Environmental Appeal Board

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1 Environmental Appeal Board Fourth Floor 747 Fort Street Victoria British Columbia Telephone: (250) Facsimile: (250) Mailing Address: PO Box 9425 Stn Prov Govt Victoria BC V8W 9V1 DECISION NO EMA-017(a) In the matter of an appeal under section 100 of the Environmental Management Act, S.B.C. 2003, c. 53. BETWEEN: Fiesta Greenhouses Ltd. APPELLANT AND: Director, Environmental Management Act RESPONDENT BEFORE: A Panel of the Environmental Appeal Board Alan Andison, Chair DATE: November 23, 2010 PLACE: APPEARING: Campbell River, BC For the Appellant: Chuck Easton For the Respondent: Dennis Doyle, Counsel APPEAL [1] Fiesta Greenhouses Ltd. (the Appellant ) appeals the September 16, 2008 decision of Jim Standen, Director of Waste Management, Ministry of Environment (the Ministry ), refusing to issue an approval to the Appellant. The Appellant applied for an approval authorizing it to discharge air emissions from its greenhouse operation located in Campbell River, BC. The emissions are produced by coal-fired boilers that heat the greenhouses. [2] The Environmental Appeal Board has the authority to hear this appeal under section 100(1) of the Environmental Management Act (the Act ), which provides that a person aggrieved by a decision of a director or a district director may appeal the decision to the Board. Section 103 of the Act gives the Board the power to confirm, reverse or vary the decision being appealed, send the matter back to the person who made the decision with directions, or make any decision the person whose decision is appealed could have made and that the Board considers appropriate in the circumstances. [3] The Appellant asks the Board to order the issuance of an approval authorizing the Appellant to continue burning coal to heat its greenhouses. BACKGROUND [4] The Appellant grows sweet bell peppers, cucumbers, and tomatoes, along with other fresh vegetables and herbs, in its greenhouses. It currently has 1.5 acres under production. The Appellant sells its fresh produce to grocery stores in

2 DECISION NO EMA-017(a) Page 2 Campbell River and Courtenay, to distributors elsewhere on Vancouver Island and the Lower Mainland, and at the Comox Valley Farmer s Market. [5] The Appellant heats its greenhouses to support plant growth from approximately early February until the end of October. During the Fall, the greenhouse boilers are on at night, and by October the boilers are on full time. From November to February, the boilers are operated at a low temperature to prevent pipes from freezing. The boilers are brought back into full operation in February when new plant crops are started. [6] The Appellant started operations in Initially, the Appellant heated its greenhouses using natural gas, but a rise in natural gas prices caused the Appellant to switch to coal in September The Appellant uses coal that is mined from the Quinsam Coal Mine located 28 kilometres west of Campbell River. The greenhouses are heated by two coal-fired boilers. Augers feed fuel into the boilers. The emissions stack on one boiler has a cyclone that reduces particulate emissions, and the other has an economizer that removes particulate emissions and recovers heat waste. [7] On March 2, 2007, the Ministry sent a letter to the Appellant advising that the Ministry had received information that the Appellant was using coal-fired boilers to heat it greenhouses, and that greenhouse operations are prohibited from discharging waste to the air unless authorized by a permit or other provision of the Act. The letter advised the Appellant to cease any unauthorized discharges from its operations. The letter also advised the Appellant that it could seek authorization for the discharge. [8] In April 2007, the Ministry approved a policy regarding applications by greenhouse operations for authorization to continue burning coal. The stated purposes of the policy were to provide a limited time period for greenhouse operations currently burning coal to transition from coal to non-coal fuel sources and to minimize, to the greatest extent possible, the emission of harmful substances resulting from coal burning to heat greenhouses. The policy directs Ministry decision-makers to only consider a time-limited approval under section 15 of the [Act] for a period of up to 15 months when considering an application from a greenhouse operation to burn coal. [9] In February 2008, the Appellant applied to the Ministry for an approval to burn coal as a fuel to heat its greenhouses. [10] On September 16, 2008, the Director denied the Appellant s application for an approval to burn coal. His decision states, in part, as follows: In adjudicating your application, it was considered that the use of coal as a fuel as described in your proposal can be expected to produce harmful emissions, such as particulates, metals (e.g. mercury) and sulphur compounds that are damaging to human health and the environment. In your application, there is no evidence that your proposed control methods would be effective in protecting the environment from the expected byproducts of combusting coal. Due to the potential impacts from greenhouse boiler emissions, it is the intention of the Ministry of Environment to put into place more stringent air

3 DECISION NO EMA-017(a) Page 3 emissions standards for agricultural operations and to not allow the use of coal as a fuel source for greenhouses. Estimates of the expected emissions from your operation exceed even the current Agricultural Waste Control Regulation particulate standards of 180 mg per cubic metre for wood fired boilers. [11] On October 15, 2008, the Appellant filed an appeal with the Board. The Notice of Appeal identifies numerous grounds for appeal, which have been summarized as follows: none of the available alternative fuels are cost-effective to heat the Appellant s greenhouses; the Appellant cannot afford to renovate its boilers to accommodate wood pellets, which are also more costly than coal and involve higher transportation costs; the Appellant has installed a scrubber and cyclone on the boilers to reduce emissions and remove particulates, and the Appellant has never received a complaint regarding coal burning; the Appellant provides local employment, and there is increasing demand for the Appellant s produce. [12] On December 9, 2008, the Agricultural Waste Control Regulation (the Regulation ) under the Act was amended. As a result, only approved fuels can be used as fuels for boilers or heaters in agricultural operations. The Regulation contains the Code of Agricultural Practice for Waste Management (the Code ), and section 18 of the Code specifies the fuels that may be used in boilers or heaters for agricultural operations. Coal is not one of the fuels listed in section 18. [13] By a February 10, 2009 letter to the parties, the Board confirmed that the appeal was scheduled to be heard on October 20 and 21, [14] By a letter dated September 25, 2009, the Appellant advised the Board that it had retained legal counsel, and its legal counsel requested an adjournment of the October 2009 hearing. The Board granted the adjournment and rescheduled the hearing to March 18 and 19, [15] By a letter dated February 23, 2010, the Appellant s legal counsel requested a three-month adjournment of the March 2010 hearing, because the Appellant wanted more time to investigate innovative fuel sources. Counsel for the Director agreed to the request for an adjournment, and the Board granted the adjournment. [16] By a letter dated March 4, 2010, the Appellant advised that it was no longer represented by legal counsel. [17] By a letter dated June 18, 2010, the Appellant advised that it was ready to proceed with the appeal hearing, and the Board set the matter down for a hearing in November [18] The Appellant submits that the appeal should be allowed. In addition to the grounds set out in its Notice of Appeal, the Appellant submits that it has investigated four alternative fuels for its boilers, and there is no locally available alternative fuel that meets the Appellant s needs. However, the Appellant proposes

4 DECISION NO EMA-017(a) Page 4 to introduce wood-based fuels during periods of low heat demand, and will continue to explore alternative fuels as they become available. [19] The Director submits that coal is not an approved fuel for agricultural operations under the Code contained in the Regulation, and that the Board should confirm the refusal to grant the approval. ISSUE [20] The only issue to be determined is whether an approval should be issued to the Appellant in the circumstances of this case. RELEVANT LEGISLATION [21] The following sections of the Act are relevant to this appeal. Permits 14 (1) A director may issue a permit authorizing the introduction of waste into the environment subject to requirements for the protection of the environment that the director considers advisable and, without limiting that power, may do one or more of the following in the permit (3) Despite subsection (1), a director may not issue or, subject to subsection (4), amend, a permit authorizing the introduction of waste into the environment if the introduction is governed by (a) a code of practice that is established in the regulations in relation to the industry, trade or business that applies for the permit or amendment, (b) a code of practice that is established in the regulations in relation to the activity or operation in respect of which the permit or amendment is applied for, or (c) a regulation, unless the regulation requires that a permit be obtained in relation to the discharge of the industry, trade, or business, activity or operation. Approvals 15 (1) A director may approve the introduction of waste into the environment for a period of up to 15 months without issuing a permit. (2) A director may issue his or her approval subject to requirements for the protection of the environment that the director considers advisable and, without restricting that power, may include as a requirement anything referred to in section 14(1). [22] The following sections of the Regulation are relevant to this appeal.

5 DECISION NO EMA-017(a) Page 5 Interpretation 1 In this regulation: agricultural operation means any agricultural operation or activity carried out on a farm including (a) an operation or activity devoted to the production or keeping of livestock, poultry, farmed game, fur bearing animals, crops, grain, vegetables, milk, eggs, honey, mushrooms, horticultural products, tree fruits, berries, and (b) the operation of machinery and equipment for agricultural waste management or application of fertilizers and soil conditioners; Code means the Code of Agricultural Practice for Waste Management April 1, 1992 attached to this regulation. Interpretation 2 (1) In this Code: Code of Agricultural Practice for Waste Management, April 1, 1992 low-sulphur fuel means (a) No. 2 heating oil, or (b) diesel fuel for use in Canada in on-road vehicles; Restrictions relating to types of boiler and heater fuel 18 Only the following fuels may be used in an agricultural operation as fuel for a boiler or heater: (a) biomass; (b) natural gas; (c) propane; (d) low-sulphur fuel;

6 DECISION NO EMA-017(a) Page 6 (e) biogas; (f) landfill gas. DISCUSSION AND ANALYSIS Whether an approval should be issued to the Appellant in the circumstances of this case. The Parties submissions [23] The Appellant submits that the alternate fuels that are currently available to it are not economically viable. The Appellant also submits that it must compete with produce from Mexico, California and Florida, and those areas benefit from lower heating and labour costs which are offset to some extent by transportation costs to the BC market. The Appellant submits that its competitive edge is the quality of its produce and its proximity to local markets. It submits that the price of peppers declined from $26.00 per five kilogram case in 2000 to $19.00 per five kilogram case in [24] The Appellant submits that the price of coal in October 2010 was $3.98 per gigajoule, plus carbon tax and delivery costs. Assuming that the Appellant used tonnes of coal in 2010 (the same amount used in 2009), the Appellant estimates that it cost just under $59,000 to heat its entire greenhouse area with coal in The Appellant explored the possibility of using several alternative fuels to heat its greenhouses, but the Appellant submits that the alternatives are all more expensive than coal and some are unavailable in sufficient quantity or are incompatible with the Appellant s boilers without costly modifications to the augers. [25] For example, the Appellant submits that the price of natural gas increased from $6.98 per gigajoule in 2000 to $16.94 per gigajoule in October Based on the 2010 price, the Appellant estimates that it would cost over $250,000 to heat its entire greenhouse area with natural gas for the year. [26] The Appellant also considered wood pellets as an alternate fuel. Wood pellets cost $11.85 per gigajoule in October 2010 and must be transported from Princeton. The Appellant estimates that it would cost over $140,000 to heat its entire greenhouse area with wood pellets for a year based on the October 2010 price. [27] In addition, the Appellant explored the possibility of using wood briquettes, bricks, pucks or chips, but the suppliers of those products do not have a steady supply of wood fibre, and the products that were tested in the Appellant s boilers were too big and caused binding and slow feeding in the auger due to friction. [28] Max and Karen Grober gave evidence on behalf of the Appellant. They are the Appellant s owners and primary operators. They described the greenhouse operation, the heating requirements for their crops, the emission control equipment installed on their boiler stacks, the competitive market for their products, and the difficulties they encountered when trying to find a viable alternative to coal. They also described their communications with the Ministry over the issue of burning coal, and the process of trying to obtain an approval.

7 DECISION NO EMA-017(a) Page 7 [29] In addition, Mr. Grober explained that the Ministry has never asked the Appellant to sample or test the emissions from the boiler stacks. However, the Appellant provided copies of a 2004 report from the manufacturer of the Appellant s boilers which describes the results of emissions testing done by the manufacturer using three types of coal, including the type of coal used by the Appellant. The results from the average of three stack tests conducted with that coal, without an emissions scrubber (the Appellant s stacks do not have scrubbers), show sulphur dioxide levels in excess of 300 mg per cubic metre, and total particulate levels of 189 mg per cubic metre. [30] Chuck Easton also testified in support of the Appellant. Mr. Easton is a retired engineer. He submitted that the greenhouse gas emissions from the Appellant s boilers would be comparable to those of burning natural gas if the Appellant was authorized to burn 60% coal and 40% wood fuels. He acknowledged that the Appellant needs to install additional equipment to meet the current emissions standards for boilers used in agricultural operations. [31] The Director submits that the Appellant s application for an approval was rejected for several reasons, including the expectation that burning coal produces harmful emissions. Although the Regulation had not yet been amended, the Director considered the Ministry s policy at that time, which was to create more stringent air emissions standards for agricultural operations and to phase out the use of coal as a fuel for greenhouse heaters. [32] The Director pointed out that, a few months after his decision was issued, the Regulation was amended, and consequently coal is no longer an approved fuel for boilers or heaters in agricultural operations. The Director submits that section 14(3) of the Act prohibits the issuance of a permit to authorize the burning of coal, because such a permit would be contrary to the Code and the Regulation. He further submits that, although section 14(3) does not expressly apply to approvals, which are issued under section 15 of the Act, the Act s provisions regarding approvals should be applied in the same manner as the provisions that apply to permits when considering applications that authorize the discharge of air emissions. [33] In addition, the Director submits that the burning of coal produces substances that are harmful to the environment and human health, and the Appellant had adequate time since the Director s decision to develop an alternate fuel source to heat its greenhouses. [34] In support of those submissions, Mr. Standen testified about the regulatory scheme that applies to waste emissions from agricultural operations, and the fuel types that are allowed for heaters and boilers in agricultural operations under section 18 of the Code. He pointed out that the maximum limit for particulate emissions from agricultural boilers and heaters fuelled by biomass was 180 mg per cubic metre as of December 9, 2008, and was reduced to 120 mg per cubic metre as of May 1, 2009, as stated in section 18.1 of the Code. He testified that the particulate emissions from the Appellant s boilers are estimated to be 190 mg per cubic metre, based on the general information provided by the Appellant. He acknowledged that some pulp mills and cement kilns in BC use coal as a fuel, but he submitted that they are not agricultural operations, and therefore, they are not regulated by the Code and the Regulation.

8 DECISION NO EMA-017(a) Page 8 The Panel s findings [35] The Panel finds that the Appellant s greenhouse operation involves the production of vegetables and is an agricultural operation as defined in the Regulation. It defines an agricultural operation as any agricultural operation or activity carried out on a farm including an operation or activity devoted to the production or keeping of crops, vegetables, horticultural products. [36] Section 18 of the Code in the Regulation clearly excludes coal from the list of authorized fuels for agricultural operations. The only authorized fuels for agricultural operations are: biomass, natural gas, propane, low-sulphur fuel, biogas, landfill gas. For added certainty, low-sulphur fuel is defined in the Code and it does not include coal. [37] When section 14(3) of the Act is read together with section 18 of the Code, they clearly prohibit the issuance of a permit authorizing the use of coal as fuel for a boiler or heater in an agricultural operation. As an agricultural operation, the Appellant s greenhouse operation is, therefore, subject to the Regulation and the Code. [38] However, the Appellant applied for an approval, not a permit. Although the Respondent suggests that the same prohibitions against burning coal that apply to permits should also apply to approvals, there is no indication in the Act that this was the intent. In fact, the Panel finds there are reasons to believe that this was not the legislative intent. [39] First, the Legislature could have included similar provisions in section 15, dealing with approvals, as it did in section 14(3), which deals with permits. Alternatively, it could have simply adopted the restrictions set out in section 14(3) as it did for the requirements of 14(1). Regarding the latter, section 15(2) states that, when issuing an approval, the director may include as a requirement anything referred to in section 14(1) of the permitting section. [40] In addition, the Panel finds that there are policy reasons for not applying the same restrictions or prohibitions to the issuance of approvals as are applied to permits. Approvals are time limited: an approval is valid for a maximum of 15 months. In contrast, there are no similar statutory time limits placed on permits. [41] In the Panel s view, this difference provides the regulator with additional tools or flexibility. There will always be situations where a government decisionmaker is faced with a situation where it is not reasonable to allow something to occur for the long term, but it is perfectly appropriate to allow it in the short term. For appropriate cases, a short term approval, with terms and conditions to protect the environment, will allow for transitions to take place (when the legislation itself does not provide for such transitions), or to allow the testing of new products or technologies that would otherwise not meet the current regulatory standards. [42] The Panel finds that, based on these considerations, the prohibitions relating to permits in section 14(3) specifically, the application of the Code - do not apply to approvals under section 15. [43] Considering the Appellant s application for an approval and the evidence presented, the Panel accepts that the particulate emissions from its operation (approximately 190 mg per cubic metre) are 10 mg per cubic metre higher than the

9 DECISION NO EMA-017(a) Page 9 old maximum limit of 180 mg per cubic metre, and are currently 70 mg per cubic metre higher than the new maximum of 120 mg per cubic metre set out in section 18.1 of the Code. Given the importance of air quality on health and the environment, the Panel agrees that it is important to reduce particulate emissions. [44] However, when considering the overall environment, the Panel also accepts the evidence that the Appellant obtains its coal from a local supplier, that it is a relatively small operation, and that it sells its produce to local markets, all of which help to reduce the impact to the environment in terms of greenhouse gas emissions. Although this is not a specific consideration identified in the Act, in terms of considering this application, the Panel is of the view that it is relevant. [45] Mr. and Mrs. Grober are clearly hardworking, honest people and the Panel found them to be credible witnesses. The Panel accepts that they have been and will continue to look for an alternative fuel for their greenhouses, one that would also be financially viable. This may or may not ultimately be possible. However, given the nature of this operation, the lack of public complaint, and the offsetting of environmental factors, the Panel is of the view that this is an appropriate case to issue an approval as an interim measure as is contemplated by the Act and the Ministry policy authorizing green house operations to burn coal. [46] Accordingly, the Panel finds that pursuant to s. 15 of the Act, an approval should be issued for 15 months from the date of this decision by the Board. It is unfortunate that the permitting legislation does not provide for any decision-making discretion with respect to coal as a fuel, in particular, the ability to evaluate the use of coal at a particular facility, but that is a policy decision of the government and the Board has no jurisdiction to change it. As a result, the Appellant must understand that, given the current legislative scheme, the Respondent has no ability to issue a long term permit to authorize the use of coal at their facility. Time is therefore of the essence for the Appellant to find an alternative fuel. DECISION [47] In making this decision, the Panel has considered all of the evidence and submissions before it, whether or not specifically reiterated herein. [48] For all these reasons, the Panel sends this matter back to the Director with the direction that an Approval be issued to the Appellant to continue burning coal at its greenhouse facility and that the Approval shall be effective immediately with an expiry date of May 3, [49] Accordingly, the appeal is allowed. Alan Andison Alan Andison, Chair Environmental Appeal Board February 3, 2011