Decision Date: April 14, 2020

Panel: Norman E. Yates

Keywords: Environmental Management Act – s. 115; Mushroom Compost Facilities Regulation – ss. 3(1)(f), 3(4), 4(2)(e), 5(1); Administrative Penalties (Environmental Management Act) Regulation – s. 7; contravention; administrative penalty; compost facility

Delfresh Mushroom Farm Ltd. (“Delfresh”) operates a mushroom compost facility in Abbotsford, British Columbia (the “Compost Facility”). The Compost Facility uses materials such as manure, straw, and hay to produce compost that is used by mushroom farmers. The discharge of waste from mushroom compost facilities is regulated by the Mushroom Compost Facilities Regulation (the “Regulation”) under the Environmental Management Act (the “Act”).

In May 2016, the Ministry of Environment and Climate Change Strategy (the “Ministry”) issued a pollution abatement order (the “2016 Pollution Abatement Order”) to Delfresh. The Ministry found that the Compost Facility was discharging effluent containing levels of bacteria and ammonia nitrogen that exceeded provincial water quality guidelines. The 2016 Pollution Abatement Order ordered Delfresh to cease operations pending submission of a pollution prevention plan to the Ministry. In February 2017, Delfresh submitted a pollution prevention plan (the “Pollution Prevention Plan”), which the Ministry found to be satisfactory.

Ministry officials inspected the Compost Facility in May, August, and November 2018, and in January 2019. During each inspection, the Ministry found that the Compost Facility was not in compliance with certain requirements in the Regulation. After each inspection, the Ministry issued an inspection report advising Delfresh of the non-compliance. In December 2018, the Ministry issued a pollution prevention order to Delfresh. Also, in December 2018, the Ministry advised Delfresh that the matter was being referred for an administrative penalty.

In February 2019, the Director notified Delfresh that she was considering imposing administrative penalties to address the Compost Facility’s contraventions of the Regulation, and she offered Delfresh an opportunity to provide submissions before she made a final decision.

In June 2019, the Director determined that Delfresh had contravened four requirements in the Schedule within the Regulation. The Director imposed administrative penalties totalling $27,400:

• $14,000 for failing to comply with section 3(1)(f) of the Schedule (management of air emissions from contained effluent and brown water);
• $9,000 for failing to comply with sections 3(4)(a) and (b) of the Schedule (straw or hay wetting and dunk tank and storage requirements);
• $1,600 for failing to comply with section 4(2)(e) of the Schedule (submit an engineer’s letter reviewing the facility’s annual production capacity); and
• $2,800 for failing to comply with section 5(1) of the Schedule (provide a security deposit).

Delfresh appealed the Director’s decision. Delfresh acknowledged that the contraventions had occurred, but it asked the Board to rescind or reduce the penalties.

The Director asked the Board to confirm the penalties, and order Delfresh to pay the Director’s costs if the appeal was unsuccessful.

The Board considered the parties’ submissions and evidence, the Director’s rationale for the penalties based on the factors listed in section 7 of the Administrative Penalties (Environmental Management Act) Regulation, and the maximum penalties for each contravention. The Board agreed with most of the Director’s findings in assessing the penalties, with a few exceptions. For example, the Board disagreed with the Director’s finding that some of the contraventions had resulted in an economic benefit to Delfresh. The Board also disagreed with some aspects of the Director’s finding that Delfresh had committed previous contraventions of a similar nature. The Board found that inspection reports and warning letters are not formal records of contraventions, and the pollution prevention order issued in 2018 was not a previous contravention of a similar nature to the contraventions that led to the penalties. Inspection reports and warnings may, however, be considered when assessing whether the contravention was repeated or continuous and whether there was any effort to correct the contravention. The Board reduced the penalties accordingly.

In conclusion, the Board ordered the Director to vary the administrative penalties as follows:

• section 3(1)(f) of the Schedule: $13,500;
• sections 3(4)(a) and (b) of the Schedule: $5,700;
• section 4(2)(e) of the Schedule: $1,500; and
• section 5(1) of the Schedule: $2,600.

As a result, the penalties were reduced from $27,400 to $23,300 in total. The appeal was allowed, in part.

The Director’s application for costs was denied.