I.
Introduction
[1]
Federal regulations require diesel fuel produced
in Canada to contain at least 2% renewable fuel. Syncrude Canada Ltd.
[Syncrude] produces diesel fuel at its oil sands operations in Alberta which it uses there in its vehicles and equipment. Syncrude challenges the
validity and applicability to it of the 2% renewable fuel requirement.
II.
Factual Background
[2]
The relevant statutory provisions are reproduced
in Annex A.
[3]
Subsection 139(1) of the Canadian
Environmental Protection Act, 1999, SC 1999 c 33 [CEPA] provides that “[n]o person shall produce, import or sell a fuel that does not
meet the prescribed requirements.” Subsection 272(1) of CEPA makes it
an offence to contravene subsection 139(1). If prosecuted by way of
indictment, Syncrude would be liable to a fine for a first offence of not less
than $500,000 and not more than $6,000,000, and on a second or subsequent
offence, to a fine of not less than $1,000,000 and not more than $12,000,000:
CEPA subsection 272(3).
[4]
Subsection 140(1) of CEPA provides that the
Governor in Council, on the recommendation of the Minister, may make
regulations “for the purposes of section 139.” In
2010, the Governor in Council promulgated the Renewable Fuels Regulations, SOR/2010-189
[RFR]. Subsection 5(2) of the RFR requires that diesel fuel produced, imported
or sold in Canada must contain renewal fuel of at least 2% by volume. That
requirement came into effect on July 1, 2011. That renewable fuel requirement
may be met by blending diesel with biodiesel, a fuel made from biological waste
matter, such as cooking oil, or from feed stocks such as canola, soy or other
crops. The requirement may also be met by purchasing compliance units from
those who have more than 2% renewable fuel in their diesel fuel. Syncrude has
been meeting this 2% requirement by purchasing compliance units.
[5]
Syncrude produces synthetic crude oil and other
substances by mining and processing oil sands within the Athabasca oil sands
region in Alberta. This involves the excavation of oil sands from open pit
mines, the extraction of bitumen from the oil sand, the conversion of bitumen
to crude oil components, the upgrading and sweetening of the produced oil
streams, the combining of the oil streams into synthetic crude oil, and the
rehabilitation and reclamation of the mine and operations areas that have been
completed.
[6]
Syncrude uses a fleet of custom equipment to
perform its extraction operations. To power this equipment, it purchases
diesel fuel but also produces much of its own diesel fuel on site. The fuel it
produces on site is used only by Syncrude and only in the Province of Alberta. In 2010, Syncrude’s operations consumed more than 361 million litres of diesel fuel,
of which more than 204 million litres were produced from its own operations.
[7]
After the promulgation of the RFR but prior to
subsection 5(2) coming into effect, Syncrude on April 26, 2011, filed a notice
of objection to the proposed regulation and requested that a board of review be
established “to inquire into the nature and extent of the danger posed by the
substance in respect of which the … regulation … is proposed.”
[8]
The Minister responded on August 18, 2011,
denying Syncrude’s request to convene a board of review, stating:
Your comments were considered in the
preparation of the final Regulations Amending the Renewable Fuels
Regulations. Responses to the comments received were included in the
Regulatory Impact Analysis Statement submitted with the final Regulations,
which were published in the Canada Gazette on July 20 [2011].
[9]
Syncrude challenges the constitutional validity
and statutory validity or vires of subsection 5(2) of the RFR. It also
submits that it was denied procedural fairness by the Minister in making the
decision to not convene a board of review, and further says that the Minister’s
decision in this regard is unreasonable.
III.
Issues
[10]
In addition to the question of the applicable
standard of review, the following are the issues to be addressed:
1.
Does Parliament have constitutional authority to
apply the biodiesel blending requirement prescribed by subsection 5(2) of the
RFR to Syncrude’s diesel fuel?
2.
Is the RFR ultra vires the
regulation-making authority of the Governor in Council under section 140 of
CEPA?
3.
Was there a denial of procedural fairness by the
Minister in making the decision not to convene a board of review due to a
failure to provide reasons and a failure to consult with Syncrude?
4.
Did the Minister err in interpreting the words
“danger” and “substance” in section 333 of CEPA?
5.
Was the Minister’s decision unreasonable on the
merits?
IV.
Analysis
A.
Constitutionality of the RFR vis-à-vis Syncrude
[11]
Questions going to constitutional authority and
the division of powers between a province and the federal government are
determined on the standard of correctness: Dunsmuir v New Brunswick,
2008 SCC 9, para 58.
[12]
The Minister correctly notes in his Memorandum
that “Syncrude only challenges the constitutionality of
subsection 5(2) of the RFR, and only as it relates to its operations.”
The Minister submits that “subsection 5(2) is in pith and
substance a legitimate use of the federal criminal law power to suppress the
evil of air pollution by mandating a 2% renewable fuel content in diesel fuel
produced.” Syncrude submits that the dominant purpose and effect of
subsection 5(2) of the RFR is to regulate non-renewable resources and promote
the economic benefits of protecting the environment, “more
precisely, its dominant purpose and dominant effect is to create a demand for
biofuels in the Canadian market place” and any prohibition of harm that
flows from the subsection is merely ancillary.
[13]
For the reasons that follow, I find that the RFR
are intra vires the federal government as a valid exercise of
Parliament’s criminal law power.
[14]
The Supreme Court of Canada in Québec
(Procureur Général) v Canada Procureur (Procureur Général), 2010 SCC 61,
[2010] 3 S.C.R. 457 [Re: Assisted Human Reproduction] provides the
framework for determining division of powers questions such as that raised
here. The Chief Justice at para 16 observes that when, as here, the challenge
is only to one or more of the provisions of the legislation, and not its entirety,
a court might begin by examining the challenged provisions because if they do
not intrude into the other’s jurisdiction, there is no need to make any further
inquiry. She went on to observe, however, that in order to make sense of the
challenged provisions, it may be necessary to examine the entire scheme of the
legislation for the “impugned provisions must be
considered in their proper context.”
[15]
Subsection 5(2) of the RFR, read alone and
without reference to its enabling statute, is a prohibition on the production,
importation, or sale of diesel fuel that contains less than 2% renewable fuel,
and thus one could suggest, as Syncrude does, that it deals with local
works and undertakings, property and civil rights, matters of a merely local or
private nature, or the development of non-renewable natural resources – matters
that fall within provincial, rather than federal
jurisdiction. However, as the Supreme Court has cautioned, one must go further
and ask what the purpose and effect of that provision is and how it fits into
the regulatory scheme. As the Chief Justice stated in Ward v Canada
(Attorney General), 2002 SCC 17, [2002] 1 S.C.R. 569 [Ward] at para 19:
“The question is not whether the Regulations prohibit the
sale so much as why it is prohibited.” Answering that question requires
that the subsection be viewed in its proper context which in this case requires
that one examine not only the RFR but also CEPA. The Court must examine the
legislative scheme as a whole and determine whether it is a valid exercise of
federal jurisdiction. Then the Court must examine whether the specific
subsection complained of is also valid.
[16]
The validity assessment is undertaken in
two steps. First, the dominant matter – the pith and substance – of the
legislation must be determined. Once that has been done, one must determine
whether it falls under one of the heads of power of the federal government or
the provinces. The pith and substance of legislation is determined by
examining the purpose and the effect of the legislation. As the Chief Justice
noted at para 22 of Re: Assisted Human Reproduction referencing an
article by D.W. Mundell: “One must ask, ‘[w]hat in fact
does the law do and why?’”
(1)
The Dominant Matter – Pith and Substance
(a)
The Purpose of the RFR
[17]
The RFR is subordinate legislation and as such
it is relevant to consider the stated purpose of its enabling legislation,
CEPA. While not determinative of the pith and substance of the RFR, it
provides informative background and context. The following excerpts from the
preamble to CEPA are instructive and identify that CEPA is designed, in part,
to address environmental degradation, protect the environment and human health,
and place the cost and responsibility of pollution on the polluter. It sets
out that in developing laws to achieve these goals, a variety of interests will
be considered contemporaneously, including environmental, health, social,
economic, and technical issues:
Whereas the Government of Canada is committed
to implementing the precautionary principle that, where there are threats of
serious or irreversible damage, lack of full scientific certainty shall not
be used as a reason for postponing cost-effective measures to prevent
environmental degradation
…
Whereas the Government of Canada recognizes the
importance of endeavouring, in cooperation with provinces, territories and
aboriginal peoples, to achieve the highest level of environmental quality for
all Canadians and ultimately contribute to sustainable development;
…
Whereas the Government of Canada recognizes the
integral role of science, as well as the role of traditional aboriginal
knowledge, in the process of making decisions relating to the protection of the
environment and human health and that environmental or health risks and
social, economic and technical matters are to be considered in that process.
…
Whereas the Government of Canada recognizes the
responsibility of users and producers in relation to toxic substances and
pollutants and wastes, and has adopted the “polluter pays” principle.
[emphasis added]
[18]
Also informative is the preamble to the RFR
which focuses on the reduction of air pollution:
Whereas the Governor in Council is of the
opinion that the proposed Regulations could make a significant contribution to
the prevention of, or reduction in, air pollution resulting from, directly or
indirectly, the presence of renewable fuel in gasoline, diesel fuel or heating
distillate oil;
…
[19]
The Supreme Court has unequivocally held that
the Regulatory Impact Analysis Statement [RIAS] accompanying regulations can
also be considered by courts in determining the purpose of the regulations and
their intended application: Bristol-Myers Squibb Co v Canada (Attorney
General), 2005 SCC 26, [2005] 1 S.C.R. 533, at para 157.
[20]
The various RIASs that were published relating
to the RFR indicate that Greenhouse Gas [GHG] emissions were the primary
concern of the Minister when proposing the RFR.
[21]
In 2005, six GHGs were added to Schedule 1 of
CEPA which lists toxic substances. The RIAS accompanying the 2005 amendments
to Schedule 1 published in the Canada Gazette Part II, Vol 139, No 24,
explained at p 2627 that they were added to the toxic substances list because
they “have significant global warming potentials (GWPs),
are long-lived and therefore of global concern… [and] have the potential to
contribute substantially to climate change.” Additionally, it noted at
p 2634 that there has been a substantial rise in the concentrations of GHGs “as a result of human activities, predominantly the combustion
of fossil fuels,” which could lead to an increase in frequency and
intensity of heat waves, that in turn could “lead to an
increase in illness and death.”
[22]
A notice of intent to develop the RFR was
introduced in 2006 in the Canada Gazette Part I, Vol 140, No 52.
The notice stated:
Use of renewable fuels offer significant
environmental benefits, including reduced greenhouse gas (GHG) emissions, less
impact to fragile ecosystems in the event of a spill because of their
biodegradability and reduction of some tailpipe emissions, such as carbon
monoxide, benzene, 1,3-butadiene and particulate matter. However, ethanol use
may result in increased emissions of volatile organic compounds, nitrogen
oxides and acetaldehyde.
[23]
Under the heading “Rationale
for Action” the notice focused first on the reduction of GHG emissions:
Use of renewable fuels can significantly reduce
emissions of greenhouse gases. This environmental benefit is projected to
increase as next-generation feedstocks and technologies come online.
Achieving a renewable volume equal to 5% of Canada’s transportation fuel pool would result in an additional 1.9 billion litres of
renewable fuels per year, over and above the effects of provincial regulations
already in place. This represents incremental lifecycle GHG emission
reductions of 2.7 million tones per year (the equivalent of almost 675,000
vehicles).
[24]
The notice set out additional rationale for the
proposed regulations, including benefits to the economy and to Canadian
farmers:
Early entry into the renewable fuels market and
the wider bio-economy may bring short- and long-term benefits to the Canadian
economy, as well as allowing farmers to find new markets, offset financial
losses, and diversify income sources.
The emerging global bioeconomy is an
opportunity to diversify farm incomes by creating market opportunities for
Canadian farmers as both developed and developing countries move away from
dependence on traditional petroleum based fossil fuels in favour of more
sustainable options. The economic potential of the bioeconomy is significant;
by 2050, the global market for renewable fuels and bio-energy alone is expected
to grow from $5 billion to well over $150 billion per year.
[25]
The proposal recognized that the provinces were
also regulating renewable fuel content and providing tax incentives to promote
renewable fuels production and use. However, it was stated that federal
regulation was also desirable to “address inconsistencies
created by a patchwork of provincial fuel requirements” which could “create barriers to interprovincial trade, e.g. by favouring
the use of biofuels produced within a certain province.”
[26]
In April 2010, a draft of the RFR was published in Part I
of the Canada Gazette. The public was given an opportunity to
file comments or notices of objection. The RFR was published in the Canada Gazette Part II, Vol 144, No 18 in September 2010.
[27]
The RIAS accompanying the RFR [September 2010 RIAS] explicitly
states that the issue being addressed is the emission of GHGs:
Greenhouse gasses (GHGs) are primary
contributors to climate change. The most significant sources of GHG emissions
are anthropogenic, mostly as a result of combustion of fossil fuels. The
emissions of GHGs have been increasing significantly since the industrial
revolution and this trend is likely to continue if no action is taken. … The
Government of Canada is committed to reducing Canada’s total GHG emissions by
17% from 2005 levels by 2020.
Existing Government of Canada initiatives on
renewable fuels have had limited success in achieving significant reductions in
GHG emissions. In view of the environmental concerns related to climate
change, additional actions are required to further reduce these emissions.
…
The objective of the Regulations is to reduce
GHG emissions by mandating an average 5% renewable fuel content based on
gasoline volume, thereby contributing towards the protection of Canadians and
the environment from the impacts of climate change. … The Regulations fulfill
the commitments under the Renewable Fuels Strategy of reducing GHG emissions
from liquid petroleum fuels and create a demand for renewable fuels in Canada…
…
The Regulations will promote an integrated and
nationally consistent approach, and make a significant contribution to
reduction in air pollution from GHGs to protect the health and environment of
Canadians.
[28]
Substantially similar explanations were provided
in the RIAS accompanying the 2011 amendments to the RFR which set July
1, 2011, as the date on which the 2% biodiesel requirement in subsection 5(2)
of the RFR would come into force: Canada Gazette Part I, Vol 145, No 9.
[29]
As earlier noted, the purpose of CEPA is to promote environmental
quality, address threats of environmental damage, to achieve the highest level
of environmental quality for all Canadians, and ultimately contribute to
sustainable development.
[30]
The RFR is consistent with all of those aims. The RIAS for both
the RFR and its amendment which set the date subsection 5(2) became effective
make clear that GHG emissions pose a significant, enduring effect on the
environment, have high global warming potentials, and can directly affect the
health of Canadians. The RIASs also explain that renewable fuels have been
shown to make a significant contribution to lowering GHG emissions on a
life-cycle basis. While the provinces currently have regulations imposing
renewable fuels requirements, Parliament was of the view that federal
regulation could contribute above and beyond the provincial contributions and
would fill gaps and address inconsistencies in provincial legislation.
[31]
Undoubtedly, the RFR was also intended to increase the demand for
renewable fuels and develop new market opportunities for agricultural producers
and rural communities – the RIAS explicitly states that this is part of the
plan. However, the RIAS also makes clear that these economic effects are part
of a four-pronged Renewable Fuels Strategy, one purpose of which is to reduce
GHG emissions: Canada Gazette Part II, Vol 144, No 18 at
pp 1684-1685. These same goals were set out in Questions & Answers –
Renewable Fuels Regulations, which was prepared to explain the RFR.
[32]
Canadian jurisprudence has held that the economy and the
environment are not mutually exclusive – they are intimately connected. The
Supreme Court of Canada in Friends of Oldman River Society v Canada
(Ministry of Transport), [1992] 1 S.C.R. 3 at para 93 stated: “The environment, as understood in its generic
sense, encompasses the physical, economic and social environment touching
several heads of power assigned to the respective levels of government.”
The Court went on at para 96 to say that “it defies reason to assert that Parliament is constitutionally
barred from weighing the broad environmental repercussions, including
socio-economic concerns, when legislating with respect to decisions of this
nature.” This is consistent with the expression in the preamble
of CEPA which states that “environmental
or health risks and social, economic and technical matters are to be
considered.”
[33]
Syncrude points to significant expenditures by the federal
government to promote the renewable fuels industry as evidence that the
dominant purpose of the RFR was to create a market for renewable fuels. Among
other expenditures, the Government of Canada contributed $200 million over four
years for capital expenditures on construction or expansion of renewable fuel
production facilities, $1.5 billion over nine years to support renewable fuels
production in Canada, $500 million over eight years to produce next-generation
renewable fuels, and $10 million over two years for scientific research and
analysis.
[34]
In my view, Syncrude takes a myopic view of the role of the RFR
in ultimately reducing GHG emissions. Part of the long-term strategy was
to create a demand for renewable fuels that would drive development of next
generation technologies. Parliament expected that these next generation
technologies would contribute to greater reductions of GHG emissions in the
long term. However, it had to create the “conditions necessary to drive these next-generation technologies to
market.” These conditions include establishing a demand for
renewable fuels to “give industry the
certainty needed in order to secure investments and a supply of renewable fuels
for the Canadian market:” Questions & Answers – Renewable
Fuels Regulations.
[35]
Creating a demand for renewable fuels was therefore a necessary
part of the overall strategy to reduce GHG emissions, but it was not the
dominant purpose. The reason the government wanted to create a demand for the
fuels was to make a greater contribution to the long term lowering of GHG
emissions.
[36]
As the Minister of the Environment stated in an interview on May
23, 2006, “what we’re looking for is,
number one, that the technology that we’re looking to invest in provide the maximum
opportunity for emissions reductions” [emphasis added]. In
the same interview, when asked whether there would be “a net benefit to the environment,” the Minister went
on to say: “Yes. And that’s why we
brought these three components together. We can’t do this framework
without the three components of energy, environment, and agriculture”
[emphasis added].
[37]
The underlying reason for contributing to infrastructure costs,
production of renewable fuels, and investment in next generation technologies
was to “generate greater environmental
benefits in terms of GHG emission reductions:” Canada
Gazette Part I, Vol 145, No 9 at p 699. Creating economic and agricultural
opportunities were necessary components of achieving these goals.
[38]
Syncrude recognizes at para 76 of its Amended Memorandum of Fact
and Law that part of the objective of the RFR was to encourage next-generation
renewable fuels production and create capital incentives to provide
opportunities to farmers in the biofuels sector. It observes that these and
other incentives collectively create a demand for biofuels. What Syncrude
overlooks is that the market demand for renewable fuels and advanced renewable
fuels technologies has to be created to achieve the overall goal of greater GHG
emissions reduction.
[39]
In my view, for the reasons stated above, the dominant purpose of
the RFR was to make a significant contribution to the reduction of air
pollution, in the form of reducing GHG emissions.
(b)
The Effect of the RFR
[40]
The second step of the pith and substance analysis is to examine
the effect of the law on those who are subject to it. The Court may consider
both its legal effect and its practical effect: Kitkatla Band v British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146 at
para 54.
[41]
Syncrude submits that, at best, the effect of the law from an
environmental perspective was unknown at the time the RFR was introduced.
There was conflicting evidence regarding the actual quantity of GHG emissions
reductions that renewable fuels generated in comparison to traditional fuels.
Syncrude submits that there was some evidence available that suggested that the
creation and use of renewable fuels actually generated increased emissions
compared to traditional fuels.
[42]
The Minister submits that the pith and substance analysis is not
concerned with the efficacy of the law or whether it actually achieves its
goals – this is a concern properly directed to and considered by Parliament.
[43]
I agree with the Minister that it is not for this court to assess
the efficacy of the law in achieving its stated purpose, as has been stated by
the Supreme Court in Ward at para 18:
The pith and substance analysis is not
technical or formalistic. It is essentially a matter of interpretation. The
court looks at the words used in the impugned legislation as well as the
background and circumstances surrounding its enactment. In conducting this
analysis, the court should not be concerned with the efficacy of the law or
whether it achieves the legislature's goals [references omitted and
emphasis added].
[44]
Syncrude’s effort to present evidence that undermines the
conclusions as to the actual savings to GHG emissions by the introduction of
renewable fuels is in vain: the efficacy of the law or whether it achieves the
legislature’s goals is an irrelevant consideration. As the Supreme Court of
Canada stated in Reference re Firearms Act (Can), [2000] 1 S.C.R. 783 [Firearms
Reference], at para 18 “efficaciousness
is not relevant to the court’s division of powers analysis.”
[45]
Even if the Court were to consider the efficacy of the law,
Syncrude has failed to present convincing evidence to show that the blending of
renewable fuels would not “make a
significant contribution to the prevention of, or reduction in, air pollution”
as required by section 140 of CEPA. Syncrude did not lead any expert evidence
to support its position that the data undermines the conclusion that there
would be a significant contribution to the reduction of air pollution.
[46]
Syncrude points to evidence that the environmental impact of land
use changes would outweigh the benefits of renewable fuels. In certain
countries, in order to allow for the production of the feedstocks used to
produce renewable fuels, there needs to be some change in land use. There was
some evidence to suggest that land use changes may blunt some of the upside to
renewable fuels, that the environmental impacts from land use changes might
actually outweigh the benefits of renewable fuels production, and that
agricultural land should not be converted to land used for biofuels crops.
However, this evidence does not apply to Canada because no land use changes
need occur here. The February 26, 2011 RIAS made clear that the RFR “are not
expected to result in changes in land use:” Canada Gazette Part I, Vol
145, No 9 at p 719. Moreover, the evidence relied on by Syncrude was in
the context of the European Union where they had higher targets of 10%
renewable fuel content compared to the Canadian targets of 2% for biodiesel and
5% for gasoline.
[47]
Syncrude’s submission also ignores the evidence that exists to
support the conclusion that incorporating renewable fuels would reduce both GHG
emissions on a life-cycle basis and certain other emissions including
acetaldehyde (in the case of biodiesel), Volatile Organic Compounds [VOCs], and
fine particle pollutants [PM2.5]. This evidence was referred to in
the RIAS accompanying the RFR. The reduction of GHGs is only one part of the
overall goal to reduce “air pollution.”
[48]
Additionally, and consistent with the preamble of CEPA, the RFR
admits that Parliament did not necessarily have a full comprehension of the GHG
emissions of various types of renewable fuels, but acknowledged a willingness
to adjust the requirements as that evidence became available: Canada Gazette
Part II, Vol 144, No 18 at p 1725. There is nothing
unconstitutional about Parliament taking steps to address the threat of GHGs in
the way it thought best, based on the evidence available to it at the time.
The scientific method is based on the assumption that what is known today may
not necessarily be what is known tomorrow. CEPA recognizes this, particularly
in the environmental context. But, as the preamble to CEPA states, Parliament
must act to address environmental threats on the best evidence available at the
time, and not await scientific certainty. There is nothing preventing
Parliament from adjusting or repealing the RFR if conclusive evidence is
presented that renewable fuels do not reduce GHG emissions, but that is a
decision for Parliament, not for the courts.
[49]
Syncrude further argued that because the RFR did not
actually produce the alleged intended effect of reducing GHG emissions, the
dominant purpose must have been to create a demand for renewable fuels and
benefit farmers. However, Syncrude has not demonstrated that the introduction
of renewable fuels has not led to reduced GHG emissions. Therefore, this
submission must also fail.
[50]
Finally, Syncrude says that there is evidence that it would
achieve significant GHG emissions reductions if the RFR did not apply to it
because it produces and uses all of its own diesel on site thereby saving on
the GHG emissions resulting from transporting fuel. Apart from the fact that
Syncrude provided no evidence to the Minister before the RFR was promulgated that
there would be an increase in GHG emissions if the RFR applied to
Syncrude, this is simply an attempt to re-brand the efficacy argument. The
Supreme Court of Canada in Ward stated at para 26 that “the purpose of legislation cannot be
challenged by proposing an alternate, allegedly better, method for achieving
that purpose.”
[51]
At its most basic level, the argument is that since the RFR
applied to Syncrude would not achieve its stated purpose, the RFR is
unconstitutional. Again, the Court is not the arbiter of whether or not the
means Parliament has chosen are effective or adequate. An analysis of the
legal and practical effects of the law is relevant only for the purpose of
determining the pith and substance of the law. As the Supreme Court of Canada
stated in Global Securities Corp v British Columbia (Securities Commission),
[2000] 1 S.C.R. 494 at para 23, “the
effects of the legislation may also be relevant to the validity of the
legislation in so far as they reveal its pith and substance.”
Although Syncrude can request an exemption from the application of the RFR,
failure by the Minister to provide such exemption does not render the RFR
unconstitutional.
[52]
However, even if the RFR as applied to Syncrude would increase
Syncrude’s GHG emissions, this is not evidence that the RFR overall
would not decrease GHG emissions. Syncrude led evidence that, together with
Suncor, their combined production accounted for 12% of western Canada’s distillate production and that the amount used on-site accounted for only 3% of western Canada’s distillate production. Even accepting Syncrude’s arguments at face-value, it is a
stretch to infer that the RFR will not achieve a reduction in GHG emissions
even with Syncrude’s alleged increased emissions.
[53]
For these reasons, I find that the effect of the
RFR is to reduce GHG emissions by requiring renewable fuels to be
blended with traditional fuels.
(c)
Conclusion on Pith and Substance
[54]
The pith and substance of the RFR and of subsection 5(2) is the
reduction of GHG emissions, and potentially other emissions. The dominant
purpose is to reduce GHG emissions; the benefits to the economy and the
renewable fuels industry are a necessary, but secondary component of the plan
to achieve reduced GHG emissions, and an intermediary step to introducing next
generation technologies that will provide even greater GHG reductions. The
effect of the RFR is to reduce GHG emissions on a life-cycle basis both
in the short term and the long term by incorporating renewable fuels.
(2)
Categorizing the Law: Heads of Power Analysis
[55]
Having determined the pith and substance of the
law, the second stage requires the Court to identify which heads of power are
engaged by the law: Re: Assisted Human Reproduction at para 19.
(a)
Criminal Law Power
[56]
The Minister argues that the RFR and its subsection 5(2) fall
under the federal criminal law power under subsection 91(27) of the Constitution
Act, 1867 [Constitution].
[57]
Syncrude challenges the validity of enacting the RFR under the
criminal law power, stating that the pith and substance of the RFR is directed
at regulating “non-renewable resources
(petroleum fuels)” and promoting “the benefits of protecting the environment by creating a demand for
biodiesel in the Canadian marketplace.” This analysis arguably
engages the provincial heads of power for: (1) local works and undertakings;
(2) property and civil rights; and (3) matters of a merely local or private
nature under subsections 92 (10), (13) and (16) of the Constitution respectively.
It also engages the development of non-renewable natural resources under
paragraph 92A(1)(b).
[58]
When the Federal head of power in issue is Parliament’s criminal
law power under subsection 91(27) of the Constitution, para 27 of the Firearms
Reference teaches that the matter is a valid exercise of the criminal law
power if there is: (1) a prohibition; (2) backed by a penalty;
(3) with a criminal law purpose.
[59]
There is no dispute between the parties that the first two
criteria are met. The determinative issue is whether the RFR was
enacted with a valid criminal law purpose.
[60]
In order to have a valid criminal law purpose, the law must
address a public concern relating to peace, order, security, morality, health,
or some similar purpose: Re: Assisted Human Reproduction para 43. It
must suppress an evil or safeguard a threatened interest such as public peace,
order, security, health, or morality, stopping short of pure economic
regulation: Reference re: Dairy Industry Act (Canada), s 5(a), [1949]
SCR 1.
[61]
Relying on Canada (Procureure générale) v
Hydro-Québec, [1997] 3 S.C.R. 213 [Hydro]
and Re: Assisted Human Reproduction, the Minister submits that the RFR
addresses a valid criminal law purpose because it aims to suppress GHG
emissions that cause harm to the environment “since unblended diesel fuel releases more GHGs on a life cycle
basis than that with renewable fuel content.”
[62]
Prohibitions directed at protecting the public
from environmental hazards have been considered valid criminal law purposes in
the past, see for example Hydro, where a unanimous Supreme Court of
Canada (although split in its decision on other issues), agreed at para 123
that “the protection of a clean environment is a public
purpose … sufficient to support a criminal prohibition … to put it another way,
pollution is an ‘evil’ that Parliament can legitimately seek to suppress.”
[63]
In Hydro, the Supreme Court made clear at
para 43 that:
To the extent that Parliament wishes to deter
environmental pollution specifically by punishing it with appropriate penal
sanctions, it is free to do so, without having to show that these sanctions are
ultimately aimed at achieving one of the ‘traditional’ aims of criminal law … the
protection of the environment is itself a legitimate basis for criminal
legislation [emphasis added].
[64]
At issue in Hydro were provisions of the Environmental
Protection Act, RSC 1985, c 16 (4th Supp), regarding
the designation and regulation of toxic substances, as well as a provision that
permitted the Minister to issue an interim order directing that a substance be
temporarily placed on the toxic substances list and regulating that substance,
where the Minister is of the opinion that immediate action is required.
[65]
The dissent agreed that protection of the environment was a
legitimate public purpose, but found that the impugned provisions were more of
an attempt to regulate environmental pollution than to prohibit or proscribe
it. In particular, the dissent found that the prohibitions were ancillary to
the regulatory scheme and not the other way around. It further concluded that
the impugned provisions were not focused on specifically prohibiting toxic
substances, but rather, regulating and controlling the manner in which they are
allowed to interact with the environment. Finally, it noted the seemingly
unlimited breadth of the impugned provisions owing to the broad definition of “toxic substance” and “substance” in the Act.
[66]
The majority held that “environmental
protection legislation should not be approached with the same rigour as
statutes dealing with less complex issues in applying the doctrine of vagueness
developed under s. 7 of the Charter” in relation to criminal law
cases, and that “the effect of requiring
greater precision would be to frustrate the legislature in its attempt to
protect the public against the dangers flowing from pollution.”
It agreed with the dissent that in certain cases, sweeping prohibitions “could be so broad or all-encompassing as to
be found to be, in pith and substance, really aimed at regulating an area
falling within the provincial domain and not exclusively at protecting the
environment,” but ultimately determined that the provisions
demarcated a restricted number of substances. The use of these substances in a
manner contrary to the regulations was ultimately prohibited, and this was a
specific targeting of substances without resort to unnecessarily broad
prohibitions.
[67]
On its face, the RFR appears to be more regulatory in nature than
prohibitory. However, like the majority in Hydro, I am of the view that
this particular evil – GHG emissions by combustion of fossil fuels – is not
well addressed by specific prohibitions. For example, much of society runs on
fossil fuels and Parliament should not be expected to prohibit the use of
fossil fuels entirely in order to meet progressive goals of GHG emission reduction.
[68]
Nor should Parliament be expected to adopt more specific
prohibitions against the components of diesel or gasoline; for example, it
would be prohibitively costly to determine which hydrocarbons (out of the many
constituents of diesel and gasoline fuels) specifically contribute to GHG
emissions. It would be even more costly for industry to comply with such
specific prohibitions, and for the Minister to monitor such a scheme of
prohibitions.
[69]
The same can be said of the components of the renewable fuels.
This was specifically noted in Questions & Answers – Renewable Fuels
Regulations, released in September 2010 which states:
[Question] The regulations do not include
requirements that renewable fuels used have lower greenhouse gas emissions than
conventional fuels. Why not?
[Answer] The impact of a renewable fuel on
emissions of greenhouse gases vary depending on the feedstock used to produce
the fuel, what processes are used to produce the fuel, and where it is produced
in relation to where it is used. There is considerable controversy as to
methodologies for estimating lifecycle emissions of various renewable fuels.
The Government has decided that for the present the regulations will not have
any such explicit requirements; however, in the future, when there is more
information available, such requirements may be introduced into the
regulations.
[70]
Additionally, the majority in Hydro at para 150 accepted
that regulations “providing for or
imposing requirements respecting the quantity or concentration of a substance
listed in Schedule I that may be released into the environment either alone
or in combination with others from any source” were valid
[emphasis added]. In this case, the RFR is structured in the same way – it
imposes requirements respecting the concentration of renewable fuels in fossil
fuel mixtures and in this way, controls the “manner and conditions of release” of GHG emissions
(on a life cycle basis) that would otherwise result from the use of fossil
fuels with no renewable content.
[71]
I observe that the structure of the RFR is different in that it
does not explicitly reduce the concentration of fossil fuels in a fuel mixture
– it does so only by mandating the addition of an alternative fuel source,
thereby implicitly reducing the concentration of the target fuel source. In my
view, this is an insignificant difference because the ultimate effect is the
same – fossil fuel use will be reduced by the proportion of renewable fuels
introduced. Put another way, the RFR prohibits the use of 100% crude
diesel/gasoline for the supplier’s average total distillate pool for each
period.
[72]
The fact that companies would be permitted to use 100% crude
diesel/gasoline in the winter months and make up for it by using larger
renewable fuel content in the summer months, or by purchasing compliance units,
does not detract from the prohibition. Compliance units are only created by
someone over-mixing renewable fuels, thereby compensating for another user’s
emissions and the net effect is therefore the same.
[73]
Additionally, the concerns of the minority in Hydro do not
apply here. First, the prohibitions are not ancillary to the regulatory
scheme. Part 7 of CEPA is concerned with controlling pollution and managing
waste. Within Part 7, Division 4 is specifically directed towards pollution
and waste created by fuels. Gasoline and diesel – the precursors to GHG
emissions – are being regulated by prohibiting uses in manners contrary to the
regulations, much like the regulation of toxic substances in Hydro.
[74]
Syncrude does not argue that the definition of “air pollution” in section
140(2) of CEPA is overbroad. In any event, section 140 is sufficiently
precise and not overbroad given that the “air pollution” in issue must result directly or
indirectly from “the fuel or any of its
components” or “the fuel’s
effect on the operation, performance, or introduction of combustion or other
engine technology or emission control equipment.” This is even
more specific than the definition of “substance”
and “toxic substance” at issue
in Hydro, which the majority found to be sufficiently precise.
Accordingly, regulations made under section 140 would not have unlimited
breadth.
[75]
Finally, if Syncrude’s argument stands, then it applies to the
whole of Division 4 which seeks to regulate fuels generally. However, Syncrude
does not challenge even subsection 5(2) of the RFR, nor the RFR as a whole, let
alone the entirety of Division 4 of CEPA. In fact, it actually concedes that
other prohibitions enacted under ss. 139 and 140 of CEPA (for example, the Sulphur
in Diesel Fuel Regulations, SOR/2002-254, which limits the concentrations
of sulphur in diesel fuel) are valid exercises of the discretion granted under
those provisions. In my view, there is nothing to distinguish a prohibition of
sulphur concentration from the imposition of a certain level of renewable fuel
content. Both seek to prevent the emission of toxic substances (sulphur
dioxide and GHG emissions) or air pollution. As noted previously, I am not
convinced that a direct prohibition and an indirect prohibition are
sufficiently different to warrant different treatment.
[76]
Questions & Answers – Renewable Fuels Regulations, released
in September 2010 also addresses the difference between the RFR and the Sulphur
Regulations:
[Question] Why are the limits on an average
basis rather than per-litre limits like under the Sulphur in Diesel Fuel
Regulations?
[Answer] The Renewable Fuels Regulations are
concerned with reducing greenhouse gases, a global national issue. It is the
overall quantity of petroleum fuels displaced by renewable fuels that provides
the greenhouse gas benefit ….
[77]
To summarize, protection of the environment is itself a valid
criminal law purpose, and in this case, there are sufficiently precise
prohibitions and penalties. That it is the overall quantity of crude fuels
displaced that provides the greenhouse gas benefit does not render the RFR an
invalid use of the criminal law power.
[78]
As an aside, Syncrude argues that subsection 5(2) of the RFR does
not raise a reasoned apprehension of harm in this case. Syncrude submits that
the production and consumption of petroleum fuels is not dangerous and does not
pose a risk to human health or safety. Syncrude concedes that regulating
substances such as PCBs and sulphur which are dangerous and pose a risk to
human health, are valid exercises of the criminal law power.
[79]
In Syncrude’s view, there is no evil to be suppressed, but even
if there were, subsection 5(2) of the RFR does nothing to prohibit the emission
of harmful substances in the environment. If this were a valid exercise of the
criminal law power, Syncrude submits that it would give “limitless definition” to criminal law that the
dissent of the Supreme Court of Canada cautioned against in Re: Assisted
Human Reproduction at paras 239-240.
[80]
First, “reasonable
apprehension of harm” is a concept originating in criminal laws
enacted under the purpose of protecting public health. As the case law
demonstrates, protection of the environment is its own valid criminal law
objective, and therefore, the RFR do not need to be justified under the same
constraints or concepts from the public health purpose.
[81]
Second, I disagree with Syncrude that subsection 5(2) would
unbind the limits of the criminal law power. As stated above, subsection 5(2)
accords with the form of a valid exercise of the criminal law power, despite
the fact that it comes in the form of a mandatory inclusion of a substance
rather than a prohibition of another substance.
[82]
Third, the dissent’s comments in Re: Assisted Human
Reproduction are of no assistance because those comments were directed
towards the assessment of morality instead of health. The dissent cautioned
that in a multicultural society, differing attitudes ought to be considered
when addressing “moral problems.”
[83]
Fourth, even being mindful of the dissent’s concerns, there is a
real evil and a reasonable apprehension of harm in this case. The evil of
global climate change and the apprehension of harm resulting from the enabling
of climate change through the combustion of fossil fuels has been widely
discussed and debated by leaders on the international stage. Contrary to
Syncrude’s submission, this is a real, measured evil, and the harm has been
well documented.
[84]
Further, the Supreme Court’s guidance at paras 55-56 of Re:
Assisted Human Reproduction is instructive. There is no constitutional
threshold level of harm that constrains Parliament’s ability to target conduct
causing these evils, provided that Parliament can establish a reasonable
apprehension of harm. More importantly, Parliament is entitled to target
conduct that elevates the risk of harm to individuals, even if it does
not always crystallize in injury.
[85]
For these reasons, I find that the dominant purpose and effect of
subsection 5(2) of the RFR is to make a significant contribution to the
reduction of air pollution, in the form of reducing GHG emissions. Parliament
chose to do so by using its criminal law power. Protection of the environment
is itself a valid criminal purpose, and the impugned provision creates a valid
prohibition backed by a penalty, although the prohibition does not take the
form of a direct, targeted, restrictive prohibition.
(b)
Conclusion on Constitutionality
[86]
Therefore, I find that the RFR is intra vires the federal
government and is constitutionally valid.
(c)
Ancillary Powers Doctrine
[87]
Having found that the RFR is constitutional under Parliament’s
criminal law power, it is unnecessary to consider the ancillary powers doctrine
which occupied a significant portion of Syncrude’s submissions. However, had I
found that subsection 5(2) of the RFR was not itself a valid exercise of
Parliament’s criminal law power, I would have found it to have been saved by
the ancillary powers doctrine.
[88]
The ancillary powers doctrine permits administrative or
regulatory provisions to be upheld despite the fact that they may, in pith and
substance, fall outside of the jurisdiction of the enacting government. Such
provisions may be upheld if they are connected to a valid legislative scheme
and further the legislative purpose: Re: Assisted Human Reproduction at
para 126.
[89]
In assessing validity of provisions, the court must determine
whether the provision is rationally and functionally connected to the scheme.
The provision should functionally complement the other provisions of the scheme
and fill gaps in the scheme that might otherwise lead to inconsistency,
uncertainty, or ineffectiveness, and it need not be shown that the scheme would
necessarily fail without the ancillary provisions: Re: Assisted Human Reproduction
at para 138.
[90]
Paras 129-130 of Re: Assisted Human
Reproduction set out three factors that typically ought to be
considered when conducting an analysis under the ancillary powers doctrine,
although this is not an exhaustive list:
1.
Scope of the heads of power in play and whether
they are broad or narrow;
2.
Nature of the impugned provision; and
3.
History of legislating on the matter in question.
The more an ancillary provision
intrudes on the competency of the other government, the higher the threshold for
upholding it on the basis of the ancillary powers doctrine.
Heads of Power
[91]
Broad heads of power lend themselves to more overlap: where the
legislation is enacted under a broad head of power, the intrusion will be less
serious. Where the head of power being intruded upon is broad, the intrusion
will be less serious.
[92]
In this case, the federal head of power is the criminal law power
and it is broad. The provincial heads of power suggested by Syncrude are (1)
local works and undertakings; (2) property and civil rights; (3) matters of a
merely local or private nature and (4) the development of non-renewable natural
resources. The first three heads of provincial power are broad, but the fourth
is relatively narrow. However, I am not persuaded that the provision intrudes
on the development of non-renewable natural resources; rather, it deals
with their use. Therefore, the intrusion is “less serious” when considering all factors.
Nature of the Provision
[93]
In this case, subsection 5(2) of the RFR is meant to create a
minimum standard across all provinces with respect to the use of biodiesel.
The RIAS published with the proposed and final regulations acknowledge that the
provinces have already legislated to some extent, and that one of the goals of
the RFR is to create consistency and fill gaps in the patchwork of provincial
legislation. In this case, Syncrude notes that under Alberta’s Oil Sands
Conservation Act, RSA 2000, c O-7 and Renewable Fuels Standard
Regulation, Alta Reg 29/2010, it would be excluded from the usual
requirement for renewable fuels that apply to fuel producers, importers, and
sellers.
[94]
Although the overall intention is to complement and supplement
provincial legislation, Syncrude’s example shows that the subsection 5(2) will
override and intrude on some aspects of provincial regulation in this area, and
this suggests that it is a more serious intrusion.
History of
Legislating
[95]
Parliament has a history of legislating with respect to
protecting the environment. In Re: Assisted Human Reproduction, the
majority noted that Parliament had a history of legislating with respect to
morality, health, and security and invoking its criminal law power to uphold
regulatory schemes and provided the examples of the Firearms Reference and
Hydro. In the majority’s view, these historical comparisons suggested
that the ancillary provisions only constituted a minor intrusion on provincial
powers.
[96]
In this case, Parliament has a history of legislating to protect
the environment and using the criminal law power to do so. However, with
respect to the use of renewable fuels, the provinces have also legislated on
the issue. In my view, this factor is therefore neutral.
[97]
Overall, I conclude that had it been found that the RFR was ultra
vires the federal government, the intrusion of the ancillary provisions
into provincial powers would not be serious enough to warrant striking it
down. The regulations are enacted under broad heads of power and only intrude
on other broad heads of power. While they override some aspects of provincial
legislation, in most respects, they seek to complement it. Finally, Parliament
has a history of legislating to protect the environment and although the
provinces have some history of legislating on the issue of renewable fuels, in
my view, this is insufficient to demonstrate that the intrusion into provincial
powers is serious.
B.
Statutory Validity of Subsection 5(2) of the RFR
[98]
Syncrude submits that the RFR are ultra vires
or invalid because they result from an invalid exercise of the regulation-making
authority of the Governor in Council in CEPA.
[99]
The RFR were promulgated pursuant to subsection
140(1) of CEPA and the parties appear to agree that the regulations were made
in respect of one or more of the following paragraphs of that subsection:
(a) the concentrations or quantities of an element,
component or additive in a fuel;
(b) the physical or chemical properties of a fuel;
(c) the characteristics of a fuel, based on a formula
related to the fuel’s properties or conditions of use;
(c.1) the blending of fuels;
(d) the transfer and handling of a fuel.
[100] Subsection 140(2) of the RFR provides a condition precedent to the
making of any regulation respecting the matters that are set out in paragraphs
140(1)(a) to (d):
(2) The Governor in Council may make a
regulation under any of paragraphs (1)(a) to (d) if the Governor in Council
is of the opinion that the regulation could make a significant contribution to
the prevention of, or reduction in, air pollution resulting from
(a) directly or indirectly, the fuel or any of
its components; or
(b) the fuel’s effect on the operation,
performance or introduction of combustion or other engine technology or
emission control equipment.
[emphasis added]
[101] Syncrude attacks the legislative validity of the RFR on three bases.
It submits that:
1.
The Governor in Council failed to form the
opinion required by subsection 140(2) of CEPA, a condition precedent to the
promulgation of the RFR. Moreover, it submits that contrary to the “intent” under section 333 of CEPA, the Minister failed
to assess the environmental impacts of the RFR by convening a board of review
prior to making his recommendation to the Governor in Council;
2.
The Minister failed to conduct a Strategic
Environmental Assessment [SEA] of the RFR before they were made into law, as
required by the Cabinet Directive on the Environmental Assessment of Policy,
Plan and Program Proposals [Cabinet Directive]; and
3.
The RFR is inconsistent with the object of CEPA
to protect the environment.
[102] For the reasons that follow, I am not persuaded that any of these
objections are founded, and I find that the RFR is legislatively valid.
(1)
Was the Condition Precedent in Subsection 140(2)
Observed?
[103] Where a condition precedent in the statute is not followed, the
regulations are ultra vires: Katz Group Canada Inc v Ontario (Health and Long-Term Care, 2013 SCC 64, [2013] 3 S.C.R. 810 [Katz] at
paras 24 and 27.
[104] The standard of review of the validity or vires of
regulations on administrative law grounds is correctness: Mercier at
paras 78-79.
[105] Syncrude argues that CEPA sets out a condition precedent to the
enactment of regulations. The Governor in Council must form the opinion that
the RFR could make a significant contribution to “the
prevention of, or reduction in, air pollution” before it can make a
regulation.
[106] Syncrude says that the Minister only considered a “preliminary scan” completed in 2006, which focuses on
GHG reductions. It submits that the Minister should have had a complete
assessment of non-GHG air pollutant emissions created by the 5% renewable fuel
requirement, as they are harmful to human health and no studies have been
conducted. Among other items, it points out that the Minister was aware that
in September 2010 the United States Environmental Protection Agency estimated
that the use of biofuels would cause 245 premature deaths in the United States because of the adverse impact on air quality. Syncrude suggests that the
Minister’s disinterest in considering other impacts of renewable fuels is
demonstrated by the failure to convene a board of review, which could have
assessed the overall impact of the RFR on air pollutants, and determined the
environmental impact on land and water.
[107] In short, Syncrude argues that because the Minister failed to
consider non-GHG pollutants and ignored evidence that the RFR could not make a
significant contribution to the prevention of, or reduction in, air pollution,
the Governor in Council could not form the required opinion under section 140
of CEPA, and the regulations are ultra vires.
[108] The Minister agrees that the opinion of the Governor in Council is a
condition precedent to it making valid regulations under the CEPA. It argues
that the establishment of a board of review is not a condition precedent to the
creation of regulations and is otherwise irrelevant to the issue raised. The
Minister submits that the Governor in Council met the condition precedent and
it is not the role of the Court to second guess it. Rather, it is submitted
that the court must simply confirm that the required opinion was formed: Mercier
v Canada, 2010 FCA 167, 2010 Carswell Nat 1960 [Mercier] at para 80;
leave to appeal refused 417 NR 390 (SCC).
[109] I agree with the Minister that the failure to establish a board of
review under subsection 333(1) if CEPA is not a condition precedent to valid
regulation-making. Moreover, it is entirely irrelevant, in my view, to the
issue being addressed.
[110] Paragraph 333(1)(a) provides, in relevant part, as follows: “Where a person files a notice of objection … in respect of a
decision or a proposed order, regulation or instrument made by the Governor in
Council … the Minister or the Ministers may establish a board of review
to inquire into the nature and extent of the danger posed by the substance in
respect of which the decision is made or the order, regulation or instrument is
proposed” [emphasis added].
[111] Syncrude submits that notwithstanding the use of the discretionary
word “may” in paragraph 333(1)(a), the
establishment of the board of review is mandatory and that was the intent of
Parliament. I disagree. Syncrude’s view is simply not supported by the
express language Parliament chose to use in section 333.
[112] Section 333 has six subsections, each dealing with the establishment
of a board of review in certain express circumstances, as follows:
(1) Where a person files a notice of objection
under subsection 77(8) or 332(2) in respect of
(a) a decision or a proposed order,
regulation or instrument made by the Governor in Council, or
(b) a decision or a proposed order or
instrument made by either or both Ministers … ,
(2) Where a person files a notice of objection
under subsection 9(3) or 10(5) in respect of an agreement or a term or
condition of the agreement …,
(3) Where a person or government files with the
Minister a notice of objection under subsection 332(2) with respect to
regulations proposed to be made under section 167 or 177 within the time
specified in that subsection …,
(4) Where a person files with the Minister a
notice of objection under subsection 332(2) with respect to regulations proposed
to be made under Part 9 or section 118 within the time specified in that
subsection …,
(5) Where a person files with the Minister a
notice of objection under section 134 within the time specified in that section
…,
(6) Where a person files with the Minister a
notice of objection under section 78 in respect of the failure to make a
determination about whether a substance is toxic or capable of becoming toxic.
[113] In each of the circumstances described in subsections 1, 2 and 5,
the circumstance is followed by the phrase “the Minister may
establish a board of review; however, in each of the circumstances described in
subsections 3, 4, and 6, the circumstance is followed by the phrase ‘the
Minister shall establish a board of review’” [emphasis added].
It is beyond doubt that Parliament intended to differentiate the circumstances
where the Minister is required to establish a board of review and those where
he has a discretion to establish a board of review. The circumstances relevant
to the facts here did not mandate the Minister to establish a board of review.
[114] The only condition precedent to the RFR is that found in subsection
140(2) of CEPA, namely that the “Governor in Council is of the opinion that the
regulation could make a significant contribution to the prevention of, or
reduction in, air pollution.”
[115] The preamble to the RFR, as published in the Canada Gazette, Part II on August 23, 2010, reflects that the Governor in Council had
formed the requisite opinion. It reads as follows:
Whereas the Governor in Council is of the
opinion that the proposed Regulations could make a significant contribution to
the prevention of, or reduction in, air pollution resulting from, directly or
indirectly, the presence of renewable fuel in gasoline, diesel fuel or heating distillate
oil.
[116] Syncrude’s submission is that “[n]othing in
the voluminous record on this Application shows the basis for any conclusion
that the Regulations result in a significant reduction in air pollution when all
air contaminants (not only GHGs) are accounted for” [emphasis in the
original]. Syncrude takes the position that the Governor in Council could not
have formed the required opinion because there was insufficient evidence
available to support such an opinion. In short, it is asking the court to
second guess the opinion of the Governor in Council.
[117] The Court must presume that the RFR was validly enacted and the
burden of proving otherwise rests on Syncrude: Katz at paras 25 and 26.
There is no evidence that the Governor in Council did not in fact form the
opinion stated by it. In reality, what Syncrude challenges is not the making
of the opinion but its validity. However, as the Minister submits, “this court is not to inquire into the validity of the Governor
in Council’s opinion that the RFR could result in a reduction of air pollution,
whether the Governor in Council formed its opinion on accurate or misleading
information, or whether its opinion is right or wrong:” See Thorne’s
Hardware Ltd v Canada, [1983] 1 S.C.R. 106, para 13; Canada (Attorney
General) v Hallet & Carey Ltd, [1952] AC 427 (PC), para 12; Reference
re Regulations in Relation to Chemicals, [1943] S.C.R. 1, para 22; Teal
Cedar Products (1977) Ltd v Canada, [1989] 2 FC 158, [Teal] para
16, leave to appeal refused 100 NR 320 (SCC); and Canadian Council for
Refugee v Canada, 2008 FCA 229, para 78-80, leave to appeal refused (2009)
395 NR 387 (note).
[118] Syncrude has offered no evidence that the opinion required was not
made and, as the Federal Court of Appeal stated in Teal, “If the Governor in Council deemed the Order in Council
necessary … it matters not that this opinion be right or wrong.” That is
a full answer to Syncrude’s submission that the condition precedent was not
fulfilled.
(2)
Was a Strategic Environmental Assessment
Required?
[119] Syncrude submits the Cabinet Directive imposes a mandatory
obligation on a Minister to ensure that a SEA is performed on regulations
before implementing any proposal that may result in important environmental
effects, either positive, or negative. It is argued that the Cabinet
Directive is a statutory condition precedent that was not followed, and
thus, the regulations are invalid.
[120] Syncrude argues that the Cabinet Directive is a “regulation” made by or under the authority of the
Governor in Council; that the Cabinet Directive required a SEA; that the
Cabinet Directive was part of the regulation making process under CEPA,
and is a condition precedent arising from the statute.
[121] This submission hinges on section 2(1)(b) of the Interpretation
Act, RSC 1985, c I-21, which reads:
“regulation” includes an order, regulation,
rule, rule of court, form, tariff of costs or fees, letters patent, commission,
warrant, proclamation, by-law, resolution or other instrument issued, made or
established
(a) in the execution of a power conferred by or
under the authority of an Act, or
(b) by or under the authority of the Governor
in Council…
[122] First, this Cabinet Directive is an administrative policy of
general application, passed under the authority of Cabinet, not the Governor in
Council, as is required by the Interpretation Act. Justice Scarth dealt
with a cabinet directive, passed by the provincial Cabinet, in the case of Independent
Contractors and Business Association of British Columbia v British Columbia
(1995), 6 BCLR (3d) 177, [1995] BCJ No 777 at para 14. To paraphrase Justice
Scarth’s analysis into the Federal sphere, a cabinet directive does not purport
to have been enacted in execution of a power conferred under an Act, nor is it
suggested that it was made by or under the authority of the Governor in
Council, or that any Order-in-Council was approved by the Governor General,
acting on the advice of the Cabinet. This Cabinet Directive is merely a
policy issued by Cabinet, and does not fall under the definition of “regulation” under section 1 of the Interpretation
Act.
[123] In any event, it is evident from the record that whether “required” or not, an SEA was made and was submitted to
Cabinet. The SEA is attached to an affidavit filed by Leif Stephanson and is
entitled: The impact of a federal renewable fuels regulation on air
pollution. Accordingly, even if the SEA were a condition precedent, it was
met.
(3)
Is the RFR Inconsistent with the Object of CEPA?
[124] Syncrude submits that the RFR does not accord with the purposes and
objects of CEPA, as the RFR does not protect the “environment”
as defined in subsection 3(1) of CEPA. The relevant portions of subsection
3(1) read:
“environment” means the components of the Earth
and includes
(a) air, land and water;
(b) all layers of the atmosphere;
(c) all organic and inorganic matter and living organisms; and
(d) the interacting natural systems that include components referred
to in paragraphs (a) to (c).
[125] Syncrude focuses on the phrase “air, land and
water” and argues that regulations under CEPA are required to protect
the whole environment—not just the air, but also land and water, due to the
above wording. It says that the Governor in Council failed to consider any
effects of the RFR on land and water, and as such, the regulations are ultra
vires.
[126] A challenge to the vires of a regulation requires that it be
shown to be inconsistent with the objective of the enabling statute or the
scope of the statutory mandate: Katz at para 24. Because of the
presumption of validity of regulations, the burden is on Syncrude to
demonstrate the regulations are invalid. As previously stated, the Court does
not inquire into the policy merits to determine whether a regulation is “necessary, wise or effective in practice.”
[127] The Supreme Court of Canada elaborated in Katz, at para 28:
It is not an inquiry into the underlying
“political, economic, social or partisan considerations” (Thorne’s Hardware
Ltd. v. The Queen, [1983] 1 S.C.R. 106, at pp. 112-13). Nor does the vires
of regulations hinge on whether, in the court’s view, they will actually
succeed at achieving the statutory objectives (CKOY Ltd. v. The Queen,
[1979] 1 S.C.R. 2, at p. 12; see also Jafari, at p. 602; Keyes,
at p. 266). They must be “irrelevant”, “extraneous” or “completely unrelated”
to the statutory purpose to be found to be ultra vires on the basis of
inconsistency with statutory purpose (Alaska Trainship Corp. v. Pacific
Pilotage Authority, [1981] 1 S.C.R. 261; Re Doctors Hospital and
Minister of Health, (1976), 12 O.R. (2d) 164 (Div. Ct.); Shell Canada
Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231, at p. 280; Jafari,
at p. 604; Brown and Evans, at 15:3261). In effect, although it is possible to
strike down regulations as ultra vires on this basis, as Dickson J. observed, “it
would take an egregious case to warrant such action” (Thorne’s Hardware,
at p. 111) [emphasis added].
[128] Syncrude has cited extensively from the record, to attempt to show
that land use was not properly considered, that there will be no net reduction
in GHG emissions, or that there will be an increase in air pollution, which
will result in negative impacts to the land and water, relative to the air.
Though its submissions were thorough, I am not persuaded that it has met the
burden of showing the RFR and the biofuel requirement is irrelevant,
extraneous, or completely unrelated to the statutory purpose of CEPA. That is
a very high burden.
[129] The Minister observed that Syncrude’s position, if accepted, would
require the Court to find all regulations under CEPA ultra vires unless
they protect all the components of the “environment”
as defined in subsection 3(1) of CEPA, despite being split into parts and
divisions that deal with specific components of the environment.
[130] The Minister submitted that CEPA does not support such an
interpretation. In oral argument, Syncrude disagreed, and stated that its
position was that certain regulations may be neutral to some aspects of the
environment, and have a positive effect on others, which would be acceptable.
Its position is that CEPA regulations cannot harm the environment.
[131] While I am hesitant to say that CEPA regulations can improve some
aspect of the environment at the expense of other aspects, I agree with the
Minister that the structure of CEPA does not support an interpretation that all
factors of the environment must be considered for every regulation passed under
CEPA.
[132]
First, although it has chosen to focus on part
(a) of the definition of “environment”, its argument is that all aspects of the
environment must be considered at all times for all regulations made under
CEPA. This would include (b), (c), and (d) which read:
(b) all layers of the atmosphere;
(c) all organic and inorganic matter and living organisms; and
(d) the interacting natural systems that include components referred
to in paragraphs (a) to (c).
[133] It would be prohibitively costly if not nearly impossible to
consider the effect of a regulation on all of the above factors for each and
every regulation made under CEPA. In my view, such a burden on the Minister
would frustrate rather than further CEPA’s objectives.
[134] Second, the organization of CEPA into specific parts and divisions
does not support Syncrude’s position. Part 7 for example deals with “controlling pollution and managing wastes” and Division
4 relates specifically to “fuels.” Within Part 7,
Division 2 relates to “protection of marine environment
from land-based sources of pollution”, Division 3 relates to “disposal at sea”, Division 5, “vehicle, engine and equipment
emissions”, Division 6, “international air
pollution”, and Division 7, “international water
pollution.” The regulation making powers are split into specific
compartments in order to restrict the factors that must be considered or taken
into account in making regulations for any specific purpose.
[135] Third, the title of Part 7 itself undermines Syncrude’s
interpretation that no regulation can permit harm to be done to any aspect of
the environment. “Controlling pollution and managing
wastes” implies that some level of pollution and waste is inevitable and
that the goal is to reduce pollution and waste as much as possible rather than
eliminate it. This necessarily entails permitting some harm to some aspect of
the environment.
[136] Finally, reading the RIASs, it is clear that some impacts on land
and water were considered. For example, studies were conducted on the impact
of a spill or leak to soil, the impact on water quality in the agricultural
sector, and the use of fertilizer. Further, the Governor in Council believed
the threat of climate change applied to and affected all three areas of “environment” – air, land and water. The December 2006
RIAS makes clear that “Use of renewable fuels can offer
significant environmental benefits, including reduced [GHG] emissions, less
impact to fragile ecosystems in the event of a spill because of their
biodegradability...” The consideration of the impact of the RFR on
ecosystems necessarily entails considering all aspects of the environment for
those ecoystems.
[137] To find the RFR ultra vires CEPA, would require a finding
that they are extraneous to the overall purpose of CEPA, and the burden of so
doing rests with Syncrude. I am satisfied that the regulations are within the
overall purpose of the statute, and Syncrude has thus failed to meet its
burden. The RFR were therefore not ultra vires the regulation making
authority of the Governor in Council.
C.
Was there a denial of procedural fairness?
[138] Syncrude
alleges that upon receiving its notice of objection and its request to
establish a board of review, the Minister owed Syncrude a duty of procedural
fairness. It argues that the Minister’s decision was of an administrative
nature and “affects the rights,
privileges or interests of an individual.” It therefore attracts
a duty of fairness: Cardinal v Kent Institution, [1985] 2 S.C.R. 643,
[1985] SCJ No 78 [Cardinal] at para 14. Syncrude submits that the
Minister was procedurally unfair by failing to provide reasons for his decision
to not convene a board of review, and by failing to consult with Syncrude.
[139] The
Minister’s principal submission is that the discretion to convene a board of
review is a decision within the legislative process and that there is no duty
of procedural fairness when the decision being reviewed is of a legislative
nature. In the alternative, it is submitted that there was no breach of
procedural fairness because reasons for the decision were provided both in a
letter to Syncrude and in the RIAS. Since reasons were provided, even if they
are inadequate, that is not a stand-alone reason for quashing a decision as
unreasonable.
(1)
Syncrude’s Notice of Objection Not Filed in Time
[140] Although
not raised by the Minister nor relied upon by him, and although not the basis
upon which the Court rejects Syncrude’s application, the Court observes that
Syncrude’s notice of objection was not timely.
[141] The
RFR was first proposed in the Canada Gazette Part I on December 30,
2006. The Minister then published a draft version of the RFR in the Canada
Gazette Part I on April 10, 2010, and members of the public were given an
opportunity to file comments and notices of objection requesting a board of
review at that time. The RFR were subsequently published in the Canada
Gazette Part II on September 1, 2010, including subsection 5(2) which
mandated the 2% average renewable fuel requirement in diesel fuel. However, no
date was set for the coming-into-force of subsection 5(2) of the RFR. That
date was set by Regulations Amending the Renewable Fuels Regulations set
out in the Canada Gazette Part I on February 26, 2011. Syncrude filed
its notice of objection on April 26, 2011.
[142] Syncrude
should have filed its notice of objection within 60 days following April 10,
2010, the date on which the Minister published the draft RFR and invited the
public to file comments and notices of objection. In 2010, 114 persons filed
notices of objection and requested a board of review be convened. Syncrude did
not.
[143] Syncrude’s
objection was only filed in respect of the amendment to the RFR which sets the date
on which subsection 5(2) is to come into force. The amendment does not change
the substance of subsection 5(2). Syncrude raises no objection about the date
on which it is to come into force, but rather objects to the substance of
subsection 5(2). In contrast to the comments and notices of objection received
in 2010, Environment Canada received 39 letters of comment in response to the
2011 amendment. Syncrude’s letter was the only one that requested a board of
review be convened. In my view, this further supports that Syncrude simply
missed its opportunity to object in a timely manner.
(2)
No Duty of Fairness is Owed Within the Legislative
Process
[144] Even
if Syncrude had filed a timely notice of objection, I am of the view that the
Minister did not owe it a duty of fairness with respect to the decision as to
whether or not he would convene a board of review because there is a general
rule that typical procedural duties and protections do not apply in the
legislative context.
[145] In
Canadian Assn of Regulated Importers v Canada (Attorney General), [1994]
2 FC 247, [1994] FCJ No 1 at paras 18-21 [Canadian Assn], the Federal
Court of Appeal reviewed Supreme Court jurisprudence and concluded that “generally, the rules of natural justice are
not applicable to legislative or policy decisions.” In
particular, it highlighted comments from Martineau v Matsqui Institution
Disciplinary Board, [1980] 1 S.C.R. 602, at page 628 where Dickson J. stated: “A purely ministerial decision, on broad
grounds of public policy, will typically afford the individual no procedural
protection, and any attack upon such a decision will have to be founded upon
abuse of discretion. Similarly, public bodies exercising legislative functions
may not be amenable to judicial supervision.”
[146] In
Wells v Newfoundland, [1999] 3 S.C.R. 199 at para 59, the Supreme Court
held that “legislative decision making
is not subject to any known duty of fairness. Legislatures are subject to
constitutional requirements for valid law-making, but within their
constitutional boundaries, they can do as they see fit.” More
recently, the Supreme Court stated in Authorson v Canada (Attorney General),
2003 SCC 39, [2003] 2 S.C.R. 40, at para 41 [Authorson] that “due process protections cannot interfere
with the right of the legislative branch to determine its own procedure”
and further, that: “Long-standing
parliamentary tradition makes it clear that the only procedure due any citizen
of Canada is that proposed legislation receive three readings in the Senate and
House of Commons and that it receive Royal Assent. Once that process is
completed, legislation within Parliament's competence is unassailable.”
[147]
Parliament can however, impose mandatory procedures for itself to
follow in the legislative process. In fact, the Court of Appeal in Canadian
Assn stated that:
In essence, what the respondents are seeking
here is to impose a public consultation process on the Minister when no such
thing has been contemplated by the legislation. There are statutes in which
regulations or policies cannot be promulgated without notifying and consulting
the public… No such legislative provision appears in the Export and
Import Permits Act, something that Parliament could have inserted if it
wanted notice to be given and consultation with the public to be held.
[emphasis added]
[148] Parliament
can set boundaries on the legislative process, particularly in the case of
regulations. However, within those boundaries, it is free to dictate its own
process. In this case, subsection 332(1) of CEPA imposes requirements that the
Minister must comply with prior to enacting a regulation:
The Minister shall publish in the Canada
Gazette a copy of every order or regulation proposed to be made by the
Minister or the Governor in Council under this Act, except a list, or an
amendment to a list, referred to in section 66, 87, 105 or 112 or an interim
order made under section 94, 163, 173, 183 or 200.1. [emphasis added]
[149] Further,
subsection 332(2) permits any person to file “comments with respect to the order, regulation or instrument or a
notice of objection requesting that a board of review be established under
section 333 and stating the reasons for the objection” within 60
days after the publication of a proposed order or regulation in the Canada
Gazette in accordance with subsection 332(1).
[150] Where
a notice of objection has been filed, subsection 333(1) stipulates that “the Minister or the Ministers may
establish a board of review to inquire into the nature and extent of the danger
posed by the substance in respect of which the decision is made or the order,
regulation or instrument is proposed” [emphasis added].
[151] By
contrast, as noted earlier, subsections 333(3), (4), and (6) mandate the
Minister to establish a board of review when a notice of objection is filed
with respect to regulations proposed under sections 118 (release of nutrients
into waters), 167 (controlling substances released into the air that create air
pollution) or 177 (controlling substances released into the water that create
water pollution), or under Part 9 of CEPA, or where the Minister fails to
determine whether a substance is toxic. Unlike these circumstances, there is
no similar provision mandating a board of review for regulations made under
section 139. The decision to convene a board of review is a discretionary one.
[152] That
discretionary decision occurs within the context of the legislative process.
Filing comments or a notice of objection is a formal way for the public to
participate in that process and communicate with the legislature. However,
within that context, the case law is clear that “legislative decision making is not subject to any known duty of
fairness:” Authorson at para 39.
[153] Further,
Syncrude and other affected parties were accorded other procedural protections
including the publication of the RIAS. As noted by Van Harten, Heckman, and Mullan
in Administrative Law: Cases, Text, and Materials, 6th Ed, (Toronto:
Emond Montgomery Publications Limited, 2010) at p 653, the RIAS is “designed to identify the purpose of the
proposed regulation, provide an analysis of its costs and benefits, and explain
why a regulatory proposal is considered necessary … describe the regulation and
its anticipated impact, alternatives considered, compliance with international
obligations, and the extent of consultation that took place in the design of
the regulation.”
[154] The
RIASs in this case reveal that the RFR was proposed in 2006. There was an
invitation to file comments and notices of objection in April 2010. The
Minister offered to, and did consult with provinces, territories, stakeholders,
and industry representatives in May 2010.
[155] Parts
of the RFR were redrafted in accordance with the feedback the Minister
received, and it was published in September 2010. The performance of the RFR
was to be reported and evaluated through the publication of annual reports on
the regulations, the annual report for CEPA, Environment Canada’s Report on
Plans and Priorities, through Departmental Performance Reports, and through Canada’s reporting obligations under the Kyoto Protocol Implementation Act: Canada
Gazette Part II, Vol 144, No 18 at p 1738.
[156] These
are the due process equivalents of the legislative process, in the regulation
making context. While CEPA provides an additional avenue for due process and
democratic participation by permitting the filing of notices of objection and
comments, receiving these filings is the extent of the Minister’s obligation to
any individual citizen, unless they fall under subsection 333(3), (4), or (6).
(3)
The Decision to Convene a Board is Not Administrative in Nature
[157] I
do not accept that upon receiving Syncrude’s notices of objection, the Minister
had to make a decision of an administrative nature that affected the “rights, privileges or interests of an
individual.” The task of the board of review is not to
adjudicate or decide on the rights, privileges or interests of any individual
member of the public, but to investigate the comments or objections raised as
they relate to the broader application of the proposed regulations.
[158] Section
333 of CEPA outlines the mandate of a board of review should one be convened.
It is to inquire into the “nature and
extent of the danger posed by the substance in respect of which the decision is
made or the order, regulation or instrument is proposed.” There
is nothing about the mandate of the board of review that is individual in
nature. It is even more tenuous to suggest that the Minister’s discretionary
decision to convene such a board, which itself does not adjudicate on the
individual rights, interests, or privileges of anyone, is administrative in
nature.
[159] Furthermore,
Syncrude’s notice of objection was primarily directed towards requesting a
specific exemption from the application of the RFR to its operations. The
requested board of review was an alternative to the exemption request. In
fact, its submissions go into detail about its own operations, technical
concerns such as cold weather operability that had already been raised by other
stakeholders and were clearly considered by the Minister, logistical concerns
specific to Syncrude, predictions as to the actual effect on Syncrude’s GHG
emissions if the RFR applied to it, as well as the fact that GHG emissions in
Alberta were already being provincially regulated.
[160] As
is discussed below in relation to the reasonableness of the decision on the
merits, all of the issues raised by Syncrude that relate to the application of
the RFR broadly were already known to the Minister. The issues specific to
Syncrude’s operations spoke to its primary request for an exemption from the
RFR, rather than advancing a basis as to why a board of review should be
convened.
(4)
Conclusion on Procedural Fairness
[161] For
the reasons set out above, I find that the Minister did not owe a duty of
procedural fairness to Syncrude. Section 332 in CEPA which allows persons to
file notices of objection following the publishing of regulations in the Canada
Gazette, is part of the legislative process for which there are no
procedural fairness obligations. The filing of a notice of objection did not
initiate an administrative decision making process into the rights, interests,
or privileges of Syncrude. The mandate of a board of review is to inquire into
the nature and extent of the dangers posed by the substances that are the
subject of the regulation in issue; that is to say, it is to examine the impact
of application of the regulations broadly. It is not tasked with adjudicating
the merits of the application of the regulations to specific persons.
D.
Minister’s Interpretation of “danger” and “substance”
[162] Syncrude
further submits that the Minister must have taken too narrow an approach to the
term “danger” and must not
have considered the concerns raised by Syncrude to be “dangers.” Syncrude submits that the substance at
issue was not GHG emissions, but biodiesel.
[163] I
reject Syncrude’s arguments. First, Syncrude presupposes that the Minister
must convene a board of review to investigate the nature and extent of the
danger of substances in relation to regulations promulgated under section 139
of CEPA. As found previously, the decision to convene a board of review in
this context is discretionary. Therefore, the Minister did not have to form
any opinion as to the scope of the term “danger.”
That was the role of a board of review, if one were convened as was done by the
board of review convened to consider the dangers of
Decamethylcyclopentasiloxane [Siloxane D5]. In conducting its review, the
board considered the scope of the word danger in section 333 of CEPA. It
is the role of the board to determine the scope of the “danger” that it is to review. The Minister’s role is
simply to determine whether a board of review ought to be convened.
[164] Even
if it were the Minister’s responsibility to determine the extent of the danger
to be reviewed by the board of review, Syncrude offers no evidence, but only
speculation, that the Minister interpreted that term too narrowly in this
case.
[165] While
I agree with Syncrude that the “substance”
in issue that a board of review would have to investigate is biodiesel and not
GHG emissions, again, there is simply no evidence that the Minister considered
the substance in issue to be GHGs rather than biodiesel. Syncrude simply
asserts that this is what happened.
E.
Reasonableness of the Decision on the Merits
[166] Lastly,
Syncrude challenges the reasonableness of the Minister’s decision to not
convene a board of review. Syncrude advances six primary arguments: (1) that
nothing in the Certified Tribunal Record [CTR] indicates that the Minister gave
any consideration to Syncrude’s objections; (2) that the testing done by
National Resources Canada [NR Can] cannot be applied to oil sands mining
operations equipment because of the specialized nature of that equipment; (3)
that the Minister did not consider the environmental impact of Syncrude having
to truck biodiesel to its operations; (4) that the GHGenius model for the
effect of the biodiesel requirement on GHG emissions is inaccurate; (5) that
the Canadian average of GHG emissions does not apply to Syncrude, whose
operations only incrementally contribute to GHG emissions; and (6) that handwritten
notes by the Minister’s staff indicate that it had a good case either to
convene a board of review or to be granted an exemption.
[167] I
find that the Minister’s decision not to convene a board of review was
reasonable for the following reasons.
[168] Although
the Minister’s response to Syncrude was brief, that does not mean that he
failed to consider its objections. There is evidence in the record that shows
that the issues raised by Syncrude had already been considered at earlier
stages in the regulation making process. The onus was on Syncrude to raise new
issues that had never before been considered. The Minister has no obligation
to reconsider issues that have already been addressed.
[169] The
record shows that the Minister was aware of all of Syncrude’s concerns that had
general applicability (that is to say, those that were not specific to only
Syncrude). For example, the Affidavit of Neeta Adams shows that Syncrude’s
concerns over the GHGenius model were already on the Minister’s radar following
the consultations with industry representatives in March 2007. It also makes
it clear that the Minister was also made aware of the need to carefully
consider the oil sands mining context by Suncor, another mining company with
operations in Alberta, which engaged with the Minister during the consultation
process.
[170] It
is shown from the affidavit of Leif Stephanson, a professional engineer
employed as Chief, Fuels Section with the Oil, Gas and Alternative Energy
Division of the Energy and Transportation Directorate with Environment Canada,
that winter performance issues were raised by Imperial Oil and Shell in June
2010. Shell even indicated that 95% of the Canadian diesel market is situated
in what Europe would classify as “extreme
arctic zones” where no blending with biodiesel would take place
in the winter months due to the higher cloud points. Syncrude is correct that
the NR Can report only tested biodiesel at temperatures down to -37°C; however,
given that even the evidence that the best biodiesel feedstocks will cloud at
temperatures below -10°C, the fact that the NR Can report did not test
temperatures to -44°C is of questionable relevance. In any event, it is clear
that Shell’s comments indicated to the Minister that a significant portion of Canada would not be able to blend in the winter, regardless of whether the coldest
temperature was -37°C or -44°C.
[171] The
record also reveals that Suncor had also informed the Minister that it was not
feasible to blend biodiesel at temperatures between -43°C and -34°C, in its
notice of objection and accompanying presentation.
[172] Syncrude’s
strategy for compliance, like Shell, Suncor, and Imperial Oil’s would therefore
be to blend biodiesel in the summer months in sufficient quantities to allow
them to not have to blend in the winter months. There is nothing unique about
Syncrude’s circumstances that would warrant an inquiry by a board of review.
[173] As
for the uniqueness of oil sands mining equipment, I note that the record shows
that Shell is also a “major player in
the oil sands sector, with its own process to manufacture bitumen and
non-conventional crudes.” Additionally, Suncor requested an
exemption for self-use or self-produced fuel that, similar to Syncrude, it
produced onsite at its oil sands operations. It is not credible for Syncrude
to say that its own mining equipment is so unique that the Minister ought to
have considered the application of the RFR to Syncrude’s machinery
specifically. Even if Syncrude’s mining equipment is unique, it has not shown
that a board of review, which considers the application of the RFR generally,
ought to be convened to look into the nature and extent of the danger of
biodiesel. It is not clear that the uniqueness of any equipment that uses the
biodiesel would ever be a factor in a board of review’s inquiry into the nature
and extent of the danger of the substance.
[174] In
terms of the use of the GHGenius model for measuring the expected GHG reduction
from the implementation of the RFR, it is clear that there is dispute over the
methodology for such modeling: the Ministry conceded as much in the Question
and Answer document. However, the Ministry has consistently taken the position
that it is the best model available. Recognizing the complexity of
environmental science and modeling, the government is entitled to some
deference as to the model upon which it has chosen to base its decisions.
[175] Finally,
with respect to the issues raised by Syncrude that are specific to the
application of the RFR to it, the Minister cannot be expected to convene a
board of review to confirm Syncrude’s own predictions as to the deleterious
effect on GHG emissions that the RFR might cause as a result of its specific
application to Syncrude. As has already been observed, that is not the mandate
of the board of review, and in my view, these objections are irrelevant to
considering the reasonableness of the Minister’s decision as to whether or not
a board of review should be convened. This also disposes of Syncrude’s
argument relating to the hand written notes of some of the members of the
department.
[176] At
the hearing, in relation to its constitutional argument, Syncrude submitted
that the Minister had not adequately considered the cost of the RFR as a means
for reducing GHG emissions. It is not for the reviewing court to assess the effectiveness
of the measures ultimately chosen by Parliament to achieve its goals. For the
purpose of the reasonableness analysis, it is enough that there is evidence in
the record that the concerns raised by Syncrude had already been raised by
others and been considered. In this regard, Imperial Oil’s notice of objection
also identified that the RFR was a relatively expensive initiative for the
reduction of GHGs, and further implored the Minister to consider the added cost
of land use changes. Therefore, even the economic issues raised late by
Syncrude were already known to the Minister.
[177] All
of the above shows that there is no evidence in the record that the Minister
failed to consider the issues raised by Syncrude in its notice of objection,
and there is evidence that all of the issues raised that were relevant to the
decision as to whether or not a board of review should be convened, were
already squarely before the Minister.
[178] The
Minister’s decision not to convene a board of review was highly discretionary
and is deserving of significant deference. In my view, it was reasonable to
conclude that Syncrude had not raised any new issues that would warrant
investigation by a board of review as other parties had already raised the same
issues, or the concerns raised were unique to Syncrude and therefore not
relevant to a board of review analysis.
V.
Conclusion
[179] In summary, I find that the RFR are constitutionally valid and were
properly made within the scope of CEPA. If procedural fairness was required,
the Minister’s decision not to establish a board of review was made in a
procedurally fair manner. Finally, the Minister’s decision was reasonable.
Accordingly, the Court dismisses Syncrude’s application for judicial review.
[180] The Minister is entitled to his costs. If the parties are unable to
agree on an amount, the Minister may have his costs assessed at the middle of
Column IV.
[181] The Court thanks all counsel for their thorough and most helpful
written and oral submissions on a complex subject.
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