Yesterday, in an important decision for stakeholders in the Ontario renewable energy industry, the Ontario Court of Appeal overturned the Divisional Court of Ontario’s February 2014 decision, which had reinstated a Renewable Energy Approval (REA) previously revoked by the Environmental Review Tribunal (ERT). The REA was for the construction and operation of a wind farm in Prince Edward County. The Ontario Court of Appeal held that the ERT’s decision – that “serious and irreversible harm” would befall the Blanding’s turtle as a result of the project – was reasonable, but that the ERT’s decision on the appropriate remedy to grant in the circumstances – revoking the REA – was unreasonable. On that basis, the Ontario Court of Appeal remitted the issue of remedy back to the ERT to decide. As a result, although the REA has now gone through three levels of judicial consideration – the ERT, the Divisional Court and the Ontario Court of Appeal, only to be sent back to the ERT to be dealt with again – the status of the REA issued by the Ministry of the Environment, who originally approved of the project, remains unresolved.

Background

In December 2012, the Ontario Ministry of the Environment and Climate Change (Ministry) issued a REA, authorizing Ostrander Point GP Inc. (Ostrander) to construct and operate nine wind turbines on a site in Prince Edward County (the Project). In its July 2013 decision, the ERT revoked Ostrander’s REA.  The ERT’s decision was based solely on its determination that the Project would cause serious and irreversible harm to the Blanding’s turtle, an endangered species, which had been identified in the area. All other grounds of appeal (i.e., alleged impacts to human health and to other animal and plant species) by the Prince Edward County Field Naturalists (PECFN) and the Alliance to Protect Prince Edward County (APPEC) were dismissed by the ERT.

The ERT’s decision was significant in that, of the many appeals to the ERT seeking to overturn the issuance of a REA for a wind farm, it was the first appeal in which a REA was revoked. The Divisional Court’s decision, which overturned the ERT’s decision and reinstated the REA, was also significant since the Divisional Court generally defers to the ERT as expert in environmental matters and will not overturn ERT decisions lightly. Please see our previous Osler Update which discussed the details of the Divisional Court’s decision.

PECFN Appeal to the Ontario Court of Appeal

Having lost before the Divisional Court, PECFN sought leave to appeal to the Ontario Court of Appeal. Pending the Court’s decision on the leave to appeal application, PECFN also sought a stay of the reinstated REA.  The Court of Appeal granted the stay in March 2014, holding that the issues raised on the proposed appeal were issues of broad public implication in the field of environmental law, and also granted leave to appeal. Ostrander cross-appealed, claiming the Divisional Court erred in dismissing its fresh evidence application.

Standard of Review – Deference to the ERT – a Key Issue for the Ontario Court of Appeal

According to the Court of Appeal, the main issue on appeal was whether the Divisional Court identified the appropriate standard of review and applied it correctly. The Divisional Court had identified the correct standard of review – whether the ERT’s decision was “reasonable” – and had correctly noted that it could not review the ERT’s findings of fact because the right of appeal under the governing statute, the Environmental Protection Act (the EPA), was confined to questions of law. However, according to the Court of Appeal, the Divisional Court erred in its application of this standard of review by failing to accord the Tribunal proper deference.

The Court concluded that “[o]n appeal the question for the court is whether the Tribunal’s decision is reasonable. In determining whether the decision is reasonable, the reviewing court is concerned with ‘justification, transparency and intelligibility’ of the Tribunal’s reasons … It is sufficient if the Tribunal’s reasons serve the purpose of showing that the result falls within a range of possible reasonable outcomes.”

“Serious and Irreversible Harm” to the Blanding’s Turtle

In applying the standard of review, the Court of Appeal overturned each reason given by the Divisional Court for concluding that the ERT’s decisions that Blanding’s turtle would suffer “irreversible harm,” was unreasonable. In doing so, the Court of Appeal upheld the ERT’s decision that “serious and irreversible” harm would be caused to the Blanding’s turtle.

Firstly, the Court of Appeal disagreed with the Divisional Court’s conclusion that the ERT erred in failing to separately consider whether the Project would cause “irreversible” harm to the Blanding’s turtle. The ERT had already found that the harm would be “serious” because there would be an increase in the Blanding’s turtle mortality; the “only real question for the Tribunal to decide was whether the increase in mortality resulting from the roads would be irreversible.” The Court of Appeal found that the ERT’s reasons, as a whole, were entirely focussed on the question of irreversibility and there was no need for the ERT to separately analyze what was evident and not disputed: whether the harm was also serious.

Secondly, the Court of Appeal rejected what it saw as the Divisional Court overstepping its bounds by conducting its own assessment of the expert evidence before the Tribunal on the size of the population impacted, the extent of the road mortality currently experienced at the site, the current vehicular traffic on the site, and the increase in vehicular traffic that could result from the Project. As the Court stated, the “assessment of” the expert evidence “was a matter for the Tribunal, not the Divisional Court.”

Ultimately, the Court of Appeal decided that the ERT’s reasons for accepting the opinions of certain experts were intelligible, and the ERT’s conclusion that there would be “serious and irreversible harm” to the Blanding’s turtle “falls within the range of reasonable outcomes and should not be disturbed.”

The ESA Permit

The Court of Appeal also overturned the Divisional Court’s analysis that the ERT had erred in failing to attach proper weight to Ostrander’s Ministry of Natural Resources (MNR) permit for the Project which had previously been obtained under the Ontario Endangered Species Act (the ESA), and failing to adequately explain the conflict between the MNR’s decision to issue the ESA permit (which permitted harm to the Blanding’s turtle1) and the ERT’s own conclusion to revoke the REA. 

The Court of Appeal accepted the ERT’s rationale that there was no conflict because the ESA permit merely addressed the issue of whether the Project would result in an “overall benefit” to the Blanding’s turtle province-wide, whereas in examining the question of irreversible harm under the EPA, the ERT was looking at a much smaller scale of population and local area impacts. The  Tribunal, in “carrying out its distinct statutory mandate under s. 145.2.1(2) of the EPA,” was entitled to (and did), “exercise… its independent judgment and [find] that the evidentiary value of the permit was outweighed by the expert evidence introduced.”

However, the ERT’s rationale, as accepted by the Court of Appeal, raises a concern for future projects as to whether the mere existence and need for an ESA permit issued by the MNR (which is issued on the basis of overall benefit, recognizing local impact to a species at risk) could serve as the supporting basis for an argument before the ERT that serious and irreversible harm will occur to a local and smaller-scale population subset of the species. Given that ESA permits are required separately from REAs and referenced in the terms and conditions of REAs themselves, there remains a concern regarding the appearance of a conflict between these two regulatory regimes.  

Cross Appeal – Ostrander’s Fresh Evidence Ought to have been Permitted

The Court of Appeal upheld Ostrander’s cross-appeal to introduce fresh evidence relating to the steps Ostrander had taken, after the ERT’s decision, to lease certain property within the Project site from the MNR to allow Ostrander to prohibit public access to the roads in that area (thereby reducing turtle mortality). The Court held that the Divisional Court applied the fresh evidence test too strictly, and disagreed with its conclusion that Ostrander could have led the fresh evidence before the Tribunal had it exercised due diligence. The Court recognized that the parties were not in a position to address remedy (to which the fresh evidence was relevant) without knowing the ERT’s decision on its merits. The Court of Appeal confirmed that “Ostrander could not reasonably have been expected to address the appropriate remedy in relation to each of the many different attacks mounted” by PEFCN and APPEC.

The ERT’s Approach to Remedy was not Reasonable

In determining that the ERT erred in simply revoking Ostrander’s REA, without any analysis or submissions from the parties on remedy, the Court of Appeal focussed on the unintelligible nature of the ERT’s reasons on remedy, and on its denial of procedural fairness to Ostrander and the Ministry – i.e., that these parties were not given the chance to address remedy after learning of the Tribunal’s decision on the merits.

The Court stated: “… it is clear the Tribunal either adopted a limited view of its remedial power or considered that it lacked the information necessary to exercise it. Whether one or the other, the Tribunal should have provided the parties with the opportunity to address remedy. …”

The Court explained that in a REA appeal such as this, “given the broad and varied range of attacks launched against the REA, it was not realistic to expect the parties to address the appropriate remedy at the end of the hearing of the merits without knowing what the Tribunal’s findings were in regard to the broad range of alleged harms. Without the contributions of the parties on the question of remedy, it is not surprising the Tribunal found itself “not in a position” to consider the full range of remedial options.”

Although the Court of Appeal agreed with the Divisional Court that the ERT erred in the way it decided the remedy in this case, it declined to decide the issue of remedy itself, preferring to send the matter back to the ERT for determination.

Significance of Decision

The Court of Appeal decision is significant in that it confirms the following:

  • Deference should be given by the courts to ERT findings of fact, both on judicial review and statutory appeal.
  • The ERT has broad remedial powers on appeals from decisions of the Director, and is not confined to simply accepting or striking down the Director’s decision.
  • In complex ERT appeals such as those challenging a REA, the ERT may be required to conduct a bifurcated hearing – first making a decision on the merits, and second, as a matter of procedural fairness, allowing the parties to lead additional evidence and make additional submissions as to remedy.  Failure by the ERT to afford the parties procedural fairness as to remedy may justify overturning its decision.
  • On appeal from the ERT to the Divisional Court, the court should not apply the fresh evidence rule too strictly and should permit the introduction of new evidence which could have been submitted to the ERT on remedy, had the ERT conducted its hearing fairly.