Executive Summary: Key Legal and Evidentiary Issues

• Fort Industrial sought permission to appeal two Alberta Energy Regulator (AER) decisions that refused a regulatory appeal and a reconsideration of an April 2019 pipeline licence amendment, which had been approved without the mandatory notice to affected landowners.
   
• Chemtrade's preliminary objection that the permission application on the first AER decision was out of time failed. Waiting for the second, closely related decision before applying was appropriate.
   
• Permission to appeal under section 45(1) of the Responsible Energy Development Act turns on four factors: general importance, significance to the decision, arguable merit, and whether the appeal will delay any underlying proceeding.
   
• The court rejected Chemtrade's description of the decisions as narrow discretionary rulings, finding that neither decision addressed the consequences of Chemtrade's confirmed non-compliance with notice requirements.
   
• Procedural fairness and natural justice concerns were held to be questions of law important enough to justify an appeal.
   
• City of Fort Saskatchewan was refused intervenor status at the permission stage because there were no exceptional circumstances, but it was permitted to intervene in the appeal itself.
   

Facts of the case

Fort Industrial Estates Ltd., Heartland Center I Ltd., and Heartland Center II Ltd. (collectively, Fort Industrial) own lands and commercial buildings within the city limits of Fort Saskatchewan. The properties lie within 500 metres of a chemical manufacturing plant and pipeline owned and operated by Chemtrade Logistics Inc. The pipeline is also within the city limits.

Before April 2019, the pipeline was designated "undefined" under the Alberta Energy Regulator's (AER) Directive 056: Energy Development Applications and Schedules (Directive 056). Under that designation, it had no setback requirements beyond its right-of-way. Chemtrade applied in November 2018 to amend its pipeline licence, and the AER approved the amendment in April 2019. The amendment redesignated the pipeline as "Level 4," reclassified its contents from miscellaneous gases to hydrogen sulfide or sour gas, and increased the licensed hydrogen sulfide content. These changes significantly increased the setback on neighbouring lands, including Fort Industrial's, to 1.5 kilometres.

Directive 056 required notice to and consultation with Fort Industrial and the City of Fort Saskatchewan. Neither was notified or consulted. Chemtrade's application nonetheless incorrectly stated that the notice requirements had been met. No hearing was held. Fort Industrial was unaware of the amendment, the increased setback, and the potential effect on the continuing planned development of its lands.

According to Fort Industrial, its planner first became aware of a potential 500-metre setback in June 2022. By spring 2023, it had learned about Chemtrade's application and the April 2019 decision. Around the same time, Chemtrade opposed Fort Industrial's development plans, relying on the increased setback. On July 7, 2023, Fort Industrial asked the AER for a regulatory appeal and reconsideration of the April 2019 decision. A compliance audit followed and confirmed that Chemtrade had not complied with Directive 056's participant involvement requirements.

On February 2, 2024, the AER issued Chemtrade a notice of noncompliance. The notice also identified inaccuracies in the release volume and level designation: the licence should have shown the pipeline as Level 2 with a 500-metre setback, not Level 4 with a 1.5-kilometre setback. Rather than suspend the licence and hold a hearing, the AER directed Chemtrade to file an amendment application correcting those errors. Chemtrade filed it on March 18, 2024. Fort Industrial and Fort Saskatchewan both filed statements of concern in the new proceeding. The AER found that no hearing was required, because the change from Level 4 to Level 2 meant Fort Industrial and other landowners were not adversely affected, and it approved the amendment.

The AER then dismissed the regulatory appeal on June 26, 2024, because it was filed outside the 30-day appeal period, which had expired in 2019. On August 2, 2024, it denied reconsideration. It held that the regulatory appeal mechanisms are available to industry and the public, and it found no compelling reason to reconsider the April 2019 decision.

Policy and legislative provisions at issue

The dispute turns on statutory and regulatory provisions rather than contractual or policy terms. Under the Responsible Energy Development Act, SA 2012, c R-17.3, section 38 provides for regulatory appeals, section 42 governs reconsideration, and section 36 defines an "appealable decision." Section 45(1) permits an appeal to the Court of Appeal on a question of jurisdiction or law, with the permission of a judge. Section 45 and the associated regulations set a one-month time limit for seeking that permission. Directive 056 imposes mandatory notice and consultation requirements. Fort Industrial also relied on the notice requirements in the Pipeline Act Rules of Practice, Alta Reg 125/2023. On intervention, Rules 14.37(2)(e) and 14.58(1) of the Alberta Rules of Court, Alta Reg 124/2010, allow a single justice to grant permission to intervene and impose conditions.

Reasoning and analysis

Chemtrade argued, as a preliminary matter, that the permission application on the first AER decision was itself filed out of time. Justice Jo'Anne Strekaf disagreed. The application, which challenged both decisions, was filed on August 30, 2024, within one month of the second decision. Relying on Fort McKay First Nation v Alberta Energy Regulator, 2013 ABCA 355, she noted that where the AER issues several interlocutory decisions, the preferable course is to wait for the final decision and appeal the ultimate result. That reasoning applied here: the two decisions were closely related, considered relief sought in the alternative, and were issued within five weeks of each other.

Fort Saskatchewan's request to intervene at the permission stage was refused. Such intervention is rarely granted, and only in exceptional circumstances (R v NMP, 2000 SCC 59; Provident Energy Ltd v Alberta (Utilities Commission), 2008 ABCA 316). The court found no such circumstances here.

On the permission application itself, the court weighed four factors: whether the issue is of general importance, whether the point is significant to the decision, whether the appeal has arguable merit, and whether it would delay any underlying proceeding (Bokenfohr v Pembina Pipeline Corporation, 2017 ABCA 40; TransAlta Corporation v Alberta Energy Regulator, 2023 ABCA 172). The overall question is whether there is an issue of law important enough to justify an appeal (Municipal District of Ranchland No 66 v Alberta Energy Regulator, 2024 ABCA 274, citing AltaLink Management Ltd v Alberta (Utilities Commission), 2022 ABCA 18).

Fort Industrial raised three questions. The first was whether the AER correctly interpreted and applied the mandatory notice requirements, and whether it erred in interpreting "appealable decision" under section 36 where mandatory notice was not given. The second was whether the AER erred in jurisdiction by failing to reconsider or reverse the April 2019 decision, or to find it void ab initio, after confirming Chemtrade's noncompliance. The third was whether the AER breached natural justice and procedural fairness by refusing reconsideration and by refusing to direct a hearing, which precluded landowners from participating in the original amendment process. Fort Industrial argued that these issues affect regulatory certainty, the integrity of the AER's processes, and the rights of landowners across Alberta.

Chemtrade instead framed both decisions as narrow and discretionary. On its view, the first decision addressed only whether Fort Industrial had acted expeditiously enough to meet or extend the appeal timelines. The second addressed only whether extraordinary circumstances warranted reconsideration under section 42, which the AER declined because regulatory appeal mechanisms existed.

Justice Strekaf found this characterization unduly narrow. In her view, it did not address the fundamental issue: the alleged failure of the AER to deal meaningfully with the procedural and substantive matters before it. Both decisions stated in their introductions that the audit results had been shared and submissions sought on how those results affected the parties' positions and the regulatory appeal process. Neither decision addressed the substance of those matters.

The regulatory appeal decision dealt only with timing. It found that Fort Industrial had not acted sufficiently expeditiously after first becoming aware of a setback issue in June 2022, and it declined to extend the time to file. Nothing in it showed consideration of the consequences of Chemtrade's noncompliance with Directive 056, the misleading nature of its application, or the resulting inability of affected landowners to participate. The reconsideration decision rested solely on the existence of the regulatory appeal process, which Fort Industrial could not access because it had been found to have missed the statutory deadline. Again, the fairness of the process and the consequences of the audit were left unaddressed.

The court held that the proposed appeal raises issues of general importance to the AER's regulatory practice and to the rights of landowners and others entitled to notice and participation. It also held that the procedural fairness and natural justice issues are questions of law important enough to justify an appeal.

On Fort Saskatchewan's second application, the court applied the test for intervention on an appeal. A proposed intervenor must be affected by the outcome and must show it can offer expertise or a fresh perspective that will help resolve the appeal (PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2020 ABCA 254; Papaschase Indian Band (Descendants of) v Canada (Attorney General), 2005 ABCA 320). Other relevant factors include whether the parties may not fully protect the intervenor's interests and whether intervention would unduly delay the proceedings or prejudice the parties (Pedersen v Alberta, 2008 ABCA 192).

Fort Saskatchewan's evidence described how the reclassification affected its land use planning and its planning and development decisions and approvals. It noted that city roads lie within the setback, yet the city received neither notice nor the required consultation. The court found that the city has a direct interest that differs from Fort Industrial's, and that its interests would not necessarily be protected in its absence. It also found that the intervention would not cause delay or prejudice, or widen the dispute.

Ruling and overall outcome

Fort Industrial was the successful party. It obtained permission to appeal on a single issue framed by the court: whether the AER breached principles of procedural fairness by failing to provide affected landowners with a meaningful opportunity to challenge the April 2019 decision, after confirming that the decision was made without compliance with its mandatory notice requirements. Fort Saskatchewan's application to intervene in the permission application was denied, but it was granted permission to intervene in the appeal proper. No monetary award was ordered, and the decision does not address costs. The applications were heard on June 10, 2026, and the reasons were filed at Calgary on September 23, 2026.