Environmental Review Tribunal
Case Nos.: 11-058/11-059/11-060/11-061/11-062/ 11-063/11-064/11-065/11-066/11-074
Dea v. Director, Ministry of the Environment
In the matter of an appeal by AbiBow Canada Inc., Abitibibowater Inc., Abitibi-Consolidated Company of Canada, Pierre Rougeau, David J. Paterson, Allen Dea, Jacques P. Vachon, William G. Harvey and Alain Grandmont filed May 27, 2011 and OfficeMax Incorporated filed May 30, 2011 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 Order No. 6248-8GRHU2 issued by the Director, Ministry of the Environment, on May 13, 2011 under sections 18, 44, 132 and 196 of the Environmental Protection Act regarding the property known as the Mud Lake Waste Disposal Site located in the City of Kenora, Ontario; and
In the matter of a teleconference held on June 3, 2011 at 11:00 a.m.
Before: Alan D. Levy, Member
Appearances:
Dennis Mahony ‑ Counsel for the Appellants, AbitibiBowater Inc, AbiBow Canada Inc., Abitibi-Consolidated Company of Canada, Pierre Rougeau, David J. Paterson, Allen Dea, Jacques P. Vachon, William G. Harvey and Alain Grandmont
Daniel Kirby - Counsel for the Appellant, OfficeMax Incorporated
Brian Blumenthal and Justin Jacob ‑ Counsel for the Director, Ministry of the Environment
Dated this 13th day of June, 2011.
Reasons for Decision
Background:
This case involves the future safeguarding of an old industrial landfill which has been closed for many years.
As part of a pulp and paper production facility in the City of Kenora, a waste pile consisting primarily of wood bark was created in 1973 and continued in use until the mid-1980s. The waste pile, also referred to as a landfill, has been named the Mud Lake Waste Disposal Site (the "Site"). A Provisional Certificate of Approval, Number A600605, was issued for the Site by the Ministry of Environment (the "MOE") in 1982 and revised in 2004.
The landfill closed when it reached its capacity of one million cubic metres of waste, and another waste pile was established nearby. It was capped with clay cover and seeded in 2003 pursuant to the Mud Lake Closure Plan Design Report (July 2003) approved by the MOE. It has been described as a large hill covered with grass. At the time of closure, financial assurance in the amount of $258,748 for the maintenance and monitoring of the Site was provided to the MOE in the form of a letter of credit from a bank.
The pulp and paper facility and the Site have been owned and operated by many companies over the years. The current owner is 4513541 Canada Inc. ("451") which acquired the facility and the Site from Abitibi-Consolidated Inc. ("ACI") in late 2010. 451 was at that time and remains insolvent.
Surface drainage from the waste pile is collected by a series of ditches and flows by gravity to a pond named Mud Lake, located adjacent to and north of the landfill. Leachate generated within the waste pile is collected by a French drain system, a rock-lined trench, with gravity flow to a pumping station. From there, the leachate is pumped to municipal sewers which flow into Kenora's sewage treatment plant. The primary outlet from the pond also directs water to the leachate pumping system ("LPS") and ultimately to the sewage treatment plant. There is a secondary outlet from Mud Lake which is used only when the level of water in the pond rises to a point which exceeds the capacity of the LPS. At that stage, this outlet discharges to a wetland located at the west end of Rabbit Lake, which ultimately flows into the Winnipeg River, a drinking water source for many rural residences and First Canadian communities.
On May 13, 2011, a Director's Order, No. 6248-8GRHU2 (the "Director's Order"), was issued by MOE Director Trina Rawn to the Appellants and 451, pursuant to the Environmental Protection Act ("EPA") sections 18, 44, 132(1) and 196, among others. By way of overview, the Director's Order requires the named orderees to:
- conduct and report on weekly inspections of surface water and leachate collection systems, and the LPS;
- conduct and report on annual inspections of the final cover, leachate seeps, slope erosion, nuisance factors (for example, litter, rodents and bears) and the perimeter ditches;
- initiate and report on a surface and ground water monitoring program;
- arrange for Kenora to continue to accept and treat leachate from the Site;
- arrange for the continuation of electricity supply to operate the LPS; and
- deliver additional financial assurance in the sum of $1 million.
The Appellants have appealed all aspects of the Director's Order to the Tribunal pursuant to section 140(1) of the EPA. 451 is the only orderee which has not filed an appeal. On behalf of his clients, Dennis Mahony requested the Tribunal to convene a meeting on short notice via teleconference, in order to consider a joint proposal being developed by the Parties. He indicated that the proposal would include a stay of some provisions of the Director's Order, an amendment of others, and an adjournment to permit ongoing settlement discussions.
Counsel for the Appellants and Director agreed that the teleconference would be held on June 3, 2011. Just prior to the commencement of that meeting Mr. Mahony circulated a document entitled "Interim Order," a copy of which is attached at Appendix A (the "Draft Interim Order"). It sets out the joint proposal which the Parties have asked the Tribunal to approve. The meeting was attended by the Director as well as Counsel.
Relevant Legislation:
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 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; …
(c) measures appropriate to prevent adverse effects upon and following the cessation or closing of the works.
143(1) The commencement of a proceeding before the Tribunal under this Part does not stay the operation of a decision or order made under this Act …
(2) The Tribunal may, on the application of a party to a proceeding before it, stay the operation of a decision or order, other than,
(a) an order to monitor, record and report; or
(b) an order issued under section 168.8, 168.14 or 168.20.
(3) The Tribunal shall not stay the operation of a decision or order if doing so would result in,
(a) danger to the health or safety of any person;
(b) impairment or serious risk of impairment of the quality of the natural environment for any use that can be made of it; or
(c) injury or damage or serious risk of injury or damage to any property or to any plant or animal life.
Issue:
Whether the Tribunal should approve the terms of the Draft Interim Order prepared by the Parties, which includes a stay of some of the provisions of the Director's Order.
Discussion and Analysis:
The Director's Order states that the landfill has been abandoned, resulting in a serious risk of contaminants being discharged into the environment and causing adverse effects. This concern was attributed to several factors, including the following:
- The Receiver for the insolvent owner of the Site, 451, was granted permission by an order of the Quebec Superior Court to abandon the landfill, effective on May 16, 2011.
- 451 will stop making payments for supply of electric power to run the LPS and treatment of leachate by Kenora.
- Routine inspect of the landfill and monitoring of leachate will be discontinued.
- The passive and electrical mechanical systems required to drain surface water and leachate will fail.
- When the primary outlet from Mud Lake becomes obstructed by the accumulation of debris, the water level will rise and overflow into the wetland.
In 2009, the pumps had ceased to operate causing contaminated water to discharge through the Mud Lake outlet. In 2010, a blockage of the primary outlet was discovered.
The Notice of Appeal filed by Mr. Mahony claims that for a variety of reasons, none of his clients should be included as Parties to the Director's Order. As a result of insolvency and restructuring, some of the corporate Appellants he represents have been released of any legal obligation they might otherwise have had to maintain the landfill and respond to the Director's Order. He submits that, as a shareholder in Abitibi-Consolidated Inc., AbitibiBowater Inc. should not be held liable for any of ACI's environmental obligations. He argues that the individuals named in the Order should not be held liable merely because they were corporate directors. He states that these Appellants were not in "management and control" of the landfill, as defined in the EPA. Overall, Mr. Mahony's clients claim that the Director's attempt to impose liability on them "is unfair, oppressive and unlawful, and an abuse of power."
The Notice of Appeal by OfficeMax Incorporated ("OMI") claims it has never had management or control of the Site, or a legal or beneficial interest in it, nor has OMI ever participated in operations which had been carried on there. Boise Cascade Corporation ("BCC") acquired OfficeMax in 2003. BCC was the owner of Boise Cascade Canada Ltd. ("BCCL"), an independently managed subsidiary which had established the landfill in 1973 and operated the mill at this location until 1994. A series of corporate changes occurred over the next few years involving Rainy River Forest Products Inc., Stone-Consolidated Corporation and ACI. After creditor protection proceedings were concluded, AbiBow Canada Inc. emerged in December 2010 as a new entity and the property was promptly sold to 451.
The interim changes to the Director's Order proposed by the Parties are summarized briefly below:
- The provisions regarding financial assurance in work items 18 and 19 of the Director's Order will be stayed pending the outcome or final resolution of the appeals.
- The timing for the requirements in work items 1 through 12 will be delayed by a few days or weeks in some instances.
- Arrangements to be made with Kenora for accepting and treating leachate will continue until the outcome or final resolution of the appeals.
- Arrangements to be made with Hydro One Networks Inc. to continue supplying electricity to the Site will continue until the outcome or final resolution of the appeals.
Sections No. 3 and 4 of the Draft Interim Order are intended to provide the Parties with a period of approximately two months in order to focus on settlement negotiations without the distraction of scheduling and preparing for a Preliminary Hearing.
During the teleconference the Parties agreed to participate in another meeting via teleconference to be held on August 17, 2011, commencing at 3:00 p.m. If approved by the Tribunal, the Parties agreed that the Draft Interim Order will be considered effective as of June 3, 2011.
A letter from the Tribunal Case Manager to Mr. Mahony (dated May 31, 2011) and another to Mr. Kirby (dated June 1, 2011) established a deadline of June 14, 2011 for providing information requested by the Tribunal in relation to matters involving scheduling, convening and providing notice of the Preliminary Hearing. The Parties requested that this deadline be postponed until August 24, 2011.
Findings:
In light of the rather long and complicated history of the establishment, operation, ownership, closure and subsequent management of the Mud Lake Waste Disposal Site, and the complex issues raised by the appeals, it is understandable that the Parties and Counsel need additional time to fully canvass matters and attempt to negotiate a final settlement addressing all concerns. In my view the Draft Interim Order represents a constructive step forward.
During the teleconference, which was convened pursuant to Rule 108 of the Tribunal's Rules of Practice, the Director and all Counsel agreed that none of the statutory bars to a stay, identified in EPA section 143(3), apply in the circumstances of this case. In any event, I am satisfied that all of the financial concerns about the continuation of proper management of the landfill are addressed by the commitments made by the Appellants in the draft Interim Order. On this basis, and mindful of the requirements of Rule 110, I informed the Parties at the conclusion of the teleconference that I would approve the terms of the draft Interim Order and I hereby confirm that decision.
In addition, I confirm my decision to grant the Appellants' request for an extension until August 24, 2011, of the deadline for providing information to the Tribunal in relation to the Preliminary Hearing. I am satisfied that this extension is reasonable and appropriate under the circumstances.
Order
The Tribunal hereby approves the terms set out in the Draft Interim Order prepared by the Parties and attached as Appendix A.
In accordance with section 2 of the Draft Interim Order, work items 1 through 17 and 20 through 23 of Director's Order No.6248-8GRHU2, issued on May 13, 2011, are hereby amended on an interim basis pending the outcome or final resolution of these Appeals.
In accordance with section 1 of the Draft Interim Order, work items 18 and 19 of the Director's Order regarding financial assurance are hereby stayed pending the outcome or final resolution of these appeals.
The deadline for the Appellants to provide information requested by the Tribunal in relation to the Preliminary Hearing is hereby extended until August 24, 2011.
In accordance with section 3 of the Draft Interim Order, these appeals are adjourned to a teleconference with the Parties on August 17, 2011, commencing at 3:00 p.m.
Stay Granted on Consent
Interim Agreement Approved
Teleconference Scheduled
Alan D. Levy, Member
Appendix A – Draft Interim Order
Appendix A