Polluter must pay for cleanup, twice

Regarding the argument that Cascades has already paid to address the environmental liabilities… the fact that Cascades has paid another person to remediate the Site, does not relieve Cascades of its responsibilities under this statute… in selling the Site to Thunder Bay Fine Papers, Cascades chose to structure the sale transaction by discounting the sale price for the Site by an estimate of the amount which would be required to address the environmental issues on the Site. While this may have been a prudent business decision, it failed to include a sufficient guarantee that Cascades’ responsibilities under the EPA would be implemented by subsequent owners. It also failed to include security provisions to ensure that the necessary funds could only be used for these responsibilities.[emphasis added]

In theory, Cascades might be able to sue Superior to recover the double payment, but if (as Superior claims) it is impecunious, this will offer little comfort.

 

 

Environmental Review

Tribunal

 

 

 

 

Case Nos.:  09-076/09-090/09-091

 

Superior Fine Papers Inc. v. Director,

Ministry of the Environment

 

In the matter of appeals by Superior Fine Papers Inc. filed July 31, 2009, and by Cascades Inc. and Cascades Fine Papers Group Inc. filed August 7, 2009, for a Hearing before the Environmental Review Tribunal pursuant to section 140 of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended, with respect to an Order issued by the Director, Ministry of the Environment, on July 29, 2009, under sections 18, 132 and 196 of the Environmental Protection Act, regarding the operation of a paper mill located at 550 Shipyard Road, City of Thunder Bay, District of Thunder Bay, Ontario; and

In the matter of a Hearing held on June 2, 3, 8, 9 and 24, 2010 at 10:00 a.m. in the Martin Room, City Hall, 500 Donald Street East, Thunder Bay, Ontario.

 

Before:  Dirk VanderBent, Vice-Chair

 

Appearances:

Andrew Sinclair – Representative for the Appellant, Superior Fine Papers Inc.

Lana J. Finney and

Alexis Alyea – Counsel for the Appellants, Cascades Inc. and Cascades Fine Papers Group Inc.

Nicholas Adamson – Counsel for the Director, Ministry of the Environment

 

 

 

 

 

Dated this 20th day of May, 2011.

 

 

 

Reasons for Decision

Background:

On July 29, 2009, pursuant to sections 18, 132, and 196 of the Environmental Protection Act (“EPA”), Jim Fry, Director, Ministry of the Environment (“MOE”) issued a Director’s Order (“the Director’s Order”) to Cascades Inc., Cascades Fine Papers Group Inc. (“Cascades”), Thunder Bay Fine Papers Inc. (“Thunder Bay Fine Papers”), and Superior Fine Papers Inc. (“Superior”), respecting a paper manufacturing facility (the “Facility”) located on the shore of Thunder Bay Harbour at 550 Shipyard Road, Thunder Bay City, District of Thunder Bay (the “Site”).  A copy of the Director’s Order is attached to this Tribunal Order as Appendix “D”.  In overview, this Order imposes requirements on all four named persons for the provision of Site monitoring, electricity, and Site security, as well as actions to be taken in respect of a waste disposal system and a waste disposal site, both of which are located on the Site.  This Order also requires provision of financial assurance.

On July 31, 2009, Superior filed an appeal of the Director’s Order with the Environmental Review Tribunal (the “Tribunal”). On August 7, 2009, Cascades Inc. and Cascades also jointly filed an appeal of the Director’s Order with the Tribunal.  Thunder Bay Fine Papers did not appeal.

Cascades Inc. can be described as the parent company of Cascades.  The Director and Cascades Inc. entered into Minutes of Settlement executed on April 14, 2010, whereby the Director agreed, subject to approval by the Tribunal, to remove Cascades Inc. as a person named in the Director’s Order, in exchange for a contractual guarantee by Cascades Inc., to perform the work that Cascades is required to perform under the Director’s Order.  The full particulars of this agreement, which includes the terms of the guarantee, are set out in the Minutes of Settlement which are attached to this Tribunal Order as Appendix E.  In filing these Minutes of Settlement with the Tribunal, the Director submitted that Cascades Inc. is a large corporation, and, therefore, the Director is satisfied that Cascades Inc. could honour its obligations under these Minutes of Settlement if required to do so.  The Parties agreed that this arrangement would avoid the requirement for a very substantial amount of evidence in this proceeding regarding Cascades Inc.’s legal responsibility under the EPA to perform the work required in the Director’s Order.  As such, the agreement avoids a substantially protracted Hearing in this proceeding.  Both Superior and Cascades, as current and former owners of the Site, acknowledge that they can be named in the Director’s Order, where the Director otherwise has jurisdiction under the EPA to order the work required.  Accordingly, the Tribunal accepts the Minutes of Settlement, and directs the Director to remove Cascades Inc. as a named person in the Director’s Order.

 

In its appeal, subject to one exception, Cascades disputes that the Director has the jurisdiction under the EPA to require Cascades to perform the work under the Director’s Order.  Alternatively, Cascades maintains that the Tribunal should not require Cascades to perform this work as it would be unfair to do so in the circumstances of this case.

In its appeal, Superior does not dispute that the Director has the jurisdiction to require Superior to perform the work required under the Director’s Order.  However, Superior argues that it does not have the financial ability to pay for the work, and, therefore, requests that compliance with these requirements be deferred.

The Tribunal now turns to a description of the history of the ownership of the Site.  A paper mill has operated on the Site for almost 90 years.  The corporate structure of prior ownership of the Site is complex.  In summary, Cascades owned the Site and operated the Facility from 1993 to December 1997 when it sold the Site to Thunder Bay Fine Papers.  In reverse of the normal circumstance where the purchaser pays the vendor, Cascades as vendor paid Thunder Bay Fine Papers the sum of $4.5 million.  Undisputed evidence adduced in this proceeding, indicates that the Site was sold as a going concern (as opposed to the value of only its constituent assets).  One of the reasons the sale transaction was structured in this manner is that Thunder Bay Fine Papers assumed responsibility for all environmental matters respecting the Site, other than certain obligations set out in Article 9(1) of the written sale agreement (the “Environmental Indemnity”) for which Cascades agreed to assume liability. Further details regarding this Indemnity are discussed below.

Thunder Bay Fine Papers operated the Facility for less than three months before going into receivership.  Pursuant to a Court Order dated February 5, 2009, the Site was sold by the Receiver to Superior.  All of Thunder Bay Fine Papers’ assets have been sold or otherwise distributed. A report filed in the bankruptcy proceeding indicates that the Receiver did not anticipate that there would be any funds available for distribution to the company’s unsecured creditors.

Superior purchased the Site from the Receiver on February 4, 2009 for $2.75 million, paying $750,000 on closing, with the balance payable by a promissory note in the principal amount of $1.75 million, repayable 6 months after closing by a vendor-take-back mortgage on the lands and a general security agreement in favour of the Vendor.  The mortgage has been assumed by another mortgagor named CIT, and the term of this mortgage has been extended.  As of the completion of the Hearing, the full balance of the principal remained unpaid.  Superior acknowledges that, prior to purchase of the Site, it was fully aware of the environmental issues associated with the Site and the Facility, which include the matters addressed in the Director’s Order.  Superior also does not dispute that it was aware that it is a successor under the terms of the Environmental Indemnity, and, therefore, is bound by the terms of this agreement.

As of the date of completion of the Hearing, Superior had not resumed production at the Facility.

The environmental issues addressed in the Director’s Order can be grouped under four undertakings on the Site:  (1) an approved waste disposal site; (2) wood wastes deposited in an area called the bark pile; (3) an industrial sewage works; and (4) site security and supply of electricity.  The Director’s Order also includes requirements for monitoring, recording and reporting, and for the provision of financial assurance. The submissions of the Parties provide detailed information regarding each of these matters. To assist in understanding the Parties’ submissions, the Tribunal provides a brief description of each of these matters.

Approved waste disposal site:

Waste from the Facility operations has been deposited in an area located within the Site (“the Approved Waste Disposal Site”) pursuant to a Provisional Certificate of Approval Waste Disposal Site No. A 590101, which was issued to a former owner of the Site, Abitibi-Price, on August 8, 1984 (“the CofA(Waste)”).  The CofA(Waste) has been transferred to each subsequent owner, in turn.   It is not disputed Cascades owned and operated the Approved Waste Disposal Site during the time it owned the Site.

The CofA(Waste), at Superior’s request, was transferred to Superior’s name on February 26, 2009.  For a number of years, waste has been deposited on an area of land outside the site boundary approved in the CofA(Waste).  This was only discovered by everyone, including the MOE, when Cascades sold the facility to Thunder Bay Fine Papers.  As the deposit of waste in the unapproved area is in violation of the CofA(Waste) and contrary to subsection 27(1) of the EPA, the Director’s Order requires Cascades and Superior to apply for an amendment to the CofA(Waste) to include this unapproved area. The Director’s Order also requires that the amendment include a closure plan, a site management plan, and a financial assurance evaluation report.

Disposition of waste in the bark pile:

As noted in the Director’s Order, the operations at the Facility also generated a need for storage space for wood wastes. These process wastes remain stored in a location at the Site referred to as the bark storage area (“the Bark Pile”).  It is not disputed that leachate generated by the Bark Pile is a contaminant, giving rise to concerns regarding contamination of groundwater flowing into Lake Superior. It is not disputed that the Bark Pile is a waste disposal site regulated by the EPA and, as such, pursuant to section 27(1) of the EPA, requires a Certificate of Approval issued by the Ministry.  As no such certificate has ever been issued, the Director’s Order requires Superior and Cascades to submit an application for a Certificate of Approval for the unapproved Bark Pile, including plans for leachate management and closure of this site.  As explained below in the description of the Environmental Indemnity, Cascades acknowledges that it is responsible for remediation of the Bark Pile.

Industrial sewage works:

Paper production operations produce wastewater which requires treatment before being discharged to Lake Superior.   The sewage treatment system (“the Industrial Sewage Works”) which was installed, includes an extensive lagoon system, located on two adjacent water lots totaling 23.14 acres in the Thunder Bay harbour on Lake Superior (“the Lagoon”). The purpose of the Lagoon is to allow paper processing materials suspended in the water to be removed from the water as sludge, by means of settling, precipitation, flocculation, or coagulation, before the water ultimately flows over a weir and into the Lake.  Hence, the Lagoon serves to both treat the water and store the sludge until it is removed by dredging.  The Lagoon is comprised of water channels that loop back and forth within these two water lots (described as 10 serpentine passes).  These channels have been created by constructing berm walls, made of earth and shale, which direct the flow of the wastewater.  The area covered by the adjacent water lots is roughly rectangular in shape.  Berm walls (at passes 5 and 10) separate the water in the Lagoon from the water in Lake Superior on three sides of the water lots.  The fourth side of the water lots borders on land, which, from an aerial photograph, appears to be a wider peninsula containing a parking lot.  The other berm walls are interior, i.e., they do not border directly on the Lake.

The channels were originally constructed without a liner.  Because of the nature of the construction, the berm has had cracks in it over the years.  Also, because of the nature of its construction, the berm walls are permeable, i.e. water could migrate from the Lagoon to the Lake and vice versa.  When it was discovered that wastewater was leaking through the berms into Lake Superior, liners were installed in the passes which border on the Lake.  In April 2005, in response to a Provincial Officer’s Order, Cascades repaired a leaking liner in pass 5, by adding a second liner in the area of the leak and weighing it down with chains.  In 1997, the lagoon system was dredged and upgraded with aerators and diffusers.

This sewage treatment system was eventually regulated as an approved on-Site sewage works, currently governed by Amended Certificate of Approval (Industrial Sewage Works) No. 3758-5NTJ43, (“the CofA(Sewage Works”)) which the Director issued to Cascades  on August 29, 2003.  As with the CofA(Waste), at Superior’s request, the CofA(Sewage Works) was transferred to Superior on April 23, 2009.

As of the date of completion of the Hearing, Superior had not resumed operation of the Industrial Sewage Works.  It is not disputed that the majority of sludge now in the Lagoon was deposited during the time when Cascades owned the Site and operated the Industrial Sewage Lagoon.  It is also not disputed that the Lagoon is filled to near capacity and will need to be dredged before operation of the Industrial Sewage Works can be recommenced.  Superior does not dispute that the berm walls require maintenance, and has spent $100,000 to commence work in this regard.  However, it is not disputed that the work could not be completed for this amount of money, and that none of the maintenance work was done along the area of the berm wall where the Director asserts that seepage has occurred.

Based on observations of reduced water levels in the Lagoon, and cracks in the berm wall on pass 5, including slumping (a depression of the land under a portion of the liner), Parts 2.2 to 2.5 the Director’s Order require that the berm walls be repaired to prevent a release of the sludge into the Lake.  Parts 2.12 and 2.13 of the Director’s Order further require removal of the sludge in the Lagoon, as well as implementation of the steps necessary to bring the components and operation of the Industrial Sewage Works into full compliance with the CofA(Sewage Works).  It should be noted that Superior is not named in these Parts of the Director’s Order, as these requirements were imposed upon Superior under separate Order.  It is not disputed that Superior did not appeal the separate Order within the prescribed time period, and, therefore, it remains binding on Superior.

Site security and supply of electricity:

Due to the presence of hazardous chemicals or flammable wastes located within the building(s) or elsewhere situated on the Site, the Director’s concerns relate to the risk of discharge of these chemicals either through ruptures of containers and pipes due to freezing, or due to damage caused by vandalism. Electricity service is required to provide the necessary heating, and to power lights to facilitate night time security monitoring of the Site.   For this reason, the Director’s Order requires that Superior and Cascades ensure that the supply of electricity to the Site is not disrupted, and arrange for two security guards to be on duty 24 hours, seven days a week.

Monitoring, recording and reporting:

The requirements in the Director’s Order target two main aspects of the Site.  The first is a requirement to identify, classify, label, register, and monitor all waste on the Site, including identification and labeling of all waste flammable materials.

The second is to conduct daily visual inspections of the Lagoon berms, and to collect samples on a daily basis (pH, conductivity, total suspended solids) and monthly basis (phenols, chloroform, toluene, phosphorus and acute toxicity) from the effluent in the sewage lagoon in the immediate area of the seepage.

Both Cascades and Superior are required to do this work.

Financial Assurance:

In this Tribunal Order, Financial Assurance refers to an order to provide financial assurance to the Crown in right of Ontario under Part XII of the EPA.  In respect of waste disposal sites and waste management systems approved under Part V of the EPA, section 35 provides that no certificate of approval shall be issued unless the applicant has provided financial security in such amount and upon such conditions as the regulations prescribe.  However, as there is no applicable regulation in this regard which applies to the Approved Waste Disposal Site or the Industrial Sewage Works, the financial security requirement under section 35 is not a consideration in this proceeding.

Based on the evidence adduced at the Hearing, the only form of Financial Assurance that was in place before the issuance of the Director’s Order is in respect of the Industrial Sewage Works.   As noted in Part 1.21 of the Director’s Order, on May 13, 2008, the Director amended the CofA(Waste) to include a requirement for Financial Assurance.   At that time the CofA(Waste) was held by Thunder Bay Fine Papers.  The amendment requires that a financial assurance evaluation report be submitted by July 21, 2008.  The Director’s Order confirms that this report has never been filed.

In order to ensure that all of the requirements of the Director’s Order are performed, the Director’s Order requires that Cascades and Superior provide Financial Assurance in the amount of $5 million.   As noted in the submissions below, the Director has revised this requested amount to just over $2.7 million.

In this proceeding, the Tribunal has granted an Order, dated November 23, 2009 staying this requirement, as against Cascades, until final disposition of Cascades’ appeal.  As against Superior, this requirement was stayed until January 31, 2009, in order to afford Superior the opportunity to submit a Financial Assurance proposal to the MOE.  The Tribunal’s Order also provided that, if required, Superior could apply for an extension of the stay.  In the Tribunal’s Order, the Tribunal observed that, under MOE guidelines, Superior’s proposal respecting Financial Assurance could include a financial analysis to support a request to be exempt from the requirement to provide Financial Assurance based on undue financial hardship.  Superior never requested an extension of the stay.  As of the date of completion of the Hearing, Superior still had not submitted a Financial Assurance proposal to the MOE.

The Environmental Indemnity:

Article 9(1) of the sale agreement between Cascades and Thunder Bay Fine Papers provides:

9.    ENVIRONMENTAL

(1)    Indemnity of Vendor in Respect of Environment Matters

The Vendor hereby assumes liability and shall indemnify and save harmless the Purchaser, its shareholders, employees, officers, directors, agents, successors and assigns from and against any and all liabilities, losses, damages, lost profits, consequential damages, costs of investigation, cleaning up and/or remediation, natural resource damages, interest, penalties, fines, monetary sanctions, costs, reasonable solicitor’s fees and expenses, reasonable consultants fees and expenses, court costs and all other expenses that are incurred or suffered by the Purchaser and its shareholders, employees, officers or directors by reason of, resulting from, in connection with, or arising out of certain environmental obligations of the Vendor, specifically limited to:

The discharge of sediments in Thunder Bay Harbour resulting from its use and occupation of the Premises prior to Date of Closing;

The dredging of the lagoon and repair of the weir on the Premises; and

The removal of the bark pile and any issues related to the bark pile.  The Purchaser shall assume responsibility for annual inspections of the quality of the ground water on the Premises.

For greater certainty, the Vendor will have the responsibility for all costs of investigation, clean-up and/or remediation, penalties, fines, monetary sanctions, costs and all other expenses that are required to carry out and perform the specific foregoing environmental obligations as set out above, to the satisfaction and approval of the Ministry of Environment, or its successors, and/or the Department of the Environment, or its successor.

The Purchaser acknowledges and agrees that the Vendor will require unrestricted access to the Premises during normal business hours including use of the landfill for remediation and clean-up purposes of those environmental obligations outlined hereinabove, in accordance with any directive issued by the Ministry of Environment, its successors, and/or Department of Environment, or its successors.

Accordingly, as of December 21, 2007, Thunder Bay Papers, as the owner and operator of the Facility, was responsible for all other matters, including any maintenance and repairs necessary for proper operations.  The Director was informed of this by way of a letter dated January 11, 2008.

The Environmental Indemnity was subsequently modified pursuant to a letter agreement between Cascades and Thunder Bay Fine Papers dated July 10, 2008 (the “Amended Environmental Indemnity”).  Pursuant to the terms of the Amended Environmental Indemnity, Cascades made a one-time payment in the amount of $500,000 to Thunder Bay Fine Papers, in return for which, Thunder Bay Fine Papers agreed to carry out and perform all obligations relating to the dredging of the Lagoon.  Furthermore, the Amended Environmental Indemnity provides that Cascades would be relieved of any further obligations, monetary or otherwise, related to the dredging of the lagoon as set out in the sale agreement.

In summary, in respect of the requirements of the Director’s Order, Cascades emphasizes that, under the Amended Indemnity Agreement, its only continuing contractual responsibility is to remove the Bark Pile and address any other issues related to the Bark Pile, excluding responsibility for annual inspections of the quality of the ground water on the Site.

It is not disputed that Thunder Bay Fine Papers used the $500,000 paid by Cascades for purposes other than dredging the Lagoon, and that these funds are no longer available for this purpose.

 

Evidence adduced at the Hearing:

The following witnesses gave evidence on behalf of the Director:

• Sherry Hakala, Senior Environmental Officer, MOE;

• Alisdair Brown, Regional Hydrogeologist, MOE, who was qualified as an expert to give opinion evidence on the groundwater impacts of the Bark Pile and Approved Waste Disposal Site and on the adequacy of the management plan and closure plan for the Approved Waste Disposal Site;

• Todd Kondrat, Regional Surface Water Specialist, MOE, who was qualified as an expert to give opinion evidence on the risks and potential impacts imposed by the constituent sludge and water in the Lagoon, in terms of its chemical and physical characterization;

• Carl Taylor, Environmental Manager for Superior Fine Papers; and

• Wim Smitts, Senior Environmental Officer, MOE.

The following witness gave evidence on behalf of Cascades:

• Leon Marineau, Vice President, Environment for Cascades Inc, and a professional engineer in the Province of Quebec, who was qualified to give opinion evidence regarding hydgrogeology, waste management, and geotechnical analysis of bearing capacity and slope slide failure analysis.

The following witness gave evidence on behalf of Superior:

• Andrew Sinclair, President, Superior Fine Papers Inc.

Apart from the financial status of Superior, the factual evidence adduced at the Hearing is not in dispute.  However, some of the inferences and opinions based on this factual evidence are in dispute.  Where necessary, the Tribunal addresses these disputes in this Tribunal Order.  Unless otherwise stated in this Tribunal Order, the Tribunal finds that all the witnesses gave their evidence in a forthright and credible manner.  As the probative evidence adduced at the Hearing has been adequately summarized in the submissions of the Parties, a further précis of the evidence has not been provided in this Tribunal Order.

Relevant Legislation and Guidelines:

Relevant legislation and guidelines that are not cited in the Tribunal’s analysis and findings are set out in Appendix F to this Tribunal Order.

 

Issues:

The Parties provided an Issues List for this proceeding.  The Tribunal has organized its findings and analysis by grouping related issues, as numbered in this Issues List.

Cascades and Superior have both requested relief on grounds of fairness.  Cascades also asserts that the Director’s Order is “unworkable”.  By way of explanation, under the Director’s Order, both Cascades and Superior are required to complete most of the work specified in this Order.  The Director asserts that they have joint and several responsibility to fulfill the requirements of the Director’s Order, and, therefore, it is left to Cascades and Superior to determine how these obligations will be shared between them.  Cascades maintains that, as it has been unable to secure Superior’s co-operation in fulfilling the requirements of the Directors Order, the Order is unworkable.

As the grounds respecting fairness and the issue whether the Director’s Order is workable, have both been raised in respect of much of the work required by the Director’s Order, the Tribunal will address them first.

Superior – Fairness – Financial Inability:

1. Whether Superior should be relieved of its responsibility, in whole or in part, for Parts 2.10-2.16 of the Director’s Order due to financial inability.

Cascades – Fairness and whether the Director’s Order is proportional and workable:

20. Whether it is fair to order Cascades to perform the work in the Director’s Order, where Cascades no longer owns the Site and, pursuant to contract and/or Court Order, private law responsibility for matters at issue in the Director’s Order (other than in respect of the Bark Pile) rests with Superior.

21. Whether it is fair for Cascades to be ordered to take any actions in relation to the dredging of the Lagoon, given that Cascades entered into an agreement with a predecessor owner of the Site, Thunder Bay Fine Papers, specifying that Thunder Bay Fine Papers would dredge the lagoon system in exchange for a one-time payment by Cascades in the amount of $500,000, which payment has been made, and Superior is bound by this agreement.

Superior – Fairness – Responsibility for the Bark Pile:

2. If Cascades has assumed responsibility for the Bark Pile, whether is it fair for Superior to be ordered to perform the work in the Director’s Order related to the Bark Pile.

Other Issues Respecting the Bark Pile:

7. Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades:

a. to develop a plan to remove as much waste as is practicable from the Bark Pile and to transport and dispose of those wastes in an approved manner, and implement the plan, and

b. to have a qualified consultant submit an application for a Certificate of Approval for the Bark Pile, including leachate management and closure plans as set out in Parts 2.11, 2.12 (c) and (e), and 2.13 – 2.14 of the Director’s Order.

8. Whether the Director has jurisdiction under sections 18 and/or 196 of the EPA to issue an order requiring a person to apply for a Certificate of Approval.

9. Whether the Director has jurisdiction under sections 18 and/or 196 of the EPA to issue an order requiring a person to apply for a Certificate of Approval for works on lands that the person does not currently own, manage or control but which it formerly owned, managed or controlled.

10. If ordered to do so under sections 18 and/or 196 of the EPA, whether a person can apply for a Certificate of Approval for works on lands that the person does not currently own, manage or control.

Issues Respecting the Approved Waste Disposal Site:

14. Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades to ensure that a qualified consultant submits a completed application to amend the CofA(Waste), as required under Part 2.15 of the Director’s Order.

15. Whether the Director has jurisdiction under sections18 and/or 196 of the EPA to issue an Order requiring a person to apply to amend a Certificate of Approval held by a third party.

16. Whether the Director has jurisdiction under sections18 and/or 196 of the EPA to make an Order requiring a person to apply to amend a Certificate of Approval held by a third party for works on lands that the person does not own, manage or control.

17. If ordered to do so under sections 18 and/or 196 of the EPA, whether a person is entitled to apply to amend a Certificate of Approval held by a third party.

Issues Respecting the Industrial Sewage Works:

3. Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades:

a. to provide to the Director a written plan detailing the steps necessary, the time required, and the name of a person licensed by the Professional Engineers Ontario, to repair the Industrial Sewage Works to stop the seepage from entering Lake Superior and implement the plan as set out in Parts 2.2-2.3 of the Director’s Order;

b. to conduct daily visual inspections, collect samples, and provide weekly written reports to the Director on the results, as set out in Parts 2.4-2.5 of the Director’s Order;

c. to retain a consultant to develop a plan to remove the waste sludges from the sewage lagoons regulated by the CofA(Sewage Works) and bring the components and operation of the Site’s sewage works into full compliance with this CofA, and to implement the plan as set out in Parts 2.11; 2.12 (a), (b), (d) and (e), and 2.13 of the Director’s Order.

Issues Respecting Provision of Electricity and Site Security:

4. Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades:

a. to make arrangements with the Independent Electricity Service Operator to ensure the supply of electricity to the Site as set out in Parts 2.6-2.7 of the Director’s Order; and

b. to develop and implement a plan to maintain security of the Site as set out in Parts 2.8-2.10 of the Director’s Order.

5. Whether Cascades ever owned, managed or controlled some or all of the equipment and/or materials that the Director is of the view require electricity and/or security as set out in Parts 2.6 and 2.7 of the Director’s Order.

6. Whether the Director has jurisdiction to order Cascades to do the work set out in parts 2.6 and 2.7 of the Director’s Order, if Cascades did not own, manage or control some or all of the equipment and/or materials that the Director is of the view require electricity and/or security as set out in these Parts.

22. Whether it is fair to order Cascades  to do the work set out in Parts 2.6 and 2.7 of the Director’s Order, if Cascades did not own, manage or control some or all of the equipment and/or materials that the Director is of the view require electricity and/or security as set out in these Parts.

23. Whether it is fair to order Cascades to do the work set out in Parts 2.12(f) and 2.13 of the Director’s Order, if Cascades did not own, manage or control some or all of the equipment and/or materials which are the subject of these Parts.

Issues Respecting Monitoring of the Site:

11. Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades to retain a consultant to develop a plan to monitor the Site as set out in Parts 2.12(f) and 2.13 of the Director’s Order.

12. Whether Cascades ever owned, managed or controlled some or all of the equipment and/or materials which are the subject of Parts 2.12(f) and 2.13 of the Director’s Order.

13. If Cascades never owned, managed or controlled some or all of the equipment and/or materials which are the subject of Parts 2.12(f) and 2.13 of the Director’s Order, does the Director have jurisdiction to order Cascades to do the work set out in Parts 2.12(f) and 2.13 of the Order.

Issues Respecting Financial Assurance:

18. Whether the requirement under Part 2.15 of the Director’s Order for Financial Assurance in the amount of $5,000,000, or the revised amount, is an accurate assessment of the amount of financial assurance required for the work required by the Director’s Order.

19. If not, what is the appropriate sum of financial assurance required for each component of the work required by the Director’s Order?

Discussion, Analysis, and Findings:

Issue #1: Whether Superior should be relieved of its responsibility, in whole, or in part, for Parts 2.10-2.16 of the Director’s Order due to financial inability.

Superior’s Submissions:

Superior states that it does not dispute the merits of the Director’s Order, but is not presently in a financial position to comply. Accordingly, Superior requests a stay, for a reasonable period of time, of the enforcement of the following paragraphs, asserting that it is a fact that Superior does not presently have the funds to carry out the work ordered:

a. 2.6 – The IESO will not ensure the power will not be interrupted without a financial guarantee, which Superior cannot do at this time.

b. 2.7 – See 2.6 at paragraph (a), above.

c. 2.8, 2.9 and 2.10 – Superior cannot afford to have two staff on the site 24 hours a day. Superior currently maintains a minimum of one person on site 24 hours a day.

d. 2.12 – Superior does not have the financial resources to pay for a consultant to perform the work ordered in 2.12, or to undertake the work that would have been outlined in 2.12 as ordered in 2.13.

e. 2.14 – The Director concedes 2.14 has been complied with.

f. 2.15 – Superior does not have the financial resources to hire the consultant to complete the work ordered in paragraph 2.15.

g. 2.16 – Superior does not have the financial resources to provide $5,000,000.00 in financial assurance to the MOE.

Superior notes that it has not appealed the Director’s Order on the basis that it is trying to avoid or dodge the work, or just simply does not want to do it.   Rather, Superior asserts that it appealed the Director’s Order (except for the Bark Pile provisions) on the basis that Superior does not at present have the financial resources to do the work. Superior maintains that once the funding is received, the work will be completed. Superior notes that it so advised MOE staff at the time the Director’s Order was issued, and maintains that this statement continues to be true.

Superior asserts that, where the Director seeks an assurance that the berm will not fail if a stay is granted to Superior, an Order encompassing testing is unnecessary in light of the testimony of Mr. Kondrat that he and Ms. Hakala went to the Site themselves to do testing, as such information was not available from Superior.   As a result, the MOE should be able to carry out any testing deemed necessary to satisfy themselves the berm is stable.

Superior observes that the other Parties have suggested that Superior could sell the assets to pay for the repairs.  In response, Superior notes the evidence of Mr. Sinclair that Superior cannot sell the assets without the written permission of the current mortgage holder. Alternatively, Superior argues that, even if the mortgage holder did give permission, there would still be insufficient funds to carry out the work. Mr. Sinclair has testified that the current value of the registered mortgage is $1,964,144.16. The current value of the metal in the facility, as per the testimony of Mr. Marineau and a quote from a contractor is $3,500,000.00. The Director originally requested $5,000,000.00 in financial assurance.  Superior observes, therefore, that the sale of the assets would be approximately $3.5 million dollars less than what is needed. Superior maintains that, even under the Director’s new scheme of financial assurance requirements totalling $2,715,240.00, there would still be a shortfall of just under $1.2 million.

Superior emphasizes that it is not a publicly traded or widely held company, and, therefore, there is no regulatory reason to have audited financial statements. Superior maintains that the unaudited statements it produced accurately reflect the financial position of Superior, and that these statements confirm that there are insufficient funds to do the work ordered.

Superior disputes the Director’s assertion that Superior’s representations regarding its financial position are suspicious. Superior asserts that it simply does not have access to funds to complete the work as ordered.  Superior maintains that, when it did have funds, it has done what it could to comply with the Director’s Order. As an example, Superior notes that it has spent $100,000 on the partial repair of the berm, but was, thereafter, without further funds to keep the hydro bill current.

Cascades’ Submissions:

Cascades submits that Superior has not provided enough documentation demonstrating that it is impecunious.  Cascades asserts that previous decisions of this Tribunal are clear that it is simply insufficient to cry poor.  Detailed evidence and supporting documentation is required if a party is going to rely on a lack of funds to avoid its environmental obligations.  In Legere v. Director, Ministry of Environment and Energy, [1993] O.E.A.B. No. 48, at pg. 3. (“Legere”) the Environmental Appeal Board stated:

As for M. Legere’s statement that he cannot afford to install the system approved by the Director, we note that he provided no financial statements, income tax returns, or other business records to support this.  An applicant who argues financial problems has the onus of proving lack of financial capacity.  This onus will not be met by bald statements, but must be backed up by sufficient documentation before the Board will accept this kind of argument.

Cascades maintains that Superior is asking that the Tribunal make a ruling relieving it of responsibilities for the environmental liabilities on its own lands, without having provided adequate financial justification, and without providing any alternatives for the protection of the environment.

Cascades submits that, on its own evidence, Superior’s contention that it lacks the funds necessary to fulfil its environmental obligations is not to be believed.  The Provincial Officer’s Order and Order under appeal were both issued in July 2009.  Superior’s response at that time was that it did not have the funds to do the bulk of the work required by the Orders.  Superior attempted to appeal the Provincial Officer’s Order on the basis of lack of funds and has appealed the Director’s Order on the same basis.  However, since making that claim, Superior, by its own admission, has received nearly $700,000 ($430,000 and $264,000) in tax rebates from the City of Thunder Bay.  Of that, a mere $100,000 has been spent on environmental issues.  Moreover, Mr. Sinclair testified that since preparing the financial documents for Superior in January 2010, Superior has received an extra $150,000 (which Mr. Sinclair at first mistakenly calculated to be $1 million).  Cascades asserts that Superior, therefore, cannot be believed when it says it has no money to do the work required by the Director’s Order.

Cascades notes that Mr. Sinclair has testified as to the assets of Superior, which Cascades submits can be liquidated to remedy the environmental issues on the Site, indicating that the evidence demonstrates that all of the equipment and other assets originally purchased from Thunder Bay Fine Papers are still on Site.  Cascades notes that Superior paid $2.5 million, which Mr. Sinclair admits accounted for a discount of $2 million for environmental liabilities.  Therefore, Superior valued the assets at the time of purchase at $4.5 million.  Mr. Marineau has testified that Cascades received offers to purchase the assets in 2007.  At that time, the assets were valued on a salvage basis at $7 million, and subsequently in 2009, at $3.5 million.  He further testified that the value is likely in the range of $2.5 to $6 million.  Accordingly, Cascades maintains that there are assets on Site that should, in fairness, be looked to first, prior to turning to a former owner.

Cascades notes that some of the assets will have to be paid to the secured creditors, but not all.  The evidence demonstrates that there is a secured creditor over the assets, CIT.  CIT was originally owed $1.7 million.  That secured debt is now in the amount of $2.1 million, due to interest and the addition of the $264,000 tax rebate that was owing to the receiver but kept by Superior.  Thus, Cascades asserts that the only credible evidence provided by Superior demonstrates that it owes this $2.1 million and nothing else.

Cascades argues that other creditors have not been proven to exist or to have any legitimate claim on the Site’s assets.  Cascades notes that Mr. Sinclair has provided what he characterizes as non-audited financial records to demonstrate the financial situation of Superior, and that Mr. Sinclair has testified that there is an additional $1.9-$2.1 million owed to other creditors.  However, in his own testimony, he mistook the total loan amount to be $3 million. These creditors include, Mr. Sinclair claims, the former shareholders and other interested parties of Thunder Bay Fine Papers. Cascades submits that neither these unaudited financial statements, nor the bald assertions put forward by Mr. Sinclair, are reliable or sufficient proof of Superior’s actual debts.

Cascades submits that proof is required before Superior escapes its environmental responsibilities, and maintains that no loan documents have been provided.  Cascades notes the following:  Mr. Sinclair says no loan documents even exist in respect of the loans from these “interested parties”, whom he refuses to name.  No cancelled cheques, bank drafts or wire transfers showing that this money was loaned to Superior have been produced.  Mr. Sinclair testified that there are bank statements but that he has not produced them.  Cascades states that Superior has instead produced what appear to be five random pages of its bank statements for a couple of months in late 2009 and early 2010.  Apart from the $264,000 tax rebate, these bank statements show no significant influxes of money and, to the contrary, they show deposits totalling $40,538.25, the tax rebate aside.  Moreover, no evidence of payments by Superior, save four invoices, has been provided.

Cascades maintains that this represents the totality of the financial information provided by Superior, and Cascades submits it is insufficient.   Cascades notes that Superior had knowledge that all relevant documents relating to its impecuniosity claim were to be produced.  Superior was subject to a motion by the Director asking for further and better production of documents relating to Superior’s financial condition.  Mr. Sinclair is a Chartered Accountant and swore an affidavit attesting to the fact that Superior had produced all of the relevant documents, and, until approximately one month ago, had the benefit of legal counsel. Other than in respect of the Bark Pile, lack of financial means is the only basis upon which Superior has appealed the Order.  Cascades argues that, if there was genuine evidence of loans beyond the CIT loan, this would have been produced.

Cascades asserts that the only evidence before the Tribunal relating to the loans to the unnamed parties consists of a single line on an unaudited financial statement, and Mr. Sinclair’s assertion that Superior owes this money to the unnamed parties.  Cascades maintains that this is wholly insufficient to prove that Superior owes $2 million to unnamed creditors.  If these loans had truly been made, there has been ample opportunity to provide documentation evidencing the making of loans and their deposit into Superior’s bank account.  Cascades notes that none of this has been provided.

Cascades argues that it may be that these are not real loans, but instead represent monies owing to Thunder Bay Fine Paper’s creditors which have been reflected on the books of Superior in the hopes of recouping some of their losses in the event that Superior obtains financing, which Mr. Sinclair denies.  Alternatively, the loans may simply have been fabricated in an effort to avoid responsibility for the environmental issues on the Site.  While there has been no evidence of this fabrication tendered, Cascades submits that the Tribunal may make this finding in light of the complete absence of any documentation evidencing these loans, and Superior’s admission that it received $700,000 after claiming it had no money to do any of the work in the Order.

Cascades submits that these alleged loans to mysterious third parties should not be considered in determining whether Superior has sufficient assets on the site to deal with its environmental obligations.  Cascades submits that the case law is clear that detailed evidence is required by a party in order to rely on a lack of funds to avoid its environmental obligations, and asserts that no evidence even approaching the required level of detail has been produced by Superior.

In summary, Cascades submits that Superior’s claims of being impecunious should, therefore, be dismissed.

Director’s Submissions:

The Director relies on the Order of the Tribunal in Kawartha Lakes (City) v. Ontario (Director, Ministry of the Environment) (2009), 48 C.E.L.R. (3d) 95, noting that, although the facts in the present case are different, the Tribunal’s statement in that case, that the objective of protecting the environment must take priority over issues of fairness, applies in the present case.

The Director submits that relieving Superior from liability in the present case would pose a threat to the environment. The Director maintains that, even if it is true that Superior has no money to carry out the work ordered, Superior currently owns and has management and control of the Site. As a consequence, it should remain bound by the Order in order to ensure that, at the very least, it cooperates with the efforts of Cascades to comply with the order.

The Director points to evidence that Superior refused to consent to Cascades applying for a Certificate of Approval for the Bark Pile on its behalf.  The Director asserts that, if Superior is released from the Director’s Order, this sort of obstructionist behaviour may well continue, with the consequence that Cascades is prevented from expeditiously addressing the environmental issues on the Site, including the Bark Pile.  Put another way, Superior should not be allowed, on the one hand, to claim that it cannot do the work ordered because it does not have the money, while, on the other hand, refuse to cooperate with Cascades’ efforts to address the environmental issues on the Site.  Superior should be required to carry out the work ordered, even if it has no money to do so itself, to ensure that Superior provides Cascades with its full cooperation, on pain of enforcement measures being taken.

The Director asserts that, even under the fairness jurisprudence in 724597 Ontario Ltd., Re (1994), 13 C.E.L.R. (N.S.) 257 (Ont. Env. App. Bd.) (“Appletex”) [affirmed at Ontario (Ministry of the Environment & Energy) v. 724597 Ontario Inc. (1995), 26 O.R. (3d) 423 (Div. Ct.)], it would be unprecedented to relieve a company in Superior’s circumstances from liability. The Director is unaware of any case where the Tribunal has relieved a corporation of liability on fairness grounds. The Director maintains that the Tribunal has only ever relieved individuals of liability on fairness grounds, usually where the individual bore no fault and did not have full knowledge of the environmental issues when he/she became involved with the site in question.  In the present case, Superior purchased the Site with knowledge of the environmental problems at issue, knowing that it had insufficient funds on hand to address those issues, that it would need a further $35 million loan to restart the mill and that there were and are significant business risks involved in operating the mill.

The Director submits that the evidence has disclosed the following:

• Superior is a company backed by sophisticated business people who have loaned it a total of roughly $2.1 million.

• These business people were investors in Thunder Bay Fine Paper and, therefore, well aware of the environmental issues associated with the Site and with the business risks associated with the business.

• Andrew Sinclair, while working for his father’s company EKT90, did work on the mill for Thunder Bay Fine Papers to make the mill operational again.

• Andrew Sinclair was then himself CFO of Thunder Bay Fine Paper for a brief period before it went into receivership, and therefore presumably aware of the financial risks associated with the business.

• The Sales Information Package prepared by the receiver for Thunder Bay Fine Paper, highlights the environmental risks associated with the Site and emphasizes that the site is to be sold “As is, where is”.

• The Sales Information Package refers to a Phase I environmental assessment report, yet Superior never requested a copy of the report prior to purchasing the Site and, apparently, never did any environmental due diligence of its own, despite its knowledge of the environmental issues on the Site.

• Superior’s own business plan highlights environmental risks associated with the Site and notes the failure of the two previous owners of the mill – Cascades and Thunder Bay Fine Paper – to make money running the mill.

• Superior purchased the Mill and associated assets on an “As is, where is” basis under paragraph 3.03 of the Agreement of Purchase and Sale.

• Superior bought the mill knowing that it needed a further $35 million in financing to resume operations, and knowing that it did not have sufficient cash in hand to address the environmental problems on the site, even by its own estimates.

• Superior did stand to gain financially if it managed to make a go of the operation.

In light of this evidence the Director submits that even under the old Appletex fairness jurisprudence, it is perfectly fair to require Superior to carry out the work ordered.  Superior knowingly assumed both financial and environmental risks hoping to reap financial gain and must live with the consequences of having assumed those risks.

The Director asserts that Superior’s evidence regarding its financial status is suspicious, noting that, although Superior claims to have no further source of funds, Mr. Sinclair has confirmed that, since January 31, 2010, when unaudited financial statements indicated that unnamed parties had loaned it $1,944,874, these unnamed parties have also advanced a further $150,000 to Superior. Thus, the Director maintains that it appears that Superior does have access to further funds.

The Director also submits that the very circumstances surrounding the loans made by these unnamed parties are deeply suspicious, noting that Superior refuses to name the parties that loaned it money, apparently because the parties in question do not want to be exposed to potential liability, environmental or otherwise. The Director notes that, although Superior claims that these parties have now loaned it a total of approximately $2.1 million, without any written record of the terms on which the loans were made, Mr. Sinclair’s evidence indicates that these unnamed parties do stand to benefit financially if the mill returns to operations because they run businesses that would do business with the mill. The Director submits that the Tribunal ought not to allow these parties to gain the benefit of potential financial gain if Superior successfully restarts the mill, while they refuse, in the interim, to shoulder the burden of remedying the environmental problems on the Site, or even to identify themselves.

Findings on Issue #1:

The Tribunal has the jurisdiction, based on fairness, to exercise its discretion to relieve a person named in an order issued under the EPA of some or all of the obligations imposed under the Order.  Previous cases have addressed, in detail, the scope of this jurisdiction and the parameters guiding the exercise of this discretion.

In Appletex, the Ontario Environmental Appeal Board (the “Board”) (predecessor to the Tribunal) stated at page 289:

… the Act does not actually require environmental protection in any particular case. The power to issue an order is completely discretionary. The Director has no duty to issue an order, and thus has no legal duty to ensure the protection of the environment in any particular case. The legislature has presumably given Directors this broad discretion …for the purpose of allowing them to take into account a wide variety of factors and do what is fair in the circumstances of each case. …

The Board endorses the principle that environmental costs should be internalized by those who create the risks or who benefit directly from them rather than the public, wherever possible.  However, this principle must be subject to considerations of fairness.

Appletex and other relevant cases have been considered in an Order by the Tribunal, dated November 20, 2009, in Kawartha Lakes (City) v. Ontario (Director, Ministry of the Environment) (2009), 48 C.E.L.R. (3d) 95 (“Kawartha Lakes 1”); a further Order, dated December 18, 2009, in the same case:  [2009] O.E.R.T.D. No. 68 (“Kawartha Lakes 2”); and the Tribunal’s final Decision in the same case:  52 C.E.L.R. (3d) 273 (“Kawartha Lakes 3”).

In Kawartha Lakes 1, the Tribunal concluded, at paragraph 74:

Nowadays, given the Tribunal’s findings in Associated Industries, supra, it is highly doubtful that the Tribunal would relieve an orderee from an order if there is jurisdiction to name that person and the environment would be compromised if they were relieved from compliance. In other words, considerations of fairness, costs, etc. are secondary to the environmental protection objective. Environmental protection is not simply an option to consider, as the implication appears to be in Appletex at 289, but rather the overarching goal to be accomplished.

The decision in Kawartha Lakes 1 emphasizes that, when exercising its discretion whether to relieve a person from his/her obligation under a control order, the paramount consideration for the Tribunal is whether such action will further the overarching purpose of the EPA.  Nevertheless, the Tribunal, in Kawartha Lakes 1, also notes that fairness issues, such as financial hardship, may continue to play an important role in appeals before the Tribunal (see paragraph 79).  While this may represent a more circumscribed approach to the exercise of this discretion, the Tribunal also notes that, even in Appletex, the Board expressly stated that it endorsed the principle that environmental costs should be internalized by those who create the risks or who benefit directly from them rather than the public, wherever possible.

Subsequent to the decision in Appletex, the Ministry, in May 2007, issued a revised policy entitled Compliance Policy – Applying Abatement and Enforcement Tools (“the Compliance Policy”).

In Kawartha Lakes 1, the Tribunal observed that, although the Compliance Policy is not a law or regulation, it nonetheless carries significant weight in the Tribunal’s deliberations, as it would not serve the goals of reducing unpredictability and unfairness to ignore the policies used by the Director (see paragraph 71).  However, in that decision, the Tribunal also noted that it can make a conscious decision not to follow a guideline if circumstances warrant (see paragraph 73).

 

The provisions of the Compliance Policy that are relevant to Issue #1 are:

Financial hardship may be taken into consideration when determining the compliance schedule, and the type of requirements to be incorporated into the order. In support of a financial hardship submission, the responsible person should file the financial information specified in Guideline F-14, “Economic Analyses of Control Documents on Private Sector Enterprises and Municipal Projects” so that the ministry can undertake an economic analysis of that person’s financial capacity in accordance with that Guideline.

The legislation also provides that a person who complies fully with an order shall not be prosecuted for or convicted of an offence in respect of the matter or matters dealt with in the control document that occurs during the period within which the control document is applicable. (pp. 17-18)

[…]

4. Financial Hardship

Where a named person can demonstrate, on reasonable and probable grounds, that they are unable to pay and can therefore not carry out the requirements of an order, the statutory decision-maker may consider adjusting the requirements of the order so that his or her imposition does not cause undue financial hardship. Generally, however, a statutory decision-maker should refrain from taking a person off a control document on the grounds of financial hardship or constraints. Doing so will tend to encourage other potential responsible persons to divest themselves of their assets when confronted with environmental cleanup costs, in order to render themselves financially unable to meet the requirements of a control document. This would undermine the administration of Ministry legislation. In addition, it may be necessary to name an individual despite their claims of financial hardship in order to ensure the ministry’s ability to cause work to be done or to require registration on title.

Finally, experience shows that it is often extremely difficult to assess whether a person named in a control document faces undue financial hardship since all of the information is within the control of the person alleging the undue financial hardship.

Human health and environmental protection is first and foremost. The Ministry will use mandatory abatement tools such as orders and name responsible parties whenever warranted to firmly and swiftly respond to a situation or incident that has the potential for significant human health and/or environmental consequences. (p. 26)

The Tribunal now turns to consideration of Superior’s request in the circumstances of this case.  Mr. Sinclair, on behalf of Superior, acknowledges that, at the time it purchased the Site, Superior was aware of the environmental concerns on the Site relating to the Bark Pile, the Industrial Sewage Works, and the Approved Waste Disposal Site.  It is important to emphasize that Superior does not seek to be excused from its responsibilities under the Director’s Order.  Mr. Sinclair, on behalf of Superior, requests only a ‘stay’ of these responsibilities.  Strictly speaking, the granting of a stay under section 143 of the EPA is only an interim measure, pending the disposition of the appeals in this proceeding.  Despite his use of this term, the Tribunal understands that Superior’s request is for an adjustment of the compliance dates specified in the Director’s Order, not that it be removed as a named person in the Director’s Order.

Although one of Superior’s submissions addresses a “stay” of Superior’s obligations in respect of the Industrial Sewage Lagoon, the Tribunal has earlier noted that Superior is not named in these Parts of the Director’s Order, as these requirements were imposed upon Superior under separate Order.  Accordingly, Superior’s obligation in respect of the Industrial Sewage Lagoon is not an issue in this proceeding.  Consequently, the Tribunal has not considered this submission in addressing Issue #2.

The evidence adduced respecting Superior’s financial circumstances suggests that sale of assets on the Site, upon decommissioning, may be sufficient to fund Superior’s obligations under the Director’s Order.  However, the evidence does not indicate when such funds could be obtained.  Although Mr. Sinclair has acknowledged that Superior has “silent” investors, the evidence does not confirm that Superior can access additional funds at this time.   The Tribunal gives due consideration to Superior’s assertion that it will implement the actions required under the Director’s Order when, and if, it secures the financing to commence operations on the Site.  The Tribunal accepts that Superior’s payment of $100,000 to implement berm repairs is evidence of Superior’s intentions in this regard.

The Tribunal accepts that Superior is experiencing some on-going capital underfunding and restricted cash-flow.  However, based on the paucity of the evidence adduced by Superior, it is difficult to determine whether these difficulties are severe enough to be characterized as a financial inability to fund the work ordered by the Director.  In this regard, the Tribunal notes that Superior did not call any evidence to counter the factual evidence referenced in the submissions of Cascades and the Director respecting the circumstances relating to Thunder Bay Fine Paper’s ownership of the Site, Superior’s acquisition of the Site, and the receipt of nearly $700,000 ($430,000 and $264,000) in tax rebates from the City of Thunder Bay since Superior acquired the Site.  The Tribunal notes that Mr. Sinclair indicates that these funds have been used to continue to maintain the Site.  Even viewing Mr. Sinclair’s efforts and motivations on behalf of Superior in their most positive light, the Tribunal accepts the submissions of the Director and Cascades that the financial disclosure provided is, at best, vague.  A detailed accounting of the disposition of the $700,000 was not provided.  Superior has submitted that, as it is not a publicly traded or widely held company, there is no regulatory reason to have audited financial statements. The Tribunal does not accept this submission.  Audited statements are produced for the purpose of verifying the financial records of a business, whenever there is a reason to do so.

The Tribunal further notes that Superior has not filed any economic or financial analysis with the MOE in support of a request to have Financial Assurance obligations reduced because of financial hardship, as is required under the MOE’s Guideline entitled “Financial Assurance Guideline” which was last reviewed by the MOE in November 2005.  The relevant sections regarding proponents who assert financial hardship are set out in sections 6.10.1 and 7.2.4:

6.10.1 Regulated parties sometimes ask to have Financial Assurance obligations reduced because of financial hardship. Some regulated parties may ask to provide only a fraction of the total Financial Assurance required at the outset of their operation until they “build up their business” or “can better afford the Financial Assurance.” Parties who ask for such considerations should be reviewed carefully before an approval is issued. They could be vulnerable to failure if economic conditions deteriorate and could constitute a risk of leaving a site remediation problem with little or no Financial Assurance. Financial Assurance is a necessary cost of doing business and is needed to internalize the environmental risks that would otherwise be borne by the public. Businesses should not be subsidized and should provide their fair share of Financial Assurance.

7.2.4 If the regulated party claims that provision of the Financial Assurance may cause unemployment or undue financial hardship, an economic or financial analysis should be carried out to verify these claims. This analysis should be completed in accordance with appropriate Ministry guidelines, procedures or policies, such as Guideline F-14, Economic Analyses of Control Documents on Private Sector Enterprises and Municipal Projects.

Accordingly, the Tribunal finds that Superior has not provided the required financial analysis to assist the MOE, and this Tribunal, in determining whether Superior’s current financial circumstances indicate that it is experiencing financial hardship.

In light of Superior’s insufficient financial disclosure, the absence of clarity regarding the nature of Superior’s obligations to its private investors, and the fact that Superior has not provided an adequate accounting of the disposition of the $700,000, verified by formal audit or other documentary records, the Tribunal finds that Superior has not met the onus of establishing that it does not have the financial capacity to meet the requirements of the Director’s Order.  Consequently, the Tribunal is not prepared to extend any of the compliance dates for Superior’s obligations under the Director’s Order, unless otherwise specified in this Tribunal Order for other reasons.

Alternatively, assuming that Superior is having cash flow problems (as opposed to adequate capital assets on liquidation of the Site), this is not the only factor to be considered by the Tribunal.  To paraphrase Appletex, the Tribunal, when exercising its discretion, must consider a wide variety of factors to do what is fair in the circumstances, to ensure that environmental costs should be internalized by those who create the risks or who benefit directly from them wherever possible.  In this regard, the Tribunal finds the following considerations to be relevant.

• Clearly, Superior will benefit if the environmental problems on the Site are remediated, as this is an important step in bringing the Site into compliance with the EPA, so that operations can resume.

 

• The Tribunal, elsewhere in this Tribunal Order, has found that Cascades is not responsible for maintaining electrical and supervisory services in the buildings on the Site.  Therefore, Superior is the only named person in the Director’s Order who is required to do this work.  It is not disputed that these services are required to secure hazardous substances stored on the Site.

 

• The Director’s Order was issued on July 29, 2009.  Hence Superior has already had over one year to pursue further financing.

 

The Tribunal has considered the Director’s argument that Superior should remain bound by the Order in order to ensure that, at the very least, it cooperates with the efforts of Cascades to comply with the Director’s Order.  However, as noted above, Superior does not seek to be removed as a named person in the Order.

In light of the above factors, the Tribunal finds that, even it accepts that Superior had or has a cash flow problem, it would not further extend the compliance dates in the Director’s Order, as against Superior.  Superior has had a lengthy time to organize its business affairs, and was well aware of the environmental liabilities associated with the Site before acquiring it.  It is time now for Superior to assume the environmental costs that are necessary to ensure that the environment is protected.

Superior does not otherwise dispute the Director’s jurisdiction to order the requirements set out in the Director’s Order.  Accordingly, subject to the Tribunal’s finding respecting Financial Assurance, the requirements of the Director’s Order will remain in place as against Superior.

Issue #20. Whether it is fair to order Cascades to perform the work in the Director’s Order, where Cascades no longer owns the Site and, pursuant to contract and/or Court Order, private law responsibility for matters at issue in the Director’s Order (other than in respect of the Bark Pile) rests with Superior.

Issue #21. Whether it is fair for Cascades to be ordered to take any actions in relation to the dredging of the Lagoon, given that Cascades entered into an agreement with a predecessor owner of the Site, Thunder Bay Fine Papers, specifying that Thunder Bay Fine Papers would dredge the Lagoon system in exchange for a one-time payment by Cascades in the amount of $500,000, which payment has been made, and Superior is bound by this agreement.

Superior’s Submissions:

Superior denies it has been obstructionist as alleged by the Director. (Superior’s submissions respecting its negotiations with Cascade respecting the Bark Pile are described in the Tribunal’s finding below).  Superior maintains that it did not stop Cascades from addressing the environmental issues, as Cascades has not tried to actually do any work to address the issues in the Director’s Order.

Superior asserts that, despite Superior’s willingness to co-operate, Cascades has done little to address the environmental issues on the Site.  Superior maintains that the main items in the Director’s Order have been known to Cascades for several years, and yet Cascades has intentionally delayed, or sought to defer its responsibility, without making an effort to continue discussions, negotiations or mediation to address its joint responsibility under the Director’s Order collaboratively – a measure which Superior maintains that it has consistently indicated its willingness to take.

Cascades’ Submissions:

Cascades submits that, where the Tribunal has determined that there is jurisdiction to issue an order, the Tribunal should then consider whether it should exercise its discretion to make the order and, if so, how to exercise its discretion in issuing the order.   In the event that the Tribunal determines that it has jurisdiction to uphold the Director’s Order, Cascades submits that the Tribunal ought to exercise its discretion to vacate the Director’s Order in its entirety as against Cascades for the following reasons:

• Because the Order is unworkable, it does not protect the environment;

• The Order is not proportional to the harm it seeks to prevent; and

• The Order is not fair.

Submissions in support of Cascades’ position that the Director’s Order is unworkable:

Cascades notes that the Tribunal considered the issue of discretion in Appletex.  There, as the foundation of its power to exercise discretion, the Board said that, “Where neither the Ministry nor the Director appear to have put their mind to principles of fairness, efficiency, and effectiveness to guide the exercise of discretion, the Board may attempt to enunciate and apply such principles.” (Appletex, paragraph 137).  Cascades submits that the principles of fairness, efficiency, and effectiveness still guide the discretionary powers of the Tribunal, under the overarching purpose of protecting the environment.

Contrary to the submission of the Director, Cascades states that it is not suggesting that matters of fairness and private civil liability ought to override protection of the environment.  Rather, Cascades submits that if the Director’s Order does not protect the environment because it is unworkable, then it ought not be upheld.  Furthermore, an order ought to be vacated against a party if it is not proportional or is unfair, provided the environment is still protected by virtue of the effect of the order, or other orders, against another party or parties.

Cascades argues that the Order in this case, as drafted, does not represent an efficient and effective way to protect the environment, maintaining that this is the key difference in Kawartha Lakes from the matter before the Tribunal.  Cascades asserts the following:  In Kawartha Lakes, the order represented the most efficient and effective way to clean up the contamination.  The orderee in Kawartha Lakes owned and controlled the lands on which the contamination was located.  It had the option to clean up the contamination in a manner satisfactory to itself and the Ministry, and then the further option to collect that cost from the contaminating parties through a civil proceeding.  This was the most practicable way to ensure the environment was protected.  In contrast, in this case, the Order does not represent an efficient or effective means of protecting the environment.

Cascades argues, moreover, that in Kawartha Lakes the relief sought by the orderee would have lengthened the hearing and reduced efficiency, without offering more effective protection of the environment.  Cascades maintains that is not the case here.   Cascades notes the following:  In Kawartha Lakes 1, the single orderee attempted to call evidence related to the factual liability of other, contaminating parties who were not named in the order.  Such evidence risked significantly and unnecessarily expanding the length of the hearing.  The Tribunal found that a detailed inquiry into fault would prejudice the ability of the Tribunal to deal with environmental problems in a prompt and efficient manner and would offer no corresponding benefit to the purposes of the environmental legislation.

Cascades maintains that the case at bar is very different.  Here, Cascades has no such ownership of the lands or undertakings.  The Director is attempting to make Cascades responsible for lands and undertakings for which it has no control, and which it cannot control due to the fact that another party, Superior, has control over the lands.  Superior is, significantly, also named in the Director’s Order, and has an outstanding effective Provincial Officer’s Order issued against it, mandating that Superior do some of the same work as that in the Director’s Order.

Cascades submits that the inquiries it is asking the Tribunal to make into the Director’s Order in this case, and the discretion it is asking the Tribunal to exercise when making those inquiries, is, therefore, fundamentally different than the situation the Tribunal considered in Kawartha Lakes.  Here, Cascades does not seek to name new parties in the Director’s Order.  Nor has Cascades sought to delve into issues of responsibility that are unrelated to the protection of the environment, as was the case in Kawartha Lakes.

Instead, in the case at bar Cascades urges the Tribunal to consider the requirements of the Director’s Order, the responsibilities, intractable conflicts, and jurisdictional issues the requirements of the Director’s Order create, and to find that the Director’s Order as drafted is unworkable–it is neither fair, efficient or effective in its protection of the environment.  And, on this basis Cascades submits, it is in the best interests of the environment that the Director’s Order be vacated against Cascades.

Cascades argues that, if there were no owner in control of the Site, then a former owner would be able to act similarly to the orderee in Kawartha Lakes.  In such a situation, where the site is abandoned, it may make sense to turn to a former owner, provided the jurisdiction requirements of section 18 are met.  However, Cascades maintains that, in this case, the Site has not been abandoned.  Superior is still an active, interested owner, and has submitted evidence in this case.  Cascades argues that to turn to Cascades, a former owner, in this situation, creates intractable conflicts concerning issues of responsibility and control, as discussed in Cascades’ submission in respect of each of the undertakings.  Cascades maintains that such conflicts lead to delays and/or stalemates and do not result in the protection of the environment.

Cascades asserts that, as a former owner, it has no control over the Site, whereas Superior does.  Cascades argues that the MOE should not look to Cascades until the resources of Superior are exhausted.  Cascades observes that the MOE has not even attempted to make a personal order against the Director and sole shareholder of the current owner, or attempted to enforce the existing Provincial Officer’s Order.  Cascades notes that the MOE admitted it has put the enforcement of that order “on hold”, and maintains that the MOE should not be permitted to accept at face value the pleas of Superior that it has no money and simply turn to a former owner because it perceives the former owner to have deep pockets.

Cascades asserts that, if Superior is not first looked to, then the Director’s Order only serves to unjustly enrich Superior and prevent Cascades from employing the least cost method to protect the environment.  Cascades argues, moreover, that perverse incentives for Superior are created that would not be in the best interests of the environment, posing the following as an example:  Despite a lack of oversight ability, the Director has ordered that Cascades be financially responsible for the Approved Waste Disposal Site, and to put monitoring, reporting and decommissioning plans in place and implement them.  However, without control of the Site, and control over the wastes that are disposed of at the approved and operational landfill, the MOE is putting Cascades at the mercy of the actions of Superior on an ongoing basis.  And, more importantly from the perspective of the environment, it gives Superior free reign to deposit, or permit the deposit of anything in the waste disposal site without financial responsibility for those actions or responsibilities for its management plan or monitoring.  Cascades submits that this is not in the best interests of the environment, maintaining that such a situation creates dangerously perverse incentives.

Cascades argues that shared responsibility is equally unworkable as this will create issues between the conflicting interests of Cascades, as a former owner, and Superior as the current owner.  In support of this argument, Cascades notes the following:  Mr. Sinclair has testified that the landfill is necessary for Superior’s operations.  Ms. Hakala has further testified that more work is required to submit an application for a Certificate of Approval to operate the landfill then to simply decommission it.  Ms. Hakala also admitted that the least cost scenario for the protection of the environment would satisfy the MOE.

Cascades questions why, therefore, does the Director’s Order require more from Cascades than the least cost option?  Cascades submits there is no valid reason relating to protection of the environment.  Cascades maintains that it has been ordered to pay to fund the requirements necessary to make the landfill site approved and operational, instead of simply being ordered to do what is necessary for the protection of the environment, which would likely be to close the landfill to which Superior is likely to strenuously object.  Cascades notes the following:  The Director concedes that Cascades should not be required to do work that is required only if the mill is returned to operation.  Yet, the Director maintains that Cascades should still apply to amend Superior’s Certificate of Approval to include a site management plan, supporting documentation for the increase in the landfill’s size, a closure plan and financial assurance evaluation, all of which either relate to the operation of the site or are not legally required.  Cascades argues that none of these are necessary or advisable to prevent the harm section 18 seeks to avoid.  Cascades maintains that, if the Order is upheld against Cascades, Superior and Cascades are likely to be in direct conflict over how the work of the Order ought to be done.  Cascades will want the least cost option, whether it impairs operations or not, and Superior will want something that benefits it and its operations, not unlike with the Bark Pile.

Cascades asserts that, as the examples of the landfill and of electricity and security for the chemicals demonstrate, the work required by the Order does not simply involve monetary issues, but fundamental issues of control regarding how the work will be carried out.  In support of this submission, Cascades asserts the following:  The Director claims that Cascades can simply do the work and then sue Superior for compensation.  However, resorting to civil courts cannot address the issue of control over how the work will be carried out.  This is in part what makes the Order unworkable, as the Order requires Cascades to have responsibility when it has no control over the site and, therefore, over what is done on the site to fulfill the Order.

Cascades asserts, as an example, that the Bark Pile has created conflicts between Superior and Cascades.  Cascades also similarly observes that, to avoid excess costs to Cascades, the least cost option regarding the lagoon may be to dredge and decommission it, or use the equipment located at the mill to dredge and dispose of it, which could similarly create conflicts.  Cascades asserts that correspondingly, reducing or eliminating the amount of monitoring, recording and reporting necessary on the Site would be the least-cost option for Cascades, maintaining, however, that this necessarily means selling assets to reduce the scope of the work or decommissioning the Site altogether.  Cascades states that it cannot do this without Superior’s consent.  Cascades argues that the Director’s Order must be functional, and that pointing to the civil courts cannot relieve the Director of this responsibility.

Cascades argues, moreover, that the work in the Director’s Order requires greater powers than can be provided by the civil courts.   In support of this argument, Cascades asserts the following:  Cascades needs Superior’s consent and cooperation as an owner.  This has not been forthcoming.  The Order is further deficient because it only provides Cascades “access”, not the control it needs to effectively deal with the environmental issues.  Cascades maintains that these issues must be addressed to do the work required by the Director’s Order and cannot be resolved in civil proceedings.

Cascades argues that, as the Order is currently drafted, Cascades is in a continuous tug of war with Superior, the owner of the Site, maintaining that the Director has only ordered that Cascades have “access” to the Site to perform the works required in the Order.  Cascades asserts that what those access rights entail is murky at best, as Ms. Hakala’s testimony in cross-examination and then in reply on this point demonstrates.  Cascades further asserts that, as demonstrated by the evidence in this hearing regarding the specific required works, set out above, more than access is required to remedy these environmental issues.  Actual work needs to be done and decisions made with respect to the assets of the Mill.  Cascades asserts that such work and decisions, while in the best interests of the environment, may not be in the best interests of the Mill’s owner.

Cascades argues that, if the environmental risks are as severe as this Order suggests, considering that it is directed against a former owner, then the orderee must have the authority necessary to carry out the required works, including disposing of hazardous chemicals with or without the owner’s consent, or decommissioning and padlocking the mill, with or without the owner’s consent.  Without these powers, a third party, such as a former owner, cannot effectively and efficiently address the environmental issues.

Cascades maintains that having a workable Order is in the best interest of the environment, citing the Tribunal’s decision in Kawartha Lakes.  Cascades submits that, in that decision, the Tribunal says repeatedly that one of the main roles of the Tribunal is to provide an efficient resolution to many of the disputes relating to decisions of the Director in a manner that furthers the protection of the environment.  Cascades argues that, in this case, the Director’s Order as drafted creates inherent conflicts, not efficient resolution, further submitting that it is not workable, and, consequently, does not protect the environment.  Therefore, it ought not to be upheld as against Cascades.

Submissions in support of Cascades’ position regarding proportionality:

Cascades notes that, under the MOE’s Compliance Policy, the MOE’s approach to compliance and enforcement is to safeguard the public interest by ensuring that the MOE’s response to an incident is proportionate to its severity.  Cascades argues that, in this case, the Director has jumped the gun and has issued an Order requiring works that are disproportionate to the environmental concerns presented by this Site, which are really no different than the majority of pulp and paper mills across Ontario.

Accordingly, Cascades argues that the Director’s Order is not proportional, further maintaining that the works required in this Order are not reflective of the risks posed by the Site, for the following reasons:

• The Site is not abandoned;

• The Site does not have unknown environmental risks;

• The Site is owned, managed and controlled by Superior, an existing entity with knowledge of the environmental issues that need to be addressed and the resources to do so; and,

• The Site’s actual environmental risks do not require an Order against Cascades.

Cascades asserts that it has demonstrated in the course of this Hearing that this is not an instance of another orphaned site with pressing environmental liabilities with no one to look after them because the site has been abandoned.  In support of this assertion, Cascades maintains the following:  This is not the Marathon Pulp/Tembec case or the Mackenzie pulp mill in British Columbia.  Similar risks do not exist here.  Mr. Sinclair, the sole shareholder, has testified that this site is owned, managed and controlled by Superior, which is attempting to get financing with the intention to operate the mill.  Although it is currently not operating, the Site is far from abandoned.  Superior has assets available which should first be applied to the environmental liabilities before a former owner is looked to for remedy.  Cascades consequently argues that it is not a proportionate response to the actual risks posed by the Site to turn to a previous owner when there is insufficient evidence demonstrating that the current owner cannot perform the required works.

Cascades asserts that Superior understood the environmental liabilities when it bought the mill, and knows what ought to be done to remedy the Site, and maintains that these risks do not necessitate turning to a former owner, who has already paid once to remedy the issues.  Cascades states that the evidence demonstrates that Thunder Bay Fine Papers had a Phase I environmental assessment for the Site, which documented the environmental issues with the Site.  This Phase I report was available to Superior.  Superior itself, in its own business plan, estimated the environmental liabilities at $2 million.

Cascades further observes that Mr. Sinclair testified that many of the same persons in control of Superior had familiarity with Thunder Bay Fine Papers.  In this regard, Cascades notes the following:  Mr. Sinclair himself was the CFO of Thunder Bay Fine Papers for a month.  His brother, Dan Sinclair, one of Superior’s directors, was the CEO of Thunder Bay Fine Papers.  Superior retained for a time the same environmental manager as Thunder Bay Fine Papers, Mr. Quennell.  As well, the alleged lenders to Superior overlapped with those who lent money to, and/or worked for, Thunder Bay Fine Papers.  Mr. Sinclair testified that Superior bought the property on an as-is, where-is basis with the knowledge that, other than in respect of the mercury-contaminated sediment in the harbour and the Bark Pile, Superior would have responsibility for all environmental issues on Site.  Cascades consequently argues that there were no surprises here, and there is no corresponding need to look to Cascades for their remedy, further maintaining that such a response is not proportionate.

Submissions regarding Fairness:

Applying the Appletex decision, Cascades submits that the Order as against Cascades ought to be revoked in its entirety on the basis that it is unfair for the following reasons:

• The current owner of the Site can afford to pay for all, or most of the work;

• Cascades has already paid to address the environmental liabilities on the Site;

• The Order is premature; and,

• The Order requires that the Site be made operational, which benefits Superior exclusively with no corresponding benefit to the environment.

Cascades’ submissions respecting Superior’s ability to pay for the work are provided under Issue #1.

In support of Cascades’ position that it has already paid to address the environmental liabilities on the Site, Cascades states that the evidence has shown that Cascades has already paid significant sums of money, directly and indirectly, to deal with the post-sale environmental liabilities on the site.  Accordingly, Cascades argues that it is unfair to require Cascades to continue to pay for the environmental issues on Site prior to turning to the current owner, who already has an outstanding Order against it.

Cascades maintains that its actions demonstrate that it was never Cascades’ intention to shirk its responsibilities regarding any of the environmental issues.  Cascades asserts that it made provisions for, and paid significant amounts of money, to ensure that any remaining environmental liabilities were addressed after it sold the facility.  In this regard, Cascades notes the following:  Mr. Marineau has testified that, in addition to transferring all of the assets of the Mill, which had been valued at the time at least $7 million on a salvage basis, Cascades paid Thunder Bay Fine Papers an additional $4.5 million.  Mr. Marineau testified that this was intended to address the environmental liabilities on the Site. The evidence shows that Cascades paid another $500,000 in exchange for Thunder Bay Fine Papers’ agreement to perform the Lagoon dredging.  Mr. Marineau demonstrated that this represented a fair estimate of the cost of the work if Thunder Bay Fine Papers undertook the work itself as part of its operations. In total, Cascades paid $12 million towards the Site when it relinquished ownership.

Cascades states that it has continued to pay, in the form of a $430,000 property tax refund it was expecting to receive from the City of Thunder Bay.  In this regard, Cascades notes the following:  Mr. Marineau testified that the refund covered the years from 2004 to 2007 in which Cascades owned the Site and overpaid on property taxes.  Mr. Sinclair has testified that it was paid instead to Superior.  Mr. Sinclair admitted that Superior has spent the entire rebate, almost half a million dollars, on the Mill’s operations.  Again, none of this has been spent on dealing with the environmental liabilities on Site, other than $100,000 on the partial berm repair.

Cascades asserts that it has paid for the environmental risks on the Site, and, therefore,  the Director’s Order requires that Cascades pay again for the maintenance of the Site while Superior owns it.  Cascades argues that the Director has the power to stop this cycle, by forcing Superior to liquidate assets to clean up the Site and comply with the two Orders issued against it.  Cascades asserts that, instead, the Director is perpetuating the cycle, by issuing this Order as it is drafted against Cascades.  Cascades submits that this does not represent a fair response to the environmental liabilities posed by the Site.

In support of Cascades’ position that the Director’s Order was premature, Cascades submits that the Director’s Order was issued without a full understanding of the reality of the environmental liabilities on the Site.  In support of this position, Cascades asserts the following:  Based on the information he had in hand at the time, it is likely that the Director thought the Lagoon berm was in a worse condition that has turned out be the case.  The other environmental undertakings, such as amending the CofA(Waste), the Site security and electricity, the Bark Pile issues, and the monitoring and recording for the Site were not the primary concern or impetus of the Director’s Order.  Many of these undertakings are already complete, or are administrative in nature.  Cascades submits that the evidence tendered at this Hearing has shown that there was either no basis for issuing the Director’s Order at all, or no basis for issuing it against a former owner, in order to protect against the harm that section 18 is intended to address.  It is submitted that even if there is a basis for any of the provisions in the Director’s Order to be upheld, the evidence demonstrates that the current owner has active management of the Site as well as assets with value that should be exhausted prior to making an order against the former owner, Cascades.  In fact, since the issuance of the Provincial Officer’s Order to Superior and the Director’s Order, both in July 2009, Superior has received significant funds but has neglected to apply these to the environmental issues, other than $100,000 spent to repair the berm, but not in the area of concern.  As such, Cascades submits that the Director has jumped the gun and acted prematurely in exercising his discretion to issue the Director’s Order in the first place and issuing it to a former owner, Cascades.  Cascades asserts that such premature action is not a fair response to the environmental issues at the Mill.

In support of Cascades’ position that Cascades should not pay to make the Site operational, Cascades notes that both Ms. Hakala and Mr. Marineau have testified to the fact that the requirements of the Order are such that Cascades is not simply being required to protect the environment, but instead to make the Mill operational again.  The Director has conceded this point, although he takes a very narrow view as to what aspects of the Order are operational requirements.  Cascades argues, therefore, that the requirements of the Director’s Order are not justifiable as a fair response to the environmental issues, and go above and beyond what is necessary to protect the environment, as Cascades has submitted with respect to each of the undertakings.  Cascades argues, moreover, that the Director has no jurisdiction to make the Order, asserting that he is limited to making orders to prevent the environmental harm that section 18 seeks to prevent.  In support of this postion, Cascades asserts the following:  The Director’s Order itself is structured so that the environmental remediation that Cascades is required to perform is only done in a way that maintains the viability of the Mill, regardless of whether there are other options that would similarly, or better, protect the environment.  Such options should include decommissioning the Site, or removing hazardous assets.  However, no provision for such is available in the Order.  As discussed in detail with respect to each of the undertakings, Cascades argues that the Director, by virtue of the Director’s Order, is thereby actively enriching Superior at Cascades’ expense, although this was undoubtedly not the intended purpose of the Order.

Cascades states that, unlike the orderee in Kawartha Lakes, Cascades cannot choose how to remedy the environmental issues.  Cascades argues that the Director has outlined the ways in which the environmental issues can be remedied in the Director’s Order itself, and, as a result, the Director’s Order necessarily maintains the viability of the Mill.  Cascades states that it is not permitted to deal with the environmental issues as it sees fit, and submits that this does not represent a fair Order against Cascades, and is not a fair means of dealing with the environmental issues at the Mill.

Cascades submits that it has demonstrated that turning to Cascades for the work required by the Director’s Order is not a fair, efficient and effective means of protecting the environment, and is, therefore, an inappropriate exercise of discretion.  The circumstances of this case militate against turning to Cascades as a former owner for the requirements outlined in the Director’s Order.

Director’s Submissions:

The Director submits that the Tribunal should reject Cascades’ arguments, as Cascades is inviting the Tribunal to engage in precisely the type of analysis of matters of fairness and private civil liability that the Tribunal has stated, in the Kawartha Lakes, must take a back seat to protection of the environment.

The Director maintains that, if it is, indeed, the case that Superior would be unjustly enriched were Cascades required to remedy environmental problems on the Site, then Cascades can seek restitution from Superior in a civil lawsuit (as it has already done with respect to the property tax refund). The Director maintains that the legal doctrine of unjust enrichment is a recognized and flexible cause of action that is designed for precisely this purpose.  As authority for this position, the Director cites Peter v. Beblow, [1993] 1 S.C.R. 980 at paras. 9-10.

The Director further asserts that it is well established that in circumstances where two parties lie under a joint legal obligation, and one of the parties discharges the obligation thereby benefiting the other party, the party that discharges the obligation can seek restitution from the party that benefited on the basis unjust enrichment.  The principle was applied, for instance, in Carleton (County) v. Ottawa (City), [1965] S.C.R. 663.  Similarly, the Supreme Court has recognized this cause of action in Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, [1992] S.C.J. No. 101, at paras. 47-48.

The Director submits that these cases recognize a cause of action designed to remedy precisely the sort of unjust enrichment to which Cascades says it would fall victim if forced to carry out the work ordered while Superior is still the owner and in management and control of the Site, i.e., Cascades and Superior would lie under a joint obligation to carry out the work, by virtue of the Director’s Order, but Cascades would be forced to do the work itself because Superior has insufficient finds to do the work. Superior would thereby be unjustly enriched at the expense of Cascades.

The Director maintains that, because unjust enrichment is a recognized cause of action in such circumstances, Cascades can make itself whole by suing Superior for unjust enrichment.  The Director submits, therefore, that Cascades should not be relieved of responsibility for any work ordered on the basis of this “unjust enrichment” argument.

The Director asserts that, if the Tribunal accepts Cascades’ “unjust enrichment” argument as a basis for relieving it of liability, a company that is a former owner or that was formerly in management and control of an undertaking or property could virtually never be issued an order, as work performed by a former owner or party formerly in management and control of a site will almost always end up benefiting the current owner of the site.  The Director notes that the only exception would be a circumstance where, as with the Bark Pile, the former owner has retained private law liability for an environmental issue.

The Director maintains that Cascades has suggested that the present case is unusual in that the Site is not an “orphan site”, because Superior still owns and occupies the Site and exercises management and control over it.  The Director notes that Cascades’ position appears to be that the Director (and the Tribunal) should indefinitely delay requiring Cascades to address the environmental problems on the Site until it becomes genuinely orphaned, and only then would it be appropriate to pursue Cascades.

The Director submits that this sort of indefinite delay in addressing environmental concerns is precisely what this Tribunal sought to avoid in Kawartha Lakes 1, where the Tribunal articulated why protection of the environment must be given priority over consideration of fairness and private law liability.  In this regard the Director refers to the decision in Kawartha Lakes 1:

… A detailed inquiry into fault would prejudice the ability of the Tribunal (and perhaps the Provincial Officer or Director in the first instance) to deal with environmental problems in a prompt and efficient manner and would offer no corresponding benefit to the purposes of the environmental legislation.  (para. 77).

…

At the end of the day, the EPA seeks to ensure that appropriate environmental measures are carried out by one or more of those who are properly named under the relevant ordering section and who have the capacity to do the work. While it may be interesting that others could have been named or that one party contributed to a problem less than others (or in the case of innocent owners, not at all), those are not really issues that are germane to the questions before the Tribunal. Those interesting issues are practically suited to resolution in another forum. Accordingly, the Tribunal finds that there is an obvious reason why many of the Appletex factors did not find their way into the Compliance Policy. The issuance of orders, and appeals therefrom, are not strictly speaking, meant to make final determinations of financial liability for contaminated sites.  (para. 79).

The Director submits that the Tribunal’s primary concern must be prompt and efficient response to environmental issues, while issues of private law liability, including unjust enrichment, should be left to civil courts to sort out.  The Director asserts that Cascades’ argument, if accepted, would result in an indefinite and lengthy delay in addressing the environmental issues on the Site.  In this regard, the Director points to Mr. Sinclair’s testimony that although Superior has a deadline of July 16, 2010 to pay off its mortgage, CIT [the mortgagee] may, once again, extend the deadline beyond its original due date in August 2009.  The Director asserts that Superior may continue to limp on indefinitely, without becoming formally insolvent, but also without the resources required to address the environmental issues on the Site.

The Director submits, on the other hand, that delaying holding Cascades to account would serve no discernible purpose even from a private law perspective. The Director maintains that, if Cascades does the required work now, and Superior eventually does obtain the $35 million it needs to restart operations, then Cascades can make itself whole, from a private law perspective, by suing Superior for unjust enrichment.  Similarly, if, as Cascades claims, Superior has machinery that could be sold off for more than it would cost to remedy the environmental issues on the Site, Cascades can sue Superior to access these resources and make itself whole.  The Director also maintains that, if Superior is genuinely impecunious and it does not obtain the $35 million it is seeking, then the Site is genuinely an orphan and Cascades will have to do the work ordered anyway.

Findings on Issues #20 and #21:

As the detailed submissions by Cascades indicate, there have been significant differences of opinion between Superior and Cascades regarding how the requirements of the Director’s Order should be implemented.  The genesis of this dispute appears to stem from Cascades’ goal in effecting remediation in the most economic manner, versus Superior’s desire to complete the work in a manner which maximizes the Site’s capacity to efficiently support on-going operations. As a result, actions have been delayed because Cascades does not have Superior’s consent, as owner of the property, to conduct the work Cascades wishes to do on the property.

One of the main areas of disagreement between Superior and Cascades relates to remediation of the Bark Pile.  Cascades proposed to remove the contents of the Bark Pile to the Approved Waste Disposal Site, or capping this waste in situ, as this is the most economical means of remediating this area of the site.  Capping in situ would require a new Certificiate of Approval.   It is not disputed that Cascades, in compliance with Part 2.14 of the Director’s Order, prepared an application for a Certificate of Approval in respect of the Bark Pile. Cascades submitted this application to the MOE indicating that Superior was the applicant.  However, it is also not disputed that the MOE requires the consent of the owner before issuing a Certificate of Approval, which was not forthcoming from Superior prior to the Hearing.

Cascades asserts that it appears that Superior did not want to reduce the space in its waste disposal site by having the bark wastes transferred there, without getting a benefit in the form of concessions from Cascades.   In response, Superior denies it has been obstructionist, maintaining that Superior and Cascades were in negotiations over capping the pile in place, but that Cascades insisted on conditions and guarantees with which Superior could neither agree or comply.  Superior asserts that it could not guarantee that there is sufficient quality of clay in the approved landfill site to cap the Bark Pile, nor guarantee that the clay in the approved landfill is of the quality that would be required to use as a capping material.  Irrespective of which person is right, one thing is clear:  Remediation of the Bark Pile has not proceeded in light of this dispute.

The MOE’s Compliance Policy partially addresses this problem at page 23:

When issuing a control document to more than one person, it is not the role of the statutory decision maker to apportion or allocate liability among parties, or make findings of “fault” or “degrees of fault”. Since the legislation provides no mechanism to adjudicate such issues in relation to persons named in a control document, statutory decision-makers should generally refrain from apportioning liability among those persons. Also, any apportionment of liability in a control document would not be binding on any court, should the same incident be the subject of a civil action between some or all of the persons named in the document. Generally, those named in a control document are to be held jointly and severally liable to carry out the work specified in the document. After the control document is issued, named persons are free to negotiate matters of “fault” and apportionment of liability among themselves. Failing a settlement of such issues, they are free to take legal action against one another and have matters of apportionment of liability and “fault” adjudicated by the courts. If indeed the named persons are able to reach a settlement which includes a clear basis for allocating liability for the work specified in the document, with the consent of the statutory decision-maker and the named persons, the control document may be amended to incorporate the settlement.

The EPA does not make any express provision regulating the order in which named persons should undertake the work required in a Director’s order.  As noted above, the Compliance Policy provides that those named in a control document are to be held jointly and severally “liable” to carry out the work specified in the control document.  In this context “liability” does not refer to private liability, i.e. liability under civil law.  Rather, it refers to an obligation under the EPA to meet the requirements of this statute to protect the environment.  Accordingly, the Compliance Policy is simply confirming that each person who has such an obligation under the EPA in respect of an environmental problem is equally responsible to fulfill the requirements of this statute.

The Tribunal has considered the following submissions raised by Cascades:

• the Director’s Order is unworkable because Cascades does not have unfettered access to the Site to implement its proposed remediation alternatives in response to the requirements of the Director’s Order;

• The Director’s Order is not proportionate because the Site is not orphaned – there is a current owner which is an existing entity with knowledge of the environmental issues that need to be addressed and the resources to respond, and, consequently, it is premature and unnecessary to require Cascades, as a former owner, to respond at this time; and

 

• The Director’s Order is unfair because Superior can afford to pay for all, or most of the work, Cascades has already paid to address the environmental liabilities on the Site, and the Director’s Order requires that the Site be made operational, which benefits Superior exclusively with no corresponding benefit to the environment.

The Tribunal will address each of these submissions in turn.

Regarding the first submission, although Cascades has referred to the Director’s Order as being “unworkable”, this term is not used in the EPA.  The Tribunal’s jurisdiction is to determine whether the required actions under the Director’s Order are in accordance with the provisions of the EPA.  In this jurisdictional context, Cascades’ submission raises two questions:

1. Whether Cascades should be named in the Director’s Order if there is an intractable dispute between Cascades and Superior regarding the appropriate remediation alternative.

 

2. Whether there is authority under the Director’s Order to authorize Cascades to both enter the Site and utilize resources on the Site to perform the actions required under the Director’s Order, if Superior withholds its permission to do so.

 

Regarding the issue of which remediation alternative should be selected, Superior and Cascades should first be encouraged to resolve any outstanding issues between themselves.  Failing such agreement, the Tribunal notes that Part 2.12 of the Director’s Order requires that both Cascades and Superior each provide plans detailing the actions necessary to fulfill the requirements under this Part of the Director’s Order.  Under Part 2.13 a proposed plan can be implemented only upon approval of the Director.  Accordingly, the Tribunal notes that, under Parts 2.12 and 2.13, it is the Director who decides which proposed remediation alternative is to be implemented.

In Oxford (County) v. Ontario (Ministry of the Environment), [2008] O.E.R.T.D. No. 40, the Tribunal has addressed some of the parameters to be considered when reviewing remediation alternatives.  At paragraph 80, the Tribunal stated:

Given the broad statutory definitions of “adverse effect” and “deemed impairment” of water quality, both the EPA and the OWRA may be applied in a very wide range of circumstances.  Therefore, it is not possible to exhaustively list the criteria to be considered when evaluating the effectiveness of a remediation alternative or its comparative merits where multiple alternatives are being proposed.  Such criteria will include:

• The nature, severity, and extent of the contamination/impairment to be redressed;

• Whether a remediation alternative addresses all the criteria within the definitions of “adverse effect” and/or “deemed impairment” of water quality;

• A comparison of the effectiveness of each remediation alternative in reducing or eliminating the contamination/impairment, and the amount of time required to achieve this result;

• A comparison of the resources (time, physical resources, and labour) required to implement each remediation alternative; and

• Whether a remediation alternative itself may cause an adverse effect or deemed impairment of water quality.

At paras. 99-100, the Tribunal further stated:

Respecting the County’s argument that the costs of a remedial alternative should be proportional to the environmental problem, the Tribunal accepts that Ministry policy should not be limited by such proportionality, as the goal is to achieve the objectives of the EPA and OWRA.   In ATCO Gas & Pipeline v. Alberta (Energy and Utilities Board), [2006] 1 SC.R. 140, the Supreme Court of Canada found that it has long been recognized that what is “in the public interest” is not really a question of law or fact but is an opinion.  As well, in Crest Centre (Meadowcrest) Inc. v. Ontario (Director, Ministry of Environment) (2007), 33 C.E.L.R. (3d) 132 (“Crest Centre”), the Tribunal also observed that the absence of a detailed statutory provision outlining factors to be considered by the Director, or a provision establishing more structured discretion for the Director, does not mean that there are no constraints on the Director’s discretion when acting in the “public interest”.  Crest Centre refers to  Johnson v. Ontario (Ministry of Environment), [2006] O.E.R.T.D. No. 5 at para. 65 where the Tribunal stated:

The Tribunal agrees that statutory decision-makers, including the Tribunal itself, have an authority and a “duty to choose the best course of action, from the standpoint of the public interest, in order to achieve the objectives of the environmental protection legislation” (Imperial Oil Ltd. v. Quebec (Minister of the Environment), [2003] 2 S.C.R. 624 at para. 38).

Therefore, in order to achieve the objectives of the EPA and the OWRA, a remedial alternative may be required, even though a cost/benefit analysis suggests its cost is expensive, or a comparative analysis indicates that a proposed alternative produces only a limited increase in benefits at significantly higher cost.  However, the cost of implementing a remedial alternative is not an irrelevant consideration.  Where comparative analysis of two or more remedial alternatives indicates each is approximately equal in optimizing remediation of an adverse impact or impairment of water, then cost may become a decisive factor, as it is also in the public interest to adopt the most cost effective alternative in such circumstances.

The Tribunal adopts this analysis.  Accordingly, if Cascades’ remediation proposal is as effective in optimizing remediation as Superior’s proposal, but costs less to implement, then cost will become the decisive factor.  The Tribunal further finds that it is unnecessary to consider whether a remedial alternative provides an additional benefit in maximizing the Site’s capacity to efficiently support on-going operations.   This is a business consideration which is unrelated to whether a proposed alternative optimizes remediation of the environmental issues addressed by the Director’s Order.

In light of the above analysis, the Tribunal also finds that Cascades’ submissions respecting unjust enrichment are not a relevant consideration.  Again, the purpose of the Director’s Order is to require work to be done that is necessary to protect the environment.  This work will be required regardless of who may otherwise benefit from it being done.

If Superior, as the current owner, wishes to implement a more expensive alternative, then Superior should be allowed to do so, but only if Superior establishes that it has the funds to guarantee the work will be done in compliance with the Director’s Order.  If Cascades, as a former owner, is called upon to effect the remediation, then it can proceed with its alternative if it is less expensive. There is no provision in the EPA granting a current owner a final right of approval over which remediation alternative should be implemented.

In light of the above analysis, the Tribunal finds that the dispute between Cascades and Superior regarding the appropriate remediation alternative can be addressed by the Director under the provisions of the Director’s Order, which are in accordance with the provisions of the EPA.

The Tribunal now turns to the question whether there is authority under the Director’s Order to authorize Cascades to both enter the Site and utilize resources on the Site to perform the actions required under the Director’s Order, if Superior withholds its permission to do so.

The Tribunal first notes there is a dispute whether Superior has refused Cascades access to the Site.  Mr. Sinclair, on behalf of Superior, maintains that Superior has never denied a request for access.  However, Cascades maintains that it could not proceed with the work, the Bark Pile being the primary example, because Superior would not agree to Cascades’ plan to transfer some of the waste to the existing Approved Waste Disposal Site. It was only at the Hearing that Mr. Sinclair indicated terms on which he would agree to such transfer.

The Tribunal notes that Part 2.1 of the Director’s Order provides:

2.1 Beginning on the day that this Order is issued, and until the provision of written notification by the District Manager, Thunder Bay District Office (the “District Manager”), SFP shall provide Cascades Inc., Cascades Fine Papers, TBFP and their agents, representatives and contractors, access to the Site at any time for the purpose of performing the work required by this order.

The Director’s authority to order this requirement is found in section 196(2) of the EPA, which states:

(2)  A person who has authority under this Act to order that a thing be done on or in any place also has authority to order any person who owns, occupies or has the charge, management or control of the place to permit access to the place for the purpose of doing the thing.

Cascades asserts that an order under section 196(2) does not authorize Cascades to enter the Site where Superior does not give its permission to Cascades to do so.  Cascades further asserts that even if Superior gives Cascades permission to access the Site, Cascades still requires Superior’s consent to use the resources on the Site, which are owned by Superior, in order to complete the work.  As noted above, Cascades proposes to deposit wastes from the Bark Pile in the Approved Waste Disposal Site, and/or use clay located on-Site for the purpose of capping the Bark Pile in situ.  Cascades’ submissions indicate that Superior required concessions from Cascades before agreeing to allow Cascades to utilize these resources.   Superior does not deny that Superior and Cascades were in on-going negotiations regarding this matter.  The Director, as noted in his submissions under Issue #1, expressed concern that obstructionist behaviour by Superior “may well continue”.   Accordingly, the Tribunal finds that, while Superior may have intended to ultimately provide permission, it was not given when Cascades requested it, and as a result, Cascades could not proceed with its proposed remediation.

The Tribunal finds that the substantive issue raised by Cascades’ submissions, is whether Cascades has the power to fulfill its obligations under the Director’s Order.  The Director emphasizes that Part 2.1, which requires Superior to permit access pursuant to section 196(2), provides the authority to enter on lands without the permission of the owner/occupier.     The Tribunal notes, however, that section 196(2) provides the jurisdiction to order the person to permit access.  The person may choose not to comply with the Order, albeit exposing the person to enforcement proceedings for non-compliance.

Cascades has submitted that, even if Superior permits access to the Site, Cascades still requires Superior’s consent to use the resources on the Site, which are owned by Superior, in order to complete its proposed remediation.  In this regard, the Tribunal notes that the authority under section 196(2) is only to permit access to the place for “the purpose of doing the thing”.  The Tribunal accepts that this section does not authorize the Director to order a person to allow the use of the person’s assets or resources located in the place to complete the work.

However, it must be again be emphasized that the context in which these issues are raised is whether Cascades has the power to fulfill its obligations under the Director’s Order.  In this regard, the Tribunal notes that, pursuant to section 147(1)(a)(iv), Cascades may request the assistance of the Director in complying with the Director’s Order.  In turn, the Director, under sections 147 and 149, has the authority to enter the Site and cause the work to be done.  As such, Cascades has the means under the EPA to ensure that the physical activities that must be performed on the Site (for which Cascades is responsible) can be completed.

In light of the above analysis, the Tribunal finds that Cascades has failed to establish that the requirements of the Director’s Order are not in accordance with the provisions of the EPA on the ground that Cascades cannot access the Site or utilize on-Site resources.

The Tribunal now turns to Cascades’ submission that the Director’s Order is not proportionate because there is a current owner which is an existing entity and, consequently, it is premature and unnecessary to require Cascades, as a former owner, to respond at this time.  The Tribunal does not accept this submission.  Provided that the terms of the Order are within the Director’s jurisdiction under the EPA, it is entirely appropriate to name a former owner in the Director’s Order where it is necessary to ensure that the purpose of the statute is achieved. In environmental matters, the timing of an intervention is often pivotal to ensure that the environment is protected.   Therefore, when deciding if a former owner should be named in the order, the enquiry is not based only on whether a current owner is obligated under the statute to respond, but whether and when that response will be made.  It is not disproportionate to name a former owner in an order where there is uncertainty whether the current owner can or will  provide a timely response to the environmental problems the control document seeks to address.  The purpose of the Director’s Order is not only to specify the required actions, but also to provide for the orderly and efficient implementation of these requirements. As already noted, where multiple named persons are required to implement an action under the Director’s Order, each is equally responsible to do so.  If one of the named persons refuses to co-operate in determining how this responsibility should be shared, then the remaining named persons must, nonetheless, proceed to implement the required action irrespective of the degree of their liability under civil law to undertake the action and/or fund the cost of its implementation.

The Tribunal now addresses Cascades’ third submission that the Director’s Order is unfair because:

• Superior can afford to pay for all, or most of the work;

• the Director’s Order requires that the Site be made operational which benefits Superior exclusively with no corresponding benefit to the environment;

• Cascades has already paid to address the environmental liabilities on the Site;

Superior’s ability to pay for the work has been addressed under Issue #1 which is discussed below.  The Tribunal has already observed that it is appropriate to name Cascades in the Order, to ensure that the requirements of the Director’s Order will be implemented.   Accordingly, the Tribunal does not find it unfair to name Cascades in the Director’s Order on this ground.

The second point of concern has been addressed in the analysis above.  The Tribunal has already found that the Director’s authority is to approve the proposed remediation alternative that best responds to the environmental concerns which the Director’s Order seeks to address.  Consequently, this clearly benefits the environment.  The Tribunal has also found that the consideration whether the approved remediation assists in making the Site operational, is not relevant to this determination.

Regarding the argument that Cascades has already paid to address the environmental liabilities, the Tribunal first notes that Cascades does not argue that it can, by private contract, be excused from fulfilling its obligations under the EPA.  As such, the fact that Cascades has paid another person to remediate the Site, does not relieve Cascades of its responsibilities under this statute.  In this regard, it is important to note that the relevant provisions of the EPA require that the work be done, not only that the work be paid for.  As Mr. Marineau testified, in selling the Site to Thunder Bay Fine Papers, Cascades chose to structure the sale transaction by discounting the sale price for the Site by an estimate of the amount which would be required to address the environmental issues on the Site.  While this may have been a prudent business decision, it failed to include a sufficient guarantee that Cascades’ responsibilities under the EPA would be implemented by subsequent owners.  It also failed to include security provisions to ensure that the necessary funds could only be used for these responsibilities.  Under the Amended Environmental Indemnity Agreement, Cascades paid Thunder Bay Fine Papers $500,000 to assume all Cascades’ obligations relating to the dredging of the Lagoon, again without additionally structuring the agreement to ensure that the funds could only be spent for this purpose.  At the time it sold the Site, Cascades knew, or ought to have known, of its continuing responsibilities under the EPA as a former owner, and operator named in the two CofAs.   Therefore, the Tribunal does not find that Cascades has established that is unfair that it be named in the Director’s Order because it has already paid to address environmental problems on the Site.  In making this determination, the Tribunal has not considered Cascades’ submissions that Superior has retained and spent property tax rebates which legally belong to Cascades.  Cascades advised at the Hearing that this matter is being litigated in the courts.  As such, this is an issue of civil liability which is outside the scope of the Tribunal’s jurisdiction to determine.

Finally, the Tribunal turns to Cascades’ submission that the Director’s Order is premature because it requires work that is currently unnecessary to protect the environment.  The Tribunal accepts that the work must be necessary or advisable to fulfill the named requirements of the EPA which the Order seeks to address. The Tribunal has considered whether the disputed requirements in the Director’s Order are necessary or advisable in its analysis below of the individual issues raised in these appeals.  As the Tribunal has found that Cascades is required to undertake certain actions in respect of the Site, the Tribunal does not accept Cascades’ submission that the Director’s Order is premature.

In light of the above analysis and findings, the Tribunal finds that Cascades has not established that it should be relieved of any of its responsibilities under the Director’s Order based on fairness.

The Tribunal notes that the original compliance dates in the Director’s Order are long past due.  However, as the Director’s Order has been under appeal, the Tribunal finds that it is appropriate to adjust the compliance dates to a date eight weeks from the issuance of this Tribunal Order, or such longer period as the Director determines is reasonable. The Director may also implement a shorter time period for specific work if necessary to address any immediate environmental concern.

Issue #2: If Cascades has assumed responsibility for the Bark Pile, whether is it fair for Superior to be ordered to perform the work in the Director’s Order related to the Bark Pile.

Submissions:

Superior argues that it is not fair that it be required under the Director’s Order to perform the work relating to the Bark Pile, since Cascades has acknowledged that it is responsible for doing this work.

Cascades and the Director did not make separate submissions respecting this Issue, as it appears the dispute between Cascades and Superior respecting the appropriate remediation alternative was resolved at the Hearing.  This agreement is discussed below in the Tribunal’s findings under Issue #7.

Findings on Issue #2:

The Tribunal finds that its analysis and findings respecting the fairness argument under Issue #20 also apply to its determination respecting Issue #2.  Accordingly, to the extent that there is any further dispute respecting the remediation of the Bark Pile, then Superior should continue to be required to do this work, to ensure that the Director can exercise his jurisdiction vis-a-vis Superior, as the current owner, to cause the work to be done.  Furthermore, if for any reason, Cascades becomes unwilling to do the work, there is no question that Superior, as the current owner, remains responsible to do this work.  In light of this analysis, the Tribunal does not accept Superior’s submission that it should not be named under the above referenced Parts of the Director’s Order because Cascades has acknowledged its obligation under private agreement to perform this work.

Superior’s obligation to provide Financial Assurance in respect of the remediation of the Bark Pile is addressed under Issues #18 and #19.

Issue #7: Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades:

a. to develop a plan to remove as much waste as is practicable from the Bark Pile and to transport and dispose of those wastes in an approved manner, and implement the plan, and

b. to have a qualified consultant submit an application for a Certificate of Approval for the Bark Pile, including leachate management and closure plans as set out in Parts 2.11, 2.12 (c) and (e), and 2.13 – 2.14 of the Director’s Order.

Issue #8: Whether the Director has jurisdiction under sections 18 and/or 196 of the EPA to issue an order requiring a person to apply for a Certificate of Approval.

Issue #9: Whether the Director has the jurisdiction under sections 18 and/or 196 of the EPA to issue an order requiring a person to apply for a Certificate of Approval for works on lands that the person does not currently own, manage or control but which it formerly owned, managed or controlled.

Issue #10: If ordered to do so under sections 18 and/or 196 of the EPA, whether a person can apply for a Certificate of Approval for works on lands that the person does not currently own, manage or control.

Superior’s Submissions:

The Tribunal notes that Superior’s submissions on these issues have been already been referenced in its submissions under Issues #20 and #2.  In addition, Superior points to the testimony of Mr. Smits that Cascades has had a Provincial Officer’s Order in place since 2004 to cap the Bark Pile in place.  Superior notes that the Director’s Order requires the submission of an application for a Certificate of Approval to cap it in place.  Superior asserts that the MOE cannot now say that capping it in place is not an option.

Cascades’ Submissions:

The Tribunal notes that some of Cascades’ submissions on these issues have already been referenced in Cascades’ submissions under Issues #20 and #2.

Cascades submits that all aspects of the work pertaining to the Bark Pile (Parts 2.12 (c), (d), (e) and 2.14 of the Director’s Order) have been fulfilled and, therefore, the Director’s Order in this regard is spent.   While the plan submitted by Cascades on behalf of Superior may never be approved by the MOE for technical reasons and because Superior has not consented, a plan nonetheless has been submitted.  Despite Cascades’ assertion that the Director’s Order is spent with respect to the Bark Pile, Cascades states that it makes submissions on this issue because it illustrates the types of conflicts experienced by Cascades as a result of the Director’s Order and how ineffective the Order is because it foists responsibility on Cascades without any corresponding control, control which is essential to effectively and efficiently carry out the Order and protect the environment.

Cascades states that Mr. Sinclair admitted that the Environmental Indemnity states that Superior has a contractual obligation to provide Cascades with unrestricted access to its landfill site for Cascades to use in remediating the Bark Pile.  Cascades asserts that it has removed about 50% of the volume of the Bark Pile, but was not permitted by Thunder Bay Fine Papers to dump the remainder of the bark (this bark being too small or wet to be used as hog fuel) into the Approved Waste Disposal Site.  Cascades maintains that it has attempted again to deal with the Bark Pile but has had difficulties in obtaining the co-operation of Superior.  Despite this, Cascades submitted a Certificate of Approval in Superior’s name and without Superior’s consent.

Cascades asserts the following:  According to Mr. Marineau and Mr. Sinclair, Superior prefers to put its own caveats in place on the usage of the landfill for the Bark Pile, regardless of the private allocation of liabilities in the Environmental Indemnity.  Mr. Marineau has testified that Superior has continued to frustrate Cascades’ access to the Mill.  While there has been some disagreement on this point, Cascades submits that Mr. Marineau’s testimony was more credible than that of Mr. Sinclair, and urges the Tribunal to accord it more weight.  Superior has continued to object and has attempted to get concessions out of Cascades before allowing it to either put the waste in the landfill, or use materials from the landfill to cap the Bark Pile in situ.  Cascades consequently maintains that it appears that Superior did not want to reduce the space in its waste disposal site by having the bark wastes transferred there, without getting a benefit in the form of concessions from Cascades.

Cascades states that Mr. Sinclair admitted at the Hearing that Superior would be willing to have the Bark Pile placed in the landfill, on two conditions—all the possible fuel is removed from the waste, at least three quarters of the volume, and the remainder is deposited in accordance with the landfill’s Certificate of Approval.  Cascades asserts that this represents the first time Superior has advised Cascades of this.  Cascades maintains that Superior has still refused its consent to Cascades for the Certificate of Approval for the Bark Pile, although it is attempting to rely on Cascades’ submission of an application for that Certificate of Approval in satisfaction of the Order.

Cascades argues that the requirement that Cascades apply for a Certificate of Approval over lands it does not own has, as has been demonstrated, causes significant problems for Cascades, as Superior has refused its consent for the Certificate of Approval and Cascades has no ability to force Superior’s consent.  Cascades notes that such refusal was noted in the Ministry’s review of the application submitted by Cascades on Superior’s behalf.  Cascades argues that this further demonstrates the ways in which the Order as drafted is unworkable, and does not result in the effective protection of the environment.  Therefore, Cascades argues that the Director’s Order is not necessary or advisable.

In addition, Cascades submits that neither section 18 nor section 196, being the sections under which the Order against Cascades was issued, actually grant the Ministry jurisdiction to order parties to apply for Certificates of Approval.  In support of this position, Cascades argues the following:  Section 18, as its title indicates, is intended to apply to preventative measures.  Certificates of Approval are not preventative measures.  A section 18 Order can require that procedures specified in the Order be implemented, under item 3, but a Certificate of Approval is not a procedure.  It is an approval of a piece of equipment or process that may result in the discharge of a contaminant.

Cascades observes that section 18 can also require, under item 8, that plans be developed and implemented to reduce or prevent discharges or the adverse effects therefrom.  However, Cascades again submits that item 8 does not encompass Certificates of Approval, which are significantly more than “plans”.  They are a legal document akin to a licence issued by the government permitting someone to operate a piece of equipment or a process that may result in the discharge of a contaminant.  Cascades argues that the Ministry is trying to bend sections 18 and 196 to create powers for itself which were simply not granted under those sections.

Cascades asserts that the Director’s Order is unworkable because it attempts to by-pass the owner and operator of the Site and place the responsibilities on a former owner who is no longer, and cannot possibly be, in management and control of the property and undertakings.  Cascades consequently argues that the result is simply an unworkable order, that is not effective in protecting the environment and, therefore, is neither necessary, nor advisable, to prevent the section 18 harm.

Director’s Submissions:

Although Cascades does not dispute the work ordered with respect to the Bark Pile, the Director states that it is worth briefly reviewing why the work ordered is appropriate.  In this regard, the Director notes the following:  The Bark Pile is an illegal waste disposal site where the wood waste has been deposited on land for which there is no Certificate of Approval to use the land as a waste disposal site, contrary to the requirements of sections 27 and 40 of the EPA.  Further, as Alisdair Brown explained in his testimony, the Bark Pile is producing strong leachate that is contaminating groundwater (and possibly surface water in a creek that runs alongside the pile and directly into the Lake).  The pile is so close to the shore of Lake Superior that natural attenuation of contaminants is insufficient to reduce contaminant levels caused by the leachate to below Provincial Water Quality Objectives (“PWQO”).  In particular, Mr. Brown’s expert opinion is that leachate from the Bark Pile has contaminated the groundwater with cobalt, iron and phenols, such that groundwater with concentrations of those contaminants at above PWQO is currently discharging into Lake Superior.  The Director maintains that Mr. Brown’s testimony regarding the discharge of water with contaminants at concentrations above PWQO has not been disputed.

The Director submits that it appears that very little is in dispute with respect to the work ordered with respect to the Bark Pile.  As indicated at the outset of the Hearing, the Director concedes that Cascades has complied with paragraph 2.14, and Cascades has submitted the required application for a Certificate of Approval for the Bark Pile, notwithstanding the technical reservations the Director and the Environmental Assessment and Approvals Branch of the MOE have regarding the application.

The Director submits that, although Superior did not itself satisfy Part 2.14 – it did not submit an application for a Certificate of Approval, and, the Director alleges, it was obstructive of Cascades’ application in that it refused to consent to the application – because Part 2.14 is issued to Cascades and Superior jointly and severally, it is sufficient that Cascades has complied with Part 2.14 to satisfy the Director’s Order.  In the circumstances, the Director submits that the appeals of Part 2.14 are moot as the paragraph has already been complied with.

With respect to the remaining Parts of the Director’s Order that address the Bark Pile – Parts 2.12 (c), (d) and (e), and insofar as they relate to Parts 2.11 and 2.13 – the Director notes that it appears that all Parties are in agreement that the provisions are advisable, subject to amending the compliance dates, in order to ensure that the Bark Pile is removed so that it will no longer cause groundwater with contaminant levels above PWQO to discharge to Lake Superior.

The Director further notes that all Parties at the Hearing eventually agreed that removing the Bark Pile to the Approved Waste Disposal Site is an appropriate and feasible way to prevent the Bark Pile from continuing to cause discharges above PWQO to Lake Superior, so long as moving the wood waste to the Approved Waste Disposal Site does not violate the terms of the CofA(Waste).

The Director states that he and Cascades, at least, view moving the whole of the Bark Pile to the Approved Waste Disposal Site to be the most efficient and, from an environmental perspective, the most desirable way of addressing the environmental problems created by the Bark Pile, certainly superior to the option of capping the Bark Pile in situ.  The Director states that Mr. Brown is of the view, in undisputed testimony, that if the contents of the Bark Pile were moved to the Approved Waste Disposal Site, which is further from the shore, it is likely that the effects of natural attenuation would be sufficient to reduce groundwater contamination levels to below PWQO before leachate contaminated groundwater discharges to Lake Superior.

Based on the evidence adduced, the Director further notes that it also appears that there is sufficient space in the Approved Waste Disposal Site to accommodate the contents of the Bark Pile, so the move can be accomplished without violating the terms of the CofA(Waste).

Findings on Issues #7, #8, #9, and #10:

The Director’s Order provides:

2.11 No later than August 4, 2009 at 2 p.m., provide to the District Manager the name, professional address and C.V. of a consultant or consultants (the “Consultant”) with the experience and training sufficient to make him, her or they proficient in the maintenance, repair and operation of industrial sewage works, the decommissioning of waste disposal sites and the submission of applications for Ministry-issued Certificates of Approval.

2.12 By no later than August 5, 2009 at 2 p.m., provide to the Director, for his approval, a detailed written plan (the “Plan”) produced by the Consultant and containing the following:

…

(c) a schedule detailing the steps necessary and time required for removing all wastes that it is practicable to remove from the Site’s Bark Storage Area and transporting and disposing of those wastes in an approved manner;

(d) the name(s) of the contractor(s) approved and available for the transport of the wastes located at the Site’s sewage works and Bark Storage Area;

(e) the name(s) and location(s) of a disposal site or sites available and approved to receive the waste from the Site’s sewage works and Bark Storage Area; and,

…

2.13 Implement the plan delivered pursuant to Article 2.12, as approved by the Director, within three (3) days of the date of the Director’s approval.

2.14 By no later than August 21, 2009, ensure that the Consultant submits to the Director of the Environmental Assessment and Approvals Branch, a completed application for a Certificate of Approval for the unapproved Bark Storage area, including all appropriate supporting documentation and fees, and specifically addressing plans for leachate management and closure with a copy of that application and supporting documentation being provided to the District Manager by the same date.

It appears that Cascades and Superior will resolve their responsibilities under the Director’s Order respecting the Bark Pile.  As noted in the Parties’ written submissions, Mr. Sinclair agreed at the Hearing that Superior would be willing to have the Bark Pile placed in the landfill, on two conditions:  (1) that all the possible fuel is removed from the waste, at least three quarters of the total volume, and (2) that the remainder is deposited in the Approved Waste Disposal Site in accordance with the terms and conditions of the CofA(Waste).  In his oral submissions, Mr. Sinclair went one step further by agreeing that all the waste could be moved to the Approved Waste Disposal Site, and, if necessary, clay from within the Site could be used, if this approach is the most economical solution, and if the Director approved it.  He confirmed that Superior would follow the Director’s decision in this regard.

In their submissions, the Director and Cascades consider that this will be the most efficient and, from an environmental perspective, the most desirable way of addressing the environmental problems created by the Bark Pile, preferable to capping the Bark Pile in situ.  As noted in the Director’s submissions, it is Mr. Brown’s undisputed testimony, that if the contents of the Bark Pile are moved to the Approved Waste Disposal Site, which is further from the shore, it is likely that the effects of natural attenuation would be sufficient to reduce groundwater contamination levels to below PWQO before leachate contaminated groundwater discharges to Lake Superior. Neither Superior nor Cascades disputes the Director’s evidence that there is sufficient space in the Approved Waste Disposal Site to accommodate the contents of the Bark Pile, so that the move can be accomplished without violating the terms of the CofA(Waste).  Accordingly, the Tribunal accepts that this agreement meets the requirements of the EPA.

In the course of this proceeding, Cascades instituted a motion requesting a stay of several Parts of the Director’s Order, including Part 2.14.  However, at the hearing of this motion, Cascades did not proceed with its request for a stay of Part 2.14, indicating that Cascades and the Director were pursuing settlement negotiation regarding this request.  Cascades did not return its request for a stay of Part 2.14 before the Tribunal for adjudication.  It is not disputed that Cascades subsequently completed and filed an application for a Certificate of Approval in Superior’s name.  As noted in his submission, the Director agrees with Cascades’ assertion that it has complied with Part 2.14 of the Director’s Order.  Superior did not dispute these submissions.  Accordingly, the Tribunal accepts that the issue is now moot and, consequently, it is unnecessary for the Tribunal to address this issue.

Issue #14: Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades to ensure that a qualified consultant submits a completed application to amend the CofA(Waste), as required under Part 2.15 of the Director’s Order.

Issue #15: Whether the Director has jurisdiction under sections 18 and/or 196 of the EPA to issue an Order requiring a person to apply to amend a Certificate of Approval held by a third party.

Issue #16: Whether the Director has jurisdiction under sections18 and/or 196 of the EPA to make an Order requiring a person to apply to amend a Certificate of Approval held by a third party for works on lands that the person does not own, manage or control.

Issue #17: If ordered to do so under sections 18 and/or 196 of the EPA, whether a person is entitled to apply to amend a Certificate of Approval held by a third party.

Superior’s Submissions:

Superior did not address these issues in its submissions.

Cascades’ Submissions:

Cascades refers to the Director’s argument that, because Mr. Brown has testified that the required amendments to the CofA(Waste) are advisable from an environmental perspective, the required amendments are the proper subject of a section 18 order.  Cascades submits that this is not the proper application of the section 18 test.  In support of this position, Cascades asserts that the Director must demonstrate that the Certificate of Approval amendments are necessary or advisable to prevent or reduce the risk of a discharge of a contaminant from the property or undertaking; or to prevent, reduce or eliminate an adverse effect from a discharge of a contaminant from the undertaking or the presence or discharge of a contaminant in, on or under the property. In support of this submission, Cascades cites Hen-Sieg Holdings Ltd. v. Ontario (Ministry of the Environment and Energy), [1995] O.E.A.B. No. 65, at p. 12.  Cascades maintains that the Director did not provide this evidence, noting that Mr. Marineau has testified that the amendments to the CofA(Waste) are not necessary or advisable to prevent a discharge of a contaminant into the environment, as they are administrative changes.

The Director argues that section 18 can require preventative action.  Cascades concedes that one of the purposes of section 18 is to prevent or reduce the risk of discharge, and so it is preventative in nature.  However, Cascades argues that the Director has failed to demonstrate that the closure plan, or any of the Certificate of Approval amendments, is directed at a risk of discharge in existence.  Cascades argues that these requirements are not directed at a risk of discharge.  In support of this position, Cascades asserts the following:  The closure plan is directed at the potential for discharge once the landfill is closed.  The landfill is currently operating.  There is no risk now.  As Mr. Brown testified, the leachate from the site attenuates prior to any discharge into the Lake.  It is not posing any immediate concern that needs to be addressed by way of a section 18 Order.  Mr. Brown simply claims that there should be continued sampling and monitoring, and the closure plan should be updated, with appropriate covering, slopes and a contingency plan for the eventuality of closure.  Cascades does not disagree that there should be continued monitoring and reporting but submits that these obligations should fall to the current owner, Superior.

Cascades further maintains that Mr. Brown testified that the closure plan is deficient by current standards.  Cascades submits that, while the closure plan may or may not need to be updated, the plan itself does not prevent a risk of discharge of a contaminant at this time.  As admitted by Mr. Brown, O.Reg 232/98 does not even legally require the closure plan to be updated.  Cascades maintains that it is extraordinary that in this case the Director is resorting to a section 18 order against a former owner in order to require the former owner to amend the current owner’s Certificate of Approval when, as Cascades asserts, (1) the current levels of leachate attenuate before any discharge into the Lake; and (2) there is no legal requirement to update the closure plan.  Cascades consequently argues that the Director’s evidence simply does not reach the level of reasonable and probable grounds required to show that the Director’s Order is necessary and advisable to prevent the harm section 18 seeks to avoid.

As Mr. Marineau agreed, and Cascades concedes, the landfill closure elements outlined by Mr. Brown represent best practices.  Cascades does not dispute Mr. Brown’s evidence that such best practices can be advisable.  However, Cascades disagrees that the Director has advanced any evidence to establish that Cascades should be ordered to implement these best practices as part of this Director’s Order.  Cascades submits that this work is simply not necessary or advisable to prevent a discharge of a contaminant into the environment.

Apart from it being neither necessary nor advisable, Cascades submits that the MOE has no jurisdiction under sections 18 or 196 to order Cascades to amend a Certificate of Approval held by a third party for a Site which it does not own or operate.  Cascades asserts that the MOE is attempting to require that a third party, Cascades, amend a Certificate of Approval issued by the MOE to Superior.  As argued in relation to the Bark Pile, Cascades submits that the application for, or the amendment of, a Certificate of Approval is not “work” the Director can order pursuant to section 18(1).  Furthermore, Cascades maintains that the legislation was simply not designed to permit third parties to amend Certificates of Approval held by other parties.  Cascades asserts that this would creates absurd results, and may open the floodgates of third parties, such as concerned citizens, applying to amend Certificates of Approvals of neighbouring industrial facilities, etc., which Ms. Hakala agreed would be of concern to the MOE.

Cascades argues that, once again, the MOE is requiring Cascades to assume responsibility for an undertaking over which it has no control.  Cascades maintains that it cannot control the use of the waste disposal site by Superior or anyone to whom Superior might sell the site.  Cascades emphasizes that Mr. Marineau testified that Cascades receives no reports from Superior regarding what is disposed of in the landfill site, and has no way to stop Superior from disposing of what it wants in the landfill.  Cascades states that, despite this lack of oversight ability, the Director has ordered that Cascades be financially responsible for the Approved Waste Disposal Site, and to put monitoring, reporting and decommissioning plans in place and implement them.  Cascades argues that, without control of the Site, and control over the wastes that are disposed of at this approved and operational landfill, the MOE is putting Cascades at the mercy of the actions of Superior on an ongoing basis.

Director’s Submissions:

The Director states that Cascades has, with some merit, argued that it should not be required to address environmental issues that will only be at issue should the facility start to operate again, as the Site is not currently operational, and if it is ever to be operational again Superior (or a successor to Superior) will have the resources to address operational environmental issues at that time.  Regarding the requirement to apply for amendment of the CofA(Waste), the Director submits that Cascades should only be ordered to post Financial Assurance adequate to ensure (i) that the CofA(Waste) is amended, as ordered, and (ii) that there is proper closure of the approved waste disposal site.  Otherwise, the Director submits that the work ordered with respect to the approved waste disposal site should be confirmed, with appropriate changes to compliance dates.

The Director submits that the basis for requiring the work ordered is two-fold:

Section 18 of the EPA:  Mr. Brown gave unchallenged testimony that the work ordered is advisable from an environmental perspective – he was not asked a single question on cross-examination; and

Section 44 of the EPA: the Approved Waste Disposal Site is out of compliance with Part V of the EPA in that it is approved for a 6.5 hectare footprint, but it is actually occupying 8.29 hectares.

The Director refers to the testimony of Mr. Brown who indicated that the closure plan included in the CofA(Waste), which was produced in 1982, is out of date and that it does not comply with current standards for waste disposal sites.  In particular, Mr. Brown highlighted five respects in which the closure plan is deficient by current standards:

• The plan does not include an impermeable cover.  An impermeable cover is required on closure to reduce infiltration of water and, thereby, reduce production of leachate.

• The plan does not provide for topsoil to be put on top of the impermeable cover prior to seeding.  Topsoil is required in order to provide a suitable medium for growth of vegetation on top of the landfill and to ensure that the roots from that vegetation do not penetrate the impermeable cover.

• The current closure plan calls for final slopes of 30º, which is steeper than the new standard of 25º.  Appropriate slopes are required to ensure stability of the waste pile.

• The current closure plan does not require post-closure monitoring of groundwater.  Post-closure groundwater monitoring is required to ensure that leachate from the site does not increase contamination levels in groundwater to unacceptable levels.

• The current closure plan does not include a contingency plan to be implemented in the event that groundwater monitoring shows that the leachate from the site is causing unacceptable levels of contamination in groundwater.

The Director notes that, in giving his testimony on these issues, Mr. Brown referred to a guideline document, the Landfill Standards, which is itself based on Regulation 232/98.  Counsel for the Director drew the Tribunal’s attention to an issue regarding the Landfill Standards and Regulation 232/98, on which it was based, that may not have come across in Mr. Brown’s testimony due to Counsel’s failure to ask Mr. Brown appropriate questions on the issue: the Landfill Standards and O. Regulation 232/98, on which it is based, do not apply to landfills for which an application for a CofA was submitted before August 1, 1998.  The Director states that, with respect to landfills for which an application for a CofA was submitted before August 1, 1998, the Landfilling Standards are informative of current best practices, but they do not have the force of binding regulations.

The Director asserts that Mr. Brown’s testimony regarding the deficiencies in the closure plan and the environmental basis for requiring that the deficiencies be remedied was not disputed.  The Director notes that Mr. Brown was not asked a single question in cross-examination.  The Director also notes the following testimony of Mr. Marineau:  On closure, a landfill site must be properly graded, properly capped, and there must be an ongoing groundwater monitoring program to ensure that leachate from the Site is not causing unacceptable levels of contamination in groundwater.  He estimated the cost of the program at roughly $25,000 per annum, though this could taper off if the monitoring confirms that contamination from leachate is not a problem.  Mr. Marineau also accepted that the Director would want the conditions of the CofA(Waste) to apply to the whole footprint of this waste site, not just the currently approved 6.5 hectare footprint, in order that the conditions be enforceable over the whole footprint of the site.  However, Mr. Marineau gave his opinion that the work ordered with respect to the approved site is not necessary or advisable in order to reduce the risk of discharge of a contaminant or to prevent or reduce an adverse effect.

The Director asserts that it appears that Cascades’ position with respect to the work ordered with respect to the Approved Waste Disposal Site is much the same as its position with respect to the dredging of the Lagoon.  The Director states that Cascades agrees that the work ordered is appropriate over the long term, but disputes that it should have to do the work right now because, it says, the approved waste disposal site is not creating any acute environmental risk that needs to be addressed right now.

The Director repeats his submissions regarding the proper interpretation of section 18(2): the sub-section clearly contemplates taking preventive action before an environmental risk becomes acute.  The Director argues that limiting the scope of section 18 orders to situations in which there is an acute and immediate environmental risk would undermine the Director’s ability to require preventive actions designed to eliminate environmental risks before they become acute.

The Director references Mr. Brown’s opinion that the Approved Waste Disposal Site, even with the addition of the contents of the Bark Pile, is far enough from the lakeshore that contamination of the groundwater by leachate from the Site will likely be attenuated by the time the groundwater reaches the shore such that contaminant concentration will be below PWQO by the time the groundwater discharges to the Lake.  The Director also notes, however, that when pressed about whether his opinion on this issue in any way altered his opinion about the necessity of the Site having an updated closure plan, Mr. Brown testified that his opinion remained the same: an updated closure plan was required, as the waste disposal site does produce leachate of significant strength, the site is still in its “productive phase” for producing leachate, and, accordingly, it must have an appropriate closure plan, including proper capping, monitoring and a contingency plan.

The Director asserts that even Mr. Marineau was of the view that further monitoring wells are required to confirm that leachate from the approved site is being sufficiently attenuated before groundwater reaches the lakeshore: His Witness Statement states:

Prior to shallow impacted groundwater discharging to Lake Superior, water quality will likely improve due to natural attenuation processes; therefore, groundwater impacts to the lake from the site will likely be minimal; however, additional groundwater monitoring wells need to be established further down gradient of the clay disposal and former coal storage areas, near Lake Superior, to confirm this. [emphasis added]

The Director submits that, to the extent that the Tribunal has any doubt that Cascades can be required to apply for an amendment to the CofA(Waste) pursuant to an order issued under section 18 of the EPA, section 44 of the EPA provides a second basis for the requirement. Cascades is a past owner of the Site and was responsible for the operation of the Approved Waste Disposal Site while it had management and control of the Site between 1997 and 2007.

The Director submits that, unlike section 18, section 44 does not require as a precondition for issuing an order that the work ordered be necessary or advisable in order to prevent or reduce the risk of a discharge or an adverse effect.  The Director maintains that the only precondition for issuing an order under section 44 is that a waste disposal site be out of conformity with Part V of the EPA.  The Director states that the Approved Waste Disposal Site is not in conformity with Part V, as waste has been deposited beyond the approved footprint in violation of the CofA(Waste) and of sections 27 and 40 of the EPA, and, therefore, the Director submits that  the Tribunal can confirm the Director’s Order on the basis of section 44.

The Director submits that, although the Director’s Order itself did not cite section 44 as a basis for the work ordered, the failure to cite a statutory head of power when issuing an order does not render the order invalid so long as the administrative actor issuing the order did have the required power to issue the order, citing, in support of this position, British Columbia (Milk Board) v. Grisnich (c.o.b. Mountainview Acres), [1995] S.C.J. No. 35. The Director further submits that this is a hearing de novo in which the Tribunal exercises its own discretion regarding the appropriate work to be ordered, and that, in conducting the “new hearing” under section 145.2, the Tribunal’s responsibility involves weighing the evidence on the issues raised within the subject-matter of a hearing to determine what ought to be done in accordance with the EPA and the regulations.  In support of this submission, the Director refers to RPL Recycling & Transfer Ltd. v. Ontario (Director, Ministry of the Environment) (2006), 21 C.E.L.R. (3d) 80 (Ont. Env. Rev. Trib.) and cases cited therein.

Findings on Issues #14, #15, #16, and #17:

Sections 27(1) and 43 of the EPA provide:

27.  (1)  No person shall use, operate, establish, alter, enlarge or extend,

(a)    a waste management system; or

(b)    a waste disposal site,

unless a certificate of approval or provisional certificate of approval therefor has been issued by the Director and except in accordance with any conditions set out in such certificate.

43.  Where waste has been deposited upon, in, into or through any land or land covered by water or in any building that has not been approved as a waste disposal site, the Director may issue an order to remove the waste and to restore the site to a condition satisfactory to the Director to,

(a) an owner or previous owner or a person who otherwise has or had charge and control of the land or building or waste;

(b) an occupant or previous occupant of the land or building; or

(c) person that the Director reasonably believes engaged in an activity prohibited by section 40 or 41 that resulted in the deposit of the waste.

Cascades, as a former owner, does not dispute that the use of the unapproved area was in place during the time that Cascades owned the Site and operated the Approved Waste Disposal Site.  It is clear that there are three remedial options to address this unapproved deposit of waste, to achieve compliance with these sections:

• Transfer the waste to an approved waste site located off-Site;

• Transfer the waste to the area currently approved under the CofA(Waste); or

• Leave the waste where it is, and amend the CofA(Waste) to include this area as part of the Approved Waste Disposal Site.

The third option is a remediation alternative, as opposed to being a measure to bring the Approved Waste Disposal Site into conformity with the current provisions of the CofA(Waste).  However, Superior and Cascades agree that the appropriate remediation alternative is to amend the CofA(Waste) to expand the approved area.  The Director has approved this alternative.

The Order requires the following work with respect to the Approved Waste Disposal Site:

2.15    By no later than August 21, 2009, ensure that the Consultant submits to the Director of the Environmental Assessment and Approvals Branch, with a copy provided to the District Manager by the same date, a completed application, including all appropriate supporting documentation and fees, to amend Waste Disposal Site Certificate of Approval No. A590101 and all of which shall include the following;

a) A closure plan;

b) A site management plan;

c) All necessary supporting documentation to support a request to increase the total area of the waste disposal site; and

d) A financial assurance evaluation report.

The Tribunal notes that Part 2.15 does not require Cascades to apply to amend the CofA(Waste) to include Cascades as one of the persons to whom this Certificate of Approval is issued, i.e. as one of the persons named on the Certificate.

The Tribunal addresses the requirement respecting the financial assurance evaluation report under Issues #18 and #19.

Other than the requirement to increase the total area of the Approved Waste Disposal Site, Part 2.15 is unclear regarding the specific amendments which the Director requires.  In this regard, the Tribunal notes that the CofA(Waste) already includes an existing site management plan dated May 3, 1982, which expressly provides that it includes a closure plan.  Based on the Director’s evidence and submissions, it appears that the Director requires an amendment to include an updated closure plan.  The evidence adduced did not provide further clarification regarding the site management plan.  Therefore, the Tribunal can only assume that this relates to any collateral site plan amendments required to implement the amendments to increase the total area and update the closure plan.  Consequently, the Tribunal has proceeded on the basis that the substantive amendments required under Part 2.15 are to increase the total area of the Approved Waste Disposal Site, and to update the closure plan.

Turning to the issue whether the Director can order Cascades to apply for the amendment required under Part 2.15, the Tribunal does not accept the Director’s submission that the jurisdiction to do so rests under section 18.  Assuming that the grounds under section 18(2) are established, and further assuming that these grounds suggest that one of the preventative measures should include an amendment to a Certificate of Approval, the Tribunal finds that the jurisdictional authority to amend a Certificate of Approval is, nonetheless, found under Part V of the EPA, specifically section 39(2) which provides:

Idem

(2) The Director may,

(a) refuse to issue or renew;

(b) suspend or revoke; or

(c) impose, alter or revoke terms and conditions in,

a certificate of approval or provisional certificate of approval where,

(d) the waste management system or the waste disposal site does not comply with this Act or the regulations; or

(e) the Director considers, upon probable grounds, that the use, establishment, operation, alteration, enlargement or extension of the waste management system or the waste disposal site may create a nuisance, is not in the public interest or may result in a hazard to the health or safety of any person.

In reaching this conclusion, the Tribunal first notes that section 39(2)(d) expressly indicates that an amendment may be imposed where the site does not comply with the EPA or the regulations.  Therefore, section 39(2) is clearly drafted to address all requirements under the EPA.  Consequently, the scope of section 39(2) is sufficiently broad to include the purposes set out in section 18(2).  The Tribunal further notes that the preventative measures listed under section 18(1) do not make express reference to an amendment of a Certificate of Approval.  As such, there is no indication that section 18 is intended to replace or supplant the Director’s jurisdiction under section 39(2).  Secondly, the Tribunal observes that, in section 39(2) (d) and (e), the Legislature has expressly defined the conditions which must be satisfied before the Director can amend a Certificate of Approval.  The Tribunal finds that there is nothing in section 18 to suggest that the Legislature intended that section 18 bypass these jurisdictional prerequisites. For these reasons, the Tribunal concludes that section 18 is not intended to alternatively address the requirement to amend a Certificate of Approval.  Accordingly, the Tribunal finds that, in determining whether the Director can order Cascades to apply for an amendment to the CofA(Waste), section 39(2) is the operative provision to be considered.  In this regard, the Tribunal also notes that there are no other provisions under Part V, which expressly state that the Director may require a former owner to apply for an amendment.

In light of this conclusion, the substantive question is whether section 39(2) provides the authority to require a former owner not named on a Certificate of Approval to apply for an amendment to the Certificate of Approval.  The Tribunal has adopted both a purposive and interpretative approach in considering the Director’s jurisdiction under this section.   Regarding the legislative interpretation of section 39(2), the Tribunal notes that this section clearly provides that the Director may amend a Certificate of Approval without first receiving an application from a person to do so.  It is similarly clear that the Director also does not require the prior consent of an “owner” as defined in Part V, or the person(s) named on the Certificate of Approval.  The only jurisdictional prerequisites to the exercise of the Director’s authority are the conditions set out in section 39(2) (d) and (e).  Where these conditions are met, the Director may then proceed to impose the amendment. As such, a requirement for an application to amend is neither indicated in this section nor necessary.

The Tribunal has considered section 44 which states:

44 .  Where a waste management system or a waste disposal site is not in conformity with this Part or the regulations, the Director may order an owner or previous owner to take such action as is required to bring the system or the site into conformity with this Part or the regulations within the time specified in the order.

Under this section, a former owner is obligated to take such action “as is required to bring the system or site into conformity …” .  However, as noted above, under section 39(2), neither an application to amend a Certificate of Approval, nor consent to an amendment, are required for the Director to amend the Certificate.

Based on this interpretative analysis, the Tribunal finds that section 39(2) does not include the authority to order a former owner not named on a Certificate of Approval to apply for an amendment to the Certificate of Approval.

As noted above, the Tribunal has also considered a purposive evaluation of section 39(2).  In this regard, the Tribunal acknowledges that the current holder of a Certificate of Approval may voluntarily request the MOE to amend the Certificate of Approval.  However, the issue before the Tribunal is whether Cascades, as a former owner, may be ordered to apply for an amendment of a Certificate of Approval where Cascades is not named on the Certificate.  A purposive evaluation involves consideration of the practical implications of imposing such a requirement.

As was indicated by the Director in this Hearing, it is the MOE’s policy to require the consent of the person(s) named on a Certificate of Approval, before the MOE will approve an application by other persons to amend an existing Certificate of Approval.  Where the current property owner is not named on the Certificate of Approval, the consent of the current owner is also required.  Under section 44, the current owner is equally responsible as the persons named on the Certificate of Approval, to take such action as is required to bring the system or the site into conformity with Part V or the regulations.  This includes conformity with the terms and conditions of any Certificate of Approval which has been issued under this Part, even if the current owner is not named on the Certificate of Approval.  For ease of reference, the Tribunal will refer to this as the “MOE Consent Policy”.

There are sound reasons for this Policy.  A Certificate of Approval for either a waste deposit site or a waste management system includes terms and conditions necessary to ensure the control and containment of adverse effects.  Of necessity, such terms and conditions include provisions to address issues relating to the daily operation of the site or system, the type and quantity of waste that may be deposited or processed, as well as provisions for closure and post-closure maintenance of the site/system.  Consequently, amending a Certificate of Approval may impose significant economic and operational responsibilities on any person who is legally obligated to ensure that site/system is in conformity with the Certificate of Approval.  As such the Tribunal accepts that it is an appropriate and responsible policy to require the consent of the current owner and persons named in a Certificate of Approval, as part of an application by any other person for an amendment to the Certificate.  Otherwise, as Cascades has noted in its submissions, someone having no obligation under the EPA in respect of an approved waste disposal site, could apply for amendments to a Certificate of Approval that would be binding on the current owner and person(s) named on that Certificate.

Accordingly, any application by Cascades to amend the CofA(Waste) must include the consent of Superior, as the current owner of the property and as the person named on this Certificate.  This case highlights the difficulties that can arise where there are disputes regarding the specific terms of the amendment.  More so, in this case, where Cascades asserts that Superior’s consent is being withheld for reasons unrelated to the requirement in the Director’s Order.  The Tribunal finds that one of the purposes of section 39(2) is to avoid these difficulties altogether by conferring on the Director the authority to impose an amendment without first requiring the submission of an application to amend the Certificate of Approval.

The Director has argued that the requirement for Superior’s consent under the MOE Consent Policy can simply be waived, or, alternatively, that Superior can be compelled to provide the consent pursuant to the application of either section 196(1) or section 147(1), thus obviating the difficulties described above.   The Tribunal finds that it is unnecessary to make conclusive findings in respect of these submissions.  Even if there is jurisdiction to compel Superior’s consent in this manner, the Tribunal notes that the Director, by doing so, would be indirectly doing what he is otherwise authorized to directly do under section 39(2), i.e., exercising the authority to implement the amendments, as determined by the Director, without the prior approval of the current owner and persons named in the Certificate of Approval.  The Tribunal finds that this further reinforces the conclusion that one of the purposes of section 39(2) is to avoid such disputes altogether by providing that the Director may impose an amendment without first requiring the submission of an application to amend the Certificate of Approval.

The Tribunal also notes that the provisions of Part V are otherwise sufficient to address the waste deposited in the unapproved area.  Pursuant to section 43, the Director can require that this waste be removed.  Furthermore, pursuant to section 44, the Director may require an owner as defined in Part V, or a previous owner, to take such action as is required to bring the Site into conformity with the CofA(Waste). The Tribunal finds that, under these two sections, the Director has sufficient jurisdiction to address any environmental problems associated with the Approved Waste Disposal Site.

In considering the scope of the Director’s authority under section 44, the Tribunal is mindful of the practical reality that the Director may require investigation or evaluation respecting a waste disposal site or waste management system, in order to determine whether it is in compliance with its Certificate of Approval, and if not, the measures required to bring it into conformity.  This may or may not fall within monitoring requirements set out in the Certificate of Approval.  The Tribunal recognizes that financial and other resources may be required in order to obtain such information. These should be borne by persons responsible under Part V of the EPA for the waste disposal site or waste management system. Accordingly, the Tribunal finds that the responsibility of a former owner, under section 44 of the EPA includes the obligation to obtain such information, where such investigation or evaluation is necessary, to establish the measures required to ensure that a waste disposal site or waste management system is in conformity with Part V and the regulations.

Therefore, the Tribunal concludes that the Director can fulfill his responsibilities under section 39(2) without first requiring an application to amend the Certificate of Approval.

Based on the above interpretative and purposive analyses, the Tribunal finds that section 39(2) does not include the authority to order Cascades to apply for an amendment to the CofA(Waste).

The Tribunal has considered Cascades’ submission in respect of section 44 that:

Cascades cannot control the use of the waste disposal site by Superior, or, frankly, anyone to whom Superior might sell the site. . . .  Cascades receives no reports from Superior regarding what is disposed of in the landfill site, and has no way to stop Superior from disposing of what it wants in the landfill.  …   However, without control of the site, and control over the wastes that are disposed of at the approved and operational landfill, the Ministry is putting Cascade at the mercy of the actions of Superior on an ongoing basis.

However, notwithstanding these concerns, section 44 of the EPA is clear and unequivocal.   A former owner is responsible to take such action as is required to bring a waste disposal site into conformity with Part V or the regulations.  The extent of Cascades’ future responsibilities under this section is not before the Tribunal.

The Director has submitted that “Cascades has, with some merit, argued that it should not be required to address environmental issues that will only be at issue should the facility start to operate again, as the Site is not currently operational, and if it is ever to be operational again Superior (or a successor to Superior) will have the resources to address operational environmental issues at that time.”  The Tribunal makes no finding in respect of this submission. Again, the extent of Cascades’ future responsibilities under section 44 is not before the Tribunal in this proceeding.

The Tribunal now turns to the amendments required by the Director under Part 2.15, and the information the Director has requested under Part 2.15 in support of these proposed amendments.

Respecting the amendment to expand the area of the Approved Waste Disposal Site to include the unapproved area, neither Superior nor Cascades opposes this amendment, nor do they dispute the obligation to provide information necessary to support it.   As noted above, there is no indication that the Approved Waste Disposal, within its approved area, is not in conformity with the CofA(Waste).  Hence, their obligation to provide the required information does not fall under section 44.  However, it is also undisputed that this amendment is in response to the requirement to comply with sections 27 and 43.  As such, the Tribunal finds that they can be required to provide the information in furtherance of their responsibilities under section 43 to address the unauthorized disposal of this waste.

The Tribunal now turns to the amendments required under Part 2.15(a) and (b) for a Site Management Plan (other than what may be required to increase the total area of the Site) and Closure Plan.   The Tribunal notes that, although the Director called undisputed evidence regarding the respects by which the current closure plan is deficient by current standards, these current standards are imposed under Regulation 232/98, which the Director concedes does not apply to the Approved Waste Disposal Site. The Director adduced no other evidence to indicate that the current condition of the Approved Waste Disposal Site is not in conformity with the Site Management Plan and Closure Plan currently in force under the CofA(Waste), nor that it does not conform with the applicable Regulation 347.

The Director is essentially asking that the CofA(Waste) be amended to include the updated standards under Regulation 232/98.  However, as noted above, to impose such amendment, the Director must first establish that the jurisdictional prerequisites set out in section 39(2) (d) and (e) have been satisfied.

Notwithstanding the evidence that the requirements under the current standards are advisable, the Tribunal cannot assume that non-compliance with the current standards, in and of itself, is sufficient to find that the prerequisites under section 39(2)(d) and (e) have been satisfied, because the Legislature clearly has not chosen to retroactively impose these regulatory standards on pre-existing landfilling sites.  Section 2 of Regulation 232/98, expressly provides:

2.  (1)  This Regulation applies to the following landfilling sites:

1. Every landfilling site that comes into existence on or after August 1, 1998 and that is intended at the time it comes into existence to have a total waste disposal volume of more than 40,000 cubic metres and to accept only municipal waste for disposal.

2. Every landfilling site for which an alteration, enlargement or extension is proposed on or after August 1, 1998 that involves an increase in the site’s total waste disposal volume, if the site is intended after the alteration, enlargement or extension to have a total waste disposal volume of more than 40,000 cubic metres and to accept only municipal waste for disposal.

The MOE Guideline, Landfill Standards:  A Guideline on the Regulatory And Approval Requirements for New or Expanding Landfilling Sites, Original Document May 1998, Last Revision Date: June 2010 (the “Landfill Standards Guideline”) further confirms that, for small and existing sites, the existing requirements under the EPA and Regulation 347 remain in effect.  This Guideline also provides that:  “Additional or more detailed requirements for waste sites and systems are addressed as appropriate through the Certificate of Approval process.”  Accordingly, the Tribunal notes that Guideline confirms that the jurisdictional prerequisites under section 39(2) (d) and (e) of the EPA continue to apply.

It has not been argued that the CofA(Waste) fails to comply with the current applicable regulations.  The Parties’ submissions did not directly address whether the current closure plan, or other aspects of the Approved Waste Disposal Site, do not comply with the EPA, or whether section 39(2) (e) applies in the current circumstances.  As such, the Parties have not fully addressed whether the Director has the authority to require an amendment to update the closure plan.  Consequently, the Tribunal is not prepared, at this time, to specify that Cascades can be required to provide technical information and analysis to support the amendment proposed by the Director.   The Director should first make a separate determination whether there is authority to impose the proposed amendment under section 39(2).  This will also afford the Director the opportunity to precisely articulate the specific amendments to be required.  If the Director concludes there is authority to require an amendment, he may then review the information required to implement the amendment, and, if necessary, issue a separate order to Superior and Cascades to provide this information where there is jurisdiction under the EPA to do so.

The Tribunal notes that Superior does not oppose the requirements imposed under Part 2.15, including updates to the closure plan.  The Tribunal encourages Superior, as the person named on the CofA(Waste),  to work with the Director to voluntarily identify and agree on the specific amendments to be implemented to the Site Management Plan and Site Closure Plan, and to provide any technical information required by the Director to support the imposition of such amendments.

In summary, as the Tribunal has found that Cascades, as a former owner, should not be required to apply to amend the CofA(Waste).  Accordingly, the Tribunal directs the Director to amend the Director’s Order removing Cascades from this obligation under Part 2.15 of the Director’s Order.  If the Director requires additional information in support of the amendment to increase the total waste area of the Approved Waste Disposal Site, then the Director should amend the Director’s Order to require Cascades and Superior to provide this information.

Issue #3: Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades:

a. To provide to the Director a written plan detailing the steps necessary, the time required, and the name of a person licensed by the Professional Engineers Ontario, to repair the Industrial Sewage Works to stop the seepage from entering Lake Superior and implement the plan as set out in Parts 2.2-2.3 of the Director’s Order;

b. To conduct daily visual inspections, collect samples, and provide weekly written reports to the Director on the results, as set out in Parts 2.4-2.5 of the Director’s Order;

c. To retain a consultant to develop a plan to remove the waste sludges from the sewage lagoons regulated by the Cof A (Sewage Works) and bring the components and operation of the Site’s sewage works into full compliance with this CofA, and to implement the plan as set out in Parts 2.11; 2.12 (a), (b), (d) and (e), and 2.13 of the Director’s Order.

Superior’s Submissions:

The Tribunal repeats its earlier observation that Superior is not named in Parts 2.2 to 2.5 of the Director’s Order, as these requirements were imposed upon Superior under separate Order.  As such, Superior’s submissions relate only to Cascades’ responsibilities in this regard.

In oral submissions, Superior agreed that the Director’s Order should only address issues respecting the structural integrity of the berm walls, and that any requirement for dredging the Lagoon should be vacated from the Director’s Order, to be dealt with by separate Order in the future, if necessary.

Cascades’ Submissions:

Cascades indicates that it relies on the evidence given by Mr. Marineau.  His evidence is summarized in his Witness Statement as follows:

34.  The lagoon system was built many years ago in order to treat the process water originating at the Facility. Process water and storm water are sent to the lagoon, where the water flows through ten passes before it goes through a weir and into Lake Superior. The “treatment” occurs by virtue of the time the process water is retained in the lagoon before it exits the weir into the Lake. The treatment occurs by virtue of the of the process water travelling through five aerated passes, during which time biological oxygen demand (“BOD”) is removed, and five non-aerated passes during which time the total suspended solids in the process water settle out and accumulate on the bottom of the lagoon as sludge. Eventually, the lagoon becomes full of sludge and the sludge needs to be removed to provide space for the process water to flow through to the Lake and for new sludge to accumulate.

35.   Therefore, the design of the lagoons is such that the process water is intended to flow through the lagoon and into the Lake after the solids have settled out over the course of several days and forms sludge at the bottom of the lagoon.

36.  The walls of the lagoon, known as the “berm” are constructed of earth and shale, a fine-grained sedimentary rock. Because of the nature of the construction, the berm has had cracks in it over the years. As well, because of the nature of its construction, and the absence of a liner for most of its history (the lagoon was originally constructed without a liner), the berm has not been impervious. Water has been able to move back and forth from the lagoon to the Lake and vice versa. As a result, there have been visual indications of seepage from the berm over the years. In order to attempt to reduce the occurrence of seepage while the Facility was operational, PVC liner was installed in parts of the berm in the late 1990’s and 2000’s. Cracking in the berm and/or indications of seepage are not necessarily indicative of imminent collapse of the berm or failure mandating repairs if the Facility is not operational.

37.  When the Facility is not operating, there is no process water flowing to the lagoon. Therefore, the only water entering the lagoon is rainwater and storm water collected onsite. As a result, seepage of rainwater and storm water through the berm walls and into the Lake directly, without travelling through all ten passes of the lagoon, does not result in the discharge of a contaminant into the natural environment or an adverse effect resulting from the discharge or presence of a contaminant. If the water was not seeping through the walls, it would simply travel to the end of the lagoon and discharge into the Lake in any event. It is only necessary for process water to travel through the ten passes to provide sufficient time for removal of BOD and for the solids to settle out before the process water enters the Lake. This is not necessary when the Facility is not operational and the water entering the lagoon is not process water.

38.  Furthermore, the seepage which has been reported here does not relate to the structural integrity of the berm, particularly in light of the fact that the Facility is not operational. Therefore, the cracks through which water may be seeping do not have to be repaired in order to reduce the risk of a discharge of a contaminant into the natural environment or an adverse effect resulting from the discharge or presence of a contaminant.

39.  Therefore, it is not necessary or advisable to repair the berm to stop seepage from entering Lake Superior so as (a) to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or (b) to prevent, decrease or eliminate an adverse effect that may result from (i) the discharge of a contaminant from the undertaking, or (ii) the presence or discharge of a contaminant in on or under the property.

40.  While I agree that the berm should be repaired if the Facility is to become operational, again, in my opinion it does not need to be done now in order (a) to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or (b) to prevent, decrease or eliminate an adverse effect that may result from (i) the discharge of a contaminant from the undertaking, or (ii) the presence or discharge of a contaminant in on or under the property.

41.  Because the water and sludge/sediment levels are the same on either side of the berm (on the Lake side and the lagoon side), there are not acting forces on the berm. Therefore, if the berm fails, it will be a slow, gradual failure over the course of a long time with the berm sliding into the lagoon. Therefore a spread of sludge into the Lake is unlikely in the event of a berm failure.

42.  And, because the sediment level on the Lake side and the sludge level on the lagoon side are the same, even if the berm failed, the sludge would not move into the Lake unless there was a complete slope side failure resulting in an open channel between the Lake and the lagoon through which the sludge could flow. In my opinion this is very unlikely to occur based on the present condition of the berm. While there is always a risk of failure of an engineered structure, it is my opinion that repairs to the berm do not have to be made now and can wait until the Facility becomes operational again. Weekly inspections carried out by the Facility operator are sufficient in order to determine whether the circumstances have changed such that there is a risk of a failure of the berm that would result in discharge of sludge to the Lake. At present, the height and width of the berm is sufficient to isolate the sludge from the Lake.

[ . . . ]

47.  The sludge does not need to removed from the Lagoon in order (a) to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or (b) to prevent, decrease or eliminate an adverse effect that may result from (i) the discharge of a contaminant from the undertaking, or (ii) the presence or discharge of a contaminant in on or under the property. The sludge should be dredged by the owner/operator prior to the Facility becoming operational again in order to make room for the process water and accumulation of new sludge.

In addition to Mr. Marineau’s evidence, Cascades makes the following submissions.

Cascades has never disputed that the sludge should not enter the Lake.  Cascades submits that the legal issue to be decided here is whether it is necessary or advisable for Cascades to carry out the requirements in the Order in order to prevent or reduce the risk of a discharge of a contaminant or to prevent, decrease or eliminate an adverse effect from the discharge of a contaminant. Cascades submits that the Director has not satisfied this test. In support of this position, Cascades asserts the following:  The Director has adduced no evidence that the sludge will enter the Lake, nor has the Director tendered any evidence as to the likelihood or risk of the type of berm failure that would cause the sludge to enter the Lake. At best, the Director’s evidence consists of Ms. Hakala’s concerns about the stability of the berm based on cracks that were observed a year ago and a drop in the water level at that same time. However, she admitted she does not know whether it is stable or not. Mr. Kondrat testified that if there was a catastrophic failure of the berm, the sludge would go in the Lake but he gave no opinion regarding the likelihood or risk of such an event occurring. Mr. Kondrat could not say for certain that such an event would harm the Lake.  Cascades submits that neither Ms. Hakala nor Mr. Kondrat are engineers, and neither of them can give an expert opinion with respect to the risk of the sludge entering the Lake. The MOE has not undertaken any studies in the last year to confirm that the berm is unstable. They have had no experts examine it. Instead, the evidence is that, the berm has existed in its present condition for decades. Despite the crack that was observed last summer, the berm is still stable.

Cascades submits that it is the only Party that has tendered evidence by anyone with qualifications to assess the condition of the berm. Cascades has advanced evidence from an expert in berm stability, Mr. Marineau, noting that, while Mr. Marineau has not conducted a geotechnical evaluation of the berm, he has made observations of it and has reviewed the MOE’s evidence regarding the condition of the berm.

Cascades also asserts that the evidence has shown that the concerns held by the MOE in June of 2009 with respect to whether the berm might imminently fail have not been borne out. Cascades maintains that the actions of the MOE itself have shown that they no longer believe the berm poses a risk of collapse in the near term. In support of this position, Cascades asserts the following:  Ms. Hakala has testified that she has not inspected the berm since February, 2010. Moreover, enforcement of the Provincial Officer’s Order against Superior to fix the berm has been put on hold while the appeal of this Director’s Order takes place, and the Director requested a delay in the Hearing of this matter in order to issue a new order requiring a study of the berm.  Cascades submits these are indicia that the MOE itself has recognized that there is no threat requiring immediate intervention with respect to the berm. And, lastly, Cascades observes that the berm has not failed since the observations upon which the MOE’s concerns are based, were made in 2009.

Cascades emphasizes Mr. Marineau’s view that a complete slopeside failure is very unlikely to occur based on the present condition of the berm and the material of which the berm is constructed. Cascades maintains that, so long as the Mill is not operating and the berm is routinely inspected and repaired, the sludge does not need to be removed. Therefore, Cascades submits that it is not necessary or advisable for the sludge to be removed at the present time in order to avoid the harm Section 18 seeks to prevent.

Contrary to the Director’s argument, Cascades asserts that it is not taking the position that there must be an imminent risk of berm failure before the MOE should be permitted to turn to Cascades to repair the berm and dredge the sludge. Cascades submits, however, that section 18 requires that there must be some demonstrable risk that the berm will fail. Reasonable and probable grounds for the opinion that the work is necessary or advisable to prevent the harm section 18 seeks to prevent are required. Cascades argues that the fact that failure of the berm is a possibility, as with any engineered structure, and the fact that a provincial officer has concerns, are simply not enough to reach the section 18 threshold, particularly in light of the fact that the only expert evidence tendered before the Tribunal is to the effect that the risk is minimal. Cascades maintains that, although the Director has shown that the sludge contains contaminants, the risk is not related to the sludge being contaminated. The sludge has always been in the Lagoon. Cascades consequently maintains that the risk is related to the structural integrity of the berm, further asserting that  the only expert evidence tendered indicates that the risk is minimal in light of the non-operation of the Mill.

Cascades argues that, provided that the berm will function to separate sludge from the Lake, which it does, the sludge does not need to be removed at the present time. Cascades notes that Ms. Hakala has testified that there are two scenarios in which the sludge would need to be removed: (1) if the Lagoon was in operation, for the proper function of the Lagoon, and (2) if the Lagoon is decommissioned; in which case the sludge would need to be dredged and disposed of as waste in accordance with the CofA.  Cascades further states that Ms. Hakala admitted that neither scenario is before the Tribunal, and that the sludge in the Lagoon is acceptable temporarily so long as the Lagoon is not operational and the berm contains it from the Lake. Cascades also states that Ms. Hakala admitted that the MOE’s real concern is with the integrity of the berm. Cascades maintains that Mr. Martineau’s evidence demonstrates that the berm integrity is not a concern at this time, and weekly inspections by the owner are sufficient to ensure that the conditions do not change, necessitating repairs. Therefore, Cascades submits that the requirements in the Director’s Order do not meet the threshold of being necessary or advisable.

Contrary to the argument advanced by the Director, Cascades asserts that this is not an indefinite delay, as the Site will eventually have to either be made operational or decommissioned. Cascades states that the MOE controls how long they are willing to wait and see if the Mill starts up again before revoking the CofA and requiring permanent decommissioning.

Director’s Submissions:

The Director concedes that so long as the Site remains non-operational, berm repair is required only to the extent necessary to ensure that the berm does not breach before or during removal of the contaminated sludge from the Lagoon system. Thus, the Director concedes that there is merit to Cascades’ argument that it should not be required to conduct work on the Lagoon berm that is only necessary in the event that the Mill becomes operational again. The Director notes, for instance, that repairs to the berm necessary to prevent untreated liquid effluent from leaking through the berm wall are not necessary unless the Mill becomes operational again, since the Mill is not currently discharging effluent into the Lagoon system – effectively, the water currently in the Lagoon system is storm water that presents a low risk to the environment.

However, the Director submits that there is substantial evidence that the lagoon berm is not structurally sound, and that the Parties should be ordered to ensure that the berm is sufficiently structurally sound to ensure that it does not breach prior to all of the contaminated sludge being removed from the Lagoon system. The Director notes that Mr. Marineau conceded in his testimony that the sludge should not be allowed to discharge into Thunder Bay Harbour.

The Director has summarized the evidence which the Director submits demonstrates that the berm is not structurally sound:

a. Carl Taylor gave evidence that in late June 2009 the water level in the lagoon system dropped by about 9 cm over a three day period, which amounts to about 12 litres per second over that period. The water level then dropped a further 16 cm (to 30 cm below the level of the weir) over the following days.

b. In late June 2009, Carl Taylor found cracks running lengthwise along the top of the berm, at one point three cracks were in parallel, and the biggest crack was about 15 feet long, one foot deep, and six inches wide.

c. Leon Marineau confirms that the cracks, which were photographed by Sherry Hakala on June 30, 2009 (Exhibit 112), look bigger than cracking he saw on the berm in April, 2009. Mr. Marineau described the cracking he saw as being roughly 10 cm deep. This suggests that the cracks expanded between April and June 2009.

d. In late June 2009, Mr. Taylor found that a portion of the top of the berm had “slumped” in towards the lagoon.

e. Ms. Hakala observed voids beneath the liner on the inside of the berm wall, though she could not recall whether she saw them in June 2009 or when she visited the Site later in the summer to take water and sludge samples.

f. Although Mr. Marineau gave an opinion that the risk of a slope side failure of the berm is minimal in present circumstances, he confirmed that

i. He has not done a geotechnical assessment of the berm’s stability, a procedure that he says would cost between $20,000 and $30,000;

ii. He would not sign a report as a professional engineer providing an opinion that the risk of failure is minimal without first doing a geotechnical assessment;

iii. He cannot explain the cause of the cracking on the top of the berm, though he theorizes that it may have been caused by the steep sides of the top of the berm being exposed as a result of the water level both inside the lagoon and in the Lake outside the berm being very low compared to historical levels; and

iv. Mr. Marineau’s opinion regarding the stability of the berm is, in part, based on the fact that water levels inside and outside the lagoon are currently in equilibrium, so there is no excess pressure on the berm from a high water level inside the berm as there would be if effluent were being discharged into the lagoon. Mr. Marineau conceded, however, that a significant rain event could raise the water level inside the lagoon and create pressure on the berm wall.

g. Ms. Hakala and Mr. Marineau both saw tears in the liner on the inside of the berm, though Mr. Marineau says that the tears were only in the top layer of the liner designed to protect the lower layer from UV light.

h. Exhibit 33, a letter from CFPG to MOE dated April 15, 2005, indicates on the last page of the letter that the lagoon liner was intended as a short-term solution to the seepage issues it was designed to address and that its expected lifetime was about 10 years. The liners were installed in 1999 and 2000.

i. Mr. Marineau did concede that he thought weekly inspections of the berm were warranted in order to take readings from markers to determine whether the berm was moving.

The Director argues that, collectively, all of this evidence raises serious concerns regarding the long-term structural integrity of the berm.

The Director submits, therefore, that the Tribunal should confirm the work ordered regarding berm repair, though in slightly altered form. The Director asserts that both Superior and Cascades should be required to do work designed to ensure that the berm is sufficiently stable that it will not breach before the sludge is removed from the Lagoon.  The Director further asserts that Superior alone should be required to do any further work required to bring the berm up to the standard required should the Mill become operational again.

Findings on Issue #3:

Issue #3, as written, includes a summary of the relevant provisions of the Parts of the Director’s Order that are being challenged by Cascades.

The relevant provision in Part 2.12 of the Director’s Order states:

2.12 By no later than August 5, 2009 at 2 p.m., provide to the Director, for his approval, a detailed written plan (the “Plan”) produced by the Consultant and containing the following:

(a) a schedule detailing the steps necessary and time required to remove the waste sludges from the sewage lagoons regulated by Certificate ofApproval (Industrial Sewage Works) No. 3758-5NTJ43;

(b) a schedule detailing the steps necessary and time required for bringing the components and operation of the Site’s sewage works into full compliance with its Certificate of Approval

. . .

(d) the name(s) of the contractor(s) approved and available for the transport of the wastes located at the Site’s sewage works and Bark Storage Area;

(e) the name(s) and location(s) of a disposal site or sites available and approved to receive the waste from the Site’s sewage works and Bark Storage Area; . . .

In his submissions, the Director concedes that the section of Part 2.4 that requires Superior and/or Cascades to collect samples on a daily and monthly basis are no longer necessary as testing results received after the Director’s Order was issued have demonstrated that the aqueous contents of the Lagoon represent a low risk to the water quality of Thunder Bay Harbour and Lake Superior if an unregulated discharge were to occur.  As the Director adduced undisputed evidence to support this conclusion, the Tribunal accepts this submission.

None of the Parties disputes that the sludge will need to be removed before the Industrial Sewage Works can resume operation.

Regarding the work required under Part 2.12 and 2.13, the Director agrees that Cascades “ought only to be ordered to ensure that the berm is adequately structurally sound such that it will not breach until the sludge within the lagoon system has been dredged and removed.”

In summary, the work required falls into four categories:  remove (dredge) the sludge from the Lagoon, repair the Lagoon berm wall, prepare and implement a schedule to bring components and operation of the Industrial Sewage works into full compliance with the CofA(Sewage Works), and conduct daily visual inspection of the berms.

In his written submissions, the Director’s position is that the provisions of the Director’s Order, as against Cascades should be upheld for all four categories, subject to the refinement respecting the scope of berm wall repair. Mr. Adamson, on behalf of the Director, acknowledged that, in principle, there would be no obligation to remove the sludge immediately, provided that the Lagoon berm walls were structurally sound.  As a result, the Director argues that Cascades is required to either repair the berm walls to ensure secure containment of the sludge presently in the Lagoon, or to remove the sludge, but not both.

Cascades, for reasons detailed in its written submissions, maintains that the Director does not have the jurisdiction to order Cascades to undertake the actions required by any of these Parts of the Director’s Order, and, even if the Director has such authority, the Director has not established that there is any risk that the berm walls will fail.  Cascades submits that weekly inspections are sufficient to determine whether there is a change in circumstances indicating that there is a risk of a failure of the berm that could result in discharge of sludge to the Lake.  Cascades also maintains that Superior, as the current owner of the Site and operator of the Industrial Sewage Works to whom the CofA(Sewage Works) is issued, should be solely responsible for the work required under the Director’s Order.

Superior’s submissions did not disclose a position respecting Cascades’ obligation under these Parts of the Director’s Order.  As for itself, Superior argues that it cannot pay for further repairs to the berm walls beyond the $100,000 it has already spent.  Superior also argues that the MOE should be able to carry out any testing deemed necessary to satisfy themselves the berm is stable.

The Tribunal first turns to the issue of the Director’s authority to order the actions required under these Parts of the Director’s Order.

Pursuant to section 25 (definition of ‘waste management system”) and section 27, Part V of the EPA clearly applies to the Industrial Sewage Works.  As noted by the Director above, Condition 3 of the CofA(Sewage Works) requires the owner to handle and dispose of the sludge generated from the works in accordance with Part V of the EPA.   Here, the purpose of the Lagoon berm walls is to contain the waste sludge so it is not deposited in the Lake.   An “owner”, as defined in Part V, is clearly required to maintain an waste management system in good repair in order to ensure that its performance conforms with the provisions of its certificate of approval.  Consequently, based on the circumstances of this case, the Tribunal finds that the actions required under these Parts of the Director’s Order are clearly within the scope of the terms and conditions of the CofA(Sewage Works).  For this reason, the Tribunal adopts its analysis and findings under Issues #7 and #14, to conclude that the Director’s jurisdiction respecting compliance with the requirements of the CofA(Sewage Works) is governed by Part V of the EPA, and not section 18.  As noted earlier, Cascades, as a former owner, can be required to take such action to bring the system into conformity with Part V or the regulations.   Therefore, the issue here is the extent to which the Industrial Sewage Works, in its current condition, is not in conformity with Part V, and, more particularly, with the CofA(Sewage Works).

The Tribunal will address each category of the required work in turn.

Regarding the Parts of the Director’s Order relating to the requirement to dredge the Lagoon, the Director, as noted above, has agreed that the sludge does not need to be dredged provided that it is contained by the berm walls.  The Tribunal accepts this submission.  It is not disputed that Superior intends to resume operation of the Industrial Sewage Works at some point in the future.

It is not disputed that the sludge contains contaminants. Under the EPA, discharge of these contaminants to the environment, i.e. to the Lagoon, are allowed only because this discharge is governed the CofA(Sewage Works) issued under Part V.  The evidence indicates that the presence of the sludge in the Sewage Lagoon while the Site is not operational does not, in and of itself, create a risk of discharge or adverse effect outside the area governed by the CofA(Sewage Works).  Although Mr. Marineau testified that the Lagoon would need to be dredged before the Industrial Sewage works could again become operational, he also indicated that the sludge could remain in the Lagoon while the Industrial Sewage Works was inactive. Accordingly, the Tribunal finds that it is clear on the evidence adduced, that the presence of the sludge in the Lagoon, while the Industrial Sewage Works is not in active operation, is not, in and of itself, contrary to the provisions of the EPA.  Therefore, the Tribunal accepts that the sludge can remain in the Lagoon in accordance with the provisions of this CofA(Sewage Works), as long as the structural integrity of the berm walls is secure, and sludge is not leaking through the berm walls into the Lake.

This conclusion thus leads to consideration of the requirements under the Director’s Order relating to berm repairs.

Mr. Marineau is a professional engineer who was qualified to give expert opinion in the areas of hydrogeology, waste management (land fill design) and geotechnical study (bearing capacity and slope slide failure analysis).  As Vice-President, Environment, for Cascade Inc., he provides technical assistance to Cascades, and as such he is familiar with the environmental matters in relation to the Site.  On behalf of the Director, Mr. Kondrat, a surface water specialist, testified that the aqueous contents of the lagoon represent low risk to the water quality of the Lake, if an unregulated discharge was to occur.  Ms. Hakala, a Senior Environmental Officer also testified regarding her observations of the berm walls, as described above in the Director’s submissions.  However, the Director did not seek to qualify either Ms. Hakala or Mr. Kondrat to give opinion evidence regarding geotechnical analysis of the berm walls.  Consequently, the Tribunal accepts that Mr. Marineau is the only witness who has the qualifications to provide expert opinion in this regard.

Although the Director adduced evidence showing that there are holes in the PVC liner near the surface level of water in the Lagoon, the Director acknowledges Mr. Marineau’s evidence that the tears were only in the top layer of the liner designed to protect the lower layer from UV light.  Hence the evidence remains unclear whether the condition of the liner is such that sludge can leak through it, although it is not disputed that the liner is aging as it was installed approximately ten years ago.

The Director adduced evidence, primarily by Ms. Hakala, indicating that on June 29, 2009, an employee of Superior contacted the MOE to advise that water levels in the Lagoon had dropped seven centemetres over the weekend despite the fact that the level in the Lagoon was below the level at which the weir (the point where the treated water in the Lagoon discharges to the Lake) would let the water out.   The Director also adduced evidence to establish that there had been a small amount of rain over this period.  Ms. Hakala testified that it was her understanding that Superior had just turned off all process water going into the Lagoon, so she expressed her conclusion that the drop in water must have been due to a leak in the berm.   Mr. Marineau indicated that a seven centemetre drop in the water level is unusual and could only be explained by massive seepage.  He expressed his doubt that the reduction in water level could have been this sudden.  He also points out that seepage does not relate to structural integrity of the berm.  However he indicated that he could not make further comment as he had never observed the static condition of the Lagoon system as opposed to its operational state.

Ms. Hakala also testified that she attended the Site on June 30, 2009 and found that there was a crack in the top of the Lagoon berm, and the berm was slumping on pass 5, by which she meant that there was a depression under the liner where there was a void due to an absence of soil.

Although Mr. Marineau is an employee of Cascades Inc., the Tribunal finds that he gave his evidence in an objective and impartial manner.  Therefore, unless otherwise stated, the Tribunal accepts his evidence and analysis.  Mr. Marineau agreed that the sludge currently in the Sewage Lagoon was deposited there when Cascades had management and control of the Site. Regarding his opinions, Mr. Marineau has indicated that cracking in the berm and/or indications of seepage are not necessarily indicative of imminent collapse of the berm or failure mandating repairs if the Industrial Sewage Works is not operational.  He expressed his opinion that the potential for a slope/slide failure is low.  However, he also indicated that with engineered (man made) structures there is never no risk.  He confirmed that his opinion is based on his knowledge of the history of the Site, and a conservative assumption that there were no acting forces on the berm.  However, in cross-examination, he also acknowledged that he could not say what the safety factor is, and he is not certain what caused the crack observed in the berm wall. He conceded that the only way to definitely determine the safety factor, is to conduct an assessment.  He explained this would entail drilling to obtain samples, performing geotechnical testing, then profiling the berm geometry and creating a model to compare safety factors against any potential for slope failure.  He indicated the cost of such assessment would be approximately $30,000, but would give a fair degree of certainty.  He acknowledged that such assessment had not been done, and without it, he could not express his opinion as a professional engineer that the risk of a slope/slide failure is minimal.

The evidence adduced indicates that, since Ms. Hakala’s observations, there have been no further problems or deterioration noted respecting the berm walls.  However, the Tribunal received no evidence to confirm that this is a reliable predictive indicator regarding the future stability of the berm walls.

Based on the evidence adduced in this proceeding, the Tribunal is not prepared to accept Mr. Marineau’s opinion that the risk of failure is minimal.  Mr. Marineau was qualified to give opinion evidence based on his professional expertise as an engineer, and he has testified that he would not affirm his opinion without first conducting a geotechnical assessment. The Tribunal finds, therefore, that the evidence adduced establishes a sufficient basis on which to conclude that there is uncertainty regarding the structural integrity of the berm.  Even if the risk of berm wall failure is low, this risk must be weighed in light of the berm’s function in containing the contaminant sludge.   In reaching this determination, the Tribunal has also considered Mr. Marineau’s evidence as stated in paragraphs 41 and 42 of his Witness Statement:

Because the water and sludge/sediment levels are the same on either side of the berm (on the Lake side and the lagoon side), there are no acting forces on the berm.  Therefore, if the berm fails, it will be a slow, gradual failure over the course of a long time with the berm sliding into the lagoon.  Therefore, a spread of sludge into the Lake is unlikely in the event of a berm failure.

And, because the sediment level on the Lake side and the sludge level on the lagoon side are the same, even if the berm failed, the sludge would not move into the Lake unless there was a complete slope side failure resulting in an open channel between the Lake and the lagoon through which the sludge could flow.  In my opinion, this is very unlikely to occur based on the present condition of the berm.

Regarding this evidence, the Tribunal first observes, as noted above, that Mr. Marineau’s evidence is that the risk is low, not that there is no risk at all.

Apart from this, the Tribunal also notes that Mr. Marineau’s evidence does not address the issue whether the Industrial Sewage Works is in compliance with the CofA(Sewage Works).  It must be emphasized that, under section 27, no person shall use a waste management system except in accordance with the terms and conditions of its certificate of approval.  It is not disputed that the berm walls under the CofA(Waste) continue to be used as a component of this waste management system to contain the contaminant sludge.  While Superior may not be fully operating the Industrial Sewage Works, it, is nonetheless continuing to use this system, and Cascades, in submitting that the sludge can remain in the Lagoon, is relying on this use as well.  Consequently, the Tribunal finds that a geotechnical assessment is required in order to determine whether the structural integrity of the berm walls is sufficiently sound so that the Industrial Sewage Works is in conformity with the CofA(Sewage Works).

In considering the scope of the Director’s authority under section 44, the Tribunal is mindful of the practical reality that the Director may require investigation or evaluation respecting a waste disposal site, in order to determine whether a waste disposal site is in compliance with its Certificate of Approval.  This may or may not fall within monitoring requirements set out in the Certificate of Approval.  The Tribunal recognizes that financial and other resources may be required in order to obtain such information. These should be borne by persons responsible under Part V of the EPA for the waste disposal site or waste management system. Accordingly, the Tribunal finds that the responsibility of a former owner, under section 44 of the EPA includes the obligation to obtain such information, where such investigation or evaluation is necessary, to establish the measures required to ensure that a waste disposal site or waste management system is in conformity with Part V and the regulations.

In light of the above analysis and findings, the Tribunal concludes that the uncertainty respecting the structural integrity of the berm walls establishes sufficient grounds to question whether the Industrial Sewage Works is in conformity with the CofA(Waste).  As such, the Tribunal finds that it is reasonable to require a geotechnical assessment of the structural integrity of the berm walls, as described by Mr. Marineau.  For sake of clarity, structural integrity includes the structural stability of the berm walls, their capacity to contain the maximum volume of water which can accumulate within the Lagoon system, and whether the berm walls in the current environment, provide an impermeable barrier to the sludge leaking through the walls into the Lake, which will include an evaluation of the condition of the liner and whether it is currently meeting its original functional specifications.  The phrase “in the current environment” is intended to include, as a relevant factor, an evaluation of the extent to which the existing sludge on the outside of the berm walls would prevent sludge from leaking through the berm walls.

As it is unclear to the Tribunal whether the Provincial Officer’s Order against Superior for remediation of the Lagoon would include the geotechnical assessment, Superior should also be required to do this work under this Director’s Order.  The Director’s Order should require only the geotechnical assessment and report.  Once this assessment is completed, the Director can issue a further Order for such measures as are deemed necessary by the Director, in light of the findings and recommendations in the assessment.

Finally, the Tribunal has considered the Director’s submission that Cascades ought only to be ordered to ensure that the berm is adequately structurally sound such that it will not breach until the sludge within the Lagoon system has been dredged and removed, and that any further repairs to the berm should be the sole responsibility of Superior and should be conducted prior to any future discharge of process wastewater into the Lagoon.   The Tribunal has found, under Issue #1, that it is irrelevant, for purposes of the EPA, to consider whether a remediation measure supports continued operations.  The requirement under section 44 is to take such action as is required to bring the system or the site into conformity with Part V or the regulations.  Accordingly, the Tribunal is not prepared to make a finding, one way or the other, whether Cascades may, at some time in the future, be responsible for other actions which are required to bring the system into conformity with Part V of the EPA or the regulations.

The Tribunal now turns to the requirement to prepare and implement a schedule to bring components and operation of the Industrial Sewage works into full compliance with the CofA(Sewage Works).

The Tribunal has already found, that a former owner’s responsibilities under section 44 include the obligation, where such investigation or evaluation is necessary, to investigate or evaluate a waste management system, in order to determine whether it is in compliance with its Certificate of Approval. The above-required geotechnical assessment is an example of such an obligation.  The Tribunal recognizes that a review by a consultant may be of assistance in identifying whether the current condition of other aspects of the Industrial Sewage Works is in conformity with the CofA(Sewage Works).  Accordingly, the Tribunal upholds the requirement under Part 2.12(b) of the Director’s Order as against both Cascades and Superior, and the requirement under Part 2.13 to implement the plan prepared by the consultant, as approved by the Director.  However, the Tribunal also notes that, based on the evidence adduced at the Hearing and the Parties’ submissions, there does not appear to be any concern that the Industrial Sewage Works does not comply with the CofA(Sewage Works) other than the issue respecting the structural integrity of Lagoon berm.  The Director acknowledges that there are no water quality issues respecting the water that is discharged to the Lake.  The Director also concedes that the presence of the sludge in the Lagoon is permitted (provided it remains contained by the Lagoon berm).  Furthermore, the Director further does not require that the Lagoon currently be dredged, and Superior agrees it will need to dredge the Lagoon before it resumes operating the Industrial Sewage Works.  Although the Tribunal upholds the requirement for the consultant review under Part 2.12(b), Cascades and Superior ought not to be required to pursue any unnecessary work in this regard.  For this reason, while the Tribunal is not directing any further amendment to Part 2.12, the Tribunal requests that the Director review the CofA(Waste) to identify the specific terms and conditions, and supporting technical specifications which the Director wishes the consultant to review.  The Director should confirm these in writing to Cascades and Superior, so this may be provided to the consultant as a term of reference for the scope of the review.

The Tribunal now considers whether Cascades should be responsible for the requirement under Part 2.4 to conduct daily visual inspections of the Lagoon berms.   In his evidence, Mr. Marineau indicated that weekly inspections were sufficient.  As the Director did not call expert evidence to challenge this conclusion, the Tribunal is prepared to accept that weekly observations are sufficient, and directs the Director to amend Part 2.4 in this regard, but with the additional proviso that the frequency of the inspections may be increased forthwith upon notice from the Director.  This latter provision will provide for flexibility should any changes in the condition of the berm walls indicate that more frequent inspections are necessary. The Tribunal notes that Part 2.4 does not specify a termination date for this on-going obligation.  The Tribunal directs that this obligation should continue until the results of the geotechnical assessment are filed with the Director.  The Director can then review this assessment, and, if it appears that further regular inspections are required, the Director can issue a further order at that time.

Regarding Cascades’ responsibility to fulfil the requirement to conduct the visual inspections, the Tribunal finds that such inspections are for the purpose of ensuring that the Sewage Lagoon remains in conformity with the CofA(Sewage Works), and, therefore, the Director has the jurisdiction under section 44 of the EPA to impose this responsibility on  Cascades.

In light of the above analysis and findings the Tribunal makes the following directions to the Director regarding Cascades’ responsibility for the Parts of the Director’s Order relating to the Industrial Sewage Lagoon:

• Part 2.11 (requiring a consultant) can remain in place against both Cascades and Superior, on the assumption that this consultant is the person who will conduct the geotechnical assessment.

• Part 2.12 (a) (d) and (e) should be vacated.

• Part 2.12 (b) should be vacated and replaced with the requirement to conduct the geotechnical assessment.

• Part 2.4 should be amended to provide for weekly visual inspections of the berm walls, but the frequency of such inspections may be varied forthwith upon notice from the Director once he has received and reviewed the geotechnical assessment.

 

Issue #4: Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades:

a. To make arrangements with the Independent Electricity Service Operator to ensure the supply of electricity to the Site as set out in Parts 2.6-2.7 of the Director’s Order; and

b. To develop and implement a plan to maintain security of the Site as set out in Parts 2.8-2.10 of the Director’s Order.

Issue #5: Whether Cascades ever owned, managed or controlled some or all of the equipment and/or materials that the Director is of the view require electricity and/or security as set out in Parts 2.6 and 2.7 of the Director’s Order.

Issue #6: Whether the Director has jurisdiction to order Cascades to do the work set out in parts 2.6 and 2.7 of the Director’s Order, if Cascades did not own, manage or control some or all of the equipment and/or materials that the Director is of the view require electricity and/or security as set out in these Parts.

Issue #22: Whether  it is fair to order Cascades  to do the work set out in Parts 2.6 and 2.7 of the Director’s Order, if Cascades did not own, manage or control some or all of the equipment and/or materials that the Director is of the view require electricity and/or security as set out in these Parts.

Issue #23: Whether it is fair to order Cascades to do the work set out in Parts 2.12(f) and 2.13 of the Director’s Order, if Cascades did not own, manage or control some or all of the equipment and/or materials which are the subject of these Parts.

Superior’s Submissions:

With respect to Parts 2.6 and 2.7 of the Director’s Order, Superior maintains that the Independent Electricity Service Operator (“IESO”) will not ensure the power will not be interrupted without a financial guarantee, which Superior cannot provide at this time.

With respect to Parts 2.8, 2.9 and 2.10 of the Director’s Order, Superior argues that it cannot afford to have two staff on the Site 24 hours a day.  Superior currently maintains a minimum of one person on Site 24 hours a day.

Cascades’ Submissions:

Cascades submits that neither Site security nor electricity is required for any matters which ought to be Cascades’ responsibility.  Cascades argues that such requirements are beyond the jurisdiction of the Director to order and, therefore, ought to be vacated by the Tribunal.

Cascades asserts that Site security and electricity are primarily necessary due to the chemicals located on Site, noting that Mr. Marineau has testified, with no contrary evidence being adduced, that the chemicals on-Site are materials that were brought on to the Site after Cascades sold it.  Cascades emphasizes his evidence that Cascades removed any hazardous materials it owned prior to selling the Site, other than some partially full paint cans and maintenance lubricants, and a small bit of fuel in two underground storage tanks, which was long ago used up in the on-Site operations.

Cascades submits that it is important to look at the section 18(2) provisions, and examine the meaning of discharge “from the undertaking or property”.  Cascades submits that the Tribunal, as confirmed by the Ontario Divisional Court in Montague v. Ontario (Ministry of the Environment) (2005), 12 C.E.L.R. (3d) 271 (Ont. Div. Ct.), at para. 24, was clear that the undertaking is defined relative to that which causes the risk of discharge.  In this regard, Cascades asserts the following:  In this situation, the undertaking or property in question is the hazardous materials, which Superior is storing at the Mill.  The existence of these materials is what may cause the risk of discharge, not the Mill itself.  As Mr. Marineau testified, Cascades never owned, managed or controlled these materials.  As such, it is not a former owner or formerly in management or control of these materials, which are the sole property of Superior.  Cascades did not bring these materials on Site and create the risk.  Therefore, Cascades argues that the Director has no jurisdiction under section 18 to order Cascades to supply electricity or security relating to these risks.

Cascades also emphasizes the following evidence:  Mr. Marineau testified that, but for the presence of these chemicals, there is no need for in person security on-Site.  In his past experience with closed or idled mills, padlocking gates are sufficient.  There are many idled mills with this type of security.  Ms. Hakala also testified that security was needed to protect against the risks of spills or vandalism related to the chemicals.  Cascades submits that neither of these are an issue but for the chemicals, which Cascades asserts are not its responsibility.

Cascades similarly argues that, without the chemicals present on-Site, the electricity necessary to visually inspect the chemicals or have an internal sprinkler system available are not necessary.  Cascades notes Mr. Marineau’s evidence that other emergency matters at the Mill related to the Approved Waste Disposal Site, the Bark Pile or the Lagoon, can use lights on generators.  Cascades further notes the evidence that there are no lights in any event at either the Bark Pile or the Approved Waste Disposal Site, and that a generator could be used to pump Lake water to fight any fires.  Cascades consequently argues that the requirement for a generator on-Site to do so will suffice, noting that the Site is no different than many other operational or non-operational mills around the province, which Cascades asserts do not have orders for electricity or site security personnel.

Cascades further notes that Ms. Hakala admitted that Superior is presently providing security for the Site, and that Mr. Sinclair testified as to the names and shift work of these security personnel.  Cascades submits that this makes the Order’s requirement for Cascades to do so unnecessary.  Finally, Cascades asserts that Ms. Hakala has also admitted that the chemical inventory has been performed, satisfying that aspect of the Order, and that the chemicals over-wintered on the Site without incident.  Cascades consequently argues that there is no need to turn to Cascades to supply Site security or electricity.  Accordingly, Cascades submits that the work ordered is neither necessary nor advisable and, therefore, jurisdiction to order it does not exist.

Director’s Submissions:

The Director submits that the Order should be confirmed as it stands.  The Director asserts that there are significant environmental risks on the Site – in particular, the threat of breach of the berm, the possibility of another fire in the Bark Pile, and the presence of significant volumes of dangerous chemicals both inside the Mill building and in outdoor storage tanks.  The Director, therefore, submits that it is crucial that Site security be maintained until those risks are permanently addressed, and that the supply of electricity be maintained in order to ensure the capacity to respond to fires or spills, and in order to inspect chemical storage areas inside the Mill building where lighting is required.

The Director asserts that the need for adequate Site security is given further urgency by Andrew Sinclair’s evidence that there have been two instances of vandalism since the summer of 2009, one within the last two months of the date of this Hearing involving the breaking of computer screens in the Mill building.

Findings on Issues #4, #5, #6, #22, and #23:

The Director’s Order requires that the following work be done with respect to site security and electrical supply:

2.6 No later than August 4, 2009 at 2 p.m., and until the provision of written notification by the District Manager, make arrangements with the Independent Electricity System Operator to ensure that the supply of electricity to the Site is not discontinued, altered, interfered with or terminated.

2.7 Provide written confirmation to the Director that the arrangements described in Article 2.2 have been made with the IESO no later than August 4, 2009 at 3 p.m.  [Note:  The reference to Part 2.2 is a typographical error.  The intent of 2.7 is to refer to Part 2.6 of the Director’s Order.]

2.8 Retain security personnel for the Site satisfactory to the Director prior to 2 p.m. on August 4, 2009.

2.9 Submit a written plan for securing the Site to the Director for his approval prior to 2 p.m. on August 4, 2009. Amongst other things the plan shall provide for: (1) two security guards on duty 24 hours, seven days a week; (2) recording of all material observations; and (3) weekly reports to the District Manager on the status and activities at the Site.

2.10 Implement the plan described in Article 2.9, as approved by the Director, within one (1) day of the Director’s approval.

Regarding the requirement for electricity, Mr. Marineau’s undisputed evidence is that Cascades removed all hazardous materials from the Site at the time it sold the Site to Thunder Bay Fine Papers, other than two underground storage tanks for fuel. He indicated that neither of these tanks requires heating, and furthermore, that the fuel in them, in all likelihood, has been used.   He also expressed the opinion that these tanks did not require Site security as the tanks are underground.  Similarly, his undisputed evidence is that electricity service is not installed at the Bark Pile, the Approved Waste Disposal Site, or the Industrial Sewage Works, and that a generator could be used for lighting or to pump Lake water in case of any fires.

Cascades does not dispute the Director has jurisdiction to impose responsibilities on Cascades, as a former owner, under section 18 of the EPA in respect of the Site, provided the grounds under section 18(2) are satisfied.  The Tribunal notes that the Compliance Policy addresses common fact situations where a decision maker may be asked to relieve a person from responsibility which may otherwise be imposed by a control document.  The first, entitled “Innocent previous persons” states:

Where a statutory decision-maker is authorized under the EPA to issue an order to a previous owner, occupant or person in charge, management or control of a site, and that person only had a connection with the site before any contaminating substance became present upon it, and has no other connection to the problem leading to the contamination or the contamination itself, it is unlikely that the statutory decision-maker has any statutory authority to issue a control document to such a person. They would not be a relevant previous owner, occupant or person in charge, management or control of the site for the purposes of the statute. Even if they were, it would likely be appropriate for the statutory decision maker to relieve such a person of liability (i.e. not name him/her in the control document). Including such an entirely innocent and uninvolved person in a control document would tend to bring the administration of the EPA into disrepute, thereby encouraging the parties and the public to flout it. This would not serve the purpose of Ministry legislation.

Of course, it is possible to conceive of situations where a person who previously had a connection to the site (for instance a previous owner) may be subject to a control document, and should not be relieved of liability, i.e. where he/she has chosen to sell uncontaminated property where an undisclosed hazardous materials storage tank was buried and subsequent to the sale of the site, the tank ruptured which led to the discharge of a contaminant into the natural environment. Therefore, every fact of a situation must be examined on its own merit.

The Tribunal finds that this aspect of the Compliance Policy applies in this case.  On the evidence, there were no hazardous substances left on-Site when Cascades sold it to Thunder Bay Fine Papers.  The Tribunal finds that Mr. Marineau’s assumption that the fuel in the fuel tanks has been used, to be a reasonable assumption.  The Tribunal accepts Cascades’ submission that the Director adduced no evidence that Cascades left any other source of contaminants on-Site where absence of electricity would result in the risk of a discharge of any source of contaminants or to prevent, decrease or eliminate other adverse effects as set out in section 18(2).  Accordingly, the Tribunal directs that Parts 2.6 and 2.7 of the Director’s Order be vacated as against Cascades.

Turning to Site security, the Tribunal finds that the above analysis and findings also apply to these requirements.  On the evidence adduced, the need for security relates to the concern regarding vandalism, primarily due either to physical damage to containers or equipment, or by setting fires, which, in turn, poses a risk of discharge of the hazardous materials or other adverse effects.  However, as noted above, Cascades did not leave these hazardous substances on Site when it sold the property, and the Tribunal has accepted that it is reasonable to assume that fuel left behind has been used.   Again, the Director adduced no evidence to indicate that there were other security risks that would result in the risk of a discharge of other contaminants or cause other adverse effects as set out in section 18(2).

In light of the above finding, it is unnecessary for the Tribunal to rule on Cascades’ submission that padlocking the Facility will provide sufficient security.  Superior has not disputed the requirement for security as set out in the Director’s Order.  Superior acknowledges that it currently has reduced the level of this security, but maintains that it has only done so due to lack of financial resources.

The Tribunal has considered whether Cascades may be responsible for provision of electricity and security respecting the Industrial Sewage Works and the Approved Waste Disposal Site.  In this regard, the evidence of Mr. Marineau is that they do not require electricity for their operation, and that emergency lighting, if required, could be provided by a generator.  The Tribunal received no submissions regarding any requirements in the two CofAs for electricity or Site security.  In any event, Superior, as the current holder of these CofAs should first be required to provide any security that is required. Furthermore, the evidence indicates that Superior has continued to maintain security (albeit a reduced level).  Therefore, the Tribunal finds that the Director has not established that there is non-conformity with the two CofAs on this ground.

The Tribunal has considered the potential for a fire in the Bark Pile.  The evidence indicates that some of the materials can be used as fuel, and, are, therefore, combustible. Also, the Director has referenced an incident where a fire occurred at the Bark Pile. However, the Parties agree that the combustible materials are to be removed from the Site and sold.  Accordingly, the evidence does not establish that there will be a risk of fire in the future.

Consequently, the Tribunal accepts Cascades’ submission that Parts 2.8 to 2.10 should be vacated as against Cascades.

Finally, the Tribunal notes that the evidence provided was not extensive.  For this reason, the Tribunal observes that, should evidence of other contaminants or potential adverse effects arise, the Director may further consider Cascades’ responsibilities under the provisions of the EPA and the regulations, as well as the provisions in the Compliance Policy.

Issue #11: Whether there are reasonable and probable grounds under section 18(2) of the EPA to require Cascades to retain a consultant to develop a plan to monitor the Site as set out in Parts 2.12(f) and 2.13 of the Director’s Order?

Issue #12: Whether Cascades ever owned, managed or controlled some or all of the equipment and/or materials which are the subject of Parts 2.12(f) and 2.13 of the Director’s Order?

Issue #13: If Cascades never owned, managed or controlled some or all of the equipment and/or materials which are the subject of Parts 2.12(f) and 2.13 of the Director’s Order, does the Director have jurisdiction to order Cascades to do the work set out in Parts 2.12(f) and 2.13 of the Order?

Superior’s Submissions:

Superior did not make written submissions on this issue.  Superior did not dispute this aspect of the Director’s Order.

Cascades’ Submissions:

Cascades notes that Parts 2.12(f) and 2.13 of the Director’s Order relate to the development of a plan to monitor, record and report on the Site, including the Lagoon, the materials and chemicals on-Site, the waste on-Site and all of the tanks and piping at the Mill, and to implement that plan.

Cascades first asserts that there must be reasonable or probable grounds to believe it is necessary or advisable for Cascades to create and implement such a monitoring and reporting plan in order to prevent or reduce the risk of a discharge of a contaminant or prevent, decrease or eliminate an adverse effect that may result from a discharge.  Cascades maintains that this Site is no different than the tens or hundreds of other mills around Ontario where former owners are not being ordered to similarly monitor, record, and report on the operations of current owners.  Cascades argues that this then begs the questions: how is a section 18 order warranted here?

Cascades argues that there are no exceptional circumstances in this case that raise the Site to a level where it becomes necessary or advisable to make such an order, let alone look to a former owner to do this work. Aside from the hazardous chemicals, which Cascades asserts are not its, Cascades relies on Mr. Marineau’s evidence that, the only necessary monitoring, recording and reporting while the Site is not in operation is the regular groundwater testing, reporting of non-operation to the MOE, and performance of the weekly berm inspections.  Cascades refers to his evidence that these costs are about $25,000 a year.  Cascades maintains that these costs are minimal and well within Superior’s abilities.  Furthermore, Cascades argues that it is Superior’s contractual obligation and obligation as the owner and holder of the applicable CofAs to perform the ground water monitoring on this Site.  Again, Cascades submits that the Director has jumped the gun in issuing the Director’s Order at all, and, in particular, to Cascades.

Cascades states that Mr. Marineau has also testified, and no one has disputed, that some of the materials the MOE has ordered that Cascades monitor and report on were never owned by Cascades, as noted above in its submissions in respect of the Site security issue.  Therefore, Cascades submits that the Director is completely without jurisdiction to require Cascades to fund the monitoring, recording and reporting of these matters.  Moreover, Cascades relies on  Ms. Hakala’s evidence that Superior has completed the inventory of the chemicals.  Cascades consequently argues that it is not necessary or advisable to have Cascades do this work, and, if required at all, ought to be the responsibility of the owner of the Site, as it is actively in management and control of the Site and has the financial wherewithal to complete these tasks.  Cascades maintains that Superior “crying poor” is an insufficient basis upon which to turn to a former owner to take responsibility for all the environmental issues at a site as though it was an orphaned site with an imminent environmental disaster about to befall it.  Cascades further asserts that there has been insufficient evidence advanced to demonstrate that the MOE should look to a former owner at this point in time, and that this requirement is not necessary to protect the environment.  As such, Cascades submits that Parts 2.12(f) and 2.13 of the Order should be vacated against Cascades.

Director’s Submissions:

The Tribunal notes that the Director did not address this matter separately in his written submissions, as some of the required work has been done by Superior, and the Director’s submissions regarding monitoring of the Industrial Sewage Works, and provision of Site security, also relate to these Issues.

The Director notes that, even Mr. Marineau was of the view that further monitoring wells are required to confirm that leachate from the approved site is being sufficiently attenuated before groundwater reaches the lakeshore.  In his evidence he indicated that:

Prior to shallow impacted groundwater discharging to Lake Superior, water quality will likely improve due to natural attenuation processes; therefore, groundwater impacts to the lake from the site will likely be minimal; however, additional groundwater monitoring wells need to be established further down gradient of the clay disposal and former coal storage areas, near Lake Superior, to confirm this. [emphasis added]

Findings on Issues #11, #12, and #13:

Part 2.12(f) and 2.13 of the Director’s Order provide:

2.12 By no later than August 5, 2009 at 2 p.m., provide to the Director, for his approval, a detailed written plan (the “Plan”) produced by the Consultant and containing the following:

…

(f) a plan for monitoring the Site (including the inspection of the lagoon berm and the identification and labeling of all waste flammable materials and chemicals on Site, classification and registration of all waste on the Site; identification of, and physical integrity of all above ground tanks, underground tanks and related piping) and for recording and reporting such monitoring activities.

2.13 Implement the plan delivered pursuant to Article 2.12, as approved by the Director, within three (3) days of the date of the Director’s approval.

Based on the evidence adduced, and the Tribunal’s findings in this proceeding, the Tribunal finds that the Director has established that the following monitoring requirements are required:

• Identification and labeling of all waste flammable materials and chemicals on Site, classification and registration of all waste on the Site; identification of, and physical integrity of all above ground tanks, underground tanks and related piping

• Visual inspections of the berm wall in the Industrial Sewage Lagoon; and

• Additional monitoring wells to assess the leachate which may reach the Lake;

The Tribunal will deal with each of these in turn.  Again, it must be noted that Superior did not dispute Part 2.12(f) or 2.13 of the Director’s Order, so the Tribunal’s findings are in respect of Cascades’ responsibilities.  Also, as the Tribunal did not receive submissions respecting conformity with specific monitoring requirements under the two CofAs, the Tribunal has not addressed this aspect of monitoring in this Tribunal Order.

Regarding the identification of materials and physical integrity of tanks, the Tribunal first notes that the Parties agree that Superior has completed the inventory of the chemicals.  It is clear that the Director has the authority, under section 18(1) #5 and #6 to require such monitoring, and it was not disputed that these requirements  are necessary or advisable so as to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property.  However, the Tribunal has already applied the Compliance Policy in finding that Cascades should not be required to provide electricity services because it removed all hazardous chemicals when it sold the Site.  The Tribunal finds the same analysis applies in respect of monitoring respecting these hazardous chemicals.  As the need to monitor the physical integrity of the tanks and related piping relates to the risk of discharge of the presence of hazardous chemicals, or the discharge or fuel and/or the potential of fire within these physical structures, the same analysis also applies.  Cascades should not be required to conduct any monitoring activities for any substances brought on Site after Cascades sold it.

The evidence is not entirely clear that the chemicals that Cascades removed from the Site also include waste flammable materials.  However, the evidence did not confirm that there were waste flammable materials on Site (other than the Bark Pile, which has already been addressed). As such, the Tribunal finds that the Director has not established grounds to impose this monitoring requirement on Cascades at this time.  Should the Director determine that there are flammable wastes presently on the Site, which were left there by Cascades (excluding waste governed by the two CofAs), the matter can be addressed at that time.

In his submissions respecting the Approved Waste Disposal Site (under Issue #14), the Director noted that Mr. Marineau acknowledged “that additional groundwater monitoring wells are required to confirm that leachate from the approved site is being sufficiently attenuated before groundwater reaches the lakeshore.”  The Director then references Exhibit 62, which is a report by True Grit Consulting Limited (“True Grit”), dated December 19, 2007.  The Executive Summary in this report indicates that True Grit was retained by Cascades Inc. to complete an evaluation of groundwater quality for monitoring events conducted at the Site in 2007.  Section 3 of this report confirms that the groundwater well network on the Site monitors three areas.  Figure 1 in this report, entitled Location Plan, confirms the location of these three areas.  They are the clay waste disposal area (which is the Approved Waste Disposal Site), a former coal storage area (a small area located adjacent to clay waste disposal area), and the Bark Pile.  On page 2 of the Executive Summary, the report states:

Based on historical and current results, leachate impacts to groundwater are apparent directly downgradient of the clay waste disposal, former coal storage, and bark storage/transfer .areas. The impacts generally appear to be limited to the shallow groundwater. Based on the lower concentrations of indicator parameters measured in the deeper groundwater, the semi-confining silty clay layer between the shallow and deeper groundwater across the site appears to be protecting the deeper groundwater from significant impact associated with the surface land use. Prior to shallow impacted groundwater discharging to Lake Superior, water quality will likely improve due to natural attenuation processes; therefore, groundwater impacts to the Lake from the site will likely be minimal; however, additional groundwater monitoring wells need to be established further downgradient of the clay disposal and former coal storage areas, near Lake Superior, to confirm this.

Therefore, it appears that these leachate monitoring wells are required for some areas that are not currently governed by the two CofAs.  Accordingly, the Tribunal finds that the Director has authority to require both Superior and Cascades to implement the recommendation for the  additional monitoring wells (a recommendation which was not disputed by Cascades or Superior) pursuant to sections 18(1) #5, and 18(2).

Respecting the Industrial Sewage Works, the Tribunal, under Issue #3, has already addressed the issue of the requirement for visual inspections as required in Part 2.3 of the Director’s Order.

In conclusion, the Tribunal finds that, as against Cascades, Part 2.12 (f) should be amended to require only the recommended implementation of the groundwater monitoring wells.

Issue #18: Whether the requirement under Part 2.15 of the Director’s Order for Financial Assurance in the amount of $5,000,000, or the revised amount, is an accurate assessment of the amount of financial assurance required for the work required by the Director’s Order.

Issue #19: If not, what is the appropriate sum of financial assurance required for each component of the work required by the Director’s Order?

Superior’s Submissions:

As noted in Superior’s submissions under Issue #2, Superior argues that it should not be required to perform the work relating to the Bark Pile since Cascades has acknowledged that it is responsible for doing this work.

Superior maintains that it does not have the financial resources to provide $5,000,000 in financial assurance to the MOE.  Superior asserts that, when it has had funds, it has done what it could to carry out compliance with the Order, citing, for example, the expenditure of $100,000 on the partial berm repair. Superior asserts that it was thereafter without further funds to keep the hydro bill current.

Superior notes that it has been argued that it could sell the assets to pay for the repairs.  Superior asserts that it cannot sell the assets without the written permission of the current mortgage holder as per the testimony of Andrew Sinclair.  Alternatively, even if the mortgage holder did give permission, Superior asserts that there would still be insufficient funds to carry out the work.  In support of this postion, Superior asserts the following:  The current value of the registered mortgage is $1,964,144.16 as per the testimony of Andrew Sinclair.  The current value of the metal in the facility, as per the testimony of Mr. Marineau and a quote from a contractor (Exhibit 129) is $3,500,000.  The Director was looking for $5,000,000 in financial assurance – at that amount, the sale of the assets would be just under $3.5 million dollars less than what is needed. Even under the Director’s new scheme of financial assurance requirements of $2,715,240, there would still be a shortfall of just under $1.2 million.

Cascades’ Submissions:

Cascades observes that the Director’s Order requires Cascades to provide Financial Assurance for every action required under the Director’s Order.    However, Cascades points to the Director’s acknowledgment that Cascades should not be required to undertake actions which make the Industrial Sewage Works operational, other than the work necessary to ensure the structural integrity of the berm walls.  Cascades further notes that, in respect of the Approved Waste Disposal Site, the Director acknowledges that Cascades should only be required to provide Financial Assurance in respect of closure costs for the landfill.

In the first instance, Cascades disputes the Financial Assurance requirement on the basis that the requirements of the Order are either not necessary or advisable, nor within the jurisdiction of the MOE for other reasons, or are an inappropriate exercise in discretion.

With respect to amount, Cascades relies on Mr. Marineau’s evidence that, for the work Cascades submits is its responsibility, namely the Bark Pile, the least cost option, namely moving the Bark Pile, would be about $250,000, and that even the cost of capping in situ would be only approximately $500,000.  Cascades states that Ms. Hakala admitted that the Financial Assurance Guideline demonstrates that the least cost option to protect the environment is acceptable as an amount of Financial Assurance, and that, even if a more expensive option is chosen, Financial Assurance can be of the lower amount.

Cascades emphasizes that Mr. Marineau testified that $5 million is not an accurate estimation of the least cost option for the rest of the requirements of the Director’s Order —  that is, if the least cost option were pursued for each of the undertakings, the environmental liabilities on the site would be significantly less than $5,000,000. Cascades asserts, for example, that the Director has based his assurance on the scenario of the sewage works being dredged.  However Cascades maintains that, if the Site is not operational and is not being decommissioned, then the Lagoon does not need to be dredged.  Cascades submits that, while dredging the Lagoon may be in the interests of the current owner, it is not appropriate for an order against a former owner who has no interest in operating the Site.  Cascades further submits that it is also not necessary in order to protect the environment.  Cascades maintains that the MOE should turn to the assets of Superior before requiring this Financial Assurance of Cascades.  Otherwise, Cascades is being required to financially backstop the operations of Superior, which is neither necessary nor advisable in order to prevent a discharge of a contaminant in or an adverse effect from a contaminant on the environment.

Cascades also argues that, ordering Cascades to take on the financial risk for a Site over which it has no control, places Cascades at the mercy of Superior.  Cascades maintains that such a situation creates incentives for Superior to potentially not act in the best interests of the environment, as it is left with complete control of the Mill and its operations, but with no legal or monetary responsibility regarding its environmental issues.  Cascades asserts that this is not advisable in order to effectively protect the environment and, in fact, may have the exact opposite effect.

Director’s Submissions:

The Director submits that Cascades should only be ordered to post Financial Assurance adequate to ensure (i) that the CofA(Waste) is amended, as ordered, and (ii) to ensure proper closure of the Approved Waste Disposal Site.  Any further Financial Assurance that might be required above and beyond those amounts for an operational waste disposal site should be the sole responsibility of Superior and should be posted prior to the Mill returning to operational status.

The Director asserts that, based on the evidence at the Hearing, the $5,000,000 estimate for the total amount of Financial Assurance required for the work ordered can now be more precisely estimated.   The Director submits that Cascades and Superior should be jointly and severally liable to post at least a total of $2,715,240 in Financial Assurance, broken down as follows:

a. Moving the contents of the Bark Pile to the approved site: $5 per cubic metre x 114,698 cubic metres of waste = $573,490

(The $5 cost per cubic metre is from Mr. Marineau’s estimate in Exhibit 146, which he confirmed in his oral testimony to still be roughly accurate; the estimate of 114,698 cubic metres of waste is from Exhibit 132 at section 2.2.3 on p. 4 of True Grit’s Bark Pile Closure Plan.)

b. Financial assurance for closure of the approved landfill: $871,750

(Source:  Mr. Marineau’s estimate in Exhibit 146 of the cost of closure and post-closure monitoring at $7.5 per square metre, for a site that covers 8.29 hectares, plus $250,000 for construction of an embankment.)

c. The cost of dredging the lagoon system;  Sacchetti Construction’s estimate, in Exhibit 110, which did not include dredging of passes 1 to 5 of the lagoon system, was $1,250,000.  Given the evidence of Ms. Hakala that passes 1 and 2 of the lagoon system were even more full of sludge than pass 5 – she testified that there were shoals of sludge in portions of those passes where the sludge was above the water level – Sacchetti’s estimate is likely to underestimate the cost of dredging.  Mr. Marineau’s testimony was that his own estimate of the cost of dredging, done in 2004, was roughly $1,000,000, an estimate which again did not include dredging passes 1 to 5.

d. Financial assurance for proper geotechnical testing of the lagoon berm in order to ensure that it will not breach until the sludge is dredged: $20,000.  In is testimony, Leon Marineau estimated the cost of proper geotechnical testing of the berm at $20,000 to $30,000, so $20,000 would be conservative estimate.

Should Superior return to operational status, Superior should be required, solely, to post adequate financial assurance for the following work:

a. Financial assurance to ensure that the lagoon berm is repaired in a manner that renders it adequate to serve its function in the industrial sewage works: $148,500.  This amount represents the cost of having Sacchetti Construction complete the repairs it commenced in 2009.  Sacchetti gave a quote of $248,000 (Exhibit 114) for the full repairs, but only did $100,000 worth of the work, leaving roughly $148,500 worth of work to be completed.  This estimate is conservative, as it assumes that Sacchetti Construction’s plan to repair the berm is adequate.  Andrew Sinclair admitted that Paolo Sacchetti, the project manager in charge of the repairs, is not an engineer and that he did not do any testing of the berm’s structural integrity before implementing the repair plan.

b. Any financial assurance above and beyond that required for closure and post-closure monitoring for the approved waste disposal site to if it is to be used as an operational site.  Superior has not provided a financial assurance evaluation report, so the precise amount required is not known at this time, but Superior can provide the report and required financial assurance at a future date prior to recommencing operations.

The Director asserts that the above estimates are conservative in that, for instance, they do not include:

a. the cost of submitting an application for amendments to the CofA(Waste) for the Approved Waste Disposal Site;

b. Financial assurance to maintain the supply of electricity, which Andrew Sinclair testified was costing $8,250 per week; or

c. Financial assurance for Site security.

Findings on Issues #18 and #19:

Part 2.16 of the Director’s Order provides:

By no later than August 14, 2009, provide financial assurance for the performance of the work specified in this Order, in the amount of $5,000,000.00 to the Crown in right of Ontario in the form of cash or an irrevocable letter of credit that conforms with Ministry Guidelines F-15.

As noted earlier in this Tribunal Order, “Financial Assurance” refers to the requirement for financial assurance under Part XII of the EPA.

As noted in the Director’s submissions, the Director maintains that the amount of the Financial Assurance should be set by the Director’s Order.  However, the Director has now revised this amount, and has further particularized the work for which Financial Assurance is required.

Based on his submission, the Director requires that Cascades and Superior be jointly and severally responsible to provide Financial Assurance for the following:

1. Removal of the Bark Pile waste and site restoration;

2. Amendment of the CofA(Waste);

3. Closure of the Approved Waste Disposal Site;

4. Dredging the Lagoon and conducting the compliance review of the Industrial Sewage Works; and

5. Geotechnical assessment of the lagoon berm and monitoring.

The Director requires Superior alone to provide Financial Assurance, for all other actions required under the Director’s Order.  Specifically this includes:

• Further repair of the berm wall to ensure the operation of the industrial sewage  lagoon is functional; and

• Operation of the Site (other than closure and post closure monitoring)

In oral submissions, the Director agreed that Cascades and Superior are not required to duplicate the posting of this Financial Assurance for which they are jointly responsible, but that it is their obligation to decide between themselves how this responsibility will be shared between them, failing which one or the other must proceed to do so.

 

These submissions raise four questions:

1. What is the scope of the Director’s authority to impose Financial Assurance requirements on Superior and Cascades, particularly in respect of matters governed by the existing CofAs issued under Part V of the EPA?

2. Apart from the Tribunal’s exercise of discretion based on fairness, should Superior be relieved of the obligation to provide Financial Assurance on the basis that it will cause adverse effects on Superior or other economic consequences?

3. Where the authority to require Financial Assurance is discretionary, should Cascades or Superior be required to provide it?

4. If Financial Assurance is required, should the amount of Financial Assurance be fixed in the Director’s Order without first following the requirement under the Financial Assurance Guideline that a proposal be submitted for review by the Business and Fiscal Planning Branch, and the Environmental Assessment and Approvals Branch?

The Tribunal will address each of these questions in turn.

Regarding the first question, the Tribunal notes that the CoA (Sewage Works) was initially issued in 1997, and the CofA(Waste), in 1984.  Based on the evidence adduced, it appears that no financial security or assurance was required by the Director for the Industrial Sewage Works prior to the issuance of the Director’s Order. Based on the information in Part 1.21 of the Director’s Order, it appears that Financial Assurance was not requested for the Approved Waste Disposal Site until an amendment to the CofA(Waste) was issued on May 13, 2008 to Thunder Bay Fine Papers.  This amendment required that a Financial Assurance evaluation report be submitted by July 21, 2008.  The Director’s Order confirms that this report was never filed.  The Tribunal received no evidence to explain why the MOE approved the transfer of the CofA(Waste) to Superior without first requiring the filing of the Financial Assurance report and obtaining the necessary Financial Assurance.  Similarly, the evidence adduced does not indicate that Financial Assurance was earlier required from Cascades respecting either the Industrial Sewage Works or the Approved Waste Disposal Site.

The Tribunal has considered the following provisions.  Section 35 of the EPA states:

Condition precedent to issue of certificate

35. No certificate of approval shall be issued to an applicant other than a municipality unless the applicant has,

(a) deposited a sum of money;

(b) furnished a surety bond; or

(c) furnished personal sureties,

in such amount and upon such conditions as the regulations prescribe to assure satisfactory maintenance of the waste management system or the waste disposal site or the removal of waste from the site if the Director considers such removal necessary.  [emphasis added]

This provision has been in the EPA since it was first passed into legislation.  However, Regulation 232/98 respecting Landfilling Sites is the only regulation that has been passed in respect of section 35.  The Director acknowledges that Regulation 232/98 does not apply to the Approved Waste Disposal Site.  Consequently, there are no regulations prescribing the amounts or conditions that may be ordered under section 35 in respect of the Industrial Sewage Works or the Approved Waste Disposal Site.   Accordingly, there is no jurisdiction under section 35 to order that financial security be posted in respect of the two CofAs.

Consequently, the only other provisions governing financial assurance are found in Part XII of the EPA.  The relevant sections from this Part provide:

Definitions, Part XII

131.  In this Part,

“approval” means program approval, certificate of approval, provisional certificate of approval or renewable energy approval, and includes a permit or approval issued by a Director under the Ontario Water Resources Act, but does not include an approval under Part X of this Act; (“autorisation”) …

“order” means an order by the Director under this Act, and includes an order, notice, direction, requirement or report made by a Director under the Ontario Water Resources Act, but does not include an order under section 136 (order for performance of environmental measures) of this Act; (“arrêté”) …

“works” means an activity, facility, thing, undertaking or site in respect of which an approval or order is issued. (“travaux”)

Financial assurance

Approval or order

132.  (1)  The Director may include in an approval or order in respect of a works a requirement that the person to whom the approval is issued or the order is directed provide financial assurance to the Crown in right of Ontario for any one or more of,

(a) the performance of any action specified in the approval or order;

(b) the provision of temporary or permanent alternate water supplies to replace those that the Director has reasonable and probable grounds to believe are or are likely to be contaminated or otherwise interfered with by the works to which the approval or order is related; and

(c) measures appropriate to prevent adverse effects upon and following the cessation or closing of the works.

Both the definitions of “approval” and “order” under section 131, and sections 132(1)(a) and (c) have been in force as they currently read since at least 1990.

As the Director has, in Part 2.15(d) of the Director’s Order, required a Financial Assurance evaluation report in respect of the CofA(Waste), it appears that the Director has required Financial Assurance for the action/requirements under 132(1)(a) (b) and (c) in respect of all aspects of the Approved Waste Disposal Site.

Respecting the Industrial Sewage Works Parts 2.12 and 2.13 of the Director’s Order requires Superior to prepare and subsequently implement:

• a schedule detailing the steps necessary and time required to remove the waste sludges from the sewage Lagoon;

• a schedule detailing the steps necessary and time required for bringing the components and operation of the Site’s sewage works into full compliance with its Certificate of Approval; and

• a plan for monitoring the Industrial Sewage Works (including the inspection of the Lagoon berm)

The Director’s Order does not contain a general requirement for provision of a Financial Assurance evaluation report in respect of the CofA(Sewage Works).  As such the Director’s Order, under Part 2.12 and 2.13 requires Financial Assurance only in respect of the specific actions referenced above.

Regarding section 132, it is clear that “approval” includes a Certificate of Approval, and, therefore, the Director has the authority to include a requirement for Financial Assurance for actions specified in a Certificate of Approval as it may be amended from time to time.  However, it is important to note that, under section 132,  the Director may require Financial Assurance only from “the person to whom the approval is issued or the order is directed …”  Part XII contains no provisions to authorize the Director to include, in an approval, a requirement that any other persons also be required to provide Financial Assurance.  Similarly, with respect to orders, the requirement for Financial Assurance applies only to persons to whom the order is issued. It is also important to note that the requirement for Financial Assurance becomes effective only as of the date of issuance of the order, or the Certificate of Approval or amendment thereto.  This is because the requirement for Financial Assurance relates only to the performance of any action specified in the approval or order.  Consequently, the Director has no jurisdiction to retroactively impose a requirement for Financial Assurance on an individual who is no longer named in an order or on a Certificate of Approval.

In light of the above analysis, the Tribunal concludes that the Director has no authority to order Cascades to provide Financial Assurance in respect of the Industrial Sewage Works or the Approved Waste Disposal Site, on the basis that Cascades formerly held the two CofAs.  As noted earlier in this Tribunal Order, the Director has the authority to issue an order to Cascades to take the actions necessary to bring the system or the site into conformity with Part V or the regulations.  A requirement for Financial Assurance can be included in any order issued to Cascades in this regard.  Cascades’ obligation in this regard is addressed below.

As Superior is the person to whom both CofA’s are issued the Director has clear authority under section 132 to impose a requirement against Superior for Financial Assurance in respect of these two CofA’s.

There are no provisions under the EPA or the regulations which make Financial Assurance mandatory for any of the requirements in the Director’s Order.  Section 132 of the EPA is the governing section, under which the Director’s authority to require Financial Assurance is discretionary.  The Tribunal notes that the Financial Assurance Guideline includes provisions to inform the exercise of this discretion.  Section 4, together with Appendix F of this Guideline, indicate that Financial Assurance is usually required in respect of approvals of under Part V of the EPA.  Section 4.1 states:

4.1 …

Orders, approvals and other activities for which Financial Assurance is usually required in every case are detailed in Section 4.3.

Orders, approvals and other activities for which Financial Assurance is usually required where certain situations or conditions apply are detailed in Section 4.4.

Section 4.3 includes approvals under Part V of the EPA.

Section 4.4 of the Guideline addresses facilities referenced in this section which also includes approvals under Part V of the EPA.  Section 4.4 states:

4.4 Financial Assurance should be required for facilities listed in Sections 4.4.1 to 4.4.5 if any of the following situations apply, which should be specified in the order or approval file as reason(s), including:

a) Where a required action, process or task could result in adverse effects, such as increased health or environmental risks, contamination of or interference with the operation and use of municipal or private wells, or hazards to public health and safety.

b) When the operation or waste residuals of a facility are judged to be high risk in that the release of a contaminant could cause health, environmental or property damage, including contamination of the operation or interference with the operation and use of a municipal or private well.

c) When a Ministry of the Environment official determines that a facility or operation will require future decommissioning, rehabilitation, site rededication or environmental clean-up measures and includes these requirements as conditions in an order or approval.

d) When future long-term or perpetual management or monitoring of an existing or potential pollution or contamination problem is required by an order or approval.

e) When there is reason to expect that the regulated party might become insolvent in the future and be unable to complete or comply with the terms and conditions of an order or approval.

f) When a regulated party or person has been convicted of violations involving pollution discharges or emissions for specific or related problems addressed in an order or approval.

g) When the regulated party has missed a deadline in any previous orders or approvals.

h) When the regulated party has received an extension to a compliance date in an order or approval.

Applying the above provisions to the actions required under the Director’s Order, the Tribunal finds that the Guideline indicates that Financial Assurance would usually be required for each of these requirements.

Turning to the second question, the Tribunal has already addressed, under Issue #2, Superior’s submission that it should be relieved of its obligations to provide Financial Assurance because it would be unfair to impose this requirement in light of Superior’s assertions regarding its financial difficulties.   Although it may be a fine distinction, the Tribunal accepts that Superior can advance a separate argument under Section 7.2.4 of the Financial Assurance Guideline, that any other adverse effects on Superior and other economic consequences of imposing a requirement for financial assurance may be considered.

The relevant provisions (sections 3, 4, 5, and 7) of Guideline F-14 provide that a regulated party who claims undue hardship, adverse financial effects, or economic consequences, such as plant closure, must request an assessment and provide detailed relevant information including, financial records together with financial performance data for the industry in which the regulated party operates, as well as cost-effectiveness and benefit-cost analyses.

Section 8 provides:

8.0 Provision of Relevant Information

8.1 Responsibility of Regulated Parties

Regulated parties who request economic analyses are expected to provide such financial and other types of information to Ministry personnel or its consultants, as needed, to carry out the analyses.

8.2 Failure to Provide Requisite Information

Failure to provide the required information by regulated parties who request financial assessment shall be interpreted to mean that the regulatory requirements have no significant adverse effects on the regulated party in question.

Superior has asserted throughout this proceeding that it is attempting to resurrect the Facility as a viable economic activity, not just for itself, but for the Thunder Bay community at large.   Although a laudable goal, this does not allow Superior to defer its obligations under the EPA.  Environmental responsibilities under the EPA are one aspect of the operating of the Facility and maintaining the Site, and, as such, it was incumbent on Superior to include the costs of such responsibilities in its business and financing plans.  In its Order dated November 23, 2009, the Tribunal identified the opportunity afforded Superior under the above Guidelines and granted Superior a stay of its obligation to provide Financial Assurance, to allow Superior to prepare and file a financial assurance evaluation report.  At the Hearing, Superior conceded that it had not done so.  Accordingly, the Tribunal can only apply section 8.2 of the F-14 Guideline to conclude that Superior has not established, at this time, that the requirement for Financial Assurance will cause Superior significant adverse effects.  Accordingly, the Tribunal does not accept Superior’s submission that its obligation to provide Financial Assurance under the Director’s Order or the CofA(Waste), should be deferred on this ground.

The Tribunal now turns to the third question.  The Tribunal will first address Cascades’ obligation to provide Financial Assurance each of the five above-described requirements.

Regarding the amendment of the CofA(Waste), as stated above, the Tribunal has found that the Director has no jurisdiction to retroactively impose a requirement for Financial Assurance on Cascades on the basis that Cascades formerly held the CofA(Waste).  It is acknowledged that there is no current requirement for closure of the Approved Waste Disposal Site.  Consequently, the Tribunal does not accept the Director’s submission that Cascades can, at the present time, be required to provide Financial Assurance for these requirements, as there is no order against Cascades to do so.  The Tribunal has found, under Issue 14, that Cascades’ only obligation is to provide such information as the Director may require to amend the CofA(Waste) to increase the total approved area where waste may be deposited.  Consequently, this is the only action for which Financial Assurance may be required at this time in respect of the Approved Waste Disposal Site.

Regarding the Bark Pile, Cascades is ordered to implement removal of the Bark Pile waste and restore the Site in that vicinity.  Consequently, there is authority to require Financial Assurance, in respect of this aspect of the Director’s Order.

Cascades is not, at this point in time, ordered to dredge the Lagoon.  Consequently there is no authority to require Financial Assurance for this requirement.   Cascades is, however, ordered to conduct the geotechnical assessment and monitor the Lagoon berm until this assessment has been completed.  Cascades is also required to retain a consultant to prepare a plan which identifies whether there are any measures required to bring the Industrial Sewage Works into conformity with the CofA(Waste) and to implement the plan as approved by the Director.  Consequently, there is authority to require Financial Assurance for these requirements.

The Tribunal notes that, in exercising the discretion to require Financial Assurance, the Financial Assurance Guideline indicates that it would usually be required, not that it must be required. Therefore, the Tribunal finds that it is still necessary to exercise its discretion in deciding whether to require Financial Assurance, based on a consideration of the relevant circumstances in this case.  In this regard, the Tribunal has considered the following.

The requirement for the geotechnical assessment of the berm walls is an immediate short term requirement.  In this regard, the Tribunal observes that the MOE’s process to evaluate Financial Assurance (described below) is somewhat extensive and complex.  Accordingly, the Tribunal has considered that there is some practical benefit in having a person directly proceed with the work which is immediately required, rather than incurring delay and expense in first pursuing this evaluation process.  However, this must be considered in conjunction with an evaluation whether the person will voluntarily proceed with the work, and has the financial capacity to ensure it is completed.

The requirement for on-going visual inspections is currently being met by Superior, and again, as ordered by the Tribunal, is short term, as the need for this requirement will be reviewed once the geotechnical assessment is completed.  Regarding the compliance review by the consultant, the Tribunal has earlier observed that, other than the geotechnical assessement, this requirement may not be extensive.  This requirement is also an immediate short term requirement.  Regarding the requirement to provide the necessary information to amend the CofA(Waste) to increase the approved area, there was no indication that extensive  work would be required, or expense incurred, to produce this information.  In contrast, the cost estimates for the remediation of the Bark Pile indicate that this is a significant undertaking.  However, Cascades has acknowledged its sole legal liability, under the Environmental Indemnity, to complete this work, and the Parties have reached an agreement on the remediation alternative to be implemented.

The evidence adduced at the Hearing indicates that Cascades had made efforts to satisfy this requirement of the Director’s Order.  There is no suggestion that Cascades could not provide the necessary funds to cover the estimated costs associated with all the above requirements. The Tribunal notes that Cascades has voluntarily complied with the provisions of the Director’s Order which were not stayed.  The Director has agreed that Cascades Inc. can be removed as a named person in the Director’s Order, accepting that Cascades Inc. will perform the required work if Cascades (i.e. Cascade Fine Papers Group) does not.

Taking all the above circumstances and considerations into account, the Tribunal is satisfied that it is unnecessary, at this time, to impose a requirement for Financial Assurance on Cascades for these requirements.

The Tribunal now considers Superior’s responsibilities in respect of the Director’s Order.

Superior has argued that it should not be required to perform the action required in  relation to the Bark Pile, which includes the provision of Financial Assurance.  The Tribunal has found that Superior should be required, under the Director’s Order to do the work related to remediation of the Bark Pile.  However, the basis for this finding is to ensure that the Director can exercise his jurisdiction vis-à-vis Superior, as the current owner, to step in and cause the work to be done if neither Cascades nor Superior complete this work.  As noted earlier, Cascades has acknowledged that it is legally liable, under the Environmental Indemnity, to complete this work, so Cascades does not assert that Superior is required to implement or fund the Bark Pile remediation.  The Tribunal has considered this acknowledgement, as well as the Parties’ agreement respecting the measures to be implemented to remediate the Bark Pile.  In light of these circumstances, it appears unlikely that Superior will be called upon to fund the implementation of the Bark Pile remediation.  Therefore, the Tribunal concludes that Superior should not be called upon to provide Financial Assurance for this requirement at this time.

Although the cost of the geotechnical assessment of the berm walls is estimated at $20,000, Superior asserted it only had funding to contribute $5,000 to this cost.  The Tribunal has not required that Cascades provide Financial Assurance for this work, in major part, because the evidence indicates that Cascades, or Cascades Inc., will fulfil this requirement.  In light of Superior’s position regarding funding, it does not appear that Superior can similarly be relied upon to ensure this work is completed.  The Tribunal has also considered that this work is necessary so that the Superior can operate the Industrial Sewage Works in the future.  For these reasons, the Tribunal is not prepared to relieve Superior of the obligation to provide Financial Assurance for the geotechnical assessment.  The Tribunal has made this determination in full recognition that the need for this Financial Assurance may be obviated if Cascades fulfils its responsibility to complete this work if Superior does not do so.

Superior does not dispute the Director’s jurisdiction to require Financial Assurance for the other work required under the Director’s Order.  Superior asserts only that the Director should not exercise his discretion to require Superior to provide Financial Assurance because Superior does not have financial means to provide it. Because the Tribunal has not accepted Superior’s submissions in this regard, and because Superior is the person who holds both CofAs, the Tribunal finds that, except for the Bark Pile remediation, Superior should be required to provide Financial Assurance for the actions required under the Director’s Order, including the geotechnical assessment.

For clarification, the Tribunal has found that, in respect of the work respecting the Lagoon berm, the Director’s Order should be amended to require only the geotechnical assessment and report.  In making this finding, the Tribunal has also noted that the Director can issue a further Order for such measures as are deemed necessary by the Director, in light of the findings and recommendations in this assessment once it is completed.  Consequently, any requirement for Financial Assurance in respect of such measures may be addressed by the Director at that time.

The Tribunal now turns to the final question whether the amount of Financial Assurance should be fixed in the Director’s Order, without first requiring that a proposal be submitted for review by the Business and Fiscal Planning Branch, and the Environmental Assessment and Approvals Branch.

The Financial Assurance Guideline clarifies that the evaluation of the amount of Financial Assurance requires preparation of an initial estimate by the person who is obliged to provide Financial Assurance, (the “regulated party”), as well as a comprehensive MOE review process, which potentially includes site visits and contacts with third parties.  The Guideline also requires that the MOE first attempt to resolve any disagreement between the MOE and the regulated party.

The evaluation of Financial Assurance is not based on a standard formula, either in terms of ascertaining the constituent components to be included in the cost estimates, or the assumptions applied in determine what each component will cost.  In this regard, the Tribunal recognizes that a simplified evaluation is implemented under Regulation 232/98 in respect of contingency measures where the cost of such measures is determined at a fixed rate per tonne of waste deposited.  However, even under Regulation 232/98, there is no fixed formula for site closure and post-closure care.  The Tribunal further notes that this evaluation is complex.  Appendix A to the Financial Assurance Guideline, entitled “Compliance Cost Items to Estimate the Amount of Financial Assurance Required for Specific Orders, Approvals, Facilities and Activities” is a multi-page document that identifies, among other things, the following:

As discussed in Section 6, at least two key types of costs must be provided for each program activity, facility, technology, etc.

(1) Capital and other one-time costs: Costs incurred for the purchase of equipment and installation of equipment, construction of buildings and other site improvements, including the costs for contract services, architect services, construction labour, laboratory testing, project management, etc.; incurred usually once during the project.

(2) Recurring or annual costs: Costs for operation, maintenance and monitoring of equipment, buildings and the site, including the costs for labour, materials, ongoing consultant services, monitoring, etc.; expressed on an annual basis.

Financial Assurance proposals that specify technologies, cost estimates, appropriate inflation and discounting procedures (where necessary) and Financial Assurance determinations are the responsibility of the approval applicants or recipients of orders with Financial Assurance conditions.

The Tribunal notes that the costs estimates provided by Director in his evidence and submissions did not comprehensively address all of the cost factors referenced in the Financial Assurance Guideline.

Consequently, the Tribunal finds that the evaluation process should first be completed to ensure that an appropriate determination of the amount of Financial Assurance can be made.  Accordingly, the Tribunal does not accept the Director’s submission that the Tribunal should proceed to fix the amount of Financial Assurance based on the evidence adduced in this proceeding.

In reaching the above conclusion, the Tribunal has considered Superior’s non-compliance with the requirement to submit a Financial Assurance evaluation report.  The Tribunal finds that the response to non-compliance has been addressed in the Financial Assurance Guideline, which provides:

7.1 …

a) If satisfactory Financial Assurance is not received according to the terms and conditions of the order or approval, the Program Director should take immediate actions such as issuing orders, or even revoking the approval in accordance with Ministry guidelines, procedures and policies and in consultation with Legal Services Branch. Normally, an approval should not be revoked if waste is already on the site. Revoking the approval will remove an important legal authority that the Ministry has to require compliance with other (non-Financial Assurance) conditions in the approval. If waste is on the site, staff should amend the approval to stop operations or to prohibit waste being brought to the site. Such an amendment should not affect any other conditions in the approval.

The Tribunal also notes that, pursuant to section 186 of the EPA, a contravention of the Act or the regulations is an offence.  The Tribunal accepts that these are adequate responses to address non-compliance with a requirement to provide Financial Assurance.

In summary, in light of the above findings, the Tribunal directs the Director to amend the Director’s Order to remove Cascades’ obligation to provide Financial Assurance.  The Director’s Order should only require that Superior provide Financial Assurance, naming the actions for which Financial Assurance is required, and specifying a compliance date for filing a Financial Assurance evaluation report.  Although the Tribunal has upheld the requirement that Superior provide Financial Assurance, the Tribunal confirms that Superior may still include a request for relief under the Financial Assurance Guideline and Guideline F-14, which can then be assessed and determined by the MOE based on Superior’s circumstances at that time.  If Superior fails to comply with the requirement to file the Financial Assurance evaluation report, then the Director can pursue the enforcement remedies as noted above.   As noted, one of the remedies is that the Director can issue an order to prohibit waste from being deposited in the Approved Waste Disposal Site.  However, the Tribunal directs that such an order should not prohibit the deposit of waste from the Bark Pile because this action is being taken as an environmental remediation measure.

Summary:

When the Tribunal alters a director’s order, the Tribunal often attaches an amended order as an appendix to its Decision.  However, in this case, there are a number of amendments, as well as the need to adjust compliance dates in light of information available to the Parties at the time they receive this Tribunal Order.  Consequently, the Tribunal directs the Director to prepare a draft amended Director’s Order in accordance with the Tribunal’s directions in this Tribunal Order.  This draft amended Director’s Order should be filed with the Tribunal within 30 days of the issuance of this Tribunal Order, together with confirmation as to whether Superior and Cascades agree that the draft amended Director’s Order reflects the Tribunal’s directions.  In the event that there is any disagreement regarding the terms of the draft prepared by the Director, or if further clarification from the Tribunal is required regarding the appropriate amendments, the Parties may contact the Case Manager to schedule a date and time to address the Tribunal to obtain directions from the Tribunal in this regard.  The Tribunal will then issue a final Decision ordering the changes to the Director’s Order.

Order

The Director is directed to amend the Director’s Order, issued on July 29, 2009, in accordance with this Tribunal Order and to prepare and file a draft amended Director’s Order within thirty days of the issuance of this Order.

 

 

 

 

Appeals Allowed in Part

Director Directed to Amend Order

 

 

 

Dirk VanderBent, Vice-Chair

 

Appendix A – List of Parties

Appendix B – List of Witnesses

Appendix C – Exhibit List

Appendix D – Director’s Order

Appendix E – Minutes of Settlement

Appendix F – Relevant Legislation and Guidelines

 

Appendix A

List of Parties

 

Appellant: Superior Fine Papers Inc.

 

Representative for the Appellant: Andrew Sinclair

 

 

Appellant (Case No.: 09-090): Cascades Inc.

Appellant (Case No.: 09-091): Cascades Fine Papers Group Inc.

 

Counsel for the Appellants: Lana J. Finney

Davis LLP

1 First Canadian Place

Suite 5600, P.O. Box 367

100 King Street West

Toronto, ON   M5X 1E2

 

Director: Jim Fry

Director, Sections 18, 132 and 196

Environmental Protection Act

 

Counsel for Director: Nicholas Adamson

Ministry of the Attorney General

Legal Services Branch, Environment

135 St. Clair Avenue West, 10th Floor

Toronto ON  M4V 1P5

 

 

 

 

Appendix B

List of Witnesses

 

For the Appellant

Cascades Fine Papers

Group Inc.: Leon Marineau

 

For the Appellant

Superior Fine Papers Inc.: Andrew Sinclair

 

 

 

For the Director: Carl Taylor

Todd Kondrat

Alisdair Brown

Wim Smits

Sherry Hakala

 

 

 

Appendix C

Exhibit List

1. to 152. Common Document Book, Tabs 1 to 152

153. Financial Assurance Guideline, Last Revision:  November 2005

154. Superior Fine Papers – Sludge Sampling Stations August 19, 2009

155. Witness Statement of Todd Kondrat

156. Witness Statement of Alisdair Brown

157. Land Fill Standards, A Guideline on the Regulatory and Approval Requirements for New or Expanding Landfilling Sites, May 1998

158. Witness Statement of Wim Smits

159. Environment Canada Daily Date Reports – Thunder Bay , June 2009

160. Witness Statement of Sherry Hakala

161. Witness Statement of Andrew Sinclair

162. Notice of Motion by the Director dated April 7, 2010

163. Affidavit of Andrew Sinclair sworn April 12, 2010

164. Witness Statement of Leon Marineau

 

Appendix D

Director’s Order

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix E

Minutes of Settlement

 

 

 

 

 

 

 

 

 

 

 

 

Appendix F

Relevant Legislation and Guidelines

Environmental Protection Act

Control orders

7.  (1)  When the report of a provincial officer contains a finding that a contaminant discharged into the natural environment is a contaminant the use of which is prohibited by the regulations or is being discharged in contravention of section 14 or the regulations, the Director may issue a control order directed to,

(a)    an owner or previous owner of the source of contaminant;

(b)    a person who is or was in occupation of the source of contaminant; or

(c)    a person who has or had the charge, management or control of the source of contaminant.

 

 

Order by Director re preventive measures

18.  (1)  The Director, in the circumstances mentioned in subsection (2), by a written order may require a person who owns or owned or who has or had management or control of an undertaking or property to do any one or more of the following:

 

1.    To have available at all times, or during such periods of time as are specified in the order, the equipment, material and personnel specified in the order at the locations specified in the order.

2.    To obtain, construct and install or modify the devices, equipment and facilities specified in the order at the locations and in the manner specified in the order.

3.    To implement procedures specified in the order.

4.    To take all steps necessary so that procedures specified in the order will be implemented in the event that a contaminant is discharged into the natural environment from the undertaking or property.

5.    To monitor and record the presence or discharge of a contaminant specified in the order and to report thereon to the Director.

6.    To study and to report to the Director on,

i.    the presence or discharge of a contaminant specified in the order,

ii.    the effects of the presence or discharge of a contaminant specified in the order,

iii.    measures to control the presence or discharge of a contaminant specified in the order,

iv.    the natural environment into which a contaminant specified in the order may be discharged.

7.    To develop and implement plans to,

i.    reduce the amount of a contaminant that is discharged into the natural environment,

ii.    prevent or reduce the risk of a spill of a pollutant within the meaning of Part X, or

iii.    prevent, decrease or eliminate any adverse effects that result or may result from a spill of a pollutant within the meaning of Part X or from any other discharge of a contaminant into the natural environment, including,

A.    plans to notify the Ministry, other public authorities and members of the public who may be affected by a discharge, and

B.    plans to ensure that appropriate equipment, material and personnel are available to respond to a discharge.

8.    To amend a plan developed under paragraph 7 or section 91.1 in the manner specified in the order.

 

Grounds for order

(2)  The Director may make an order under this section if the Director is of the opinion, on reasonable and probable grounds, that the requirements specified in the order are necessary or advisable so as,

(a)    to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or

(b)    to prevent, decrease or eliminate an adverse effect that may result from,

(i)    the discharge of a contaminant from the undertaking, or

(ii)    the presence or discharge of a contaminant in, on or under the property.

 

 

25.  In this Part,

. . .

“owner” includes,

(a)    a person that is responsible for the establishment or operation of a waste management system or waste disposal site, or

(b)    the person that owns the land in or on which a waste disposal site is located; (“propriétaire”)

 

Certificates of approval

27.  (1)  No person shall use, operate, establish, alter, enlarge or extend,

(a)    a waste management system; or

(b)    a waste disposal site,

unless a certificate of approval or provisional certificate of approval therefor has been issued by the Director and except in accordance with any conditions set out in such certificate.

Condition precedent to issue of certificate

35.  No certificate of approval shall be issued to an applicant other than a municipality unless the applicant has,

(a)    deposited a sum of money;

(b)    furnished a surety bond; or

(c)    furnished personal sureties,

in such amount and upon such conditions as the regulations prescribe to assure satisfactory maintenance of the waste management system or the waste disposal site or the removal of waste from the site if the Director considers such removal necessary.

 

 

Information to be furnished

38.  An applicant for a certificate of approval shall submit to the Director plans and specifications of the work to be undertaken together with such other information as the Director may require.

39.  (1)  The Director, after considering an application for a certificate of approval, may issue a certificate of approval or provisional certificate of approval.

Idem

(2)  The Director may,

(a)    refuse to issue or renew;

(b)    suspend or revoke; or

(c)    impose, alter or revoke terms and conditions in,

a certificate of approval or provisional certificate of approval where,

(d)    the waste management system or the waste disposal site does not comply with this Act or the regulations; or

(e)    the Director considers, upon probable grounds, that the use, establishment, operation, alteration, enlargement or extension of the waste management system or the waste disposal site may create a nuisance, is not in the public interest or may result in a hazard to the health or safety of any person.

Terms and conditions

(3)  In imposing terms and conditions in a certificate of approval or provisional certificate of approval, the Director may include terms and conditions in respect of, but not limited to,

(a)    future specified alterations, extensions or enlargements, including future specified alterations, extensions or enlargements to be carried out by persons prescribed by the regulations;

(b)    operational parameters, including maximum rates of production, process limits, performance limits and parameters relating to equipment and infrastructure; and

(c)    alterations, extensions or enlargements to be carried out within the operational parameters mentioned in clause (b), including alterations, extensions or enlargements to be carried out within the operational parameters by persons prescribed by the regulations.  2010, c. 16, Sched. 7, s. 2 (28).

Same

(4)  If the Director imposes terms and conditions mentioned in clause (3) (a), (b) or (c) in respect of alterations, extensions or enlargements to be carried out by persons prescribed by the regulations, the certificate of approval or provisional certificate of approval shall be deemed to include a condition that the holder of the approval must give the persons notice of the terms and conditions in the approval.

…

 

Prohibition as to deposit of waste

40.  No person shall deposit, or cause, permit or arrange for the deposit of, waste upon, in, into or through any land or land covered by water or in any building that is not a waste disposal site for which a certificate of approval, provisional certificate of approval or renewable energy approval has been issued and except in accordance with the terms and conditions of the certificate or approval.

Order for removal of waste

43.  Where waste has been deposited upon, in, into or through any land or land covered by water or in any building that has not been approved as a waste disposal site, the Director may issue an order to remove the waste and to restore the site to a condition satisfactory to the Director to,

(a)    an owner or previous owner or a person who otherwise has or had charge and control of the land or building or waste;

(b)    an occupant or previous occupant of the land or building; or

(c)    a person that the Director reasonably believes engaged in an activity prohibited by section 40 or 41 that resulted in the deposit of the waste.

 

Order by Director

44.  Where a waste management system or a waste disposal site is not in conformity with this Part or the regulations, the Director may order an owner or previous owner to take such action as is required to bring the system or the site into conformity with this Part or the regulations within the time specified in the order.

 

 

Control orders

124.  (1)  The Director may, where he or she is authorized by this Act to issue a control order, order the person to whom it is directed to do any one or more of the following, namely,

(a)    to limit or control the rate of discharge of the contaminant into the natural environment in accordance with the directions set out in the order;

(b)    to stop the discharge of the contaminant into the natural environment,

(i)    permanently,

(ii)    for a specified period, or

(iii)    in the circumstances set out in the order;

(c)    to comply with any directions set out in the order relating to the manner in which the contaminant may be discharged into the natural environment;

(d)    to comply with any directions set out in the order relating to the procedures to be followed in the control or elimination of the discharge of the contaminant into the natural environment;

(e)    to install, replace or alter any equipment or thing designed to control or eliminate the addition, emission or discharge of the contaminant into the natural environment;

(f)    to monitor and record, both in the manner specified in the order, the discharge into the natural environment of the contaminant specified in the order and to report thereon to the Director;

(g)    to study and to report to the Director upon,

(i)    measures to control the discharge into the natural environment of the contaminant specified in the order,

(ii)    the effects of the discharge into the natural environment of the contaminant specified in the order,

(iii)    the natural environment into which the contaminant specified in the order is being or is likely to be discharged; and

(h)    to report to the Director in respect of fuel, materials and methods of production used and intended to be used, and the wastes that will or are likely to be generated.

Report to Director

(2)  A person required under subsection (1) to study and to report to the Director on a matter shall report to the Director in the manner, at the times and with the information specified by the Director in the order.

 

 

Financial assurance

Approval or order

132.  (1)  The Director may include in an approval or order in respect of a works a requirement that the person to whom the approval is issued or the order is directed provide financial assurance to the Crown in right of Ontario for any one or more of,

(a)    the performance of any action specified in the approval or order;

(b)    the provision of temporary or permanent alternate water supplies to replace those that the Director has reasonable and probable grounds to believe are or are likely to be contaminated or otherwise interfered with by the works to which the approval or order is related; and

(c)    measures appropriate to prevent adverse effects upon and following the cessation or closing of the works.

…

Amendment of approval, order or certificate of property use

(3)  The Director may amend an approval, order or certificate of property use to change a requirement as to financial assurance contained in the approval, order or certificate of property use.

 

Failure to provide financial assurance

133.  (1)  Failure to provide financial assurance specified in an approval or in accordance with a stage specified in an approval is grounds for revocation of the approval and for an order in writing by the Director prohibiting or restricting the carrying on, operation or use of the works in respect of which the financial assurance is required.

Idem, order

(2)  Failure to provide financial assurance specified in an order or in accordance with a stage specified in an order is grounds for an order in writing by the Director prohibiting or restricting the carrying on, operation or use of the works in respect of which the financial assurance is required.

…

 

 

Director may cause things to be done

147. (1)  Where an order or decision made under this Act is not stayed, the Director may cause to be done any thing required by it if,

(a)    a person required by the order or decision to do the thing,

(i)    has refused to comply with or is not complying with the order or decision,

(ii)    is not likely, in the Director’s opinion, to comply with the order or decision promptly,

(iii)    is not likely, in the Director’s opinion, to carry out the order or decision competently, or

(iv)    requests the assistance of the Director in complying with the order or decision;

(a.1)    a receiver or trustee in bankruptcy is not required to do the thing because of subsection 19 (5) or 168.20 (7); or

(b)    in the Director’s opinion, it would be in the public interest to do so.

 

Notice of intent to cause things to be done

(2)  The Director shall give notice of an intention to cause a thing to be done under subsection (1),

(a)    to each person required by an order or decision made under this Act to do the thing; and

(b)    if a receiver or trustee in bankruptcy is not required to do the thing because of subsection 19 (5) or 168.20 (7), to the receiver or trustee in bankruptcy.

 

Idem

(3)  A person who receives a notice under subsection (2) shall not do the thing referred to in the notice without the permission of the Director.

 

 

Entry without judicial order

149.  (1)  A person who is responsible for doing a thing under section 146, 147, 148 or 148.1 may, for the purpose, enter on or into any land or place on or in which the thing is to be done and any adjacent land or place without an order if,

(a) the entry is made with the consent of an occupier or owner of the land or place; or

(b) the delay necessary to obtain an order under subsection (2) would result in,

(i) danger to the health or safety of any person,

(ii) impairment or serious risk of impairment of the quality of the natural environment for any use that can be made of it, or

(iii) injury or damage or serious risk of injury or damage to any property or to any plant or animal life.

Order authorizing entry

(2)  A justice who is satisfied on evidence under oath that there is reasonable ground to believe that entry on land or into or on a place is necessary for the purpose of doing a thing under section 146, 147, 148 or 148.1, may issue an order authorizing the person named in the order to make the entry and do the thing.

 

 

Order by provincial officer: contraventions

157.  (1)  A provincial officer may issue an order to any person that the provincial officer reasonably believes is contravening or has contravened,

(a)    a provision of this Act or the regulations;

(b)    a provision of an order under this Act, other than an order under section 99.1, 100.1, 150 or 182.1 or an order of a court; or

(c)    a term or condition of a certificate of approval, provisional certificate of approval, certificate of property use, renewable energy approval, licence or permit under this Act.

…

What order may require

(3)  The order may require the person to whom it is directed to comply  within the time specified relating to,

(a)    achieving compliance with the provision, term or condition;

…

(h)    submitting an application for a certificate of approval, provisional certificate of approval, renewable energy approval, licence or permit;

 

 

Regulations relating to Part V

176(4)  The Lieutenant Governor in Council may make regulations relating to Part V,

…

(f)    prescribing the amounts and conditions of deposits and bonds and sureties for the purpose of section 35, and prescribing the terms and conditions upon which deposits may be returned under section 37;

 

Orders, consequential authority

196.  (1)  The authority to make an order under this Act includes the authority to require the person or body to whom the order is directed to take such intermediate action or such procedural steps or both as are related to the action required or prohibited by the order and as are specified in the order.

 

Same, authority to order access

(2)  A person who has authority under this Act to order that a thing be done on or in any place also has authority to order any person who owns, occupies or has the charge, management or control of the place to permit access to the place for the purpose of doing the thing.

 

Application

(3)  Subsection (1) applies in respect of every order made under this Act whether or not the order was made before the 1st day of January, 1984.

 

 

Guideline F-14, Economic Analyses of Control Documents on Private Sector Enterprises and Municipal Projects.

 

3.0 Purposes and Uses of Economic Analyses

 

(a) to assess and verify claims by a regulated party that it cannot afford the costs associated with a control document, or that costs associated with a control document are expected to cause plant closures, unemployment, or other undesirable consequences

 

(b) to provide information about the costs, benefits and other economic consequences of proposed conditions or environmental conditions in a control document

 

(c) to help decide on environmental objectives in a control document; or

 

(d) to provide evidence for environmental prosecutions or for sentencing hearings after convictions.

 

4.2 Reasons for Initiating an Economic Analysis

 

(a) a regulated party claims undue hardship, adverse financial effects, or economic consequences, such as plant closure, and requests an assessment;

 

5.0 Information that may be required:

 

To conduct analyses, the Economic Services Branch shall normally require:

 

5.1 Cost-Effectiveness Analyses

 

…(c) estimates of the capital and operating costs of implementing specified technologies or management procedures to achieve the stated objectives.

 

5.2 Financial Impact Analyses

 

In addition to the information described under 5.1(c):

 

(a) detailed financial statements of the regulated party’s operation for at least five years including, at minimum: consolidated income statements, balance sheets, statement of changes in financial position, relevant transfer prices and adopted accounting policies;

 

(b) where a single establishment of a large, multi-establishment regulated party is the focus, desegregated financial data for the specific establishment are required; and

 

(c) financial performance data for the industry in which the regulated party operates.

 

5.3 Benefit-Cost Analyses

 

In addition to the information described under Section 5.1:

 

(a) estimates of the physical quantities of equipment, chemicals, materials, labour (person-hours or years of work, etc.) and their financial values required to achieve various levels of abatement, pollution reduction or degrees of environmental protection, as well as any cost reductions or revenues resulting;

 

(b) non-financial consequences of complying with the Control Document including (but not limited to) lay-offs, reduced or increased output or production; and

 

(c) quantitative estimates and/or qualitative descriptions of the environmental and social gains or losses resulting from the proposed action(s) and, where possible, estimates of the dollar values associated with these consequences.

 

7.0 Further Analyses

 

If a financial analysis indicates that the control document compliance costs could cause severe financial burdens, plant closures, or employee layoffs, a more comprehensive benefit-cost analysis may be implemented.

 

8.0 Provision of Relevant Information

 

8.1 Responsibility of Regulated Parties

Regulated parties who request economic analyses are expected to provide such financial and other types of information to Ministry personnel or its consultants, as needed, to carry out the analyses.

 

8.2 Failure to Provide Requisite Information

Failure to provide the required information by regulated parties who request financial assessment shall be interpreted to mean that the regulatory requirements have no significant adverse effects on the regulated party in question.