Appeal No. 95-020


Date of Hearing - January 15, 16, 17, 1996
Date of Report and Recommendations - February 14, 1996



IN THE MATTER OF Sections 84, 85, 86, 87, 91, 92 and 93 of the Environmental Protection and Enhancement Act, (S.A. 1992, ch. E-13.3 as amended);

-and-

IN THE MATTER OF
an appeal filed by Custom Environmental Services Ltd. with respect to Approval #95-IND-085 issued by the Director of Chemicals Assessment and Management, Alberta Environmental Protection to Custom Environmental Services Ltd. on September 29, 1995.

Cite as: Custom Environmental Services Ltd. v. Director, Chemicals Assessment and Management, Alberta Environmental Protection.

PANEL MEMBERSHIP:
Joan C. Copp
M. Anne Naeth
Max A. McCann

APPEARANCES:
Appellants: Custom Environmental Services Ltd. represented by Richard Secord and Karin E. Buss (counsel). Witnesses: Brian Winters Other Parties: Director, Chemicals Assessment and Management, represented by William McDonald (counsel). Witnesses: Jerry Lack, Silver Lupul, Robert Kemp, Darren Lysak, Scott McClure. Also In Attendance: Richard A. Neufeld, representing Chem-Security (Alberta) Ltd.

FACTUAL BACKGROUND

On January 31, 1995, Custom Environmental Services Ltd. (the "Appellant") submitted an application to Alberta Environmental Protection (the "Department") for a renewal of Approval # 93-IND-007 which was to expire on March 31, 1995 (the "1993 approval"). Subsequent to the application, the Appellant received amending approval # 93-IND-007A in March 1995 which extended the expiry date to September 30, 1995. During the summer of 1995, the Appellant received a draft of approval # 95-IND-085. Following receipt of the draft the Appellant advised the Department that it strongly objected to the conditions in the draft approval because it would "seriously curtail the company's waste management and recycling activities". A meeting of officials from the Department and the Appellant was held to address the Appellant's concerns with the restrictions contained in the draft approval.

The Director of Chemicals Assessment and Management issued Approval # 95-IND-085 (the "Approval") on September 29, 1995.

On October 26, 1995, the Appellant filed a Notice of Objection pursuant to section 84 (1) (b) of the Environmental Protection and Enhancement Act (the "Act") with this Board appealing the Approval. Included in the Notice of Objection was a request to have the hearing of the matter expedited. The Appellant obtained the consent of the Director to proceed with an expedited hearing and the Board set the hearing for January 15, 16 and 17, 1996.

The Notice of the Hearing was published in two local newspapers, the Edmonton Journal and the Edmonton Sun on Thursday, November 30, 1995. The Notice stated that any persons other than the parties who wish to make a presentation before the Board should submit a request in writing by December 15, 1995. In addition, the Board sent copies of the Notice of Hearing to Alberta Special Waste Management Corporation (the "ASWMC") and to the Capital Health Authority because of their potential interest.

On December 15, 1995, Mr. A.F. (Art) Mathes, a Vice President of Chem-Security (Alberta) Ltd. ("CSAL") wrote to the Board, requesting an opportunity for his company to participate in the appeal since he felt CSAL was directly affected by the Appellant's proposal to deal with hazardous waste. Following CSAL's request to participate, the Board asked for input from the Appellant and the Director. The Board also received input from Richard Neufeld, counsel for CSAL. On January 5, 1996, the Board advised the Appellant and the Director by letter (with a copy to CSAL) that CSAL would be able to make a statement or argument at the conclusion of the evidence presented at the hearing and prior to the closing arguments of the Director and the Appellant, but would not be permitted to fully participate as a party to the appeal.

In accordance with section 10 of the Environmental Appeal Board Regulation (Alta. Reg. 114/93), written submissions were received from the Appellant and the Director.

MATTERS RAISED BY THE APPELLANT IN THE NOTICE OF OBJECTION

In its Notice of Objection the Appellant identifies the following matters as issues to be addressed in this appeal:

SUMMARY OF THE EVIDENCE

(a) Evidence of the Appellant

Brian Winters, president of Custom Environmental Services Ltd., testified on behalf of the Appellant. He handles waste generated inside and outside of Alberta. The activities he engages in include collecting, storing, transferring, recycling and minimizing hazardous waste, blending hazardous waste for efficient disposal, fuel blending, cleaning containers for use of scrap metal, removing dry-cleaning fluids and fuel from jet filters and recycling them, recycling PCB lamp ballasts, stabilization of heavy metal waste and mixing acids and bases to produce products that could be used by cement companies. He emphasized that the Appellant does not operate, and has never operated, a hazardous waste disposal facility.

Mr. Winters stated that he had a 1992 agreement with the ASWMC for the storage, bulking and collection of hazardous waste. In September 1993, the Appellant advised ASWMC that it intended to conduct recycling activities with lamp ballasts, capacitors and transformers. ASWMC advised the Appellant that it required an amendment for these activities. He testified that in October 1993, when he applied for an amendment to this approval, he was advised by the Department to review the Act and list activities requiring an approval. He testified that he listed treatment in the application because the term was so broadly defined that it covered almost everything that he was doing at his facility. He was granted the approval requested. This was the 1993 approval. Mr. Winters testified that the Department has never cited the Appellant in violation of licenses or approvals nor raised concern about the environmental effects of the facility. After an inspection by the Department in April 1994, he stated he was told everything was "okay".

In July 1994, the Appellant began mixing acids and bases for recycling purposes. After an October 1994 inspection by the Department, Mr. Winters testified that he received a letter indicating the Department considered some specific blendings (mixing acids and bases) to be "treatment" which required the prior approval of ASWMC. Mr. Winters testified that he replied to the Department saying that he had used the term "treatment" in the application for the 1993 approval and had therefore received approval to conduct these activities when the 1993 approval was issued. He testified that there were no further requests from the Department so he assumed everything was acceptable.

Mr. Winters stated that when he applied for renewal of the 1993 approval in January 1995, he specifically asked for approval of certain recycling activities such as recycling of PCB lamp ballasts and the solidification process they were developing. He described the facility as a "storage, transfer, blending/treatment facility". At that time he also asked to increase the storage volume waste. The Department wrote to him raising concerns about treating third party waste and the solidification process and stated the Appellant would need authorization from ASWMC. The Appellant notified ASWMC of its intention to recycle lamp ballasts. Mr. Winters testified that Mr. McClure told him by telephone that he needed no approval for recycling activities. In March 1995, the Appellant received approval from the Department to import hazardous recyclables.

In spring 1995, Mr. Lysak and Mr. McKinnley, of the Department, inspected the site. Mr. Winters testified that they had initially been concerned with some treatment of hazardous waste but were satisfied when they saw the 1993 approval and the Agreement. Mr. Winters said he tried to further clarify these activities with Mr. McClure but received no reply to his letter.

When Mr. Winters received the draft approval in the summer of 1995, he objected to its curtailing of activities he had previously conducted. Mr. Winters testified that he met with the Department and was told that the reason for the restrictions was to ensure hazardous waste was not diverted from the Swan Hills Special Waste Treatment Centre (the "Swan Hills plant"). He stated that no concerns were raised with him regarding environmental concerns of the Appellant's operations or facility.

Mr. Winters stated that he was appealing restrictions to the Approval. He stated that he is not "treating" as defined by the SWMC Act but is conducting "intermediate processing". He objects to not being able to do any segregating of hazardous and nonhazardous articles or components from the same container by mechanical means since this prevents him from recycling lab packs, dry-cleaning filters and jet fuel filters for which he requires a vacuum. Mr. Winters said he is restricted from conducting activities he has always done such as dispersing solids into liquids if the resultant mixture has the same hazard class as the original liquid and from stabilizing acids and bases.

Mr. Winters testified that the new restrictions are crippling his business. He has had to lay off five employees and another five from a related company and has lost at least one contract.

Mr. Winters testified that only in September 1995, in discussions regarding approvals and with respect to the interpretation of approvals, had the Department advised him that the treatment of hazardous wastes by the Appellant was not permitted. He also testified that only as of September 1995, the Appellant was advised by the ASWMC that it had not been authorized to treat hazardous waste in the Agreement.

The Appellant's position is that its activities have not changed but are now being restricted from what had previously been permitted.

(b) Evidence of the Director

The evidence of the Director was presented by Jerry Lack, Director of Chemicals Assessment and Management, Silver Lupul, Branch Head, Industrial Waste Division, Darren Lysak, Investigator, Pollution Control Division, Robert Kemp, Industrial Waste Engineer, Approval Coordinator, all of the Department, and Scott McClure, on behalf of Alberta Special Waste Management Corporation.

Mr. Lupul provided the Board with an overview of the Alberta Special Waste Management System and a history of this program which was established by the Government of Alberta to treat and dispose of hazardous waste in Alberta.

Mr. Lupul testified that there was a clear distinction between hazardous waste and hazardous recyclables in terms of the rules that apply. He explained that in the legislation "treatment" is associated with "hazardous waste" and "processing" is related to "hazardous recyclables". A further distinction between hazardous waste and hazardous recyclables is that hazardous recyclables will be processed to some beneficial end use. He further stated that the Government implemented specific rules on importation and that a ban on importing hazardous waste was implemented from the outset. He testified that importing hazardous recyclables fell under slightly different rules than hazardous waste. The current regulations under the Act identify different requirements that apply to each of these streams.

Mr. Lupul testified that the generator of hazardous waste has three options: the first is to treat the waste on its own premises; the second to ship it out, of the Province to an appropriate destination; the third is to ship it to the Swan Hills plant.

Operators who have hazardous recycles can convert them into a product or can ship them to firms who are involved in recycling. There the material can be processed into a finished product.

Mr. Lack's testimony provided the Board with an overview of the changes that are taking place in connection with the approval process. He testified it has become evident to the Department in issuing approvals that not everyone understands exactly what the Department is authorizing. He has re-emphasized to his staff that when approvals are drafted they ensure that there will be no misinterpretation of the terms. With respect to this Approval, he testified that he instructed staff to ensure that treatment of waste by the Appellant be prohibited.

Mr. Kemp provided an overview of the application review process and then reviewed the specific terms of the Approval that were questioned in the Notice of Objection.

Mr. McClure testified the ASWMC was created in 1984 to develop an effective system for managing hazardous waste in Alberta. The objectives of the ASWMC were to ensure that there were adequate facilities developed to manage hazardous waste. Under the SWMC Act, the ASWMC was given the exclusive rights for the storage, operation of collection facilities, treatment and disposal of hazardous wastes and no other parties could engage in these activities unless they had an agreement with the ASWMC.

He stated that the Appellant's Agreement authorizes collection and storage only of hazardous waste. It does not authorize the treatment of hazardous waste. He further stated that under the SWMC Act a company must have an agreement with ASWMC to treat hazardous waste. He testified that he had two discussions with Mr. Winters on the subject of the Appellant's treatment of hazardous waste - one in spring 1995, as a result of complaints from other brokers and the second in September 1995 on the same subject. On both occasions Mr. McClure advised Mr. Winters that the Appellant was not authorized to treat hazardous waste. He testified that an operator is not required to have a license from the ASWMC to process hazardous recyclables. He indicated that there have been discussions between the ASWMC and the Department about processing hazardous recyclables. It was decided to leave the matter of recycling to the discretion of the Department.

Mr. Lysak described the relationship between his division (Pollution Control Division) and the Chemicals Assessment and Management Division. He stated that his division had conducted two inspections at the Appellant's site - March 2, 1995 and in August 1995. The March inspection arose because it was alleged that there were a number of approval contraventions regarding the treatment of hazardous waste. Mr. Lysak testified that no enforcement action was taken because the approval was being reviewed for renewal and he believed that the concerns could be addressed in the new approval terms.

CHEM-SECURITY'S SUBMISSION

Mr. Neufeld submitted a written argument to the Board which outlined the regulation of hazardous waste management in Alberta. He quoted from both the SWMC Act and the Act. He stated that for the Appellant to treat hazardous waste at its Edmonton facility it requires authorization pursuant to two statutes - the SWMCA Act and the Act. CSAL's position is that it is evident by the evidence presented that the Appellant did not hold such authorization nor had it held such authorization in the past. He argued that the 1992 Agreement authorized the Appellant to construct and operate a hazardous waste management facility for the "storage, bulking and collection of hazardous waste" but that the agreement contained no reference whatsoever to treatment activities. The 1994 Agreement is similarly worded.

THE ISSUES IN THIS APPEAL

The issues that the Board must consider in making its recommendations to the Minister of Environmental Protection are as follows:

a) Did the Director err in setting the terms and conditions of the Approval?

b) Are reporting requirements to which the Appellant objects unreasonable?

c) Is the Director required to give notice to an approval holder when he intends to change any of the terms and conditions when issuing a renewal approval?

THE BOARD'S CONSIDERATION OF THE ISSUES

a) Did the Director err in setting the terms and conditions of the Approval?

Based on all of the evidence and on the Board's review of the application for the 1993 approval, the 1993 approval, the application for this Approval and the Approval, the Board does not believe that the Director erred in any way in the consideration of the scope of activities for which the Appellant applied and for which it was granted an approval. The Appellant points to a very broad generic wording list that was contained in his application for this Approval as being justification for what the Director should have approved. The Board does not agree. The Director had sufficient information before him in the application which dealt specifically with certain activities and the Director approved those activities which dealt with processing of hazardous recyclables. The misinterpretation used by the Appellant to justify its claims for activities for which it should be approved is not supported by the documents on which it relies. This Board believes that the Director acted reasonably in approving activities specifically set out in the application and not other activities merely referred to in the application.

b) Are the reporting requirements unreasonable?
The Appellant objects to four of the clauses in the Approval. Its position is that the reporting restrictions imposed by the Department are unreasonable, impractical, and without clear or justifiable reason. In addition, it argued that the requirements significantly increase the Appellant's costs thereby making it difficult to continue its operations in an economical manner.

(i) The Notice of Objection indicated that the Appellant objected to clause 2.2.4:

The number of containers and hazard class of each container received and shipped during the day shall be recorded.


During the hearing the Appellant acknowledged that this matter was no longer a concern because it kept track of each container and class in any event. This matter did not cause it any further concern.

(ii) The Appellant also objected to Clause 2.2.3:

An end of day total shall be kept of all containers stored at the plant.


The Board heard a great deal of evidence about the length of time it would take to conduct a manual count on a daily basis of all the containers stored at the plant. The Appellant testified that this could take up to two hours each day whereas the Department's evidence was that this would only take 15 minutes. The clause does not indicate that a manual count must be conducted each day. In addition the evidence led by the Appellant also indicates that the information is available and can be determined based on the count which is maintained of the number of containers received at the plant and shipped from the plant each day. It is therefore a relatively simple task to determine the change in the number from the previous day. The Board dismisses any concern the Appellant may have with respect to this matter.

(iii) The next reporting issue raised by the Appellant is found in Clause 6.1.11 of the Approval:

Not more than 620 drum equivalents containing hazardous waste, hazardous recyclables or dangerous oilfield waste shall be stored at the plant in containers. For the purpose of this section:


a) all containers at the plant that are not empty shall be assumed to be full regardless of the actual volume of material in the container;


b) intermediate bulk units (IBU) shall be prorated by dividing their nominal volume in litres by 205 litres. IBUs shall be assumed to be full if there is no provision for at the plant for measuring the actual volume in the IBU and the IBU contains any material; and


c) tote bags shall be assumed to be full if they contain any waste and shall be prorated by dividing their nominal value in litres by 205 litres.


The Appellant states that this change in the Department's requirement significantly reduces the Appellant's storage capacity or significantly increases its costs. The Department's evidence indicated the limits are tied to the financial security required of the Appellant under the Waste Control Regulation. Inventory control is exceedingly important to the financial security requirements which in turn are linked to the requirement to ensure reclamation of the site. The Department felt that this requirement was necessary to ensure that the Appellant did not exceed the inventory amounts for which it had posted financial security. The onus in these matters is upon the Appellant to show that there is a reasonable or strong negative impact upon it by clauses in the Approval. In this case the Appellant has failed to persuade the Board that this requirement is unreasonable or severely impacts its business and that this clause needs to be amended or deleted.

(iv) The Appellant also objected to clause 11.8.2 of the Approval:

The format for the report required under 11.8.1 shall be as shown in Appendix A.


The Appellant filed a letter indicating that a new custom designed inventory accounting computer program which would enable it to comply with this provision would cost $75,000. The Appellant's position is that this requirement is too onerous a burden on an operation of its size. The Director indicated that this is a new requirement because the Appellant is now engaging in an activity which was not previously authorized, namely, the importation of hazardous waste which would be sent for treatment at the Swan Hills plant. The Director's position is that this report is required because decision No. 9301 of the Natural Resources Conservation Board requires that treatment of imported hazardous waste not be subsidized by the taxpayers of Alberta and it is therefore necessary to determine where waste originates from to comply with the terms imposed upon CSAL.

The Board has some difficulty with this issue and an argument was raised whether or not it was appropriate for the Department to impose conditions on companies which did not participate in the importation hearing before the NRCB. It does seem a large step for the Department to take the position that it can impose requirements on other companies to ensure that CSAL satisfies the requirements imposed upon it by the NRCB. Perhaps the Appellant could report the source of the hazardous waste to CSAL when it sends shipments there. Presumably CSAL could reject shipments that did not satisfactorily state the origin of the hazardous waste. The Board is concerned whether or not the Director should impose this obligation when the Director has not indicated that the Department needs the information. It may be appropriate for the Director to reconsider this.

c) Is the Director required to give notice when he makes "changes" in an approval?

The Appellant argues that the Approval contains substantial changes to the 1993 Approval and seriously curtails the activities which the Appellant currently carries on. The Appellant further argues that because these changes have a substantial impact on the extent of the Appellant's business, the Director is required not only to give prior reasonable notice to the Appellant of such changes but must also give fair and reasonable reasons to the Appellant for making such changes.

With respect, the Board does not agree. Appellant's counsel referred us to Sloan v. Director, Ministry of Environment and Energy, [1993] O.E.A.B. No. 55, a decision of the Ontario Environmental Appeal Board where Mr. Sloan's approval was revoked by a director of the Ministry of Environment and Energy in Ontario. In that case the director was required by statute to provide reasons for a complete revocation of an approval; this was not provided by the director prior to revoking the Mr. Sloan's operating approval. The evidence in that case also seems to indicate that there were very serious concerns with Mr. Sloan's operation as a result of complaints and violations (for which he was convicted on several occasions) during the operation of his approval. The director used the licensing procedure to enforce matters he had not been able to enforce through prosecution.

In Sloan the Director was taking away an operating permit and was required by statute to give reasons for so doing. In the case before this Board, it is the Director's position, and evidence was presented to the Board, that the basic position of the Director has not changed from the issuing of the earlier approval to the issuing of this Approval. What has changed is the Director's concern that the Appellant was unclear of the terms of the 1993 approval and is conducting activities which were not applied for and which the Director says are not approved. In order to make it very clear to the Appellant exactly what the restrictions are on his handling of hazardous waste and to ensure that there is no misunderstanding as to exactly which activities the Appellant is approved to conduct, the Director set out in very straightforward language what the Appellant is not to do or is prohibited from doing. It is the Director's position that there is no change in what activities have been approved but merely a change in the terms used. In any event, there is no obligation under the Act to provide any prior notice (either written or otherwise) for such changes.

The Director's evidence was that both in writing and during meetings the Appellant was given sufficient notice that the Director was going to be very specific in this approval as to what activities would be approved. In addition, the Appellant received a copy of the draft approval for review and comments prior to the actual issuance of the Approval.

The Appellant testified that there would be negative impact upon the business because he had entered into contracts and planned his business based on the assumptions that there would not be any changes when the new approval was issued. It is the Appellant's position that the previous scope of his activities was revoked and that he should therefore fall within the Sloan case where reasons should be given prior to the revocation of any activities. In this case, however, the Board does not see any reason why the Director should give any further notice because the changes made were to clarify terms already present. The Board further points out that there is no obligation contained in the Act requiring the Director to give notice or reasons for his decision to impose terms or conditions.

THE BOARD'S RECOMMENDATIONS

The Board recommends that:

1. the Minister confirm the decision of the Director of Chemicals Assessment and Management to issue Approval # 95-IND-085 with respect to application #002-134, issued September 29, 1995; and

2. copies of this report and recommendations and of any decision by the Minister be sent by the Board to the following persons:

Signed and Dated on February 14, 1996 at Edmonton, Alberta

Joan Copp

Max A. McCann

M. Anne Naeth



ORDER

I, Ty Lund, Minister of Environmental Protection, agree with the Recommendations of the Environmental Appeal Board and order that they be implemented.

Dated at Edmonton this 21st day of February, 1996.

Signed, Honourable Ty Lund

Minister of Environmental Protection

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