The appeal by the Minister of Environment and Environmental Appeal Board from Sarg Oils’ successful application for judicial review of a decision of the Environmental Appeal Board was allowed where the Court found that the Board’s reasons did not disclose any reviewable error

Administrative law – Environmental issues – Oil wells – Decisions of administrative tribunals – Environmental Appeal Board – Contaminated sites – remediation – Judicial review – Natural justice – Compliance with legislation – Standard of review – Patent unreasonableness

Sarg Oils Ltd. v. (Alberta) Environmental Appeal Board, [2007] A.J. No. 960, Alberta Court of Appeal, June 29, 2007, P.T. Costigan, J. Watson JJ.A. and D.A. Sirrs J.

In 1985, Sarg Oil (“Sarg”) purchased 16 oil wells that were near the end of their productive lives. It sold the wells to another company without obtaining regulatory approval. As a result, Sarg remained the Licensee of Record for the wells even though it divested itself of ownership in them. In October 1991, Sarg was ordered to abandon the wells by the end of May 1992. When this was not done, the Regulators did the abandonment work and sued Sarg for the costs. In September of 1994, 16 Environmental Protection Orders were issued against Sarg to properly clean-up the sites. The Board, in 1995, upheld the Orders. The decision was set aside on judicial review and the Board was ordered to conduct a new Hearing. The Hearing was held and in December 1996, the Board recommended that the Orders be upheld because Sarg remained the Licensee of Record. Sarg’s Judicial Review Application was allowed and the matter was referred back to the Board for a new Hearing. The chambers judge had found that Sarg did everything possible to divest itself of all of its interest in the well sites. Sarg did not clean up the sites because it believed that the sale was completed. The chambers judge further found that the Board breached the rules of natural justice because it failed to make adequate inquiries into Sarg’s designation as Licensee. The Board appealed this decision.

The Alberta Court of Appeal allowed the Board’s appeal, finding that the Board’s reasons did not disclose any reviewable error. The Court noted that the Board had concluded that Sarg had not been diligent in closing the sale transaction and monitoring the transfer of the licenses. There was evidence to support the Board’s conclusion and its decision could not be said to be irrational or patently unreasonable. It was not patently unreasonable for the Board to conclude that Sarg was responsible for clean-up of the well sites, even if there might have been others who were concurrently responsible. The Court of Appeal found that the chambers judge erroneously reviewed the decision on its merits for correctness instead of determining whether or not there was a reviewable error. In the result, the Board’s appeal was allowed and Sarg’s application for judicial review of the Board’s decision was dismissed.

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