Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

CN Pleads to Environmental Charges

As a result of guilty pleas entered in Alberta and British Columbia on Monday, CN will pay a total of $1.8 million, much of which will directly benefit environmental organizations in those provinces.

Following two train derailments in 2005, CN was charged with offences under the Alberta Environmental Protection and Enhancement Act, the British Columbia Environmental Management Act, the federal Fisheries Act and the federal Migratory Birds Convention Act.

Pursuant to the resolution reached on May 25, 2009, CN will pay $600,000.00 to the Wildlife Rehabilitation Society of Edmonton; $400,000.00 to support fisheries and fish related habitats in Northern Alberta; $350,000.00 for projects in the Squamish River watershed; and approximately $300,000.00 to NAIT to develop a course to provide training for emergency preparedness and volunteer firefighters. As part of a creative sentencing proposal, CN will also create an emergency response plan.

The settlement was based on joint submissions from all parties and is an example of effective collaboration between government, industry and conservation groups. It signals good news, not only for the environmental organizations to which the funds will be paid, but also for wildlife and natural habitats in Alberta and British Columbia.

City of Edmonton Announces Waste to Fuel Facility

Edmonton is one step closer to having the world's first industrial-scale facility for producing advanced biofuels from municipal solid waste. On April 21, 2009, Alberta Environment issued the necessary regulatory approval so that EnerkemGreenField Albert Biofuels ("Enerkem") can begin construction at its new Edmonton "waste-to-fuel" facility

In 2008, the City of Edmonton entered into a 25 year agreement with Enerkem to build and operate a municipal solid waste to ethanol facility, which is to be located at the Edmonton Waste Management Centre.

Under the agreement, the City of Edmonton will provide the facility with at least 100,000 tonnes of sorted municipal waste per year. Such waste is the end product after recycling and composting, and would otherwise be landfilled. The Enerkem facility will use thermo-chemical technologies to convert carbon rich materials, present in the waste, into gas. The gas is then cleaned, purified and further converted into biofuels such as methanol and ethanol.

When completed, the facility will have the capacity to generate 36 million litres of advanced biofuels, primarily ethanol, through a process that maintains a positive energy balance. Enerkem and the City of Edmonton boast that the project will be the equivalent of removing 12,000 cars from the road, as it will reduce Alberta's carbon dioxide emissions by 6 million tons.

The estimated cost of the Edmonton facility is $70 million dollars. The City of Edmonton and the Alberta Energy Research Institute are together contributing $20 million dollars, and the City of Edmonton states that it will also be contributing $50 million to a related processing and research facility as part of its Waste Management Centre.

Enerkem is Canadian based company that is involved in several second generation biofuel production projects across Canada. Since 2003, it has operated a small-scale pilot project in Sherbrooke, Quebec which uses a variety of waste products, including municipal solid waste, to produce biofuels. In 2009, a commercial-sized Enerkem facility in Westbury, Quebec entered its start-up phase. The Westbury facility will produce biofuels from decommissioned electricity poles.

The regulatory approval issued to Enerkem on April 21, 2009 marks the final step in the regulatory process for the Edmonton facility. The approval imposes strict guidelines on the construction of the facility and reporting requirements in several areas of potential concern, including air, water and soil pollution. Among other requirements, Enerkem must develop and implement a carbon capture plan and groundwater monitoring program.

Jennifer Cleall and Elise Currie-Roberts

If everything goes according to schedule, construction will begin at the Edmonton facility later this year and will be completed near the end of 2010.

New Deposits May Keep More Milk Containers Out of Alberta Landfills

In less than 2 weeks Albertans will be paying refundable deposits and non-refundable container recycling fees on milk and other dairy containers as part of an effort to increase recovery rates for those containers. Deposits are an effective way of encouraging the recycling of beverage containers, and it is anticipated that the 10-cent and 25-cent deposits on milk containers will ultimately help increase the recovery rate of these containers to the provincial goal of 85% of containers sold.

Deposits are only one factor in the decision to recycle, and no doubt a comprehensive effort is needed to educate and encourage consumers to return and recycle containers, including milk containers. Container recovery rates for 2006 through 2008 hovered well below the provincial goal at about 75%. Without including milk containers, this means about 500 million containers a year are not recovered. This was lower than recovery rates in Alberta in 2003 through 2005, where rates in excess of 80% were reached.

Factors such as a greater variety and number of containers being sold, more beverages being consumed outside the home, consumer dissatisfaction with the depot return experience and in some parts of Alberta, inconvenient access to depots are all cited as contributing to reduced recovery rates. New deposits and increased deposits may assist consumers in making the choice to recycle where it may otherwise be inconvenient to do so, but it is more likely deposits are only one part of a more comprehensive scheme to bring consumers on side and address some of those factors known to contribute to reduced recovery rates.

Last October, the government of Alberta increased deposits on other beverage containers for the first time in 20 years. While it may be too early to tell, it will be interesting to see the impact of the increased deposits on recovery rates for containers already in the system.

Alberta's Proposed Land Stewardship Legislation: Effects on Conservation Tools

On April 27, 2009, the Honourable Ted Morton, Minister of Sustainable Resource Development, tabled Bill 36, the Alberta Land Stewardship Act ("ALSA"). This proposed legislation passed second reading on May 13 and is scheduled to receive third reading in early June.

ALSA was drafted as part of Alberta's new approach to land use planning. It contemplates, among many other things, a number of changes to Alberta's conservation easement ("CE") regime and creates new conservation and stewardship tools.

Conservation Easements

ALSA proposes to repeal the sections of the Environmental Protection and Enhancement Act ("EPEA") which set out the required criteria of a CE and the notice, registration and enforcement requirements of CEs. Those sections will be updated and located in ALSA.

Prior to the changes proposed by ALSA, a CE could be registered to protect, conserve and enhance biological diversity, the environment, and natural scenic and esthetic values, and for purposes consistent with recreational use, open space use, environmental education use and use for research and scientific studies. ALSA proposes to broaden the above purposes to include the protection, conservation and enhancement of agricultural land and land for agricultural purposes.

Conservation Directives

ALSA also contemplates what will be called "conservation directives". A regional plan under ALSA may designate a conservation directive to permanently protect, conserve, manage and enhance environmental, natural scenic, esthetic or agricultural values. A conservation directive could restrict a landowner's ability to use his or her land in certain ways, while leaving title to the land in the landowner's name. The effect of a conservation directive seems to be similar to that of a CE, with the obvious exception that a conservation directive is not freely agreed to by the landowner.

Should a landowner feel the market value of his lands has decreased due to the designation under a conservation directive, that landowner may apply to the Land Compensation Board for compensation. ALSA will make Alberta the first jurisdiction in Canada to compensate landowners whose property values are affected by conservation restrictions under regional plans.

It is not clear how third parties will be able to determine whether certain lands are affected by a conservation directive. ALSA indicates that regulations may be enacted regarding the "duties and responsibilities of the Registrar of Titles respecting the registration, recording, filing, amendment, termination or repeal of a conservation directive". This suggests that a notation may be made on a Certificate of Title indicating that the lands are subject to a conservation directive. It also remains to be determined how conservation directives will affect lands against which a conservation easement has already been implemented.

Conservation Offsets

ALSA establishes the concept of a "stewardship unit" and conservation offset programs which are to be used to counterbalance the effects of an activity. "Activity" is broadly defined to include anything that requires a statutory consent and anything that must comply with a rule, code of practice, guideline, directive or instrument, a definition which encompasses numerous industrial activities. ALSA also contemplates regulations that will establish an exchange for the issuance and trading of stewardship units, as well as delineate how a stewardship unit is created.

While ALSA leaves many of the details of this system to be enacted by regulation, it has established the framework for the system. The concept of "counterbalance" in the draft legislation contemplates providing, acquiring, using or extinguishing stewardship units to counterbalance the effect of an activity. Counterbalancing also includes encouraging voluntary measures to offset an activity by committing to additional restoration of land, acquisition of land, donations of money or other resources, and the establishment of a conservation easement.

ALSA contemplates regulations which will set a restriction on the maximum effect of an activity in respect of the environment, and may specify a stewardship unit that will counterbalance the effect of an activity, specify the period of time within which the stewardship unit must be used or extinguished, and prohibit that activity without the extinguishment of the stewardship unit. This will make stewardship units vital for future development and industrial activity affected by the regulations under ALSA.

The legislation also allows regulations to accredit anything that is suitable as a stewardship unit to counterbalance an activity, which implies that voluntary offsets (such as the Winagami Lake project between Alberta Conservation Association and Suncor Energy) may be accredited as stewardship units in the future.

Development Credits

ALSA also lays out the framework for the creation of a scheme for the transfer of development credits (a "TDC scheme"). The TDC scheme must designate a conservation area that will be used for the protection and conservation of the environment, natural scenic or esthetic values, agricultural uses, or that will be designated as a provincial or municipal historic resource under the Historical Resources Act. It must also designate one or more development areas and the terms and conditions under which a stewardship unit may be realized or used by a title holder in the conservation area.

The TDC scheme contemplates the realization, sale or disposition of stewardship units if the title holder enters into a conservation easement, consents to a designation under the Historical Resources Act, or provides some other form of conservation or protection that is satisfactory to the local authority.

By designating conservation areas and development areas, TDC schemes in other jurisdictions have allowed the transfer of credits from conservation areas as an offset for development activity occurring in development areas. The legislation hints at this and would permit it but has left the specific details of such a scheme to the upcoming regulations.

Davis LLP has extensive experience with conservation easements in Alberta and is able to assist organizations in respect to these and other conservation and stewardship tools. We will be monitoring the proposed ALSA for upcoming changes and proposed regulations and will provide further updates on this innovative new legislation.