On July 17, 2013, the BC Environmental Appeal Board ("Board") rendered an important ruling in an appeal by a commercial landowner seeking to overturn a decision of a director of the Ministry of Environment ("MOE").

The director had rejected an application for two certificates of compliance (for the source site and a portion of impacted neighbouring property) and required, even after many years of investigation and remediation, resubmission of the entire application to current standards. The Board allowed the appeal and ordered the director to issue the certificates of compliance.

Richard Bereti and Una Radoja of Harper Grey LLP acted for the successful party, Morguard Investments Limited, in this appeal. Their contact details can be found at the end of this Alert.

WHAT THIS DECISION MEANS FOR YOU

A certificate of compliance confirms that the site in question has been remediated to applicable standards. It is the most important instrument one can seek from the MOE. This case is of importance to environmental consultants seeking certificates of compliance, as the Board made key findings respecting what is and is not required to be included in an application for a certificate of compliance. Landowners, developers, environmental insurers seeking “closure”, and of course solicitors advising clients respecting applications to the MOE will all benefit from the important rulings in this case.

The Board found that the MOE's refusal to issue certificates of compliance was based on contamination having been found on adjacent lands on the eve of issuance. This decision confirms, among several other important things, that the commonly held view that a certificate of compliance will not be granted, without all contamination having been located, is not supported in law.

The case also addresses bias, vagueness in regulatory decisions, burden of proof, standards of remediation in BC, and the lack of MOE power to set remediation requirements that are either unreasonable, retrospective, or expedient but not explicitly supported in law.

THE DECISION

In October 2009, Morguard Investments Limited (“Morguard”) applied for a numeric certificate of compliance for its property (the “Morguard Site”) and a portion of the neighbouring property (the “Management Area”) impacted by dry-cleaning solvents (PCE). In July 2011, the director issued draft certificates of compliance for the two sites. Shortly after issuance of the draft certificates, but before they were finalized, the neighbouring property owner, in the course of carrying out a detailed site investigation (“DSI”) on its own property, discovered three isolated exceedences of PCE in deep groundwater beyond the Management Area. The neighbouring property owner submitted this information to the director and argued that the three exceedences meant that Morguard had failed to fully delineate the contamination plume, that contamination likely remained at the Morguard Site and Management Area, and that the certificates therefore ought not to be issued.

On February 8, 2012, the director rejected Morguard’s certificate of compliance application in its entirety and required resubmission on several bases, including that Morguard failed to complete a proper DSI and submit a specific DSI report, that Morguard failed to establish that contamination was fully remediated at the Morguard Site and the Management Area in light of the new data presented by the neighbour, and that Morguard failed to fully investigate or 'delineate' the extent of contamination, also in light of the new data.

In allowing the appeal and ordering the director to issue the certificates of compliance, the Board concluded that Morguard reasonably delineated the contamination at the Morguard Site and the Management Area in accordance with the standards in place at the time when the application was made.

The investigative standard was not one of perfection. The discovery of contaminants outside the delineated area was not sufficient to impugn either the appropriateness of Morguard’s delineation or the quality of the remediation completed at the Morguard Site and the Management Area, given the totality of the confirmatory data reviewed by the Board. Although the director was entitled, pursuant to section 53 of the Environmental Management Act (the “Act”), to consider the three exceedences on the neighbouring property, they were found not to be indicative of continuing contamination at the Morguard Site or the Management Area, deficient delineation or a migration risk to neighbours as alleged by the neighbouring property owner. In short, the mere fact of imperfection does not render an investigation or remediation deficient.

The Board also found that, absent a 'remediation order' by the director, there is no specific legal requirement imposed on an applicant seeking a certificate of compliance to complete a DSI or submit to the director a DSI report. In any event, it was found that Morguard did complete a DSI and did submit a DSI report, even though the “report” consisted of more than one document. The Board found that substance is to be preferred over form in the context of potential technical deficiencies in certificate of compliance applications.

Ultimately, the Board found that all legal requirements for issuance of the certificates of compliance were met by Morguard, and ordered the director to issue the certificates.

This case illustrates that the director does not have unfettered discretion to refuse to issue certificates of compliance on the basis that he or she "may" issue one. Rather, the director must only act within the powers conferred on him or her by the Act. The mere fact that contamination exists on neighbouring property, even where it migrated from the site for which a certificate of compliance is sought, will not invalidate an application if the legal and technical requirements for issuance of a certificate, in place at the time the application was made, have otherwise been met. This case confirms that the standard by which environmental investigations and remediation are to be judged is not one of perfection.

The Board reviewed the facts, science and law in detail, and replaced its judgment for that of the director on the central technical (and legal) issues in the case.

To read the full-text Decision click on the case cite below.

Burquitlam Building Limited and Morguard Real Estate Investment Trust v. Director, Environmental Management Act