The Court of Appeal of Alberta has agreed to hear a challenge involving a 730-metre sour-gas pipeline near Fort Saskatchewan after a regulatory audit found required consultation had not been completed before an earlier licence decision.
The case involves Chemtrade Logistics Inc., the Alberta Energy Regulator and three related development companies collectively known as Fort Industrial. The City of Fort Saskatchewan has been granted intervener status.
The court’s Sept. 23 decision does not overturn the pipeline licence. It grants permission for an appeal to proceed.
How the dispute began
In April 2019, the Alberta Energy Regulator approved an amendment to Chemtrade’s pipeline licence without a public hearing.
The amendment changed the regulatory classification of the line and introduced development setbacks affecting nearby land.
According to court materials and subsequent reporting, Chemtrade’s application indicated that the required participant-involvement and consultation steps had been completed.
Fort Industrial and the City of Fort Saskatchewan later said affected landowners and municipal officials had not been notified of the new restrictions.
The setback was discovered years later
Fort Industrial says it became aware of the development restriction in 2022 during routine land-use planning.
The dispute intensified after Chemtrade relied on the setback to object to proposed development on neighbouring lands.
Fort Industrial then asked the AER to reconsider the earlier regulatory decisions.
An AER audit found consultation failures
In 2024, an AER compliance audit found that Chemtrade had not completed the consultation required under the regulator’s rules before the 2019 application was approved.
The audit also concluded that the line should have been classified at a lower hazard level than the one used in the 2019 decision.
The original classification carried a 1.5-kilometre development setback. The corrected classification reduced the setback to 500 metres.
The regulator required Chemtrade to submit corrected information.
The regulator approved the corrected licence without a hearing
After Chemtrade reapplied, Fort Industrial and the City of Fort Saskatchewan objected.
The AER ultimately concluded that the smaller setback meant the neighbouring landowners were no longer adversely affected in the way required to trigger a hearing and approved the corrected licence.
Fort Industrial challenged that decision.
Why the Court of Appeal agreed to hear the case
Justice Jo’Anne Strekaf granted permission to appeal on Sept. 23.
She wrote that the proposed appeal raises issues of general importance involving the AER’s regulatory practices and the rights of landowners and others who may be entitled to notice and participation.
The appeal is expected to examine whether affected parties were given a meaningful opportunity to challenge regulatory decisions after the AER itself identified failures in the original consultation process.
That question reaches beyond this single pipeline because AER rules govern how energy projects interact with neighbouring landowners and municipalities throughout Alberta.
This is also a land-development dispute
The case should not be confused with a claim that the pipeline has leaked or exposed nearby residents to hydrogen sulphide.
The applicants are development companies whose land-use plans were affected by the regulatory setback. The City of Fort Saskatchewan is participating because the pipeline and its setback affect municipal planning and infrastructure.
The safety issue remains relevant because sour gas contains hydrogen sulphide, which can be highly toxic, and development setbacks exist to reduce risk around facilities and pipelines.
But the legal dispute before the Court of Appeal centres on notice, consultation, hearing rights and how the AER responded after its audit identified non-compliance.
What Chemtrade and the AER say
Chemtrade has said its objective is to ensure the required setback is respected so that it and neighbouring operations can continue to operate safely and meet regulatory obligations.
The company has said it continues to engage with stakeholders but has limited further comment while the matter is before the courts.
The Alberta Energy Regulator has also declined detailed comment because the appeal is pending.
The City of Fort Saskatchewan has said it is pleased that the appeal will be heard.
What happens next
The Court of Appeal has only granted permission to appeal. It has not ruled on the merits of Fort Industrial’s arguments and has not cancelled Chemtrade’s licence.
The appeal itself will determine whether the challenged AER decisions should stand and may provide guidance on how the regulator must handle notice and participation when earlier approval processes are later found to have been deficient.
No hearing date has been publicly reported.
Sources: Court of Appeal of Alberta, Fort Industrial Estates Ltd v Alberta Energy Regulator, 2026 ABCA 302; Alberta Energy Regulator materials; CBC News reporting; court and regulatory filings.
