Canada: Ontario Environmental Bill Of Rights Has New Life – MOE Statement Of Environmental Values Renders Director’s Decision Potentially Unreasonable Says Divisional Court

Copyright 2008, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Environmental Law, July 2008

In December 2006, the Director of the Ministry of the Environment (MOE) issued Certificates of Approval to Lafarge Canada Inc. to allow it to operate a waste disposal facility at its cement facility in Bath, Ontario. The Certificates of Approval would have allowed Lafarge to incinerate solid non-hazardous wastes in its cement kiln as an alternative to primary fuels. In April 2007, the Environmental Review Tribunal (ERT) granted leave to appeal to a host of individual parties from the Director's decision. The Ontario Divisional Court recently dismissed an application for judicial review brought by Lafarge of the ERT decision.

The ERT had relied on the language of the MOE's Statement of Environmental Values to call into question a decision that was, on the facts before it, in compliance with the province's regulation respecting air emissions and the policies crafted by the MOE to guide the application process for Certificates of Approval. In refusing to overturn the ERT's decision, the Divisional Court has sent a clear message to Ontario's regulated community and the government officials tasked with regulating them that prior practice is no longer sufficient, and compliance with government standards will no longer necessarily be sufficient to support an approval.

While further regulatory action would appear to be necessary to clarify the onus on those applying for Certificates of Approval, following is a summary of the facts and issues leading to this recent important decision.

The SEV

Ontario's Environmental Bill of Rights (EBR) required several ministries, including the MOE, to establish Ministerial Statements of Environmental Values (SEVs) and to take steps to "ensure that the [SEV] is considered whenever decisions that might significantly affect the environment are made in the ministry." SEVs are meant to be a means for government ministries to record their commitments to the environment and be accountable for ensuring their consideration of the environment in their decisions.

The MOE (it was then the MOEE) established a SEV (http://www.ebr.gov.on.ca/ERS-WEB-External/content/sev.jsp?pageName=sevList&subPageName=10001 )that holds it to three guiding principles – the Ecosystem Approach, Environmental Protection (including the precautionary principle) and Resource Conservation. The SEV states that it will be used by the MOE "as it develops Acts, regulations and policies." Since the crafting of the SEV, it has been the MOE's position that the regulations and policies it utilizes in making regulatory decisions ensure that those decisions will be made in compliance with the SEV, as they were developed with the SEV in mind.

The Air Pollution Regulation

The Air Pollution Regulation requires that, before being granted a Certificate of Approval, proponents undertake modeling of the worst-case emissions from the proposed facility and determine the modeled concentrations of a variety of contaminants at the "Point of Impingement" (the "POI", a point off-site of the facility where concentrations will be highest – generally the property line).

POI-based standards have been criticized on many fronts over the years, as many feel that standards that look at the emissions of a single facility in isolation, without looking to the baseline conditions of that facility prior to its construction will not be able to properly protect against environmental (and particularly cumulative) impacts. The MOE has rejected this argument in a manner consistent with its approach to the SEV – the MOE states that the numerical limits and standards in the Air Pollution Regulation were developed using a "global, ecosystem approach to regulating air quality".

The Application To The ERT

The individual appellants sought leave to appeal the granting of the Certificates of Approval pursuant to section 41 of the EBR, which establishes what appears to be a very limited right of review. The section states:

Leave to appeal a decision shall not be granted unless it appears to the appellate body that,

1. there is good reason to believe that no reasonable person, having regard to the relevant law and to any government policies developed to guide decisions of that kind, could have made the decision; and
   
   
2. the decision in respect of which an appeal is sought could result in significant harm to the environment.
   
   

The Grounds Of Appeal

The applicants argued, amongst other things, that in granting the Certificates of Approval, the Director failed to take into account the SEV (particularly the ecosystem approach, the precautionary approach, resource conservation and the requirement for public participation). (Note that a host of grounds not related to the SEV were put forward, including the potential impact on common law rights of landowners, discrimination against the community in question and the failure to obtain local airshed conditions – these grounds are outside the scope of this review.) The Director stated that the SEV was intended to have been applied, and had already been applied, in the creation of laws and policies. By extension, the Director argued that compliance with environmental regulations was compliance with the SEV, as the regulations were crafted with the SEV in mind. Finally, the Director stated that a decision could only be unreasonable if the Director did not apply the relevant laws or government policies, and that the reasonableness of those policies was not for the Tribunal to review.

The Tribunal's Decision

The ERT agreed with the Director that it was not open to it to assess the reasonableness or adequacy of the MOE's laws and policies. Furthermore, the ERT agreed that it did not have the mandate to require changes to those laws and policies or to impose upon the Directors a duty to achieve a higher standard of environmental protection than those laws and policies required.

It appears to have been common ground amongst the parties before the ERT that the Director had determined that the proposed facilities would meet the requirements of the Air Pollution Regulation. Notwithstanding this compliance, and Ministerial regulations and policies that would seem to support it, the ERT determined that the Director failed to consider the SEV in the specific applications, and on that basis determined that there was sufficient evidence that the decision was unreasonable in order to grant leave. In so doing, the ERT established that compliance with the numerical requirements in regulations is not necessarily sufficient to ensure a reasonable decision has been made.

As the ERT stated:

The ERT explicitly rejected the Director's argument that the SEV was complied with through compliance with laws and policies. Furthermore, while claiming it recognized its lack of jurisdiction on this front, the ERT implicitly determined that MOE regulations and policies were themselves unreasonable as, in its view, compliance with those policies lead to what was possibly an unreasonable result.

Some months after the ERT decision was issued, the proponent applied to the Divisional Court for judicial review. (The issue of delay was one brought before the Court, which stated that future applications should be brought forth "in a timely fashion or risk having the application dismissed for delay".)

The Divisional Court Decision

The Divisional Court endorsed the ERT's approach to reviewing the Director's decision-making, as well as the rejection that the SEV was intended to be used by the MOE in developing legislation, and not the Director, as it made regulatory decisions. The court stated:

Implications

The initial outcome of the above is that there is now a significant amount of regulatory uncertainty in Ontario. The current Air Pollution Regulation and its accompanying policies are apparently no longer the sole measuring stick for proponents, but rather the "floor," with undetermined site-specific requirements to be established, presumably through policies that the MOE will now have to draft to guide its Directors.

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