Appeal No. 96-081


Date of Hearing: February 18, 1997
Date of Report and Recommmendations: March 3, 1997



IN THE MATTER OF Sections 84, 85, 86, 87, 89, 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 Castledowns Bottle Depot Ltd., with respect to Approval No. 96-BCD-028/Application No. BC96-0026 issued by the Acting Director of Action on Waste Division, Alberta Environmental Protection.

Cite as: Castledowns Bottle Depot Ltd. v. Acting Director of Action on Waste Division, Alberta Environmental Protection.

HEARING BEFORE
Dr. William A. Tilleman
Dr. M. Anne Naeth
Dr. John P. Ogilvie

APPEARANCES
Appellant: Mr. Edward Chung, Castledowns Bottle Depot Ltd., represented by Ms. Wendy Danson, McCuaig Desrochers; Dr. Alan Brownlee and Mr. Timothy Mastel-Marr

Other Parties: Mr. William McDonald, Environmental Law Section, Alberta Justice, representing the Director of Action on Waste Division;
Ms. Betty Teichroeb, Action on Waste Division and Ms. Jean Eve Mark, Action on Waste Division, Alberta Environmental Protection

Mr. Marek Lupicki and Mr. Jerry Kucharzow represented by Mr. Steven Ferner

BACKGROUND

On December 20, 1996, Castledowns Bottle Depot Ltd., represented by Ms. Wendy Danson, filed a Notice of Appeal with the Environmental Appeal Board with respect to Approval No. 96-BCD-028 issued to 692987 Alberta Ltd. for the operation of a Beverage Container Depot. The Approval was issued on December 6, 1996, by the Acting Director of Action on Waste Division.

The appellant in their Notice of Appeal applied, pursuant to section 89 of the Environmental Protection and Enhancement Act, (Act) for a Stay of the Decision of the Director pending the appeal.

The Board wrote to Ms. Danson on December 23, 1996, acknowledging receipt of the appeal and by copy of that letter requested all related correspondence, documents and materials from the Department of Environmental Protection (the Department) to be received by the Board by January 6, 1997. A further request for documentation relating to the appeal was sent to the Department on January 15, 1997.

All requested correspondence was received from the Department on January 17, 1997 and a copy was sent to all parties. The Board also informed Mr. Jerry Kucharzow and Mr. Marek Lupicki that an appeal had been filed and provided them with a copy of the appeal on January 17, 1997. Along with the information sent to the parties, the Board directed that a Stay Hearing be held on January 23, 1997, at their office in Edmonton.

A Stay Hearing was held at the Board office on January 23, 1997. The Board issued a Decision Report on January 23, 1997, dismissing the Stay application.

THE HEARING

On January 31, 1997, the Board wrote to all parties advising that a hearing date had been set and included a Notice of Hearing. Written submissions were requested and received. On February 18, 1997, the hearing took place at the Board office.

THE ISSUES

The issues to be decided in this appeal are whether the Director acted reasonably in reaching the decision that he did. Specifically:

  1. Did the Director follow the intent of the legislation as set forth in section 2 of the Act in issuing the approval?
  2. Did the Director have available to him sufficient accurate information to permit him to make a proper decision?
  3. Do the standards applied by the Director to allow the new Universal Bottle Depot properly reflect the intent of the Act?

 

SUMMARY OF THE EVIDENCE

The Appellant

Mr. Edward Chung


Mr. Chung testified that he and his wife had purchased the Castledowns Bottle Depot in 1986. Prior to that date he had been employed at the Depot as Manager. He said the purchase price in 1986 was $150,000. He estimated that the value today is approximately $300,000.

Mr. Chung believes that if the approved bottle depot is established his market will be sharply reduced. He did not know if he would be put out of business, but indicated he might have to lay off the present staff consisting of three full-time and one part-time employees. In this event, the depot would have to be operated by his wife and himself. Through this reduced business, he estimated that the value of Castledowns Bottle Depot might be cut in half.

Mr. Chung filed a survey of addresses of customers using the Castledowns Bottle Depot and indicated that 78% of them lived in the area that the new depot intended to serve.(1); Mr. Chung pointed out that the immediate area surrounding the Castledowns Bottle Depot is industrial and that he serves the area to the east where the approved depot will be located. He said that his main competitor is the Bottle King Depot located to the south and that he had some competition from the Fort Road Bottle Depot located to the southeast of his depot.

Mr. Chung testified that his only means of competing with other depots is to provide better service to his customers than the competition does. There is no flexibility in the amount of the refunds paid to customers as this is set by the regulations.

Mr. Chung introduced a map of the north part of Edmonton with an overlay showing the traffic districts.(2) The Castledowns Bottle Depot and its competition serve traffic districts 9, 10, 17, 18 and 19. The southern boundary of this area is the C.N.R. tracks and the Yellowhead Trail.

Dr. Alan Brownlee

The appellant called Dr. Brownlee as an expert witness. Dr. Brownlee received a Bachelor's degree in civil engineering in 1976 and a Doctor of Philosophy in transportation forecasting. He is employed by the City of Edmonton in the Transportation Department as Supervisor of Forecasting.

Dr. Brownlee introduced a November 1996 report entitled The Socio-Economic Forecasts 1996-2001 for the City of Edmonton, prepared by the City Forecast Committee of which he is a member.(3); The forecast population growth from the 1993 population of 626,999 was 15,756 by 1997 for a total of 642,755 and 42,409 by 2001 for a total of 669,408. He testified that the population growth in the north part of Edmonton is not disproportionately large in relation to the rest of the city. CFB Griesbach, in traffic district 9, may grow by approximately 3,000 people as a result of military transfers.

Dr. Brownlee introduced a map of Edmonton showing the traffic density on selected routes.(4); The map indicates a greater traffic flow past the depot proposed by the approval holder than past the Castledowns depot. However, Dr. Brownlee pointed out that 50% of trips made are for more than one purpose, a phenomenon called "trip chaining".

Mr. Timothy Mastel-Marr

Mr. Mastel-Marr, called as a witness by the appellant, serves part time as the Executive Director of the Alberta Bottle Depot Association (ABDA). He owns and operates two bottle depots in Edmonton, south of the North Saskatchewan River. These are the Triple H Southside Bottle Depot which he has had for 25 years and the Millwoods Bottle Depot which he started two years ago. He said that there are 15 depots in Edmonton, 10 north of the river and 5 on the south side. Thirteen of these depot owners are members of the ABDA. There are 165 members of the ABDA.

When asked about the origin of the requirement that there be a population of 40,000 available to the new depot, Mr. Mastel-Marr replied that this number is required to make the depot viable. He said that the 40,000 population and the 3 km separation between depots must be considered together. Mr. Mastel-Marr testified that the ABDA believes that 40,000 population is too low and accordingly has recommended to the Department that the number should be increased to 50,000, but the Department has made no changes.

The ABDA prefers tendering rather than the application and approval method that was used in this case. Mr. Mastel-Marr pointed out that the last three depots established, two in Calgary and one in Edmonton, were tendered.

Under cross-examination Mr. Mastel-Marr indicated that he had input into the guidelines used by the Department in the approval process under the Act. When questioned about a letter(5) sent by the ABDA to the approval holder dated January 7, 1997, thanking them for their membership registration, he said that the letter was sent by his Association in error.

The Department

The Department presented two witnesses as a panel: Ms. Jean Eve Mark, Head of the Beverage Container Management Section and Ms. Betty Teichroeb who works in depot inspection in that section. Ms. Teichroeb testified that when the Department received the application for the new depot she confirmed the population data submitted with the City of Edmonton, inspected the proposed site and checked the distance to the Castledowns Bottle Depot by driving. Since these factors met the guidelines she recommended that the application be approved.

Ms. Mark stated that the guidelines regarding the establishment of bottle depots were developed when the Beverage Container Act became effective in 1973. This act was revised in 1977 and incorporated into the Act in 1993. Depot owners, consumers and beverage producers all had input into the development of the guidelines. She stated that there had never been a failure of a bottle depot in Edmonton.

SUMMARY OF THE ARGUMENTS

Ms. Wendy Danson

Ms. Danson argued that the guidelines used by the Director to approve the application do not comply with section 2 of the Act. Under that section, the Director must consider environmental matters (the impact on the environment) and economic issues (the impact on the economy of the surrounding area). She submitted that the Director used erroneous population figures and misjudged the amount of growth in the area. Further, the Director arguably neglected to consider the effect of the new depot on the viability and value of the Castledowns Bottle Depot. The new depot should, therefore, be moved one kilometre north and east to avoid this conflict.

Ms. Danson argued that the new depot should have been "tendered" as was the practice prior to the enactment of this legislation. She said that tendering was a fair method of depot establishment. Under the Act directly affected depots can file a statement of concern only after the approval process is well underway. To support her argument for the return of "tendering" she cites Syncrude Environmental Assessment Coalition v. Alberta (Energy Resources Conservation Board)(6). In this appeal the Appeal Court stated,

"Legislation is not to be read to prejudicially affect existing status or accrued rights unless the way in which it is framed requires it."

Ms. Danson expressed the opinion that the guidelines and standards developed by the Director under the authority of section 18 of the Beverage Container Recycling Regulations are ultra vires because Athey are unclear, ambiguous and fail to meet the policy objectives and legislative intent of the Act. Section 18, for example, states:

18--- The Director may

(a) establish guidelines governing the operation of depots, including but not limited to the general operation and administration of depots including the hours that they must remain open to receive empty containers;

(b) limit the number of depots in all or any part of Alberta.

She supports her argument by referring to two cases, Heppner v. Minister of Environment of Alberta and Attorney General of Alberta(7) and Sentes v. Saskatchewan (Program Manager for the Mortgage Protection Plan)(8).

Mr. William McDonald

Mr. McDonald stated that Part 9, Division 1 of the Act sets up the system under which waste recycling is to be conducted. Section 168 provides for the type and content of the regulations that Cabinet can make for efficient system operation. Part (p) of that section provides that Cabinet may make regulations "respecting the establishment and operation of depots, including the qualifications of persons who may operate them." The use of the word "respecting" in the legislation allows Cabinet to delegate these duties. Section 18 of the regulation delegates the duties to the Director and allows him to carry them out.

Since the amounts of the refunds paid by the depot to its customers and paid by the beverage distributer to the depot are fixed, a depot does not operate in a free market. The number of depots must balance convenience to customers and transport distance. There must be a sufficient population base to support the depot. A population base of 40,000 does this. It is a matter of a depot effectively marketing its services.

Mr. McDonald argued that, since the Director checked the population statistics submitted with the application with the City of Edmonton, and found them valid and found the separation to be approximately four kilometres, he properly applied the standards developed for depot location. The Castledowns Bottle Depot will undoubtedly lose some business to the new depot but this can be countered by effective marketing.

Mr. Steven Ferner

Mr. Ferner's argument supported that of Mr. McDonald. He noted that the population quoted by the appellant for the City of Edmonton (651,100) is sufficient to support 16 depots. There are only fifteen depots at present. It is a matter of whether a new depot should be in the north or the south. The approval holder meets all of the standards and guidelines established by the Director under authority of section 18 of the Beverage Container Recycling Regulation as well as the conditions of the Act. It is proper, therefore, that the application was approved.

CONSIDERATIONS OF THE BOARD

As pointed out above, there are three specific issues that must be considered by the Board in reaching a conclusion regarding this appeal. Essentially, the Board must consider the reasonableness of the Director's decision.

Intent of the Legislation Section 2(b) of the Act sets out the principles and intentions underlying this Act. It states:

2--- The purpose of this Act is to support and promote the protection, enhancement and wise use of the environment while recognizing the following:
...
(b) the need for Alberta's economic growth and prosperity in an environmentally responsible manner and the need to integrate environmental protection and economic decisions at the earliest stages of planning;...

Subsection 2(b) has been referred to by each of the parties as being pertinent to these proceedings.

The appellant inferred that the Director, in approving the application, did not give full recognition to the intent of the Act. The Board disagrees. By examining the population base of the area to be served, its growth potential and the location of the depot in relation to other depots, the Director acted reasonably because he took into account both environmental and economic factors. Environmental factors, because if there are not enough proper receiving facilities the recycling program will fail with the resulting detrimental effect on the environment. Economic factors, because if there are too many receiving facilities they will not survive.

The Director, in the Board's view, took into account and carefully considered both environmental and economic matters in making his decision to approve the application and, therefore, abided by the requirements of the Act.

Information Available and its Accuracy

When the approval holder submitted its application for a license to operate a bottle depot, the application was accompanied by detailed population statistics for all traffic districts in Edmonton provided by the city. The data for actual population and projected population indicate that, based on the requirement of 40,000 people needed to support one depot, there is sufficient population in Edmonton to support sixteen depots, or an additional one to the present fifteen.

The location of the proposed depot in relation to other depots in Edmonton was clearly illustrated on a map(9) which showed that the required three kilometre separation from its nearest neighbour was met.

The Director's staff (upon whom the Director relied) contacted personnel in the Edmonton Planning Department and confirmed that the population statistics received were accurate. The staff also visited the proposed site to make sure it was suitable. By actually driving to the neighbouring depots the staff determined that the proposed depot's location is in excess of three kilometres from its neighbours. The Board finds all of these steps to be reasonable and proper in the circumstances.

The appellant questioned the accuracy of the population statistics submitted by the approval holder and used by the Director in granting the license. Counsel for the appellant filed a projection of the population(10) prepared by Dr. Brownlee of those traffic districts which will probably serve the approval holder's depot as well as that of the appellant. Dr. Brownlee testified that these data had been prepared on February 8, 1997. The following table compares the approval holder's figures (which were used by the Director in making his decision) with Dr. Brownlee's current figures.

Comparison of Population Estimates - North Edmonton
  1993 1995 2001
Traffic District Approval Holder Brownlee Approval Holder Brownlee Approval Holder Brownlee
Calder 21,500 21,700 21,700 21,900 22,000 22,400
Londonderry 50,800 50,395 50,700 50,425 50,800 52,000
Castledowns 33,800 33,540 35,200 34,325 39,200 40,050
Lake District 10,700 10,670 13,600 12,125 22,800 17,775
 
Totals 116,800 116,325 121,200 118,775 134,800 132,225
Difference -475 -2,425 -2,575
Percentage Difference -0.4% -2.0% -1.9%

This comparison shows that Dr. Brownlee's figures are approximately two percent lower than those of the approval holder. The Board believes that this difference is not significant. The projection of population statistics, particularly for small sections of a city that are changing and growing is not an exact science and this amount of variation between forecasts made at slightly different times is to be expected.

The Board believes that the Director used population figures that are as accurate as can be obtained in making his decision to approve the application. This was entirely reasonable.

Intent of the Act

The appellant argues that the standards and guidelines that the Director uses to make a decision on an application for a bottle depot do not properly reflect the intent of the Act and, therefore, should be declared ultra vires. The appellant further argued that since the method of selecting applications for a license to operate a bottle depot had changed with the proclamation of the Act on September 1, 1993, section 18 of the Beverage Container Recycling Regulation was invalid. In support of this contention, the appellant cited Syncrude Environmental Assessment Coalition v. Alberta (Energy Resources Conservation Board)(11)  and specifically indicated the following statement by the Appeal Court in their decision:

"Legislation is not to be read to prejudicially affect existing statutes or accrued rights unless the way in which it is framed requires it."

The Board has considered this matter and believes that the requirements for recycling beverage containers are fully laid out in Part 9, Division 1 of the Act and that the Regulation is there to evolve naturally with the change in legislation. The fact that tendering is no longer used as a method of approval does not affect any existing statutes nor does it detract from any accrued rights of persons to apply for a license. At least, not in this case. Syncrude, therefore, does not apply.

The Board believes that the current practise used by the Department in approving an application is more open than the tendering process. Each application must be advertised in a local paper and anyone who considers himself/herself directly affected may submit a statement of concern. These are considered and weighed by the Director before he issues the approval. Finally, if the approval is issued, anyone who submitted a statement of concern and who still considers himself/herself to be directly affected may submit an appeal to this Board. In fact, the Board may consider an appeal from someone who did not file a statement of concern if the regulations were not followed by the Director, or common law requirements of procedural fairness or natural justice were not met. Overall, this appears to be more open than tendering.

The appellant also cited Sentes v. Saskatchewan (Program Manager of the Mortgage Protection Plan) (12)  in support of its ultra vires contention. In this case, the legislature introduced legislation to reduce monthly mortgage subsidy payments, but before the legislation was enacted, the legislature was prorogued. To affect the reduction in subsidy Cabinet passed a regulation under which payment of a portion of the monthly subsidy was postponed for nine months. Two mortgage holders appealed the legality of the regulation. The regulation was held to be ultra vires by the court but the declaration's operation was postponed for four months.

It appears to the Board that the Sentes case involves a very different matter than the case at hand. In Sentes the regulation was making a change in the legislation itself by changing the amount paid and the method of payment. Sentes does not apply to the case before us.

CONCLUSION

The Board concludes that the Beverage Container Recycling Regulation, the legislation in the case before us, is intra vires and that the standards and guidelines developed under section 18 of that Regulation were properly applied. The Director acted reasonably by applying those standards properly and exercising his judgment appropriately in issuing this approval based on adequate information and field investigations placed before him by his staff.

OTHER MATTERS

At the conclusion of the hearing, counsel for the approval holder sought costs, arguing that the appeal by Mr. Chung was frivolous or vexatious.

The Board disagrees. The appellate provisions in the Act were introduced in September of 1993 as part of a new comprehensive statutory scheme that included the opportunity for Albertans to challenge certain decisions made by environmental regulators. It would be undesirable for the Board to use its power to award costs to thwart appellants who feel they have specific, legitimate concerns, even though in the end the rather specific terms of the Act may preclude the Board from hearing the appeal, or the appellants may be unsuccessful in the appeal. We decline to grant costs to any party.

RECOMMENDATIONS

  1. The Board recommends that the appeal be dismissed.
  2. The Board recommends that the Director examine the standards used in dealing with applications for beverage container depot approvals and clearly define them. More specifically, first, the "3 kilometre radius" used is not clear. Do the 3 kilometres refer to a point-to-point separation between depots of 3 kilometres, or 6 kilometres being the sum of the 3 kilometre radii? Second, it is not clear how the separation distance and population base is applied when considering rural, urban and semi-urban locations.
  3. With respect to section 92(2) and 93 of the Environmental Protection and Enhancement Act, the Board recommends that copies of this Report and Recommendations be sent to the following parties:
    • Ms. Wendy Danson, McCuaig Desrochers, representing Mr. Edward Chung of Castledowns Bottle Depot
    • Mr. Steven Ferner representing Mr. Marek Lupicki and Mr. Jerry Kucharzow of 692987 Alberta Ltd., Alberta Beverage Container Depot
    • Mr. William McDonald, Environmental Law Section, Alberta Justice, representing Mr. Laury North of Action on Waste Division, Ms. Betty Teichroeb of Action on Waste and Ms. Jean Eve Mark of Action on Waste, Environmental Protection

Signed and Dated March 3, 1997, at Edmonton, Alberta.

Dr. William A. Tilleman, Chair

Dr. John P. Ogilvie

Dr. M. Anne Naeth



Footnotes

1. Exhibit 5 - Survey of Customer Service Area by Castledowns Bottle Depot.

2. Exhibits 4A and 4B - Map of the North Section of the City of edmonton and traffic districts.

3. Exhibit 8 - The Socio-Economic Forecasts 1996-2001 for the City of Edmonton from November 1996.

4. Exhibit 10 - 1996 Traffic flow map from the City of Edmonton, Transportation Department showing the average annual weekday traffic.

5. Exhibit 15 - Letter dated January 7, 1997 to Mr. Jerry Kucharzow and Mr. marek Lupicki from the Alberta Bottle Depot Association.

6. Syncrude Environmental Assessment Coalition v. Alberta (Energy Resources Conservation Board), (1994) 174 AR. 161.

7. Heppner v. Minister of Environment of Alberta and Attorney General of Alberta, (1977) 4 Alta. L.R. (2d) 139 (S.C.A.D.).

8. Sentes v. Saskatchewan (Program Manager for the Mortgage Protection Plan), (1991) 7 Admin. L.R. (2d) 140 (Sask. Q.B.).

9. Exhibit 4A and 4B - Map of the north section of the City of Edmotnon and traffic districts.

10. Exhibit 6 - Forecast of the City of Edmonton population totals dated February 8, 1997.

11. Syncrude Environmental Assessment Coalition v. Alberta (Energy Resources Conservation Board), (1994) 174 AR. 161.

12. Sentes v. Saskatchewan (Program Manager for the Mortgage Protection Plan), (1991) 7 Admin. L.R. (2d) 140 (Sask. Q.B.).


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 18th day of March, 1997.

Signed, Honourable Ty Lund

Minister of Environmental Protection

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