Environmental Review Tribunal
Tribunal de l’environnement
ISSUE DATE: November 05, 2018
CASE NO.: 11-180
PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c.E.19, as amended
Appellant: Nortel Networks Limited/Corporation Nortel Networks Limitée
Respondent: Director, Ministry of the Environment, Conservation and Parks
Subject of appeal: Order issued under sections 18 and 196 and 197 of the Environmental Protection Act, regarding the discharge of volatile organic compounds, including trichloroethylene, from operations impacting groundwater
Reference No.: 4404-8J5KFV
Property Address/Description: 180 Strowger Boulevard
Municipality: City of Brockville
ERT Case No.: 11-180
ERT Case Name: Nortel Networks Limited v. Ontario (Environment, Conservation and Parks)
Heard: October 22 and 24, 2018 by telephone conference call
APPEARANCES:
Parties Nortel Networks Limited/Corporation Nortel Networks Limitée Counsel Alexandria Pike
Parties Apex Logistics Inc. Counsel Charles Birchall
Parties Director, Ministry of the Environment, Conservation and Parks Counsel Paul McCulloch
DECISION DELIVERED BY HUGH S. WILKINS
Background
1This Decision addresses the proposed settlement of an appeal brought by Nortel Networks Limited/Corporation Nortel Networks Limitée (“Nortel”). It arises from a Director’s Order from the Ministry of the Environment (now the Ministry of the Environment, Conservation and Parks (“MECP”)) that was issued in September 2011 requiring work to be done at a contaminated site located at 100 Strowger Boulevard (“Site”) in the City of Brockville (“City”).
2Director’s Order Number 4404-8J5KFV was issued to Nortel, Apex Logistics Inc. (“Apex”) and S.C.I. Brockville Corp. (“SCI”) requiring the assessment and remediation of impacts from contamination from volatile organic compounds (“VOCs”), trichloroethylene (“TCE”) and their breakdown products on groundwater at the Site (“Director’s Order”). Various companies involved in telecommunications have conducted manufacturing activities at the Site since 1963. A subsidiary of Nortel, Brock Telecom Limited, bought the Site in January 1990. Nortel assumed responsibility for the groundwater remediation system as part of the purchase agreement. In 1999, Nortel sold Brock Telecom Limited to SCI, which owned and managed the Site until April 2006 when the Site was sold to Apex. Apex is the current owner and has managed and controlled the Site since 2006.
3The Director’s Order was issued on September 7, 2011 and was subsequently appealed by Nortel to the Environmental Review Tribunal (“Tribunal”). SCI elected not to appeal the Director’s Order. Following the filing of the appeals, the Tribunal added Apex as a party and stayed the proceedings while the Parties made efforts to resolve the appeals and satisfy their obligations under the Director’s Order. Throughout this time, SCI undertook work to satisfy the Director’s Order and regularly consulted with MECP regarding the work underway.
4Nortel is insolvent. It obtained protection under the Companies’ Creditors Arrangement Act (“CCAA”) in 2009 and has been subject to the oversight of the Ontario Superior Court of Justice (Commercial List) with respect to issues regarding its insolvency.
5The Parties updated the Tribunal as the matter proceeded through the courts under the CCAA. By means of telephone conference calls (“TCCs”), the Tribunal has been kept informed of the Parties’ efforts to resolve the matters and procedural issues have been addressed.
6In April 2018, Nortel entered into a settlement agreement with SCI and Sanmina Corporation (SCI’s parent company) and in October 2018 with MECP and Apex with respect to their claims in the CCAA proceedings. In their settlement agreements, MECP and Apex consented to the withdrawal of the Nortel appeal and revocation of the Director’s Order as against Nortel. The settlement agreements were approved by the Superior Court of Justice on October 17, 2018.
7On October 18, 2018, Nortel informed the Tribunal by email correspondence that it wished to withdraw its appeal and stated its support for the revocation of the Director’s Order.
8On October 22 and 24, 2018, the Tribunal convened settlement conference TCCs at which it considered the proposed settlement of the appeal before the Tribunal.
Relevant Legislation and Rules
9The following are the relevant provisions of the Environmental Protection Act (“EPA”) and the Tribunal’s Rules of Practice and Practice Directions (“Rules”).
Purpose of the Act
3.(1) The purpose of this Act is to provide for the protection and conservation of the natural environment.
Tribunal’s Rules
Termination of Proceedings
A Proponent or Applicant who proposes to withdraw an application, an Appellant who proposes to withdraw an appeal, or a Director, Risk Management Inspector or Official, Authority or municipality who proposes to revoke a decision that is the subject of the appeal shall notify the Tribunal, other Parties, Participants and Presenters by letter. Any Party, Participant or Presenter who objects to the proposed withdrawal of an appeal or revocation, with the exception of the revocation of an order made under section 74 of the Ontario Water Resources Act, shall notify the Tribunal and the other Parties, Participants and Presenters within ten days of the date of the letter.
Where there has been a proposed withdrawal of an appeal as part of a settlement agreement not objected to by any Party that alters the decision under appeal, the Tribunal shall review the settlement agreement and consider whether the agreement is consistent with the purpose and provisions of the relevant legislation and whether the agreement is in the public interest. The Tribunal shall also consider the interests of Participants and Presenters. After consideration of the above factors, the Tribunal may decide to continue with the Hearing or issue a decision dismissing the proceeding.
Where a Director, Risk Management Inspector or Official, Authority or municipality proposes to revoke a decision that is the subject of an appeal, the Tribunal shall consider whether the proposed revocation is consistent with the purpose and provisions of the relevant legislation and whether the proposed revocation is in the public interest. The Tribunal shall also consider the interests of Parties, Participants and Presenters. After the consideration of the above factors, the Tribunal may decide to continue with the Hearing or issue a decision dismissing the proceeding.
Issues
10The issues to be addressed are whether the Tribunal should accept the proposed withdrawal of Nortel’s appeal, accept the proposed revocation of the Director’s Order in its entirety, and dismiss the proceeding under Rules 201 and 202.
Discussion and Analysis
11The Tribunal’s Rules require the Tribunal to consider whether a proposed withdrawal of an appeal (under Rule 201) and/or a proposed revocation of an order (under Rule 202) are consistent with the purpose and provisions of the relevant legislation and whether they are in the public interest. In these regards, the Tribunal must also consider the interests of Parties, Participants and Presenters. The Tribunal has the discretion either to continue with the proceeding or to dismiss it.
12Under Rule 198, an Appellant who proposes to withdraw an appeal must notify the Tribunal, other Parties, Participants and Presenters by letter. Any Party, Participant or Presenter who objects to the proposed withdrawal must notify the Tribunal and the other Parties, Participants and Presenters within ten days of the date of the letter. In the present case Nortel notified the Tribunal, MECP and Apex of its proposed withdrawal on October 18, 2018. The Tribunal has received no objections to the proposed withdrawal. There are no Participants or Presenters and no other Parties in this proceeding.
13In support of the proposed settlement, the Director filed an affidavit sworn by Robert Putzlocher. He is a District Engineer with the MECP and has been involved with the review and evaluation of activities related to the Site since 2016.
14SCI’s work at the Site culminated in the preparation of a site-specific risk assessment. Mr. Putzlocher stated that this risk assessment concluded that, in the absence of the implementation of risk mitigation measures, potentially unacceptable risks to human health exist on the Site with respect to indoor workers, subsurface/construction workers, and outdoor workers. He stated that the exposure pathways include the inhalation of indoor air, inhalation of outdoor air in a trench, and contact with groundwater. He said that the site-specific risk assessment did not identify any potentially unacceptable risks to ecological receptors.
15Mr. Putzlocher stated that the site-specific risk assessment identified the following risk management measures for mitigating the potentially unacceptable risks:
installation of a sub-slab depressurization system for new or existing enclosed buildings;
installation of vapour intrusion barriers for new enclosed buildings;
preparation of site-specific health and safety plans for any below-grade construction work; and
preparation of groundwater management plans for any below-grade construction work.
16Mr. Putzlocher stated that a sub-slab depressurization system and vapour intrusion barriers would address known indoor air impacts and that a site-specific health and safety plan and a groundwater management plan would address potential inhalation of vapours and contact with groundwater. He stated however that a risk management plan for implementing these measures needs to be further developed and then reviewed and accepted by MECP.
17To address this, Mr. Putzlocher stated that if the proposed settlement is accepted by the Tribunal, the Director has committed to issue a new order requiring SCI to submit a final risk management plan in the form of an updated site-specific risk assessment to MECP for evaluation and approval (“new Director’s Order”).
18Mr. Putzlocher also stated that contaminants have migrated off-site to a property to the south; however, they do not currently pose a risk to either human or ecological receptors off-site. He said the new Director’s Order will require further investigations to be conducted regarding this off-site contamination. He said there are monitoring wells installed on the property and the owner of the property has been informed of the proposed settlement.
19Mr. Putzlocher explained that the outcome of the settlement of SCI's CCAA claim against Nortel is that SCI was granted a $10.735 million confirmed unsecured claim against Nortel by the court subject to a distribution of approximately 45-49 cents per dollar owed. As a result, SCI will receive roughly $5 million from Nortel for the costs of the environmental work that SCI has completed to date and for the costs of doing the outstanding work. He said the estimated costs of the outstanding work required to implement the risk management measures, their ongoing operation and continued environmental management of the Site is roughly $4.5 million. He stated that the new Director's Order will require that SCI provide $2.25 million in financial assurance to MECP and, noting that this amount will not cover all the future costs, he said Sanmina has provided a letter of commitment to MECP stating it will supply all necessary financial support to allow SCI to carry out the required environmental work.
20The Director submits that MECP and SCI have agreed to request that the Tribunal revoke the Director’s Order in its entirety and a new Director’s Order be issued to SCI requiring it to complete the work identified in the site-specific risk assessment. The Director submits that the new Director’s Order will be issued within 30 days of a Tribunal decision dismissing the appeal. The Director submits that the new Director’s Order will require SCI to:
prepare an updated site-specific risk assessment and have it peer reviewed;
submit the updated site-specific risk assessment to the Director pending the outcome of the peer review that includes a list of all measures to be implemented at the Site to address both on-site and off-site risks and a schedule for them to be implemented and monitored;
once accepted by the Director, implement the risk management measures set out in the updated site-specific risk assessment;
provide the Director will annual reports; and
provide the MECP with financial assurance in the amount of $2.25 million.
The Director submits that Apex, as owner of the Site, will be required to provide access to SCI to carry out this work and also to register the new Director’s Order on the property title.
21The Director submits that the proposed settlement is consistent with the purpose and provisions of the EPA and is in the public interest because:
the new Director’s Order will require SCI to continue carrying out the necessary work to assess and address the human health and environmental risks associated with the contamination and the proposed risk management measures and will address any potential adverse effects from the contamination;
based on its compliance record, SCI is very likely to comply with the new Director’s Order; but if it does not, the outstanding work will be partially backed by financial assurance and the Director can arrange for remaining work to be carried out under the EPA;
Nortel will make a significant financial contribution to SCI to address the costs of the environmental work that has been done so far and the work that will be completed in the future in line with the polluter pays principle; and
the proposed settlement avoids any further litigation between MECP, Nortel, SCI and Apex, which would have consumed significant time and resources.
22Nortel submits that the proposed settlement is consistent with the purpose and provisions of the EPA and is in the public interest because:
settling without litigation provides significant certainty in the context of Nortel’s insolvency; and
the settlement with SCI makes available significant resources to allow SCI to continue to carry out work with respect to the Site, and with the financial assurance requirement, the settlement provides a secure course of action for satisfaction of outstanding obligations under the Director’s Order.
Findings
23Taking into account the provisions of the Director’s Order, the work that has already been completed by SCI, Nortel’s insolvency, the requirements under the new Director’s Order, and the funding that will be provided under the terms of the proposed settlement for further work to be undertaken at the Site, the Tribunal finds that the proposed withdrawal of the Nortel appeal and revocation of the Director’s Order are consistent with the purpose and provisions of the EPA. The Tribunal also finds that they are in the public interest. The Tribunal notes with concern that there may be outstanding risks to human health and the environment at the Site, but is satisfied by the assurances of the Director and his expert that the financial assurance to be provided by SCI and SCI’s commitment to comply with the new Director’s Order will be sufficient to address these outstanding issues and to ensure the protection and conservation of the natural environment.
24The Tribunal accepts Nortel’s withdrawal of its appeal, revokes the Director’s Order in its entirety, and dismisses the proceeding pursuant to Rules 201 and 202.
DECISION
25The withdrawal of the Nortel appeal is accepted and the Director’s Order is revoked in its entirety. The appeals are dismissed.
Director’s Order Revoked
Appeals Dismissed
“Hugh S. Wilkins”
HUGH S. WILKINS
MEMBER
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Environmental Review Tribunal A constituent tribunal of Environment and Land Tribunals Ontario Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248