Agriculture, Food and Rural Affairs
Appeal Tribunal
1Stone Road West
Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales
1 Stone Road West
Guelph, (Ontario) N1G 4Y2
Tel: (519) 826-3433, Fax: (519) 826-4232
Email: AFRAAT@ontario.ca
Guelph (Ontario) N1G 4Y2
Tél.: (519) 826-3433, Téléc.: (519) 826-4232
Email: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Gubbels v Ontario Flue-Cured Tobacco Growers’ Marketing Board
Gubbels v OFCTGMB 2002 ONAFRAAT 13
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
March 21, 2002
DATE OF DECISION:
April 8, 2002
2002-13
NEUTRAL CITATION:
2002 ONAFRAAT 13
Gubbels v Ontario Flue-Cured Tobacco Growers’ Marketing Board
IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT.
AND IN THE MATTER OF:
An Appeal to the Agriculture Food and Rural Affairs Appeal Tribunal by Mr. Hubert Gubbels and Mrs. Johanna Gubbels from decisions of the Ontario Flue-Cured Tobacco Growers’ Marketing Board (OFCTGMB) dated November 29, 2001 and January 18, 2001, by which it denied the appellants’ request for a regulatory exemption which would allow the appellants to be eligible for special grants to retro-fit all kilns used by them in their tobacco growing operation.
Before:
.Murray Cardiff, Chair; Mary Field, Member; George Klosler, Member
Appearances:
Hubert Gubbels, appellant
Barry Bresner, counsel to the respondent, the OFCTGMB
Gary Godelie, Vice Chair, OFCTGMB
DECISION OF THE TRIBUNAL
This appeal was heard in Guelph, Ontario on March 21, 2002. Mr. and Mrs. Gubbels appealed from decisions of the Ontario Flue-Cured Tobacco Growers’ Marketing Board (OFCTGMB) to deny their request for an exemption from its regulations which would allow them to be eligible for funding to offset the cost of retrofitting tobacco kilns located on a farm owned by Mr. Gubbel’s brother.
Statutory Context
Section 16 (2) of the Ministry of Agriculture, Food and Rural Affairs Act is as follows:
16(2) Subject to subsections (4) and (5), if a person is aggrieved by an order, direction,
policy, decision or regulation made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marketing board written notice of the appeal.
The Issues
The issue before the Tribunal is:
Should the appellants be exempt from a requirement of the OFCTGMB that tobacco kilns converted to indirect heat be located on their own land in order to be eligible for conversion rebates?
The Evidence
Appellants
Mr. Hubert Gubbels told the Tribunal he was disadvantaged by a policy of the OFCTGMB and that as a result he might be forced to exit the tobacco industry earlier than he planned. He said that due to his special circumstances he requested an exemption from a marketing board regulation so that he could have access to grants to convert kilns located on a farm owned by his brother Mr. William Gubbels.
Mr. Gubbels told the Tribunal:
He had been a tobacco grower since 1979.
He had sold a farm for financial reasons in 1987 and since then had been dependent on the use of six stick kilns located on his brother William Gubbels’ farm.
The OFCTGMB passed a regulation which required tobacco to be cured in kilns that had been converted to indirect heat. The marketing board also required that these kilns be located on land owned by the tobacco grower.
The Province of Ontario was providing rebates to tobacco growers who retrofitted their kilns to meet new industry standards.
The OFCTGMB was administering the rebate program.
He had eight kilns on his own farm which were eligible for rebate. The kilns located on his brother’s farm were not eligible for the rebate.
It was not feasible for him to invest in new kilns on his own property as he was 63 years old and the financial investment required would not be recouped before he retired from farming.
The OFCTGMB did not give him adequate notice of the policy change.
For the past 14 years, the OFCTGMB had exempt him from a regulation requiring him to grow at least 70% of his tobacco crop on his own land.
He and his wife were told all the kilns they used would be eligible for the rebate by an employee of the OFCTGMB. The same employee later told them they would need to appeal to the marketing board to receive the rebate on the kilns located on William Gubbels’ farm.
He did not legally own the kilns on the William Gubbels property but had exclusive use of these kilns and was responsible for their upkeep.
He believed that tobacco growers who were leasing kilns were eligible for the rebate.
He believed that there was sufficient money provided by the province to allow for the rebate to be granted on the six kilns located on his brother’s farm.
While the OFCTGMB only required him to have seven kilns to cure his tobacco crop, it was not practical to use so few kilns with the size of crop he grew.
He was informed that kilns would have to be located on his land in order to be eligible for funding on May 3, 2001. He felt he should be exempt from this provision due to his special circumstances.
The OFCTGMB has not said he would not be exempt from the provision to cure his crop in kilns located on his own land, but it has refused to exempt him from the requirement that kilns be located on his land in order to be eligible for the rebate.
He was concerned that any kilns not eligible for the provincial rebate would also be ineligible for future rebates.
It cost him approximately $7,500 per kiln to retrofit four kilns. The provincial rebate available is $1,500 per kiln.
Respondent
Mr. Barry Bresner told the Tribunal that the appeal concerned the funding of the retrofitting of kilns. He said the ability of Mr. Gubbels to continue to grow and cure tobacco on his brother’s farm was not an issue.
Mr. Bresner said that tobacco kilns must have a retrofit in order to reduce cancer-causing nitrosamines in tobacco. He said there was a limited amount of money available to assist growers in retrofitting their kilns and the OFCTGMB had to establish criteria for funding. He said the need for kilns to be located on land owned by tobacco growers was well published and that all producers treated in the same manner and with the same eligibility criteria. Mr. Bresner said the marketing board had granted 14 exemptions to the these criteria – 13 where the kilns were located on land owned by the parent or child of a tobacco grower and one where the grower agreed to move kilns onto his own land.
Mr. Bresner also said:
Mr. Gubbels was only required by the OFCTGMB to have seven kilns in total and he had eight kilns on his own farm which were eligible for the rebate.
The OFCTGMB expected to run a slight deficit on the rebate program, due to administrative costs. No decision had been made as to how to allocate a surplus in the program, in the event there is a surplus.
Mr. Gubbels does not own the kilns located on his brother’s property. His brother or his brother’s estate could sell these kilns.
The OFCTGMB did not believe it was fair to revise the eligibility criteria for the rebate program after the fact.
Mr. Gary Godelie told the Tribunal he was a Vice Chair of the OFCTGMB and was in his sixth year of service on the board. He explained that the OFCTGMB had to require the nitrosamines in tobacco be reduced in order to meet market requirements. He said the buyers would not accept tobacco grown in 2002 unless kilns were converted.
Mr. Godelie also told the Tribunal:
The Tobacco Advisory Committee researched methods of reducing nitrosamines in 2000 and determined that converting kilns to indirect heat was the preferred technology.
At least 25% of each grower’s kilns were required to be converted in 2001; the balance of kilns were required to be converted in 2002.
The OFCTGMB held retrofit days to stimulate interest in kiln conversion.
The provision that kilns be located on land owned by tobacco growers to be eligible for funding was communicated to growers on May 3, 2001.
The OFCTGMB felt it was important to ensure they knew the true number of kilns used by tobacco growers and that it was important that only tobacco growers be eligible for rebates.
The OFCTGMB provided all tobacco growers with a program guide which explained the rebate program.
The OFCTGMB engaged a third party to administer the tobacco rebate program. Board staff did not administer the program but did coordinate inspections.
As a board member, he has heard 33 appeals related to the rebate program.
He expected that the OFCTGMB would find Mr. Gubbels eligible for funding if he moved the kilns on his brother’s farm onto his own property.
The OFCTGMB had invested $20 million it received from the province for the rebate program and expected to receive some interest on the money.
No grower can make money on the rebate program as the rebate is only paid to the extent that the growers have spent money on kiln conversion.
The OFCTGMB determined the amount of the rebate available based on the number eligible of kilns that tobacco growers declared on forms circulated in May 2001.
If the OFCTGMB acquires additional funds for the rebate program, he expected these funds would be distributed in the same manner as the money provided by the province.
Converted kilns that were being purchased on a lease-to-own basis were eligible for the rebate.
Summations
Mr. Gubbels said it was physically possible to relocate his brother’s kilns to his farm but it was not financially viable. He said he required 14 kilns to efficiently cure his tobacco crop and his only option was to retrofit the kilns on his brother’s farm as well as his own farm. He submitted that he should be eligible for the rebate on the conversion of all his kilns as the province did not specify that all the kilns he used had to be located on his farm when it provided $20 million to help with the retrofitting of kilns.
Mr. Bresner said that the OFCTGMB understood why Mr. Gubbels preferred to continue to grow and cure tobacco on his brother’s farm and that it was not suggesting that he would not be able to continue to receive exemptions to allow him to do this. He argued that the kilns owned by William Gubbels did not fit the criteria of the program developed by the OFCTGMB and that this was clear from the start. He said the eligibility criteria were developed for the common good and had been applied consistently by the marketing board. Mr. Bresner asked the Tribunal not to disturb these criteria. He said changing the criteria would create uncertainty and could lead to the funds running out.
The Findings
The Tribunal finds that the OFCTGMB developed its regulations regarding the conversion of tobacco kilns to indirect heat after consultation with the industry and in response to a change in market requirements. The Tribunal finds that the amount of notice the marketing board gave to growers was reasonable given the changed market circumstances.
The Tribunal finds that the eligibility criteria were published and were applied consistently by the OFCTGMB. Mr. and Mrs. Gubbels were not treated differently than other tobacco growers. The Tribunal accepts that it is not feasible for Mr. and Mrs. Gubbel to move kilns from the farm owned by Mr. William Gubbels to their own farm. However, the Tribunal does not believe that the requirement of the OFCTGMB that kilns be owned by tobacco growers and located on their own property in order to be eligible for funding is unreasonable.
This decision of the Tribunal does not preclude the OFCTGMB from using different criteria to allocate any additional rebate funds that it may acquire from another source.
Decision and Reasons
After careful consideration of the evidence filed and the submissions made the Tribunal decided to deny the appeal.
The reasons for this decision are:
Mr. and Mrs. Gubbels were not treated differently from other tobacco growers with regard to the eligibility criteria.
The notice that was given by the OFCTGMB to tobacco growers of the requirement to retrofit kilns to indirect heat was reasonable given the rapidly changing market forces.
The funding criteria that kilns be owned by tobacco growers and located on their own property is not unreasonable.
Dated at Guelph, Ontario this the 8th day of April, 2002.