Environmental Review Tribunal
Tribunal de l’environnement
ISSUE DATE: March 20, 2019
CASE NO(s).: 15-148 and 15-158
PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended; and section 100(4) of the Ontario Water Resources Act, R.S.O. 1990, c. O.40, as amended
Appellants: See Appendix 1 – Appellant List (15-148)
Respondent: Director, Ministry of the Environment, Conservation and Parks
Subject of appeal: Order to maintain environmental protection measures and to assess and report on environmental conditions regarding steel mill and mining operations
Reference No.: 7313-A44LL6
Property Address/Description: Site 1: 105 West Street Site 2: McLeod Mine adjacent to the Magpie River Site 3: Goudreau Mine approx. 35 km northeast of Wawa
Municipality: Site 1: Sault Ste. Marie Site 2: immediately north of Wawa Site 3: Aguonie Township
Upper Tier: District of Algoma
ERT Case No.: 15-148
ERT Case Name: Ghosh v. Ontario (Environment, Conservation and Parks)
PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended; and section 100(4) of the Ontario Water Resources Act, R.S.O. 1990, c. O.40, as amended
Appellants: See Appendix 2 – Appellant List (15-158)
Respondent: Director, Ministry of the Environment, Conservation and Parks
Subject of appeal: Order to maintain environmental protection measures and to assess and report on environmental conditions regarding steel mill and mining operations
Reference No.: 7313-A44LL6, Amendment No. 1
Property Address/Description: Site 1: 105 West Street Site 2: McLeod Mine adjacent to the Magpie River Site 3: Goudreau Mine approx. 35 km northeast of Wawa
Municipality: Site 1: Sault Ste. Marie Site 2: immediately north of Wawa Site 3: Aguonie Township
Upper Tier: District of Algoma
ERT Case No.: 15-158
ERT Case Name: Ghosh v. Ontario (Environment, Conservation and Parks)
Heard: January 29, 2019 by telephone conference call
APPEARANCES:
| Parties | Counsel |
|---|---|
| Essar Steel Algoma Inc., Essar Mumbai and Company Officers | Patrick G. Duffy |
| Company Directors | Jennifer Teskey |
| Director, Ministry of the Environment, Conservation and Parks | Nadine Harris and Justin A. Jacob and Catherine Bulman (Student) |
DECISION DELIVERED BY MARLENE CASHIN
REASONS
Background
1This decision relates to a settlement hearing held on January 29, 2019, proposed to dispose of the appeals described below, during which the Environmental Review Tribunal (“Tribunal”) was asked to order the revocation of a director’s order and dismiss the appeals in this matter.
2On November 9, 2015, Essar Steel Algoma Inc. (“Company”) and certain of its related entities filed for protection under the Companies’ Creditors Arrangement Act (“CCAA”). The Ontario Superior Court of Justice approved a $200 million financing agreement to allow the Company to operate as a going concern while restructuring its debt. On the same day, the Director of the Ministry of the Environment and Climate Change (now the Ministry of the Environment, Conservation and Parks (“MECP”)) issued an initial Director’s Order (No. 7313-A44LL6) to the following Orderees: the Company; a related entity identified as "Essar Mumbai"; Kalyan Ghosh, Jatinder Mehra, Naresh Kothari and Kishore Mirchandani, directors of the Company (“Company Directors”); and Rajat Marwah, Pramod Kumar Shukla, David James Rennie and J. Robert Sandoval, officers of the Company (“Company Officers”). The initial Director’s Order was amended on November 15, 2015 (“Amendment No. 1”). The initial Director’s Order and Amendment No. 1 are referred to collectively as the “Order”.
3The Order relates to the following three sites in Northern Ontario, all owned by the Company: a steel mill located at 105 West Street, Sault Ste. Marie, Ontario (“Steel Mill”); the McLeod Mine property located adjacent to the Magpie River, immediately north of Wawa, Ontario; and the Goudreau Mine, located approximately 35 kilometres northwest of Wawa in Aguonie Township (together, the “Mining Properties”).
4The Order is a preventative measures order issued under s. 18 of the Environmental Protection Act (“EPA”), intended, according to the Director, “to prevent, decrease or eliminate the risk of harm to the environment in response to the risks related to the Company’s insolvency.”
5All of the Orderees appealed both the initial Director’s Order and Amendment No. 1 to the Tribunal. A complete list of the Appellants is included in Appendices 1 and 2 to this order. A Pre-hearing Conference (“PHC”) regarding the appeals was held on January 28, 2016. No requests for participant or presenter status were made at that time.
6On December 18, 2015, prior to the PHC, the Tribunal had issued, by oral disposition on the consent of all Parties, an interim stay on a motion brought by the Company Directors, of s. 2.9 of the Order as it applied to the Company Directors. On January 28, 2016, the Tribunal heard stay motions brought by the Company Directors and by the Company and the Company Officers. In an order issued February 2, 2016, the Tribunal confirmed the interim stay, and further stayed s. 2.9 of the Order, insofar as that section applies to the Company Directors, and s. 2.11 of the Order, insofar as that section applies to the Company and the Company Officers, until the disposition of the appeals. On April 12, 2016, the Tribunal provided reasons for granting the Company Directors’ interim stay and stay motions, and granting in part the Company and Company Officers’ stay motion.
7During a telephone conference call (“TCC”) on May 20, 2016, on consent of all of the Parties, the Tribunal by oral disposition issued a stay of s. 2.11 of the Order as it applies to the Company Directors, until the disposition of the appeals. The Tribunal issued written reasons for this disposition on June 20, 2016.
8Since the spring of 2016, the Parties have been engaged in discussions that they hope will result in a settlement of the appeals, in the context of the ongoing CCAA proceedings. Given the positive progress in the discussions, in March 2016, the Tribunal vacated the hearing dates, which had been previously set for the appeals. The Tribunal has continued to allow time for settlement discussions to occur, but has required that status updates from the Parties, by way of TCC, take place regularly as needed and has granted a series of adjournments.
9At a TCC which took place on November 19, 2018, the Parties advised that a purchase agreement for the sale of the Company had been approved under the CCAA proceedings, and that the transaction was progressing towards closing, but some conditions remained to be satisfied. The Parties requested a further extension of time in order to finalize a settlement agreement by the next TCC. The Tribunal agreed, and in an order dated January 8, 2019, the Tribunal adjourned the appeal proceedings related to the Order, to a TCC with the Parties to be held on January 29, 2019.
10Further information on these appeals can be found in orders of the Tribunal dated February 2, 2016, April 12, 2016, June 20, 2016 and January 8, 2019.
11On January 23, 2019, Mr. Jacob, for the Director, sent an email message to the Tribunal advising that the Parties to the proceeding had reached a resolution, in which the Director proposed a revocation of the Order that is the subject of the appeals. Mr. Jacob requested, on behalf of the Parties, that they be given the opportunity to present the resolution to the Tribunal at the TCC scheduled for January 29, 2019. Attached to the email were documents that the Parties intended to rely on to support the resolution, as follows: an electronic copy of a letter from Nadine Harris, Counsel for the Director, that set out the submissions in support of the dismissal of the proceeding; an electronic copy of an affidavit of Ron Dorscht, Supervisor of the Sault Ste. Marie Area Office of the MECP, dated January 22, 2019; and an electronic copy of an affidavit of Dean Touchette, Compliance Manager of the Ministry of Energy, Northern Development and Mines (“ENDM”), dated January 22, 2019.
12On January 24, 2019, Patrick Duffy, counsel for the Company and Company Officers, sent an email message to the Tribunal attaching a document titled Special Report of the Monitor – Environmental Matters, January 24, 2019. Mr. Duffy asked that the report be filed with the Tribunal in order to assist the Tribunal in understanding the steps in the CCAA process and to provide context for the evidence filed by Mr. Jacob earlier in the week. Mr. Duffy also indicated that the report was being filed with the consent of all Parties to the appeals.
13On January 29, 2019, a TCC was held to consider the submissions of the Parties regarding the resolution they had reached. In addition to the representatives of the Parties, also attending the TCC were Jennifer Fairfax and Patrick Welsh, lawyers involved in Algoma’s CCAA proceedings, and Nicholas Kluge, lawyer for the Monitor, Ernst & Young Inc.
14The Tribunal, having considered the evidence referenced above, and the oral and written submissions of the Parties, delivered an oral decision as follows:
The Tribunal accepts the Parties’ agreement to settle this matter, as being consistent with the purpose and provisions of the relevant legislation and in the public interest. The Director is directed to revoke the Order, and in accordance with Rule 202, the appeal is dismissed.
15These are the reasons for that decision.
Issue
16The issue is whether the Tribunal should accept the proposed revocation of the appeals, as being consistent with the purpose and provisions of the EPA and the Ontario Water Resources Act (“OWRA”) and in the public interest.
Relevant Legislation and Rules
17The relevant legislation and rules are as follows:
- (1) The purpose of this Act is to provide for the protection and conservation of the natural environment.
0.1 The purpose of this Act is to provide for the conservation, protection and management of Ontario’s waters and for their efficient and sustainable use, in order to promote Ontario’s long-term environmental, social and economic well-being.
Rules of Practice of the Environmental Review Tribunal (“Rules”)
- 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.
Discussion, Analysis and Findings
18Under Rule 202 of the Rules, a proposed revocation of a decision must be presented to the Tribunal for review. This is so that the Tribunal can consider whether the proposed revocation is consistent with the purpose and provisions of the relevant legislation and is in the public interest. The Tribunal must also consider the interests of Parties, Participants and Presenters. In this situation, there are no Participants or Presenters.
19Ms. Harris, for the Director, told the Tribunal that circumstances at the Steel Mill have changed since the Order was issued, in that the Steel Mill now has a new owner, Algoma Steel Inc. (“NewCo”) operating the facility. She advised that as part of the CCAA process, the MECP and NewCo entered into an agreement in which NewCo has agreed to develop, implement, and fund a Legacy Environmental Action Plan (“LEAP”) at the Steel Mill (“Mill Agreement”). In light of these changes in circumstances, she said, the Parties are of the view that the Order is no longer required and are requesting its revocation.
20The Director submits, as set out in the letter of Ms. Harris dated January 22, 2019, that revocation of the Order in regard to the Steel Mill, is consistent with the purposes and provisions of the EPA and the OWRA, and is in the public interest for the following reasons:
i. With a new owner and operator at the Steel Mill, the risk of harm to the environment resulting from operations ceasing at the Steel Mill has been addressed, eliminating the need for the category (a) obligations in the Director’s Order.
ii. Furthermore, the new owner is responsible for ensuring its operations at the Steel Mill going forward are in compliance with the [Environmental Compliance Approvals] and other statutory requirements, eliminating the need for the category (b) obligations in the Director’s Order.
iii. [Essar Steel Algoma Inc.] complied with sections 2.9 and 2.10 of the Order, eliminating the need for these category (c) obligations in the Director’s Order. An acceptable Terms of Reference was submitted to the Ministry on May 4, 2016.
iv. The remaining category (c) obligation in section 2.11, which required the preparation of a site wide environmental conditions report, has been superseded by the agreement between the MECP and NewCo to develop, implement and fund the LEAP. The LEAP will provide the necessary work to understand the site conditions and mitigate areas that may pose environmental risks from historic contamination.
v. The revocation of the Order and dismissal of the appeal will bring closure and finality to a lengthy proceeding on terms that are acceptable to all Parties.
21Mr. Jacob, for the Director, outlined the current circumstances at the Mining Properties, which have also changed since the Order was issued. He advised the Tribunal that NewCo did not acquire the Mining Properties and that the court appointed Monitor remains in place and is looking for a buyer for the properties. Mr. Jacob said that at the Goudreau properties, the company has continued with monitoring and a Proposed Rehabilitation Plan has been developed. With regard to the McLeod properties, the ENDM has inspected the site and documented current conditions. As well, the issue of the acidic water filling McLeod Mine has been addressed through the construction in 2018 of the water treatment plant (”WTP”). Mr. Jacob also advised that the MECP and the ENDM have entered into an agreement with NewCo regarding the Mining Properties (“Mining Agreement”), whereby NewCo will pay $10 million towards the rehabilitation of the Mining Properties and supply the alkaline material required for fill at the Goudreau Mine.
22As set out in Ms. Harris’ letter, the Director submits that the Order is no longer required as it relates to the Mining Properties, because:
i. ESAI has submitted an acceptable Terms of Reference to the MECP that satisfies the requirements of sections 2.9 and 2.10 of the Order in relation to the Mining Properties.
ii. The MECP and ENDM have received or obtained updated information about the present site conditions at the Mining Properties, such that there is no need for a comprehensive site wide environmental condition report at this time.
iii. The construction and implementation of the WTP addresses the most pressing environmental issue at the McLeod site.
iv. The resolution achieved through the Mines Agreement ensures that NewCo will provide alkaline fill material to fill the pits at the Goudreau properties, which will mitigate environmental and human risks.
v. The financial assurance provided by NewCo under the Mines Agreement will contribute to any rehabilitation efforts that may be undertaken by ENDM to rehabilitate the two Mining Properties, in the event there is no buyer.
vi. The revocation of the Order and the dismissal of the related appeal does not interfere with the MECP’s mandate to protect the environment and human health going forward.
vii. MECP continues to have regulatory authority over the Mining Properties. As consideration for NewCo’s commitments regarding the Mining Properties, only five individuals were released from liability with respect to legacy environmental contamination. No corporate entity or other individuals were released under the Mines Agreement.
viii. ENDM similarly has regulatory authority over the Mining Properties, including the ability to conduct inspections. If a buyer is found for the Mining Properties, ENDM has the ability to order them to provide a closure plan for the rehabilitation of these properties. The buyer would also be liable in respect of the Mine Hazards.
ix. If there is no buyer for the Mining Properties, ENDM retains the ability to implement any required measures to address the Mine Hazards through the Abandoned Mines Rehabilitation Program.
23On behalf of the Company and Company Officers, Mr. Duffy concurred in the submissions made by counsel for the Director. Counsel for the Company Directors, Ms. Teskey, also concurred. As noted previously, there are no Participants or Presenters whose interests must be considered.
24Having considered the Parties’ submissions, including the written submissions of the Director, the Tribunal is satisfied that the resolution proposed by the Parties is consistent with the provisions and purposes of the EPA and the OWRA, and is in the public interest. In particular, the Tribunal finds that through the Mill Agreement, the development and implementation of the LEAP will provide for monitoring of soil, groundwater and sediment and for risk management, mitigation or remediation measures to prevent or reduce the risk of off-site discharges at the Steel Mill, and that the funding provided through the Mines Agreement will be used for rehabilitation efforts at the Mining Properties, all of which is in the public interest. As well as being consistent with the provisions and purposes of the EPA and the OWRA and in the public interest, the Tribunal finds that the Parties’ interests in resolving the issues in the appeals will be satisfied by the proposed revocation of the Order. As a result, the Tribunal finds that the proceeding should be dismissed in accordance with Rule 202.
DECISION
25The Tribunal orders the Director to revoke the Order (Director’s Order No. 7313-A44LL6 issued November 9, 2015 and amended on November 15, 2015) in its entirety, and dismisses the proceeding.
Director Ordered to Revoke Order
Appeals Dismissed
“Marlene Cashin”
MARLENE CASHIN
MEMBER
Appendix 1 – Appellant List (15-148)
Appendix 2 – Appellant List (15-158)
If there is an attachment referred to in this document, please visit www.elto.gov.on.ca to view the attachment in PDF format.
Environmental Review Tribunal A constituent tribunal of Tribunals Ontario - Environment and Land Division Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248
Appendix 1
Appellant List (15-148)
| Appellant Name | File No. |
|---|---|
| Kalyan Ghosh | 15-148 |
| Jatinder Mehra | 15-149 |
| Naresh Kothari | 15-150 |
| Kishore Mirchandani | 15-151 |
| Pramod Kumar Shukla | 15-152 |
| Rajat Marwah | 15-153 |
| David James Rennie | 15-154 |
| J. Robert Sandoval | 15-155 |
| Essar Steel Algoma Inc. | 15-156 |
| Essar Mumbai | 15-157 |
Appendix 2
Appellant List (15-158)
| Appellant Name | File No. |
|---|---|
| Kalyan Ghosh | 15-158 |
| Jatinder Mehra | 15-159 |
| Naresh Kothari | 15-160 |
| Kishore Mirchandani | 15-161 |
| Pramod Kumar Shukla | 15-162 |
| Rajat Marwah | 15-163 |
| David James Rennie | 15-164 |
| J. Robert Sandoval | 15-165 |
| Essar Steel Algoma Inc. | 15-166 |
| Essar Mumbai | 15-167 |