Environment, Energy & Resources Law Report - March/April 2010

Edited by John Willms

Contents

• MOE issues model for streamlining its C of A process
• Consultation and hunting rights stalls coal mine
• Ontario makes consumers pay for conservation
• Ottawa drafts minimum national standards for municipal wastewater effluents
• Solar projects dominate list of OPA's FIT contracts
• Ontario Budget promises new push to commercialize water sector
• Feds propose tailpipe standards to cut greenhouse gases
• New hazwaste and land disposal manuals
• EBR updated
• Ottawa & BC to negotiate equivalency agreement on climate change

Ontario to streamline Certificate of Approval process

The Ontario Ministry of the Environment says it will be easier to apply for and obtain environmental approvals using its proposed risk-based approvals model. To be introduced over the next two years, the model will focus approvals resources on activities that pose the greatest risk to the environment and on businesses with poor compliance records.

MOE says that the approvals modernization process should also,

• allow for single-site, multi-media permits and single, multi-site approvals
• provide service delivery standards and online tools to support governmentto- business interaction in the approvals processes
• improve public transparency through improved reporting and an online public information website to access approvals related information

Under the streamlined approach, eligible activities would be registered with the Ministry and would bypass the C of A requirements. Although MOE is not calling it "permit by rule", that is the proposal. Facilities would be required to register with MOE, operate according to rules established in regulation, and certify to MOE compliance with these rules on a regular basis. Regulated operations would be subject to audit by the Ministry.

The posting does not contain any significant changes for processing of application for activities not eligible for permit by rule. Strikingly absent is any mention of the MOE's obligation to consider cumulative effects. We have not seen any proposals that MOE will issue Cs of A based on the detailed technical review of the documentation submitted by the applicant and results of any public input. Nothing new here.

Processing of submissions under both the Registry and C of A processes is to be modernized via a one-window, online system. Business will be able to log on to access their "account", submit information, track the status and remit fees related to their applications.

The streamlined system should help the Ministry process the more than 6,000 requests for Cs of A it receives each year. The proposal was posted on the Environmental Registry March 2, 2010, with a deadline for public comment of April 16, 2010. The Ministry expects to begin introducing changes to the environmental approvals system by September 2012. We do not anticipate major changes to legislation. As is usually the case nowadays, the devil will be in the detail of the comprehensive regulatory and policy decisions.

Need for meaningful consultation stalls BC coal mine

A small First Nations band has thrown up a temporary legal roadblock to a proposed coal mining project by First Coal Corporation planned for the Chetwynd area of central British Columbia. The West Moberly First Nations argued in the province's Supreme Court that the proposed development threatened the survival of the endangered Burnt Pine caribou herd in the band's traditional hunting territories. B.C. Supreme Court Justice Paul Williamson noted that there is currently no plan in place for the protection and rehabilitation of the Burnt Pine herd, which is a "failure to accommodate reasonably." He ordered the Crown to "proceed expeditiously" to put a protection plan in place. The Court also ruled that the Crown had failed to engage in meaningful consultation, as required under their 1899 Treaty No. 8 that guaranteed the West Moberly hunting rights in the area. The Court ordered a 90-day stay to further exploration and development activity while such consultation takes place.

Ontario funds conservation with levy on electricity consumers

Ontario will require energy consumers to directly subsidize energy conservation programs in the province. New O. Reg. 66/10, Assessments for Ministry of Energy and Infrastructure Conservation and Renewable Energy Program Costs, made under the Ontario Energy Board Act, 1998, was published in the March 27th issue of the Ontario Gazette. The phantom regulation had been posted on and then disappeared from the province's e-Laws website earlier that week, sparking some derision in the Legislature. Countering claims that the regulation imposes a "backdoor energy tax" on homeowners' energy bills, Energy Minister Brad Duguid explained that the estimated $53.7 million to be raised (approximately $4 per year for the average consumer) will be used to undertake energy audits, subsidize retrofits and help industrial and commercial firms switch to solar power. The regulation sets forth the formula to be used by the Ontario Energy Board in apportioning the government's conservationrelated costs and expenditures among the Independent Electricity System Operator (IESO) and those distributors licensed under Part V of the Act. Distributors have until July 30, 2010, to recover the required cash "from persons to whom it distributes electricity in its service area".

Ottawa releases draft wastewater regulations

In 2009, the Canadian Council of Ministers of the Environment (CCME) endorsed a Canada-wide Strategy for the Management of Municipal Wastewater Effluent (see the full story in the May/June 2009 issue of our newsletter). To implement the CCME Strategy, the federal government has proposed regulations under the Fisheries Act to adopt minimum national effluent quality standards. The standards are achievable through normal secondary wastewater treatment. Standards would apply to any wastewater system with a daily discharge capacity of 10 m3 or more (but would not apply to facilities located in the NWT, Nunavut, or north of the 54th parallel in Quebec and Newfoundland-Labrador). In addition to the standards, the proposed regulations require monitoring, record keeping and reporting of the discharge of the designated "deleterious substances" (i.e., BOD, suspended solids, total residual chlorine and un-ionized ammonia). The standards would be phased in over three years and non-complying facilities could apply for a transitional authorization that could give them another 10-30 years to meet the standards (depending on the environmental risk a facility poses). The total costs of compliance are estimated at $5.9 billion, the bulk of which would be borne by the municipalities, which own and operate most treatment plants. The draft Wastewater Systems Effluent Regulations were published in the Canada Gazette, Part I on March 20, with a deadline for public comment of May 19, 2010.

* expressed as nitrogen (N), at 15°C ± 1°C

OPA issues the first FIT contracts for renewable projects

Ontario Power Authority (OPA) has issued 694 contracts under the province's Feed-In Tariff (FIT) program, providing stable, guaranteed pricing to renewable energy producers. These projects are "capacity allocation exempt", meaning that they can be developed without significant impact on the transmission or distribution systems through an expedited connection process. The first batch of 510 contracts for mid-scale (10-500 kW) projects was announced on March 10, 2010, and the second batch of 184 largescale (over 500 kW) projects on April 8. The OPA had received 956 eligible applications for the first round of capacity allocation exempt FIT contracts and gave priority to the most viable and "shovel-ready" projects.

The approved FIT projects will supply 2,535 MW of power, enough to power some 600,000 homes. The successful proponents include farmers, municipalities, local distribution companies, commercial businesses, industrial customers, schools and hospitals, a winery and even a church. Thirty-six community and aboriginal projects, generating a total of 120 MW, will receive a first round FIT contract. The full list of approved proponents is available on the OPA website. About 80 percent of the approved projects are for solar generation; the remaining contracts cover biogas, water, on and off-shore wind, landfill gas and biomass projects. Economically viable projects that do not receive contracts in this round of approvals will be considered when more transmission capacity is available.

As of April 6, 2010, OPA has also issued almost 3,000 microFIT conditional offers, for small-scale projects of 10 kilowatts or less, subject to applicants obtaining approval to connect to the electricity grid from their local distribution company. To date, OPA has received nearly 8,500 microFIT applications and is continuing to review and verify these applications. MicroFIT is an ongoing program with applications being accepted on a continual basis. Once the current applications have been processed, OPA anticipates a 30-day turnaround for microFIT applications.

Emphasis on water infrastructure raised in Ontario budget

With Ontario's Green Energy Act, 2009 sparking a boom in renewable energy development, the Ontario government is hoping that a strategy for water treatment and conservation will strike gold a second time. As part of its 2010 Budget, the government announced it will promote new business and employment opportunities in the water sector by supporting the commercialization of water and wastewater technologies. Through its water strategy, part of the Open Ontario plan, the government will

• introduce a new Water Opportunities Act to support the development of new technologies and practices for water conservation and treatment
• improve the efficiency of Ontario's water and wastewater infrastructure
• work with researchers and entrepreneurs to create jobs and to attract clean water expertise and investment in the province
• promote Ontario's water technology sector at home and abroad

While the government has issued few details, a market analysis report issued by the Ontario Centre for Environmental Technology Advancement (OCETA) and funded by the province may provide some insight into its plans. According to The Water Opportunity for Ontario report, the global market for clean water and wastewater technologies is worth some $400 billion (US) a year. With over 300 companies providing water equipment and services in Ontario, the report suggests we are well positioned to become a global leader in the sector by 2015. The report calls for new legislation that would

• encourage sustainable water behaviour
• adopt transparent costing and accounting of water use
• support water technology demonstration and early adoption
• attract early stage, innovative water technology companies to Ontario

Meanwhile, the Legislature is considering a private member's bill, the Sustainable Water and Waste Water Systems Improvement and Maintenance Act, 2009. Although the chances of a private member's bill passing are not high, it may have refocused the government's attention on the water agenda and the work still left undone following the Walkerton Inquiry Report. Bill 237 would establish the Ontario Water Board to oversee aspects of municipal water and wastewater treatment. Municipalities would be required to assess the full cost of providing water or wastewater services, describe how they intend to pay the full cost, and then submit this assessment as a Business Plan for review and approval to the proposed Water Board.

A coalition of environment groups—including the Canadian Environmental Law Association, Great Lakes United and Ecojustice—was quick to respond to the announcement, saying the province would be more prudent to focus its attention on water conservation. The groups called on Ontario to:

• implement water efficiency standards
• link water conservation to infrastructure grants
• appoint a Chief Water Conservation Officer
• require water conservation plans for all Permit-to-Take- Water holders

Canada/US announce greenhouse gas limits on vehicles

The announcement may have come on April Fools' Day, but federal Minister of Environment, Jim Prentice, waited until noon so nobody would think he was kidding. Beginning in 2011, Canada and the U.S. will effectively share common tailpipe standards designed to reduce greenhouse gas emissions from new vehicles by approximately 25% by 2016. Over the lifetime of the 2011 to 2016 model-year vehicles sold in Canada, technological improvements should remove a total of 92 megatonnes of "carbon dioxide equivalent" in GHG emissions.

Since passenger cars and light trucks account for 12 percent of domestic emissions, the announcement supports Canada's commitment to reduce GHGs by 17% from 2005 levels by the year 2020. It also reinforces the federal government's stated intention of harmonizing Canada's climate and energy policies with the United States.

Fuel economy is also slated to improve about 40%, to 6.6 litres per 100 kilometres or 35.5 miles per gallon in the US. As a result of the new rules, the cost of the average new car should increase by approximately $1,000, according to government and industry estimates. However, the government says consumers can be expected to recoup the higher costs in about 18 months through improved fuel economy.

The regulation would also provide standards specific to other tailpipe GHG emissions, such as nitrous oxide (N2O) and methane (CH4). With each new model year from 2012-2016, the fleet average GHG emission standards would become progressively more stringent.

There are significant elements of emissions trading built into the scheme. Companies would be required to comply with "unique" fleet average GHG emission standards—based on the number and the size or "footprint" of the vehicles sold—beginning with the 2011 model year. Companies could purchase credits from the Receiver General at a rate of $20 per Mg of CO2eq to offset a deficit incurred for that first model year. Companies would be able to generate GHG emission credits for the 2008-2010 period that could be applied to the 2011 model year if average GHG performance exceeds specified levels.

To increase "compliance flexibility", credits would be granted for companies doing better than the applicable fleet average standard for a given model year; these credits would have a lifespan of five model years and could be traded between companies. It is anticipated that the average GHG emission performance of the 2016 Canadian fleet of new cars and light trucks would achieve an average level of 153 g CO2/km, a decrease of about 25% over current levels.

As an incentive to market "advanced technology vehicles" (such as electric vehicles, plug-in hybrid electric vehicles and fuel cells vehicles), a company would be credited with selling two times the number of ATVs than it actually sold in the calculation of its fleet average GHG emission performance.

Vehicle design improvements which indirectly reduce GHG emissions—such as technologies that reduce the impact of air conditioning refrigerant leakage or improve the efficiency of air conditioning systems—could also be subtracted from the average CO2 tailpipe emissions of a company's fleet.

Annual reporting of a company's fleet average GHG performance and related vehicle model information would be mandatory. Reporting would include information about emission credits and deficits and emission trading between companies.

As an incentive to market "advanced technology vehicles" (such as electric vehicles, plug-in hybrid electric vehicles and fuel cell vehicles), a company would be credited with selling two times the number of ATVs than it actually sold in the calculation of its fleet average GHG emission performance.

Ontario finalizes rules for land disposal of hazwastes

It has taken nearly three years to firm up the details, but the Ministry of the Environment has finally released its revised Registration Guidance Manual for Generators of Liquid Industrial and Hazardous Waste and its new Land Disposal Restrictions (LDR) Handbook. Last updated in 2001, the Registration Manual incorporates significant new information related to the LDR program that prohibits the land disposal of hazardous wastes unless treated to meet specific standards. It also contains updated information about online registration and manifesting through the Hazardous Waste Information Network, an overview of the revised rules relating to on-site storage and processing, the proper management of wastes from field operations, the revised schedules of hazardous wastes, the use of alternative fuels, and streamlined approvals process for new or emerging waste technologies.

For copies of these materials refer to http://www.ene.gov.on.ca/en/land/

Ontario updates lists of acts and instruments subject to EBR

As part of its routine efforts to keep the Environmental Bill of Rights, 1993 up-to -date and relevant, the province has amended the General Regulation (O. Reg. 73/94) and the Instrument Regulation (O. Reg. 681/94) that specifies which ministries, Acts, regulations and instruments are subject to the different provisions of the EBR. In addition to housekeeping changes, the Lake Simcoe Protection Act, 2008, the Toxics Reduction Act, 2009 and the Food Safety and Quality Act, 2001 have been prescribed under the Act, as have instruments under the Safe Drinking Water Act, 2002 and the Endangered Species Act, 2007.

Ottawa & BC negotiate equivalency on climate change

In a rare sign of life in the fed's climate change initiative, Environment Minister Jim Prentice and British Columbia's Minister of State for Climate Action John Yap signed an Agreement in Principle on Efforts to Address Climate Change on April 6, 2010. This is the first step towards a formal Equivalency Agreement under the Canadian Environmental Protection Act, 1999. Minister Prentice says his government will continue to work in close collaboration with the provinces and territories in developing harmonized climate change strategies with the United States. As an equivalency agreement, however, this is unlikely to derogate from B.C.'s commitments under the Western Climate Initiative, or B.C.'s more aggressive approach to combating climate change.

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