A sewage-treatment operator near Blind Bay, B.C., has won a reduction in an environmental penalty for using an unauthorized third lagoon, but failed to have the lagoon approved through its appeal.
In Shuswap Lake Estates Ltd. v. Director, Environmental Management Act, 2026 BCEAB 34, the British Columbia Environmental Appeal Board reduced a $17,000 administrative penalty to $9,000 on August 20. It upheld a separate $1,700 penalty for failing to submit a required operations report on time.
The combined penalties therefore fell from $18,700 to $10,700. The ruling did not eliminate the permit violations or authorize the third lagoon.
An extra lagoon still needed authorization
Shuswap Lake Estates holds a permit to discharge treated effluent to ground from its spray-irrigation facility, with the golf course identified as the discharge point. The authorized treatment works include two aerated lagoons and related equipment.
A director's delegate imposed the penalties in March 2024. The larger penalty concerned operation of a third, unauthorized lagoon for 901 days, from February 15, 2021, to August 4, 2023. The other concerned a biennial operations and inspection report due January 31, 2023.
The company argued that the third lagoon, added by a previous owner, was a small accessory that improved treatment rather than an independent work requiring authorization. It said the lagoon represented only nine per cent of the facility's effluent volume and helped break down solids before they reached the two main lagoons. It was taken offline in December 2024.
The board found insufficient technical evidence to determine that the lagoon was merely an authorized accessory. One company representative was an engineer, but had not been qualified as an expert witness because the required advance notice was not given. His statements were considered submissions as an owner and operator, not expert evidence.
Lower environmental risk, continued non-compliance
The board accepted that operating unauthorized works was a moderately serious contravention because it impaired the ministry's ability to regulate the facility. But it distinguished that regulatory concern from the actual or potential harm used to calculate the penalty.
The ministry had effectively relied on the same interference with oversight for both factors. On the evidence, the board found the potential for environmental or human-health harm was low rather than medium. The third lagoon was upstream of the permitted lagoons; the facility did not discharge to a receiving water body; and the company presented data showing that about 97 per cent of relevant effluent samples met permit limits over more than 12 years.
That was not a finding that the facility could operate without supervision or that there could never be harm. It meant the appropriate starting penalty was $5,000 rather than $10,000.
The board retained three 20-per-cent increases for previous non-compliance, the continuing violation and its deliberate nature. It also kept a $1,000 addition for the economic benefit of avoiding the costs of obtaining authorization. Applied to the reduced starting amount, those factors produced a $9,000 penalty.
The company did not earn a reduction for due diligence or corrective efforts. It had been warned about the need to comply, had not diligently completed its amendment application, and continued using the lagoon throughout the period covered by the penalty. Taking it offline later did not erase that history.
The separate reporting penalty stayed at $1,700. Later reporting improvements were positive steps, the board said, but did not satisfy the January 2023 deadline. Previous similar failures and knowledge of the reporting requirement justified the additions to that penalty.
Board had power to amend the permit, but declined
The company also asked the board to change its permit from two lagoons to three. The director argued the board lacked authority to make that change in a penalty appeal.
The board rejected that jurisdictional position. It found the director had statutory authority to amend the permit and seek technical information, and that its own appeal powers extended to decisions the director could have made.
Nevertheless, it declined to exercise that power here. An application through the ministry's established permit-amendment process would provide more consistent and efficient regulation, including for future changes. The company committed to applying through that process if it decided to bring the third lagoon back online.
The result was a mixed appeal: a lower penalty based on the evidence of risk, but continuing consequences for unauthorized operation and missed reporting, with no shortcut to approval of the extra lagoon.
