Environment @ Gowlings: May 25, 2012 - Volume 9, Number 4

Edited by Harry Dahme

In this issue:

• Carbon Capture and Storage - An Alberta Perspective
• Castonguay Blasting - A Case Comment
• Supreme Court Will Not Hear Appeal of Smith v. Inco
• KPIA, RIP
• Introducing the Metal Dealers and Recyclers Act (B.C.)

CARBON CAPTURE AND STORAGE - AN ALBERTA PERSPECTIVE

By: Nadia Conforti, Student-at-Law, Arnold Olyan and Garth Parker

Carbon capture and storage (CCS) is a process that first captures and then sequesters industrial carbon dioxide (CO2) emissions before release into the atmosphere. The CCS process involves the following stages:

1. CO2 capture and compression;
2. CO2 transport from the capture site to an injection/storage site;
3. injection and permanent storage of CO2 in geological formations; and
4. upon injection completion, post-closure long-term monitoring of the CO2 storage site.

A CCS system combining these features will reduce industrial CO2 emissions into the atmosphere.

The Alberta Government considers CCS a critical technology to reduce industrial greenhouse gas (GHG) emissions and has proposed CCS as the largest portion of its GHG reduction strategy. Alberta has taken significant steps in advancing its CCS initiative by establishing a legal and regulatory framework to implement large scale CCS projects. Although the CCS initiative provides a potential solution for sustainable hydro-carbon production in Alberta, large scale CCS raises numerous issues.

Background

In January 2008, the Government of Alberta released its Climate Change Strategy. The report reiterated the Province's target to reduce annual GHG emissions from a 2010 baseline by 50 megatonnes (Mt) by 2020 and added a target of reducing annual GHG emissions by 200 Mt by 2050 (inclusive of the 50 Mt target).

The Climate Change Strategy anticipated that CCS implementation would account for up to 70% of Alberta's targeted GHG emissions reductions. The Strategy also included the establishment of the Alberta Carbon Capture and Storage Development Council to facilitate the implementation of CCS in Alberta by recommending those economic, regulatory, and technical requirements consistent with CCS implementation.

Formalized Regulatory Framework

1. Carbon Capture and Storage Funding Act, S.A. 2009, c. C-25 (the "Funding Act")

The purpose of the Funding Act is to encourage and expedite the design, construction and operation of CCS projects in Alberta. The Funding Act provides the Minister of Energy (the "Minister") with the legal authority to make grants facilitating the Funding Act's purpose. To date, the Minister has allocated $2 billion in provincial funding to four CCS projects:

1. The Alberta Carbon Trunk Line Project by Enhance Energy for construction and operation of a 240 km pipeline that will collect and transport CO2 from industrial emitters (initially a fertilizer manufacturing facility and an oilsands bitumen refinery in Redwater, Alberta) to existing oil reservoirs. The injection of CO2 below the oil reservoir is intended to both enhance oil recovery and provide significant storage.
2. The Shell Quest Project to capture more than one million tonnes of CO2 annually from Shell's Scotford oilsands upgrader located near Fort Saskatchewan, Alberta and transport same by pipeline to injection wells located in Central Alberta.
3. The Swan Hills Synfuels Project for piloting of in-situ coal gasification to convert a deposit of deep unmineable coal into synthetic gas (syngas) underground that will be processed at a conventional gas plant to remove CO2 as a byproduct of the gasification. The CO2 from this process will be captured and used for enhanced oil recovery and the produced syngas will be used as a fuel in a combined cycle power generation station to produce low emission electricity.
4. TransAlta Corporation's Project Pioneer for construction of a carbon capture facility at the Keephills 3 coal-fired power plant located west of Edmonton, Alberta anticipated to capture and store one million tonnes of CO2 annually. It must be noted that on April 26, 2012 Project Pioneer's industry partners, TransAlta Corp, Enbridge Inc. and Capital Power Corp., announced they will not be proceeding with CCS project due to economical concerns. See discussion below under "Cost Considerations".

2. Carbon Capture and Storage Funding Regulation, Alta Reg 64/2010 (the "Funding Regulation")

The Funding Regulation authorizes Ministerial spending for CCS education and research, and for development and refinement of the provincial regulatory regime for CCS. In March 2011, the Alberta Government launched a Regulatory Framework Assessment (RFA), funded pursuant to this regulation. The objectives of the RFA are to: (i) review the current regulatory requirements in Alberta that apply to CCS; (ii) examine CCS frameworks in other jurisdictions; and (iii) identify opportunities to improve Alberta's regulatory framework. The review is expected to be completed in late 2012. As yet, there has been no public announcement arising as an outcome of the RFA.

3. Carbon Capture and Storage Statutes Amendment Act, 2010 c. 14 (the "CCS Amendment Act")

The CCS Amendment Act attempts to provide legal certainty regarding several aspects of the CCS process including:

1. Ownership of Pore Space and Grant of Sequestration Rights:
   
   To accommodate CCS, ownership of all pore space for the purpose of storing CO2 has been vested in the Crown in Right of Alberta (the Crown) under the Mines and Minerals Act¹ (the MMA). Further, authority has been vested in the Minister of Energy to contract with counterparties for: (1) an evaluation permit² granting the right to drill evaluation wells to determine the suitability of geological formations for CCS³, and (2) a carbon sequestration lease⁴ granting rights to inject captured carbon dioxide for sequestration⁵. The CCS Amending Act is retroactive and supersedes existing mineral or storage rights.
2. Long-term Stewardship and Liability:
   
   The lessee under a carbon sequestration lease must obtain a well licence and an approval from the Energy Resources Conservation Board under the Oil and Gas Conservation Act prior to drilling or using a CCS well.⁶ During injection operations, a lessee is required to monitor all wells and facilities and, upon ceasing injection operations, comply with all closure requirements of the approved closure plan.⁷ The lessee may then apply to the Minister for a closure certificate, which the Minister may issue if satisfied that: (i) the lessee has met all monitoring, closure, abandonment, decommissioning and reclamation obligations; (ii) the lessee has complied with all relevant environmental requirements, and (iii) the captured CO2 is behaving in a stable and predictable manner, with no significant risk of future leakage.⁸ Upon issue of a closure certificate by the Minister, the Crown permanently assumes all obligations of the lessee for the sequestered CO2 and conditionally indemnifies the lessee against liability in tort.⁹
3. Post-Closure Stewardship Fund:
   
   Lessees are required to pay a fee per tonne of "captured carbon dioxide injected"¹⁰ into a post-closure stewardship fund (the "Fund") for the duration of the CO2 injection period.¹¹ Monies paid into the Fund will be available to the Crown to be used for monitoring the injected CO2 plume, fulfilling the obligations the Crown has assumed from the lessee, and paying for the costs of reclamation and remediation activities.¹²

4. Carbon Sequestration Tenure Regulation, A.R. 68/2011 (the "CST Regulation")

The CST Regulation establishes requisite procedures for Ministerial agreement to make pore space available, to evaluate suitability for sequestration and to subsequently undertake sequestration of CO2.

The CST Regulation: (i) defines "pore space" and "deep subsurface reservoirs"¹³; (ii) establishes the application process and terms for permits and leases¹⁴; (iii) limits the size of parcels of land for permits and leases¹⁵; (iv) sets the annual rental fee for subsurface reservoirs¹⁶; (v) provides detailed provisions for monitoring, measurement and verification plans requiring Ministerial approval and periodic update¹⁷; and (vi) creates the obligation to provide a closure plan and details the specifications required for inclusion in a closure plan that requires Ministerial approval and periodic update¹⁸.

The CST Regulation expires on April 30, 2016 and will be reviewed under the RFA.

Sustainable Development

If fossil fuels continue to play a critical role as an energy source, CCS is increasingly recognized as a solution allowing for the continued production of coal and oil and gas coincident with improved energy efficiency and the development of a renewable energy portfolio.

Industry has recognized that CCS may be particularly efficient in respect of large emissions at industrial facilities, especially when integrated into designs for oil sands and other hydro-carbon production facilities. In Alberta, large CO2 emitters are typically located in clusters, there is often infrastructure available to transport the captured CO2, and there is a foundation of industry knowledge critical to developing the monitoring technology necessary to make CCS viable. Industry recognition and support is exemplified by the Integrated CO2 Network (ICO2N) which is a group of Canadian corporations from the coal-fired power, conventional oil and gas development, oil sands and other industry sectors working to accelerate the development and deployment of CCS technologies. As explained by Stephen Kaufman, director of climate change management and solutions with Suncor Energy Inc. and the industry chair of ICO2N, "CCS offers great potential for making significant reductions in our GHG emissions, and we recognize that one day it could play a key role in reducing the environmental footprint of the industry".

Liability

The willingness of the province to assume all obligations (and therefore liability) for stored CO2 is a considerable departure from current practice in respect of conventional oil and gas operations, which in most jurisdictions provides for operator liability. Under Alberta's regulatory framework, liability is assumed by the Province at the point when the captured carbon dioxide is behaving in a stable and predictable manner, with no significant risk of future leakage¹⁹ and the lessee has complied with the closure requirements set out in regulations and related legislation.²⁰ Interestingly, provincial indemnification is only made available to the lessee and it is unclear who will assume liability in respect of possible claims brought against the other participants in a CCS project, such as equipment suppliers or the original producer of the CO2. This suggests that Crown liability may be narrower than it first appears.

The MMA also provides that, subject to regulation, the Crown will assume ownership of the sequestered CO2 if the lessee ceases to exist prior to the issuance of a closure certificate.²¹ This provision provides some additional assurance that the Crown will assume the lessee's obligations in the event of the insolvency of a lessee. However, until further regulations are promulgated, the extent of assumed liability is uncertain.

Technology

Evolving technology often develops in "fits and starts". This has resulted in certain "technological gaps" that science must address as CCS develops:

1. CO2 Site Assessment: A reliable means of predicting the suitability of a site and its potential storage capacity is essential. Seismic methodology will be required to accurately and reliably map deep sub-surface locations.
2. Assessing Likelihood of CO2 Storage Leaks: A reliable means of assessing and predicting faults and fractures impacting containment at a storage site is essential. A better understanding of the effects of by-products captured coincidentally with CO2 on cap rock or other material that surrounds the storage site or provides the site seal is also necessary.
3. Tracking CO2 Leaks: Tracking methods to accurately and reliably verify and observe CO2 plume movements and any leakage to the biosphere require improvement.
4. Long Term Outcomes: Environmental studies are required to determine the effects of CO2 sequestration on groundwater, and on both terrestrial and aquatic plants and animals.

Cost Considerations

Because CCS is a nascent development in Alberta, it is difficult and premature to quantify the capital cost of and actual operational expenses associated with a CCS project. In these initial stages, expenditures will necessarily focus on infrastructure, retrofits to source plants requiring CCS technology, and the assessment of appropriate secure storage sites. As Alberta's CCS initiative matures, cost assessment will be required to determine the "stand alone" viability of CCS projects. The cost of CCS implementation and operation must be competitive with the "cost of carbon" and not significantly increase the cost to industrial emitters of processing hydrocarbons. An example of this concern is the recent cancellation of the Project Pioneer CCS project by its industry partners who opted to pay emissions penalties in preference to incurring project development costs. A currently low price (tax) on carbon with no expectation or certainty regarding future prices was cited as the main reason that the project would not proceed. Commercial-scale viability of CCS technology will be dependent on a robust market for carbon sales and the price of emissions reductions being sufficient to encourage investment in the technology. Consideration of funding arrangements for CCS projects, including government funding and incentive schemes or other arrangements to first establish and then ensure the long term viability of CCS in Alberta will be required.

Importance of Government Support

Alberta's development of a regulatory framework supporting CCS initiatives is due in no small measure to the policies of previous Alberta administrations, who made CCS a priority in their strategy to reduce GHGs. Although the government of Premier Alison Redford remains fully committed to CCS implementation, there have been indications of a possible shift in priority to diversify the funding committed to CCS into other clean energy technologies and emission reduction solutions that support GHG reduction strategies. This may, at least in the shorter term, suggest a shift in Alberta's GHG reduction strategies to a more multi-faceted approach until the initially approved CCS projects have demonstrated that the piloted technologies are viable and effective tools into which further research and investment is desirable.

Conclusion

The Alberta Government considers CCS a critical technology for reducing industrial GHG emissions. Development of an appropriate legal and regulatory regime for a new technology is an organic process which will quite understandably require experiment, assessment, and revision. Patience is required as the CCS industry develops the tools necessary to ensure the safe, secure, and effective storage of CO2 in large quantity.

CASTONGUAY BLASTING - A CASE COMMENT

By: Gatlin Smeijers

On November 26, 2007, Castonguay Blasting Ltd. ("Castonguay") was conducting blasting operations at a road widening project in the town of Mamora, Ontario. On that day, a particular blast went awry, sending blasting debris (fly-rock) approximately 90 meters into the air, landing on and causing damage to a house and vehicle located on a neighbouring property. Castonguay immediately notified both the Ministry of Labour and the Ministry of Transportation of the accident.

Several months later, the Ministry of the Environment (MOE) learned of the incident and, after a year and a half of contemplation, decided to charge Castonguay with failing to report a discharge of a contaminant into the natural environment, contrary to s. 15(1) of the Environmental Protection Act (EPA).

For reference, s. 15(1) provides:

The premise behind the MOE's charge was that the fly-rock was a contaminant that was discharged into the natural environment (i.e. the air) and caused damage to property, which is an adverse effect. Castonguay's failure to report the incident to the MOE was therefore a contravention of s. 15(1) and an offence under the EPA.

At trial, Justice Hunter of the Ontario Court of Justice dismissed the charge on the basis that the EPA and specifically s. 15(1) was not intended to apply to discharges that did not also impair the "natural environment" in more than a trivial manner. According to his interpretation, a discharge that results in only damage to property, absent some impairment of air, land, or water, is not within the scope of the EPA. Justice Hunter suggested that in order for the EPA to apply, there must be an "environmental event" and concluded that to characterize the fly-rock as a contaminant was an absurd result.

On appeal to the Ontario Superior Court of Justice, the dismissal was reversed by Justice Ray. The thrust of the Superior Court decision was that there is nothing in the EPA that limits its application to only the "natural environment" or "environmental events". Justice Ray concluded that the trial court made an error of law by placing such a limitation on the plain wording of the EPA and its express definitions.

Justice Ray's reversal, and conviction of Castonguay, was brought before the Ontario Court of Appeal in the Fall of 2011. In the recently released decision, the majority dismissed Castonguay's appeal. There was a strong dissent by Justice Blair.

The conflict between the dissent and the majority almost precisely mimics the disagreement between the Superior Court and the Ontario Court of Justice. The conflict concerns the scope of the definition of "adverse effect" and the implications of the Supreme Court of Canada's decision in Ontario v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031.

The Canadian Pacific decision concerned whether the extremely broad definition of "adverse effect" was unconstitutionally vague. The current definition is largely the same as it was at the time of the Canadian Pacific decision, with the exception of the addition of "means one or more of" to the current definition. The definition includes several enumerated categories of adverse effect, as follows:

In concluding that part (a) of the definition was not unconstitutionally vague, the Supreme Court limited its scope to exclude "trivial or minimal threats to the environment".

The conflict in the Castonguay Blasting decisions is whether this limitation applies only to part (a) of the definition or whether it also applies to parts (b) through (h). If it only applies to part (a), then the fly-rock is a contaminant and the damage to the house and vehicle are an adverse effect to which the EPA applies. If on the other hand, all of the forms of adverse effect must necessarily also include some non-trivial impact on the natural environment, then the damage to the house and vehicle is not an adverse effect within the scope of the EPA.

Ultimately the Court of Appeal majority took the position that an impact on the natural environment was not a requirement for all of the enumerated forms of adverse effect. Therefore damage to property is in and of itself an adverse effect, to which the EPA applies if it is caused by the discharge of a contaminant.

Whatever one's view of the complex prior case law and its precise implications, it is apparent that the majority's interpretation has the potential to lead to absurd results in some circumstances.

One example that has been raised is that of children playing a game of baseball. If the batter hits a stray ball and that ball breaks the window of a nearby house, does the MOE need to be notified? Just as was the case in Castonguay Blasting, the ball is a solid that is being discharged into the air and causing damage to property.

Another example is that of hunting. There is no exemption in the EPA for hunting activities. Yet, according to the reasoning in the Castonguay Blasting decision, a bullet could be characterized as a solid contaminant that is discharged to the air and results in an injury to animal life, which is an adverse effect. Are hunters required to notify the MOE every time they shoot a deer?

While it is intuitive that the Ontario Legislature did not intend the EPA, or the MOE, to regulate little league baseball or the fall deer season, it is in these far-fetched examples that the real importance of the Castonguay Blasting decision is highlighted. Despite the perhaps correct interpretation of the EPA by the Court of Appeal, the decision fails to provide any guidance on how far this interpretation extends. The majority draws no principled line between fly-rock and a stray baseball.

The result is that, for the time being, the scope of the foundational provisions of the EPA concerning discharges to the natural environment is somewhat uncertain.

SUPREME COURT WILL NOT HEAR APPEAL OF SMITH V. INCO

By: Gatlin Smeijers

On April 26, 2012 the Supreme Court of Canada refused leave to appeal from the dismissal of Ellen Smith's environmental class action concerning Inco's refinery formerly located in Port Colborne. The refusal marks the end of a long and complex legal battle that has served as a test case for environmental class actions in Ontario.

In brief, the class action sought to recover property devaluation damages arising from nickel contamination, caused by Inco, on residential properties surrounding the refinery. At trial, Justice Henderson of the Ontario Superior Court found Inco liable in nuisance and strict liability for $36 million.

On appeal, the residential property owners' claims were unanimously dismissed. The Ontario Court of Appeal, in reversing the large award, found that the plaintiffs had failed to prove that their properties were in fact devalued as a result of the nickel contamination. Additionally and more importantly, the court concluded that the tort of private nuisance and the doctrine of strict liability did not apply in the circumstances. The key points of the Court of Appeal decision in this regard are as follows:

• In order for liability in nuisance to arise as a result of environmental contamination, something more than a "mere chemical alteration in the content of soil" is necessary. To constitute physical harm, a change in chemical composition must have a detrimental effect on the land itself or the rights associated with the use of land. In the residential context, such detrimental effects include negative health effects, but property devaluation due to a perceived risk of negative health effects is not sufficient to establish liability in nuisance.
• The strict liability doctrine founded in the English case of Rylands v. Fletcher is not limited to single isolated escapes of substances. However, the doctrine does not apply to emissions into the natural environmental that are the intended consequence of an activity that is approved and carried out in accordance with all rules and regulations. Strict liability, in the environmental context, is limited to "mishaps" that occur in the course of the conduct of an unnatural or unusual activity.
• Strict liability does not apply unless the defendant has made an unnatural use of its land. The act of bringing a foreign substance onto the land does not alone constitute an unnatural use. In order to establish strict liability, the plaintiff must show that the defendant's use of the land was "not an ordinary or usual use" in light of "the degree of dangerousness posed by the activity and the circumstances surrounding the activity". While compliance with environmental and zoning laws is not determinative, it is "an important consideration" which in this case weighed favourably for Inco.
• In Canadian law, there is no tort of strict liability for extra-hazardous activities. Imposing strict liability for certain inherently dangerous activities is a task that should be left to the legislature. The harm caused by dangerous activities is currently addressed through the tort of negligence and its ever flexible standard of care.

The Court of Appeal decision, as whole, represents the increasing importance of regulatory standards and approvals in the private law of liability for environmental contamination. In placing limits on the breadth of the individual elements of nuisance and strict liability, the scope of these recovery mechanisms has been significantly narrowed. How these torts will be treated in future cases, particularly those involving regulated activities and lacking significant human health risks, remains to be seen. However, for the time being, the Court of Appeal decision has provided defendants with ample arguments, in many common circumstances, against claims grounded in nuisance and strict liability.

KPIA, RIP

By: Ian Richler

The budget implementation bill, which was tabled on April 26, 2012 and is currently in the committee stage in the House of Commons, will make a number of significant changes to federal environmental legislation. Much of the commentary about the bill has focused on the complete overhaul of the environmental assessment regime (described in our last issue). Somewhat overlooked is a provision buried towards the end of the lengthy bill: the repeal of the Kyoto Protocol Implementation Act (KPIA).

The repeal of the KPIA hardly comes as a surprise. After all, Canada gave formal notice of its withdrawal from the Kyoto Protocol last December (the withdrawal takes effect one year later). Even before the withdrawal notification, Canada had announced that it would not meet its greenhouse gas reduction targets under the protocol. The KPIA had therefore become somewhat of an anachronism.

The KPIA started out in 2007 as a private member's bill, sponsored by an opposition MP and passed despite the objections of the (then minority) government. These unusual beginnings help explain why the KPIA's time on the statute books was both tumultuous and short.

The KPIA requires the government to prepare an annual Climate Change Plan describing the measures to be taken to ensure that Canada meets its obligations under the protocol. It also tasks the National Round Table on the Environment and the Economy (NRTEE) – an independent advisory body established by Parliament – with preparing a response to each Climate Charge Plan. (Incidentally, the NRTEE will suffer the same fate under the budget bill as the KPIA: elimination.)

Every year since the KPIA was passed, the government has duly prepared a Climate Change Plan, and every year the NRTEE has reviewed it. But the government stated plainly that these plans would not actually achieve Canada's emissions targets under the protocol.

In short, as a result of the KPIA, the government found itself in the awkward position of having to prepare plans to achieve targets it had renounced as unachievable. The government's solution was to prepare the plans, but to concede openly that they would not really bring Canada into compliance with the protocol.

An environmental group, Friends of the Earth, took the government to court, arguing that the failure to take the Kyoto targets seriously amounted to a breach of the KPIA. The Federal Court disagreed, concluding that "the Court has no role to play reviewing the reasonableness of the government's response to Canada's Kyoto commitments".²² The Federal Court of Appeal upheld the lower court's decision that the government's approach was a political question, not a legal one, and the Supreme Court of Canada refused to hear a further appeal.

When the Conservatives won a majority in the 2011 election, it seemed like only a matter of time before they would repeal the KPIA, and thereby cancel the rather odd annual ritual of unveiling a Kyoto "implementation" plan that was not designed to implement Kyoto. Now, with the budget bill, they have done so.

What is the moral of this strange story? It is hard to say, but it probably tells us more about political gamesmanship in a minority Parliament than about anything else. The KPIA never really had any practical impact on industrial emitters in Canada or other stakeholders. Ultimately the repeal of the KPIA may signify no more than that the law has finally caught up with the reality that the Kyoto Protocol has no bearing on Canadian climate change policy.

INTRODUCING THE METAL DEALERS AND RECYCLERS ACT (B.C.)

By: Shane Hopkins-Utter

The Metal Dealers and Recyclers Act, SBC 2011, c. 22 will be brought into force on July 23, 2012. The Ministry of Justice has posted an explanation of the act online, "Overview of the Metal Dealers and Recyclers Act" which explains that the Act is intended to deter metal theft. The Act regulates items substantially made of non-ferrous metal such as aluminum, copper, including brass and bronze, lead, magnesium, nickel, and zinc. Further items or classes of items prescribed in the regulations are:

1. metal traffic control lights, signals and signs;
2. street lighting poles, wiring and fixtures;
3. sewer grates and manhole covers;
4. metal guardrails and handrails;
5. metal grave markers, funeral vases, memorial plaques and monuments;
6. new scrap metal from a construction site or a manufacturing process.

The meaning of "regulated metals" does not include used metal cans or containers for food, beverages or paint, metal domestic or household products normally recycled to avoid waste, or items or classes of items excluded by regulation.

The Act requires metal dealers and recyclers who purchase regulated metal to register with the Province, record information about the seller and a description of the regulated metal, and provide a summary report of the purchase to police on the same day of the sale. Metal dealers and recyclers of regulated metal will be required to register with the province no later than January 23, 2013. Cash transactions are limited to $50 when purchasing regulated metal, and any greater amount must be paid by cheque. As well, a person will be unable to sell regulated metal unless they provide their driver's licence or BC Identification Card to the dealer or recycler and explain the origin of the metal.

Metal dealers and recyclers who have commercial accounts to regularly purchase regulated metal from a business will not have to record information for these purchases. However, they must establish an account with each commercial entity for the purpose of purchasing regulated metal on an ongoing basis, keep a current list of all these commercial entities, and create and maintain a record of specified information for each commercial entity including its full name and business address, Excise Tax Act (Canada) registration number, and dates, total value and descriptions of each transaction. Metal dealers and recyclers cannot have commercial accounts with mobile metal dealers or recyclers.

Mobile metal dealers and recyclers who conduct their businesses from a motor vehicle and do not have a physical business location are not required to register under the Metal Dealers and Recyclers Act and are not required to collect information when purchasing or collecting regulated metal. However, mobile metal dealers and recyclers are required to sell their regulated metal to a registered metal dealer or recycler. Registered metal dealer or recycler must record all required information and must provide a report to the police.

If a metal dealer or recycler or any of its employees has reasonable grounds to believe that regulated metal in the possession of the metal dealer or recycler is stolen property, the metal dealer or recycler or the employee, as applicable, must immediately inform the local police authority of the fact. Police may obtain a court order to access the information the dealer or recycler collected about the purchase if the dealer's or recycler's report matches a description of reported stolen property.

The Metal Dealers and Recyclers Act also provides inspectors with powers to enter and inspect the premises of a metal dealer or recycler, inspect, audit or examine any record, goods or other thing in the premises, demand that a document or any other thing be produced for inspection, and remove a record or any other thing for review and copying or that may be required as evidence from the premises. Inspectors may also question a person. However, inspectors may not enter dwelling places except with the consent of the occupant or a warrant. It is an offence to obstruct, impede or refuse to admit an inspector who is exercising powers or performing duties under the Act or a warrant issued under, or for the purposes of enforcing, the Act.

The Metal Dealers and Recyclers Act makes it an offence to sell or purchase regulated metal except as provided for in the Act. Generally, offences also include the failure of a metal dealer or recycler to:

• assign a customer code to each transaction;
• record required transaction information;
• provide a report to police for each transaction within the prescribed period of time;
• keep transaction records;
• carry on business as a metal dealer or recycler without registering under the Act.

It is also an offence to provide false or misleading information when providing information required or authorized by the Act, when applying for registration under this Act, or when requested, ordered or directed by the registrar or an inspector to provide information, unless that person exercised due diligence and could not have known that information was false or misleading. Employees, officers, directors or agents of a business entity who authorized, permitted or acquiesced in the commission of offence by the entity also commit an offence whether or not the business entity is prosecuted for the offence.

On conviction for an offence, individuals are liable to a fine of not more than $10 000 or imprisonment for not longer than 6 months, or both, whereas business entities convicted of an offence are liable to a fine of not more than $100 000.

Administrative penalties may be imposed up to 2 years after a contravention of the Act, in the amount of not more than $5 000 for individuals, and not more than $50,000 for business entities. A person against whom a penalty is imposed is entitled to request a reconsideration of the penalty. If the administrative penalty is not paid within 30 days of a notice, it constitutes a debt and may be filed in court and collected upon as a judgment.

The Metal Dealers and Recyclers Act also takes precedence over municipal bylaws governing the sale of regulated metal, meaning some bylaws may no longer be applicable. The BC Ministry of Justice recommends that dealers and recyclers check with their local municipalities to confirm if provisions of the bylaws are still applicable.

To read the text of the Metal Dealers and Recyclers Act, go to: http://www.leg.bc.ca/39th4th/3rd_read/gov13-3.htm

For further information, see the Ministry of Justice, Metal Recycling: Rules and Requirements, available at: http://www.pssg.gov.bc.ca/metalrecycling

Footnotes

1. R.S.A. 2000, c. M-17, s. 15.1; the Surface Rights Act, R.S.A. 2000, c. S-24 continues to apply to protect surface owners' rights.

2. Carbon Sequestration Tenure Regulation, Alta Reg 68/2011, s. 3.

3. Supra note 1, ss. 15.1(3) and 115(1).

4. Supra note 2, s. 9.

5. Supra note 1, ss. 15.1(3) and 116(1).

6. Ibid., s. 116(2).

7. Ibid., s. 116(3).

8. Ibid., s. 120.

9. Ibid., s. 121.

10. Supra note 2, s. 20. Fee to be set by Minister and still undetermined.

11. Supra note 1, ss. 116(3)(g) and 122(3).

12. Ibid., s. 122(2).

13. Supra, note 2, ss. 1(c) and 1(i).

14. Ibid. ss. 3, 4, 9, and 10.

15. Ibid. ss. 5 and 12.

16. Ibid. ss. 6 and 13; annual rental rate prescribed in Mines and Minerals Administration Regulation, Alta Reg 262/1997, s. 20(3.1).

17. Ibid., ss. 15, 16, and 17.

18. Ibid., ss. 18 and 19.

19. Supra note 1, s. 120(3)(f).

20. Ibid, s. 120(3)(a).

21. Ibid, ss. 121(3) and 124(j).

22. Friends of the Earth v. Canada (Governor in Council), 2008 FC 1183.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.