Law Times

PAGE 8 FOCUS ON Energy Law Wind energy a developing area Stakeholders awaiting word on province's changes to FIT BY JULIUS MELNITZER For Law Times T he wind energy landscape in Canada is continuing a steady evolution on all fronts. Here are a few of the developments: FIT 2.0 At press time, wind energy stakehold- ers were waiting for the Ontario gov- ernment's response to the Ministry of the Environment's review of the feed-in tariff program. "We're expecting FIT 2.0 some time in March," says Thomas Timmins of Gowling Lafleur Henderson LLP. Meanwhile, a lot of people are unhappy. "Stakeholders are quite frustrated because it's been a while since they've had a clear picture of what was hap- pening," says Ken Pearce of Blake Cassels & Graydon LLP. "Before the election, the Tories said they would kill FIT. Then the Liberals got back in but they sat on their hands until the fall." Timmins expects one of the major changes in FIT 2.0 will relate to the domestic-content rules. "Hopefully, the domestic-content rules will give credit for products that Ontario companies have exported, as well as tweak- ing the language to tighten the provisions and add greater certainty," he says. "The point is that Ontario now has a wind industry and the magic is to export our knowledge and industrial capacity." But Pearce doesn't think the domestic- content rules will change. "I think they'll stay the way they are even though the government has got a lot of flak over them," he says. Timmins also expects other changes. "We might see changes to the authority of municipalities in this area," he says. "Some centralization to a single point of contact is required, but I'm not sure whether that contact will be in the munici- pal or provincial sphere." Whatever the changes, Pearce believes their impact may be limited. "What a lot of people don't realize is that the FIT program doesn't have the scope for many more projects," he says. "There are a lot of projects in the queue and I don't think there's much room left." NATIONWIDE DEVELOPMENTS Apart from Ontario, the rest of Canada is showing considerable interest in wind energy. In British Columbia, for example, liq- uefied natural gas (LNG) facilities could benefit from the technology. "There's no power generation in the Kitimat area, where the LNG facilities are located, that will support the load that those facilities will create," says Pearce. "Bringing power from other parts of the province will create huge transmission line issues and it makes more sense to build a large wind project locally." For its part, Quebec has about 3,000 megawatts of wind power coming online. Saskatchewan has been putting out requests for proposals and awarding contracts. Manitoba Hydro is working with inde- pendent power producers on wind energy development. In addition, Nova Scotia's renewables program is focusing on wind. "Alberta is in a different situation because their electricity market is an open one that has no government support or subsidies of the type that exist in other Canadian jurisdictions," says Pearce. JURISPRUDENCE Ontario's Environmental Review Tribunal has confirmed that it won't dilute the test that parties seeking review of a renew- able energy approval under s. 47.5 of the Environmental Protection Act must meet. "Appellants seeking to overturn an [approval] must show that the proposed project will cause serious harm to human health or serious harm to plant life, animal life or the environment," says Timmins' col- league Jennifer Danahy. "In this case, the appellants were arguing Stakeholders are frustrated with the wait for word on changes to the feed-in tariff program, says Ken Pearce. that approval should not be issued if the science was not certain, but the [tribunal] upheld the test." Erickson v. Director, Ministry of the Environment arose after the ministry issued an approval for the construction of a facility known as the Kent Breeze wind farms near Chatham, Ont. Apart from calling expert evidence on the impact of wind farms on human health, the appellants argued the project would cause serious harm to people because the approval didn't comply with the ministry's statement of environmental val- ues that dictates a precautionary approach to the issue. But the tribunal saw no connection between any deficiencies in the ministry's approach to the statement of environmen- tal values and the danger to human health. "Again, it is a large leap to state that any deficiencies in how the [statement] was considered mean that the project will cause serious harm (especially where the hearing itself constitutes an independent assess- ment of the serious harm test)," the tribunal wrote. "In this regard, the appellants have not proven that serious harm will be caused with reference to the approval's alleged non- compliance with the [statement]. Rather, they have simply raised valid concerns about the process by which the application was assessed in light of the [statement]." The upshot is that it will be difficult for appellants to use procedural arguments to satisfy the test for serious harm. "Section 145.2.1(2) is more direct in nature than the tests that may be applicable in other types of pro- ceedings," the tribunal concluded. "Under the new [approval] provi- sions, it is clear that any argument about a procedural failing has to also prove that the harm listed in section 145.2.1(2) will result." But Erickson does leave room for the argument that the appellants might meet the test for serious harm by relying on the cumulative impact. "The case also suggests that indi- rect effects on health such as head- aches and sleep disturbance might be sufficient to meet the test and that appellants are not confined to rely- ing on direct impacts like ice flying off the turbines," says Danahy. WIND RESOURCE ACCESS RIGHTS Although a wind energy project's right to access wind resources plays a key role in determining its long- term sustainability and value, sig- nificant legal uncertainties remain around the right to it. "The law is evolving around the world, including places like Texas, India, South Africa, the United Kingdom, and Ireland," says Timmins. "The key issue con- cerns conflicts among adjacent landowners regarding access to wind resources." For example, commercial turbines cre- ate a wake that can extend almost a kilome- tre downwind. "That can significantly reduce the pro- ductivity of turbines located in the wake," Timmins notes. "So one landowner could profit from wind turbines at the expense of others who can't profit in the same way as a result of the wake." Similarly, tall buildings create wind shadows that could give rise to disputes. "Litigation and delay are highly likely unless issues involving access to wind are resolved early in a project's development," says Timmins. The usual way to secure access to wind is through the purchase of easements or the use of non-interference contracts for land located upwind of wind energy projects. "The most cost-effective but secure solution to this issue has typically been to acquire negative wind easements that pro- hibit adjacent landowners from erecting a structure or engaging in an activity that obstructs wind flow," says Timmins. Although Canadian courts haven't yet spoken on wind access rights, observers expect the California Courts of Appeal's ruling in Contra Costa Water District v. Vaquero Farms Inc. to be of considerable influence. The court held that wind-power rights are part of those associated with land ownership. "If Canadian courts agree, downwind landowners could seek damages or injunc- tive relief based on private nuisance from upwind landowners who have wind tur- bines on their property," says Timmins. "Courts may also recognize other causes of action derived from riparian and mineral rights law." LT www.lawtimesnews.com March 26, 2012 • Law TiMes

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