least in part due to the nature of their respective mandates. The AUC is a regulator and makes decisions to grant various approvals and regulatory authorizations in the first instance. On the other hand, tribunals like the EAB and PLAB are appeal tribunals that do not grant approvals in the first instance, but rather hear appeals of decisions made by governmental officials, where it may be presumed that the initial decision-maker already considered the public interest. Accordingly, the policy considerations are different, which is reflected in the legislative framework and practices of the tribunals.

    Impact Assessment Agency (“Agency”)

    (formerly the Canada Environmental Assessment Agency)

  • Impact Assessment Act, SC 2019, c 28, s 1

    The Agency is a federal body accountable to the Minister of Environment and Climate Change. It leads federal reviews of major resources projects, looking at the environmental, economic, social, and health impacts of these potential projects.

    The Agency’s Funding Program is meant to help individuals participate, and to ensure their concerns are taken into account. Funding is not determined per project or activity; rather, it is determined by the level and complexity of activities undertaken with the applicant, either Indigenous groups or the public. The Agency pre-establishes maximum funding levels for many activities so that the same amount is available to each applicant across the country.

    Canada Energy Regulator (“CER”)

    (formerly the National Energy Board)

  • Canadian Energy Regulator Act, SC 2019, c 28, s 10

    –      s. 206

    The CER reviews extra-provincial energy development projects. It also enforces safety and environmental standards.

    The CER administers a Participant Funding Program (PFP) to facilitate the participation of the public – and, in particular, the Indigenous peoples of Canada and Indigenous organizations – in public hearings under section 52 or subsection 241(3) of the Canadian Energy Regulator Act and any steps leading to those hearings. The program is not intended to cover the full cost of expenses. PFP is administered independently of the public hearing.

    Takeaways:

    • Costs before an environmental tribunal do not work the same way as costs before a court;
    • Tribunals often do not follow the ‘loser pays’ principle;
    •  Tribunals are constrained by their legislation, and all have different practices;
    • Contribution to the process is an important consideration; and
    • Costs are highly discretionary and will depend on the particular circumstances of a given matter.

      • For further information on costs awards work before environmental tribunals, and how this might affect your litigation strategy, please contact Sean Parker, Anna Fitz, or any member of our Energy, Environmental and Regulatory practice group.

       

      [1] The hyperlink to the recorded webinar will be available for 30 days after the publication of this article. 

      [2] Shaun Fluker and Erik Dalke, “An Analysis of Costs Awarded by the Alberta Energy Regulator,” 2018 55-3 Alberta Law Review 805

      [3] King and Kingdom Properties Ltd. v. Director, Regional Compliance, Lower Athabasca Region, Alberta Environment and Parks, 2020 ABPLAB 3.

      [4]  Cherokee  Canada  Inc.  et  al.  v. Director,  Regional  Compliance, Red     Deer-North     Saskatchewan     Region,     Operations     Division,     Alberta Environment and Parks, 2020 ABEAB 10; Appeal Nos. 16-055-056, 17-073-084, and 18-005-010-CD (A.E.A.B.),2020ABEAB 10.

       [5] Canadian Natural Resources Limited v Robb Farms Ltd., 2021 ABSRB 257

      Canadian Natural Resources Limited v Flanagan, 2020 ABSRB 908

      Montana Alberta Tie Ltd. (Re), 2012 ABSRB 73