March 2012 - In a major decision1 handed down on March 12, 2012, the Superior Court of Québec annulled Directive No. 06-01, which had previously been applied by officials of the Québec Ministry of Sustainable Development, Environment and Parks (MSDEP) to manage the impact of projects on wetlands at the point of application for certificates of authorization under Subsection 22(2) of the Environment Quality Act (EQA), according to which a certificate of authorization be secured from the MSDEP prior to carrying out any work or activity in a watercourse, pond, marsh, swamp or bog.
WHAT IS DIRECTIVE NO. 06-01?
In 2006, the MSDEP decided to develop and implement a procedure for assessing new projects submitted to it for authorization. This procedure found its expression in Directive No. 06-01. With this directive, the MSDEP wished to provide a more solid framework for reviewing applications for a certificate of authorization in connection with any project involving wetlands. The objective of the Directive was two pronged:
- To define the analytical conditions for issuing certificates of authorization based on the wetland category involved; and
- To differentiate between project sizes based on the location of these wetlands.
The Directive sought to standardize the requirements imposed on promoters and the MSDEP's analysis of applications for authorization.
WHAT IS THE IMPACT OF THE SUPERIOR COURT'S DECISION?
In theory, the decision of the Superior Court means that officials from the MSDEP may no longer (i) use Directive No. 06-01 in reviewing an application for a certificate of authorization in connection with activities on wetlands nor (ii) require that businesses "compensate" their encroach ment on wetlands by giving up one or more lands belonging to them.
Furthermore, in February 2012, the MSDEP published a document entitled Guide for Reviewing Applications for a Certificate of Authorization in Connection with Projects Involving Wetlands2, which was to serve as a complement to the procedure set out in the Directive. The annulment of Directive No. 06-01 therefore has a direct impact on the use of this guide by the MSDEP.
However, the consequences of this decision remain uncertain at this time. In fact, the MSDEP is currently reviewing the Superior Court's decision and considering whether to lodge an appeal and what other follow up action is to be taken. The Minister nevertheless declared in a press release that "[TRANSLATION] nothing will make this government back down as far as wetlands conservation and sustainable management are concerned3." This review period is likely to delay work on current files.
Various options are available to the MSDEP. For instance, the MSDEP could decide to appeal from the decision of the Superior Court4 and apply to the Court of Appeal to suspend the application of the trial court decision pending judgment. This would enable the MSDEP, pending a final decision from the appellate court(s), to continue applying Directive No. 06-01 to current files, which directive, as previously mentioned, was aimed at correcting a lack of uniformity within the MSDEP in processing files involving wetlands. The MSDEP could also request that the Government of Québec amend the legal frame - work so as to ensure the legal compliance of the procedure set out by Directive No. 06-01 and the Guide for Reviewing Applications for a Certificate of Authorization in Connection with Projects Involving Wetlands.
DECISION OF THE SUPERIOR COURT
The decision of the Superior Court was rendered in the context of an application for mandamus brought by Les Atocas de l'Érable to compel the MSDEP to grant it a certificate of authorization for the enlargement of a cranberry farm, which certificate had been applied for in 2007 and had yet to be issued in 2011.
Among other things, these delays were due to the fact that, in connection with the processing of the application, an MSDEP official was seeking, based on Directive No. 06-01, to secure from the cranberry producer a strip of land in order to compensate for the producer's encroachment on wetlands.
The negotiations in connection with the exchange of lands, a morass of applications, offers, counter offers and confirmations pertaining to the zones to protect, thus caused significant delays in processing the file, and also increased the number of procedural steps that the business had to take with the regional county municipality and local municipalities to amend the certificates of compliance required by the MSDEP. In light of the protracted three year period of negotiations, the Court characterized the process as "cumbersome" and the authorization procedure as a process of "going around in circles".
The Superior Court found on the one hand that it was not in a position to allow the mandamus and compel the Minister to grant the certificate of authorization, as this is a discretionary power. However, the Superior Court handed down a declaratory judgment annulling the scope of Directive No. 06-01 while returning the file to the MSDEP and ordering the review of the certificate of authorization application within a four month timeframe, and without applying the Directive No. 06-01.
DIRECTIVE NO. 06-01: ARBITRARY POWER VS. DISCRETIONARY POWER
At the outset, the Superior Court notes that the Directive No. 06-01 applied by officials had not been disclosed to the public. A mere flyer had been given to promoters interested in development. Yet, the Directive was rigorously followed and applied by officials in processing applications for certificates of authorization.
The Superior Court explains that the Directive is a rule with internal scope governing administrative activity without imposing any legal duty. Its purpose therefore is to ensure more consistency in the application of a discretionary power. In this respect, the Superior Court points out that discretionary powers and arbitrary powers are not to be confused.
Hence, although pursuant to the Environment Quality Act, the Minister has a broad discretionary power in processing applications for certificates of authorization, such discretionary power is not absolute. The exercise of the discretion may be challenged in several circumstances, including if it is exercised (i) for improper purposes, not provided for by law, (ii) in bad faith, (iii) based on erroneous principles or irrelevant considerations, or (iv) in a manner which is discriminatory and unjust, arbitrary or unreasonable.
In this context, the Superior Court notes that, on the one hand, Subsection 22(2) of the Environment Quality Act provides for the possibility, for a party, to submit an application for a certificate of authorization but, on the other hand, the internal directive of the MSDEP, owing to its three principles: "avoid, minimize, compensate", in fact encourages parties not to apply for certificates of authorization. Consequently, the Directive, although it has no legal force, purports to prevent the granting of something that is specifically provided for in the Act.
The Superior Court finds that it is not possible to thus modify the scope of the Environment Quality Act by way of a directive and therefore holds that Directive No. 06-01 is illegal.
A BREACH OF THE RIGHT TO PEACEFUL ENJOYMENT OF PROPERTY PROTECTED BY THE QUÉBEC CHARTER AND THE CIVIL CODE OF QUEBEC
Moreover, the Superior Court believes that the Directive purports to alter or limit the fundamental right of peaceful enjoyment of property, provided for in Section 6 of the Charter of Human Rights and Freedoms. The Charter provides that "[e]very person has a right to the peaceful enjoyment and free disposition of his property, except to the extent provided by law."
The Civil Code of Québec also defines the right of ownership in Article 947 as "the right to use, enjoy and dispose of property fully and freely, subject to the limits and conditions for doing so determined by law [...]".
However, the Court notes that the Directive requires that the applicant for a certificate of authorization give up or voluntarily exchange certain assets for others, namely by offering up one or more lands to compensate for a strip encroaching on wetlands, even though the rule for exchanging lands is not specified, thus creating an arbitrary situation.
For the Court, "[TRANSLATION] the initiative is interesting and tempting as far as preserving the great environmental capital is concerned. However, the problem is that to impose a limit or a condition affecting the exercise of an ownership right, it must be enshrined in law pursuant to Article 947 C.C.Q."
However, as the Court mentions, the Directive has no legal force and the Environment Quality Act itself does not provide for such compensation measures. Therefore, the Court points out that the MSDEP may not require and compel a business to submit to such exchange procedure, with no grounding in law, unless the Minister should resort to expropriation provisions.
Hence, the Court considers that the Directive has no legal basis either in its reference or its effects, as what is discretionary may not become arbitrary.
The foregoing reasons support the Superior Court's decision to declare the Directive No. 06-01 to be null and to consider improper, arbitrary and unreasonable the discretion exercised by the MSDEP, with all the more reason that the compensation is illegal as it results in a breach of the right of ownership.
As a result, unless the MSDEP appeals from the decision by mid April 2012 or the Government of Québec amends the applicable legal framework, officials reviewing applications for certificates of authorization in connection with activities involving wetlands may henceforth no longer impose this Directive and, more importantly, may not require any compensation from an applicant for a certificate of authorization.
1 Les Atocas de l'Érable inc. c. Québec (Procureur général), 2012 QCCS 912, "canlii.ca/t/fqkgt" [in French].
2 Available only in French.
3 Press release by Minister Pierre Arcand dated March 14, 2012, ministère du Développement durable, de l'Environnement et des Parcs, http://www.MSDEP.gouv.qc.ca/infuseur/communique.asp?no=2052 [in French].
4 As of writing, no notice of appeal appears on the Court record.
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