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Windstream Energy v. Canada

Windstream Energy LLC v. The Government of Canada, PCA Case No. 2013-22
Nature of the proceedings:
International
Type of case:
Investor-State
Economic sector:
Electricity, gas, steam and air conditioning supply (energy)
Electricity, gas, steam and air conditioning supply (energy)
Date of introduction:
28 Jan 2013
Status of the case:
Decided in favor of investor
Claimant’s country of origin:
United States
Respondent:
Canada
Institution:
PCA (Permanent Court of Arbitration)
Rules of arbitration:
Seat of arbitration:
Toronto
Applicable treaties:
NAFTA - Article 1503...

Documents of the case

Source(s) of the individual document(s):
Reproduced with the permission of the Permanent Court of Arbitration :
Link1 (EN) Official source

Lawyers, other representatives, expert(s), tribunal’s secretary

Government of Canada Counter-Memorial

Introduction

I. Overview

1.
The development of an offshore wind facility is an inherently "high-risk" activity. Today, only nine fully commissioned offshore wind facilities with a capacity of 300 MW or more exist in the world, all of them in Europe, and none of them in a freshwater environment. Not a single offshore wind facility is operational in North America.
2.
The reason why there are so few operational offshore wind facilities is simple. Developing one requires overcoming significant challenges with respect to getting financing, obtaining access to a site, connecting to the electricity grid, conducting relevant research, acquiring the requisite permits, obtaining the necessary equipment and expertise, and securing onshore and offshore facilities to support construction. Most importantly, though, it requires time – particularly if it is a novel type of project, such as a freshwater wind facility, or first-of-a-kind project in a jurisdiction. The proponent requires enough time to ensure that it has gathered the relevant information, done the appropriate studies, obtained the necessary financing, consulted with all relevant stakeholders, and constructed the project efficiently, safely and properly. The regulatory authorities also need sufficient time to understand and evaluate all of the potential effects of the proposed project, and to develop the regulatory standards, guidelines and permitting requirements necessary to protect people and the environment from harm or interference through appropriate mitigation measures. Such timeframes for both the proponent and the government regulators are measured in years, not months. North America’s most advanced offshore wind project, the Cape Wind project, remains unconstructed more than a decade after filing for its initial permits.
3.
Time is ultimately what this claim is about, and in particular, the time that the Government of Ontario requires to develop the regulatory framework necessary to assess the Claimant’s proposal to construct the first ever large-scale freshwater wind facility in the world. Put differently, this dispute is about whether Ontario has the right to proceed with caution when determining how to assess an activity that has never been attempted before and which would have uncertain effects on the Great Lakes environment and the millions of people who depend on it. The Claimant alleges that the fact that the Government of Ontario did not complete all the work necessary to develop the regulatory framework by May 4, 2012 violates Canada’s obligations under the NAFTA. The Claimant is wrong. NAFTA does not prohibit reasonable regulatory delays, which the Claimant deems unreasonable due to its own risk taking.
4.
In 2007, the Claimant invested in Ontario with the idea of erecting a wind facility on the shoals off of Wolfe Island in Lake Ontario (the "Project"). At the time, the Ministry of Natural Resources ("MNR") was not accepting applications for Crown land for offshore wind projects, the Ontario Power Authority ("OPA") had no program to procure energy from offshore wind projects, and the Ministry of the Environment ("MOE") had no regulatory process applicable to the environmental review of offshore wind projects that streamlined the necessary approvals.
5.
Apparently undeterred by these risks, when the opportunity to apply for Crown land opened in 2008, the Claimant seized it. On February 20 and June 30, 2008, the Claimant applied for Crown land on the lakebed near Wolfe Island and Amherst Island in Lake Ontario for the purposes of developing its proposed offshore wind facility. A portion of the Crown land making up the Claimant’s application was situated in the narrows between Kingston and Wolfe Island. The rest extended out from Wolfe Island towards the U.S. border.
6.
The Claimant was not the only prospector of renewable energy projects on Crown land. At $1,0001 per Crown land application, the cost of applying was hardly a deterrent. The Claimant’s Crown land applications were among over 500 that MNR received by December 2008, 144 of which were to develop offshore wind farms. In the end, 16 different proponents had applied for Crown land to develop a total of 35 offshore wind projects. However, the OPA still had no program for procuring energy generated from offshore wind facilities, and there was no streamlined regulatory approval process in place specific to offshore wind development.
7.
In 2009, the Green Energy and Green Economy Act, 2009 ("GEGEA") was introduced by the Government of Ontario. The GEGEA had numerous broad goals related to renewable energy and conservation, but of particular relevance to this case are two of its initiatives. First, the GEGEA paved the way for the OPA to establish a Feed-in Tariff ("FIT") Program in Ontario. This procurement program for renewable energy provided standard program rules, standard contracts and standard pricing based on classes of generation facilities. Under the FIT Program, the OPA would not assess the feasibility of the project. Instead, it would offer a FIT Contract to a proponent if there was sufficient capacity at the proponent’s proposed connection point to accommodate the amount of electricity that it proposed to provide. A FIT Contract provided no guarantee that a project would actually proceed or that necessary permits would be granted. It was left entirely to proponents to "navigate through the regulatory approvals necessary to bring their projects to life".2 Second, the GEGEA consolidated many of the provincial environmental approvals for renewable energy projects into a streamlined approval known as the Renewable Energy Approval ("REA"), and made MOE the primary regulator.
8.
When the OPA launched the FIT Program on October 1, 2009, it was flooded with hundreds of applications for FIT Contracts. Yet, only two proponents applied for offshore wind projects. Thus, only two of the 16 proponents that applied to MNR for Crown land to develop offshore wind projects by December 2008 applied for a FIT Contract, despite the fact that seven of them had already obtained Applicant of Record ("AOR") status and were therefore eligible to proceed to the permitting stage. The lack of interest in the FIT Program for offshore wind development was not a surprise. With no experience having been built up in the province (or in North America), neither industry nor the Government of Ontario was ready.
9.
The Claimant was one of the two proponents to apply under the FIT Program for a contract for an offshore wind project. In November 2009, the Claimant submitted eleven FIT applications for wind power projects totalling 1,045 MW. Ten of its applications were for onshore wind projects totalling 745 MW, and one was for a 300 MW, 130-turbine offshore wind facility. At the time of its application, the Claimant’s offshore wind project was no more than a dream. The proponent had applied for access to some Crown land, but it had not yet been granted site access over a single hectare. Further, it had no plan on how to bring its dream to a reality – it applied to the FIT Program without having conducted a proper feasibility study. It seems that although the Claimant was no more ready than other proponents, it was more willing to gamble.
10.
The Government of Ontario was not ready to process offshore wind projects either. At the time the FIT Program was launched, the regulatory framework in Ontario for approving an offshore wind project, including its development, construction, operation and decommissioning, remained incomplete. The REA process, created by the GEGEA and the REA Regulation, established the framework for the regulatory approval of offshore wind projects in Ontario. However, in contrast with the proponent-driven environmental assessment ("EA") process, the REA process is prescriptive in nature, with clear requirements for a project proponent to satisfy. When the REA Regulation came into force on September 24, 2009, MOE had yet to finalize the regulatory requirements for offshore wind facilities. For example, while it contained technology-specific rules and requirements for onshore wind facilities, which set out precise setback distances from noise receptors, property lines and land-based transportation corridors, the REA Regulation merely stipulated that an offshore wind facility report would be required for a Class 5 offshore wind facility. It did not contain the prescriptive rules that the Claimant would be required to satisfy. As the Claimant’s representative and expert witness explained at the time, "many of the rules governing off-shore projects have yet to be written."3
11.
The OPA considered the Claimant’s FIT applications in the early months of 2010. In its application to the FIT Program for an offshore wind facility, the Claimant selected a connection point that could easily accommodate 300 MW. Since the application met the appropriate requirements under the FIT Program, the OPA had no other choice but to offer the Claimant a FIT Contract. It notified the Claimant that it would be offered a FIT Contract for its 300 MW Wolfe Island Shoals project in April 2010, and formally offered the contract on May 4, 2010. It remains the only FIT Contract for an offshore wind project that the OPA offered.
12.
At the launch of the FIT Program, the standard FIT Contract for offshore wind facilities required projects to achieve Commercial Operation four years following the contract date, and subjected them to termination if their date of Commercial Operation did not occur within 18 months of that date. From the moment it was informed by the OPA that it would be offered a FIT Contract, the Claimant had doubts about whether it could satisfy such standard conditions. The Claimant expressed its concerns as early as April 19, 2010. A four-year Milestone Date of Commercial Operation ("MCOD") would make any proponent nervous, but particularly a proponent hoping to build Canada’s largest wind facility, and the first of its kind in the world.
13.
There were many development and construction risks for the Claimant’s Project. For example, the 130 massive 3,000 metric tonne foundations that the Claimant planned to use would have created considerable challenges in terms of lakebed preparation, fabrication, storage and transportation. Further, the presence of a major international shipping lane through the proposed site strongly suggests that the Project’s layout would have to change and that some of the 130-turbines would have been dropped. There would have been a number of serious construction risks as well. In particular, seasonal construction restrictions and weather disruptions, the lack of available specialized vessels, and the time required for manufacturing the foundations, all made Commercial Operation within a four-year period likely impossible.
14.
Moreover, the Claimant had an even more obvious reason to be concerned about the viability of its proposal in the spring and summer of 2010. On June 25 and August 18, 2010, MOE and MNR, respectively, had posted for public comment on the Environmental Registry, policy proposal notices regarding offshore wind and access to Crown land for offshore wind projects. In particular, MOE’s June 25, 2010 proposal notice (the "Offshore Wind Policy Proposal Notice") explained that work on the regulatory framework for offshore wind development was ongoing, and that the requirements for offshore wind projects under the REA Regulation remained incomplete. It noted that MOE would be engaging with other ministries to make the necessary regulatory and policy changes to provide greater certainty and clarity on offshore wind requirements.
15.
The Offshore Wind Policy Proposal Notice also discussed human health and environmental considerations around offshore wind development and solicited input on a proposed five kilometre shoreline exclusion zone for offshore wind projects. In particular, it highlighted the need to protect water bodies and to ensure that Ontarians enjoy safe drinking water, beaches, food and fish, as well as preserve the province’s natural and cultural heritage. The notice anticipated that the future offshore-specific guidance documents would include Cultural Heritage Guidance for Offshore Renewable Energy Projects from the Ministry of Tourism and Culture ("MTC"), Offshore Wind Noise Guidelines from MOE, and Coastal Engineering Study Guidance from MNR. The notice made clear that the proposed direction was subject to change, depending on the feedback received from the public through the Environmental Bill of Rights ("EBR") process and research underway by MOE, MNR, and MTC.
16.
It was at this juncture that the Claimant, once again, demonstrated its extraordinary risk tolerance. While MOE was still receiving feedback from the public and conducting its own research, the Claimant signed its FIT Contract on August 20, 2010. The only difference between its FIT Contract and the standard contract was that it had five years, instead of four years, to bring its Project into Commercial Operation.
17.
In signing its FIT Contract, the Claimant took a number of high-risk gambles. It gambled that MOE would adopt only a five kilometre setback as a means of addressing all of the concerns raised by the public and the research. Given that 85 per cent of the Crown land that the Claimant had applied for was located within the proposed five kilometre setback, the Claimant also gambled that it would be allowed to swap its existing Crown land applications for Crown land located outside the proposed five kilometre setback. Finally, in signing its FIT Contract, the Claimant accepted the OPA’s termination rights and gambled that it would be able to bring its project into Commercial Operation within five years, despite being well aware that the regulatory process for its permits and approvals was still under development.
18.
The public response to MOE’s Offshore Wind Policy Proposal Notice was unprecedented. MOE received many more comments in response than for any other EBR posting related to renewable energy, and 65 per cent of those received were opposed to offshore wind development altogether. The majority of comments considered that more scientific research was required to ensure that a five kilometre setback would be sufficient. Specific concerns for further study included measures to protect drinking water, transportation and navigation, and potential effects on fish and wildlife and shoreline ecosystems. The heightened public interest in offshore wind along with strong likelihood that a REA decision on the first project would be challenged, made it clear to MOE that its policy on offshore wind development had to be bullet-proof.
19.
MOE continued its work to develop the REA policies and guidelines for offshore wind throughout the summer and fall of 2010. It conducted a review of what other jurisdictions were doing and held a number of technical workshops with both government experts and independent experts on noise, water quality, technical specifications and safety issues. This review and the discussions at those meetings made clear that further scientific work was required to understand the risks associated with offshore wind development, operation and decommissioning in the Great Lakes. As the Great Lakes Wind Collaborative ("GLWC") later recognized, Great Lakes region-specific research on the ecological impacts of offshore wind is "notably lacking", and "[a]dditional research and studies are needed to direct how wind projects are planned, sited and operated in the region."4 It forecasted the research needed to answer these questions will likely take "years and possibly decades".5 In line with these opinions, the Government of Ontario worked with the [REDACTED] Ontario initially envisaged a three-year plan to complete its work.
20.
As a result, by January 2011, it was clear to the Minister of Environment that the scientific underpinnings for the regulations required years of research, and that any policy on offshore wind development had to be supported by sound science because it would be closely scrutinized. He therefore decided, along with his colleagues, the Ministers of Energy and Natural Resources, to defer offshore wind development altogether. Contrary to the Claimant’s baseless allegations of political interference, the Minister of the Environment’s decision was grounded in the precautionary principle. He made the decision in the discharge of his duties to protect human health and the environment.
21.
The only question that remained was what to do with the Claimant’s FIT Contract and the other Crown land applications for offshore wind. Ultimately, the Government of Ontario decided to cancel all Crown land applications for offshore wind sites with the exception of the Claimant’s. Given the Claimant’s unique position as the only FIT Contract holder for offshore wind, its contract was frozen until the regulatory framework could be finalized. Upon communicating this message to the Claimant, government representatives invited it to meet with the OPA to reach a suitable arrangement, which might include changes to the FIT Contract’s Force Majeure, security deposit and termination provisions. Such meetings with the OPA occurred, but the Claimant rejected the reasonable solutions put forward to accommodate it, and instead made unreasonable and unrealistic demands of the OPA and the Government of Ontario. It was the Claimant that ultimately abandoned the discussions.
22.
Ontario has not abandoned its efforts to complete the science required to move forward with offshore wind development. In fact, it is still undertaking the work required in order to allow it to develop the required regulatory framework, with additional studies being commissioned and money continuing to be spent on new science.
23.
Throughout this entire time, the Government of Ontario has acted reasonably and fairly, and it has appropriately balanced all of the various interests involved. The fact is that Ontario needs more time to develop the regulatory framework for offshore wind development in the Great Lakes, a common concern of all Great Lake partners. NAFTA does not require a government to rush into decisions simply because the Claimant took unnecessary risks in choosing to sign a FIT Contract that requires Commercial Operation by a certain date. To the contrary, NAFTA Parties have maintained the regulatory space to proceed with caution and ensure that their programs and policies have an adequate scientific foundation.
24.
Moreover, as the evidence in the record shows, Ontario has done everything reasonably possible to accommodate the Claimant and its project while the necessary scientific foundation for the regulation of offshore wind development is laid. To be clear, Ontario did not revoke any of the Claimant’s permits. The Claimant had none. Ontario did not impose a halt on ongoing construction. Construction had not even begun. Ontario did not cancel or invalidate the Claimant’s FIT Contract with the OPA or direct the OPA to change any of its terms. The Claimant’s FIT Contract remains in force and is binding today. Ontario did not even materially change the regulatory environment that existed when the Claimant made its investment. In fact, the status quo that existed when the Claimant invested in Ontario continues to exist today. What Ontario did do was offer the Claimant the opportunity to freeze its contract and remain protected from termination. It was the Claimant that refused.
25.
It was the Claimant’s choice to assume the risks associated with the FIT Contract, and it did so with full knowledge of the development, construction and regulatory risks involved. It should not be compensated just because those risks have materialized. Indeed, contrary to its allegations, the Claimant also needed more time if it was to have any chance of successfully developing a project. However, it did not have that luxury. The Claimant’s FIT Contract contains specific termination rights in favour of the OPA, and there should be little dispute that at the time of the decisions being challenged here, the Claimant had an unviable project. Given where the Claimant was in the development process when it signed its FIT Contract, and given the first-of-a-kind nature of its proposal, the Windstream Wolfe Island Shoals offshore wind facility was doomed to fail from the moment that the Claimant signed on the dotted line. It was simply not a project that could be built within the timelines required by the FIT Contract. NAFTA Chapter 11 is not intended to provide a windfall to a Claimant merely because it had an idea.
26.
In sum, the Claimant has failed to prove that any aspect of the Government of Ontario’s decision to defer offshore wind development on February 11, 2011 breached Canada’s obligations under the NAFTA or caused it any losses. Canada has structured the remainder of its submissions as follows.
27.
First, Canada will provide an overview of the relevant facts related to this dispute. In particular, Canada will describe the FIT Program, the Provincial and Federal approval and permitting requirements applicable to renewable energy projects, the Claimant’s proposal and the circumstances surrounding its signing of its FIT Contract, the Government of Ontario’s decision to defer the development of offshore wind facilities, and the Government of Ontario’s efforts to do the science required to support the development of a regulatory framework for offshore wind projects.
28.
Second, Canada explains that the Tribunal lacks jurisdiction to consider the legality of measures which are not measures of the Government of Ontario, but of state enterprises that were not acting in the exercise of delegated governmental authority, namely the OPA.
29.
Third, Canada shows that, pursuant to Article 1108, Articles 1102 and 1103 do not apply in this dispute because the measures challenged as a breach of those articles constitute or involve procurement.
30.
Fourth, Canada explains that even if the Tribunal were to consider the alleged breaches of Articles 1102 and 1103, these claims are meritless. The Claimant has failed to demonstrate that either TransCanada Corporation ("TransCanada"), Samsung, or any other comparator, was accorded more favourable treatment in like circumstances. Neither TransCanada nor Samsung were FIT proponents, and neither sought to develop an offshore wind project in Ontario. As a result, the decision to defer offshore wind development did not apply to them. In fact, the treatment accorded to the Claimant was more favourable than the treatment of investors with whom it was in like circumstances, namely other proponents of offshore wind projects in Ontario who applied for FIT Contracts. The Claimant’s Project was kept alive, but all others were cancelled.
31.
Fifth, Canada shows that it has also not violated any of its obligations under Article 1105. While the Claimant has tried to tell a story of political interference and asked for an adverse inference to be drawn from unrelated events, there is no evidence that the deferral decision was politically motivated. Contrary to the Claimant’s baseless allegations, the Government of Ontario’s approach was based on the need for additional research, something that U.S. Great Lake jurisdictions equally require. In particular, it was based on the need for research to develop and support an adequately informed and scientifically defensible regulatory framework for offshore wind. Furthermore, the decision to defer offshore wind development was, itself, entirely consistent with the REA Regulation and did not violate any specific commitments made by the Government of Ontario to the Claimant. The Claimant has failed to establish that it had any legitimate expectations that its Project would be able to proceed quickly through the regulatory process before the requirements for offshore wind facilities were put in place, or that Ontario made any specific representations and assurances that induced its investments. Far from being shocking or egregious, the treatment accorded to the Claimant was reasonable and accommodating.
32.
Sixth, Canada explains why the alleged measures do not violate Canada’s obligations under NAFTA Article 1110. There has been no expropriation, since the deferral has not resulted in a substantial deprivation of the Claimant’s investments. In particular, neither the Claimant’s Project nor its key asset, the FIT Contract, had economic value prior to the alleged expropriation and further, even if they did, the deferral is merely temporary in nature. The deferral is a good faith, non-discriminatory general measure adopted for the public purpose of ensuring that the Government of Ontario is in a position to adequately assess any environmental, health and safety risks associated with offshore wind energy development. It is not an unlawful expropriation.
33.
Finally, Canada shows that even if this Tribunal were to find a breach of Canada’s obligations, the Claimant did not suffer any losses as a result of that breach. The Claimant could not have brought its Project into operation within the deadlines in the FIT Contract, and hence, the Project was valueless before any of the measures being challenged here were adopted by Ontario. Further, even if the Tribunal were to ignore this fact, there are numerous other factors associated with the riskiness and costs of the Claimant’s Project that would have rendered it valueless on the valuation date. This was a project that simply was not viable within the contractual constraints to which the Claimant agreed and accordingly it had no value at the time of the alleged wrongful conduct.

II. The Roles and Mandates of the Ministries of the Ontario Government and the Ontario Power Authority Relative to Renewable Energy Projects in Ontario

34.
Several ministries of the Government of Ontario, and the independent OPA, are involved in the renewable energy sector in Ontario, each with a different mandate.

The Ministry of the Environment and Climate Change, or the Ministry of the Environment ("MOE") as it was known previously,6 is responsible for promoting clean and safe air, land, and water to ensure healthy communities, ecological protection and sustainable development for Ontarians.7 It is the primary regulator of renewable energy projects in Ontario, through the administration of Part V.0.1 of the Environmental Protection Act8 and its implementing regulation, the Renewable Energy Approval Regulation.9 When making decisions in respect of renewable energy, MOE is guided by the purpose of Part V.0.1 of the EPA which provides for the protection and conservation not only of the natural environment (i.e. air, land and water, and plant and animal life including human life), but also of the human environment, including the social, economic and cultural conditions that influence human and community life.10 MOE also administers a number of other statutes including the Clean Water Act, 2006, the Environmental Assessment Act, the Ontario Water Resources Act, the Environmental Bill of Rights, 1993 and the Safe Drinking Water Act, 2002.11

The Ministry of Natural Resources and Forestry, or the Ministry of Natural Resources ("MNR") as it was known previously,12 exercises stewardship over Ontario’s provincial parks, forests, fisheries, wildlife, mineral aggregates, petroleum resources and Crown land and waters.13 It has two main roles relating to renewable energy in Ontario. First, MNR is responsible for the management, sale and disposition of Crown land under the Public Lands Act.14 Second, MNR is responsible for reviewing the natural heritage component (birds, bats and fish) of REA applications before they are submitted to MOE. It also administers additional permits that may be required during the development of a renewable energy project, including permits to conduct geotechnical testing of the lakebed.

The Ministry of Energy, or the Ministry of Energy and Infrastructure ("MEI") as it was known previously,15 establishes energy policy and the legislative and regulatory framework in which regulated entities and electricity-sector participants must operate in order to develop the electricity generation, transmission and other energy-related facilities that help power the Ontario economy in a sustainable manner.16 MEI is responsible for publishing the Long-Term Energy Plan,17 which guides the policies for energy procurement and conservation in the province. MEI is responsible for the administration of the Green Energy Act,18 which established the Renewable Energy Facilitation Office ("REFO"), a "one-window access point" where proponents of renewable energy projects can obtain information and connect with the appropriate government and agency resources.19 Through REFO, the Ministry plays a coordinating role for specific renewable energy projects.

The Ministry of Tourism, Culture and Sport or the Ministry of Tourism and Culture ("MTC") as it was known previously, is responsible for reviewing the cultural heritage resources (archaeological resources and heritage resources) components of REA applications, before they are submitted to MOE.20

The Ontario Power Authority ("OPA"), was, prior to January 1, 2015, an independent non-share capital corporation21 established pursuant to the Electricity Restructuring Act, 2004. On January 1, 2015, amendments to the Electricity Act, 1998 came into force to provide for the amalgamation of the OPA and the Independent Electricity System Operator ("IESO"). The new entity was continued under the IESO name.22 The predecessor OPA was responsible for medium and long-term system planning, conservation, demand management and procurement of new generation through long-term power purchase agreements ("PPAs").23 It was also charged with developing integrated power system plans to manage and respond to the demand, supply and transmission goals identified by the Government of Ontario.24 The Electricity Act, 1998 provided that the predecessor OPA was not an agent of the Crown.25 Pursuant to 25.32 and 25.35 of the Electricity Act, 1998, the Minister of Energy has the power to issue directions to the OPA with respect to energy procurement programs. The OPA developed and the IESO continues to administer the FIT Program and is the creditworthy counterparty of FIT Contract holders.

III. Materials Submitted by Canada

35.
Along with this Counter-Memorial and the attached exhibits and authorities, Canada has submitted the following documents:

Witness Statement of John Wilkinson: Mr. Wilkinson served as Member of Provincial Parliament in the Legislative Assembly of Ontario from October 2, 2003 to September 7, 2011. During his first term, Mr. Wilkinson acted as Parliamentary Assistant to the former Minister of the Environment Leona Dombrowsky. During his second term he served in the provincial Cabinet, first as Minister of Research and Innovation, then as Minister of Revenue, and finally as Minister of the Environment from August 18, 2010 to October 20, 2011. He made the decision to defer offshore wind development in the discharge of his duties as the Minister of the Environment.

Witness Statement of Marcia Wallace: Dr. Wallace is currently the Regional Director, Municipal Services Office – Central Ontario, at the Ministry of Municipal Affairs and Housing ("MMAH") of the Government of Ontario. Prior to this, she was Manager, Renewable Energy, in MOE’s Environmental Programs Division from November 2008 to July 2010. She then became the Director, Modernization of Approvals until October 2013 when she started her position at MMAH. She navigated MOE through the design, development and implementation of the GEGEA by coordinating and leading the development of a regulatory framework for the new Renewable Energy Program. Dr. Wallace has knowledge of the regulatory framework for the approval of renewable energy projects in Ontario and is familiar with work undertaken by MOE to develop the regulatory framework for offshore wind. She participated on behalf of MOE in the multi-ministry process of developing policy options for offshore wind in the months before the deferral.

Witness Statement of Doris Dumais: Ms. Dumais is MOE’s current Director, Modernization of Approvals, and has nearly three decades of experience in the areas of program delivery and program development for environmental permitting and approvals. She worked in MOE’s Operations Division as Director of the Approvals Program from December 2007 to September 2011, when she became Director of the new Environmental Approval Access and Service Integration Branch. Ms. Dumais led the team of technical specialists responsible for screening and reviewing applications for REAs, including the Directors who decide whether or not it is in the public interest to issue or refuse to issue a REA.

Witness Statement of Rosalyn Lawrence: Ms. Lawrence is the Assistant Deputy Minister of the Policy Division at MNR, which is responsible for all policy development related to natural resource management matters. She has general knowledge about the issuance of MNR permits and approvals related to renewable energy, including issues related to Crown land offshore wind development, and the development of a regulatory framework for offshore wind.

Witness Statement of Susan Lo: Ms. Susan ("Sue") Lo was the Assistant Deputy Minister of the Renewables and Energy Efficiency Division at MEI from June 2009 until February 2013. She was involved in the implementation of the GEGEA, including the FIT Program and the establishment of REFO. Ms. Lo was further involved in the development of the Government of Ontario’s 2010 Long-Term Energy Plan (the "2010 LTEP") and MEI’s policy discussions regarding options for moving forward with offshore wind development.

Witness Statement of Perry Cecchini : Prior to January 1, 2015, Mr. Cecchini was Manager RESOP/FIT in the Electricity Resources Contract Management group at the OPA; on January 1, 2015, the OPA was merged with the IESO, where Mr. Cecchini retains the same functional role in the Market and Resource Development division. Mr. Cecchini was involved in the administration of FIT contracts and, along with his team, remains responsible for ensuring that FIT Contract counterparties develop and operate renewable energy generation facilities in accordance with the terms of their particular FIT Contract.

Expert Report of URS : URS has provided an expert report assessing the environmental permitting and engineering feasibility of the Claimant’s Project. URS is a global engineering company with experience in complex and diverse engineering projects all over the globe, including renewable energy projects. URS is considered one of the world’s foremost engineering companies.

Expert Report of Berkeley Research Group: Mr. Chris Goncalves, of Berkeley Research Group ("BRG") has provided an expert report assessing the Claimant’s damages claim. He and his team are economics and valuation experts with experience assessing the value of renewable energy projects, and in assessing damages in international arbitration.

The Facts

I. Background on Renewable Energy Policy in Ontario

A. Ontario’s Early Renewable Energy Initiatives 2003-2008

36.
In 2003, the newly elected Government of Ontario was faced with the need to restructure an electricity system that was dependent for approximately one quarter of its generation capacity on heavily polluting coal-fired power plants.26 In light of the health and environmental concerns associated with such facilities, their elimination became one of the key priorities of the new government’s election campaign in 2003.27 An independent study commissioned by the new government in 2005, entitled Cost Benefit Analysis: Replacing Ontario’s Coal-Fired Electricity Generation, estimated that the elimination of coal-fired generation would lead to annual savings of $4.4 billion, when health and environmental costs were taken into consideration.28
37.
The decision to eliminate coal-fired generation signalled an era of significant change in Ontario’s energy policy, with new energy initiatives, legislation and evolving regulatory frameworks being developed, adopted and implemented across multiple ministries. In order to replace, at least in part, the coal-fired electricity generation capacity that was being eliminated, the Government of Ontario sought to significantly increase electricity supply and capacity from renewable sources of energy generation, such as solar, wind, bioenergy and hydro-electric energy.
38.
As a first step, in June 2004 the government introduced the Electricity Restructuring Act, 2004 ("ERA") in the Legislative Assembly of Ontario ("Ontario Legislature").29 One of the purposes of the ERA was "to restructure Ontario’s electricity sector, and to promote the expansion of electricity supply and capacity, including supply and capacity from alternative and renewable energy sources."30 The ERA was passed by the Ontario Legislature and came into force in December 2004.31
39.
A major feature of the ERA was the establishment of the OPA through amendments to the Electricity Act, 1998.32 The OPA was an independent non-share capital corporation responsible for medium and long-term system planning, conservation, demand management and procurement of new generation through long-term PPAs.33 It was constituted with independent legal personality by being given the "capacity, rights, powers and privileges of a natural person for the purpose of carrying out its objects".34 The Electricity Act, 1998 expressly stipulates that the OPA is not an agent of the Crown.35
40.
The ERA specifically empowered the OPA "to enter into contracts relating to the procurement of electricity supply and capacity",36 including from alternative and renewable energy sources.37 It also charged the OPA with developing integrated power system plans to manage and respond to the demand, supply and transmission goals identified by the Government of Ontario in supply mix directives made pursuant to the Electricity Act, 1998.38
41.
Because the OPA is an independent corporation, the Electricity Act, 1998 specifically empowers the Minister of Energy to direct the OPA to take certain specified actions with respect to its energy procurement programs. This allows, for example, the Minister of Energy to direct the OPA to take actions that relate to the government’s broader energy policy objectives. The decision of whether or not to issue a direction to the OPA is entirely within the discretion of the Minister of Energy.39 The scope of the Minister’s authority to issue directions to the OPA is limited to the types of directions specified in sections 25.32 and 25.35 of the Electricity Act, 1998.
42.
In conjunction with and following the introduction of the ERA, the Government of Ontario directed the OPA to implement a number of renewable energy procurement initiatives, including (1) the Renewable Energy Supply ("RES") I and II procurements, which ran in 2004 and 2005 and together resulted in nineteen contracts being awarded for approximately 1,300 MW of capacity, and (2) the Renewable Energy Standard Offer Program ("RESOP"), which ran from 2006 until May 2008 and resulted in 314 contracts being awarded for approximately 1,300 MW of capacity.40

B. The Green Energy and Green Economy Act, 2009

43.
On February 23, 2009, the Government of Ontario introduced the Green Energy and Green Economy Act, 2009 ("GEGEA") into the Ontario Legislature.41 It was passed and received Royal Assent on May 14, 2009.42 The GEGEA aimed to build and support a strong green economy and to better protect the environment,43 by "making it easier to bring renewable energy projects to life" and by fostering a culture of conservation by promoting lower energy use.44 To accomplish these aims, the GEGEA created new standalone legislation, the Green Energy Act, 2009,45 and amended fifteen other existing statutes.
44.
Among other things, the GEGEA:

amended the Planning Act46 to exempt certain renewable energy projects from municipal plans, bylaws and orders related to land use and zoning;47

established REFO within MEI48 to act as a "one-window access point" responsible for connecting renewable energy stakeholders with the relevant government ministries and regulatory authorities;49

granted the Minister of Energy authority to direct the OPA to establish a feed-in tariff program designed to procure energy from renewable energy sources;50 and

established the REA process in order to "coordinate approvals from the Ministries of the Environment and Natural Resources into a streamlined process".51

II. The FIT Program

A. The Creation of the FIT Program

45.
The GEGEA added section 25.35 to the Electricity Act, 1998, authorizing the Minister of Energy to direct the OPA to develop a feed-in tariff program.52 A feed-in tariff program is a renewable energy standard offer procurement program that features standardized program rules, contract prices designed to reflect the costs of generation, and economic incentives for proponents of renewable generation.53 Feed-in tariff programs are used worldwide to encourage and promote the greater use of renewable energy sources. In fact, in the summer of 2008, the Minister of Energy made trips to Denmark, Germany, Spain and California where he reviewed their approaches to renewable energy, including their use of feed-in tariff programs.54
46.
On September 24, 2009, the Minister of Energy exercised the authority granted to him and directed the OPA, pursuant to sections 25.35 and 25.32 of the Electricity Act, 1998, to "develop a feed-in tariff ("FIT") program […] designed to procure energy from a wide range of renewable energy sources," including wind, solar photovoltaic, bioenergy, and smaller-scale (50 MW or less) waterpower (together, referred to as the "Minister’s Direction").55 The program was publicly announced the same day.56
47.
The Minister’s Direction established the following objectives for the FIT Program:

increase capacity of renewable energy supply to ensure adequate generation and reduce emissions;

introduce a simpler method to procure and develop generating capacity from renewable sources of energy;

enable new green industries through new investment and job creation; and

provide incentives for investment in renewable energy technologies.57

48.
The Minister’s Direction further specified that FIT Contracts would take the form of 20-year PPAs for all renewable fuels except waterpower, which would have 40-year PPAs.58 However, the Minister’s Direction emphasized that, notwithstanding the obtaining of a FIT Contract, projects would still need to obtain regulatory approval. In particular, the Minister’s Direction stated that proponents would be "subject to all laws and regulations of the Province of Ontario and Government of Canada."59 The concurrent press release announcing the FIT Program also noted that while the FIT Program would simplify the OPA’s contracts and pricing for new renewable energy projects, proponents still had to "navigate through the regulatory approvals [that were] necessary".60

B. The FIT Rules

49.
On September 30, 2009, a week after receiving the direction to establish the FIT Program, the OPA released Version 1.1 of the FIT Rules.61 The OPA had consulted the public and other stakeholders extensively during the development of the FIT Rules throughout the summer of 2009.62
50.
The FIT Rules govern all aspects of the FIT Program including eligibility, application requirements, application review and acceptance, connection availability management, the contract form and execution, contract pricing, settlement arrangements, Aboriginal and community projects, program review and amendments, confidentiality, and program launch.63 Pursuant to the FIT Rules, to be eligible to participate in the FIT Program, an applicant had to meet only certain basic project eligibility requirements. In the case of applications for wind power projects, the only substantive requirements were that the applicant’s proposed generating facility had to:

be located in the Province of Ontario;

constitute a renewable generating facility, but not be an Existing Generating Facility at the time of the application (subject to exceptions for incremental projects);

connect to a distribution system, a host facility or the IESO-controlled grid; and

not have or have had a prior contract relating to the proposed facility64

51.
In addition to the foregoing basic eligibility requirements, the FIT Rules also established application requirements for ensuring that a renewable energy project, including a wind project, met the program eligibility conditions. Specifically, applicants had to submit to the OPA:

nona-refundable application fee, based on Contract Capacity, of a maximum of $5,000;65

application security, based on the size of the project, to a maximum of $10,000/MW;66

an authorization letter authorizing the local distribution company and IESO to provide the OPA information relating to the applicant or project;67

connection details regarding the project, including contract capacity, renewable fuel(s), proposed connection point and other information such as name of feeder, transformer station or high-voltage circuit) or an indication that it intended to be enabler requested;68

evidence of site access (land ownership, land lease, option agreement, etc.) or evidence of having applied for site access where the proposed project was on provincial Crown land;69 and

a valid email address for the purposes of correspondence related to the FIT Program.70

52.
If a project met the eligibility requirements, and filed a correct and complete application, then the application would be reviewed by the OPA and ranked in accordance with the relevant criteria specified in the FIT Rules.71 Generally, applications were ranked based on the time that they were received by the OPA. However, at the launch of the FIT Program, all applications were treated as though they were received at the same time, and were given a ranking based on whether they met certain shovel-readiness criteria. Applications were then considered for FIT Contracts in the order of their provincial ranking.72 Whether an application would be offered a FIT Contract depended solely upon whether there was connection capacity at the point that it had specified in its FIT Contract.73 Accordingly, even a low-ranked project could receive an offer of a FIT Contract if there was still capacity at the point on the electricity system where it chose to connect when its application was considered by the OPA. The offer of a FIT Contract was not a guarantee that the project would proceed or that it would be commercially successful.

C. The Standard FIT Contract

53.
Like the FIT Rules, the standard form FIT Contract was also released on September 24, 2009 after having been subject to public and stakeholder consultation process during the summer months.74 The FIT Contract is a standard long-term fixed-price contract that provides standard terms and conditions applicable to all FIT projects, as well as terms and conditions specific to the different types of renewable energy fuels under the FIT Program.75

1. Term and Pricing

54.
As noted above, the Minister’s Direction mandated that PPAs entered into pursuant to the FIT Program would be 20 years in length for projects other than water power projects, which would receive a 40-year term.76 The FIT Rules require the pricing of FIT Contracts to be set in accordance with the price schedule in force at the time of the Offer Notice.77 The FIT Program was initially developed to offer prices with a reasonable rate of return for renewable energy.78 For example, in 2009, when the FIT Program was launched, the specified price was 13.5 cents/kWh for onshore wind facilities, 19.0 cents/kWh for offshore wind facilities, and between 44.3 cents and 80.2 cents/kWh for solar projects.79

2. The Milestone Date for Commercial Operation

55.
FIT Contract holders (also known as "Suppliers") are required to bring their project into Commercial Operation by the "Milestone Date for Commercial Operation" ("MCOD") applicable under Exhibit A of their FIT Contract.80 When entering into a FIT Contract with the OPA, a Supplier expressly acknowledges that "time is of the essence to the OPA with respect to obtaining Commercial Operation […] by the [MCOD] set out in Exhibit A"81 and commits to bring its project into timely Commercial Operation by the MCOD. A project is deemed to have achieved Commercial Operation when the FIT Contract holder meets all the requirements as outlined in section 2.6 of the FIT Contract, including receiving a Notice to Proceed ("NTP") from the OPA.82
56.
The MCOD is defined in terms of a period of time following the Contract Date, which is the date on which the FIT Contract was awarded, as set out on the contract cover page.83 Time frames for achieving Commercial Operation vary depending on the renewable fuel type.84 The MCOD time periods set at the launch of the FIT Program were three years for an onshore wind facility, three years for a solar project, four years for an offshore wind facility, and five years for a waterpower facility.85

3. Force Majeure

57.
The FIT Contract allows Suppliers who encounter difficulty in meeting their obligations under the FIT Contract, including achieving their MCOD due to factors outside their control, to invoke Force Majeure. Section 10.1 of the FIT Contract, which contains the provisions on Force Majeure, provides that if an event of Force Majeure prevents the Supplier from meeting an obligation, including achieving Commercial Operation by the MCOD, the Supplier will be excused and relieved from performing or complying with such obligation during the period in which the Supplier is in Force Majeure status.86
58.
So long as the OPA is notified in a timely fashion that the Supplier is invoking Force Majeure and the Supplier provides the full particulars of the event of Force Majeure as required by Section 10.1 of the FIT Contract, Force Majeure is deemed to have been invoked with effect from the commencement of the event or circumstances constituting the Force Majeure (the "Force Majeure event").87 If the Force Majeure event prevents the Supplier from achieving Commercial Operation by its MCOD, the FIT Contract requires that the OPA extend the MCOD for the reasonable period of delay directly resulting from the Force Majeure event.88

4. The OPA’s Termination Rights

(a) Supplier Default Termination

59.
The Supplier accepts the risks of being unable to meet the MCOD specified in its FIT Contract. The Term of the FIT Contract expires on the day before the twentieth anniversary of the earlier of the MCOD and actual Commercial Operation date.89 Thus, if a Supplier is unable to meet its MCOD, then it may not be able to capitalize on the full value of the FIT Contract, unless the OPA extends the Term,90 or the Supplier does by making payment to the OPA at a rate and within the timeframe specified in the FIT Contract.91
60.
More importantly, however, under the FIT Contract, if more than 18 months have passed since the MCOD ("the Default Date"), it is considered a Supplier Event of Default unless the project is in Force Majeure status.92 After the Default Date, the OPA may unilaterally terminate the FIT Contract without penalty, set-off amounts owed by the Supplier against outstanding monies owed by the OPA, or draw on all, or a portion of, the Completion and Performance Security.93

(b) Force Majeure Termination

61.
Pursuant to Section 10.1(g), both the OPA and the Supplier have the right to unilaterally terminate a FIT Contract if one or more events of Force Majeure delay Commercial Operation for an aggregate of more than 24 months past the original MCOD. Similarly, under Section 10.1(h), both parties have the right to unilaterally terminate the FIT Contract if one or more events of Force Majeure prevent the Supplier from complying with obligations (aside from payment obligations and the obligation to achieve MCOD) for more than an aggregate of 36 months in any 60 month period during the Term of the FIT Contract.
62.
In both cases, where either party exercises its Force Majeure termination rights, the Supplier is entitled to the return of its security.94

(c) Pre-Notice to Proceed Termination

63.
One of the main requirements for a Contract Facility to be deemed to have achieved Commercial Operation under Section 2.6(a) of the FIT Contract is for the OPA to have issued a NTP under Section 2.4 of the FIT Contract. To obtain a NTP, a Supplier has to demonstrate that it fulfilled all NTP Pre-requisites, including documentation of a completed REA (or any other equivalent environmental and site plan approvals, as applicable), a Financing Plan including signed commitment letters for at least 50 per cent of expected development costs and agreement in principle to fund the entire development costs, a Domestic Content Plan, and documentation of application for and completion of all applicable Impact Assessments.95
64.
Until the OPA issues a NTP and the Supplier pays Incremental NTP Security, pursuant to Section 2.4(a), both the OPA and the Supplier have the right to terminate the agreement in their sole and absolute discretion.96 The OPA’s and Supplier’s mutual rights of termination under Section 2.4(a) are described as "pre-NTP termination rights".
65.
If the OPA exercises its termination right under Section 2.4(a), the Supplier is entitled to request return of all Completion and Performance Security and the OPA must refund it within 20 business days.97 In addition, the OPA would be liable to the Supplier for its Pre-Construction Development Costs incurred prior to the Termination Date, subject to an upper limit specified in Exhibit A.98 In the case of an offshore wind project, the OPA’s liability is capped at $500,000 plus $2 per kW of the total capacity under the FIT Contract.99 Before the OPA issues a NTP, the OPA is not liable for any costs the Supplier incurred beyond the liability cap.100
66.
If the Supplier exercises its termination right under Section 2.4(a), the Supplier is liable to the OPA for payment of liquidated damages equivalent to the amount of the Completion and Performance Security, and would forfeit its security.101
67.
On August 2, 2011, the Minister of Energy directed the OPA to offer all Suppliers under the FIT Program the opportunity to obtain a waiver of the OPA’s pre-NTP termination rights under Section 2.4(a) of the FIT Contract.102 The purpose of offering this waiver to all Suppliers was to support manufacturing supply chain development.103 The Claimant accepted this offer and the OPA’s pre-NTP termination rights in the FIT Contract with the Claimant were waived on August 29, 2011.104

5. Domestic Content

68.
FIT Contract holders must construct their projects in accordance with a Minimum Required Domestic Content Level, which varies based on the type of renewable energy.105 The requirements are specified in the FIT Rules, expressed as a percentage of a project’s components that must be domestically sourced and is calculated following the Commercial Operation Date.106
69.
The FIT Contract enumerates the criteria for meeting the domestic content requirements.107 It specifies "designated activities" for which a qualifying percentage is applied if that activity has been completed using domestic resources. The cumulative total of the qualifying percentages allocated to the contract facility must be equal to, or greater than, the minimum required Domestic Content Level.108

D. The Steps Remaining in the Development of FIT Projects Following FIT Contract Award

70.
Obtaining a FIT Contract does not guarantee or make it any more likely that a project will be permitted to proceed to development, or that it will reach Commercial Operation.109 Numerous regulatory approvals, permits and licenses are required prior to the commencement of construction on any project. These include provincial approvals or permits (such as a REA, in the case of a wind project) as well as federal approvals and permits, various technical impact assessments, the approval of completed financing plan, and the approval of a completed Domestic Content Plan.110 Thereafter, as part of the requirements for Commercial Operation, the Supplier must submit a Supplier’s certificate regarding Commercial Operation,111 an independent engineers certificate regarding Commercial Operation,112 a Metering Plan (or relevant metering information), and an as-built single line electrical drawing. A Workplace Safety and Insurance Act clearance certificate, an Ontario Energy Board ("OEB") Generator Licence, and connection confirmation from the local distribution company are also required.113 Some of these approvals are significant hurdles for FIT Contract holders. In fact, over half of all projects with FIT Contracts have yet to obtain NTP.114

III. The Provincial Approval and Permitting of Renewable Energy Projects in Ontario

A. The Renewable Energy Approval (REA) Process

71.
Prior to the enactment of the GEGEA, the approval process for a renewable energy project included a patchwork of environmental approvals processes under the Environmental Protection Act115 ("EPA"), environmental assessments under the Environmental Assessment Act,116 and local land use planning process under the Planning Act.117By adding Part V.0.1 to the EPA118 and making related legislative amendments, the GEGEA consolidated the majority of these processes into one streamlined process, and made MOE the primary regulator of renewable energy projects in Ontario.119 MOE was mandated to ensure the purpose of Part V.0.1 of the EPA, which is the protection and conservation of the environment.120
72.
Pursuant to new subsection 47.3(1) of the EPA, a proponent is prohibited from constructing or operating certain renewable energy facilities, including most onshore and offshore wind facilities, "except under the authority of and in accordance with a renewable energy approval issued by the Director" through MOE.121
73.
However, the amended EPA did not specify what form the application for a renewable energy approval should take, what its contents should be, or how it should be assessed by regulators. The details of the REA process including its application requirements were to be set out in the regulations made under the EPA.122 Indeed, the EPA provides the authority to make regulations governing the preparation and submission of REA applications, REA application eligibility requirements, and the rules, standards, and requirements applicable to renewable energy projects (from planning to construction, operation, and decommissioning or closure).123
74.
In contrast with the iterative, proponent-driven EA process, the REA process was designed to be prescriptive. The regulator would decide in advance what criteria proponents had to fulfil. It would communicate those requirements through "clear, up-front provincial rules",124 and evaluate a proponent’s application against the standards specified in those rules.125
75.
To allow time to develop these regulations, the GEGEA provided that the REA-related amendments would not come into force until a date to later be proclaimed.126 Following the enactment of the GEGEA, MOE, led by the Manager of Renewable Energy, Dr. Marcia Wallace, was responsible for leading the development of the implementing regulations.127

1. The Development and Establishment of the REA Regulation

76.
On June 9, 2009, MOE posted a proposal for public comment on Ontario’s Environmental Registry (the "REA Regulation Proposal Notice"),128 including a document outlining in detail the proposed regulatory requirements for the REA Regulation (the "Proposed REA Regulation Content").129 On September 24, 2009, after the required comment period closed, the government adopted the regulation, Renewable Energy Approvals under Part V.0.1 of the Act, O. Reg. 359/09130 (the "REA Regulation"), and Part V.0.1 of the EPA came into force.131 The same day, MOE posted a decision notice on the Environmental Registry in respect of the regulation (the "REA Regulation Decision Notice").132 The REA Regulation Decision Notice informed the public of the establishment of the REA Regulation, summarized its main requirements, and also summarized the results of the public consultation and how the public consultation was taken into account in the development of the regulation.
77.
According to the press backgrounder released by MEI on September 24, 2009, the REA Regulation was "designed to ensure that renewable energy projects are developed in a way that is protective of human health, the environment, and Ontario’s cultural and natural heritage."133 It represented a new approach to regulating renewable energy generation facilities that "integrate[d] provincial review of the environmental issues and concerns that were previously addressed through the local land use planning process (e.g. zoning or site planning), the environmental assessment process and the environmental approvals process (e.g. Certificates of Approval, Permits to Take Water)."134

2. The Approvals Process under the REA Regulation

78.
The following diagram summarizes the overall REA process. The various steps reflected in this diagram are discussed at length below.

Figure 1: Overview of the principal elements of the REA application process.135

(a) REA Requirements

79.
The REA Regulationprescribes technology-specific requirements for different types of renewable energy generation facilities depending on the renewable energy source that the facility uses to generate electricity.136 The REA Regulation further divides most of the types of renewable energy generation facilities into classes and applies customized requirements to each class.137 There are five classes of wind facilities-four for onshore (Classes 1-4) and one for offshore (Class 5).138 If one or more parts of a wind turbine are located in direct contact with surface water other than a wetland, the facility falls into Class 5 (offshore).139 In addition to certain technology-specific requirements applicants for Class 5 facilities must submit with their REA application an offshore wind facility report. As Dr. Wallace explains, the requirements for the report were intentionally left "broad, non-specific and descriptive" because MOE "had not yet established prescriptive technology-specific rules and requirements by the time the REA Regulation was adopted."140 The offshore wind facility report served as a "placeholder" for the technology-specific requirements for offshore wind that MOE would develop over time based on research and consultation, and adopt through regulatory amendments, policies and guidelines.141

(b) REA Exemptions

80.
The REA Regulation exempts certain classes of renewable energy projects from having to obtain a REA. For example, Class 1 wind facilities, which have minimal capacity of less than 3 kW (enough to power a home dishwasher and refrigerator) are exempted.142 In addition, while Class 2 wind facilities, known as "small-scale wind" due to their lower capacity of less than 50 kW (enough to support less than 40 households or supplement a small Commercial Operation), must obtain a REA, they are subject to less onerous requirements than onshore wind facilities with higher capacity (Classes 3 and 4).143
81.
The REA process also does not apply to waterpower projects. As explained by Dr. Wallace, the REA Regulation specifically exempts all waterpower facilities from the requirement to obtain a REA, and waterpower projects remain subject to the EA and environmental approvals processes that applied before the coming into force of the GEGEA.144 Waterpower projects were excluded from the REA requirement due to their unique engineering and site-specific design, and because they were already regulated through a streamlined approval system through the Class EA for Waterpower Projects put in place just prior to the establishment of the REA Regulation.145 Establishing the Class EA for Waterpower Projects had taken approximately three years and involved extensive consultation and approval by Cabinet.146 Additionally, the provincial Class EA was coordinated with the federal EA process pursuant to a federal-provincial agreement,147 and subjecting waterpower projects to the REA process would have negated the benefits of this coordinated approach.148

(c) Pre-Submission Activities

(i) Pre-Submission Consultation Meeting and the Draft Project Description Report

82.
The process of obtaining a REA typically begins with a pre-submission consultation meeting with the Environmental Approvals Access and Service Integration Branch ("EAASIB") of MOE.149 The pre-submission consultation meeting is recommended, but not mandatory.150 Regardless of whether the proponent schedules this pre-submission consultation, it must submit to MOE a draft project description report ("PDR") and request from MOE a list of Aboriginal communities with which the proponent must consult (the "Aboriginal consultation list").151
83.
The PDR is the central summary document in the REA application process, and is critical to MOE review and public consultation.152 It includes a brief description of the renewable energy project and all negative environmental effects that may result from it.153 Submission of the draft PDR is the first prescribed step in the REA application process, and is required to provide MOE with all the necessary details about facility components and proposed activities (i.e. construction, operation, decommissioning).154 One of the key elements defined in the draft PDR is the project location, which is needed in order to proceed with the required assessments.155
84.
The Claimant never requested a pre-submission consultation meeting from the EAASIB.156 It met with MOE representatives on multiple occasions beginning on April 19, 2010, but this was to discuss Ontario’s policy on offshore wind in general, as opposed to discussing the Claimant’s specific Project.157 Nor did the Claimant ever submit a draft PDR or request an Aboriginal consultation list.158 As such, it never initiated the process of applying for a REA.
85.
The Claimant’s approach to advancing its project contrasts with that of other proponents of offshore wind projects, such as Trillium Wind Power Corporation ("Trillium"), which did not apply for a FIT Contract, and SouthPoint Wind, which applied for three FIT Contracts.159 By the spring of 2010, both had initiated the REA process with MOE by submitting a draft PDR.160 In addition, Trillium had requested an Aboriginal consultation list.161
86.
The pre-submission requirements to the REA application process include consulting with Aboriginal communities, municipalities and the public about the project, conducting the prescribed studies and assessments, obtaining comments and confirmations necessary from MTC and MNR on heritage and natural heritage requirements, and preparing the technical reports prescribed in Table 1 of the REA Regulation.
87.
Table 1 of the REA Regulation sets out five "core reports" that must be submitted as part of a REA application: (1) a PDR, (2) a consultation report, (3) a construction plan report, (4) a design and operations report and (5) a decommissioning report.162 Proponents must also provide the documentation submitted to MNR and MTC, along with any comments received. In addition, Table 1 specifies the reports required for specific types of renewable energy facilities. In the case of an offshore wind facility, this includes an offshore wind facility report.163

(ii) The REA’s Consultation Requirements

88.
The REA Regulation requires applicants to consult with Aboriginal communities, municipalities and the general public.164 The requirements exist to ensure that stakeholders are notified about projects and provided an opportunity to give feedback and information to the applicant.165 Consultation is a critical component of the REA process, and an application will not be deemed complete until the applicant has met or exceeded all consultation requirements.166
89.
MOE must and does take Aboriginal consultation requirements very seriously, due to the Crown’s constitutional duty to consult.167 While the Crown is ultimately responsible for ensuring that the duty has been met, it has delegated certain procedural aspects of consultation to REA applicants through the EPA and REA Regulation.168
90.
Aboriginal consultation begins when the proponent requests an Aboriginal consultation list from MOE. This list identifies Aboriginal communities that the proponent must consult because they have constitutionally protected Aboriginal or treaty rights, or because they may be adversely affected by the project or may be interested in any negative environmental effects of the project.169 MOE develops this list in collaboration with other ministries of the Government of Ontario, based on the proponent’s draft PDR.170
91.
Aboriginal consultation prescribed in the REA regulation involves providing communities on the Aboriginal consultation list with initial notice of the project, a draft PDR at least 30 days in advance of the first public meeting, and information on potential adverse impacts that the project may have on constitutionally protected Aboriginal or treaty rights. It also requires seeking and incorporating comments on most draft REA application documents, and providing drafts of most of the REA application documents at least 60 days in advance of the final public meeting.171 In addition, the REA Regulation gives the Director the discretion to require additional Aboriginal consultations where the proposed project has the potential to have a significant adverse impact on the exercise of Aboriginal rights.172 This would likely include applications for "large scale wind facilities that are expected to have significant environmental impacts, and are proposed to be located on Crown land where one or more Aboriginal communities are known to exercise an Aboriginal or treaty right."173
92.
In addition to Aboriginal communities, a REA applicant must consult the public in general.174 The overall public consultation process usually begins when the applicant publishes in a local newspaper a Notice of Proposal to Engage in a Project, which includes a brief description of the project proposal including a map of the project location as well as contact information of the applicant.175 The proponent must also hold at least two public meetings, giving at least 30 days’ notice before the first public meeting and 60 days’ notice before the last public meeting.176
93.
REA applicants must also consult with the municipalities and local authorities of the area in which the proposed project is situated.177 Municipal consultation involves providing initial notice of the project, providing a draft PDR and municipal consultation form at least 30 days in advance of the first public meeting, and providing drafts of most of the REA application documents at least 90 days in advance of the final public meeting.178
94.
Once it has completed the consultation requirements, the proponent must prepare a consultation report to include in its REA application. The report provides a record of comments and information received through the consultation process, and how they were considered, including whether the project was modified as a result.179 It allows MOE to determine if the proponent has met the consultation requirements for a complete application.
95.
The following diagram summarizes the consultation requirements of the REA process:

Figure 2: Overview of consultation requirements in the REA application.180

(iii) The REA’s Cultural Heritage and Natural Heritage Requirements

96.
In preparing a REA application, proponents must determine and address the potential negative effects of the project on cultural heritage resources and natural heritage resources at and near the project site. Ontario’s cultural heritage resources include archaeological resources, built heritage resources and cultural heritage landscapes.181 A REA applicant must conduct both an archaeology assessment and a heritage assessment unless it determines that there is low potential for archaeological resources and heritage resources at the project location.182
97.
Archaeological resources are defined as archaeological sites or marine archaeological sites.183 An archaeological site is "any property that contains an artifact or any other physical evidence of past human use or activity that is of cultural heritage value or interest".184 A marine archaeological site is "an archaeological site that is fully or partially submerged or that lies below or partially below the high-water mark of any body of water".185
98.
The archaeology assessment must be undertaken by a consultant archaeologist licensed by MTC.186 This consultant archaeologist must also prepare an archaeological assessment report, which the applicant is required to submit for review by MTC.187 The applicant must also submit this report and any comments received from MTC with its REA application to MOE.188
99.
Heritage resources are defined as "real property that is of cultural heritage value or interest", including buildings, structures, and landscapes.189 If the site has potential for the presence of a heritage resource, the presence or absence of a heritage resource must be confirmed by applying the regulatory criteria for determining cultural heritage value or interest.190
100.
If the presence of a heritage resource is confirmed, the heritage assessment must evaluate the impact of engaging in the renewable energy project on heritage resources and provide recommendations for measures to avoid, eliminate or mitigate that impact.191 The applicant must then submit its heritage assessment report for review by MTC, and include the report and comments received from MTC in its REA application to MOE.192
101.
The REA Regulation protects natural heritage features including areas of natural and scientific interest, wetlands, woodlands, wildlife habitat, sand barrens, savannah, tallgrass prairies and alvars.193 All REA applicants must conduct a natural heritage assessment, consisting of a records review and site investigation to identify such natural features in the vicinity of the project location, and an evaluation of the significance of each natural feature identified.194 The applicant must submit a natural heritage assessment report to MNR.195 REA applicants for Class 3, 4 and 5 wind facilities must also submit to MNR an environmental effects monitoring plan in respect of birds and bats in accordance with the applicable MNR guidelines.196
102.
The applicant must obtain written confirmation from MNR that its natural heritage assessment was conducted in accordance with MNR’s Natural Heritage Assessment Guide.197 It must include that confirmation letter and any comments received from MNR on its environmental effects monitoring plan in its REA application package.198

(iv) The REA’s Water Assessment Requirement

103.
All renewable energy projects except Class 2 wind facilities are required to conduct a water assessment in respect of water bodies, consisting of a records review and site investigation, and submit a water assessment report with the REA application to MOE.199

(d) Submission and Review of REA Applications

104.
When a proponent has fulfilled all of the pre-submission requirements, it may submit the complete application to MOE for screening.200 The EAASIB reviews the application to ensure it is complete, focusing only on whether the regulatory requirements for a complete application have been met, and not on the sufficiency of the substantive content of the application.201 The EAASIB may deem it complete or return it to the proponent if it is missing information.202
105.
An application that has been deemed complete proceeds to technical review by a team of inter-ministerial technical experts led by MOE’s Environmental Approvals Branch ("EAB").203 It reviews the application substantively to determine whether it meets the regulatory requirements and whether or not there is adequate information to allow the Director to make a decision in the public interest to issue or not issue a REA.204 MOE has a six-month service standard for reviewing REA applications, but as Ms. Doris Dumais, MOE’s Director, Modernization of Approvals and former Director of the Approvals Program, explains "while MOE makes best efforts to complete the technical review in six months, this timeframe is a target only" and there is no guarantee or "legal requirement for the target to be met.205 In some cases, the review of Class 3 and 4 onshore projects has taken as long as 13 months.206 Since there would be a "steep learning curve" with the first review of a REA for an offshore wind facility, it would likely take "more than a year".207

(e) Decisions on REA Applications

106.
At the end of the technical review, the Director decides whether to issue or refuse to issue a REA to the applicant. Under the authority of the EPA, the Director makes an independent and discretionary determination of whether or not it is in the public interest to issue a REA. The EPA and the REA Regulation do not define the term "public interest". However, it is clear that the public interest is not limited to the two considerations cited by the Claimant: serious harm to human health or serious and irreversible harm to the natural environment.208 These are merely the grounds upon which the Environmental Review Tribunal ("the ERT") may set aside a Director’s decision if it has been appealed by a member of the public.209
107.
In contrast to the limited mandate of the ERT, the Director’s determination of what is in the public interest is based on many considerations. In particular, it will necessarily be informed by the purpose of Part V.0.1 of the EPA on renewable energy, which is the protection and conservation of the environment, including not only the natural environment, but also human life and the social, economic and cultural conditions that influence the community and human life.210 A decision in the public interest will also necessarily be informed by MOE’s Statement of Environmental Values, which recognizes the need to use a precautionary, science-based approach in decision-making to protect human health and the environment.211
108.
An MOE Director may issue or refuse to issue a REA.212 Even if the applicant does obtain a REA, it will be subject to multiple binding conditions including those related to timelines for starting construction, revising decommissioning plans, implementing procedures for recording complaints about adverse effects from the facility, and/or building the facility according to plans in the application documents, among others.213

(f) Appeals of Decisions on REA Applications

109.
A Director’s decision on a REA application is subject to appeal to the ERT by the applicant and by any resident of Ontario.214 The decision of the ERT which hears the appeal is then subject to an appeal to the Ontario Divisional Court on a question of law and to the Minister of the Environment on any matter other than a question of law.215 In total, there have been 33 appeals from the 47 REAs issued for Class 3 and 4 (0.05 MW capacity and greater) onshore wind facilities, representing a 70 per cent appeal rate.216

3. The REA Regulation and Offshore Wind Projects

(a) Ontario’s Lack of Experience with and Precautionary Approach to Offshore Wind Projects

110.
Prior to enacting the GEGEA, Ontario had nearly 15 years of experience assessing the impacts of and regulating onshore wind facilities.217 According to the Canadian Wind Energy Association ("CanWEA"), 25 onshore wind facilities were operational in Ontario by the end of 2009, with an aggregate capacity of 1,168.3 MW and an average capacity of 46.7 MW.218
111.
However, Ontario had no equivalent experience in regulating large-scale offshore wind facilities. In conjunction with this lack of regulatory experience, the Government of Ontario had several concerns, including how Great Lakes wind development might conflict with existing commercial and recreational uses.219 There was also uncertainty around whether existing provincial infrastructure was sufficient to support offshore wind development, and around the impact of offshore wind development on large freshwater lakes in terms of coastal impacts, sediment movement and ice build-up, as well as public concern about projects near populated shorelines.220 Another area MOE was particularly concerned about was noise emissions, from construction of onshore components and onshore assembly of wind turbines, from installation and decommissioning, as well as from operation.221 MOE’s particular concern was that "[o]n-shore wind setbacks are not sufficient as sound carries over water differently".222
112.
As a result, Ontario would proceed cautiously with respect to offshore wind development. In November 2006, MNR decided to defer consideration of Crown land applications from offshore wind projects.223 While the Minister of Natural Resources, Donna Cansfield, announced that she was lifting the deferral in January 2008,224 this decision only "open[ed] the door to exploring the development of Ontario’s vast offshore wind energy potential."225 It did not imply that any such applications would be granted site access or that the Government of Ontario had fully developed the regulatory processes for assessing offshore wind projects. As a result, project proponents remained cautious. Not wanting to assume the risk of completing any work prior to the lifting of the deferral, proponents chose to direct funds to the development of their other projects.226
113.
In October 2009, just a few weeks after the launch of the FIT Program, Minister Cansfield acknowledged the continued existence of regulatory uncertainty with respect to offshore wind projects, stating that MNR’s research had "made it clear that developing offshore wind potential would be practical and environmentally sound once the appropriate infrastructure is in place."227 Minister Cansfield’s statement referred not only to physical infrastructure, but to regulatory infrastructure, including Crown land site release policies.
114.
When it was developing the REA Regulation in 2009, MOE had considered exempting offshore wind facilities from the requirement to obtain a REA, as it did for waterpower facilities.228 As described above, instead of a REA, waterpower facilities must undertake an EA pursuant to the Class EA for waterpower projects under the Environmental Assessment Act.229However, while offshore wind facilities, like waterpower projects, were considered complex, there was no equivalent class EA already in place for offshore wind facilities, and no federal-provincial understanding about harmonization of the EA process for offshore wind facilities.230 As a result, the Government of Ontario decided to include offshore wind facilities under the REA Regulation.
115.
However, as explained by Dr. Wallace, the REA Regulation adopted in 2009 did not include the necessary technology-specific rules and requirements for offshore wind facilities, as it did for other classes of renewable energy facilities.231 In this regard, it is important to note that MNR’s Approval and Permitting Requirements Document for Renewable Energy Projects ("APRD")232 provides only minimal elaboration on the requirements for the offshore wind facility report and only for issues within the mandate of MNR.233 In particular, the APRD requires the offshore facility report to include additional information, including the location of shipping channels and commercial fisheries zones, the proposed location of submarine cables and connection to on-shore transmission, the location of existing dispositions of the lake bed, and the location of offshore oil and gas licenses, leases, wells and works.234 In addition, the APRD specifies that the records review as part of the natural heritage assessment for an offshore wind project needs to include information on fish and fish habitat, fish populations and fisheries, rare vegetation communities as defined by MNR’s Natural Heritage Information Centre, species and habitat protected under the Endangered Species Act, 2007235 ("Endangered Species Act") wildlife species and their habitat, and hazard lands.236 Finally, the APRD specifies that applicants are also required to undertake a coastal engineering study to address the potential effect of the proposed project on natural erosion and accretion, and to establish baseline information for MNR.237
116.
The APRD requirements relate primarily to the natural heritage component of the REA Regulation. They do not address the other aspects necessitating standardized rules and requirements. For example, in contrast to onshore wind facilities, there were no comparable noise-based rules specified in respect of wind turbines placed in waterbodies, nor were there safety-based setbacks prescribed from water-based transportation corridors (e.g. shipping lanes).238
117.
As Dr. Wallace confirms, MOE clearly communicated the underdeveloped state of the regulatory framework for offshore wind to interested stakeholders, including industry and the general public, through EBR postings on the Environmental Registry, both before and after the adoption of the REA Regulation.239 These EBR postings spanned from June 2009 to June 2010, and included the following:

June 9, 2009 REA Regulation Proposal Notice: The posting cautioned that the proposed regulation did not include the to-be-developed regulatory requirements specific to offshore, stating that "[t]he Ministry of the Environment and Ministry of Natural Resources are working together to develop future setbacks related to offshore wind energy facilities that will address natural heritage, coastal impacts, and noise emissions."240 It also stated that the future regulatory requirements would include noise requirements, and proposed that proponents would have to "submit a noise study that would take into account the unique noise conditions created by off-shore development."241

September 24, 2009 REA Regulation Decision Notice: This posting explicitly stated that "special rules" would apply to offshore wind projects and that "[t]he Ministry of the Environment and the Ministry of Natural Resources continue to work on a coordinated approach to off-shore wind facilities which would include province-wide minimum separation distance standards for noise."242

March 1, 2010 Technical Bulletins Policy Proposal Notice: This posting proposed draft technical bulletins that MOE had developed as potential guidance documents intended to assist proponents of renewable energy projects in interpreting the requirements of the REA Regulationand in preparing reports for their REA submission. It attached six draft technical bulletins, including one for wind turbine setbacks ("Draft Technical Bulletin Six").243 Draft Technical Bulletin Six noted that the REA Regulation did not yet specify minimum noise, property, or road setback distances for offshore wind turbines, but stated that setbacks would nonetheless play a significant role in the assessment under the offshore wind facility report.244

June 25, 2010 Offshore Wind Policy Proposal Notice: As described below, this posting contained MOE’s proposal for developing the regulatory framework for offshore wind and advised of a second posting that would be made for phase 2 of MNR’s Crown Land Renewable Energy Policy Review. In this posting, MOE acknowledged the need "to provide greater certainty and clarity on off-shore wind requirements."245 It also included a discussion paper which acknowledged the need to "introduce greater clarity" about Ontario’s offshore wind policy, and to more fully develop the approach and offshore wind specific-requirements, through future regulatory amendments, EBR postings and guidance documents.

(b) MOE’s Offshore Wind Policy Proposal Notice, June 25, 2010

118.
As a result of its initial work and in consideration of the work that remained to be done on developing the regulatory framework for offshore wind, on June 25, 2010, MOE posted a policy proposal on the Environmental Registry outlining its proposed approach to regulating offshore wind facilities under the REA Regulation.246 The proposal was entitled "Renewable Energy Approval Requirements for Off-shore Wind Facilities - An Overview of the Proposed Approach" (the "Offshore Wind Policy Proposal Notice"). A discussion paper outlined the proposed approach in greater detail (the "Offshore Wind Requirements Discussion Paper").247
119.
The Offshore Wind Policy Proposal Notice explained that development of the regulatory framework for offshore wind facilities was ongoing, and that the EBR posting was one part in the early stages of an overall policy development process to resolve the regulatory uncertainty around the requirements for offshore wind facilities under the REA Regulation:

Partner ministries are working together to provide greater certainty and clarity on off-shore wind requirements. The Ontario government is proposing an approach and is seeking input from interested members of the public, early in the process, to inform the work that will be completed to finalize the approach and the off-shore wind specific requirements under the REA regulation. This approach will also be supplemented by the outcome of research underway by the Ministry of the Environment, Ministry of Natural Resources (MNR), and Ministry of Tourism and Culture and will be the subject of subsequent Environmental Registry postings that will outline requirements for off-shore wind development as proposed amendments to O. Reg. 359/09 and the REA process.248

120.
The Offshore Wind Policy Proposal Notice also stated that MNR had completed Phase 1 of its Crown Land Renewable Energy Policy Review, and would soon post Phase 2 on the Environmental Registry, including "consideration of where, when and how the Government makes Crown land available for off-shore wind projects."249
121.
The Offshore Wind Requirements Discussion Paper discussed and solicited input from interested stakeholders, including industry and the general public, on a proposed five kilometre shoreline exclusion zone for offshore wind projects. MOE proposed the five kilometre exclusion zone in light of its commitment to protect water bodies, including the Great Lakes, and to ensure that Ontarians enjoy safe drinking water, beaches, food and fish, and natural and cultural heritage.250
122.
The Offshore Wind Requirements Discussion Paper also discussed "various considerations relevant to offshore wind projects and the protection of human health and the environment, including the province’s natural and cultural heritage."251 Through the discussion paper, MOE sought to bring stakeholders greater clarity about Ontario’s direction for the regulatory framework for offshore wind. However, like the posting on the Environmental Registry, it also reiterated that MOE was still at the beginning of a policy development process which would ultimately result in changes to the REA process, and future guidance documents and regulatory amendments to be proposed in later Environmental Registry postings, taking into account the public comments received in the first posting.252 It anticipated that the future offshore-specific guidance documents would include Cultural Heritage Guidance for Offshore Renewable Energy Projects from MTC, Offshore Wind Noise Guidelines from MOE, and Coastal Engineering Study Guidance from MNR.253
123.
The public consultation period for the Offshore Wind Policy Proposal Notice was originally open for 60 days until August 23, 2010, but due to significant public interest in the notice, MOE extended the consultation period by an extra fourteen days until September 7, 2010.254 During the 74-day consultation period, MOE received an unprecedented total of 1,403 comments, including comments from individual members of the public, community-based associations, environmental non-governmental organizations, municipalities, energy-proponents and Aboriginal communities.255 This level far surpassed the number of comments MOE received when it had consulted on proposed amendments to the REA Regulation in 2011 and 2012, and was even more than MOE received when it consulted on its proposal for the REA Regulation in 2009.256
124.
Over 65 per cent of respondents opposed offshore wind development,257 and a majority of respondents expressed concern either that the proposed five kilometre exclusion zone may not be far enough from the shoreline, or that there were significant areas of scientific uncertainty resulting in the need for further study. Specific considerations for further study included measures to protect drinking water, transportation and navigation, and potential effects on fish and wildlife and shoreline ecosystems.258 When the newly appointed Environment Minister, John Wilkinson, became aware of these concerns, he determined that it was particularly important that the regulatory framework be firmly supported by sound science and the precautionary principle.259

(c) MOE’s Jurisdictional Review and Relevant Great Lakes Considerations

125.
While it was consulting on the five kilometre shoreline exclusion zone, MOE also conducted a review of approaches to setbacks in the Great Lakes Region.260 According to this review, Ohio and Michigan were also considering proposed setbacks of 5.5 km to nine km.261
126.
MOE’s review of regulations and policies in other jurisdictions confirms that uncertainty in the regulation of offshore wind development is not unique to Ontario. This is also supported by documents prepared in 2010 and 2011 by the International Joint Commission ("IJC") and a more recent report commissioned by the U.S. Department of Energy ("DOE") from Navigant Consulting Inc. (the "Navigant Report").262 Both reports indicate that Ontario is not unique in its view that the state of the science must be advanced before offshore wind development can responsibly be permitted in the Great Lakes.
127.
The IJC is an international organization created by the Canada-U.S. Boundary Waters Treaty,263 which prevents and resolves boundary waters disputes between the U.S. and Canada and pursues the common good of both countries as an independent and objective advisor to the two governments.264 In particular, the IJC "rules upon applications for approval of projects affecting boundary or transboundary waters and may regulate the operation of these projects; it assists the two countries in the protection of the transboundary environment, including the implementation of the Great Lakes Water Quality Agreement ("GLWQA")265 and the improvement of transboundary air quality; and it alerts the governments to emerging issues along the boundary that may give rise to bilateral disputes."266
128.
In September, 2010, the Co-Chairs of the Council of Great Lakes Research Managers (the IJC’s principal advisor on research programs and research needs), wrote to the IJC Commissioners regarding Great Lakes research related to offshore renewable energy development projects (including wind projects), urging the Commission to "open a dialog with the [U.S. and Canadian] governments to stimulate more foundational research, coordination, and planning on offshore renewable energy development as it applies to the waters of the Great Lakes."267 The Council noted that existing regulatory schemes were "disparate", creating "an atmosphere of disarray and uncertainty", which could result in jurisdiction shopping by offshore wind project proponents searching for the weakest regulations.268 This concern led the Council to emphasize the critical importance of consistent, informed, research-based decision making to address the environmental impacts of wind farms based on sound science.269
129.
The IJC replied on February 14, 2011, stating its appreciation of the Council’s advice and recommendations on "the need for a harmonized approach to offshore renewable energy development across the Great Lakes and the development of support for consistent, informed, research-based decision making", and its particular interest in offshore wind energy.270 The IJC further requested the Council to prepare a report on the state of knowledge concerning potential environmental effects that offshore wind energy may pose on the Great Lakes and identifying a list of prioritized research needs.271
130.
Since the GLWC was already preparing a similar report on the state of the science of offshore wind, the Council decided it would provide comments for incorporation in that report rather than drafting an independent report.272 The GLWC is a multi-sector and inter-disciplinary coalition of wind energy stakeholders working to facilitate the sustainable development of wind power in the Great Lakes region affiliated with the Great Lakes Commission, a U.S. interstate agency in which the Canadian provinces of Ontario and Quebec participate as associate members.273
131.
The GLWC finalized and published its report in November 2011 (the "GLWC Report"), concluding as follows:

The body of scientific literature about ecological impacts of wind energy is still relatively young. Great Lakes region-specific research, particularly as it relates to offshore wind, is notably lacking. Additional research and studies are needed to direct how wind projects are planned, sited and operated in the region. Answers are needed to questions such as: What are acceptable levels of take for a species? What are appropriate buffers from important ecological areas? How is "ecologically‐defensible" determined?

The research needed to answer these questions will likely take years and possibly decades.274

132.
In relation to aquatic resources in particular, the report found it "difficult to address knowledge gaps related to Great Lakes offshore wind power at the present time" given the absence of any existing projects to study in the region.275 Further, the report questioned the appropriateness of relying on European experience with offshore wind when predicting environmental effects in the Great Lakes, since "it is difficult to say with any certainty that these impacts will be analogous with those in the Great Lakes ecosystem since both environments are so different."276 It is also important to note that the scope of the report was restricted to environmental effects on birds, bats and aquatic resources (e.g. fish and aquatic mammals), and it did not address the broader regulatory considerations related to the human environment such as noise and technical standards and safety. Nor did it address other concerns raised by the public, such as those related to noise, decommissioning, navigation, and drinking water.
133.
Like the IJC documents, the Navigant Report commissioned by the U.S. DOE also refers to overall regulatory uncertainty in the Great Lakes region, noting that it led to the conclusion of a bipartisan federal-state Memorandum of Understanding between five Great Lakes Governors and ten federal agencies "to support the efficient, expeditious, orderly and responsible review of proposed offshore wind energy projects in the Great Lakes".277 The report also noted that "[p]resently none of the Great Lakes states has a policy (e.g., laws or regulations) or permitting program designed to address the permitting issues specific to offshore wind."278 It confirmed that "the environmental impacts of offshore wind in the United States are not well understood" and form a barrier to regulatory development. It also notes that "not one offshore wind project is under construction or operating in the Great Lakes".279 Two of the experts retained by the Claimant in this proceeding, COWI and SgurrEnergy, contributed to the Navigant Report.280

(d) MOE’s Technical Workshops, Summer 2010

134.
In conjunction with the Offshore Wind Policy Proposal Notice, MOE held several technical workshops during the spring and summer of 2010 on topics relevant to the development of a regulatory framework for offshore wind. Subject matter experts from within and outside of government participated in these sessions, which were held on the issues of noise, water quality and sediment management, and technical and safety standards.

(i) Noise

135.
MOE held technical workshops on noise on April 29, 2010 and August 23, 2010.281 The first session covered noise propagation over water, ground attenuation, atmospheric effects on noise propagation over water, the mathematical expression for determining wind shear, wind turbines and transformers, noise setback distances, noise receptors, combined effects of multiple offshore wind facilities, and noise measurements of offshore wind facilities.282 Participants included industry consultants such as HGC Engineering, Zephyr North Ltd., and Helimax.283
136.
Following the first noise workshop, a representative of Helimax acknowledged that MOE was "facing a huge hurdle" since no satisfactory noise model existed.284 This representative advised that consultation with a noise specialist from GL Garrad Hassan indicated that the International Organization for Standardisation ("ISO") model should be discarded after one kilometre of propagation over water, and that a "Swedish model [was] seen also as too conservative."285
137.
The goal of the second noise workshop was to recommend an appropriate noise propagation model for offshore wind projects in Ontario, following a discussion of fundamental issues such as worst-case scenario noise modelling, reflection from an upper layer, and wind shear, and of available propagation models used in other jurisdictions.286 In advance, MOE circulated to participants a background document on modelling noise propagation from offshore wind facilities.287 Invited participants included representatives of industry including Helimax, Golder Associates, Zephyr North and HGC Engineering, as well as MOE representatives.288 According to a MOE staff member, most of the noise experts and consultants dealing with wind turbine noise in Ontario were in attendance.289
138.
At the conclusion of this workshop, the objective of recommending an appropriate noise propagation model was not achieved as the experts advised they could not endorse any of the options and that MOE’s background document may not be the most appropriate for offshore wind noise propagation modelling.290 The experts provided two main recommendations: first, that, at a minimum, theoretical research be conducted, and second (and preferably), empirical data should be collected through measurements.291 The first recommendation could be undertaken based on available data with one to two months’ work. The second recommendation included taking measurements over the following May to July of 2011, with all work being finished in December 2011.292
139.
Following this workshop, MOE concluded that [REDACTED]

(ii) Water Quality and Sediment Management

140.
MOE held a water quality and sediment management workshop on July 16, 2010.295 The workshop was intended to determine the data and modelling studies that would be required to predict, quantify and test water quality impacts from the construction, maintenance, operation, and decommissioning of an offshore wind project, including potential impacts from excavation or dredging during installation, and to determine the water and sediment quality monitoring studies and procedures that would be required for offshore wind projects.296
141.
The workshop indicated that there were potentially 14 different Aboriginal communities who would be interested in and/or affected by the development of offshore wind projects in Ontario, and that they may claim Aboriginal title over the lakebed.297 It also indicated the need to develop better information sharing tools about water quality and make them available to proponents over the web.298 The workshop suggested that no development should be allowed within one kilometre of an intake protection zone 1, and that water quality modelling would need to be conducted within intake protection zones 2 and 3.299
142.
The workshop also raised the need to ensure proper management of the dredged sediment associated with the installation of transmission cables and turbine foundations.300 The workshop confirmed to MOE that [REDACTED]

(iii) Federal-Provincial Collaboration

143.
MOE hosted a workshop on federal-provincial collaboration with respect to offshore wind projects on August 4, 2010.302 The meeting included a brainstorming session on the process steps and timelines of the provincial REA and the federal major projects management/screening environmental assessment for proposed offshore wind projects in Ontario, as well as a discussion of technical aspects of offshore wind projects and opportunities for collaboration on technical study requirements.303 The key questions explored related to areas for potential collaboration between the provincial REA and federal major projects management/screening environmental assessment processes, technical areas of collaboration between federal and provincial experts, and identifying gaps and overlaps in these areas.304

(iv) Technical Specifications and Safety Issues

144.
On September 13, 2010, MOE held a workshop on technical specifications and safety issues, as well as spectrum interference.305 Topics covered at the workshop included available international guidelines for offshore wind turbine support structures and their applicability to offshore wind development in Ontario, ice and ice flow issues, and spectrum and other interference issues.306
145.
Participants in this workshop included members of the Canadian Standards Association ("CSA"), a representative of the Department of National Defence in radio communications systems, a representative of the Royal Canadian Mounted Police in the areas of spectrum engineering, and representatives of Nav Canada, as well as representatives of federal and provincial governments involved in regulating or overseeing the energy sector.307
146.
The workshop indicated that CSA was doing some work to adopt international design standards for offshore wind turbines, but that some modifications were necessary for the Great Lakes context.308 However, standards specific to all other offshore wind facility components (e.g. foundations, cables, and transformers) would require further study as it was unclear whether existing standards were sufficient.309

(e) The Continued Uncertainty with Respect to Offshore Wind Projects in the Great Lakes

147.
The substantial work that MOE did in the context of attempting to develop the detailed requirements for offshore wind projects made clear to Ontario that it was widely accepted that the science was simply not sufficient. Indeed, by late 2010, there were strong indications that years of science could be needed before adequate and comprehensive regulations for offshore wind projects in the Great Lakes could be put into place.

B. Access to Crown Land for Wind Projects in Ontario

148.
As noted above, while the REA sought to streamline most of the existing approvals and permits needed for renewable energy projects into a single process, there still remained some permits that had to be obtained outside of the REA process altogether. One such set of permits and approvals particularly relevant to offshore wind projects relates to access to Crown land.

1. MNR’s Policies on Access to Lakebed Crown Land

149.
The beds of most navigable lakes and rivers in Ontario are Crown land over which MNR has stewardship responsibility under the authority of the Public Lands Act.310 Pursuant to this statute, the Minister of Natural Resources controls the management and disposition of all public lands.311 The Public Lands Act also prohibits any person from taking possession of public lands without lawful authority or placing any material, substance or thing on public lands without written consent.312 Thus, to undertake the on-site testing, field studies and the construction work necessary to develop and operate a renewable energy project on Crown land, the proponent must obtain access to Crown land from MNR through the Crown land Site Release process.313
150.
MNR first established its formal policy governing the Crown land Site Release process for wind projects on January 27, 2004 as Policy PL 4.10.04, entitled "Wind Power Development on Crown Land".314 This policy had the goal of "providing a fair, orderly and consistent approach" to the development of wind power on Crown land in Ontario.315 MNR also issued accompanying procedural guidance as Procedure PL 4.10.04,316 which was updated in November 2004.317 MNR updated both Policy and Procedure PL 4.10.04 in April 2005,318 January 2008,319 and July 2010.320 MNR further updated Procedure PL 4.10.04 in May 2013321 and also replaced Policy PL 4.10.04 with Policy PL 4.10.06, entitled "Renewable Energy on Crown Land", in February 2014.322
151.
When the FIT Program was launched, MNR had a three-stage process for establishing a wind project on Crown land under Policy and Procedure 4.10.04: (1) windpower testing application and review; (2) windpower development review; and (3) issuing permits and tenure for development of a wind farm on Crown land.323 The first two stages represented the site release process, through which the applicants for Crown land sought to obtain status as the Applicant of Record ("AOR status") in respect of specific "grid cells" or groupings of grid cells of Crown land.324 Obtaining site release or AOR status allowed an applicant to proceed to the third stage, at which point it could request the relevant permits and approvals necessary for the development of the wind project.325
152.
The applicant with AOR status was the only applicant awarded an opportunity, through a site release process, to pursue the required approvals and permits for the development of a wind facility on a given Crown land site.326 While several applicants could apply for the same grid cells of Crown land, only one applicant could be granted AOR status. As such, the applicant that obtained AOR status (site release) would have the exclusive opportunity to pursue the necessary approvals and permits to proceed with feasibility testing and the eventual development of an offshore wind project at that location.327 This gave the applicant holding AOR status a degree of certainty since it could be comfortable that MNR would not accept applications for wind testing or development on the same area of Crown land from any other applicant.328
153.
Despite the certainty of having the sole right to apply for permits and approvals, AOR status conferred no legal rights or tenure on the Applicant.329 As stated in Policy 4.10.04, "[t]he site release is not a disposition; it is the completion of a process to select an appropriate Applicant for potential windpower testing and an Applicant of Record for subsequent windpower development."330 The applicant holding AOR status was simply "awarded the opportunity to proceed through the environmental assessment processes and apply for the necessary approvals for the development of a wind facility.331 It was still "required to complete all [e]nvironmental [a]ssessment requirements for the proposal prior to any authorizations or approvals being issued by MNR."332 Further, as confirmed by Rosalyn Lawrence, the Assistant Deputy Minister of MNR’s Natural Resource Management Division, the AOR status holder must meet regulatory and/or development milestones as described in the AOR letter.333

2. The Procedure for Obtaining AOR Status and the FIT Program

154.
Applications for Crown land for renewable energy projects are only received during "windows of opportunity" established by MNR, under terms and conditions determined by MNR.334 Outside of these windows of opportunity, MNR does not accept or consider applications for Crown land for renewable energy projects. The last application window occurred from February 20 to December 10, 2008, which is when the Claimant applied for Crown land in Lake Ontario, near Wolfe Island.
155.
Following the closing of that window, prior to the establishment of the FIT Program, MNR was facing a backlog of applications for Crown land,335 with 100 applications for waterpower projects and over 400 applications for wind projects,336 including 144 applications for offshore wind power development from 16 proponents, representing 35 projects.337 Only 14 of these 144 applications, representing 7 proponents, obtained AOR status.338
156.
MNR saw the FIT Program as a unique opportunity to address this backlog and manage the ongoing applications.339 By conducting a review of the outstanding applications for Crown land after the OPA had awarded the FIT Contracts, MNR could give priority consideration to applicants that would be developing their Crown land parcels in order to meet the conditions of their FIT Contracts.340 This strategy proved successful in narrowing the pool of applications for consideration by MNR, as only 78 of the over 400 wind power applications for Crown land (both onshore and offshore) were included as part of a FIT application.341
157.
As part of the implementation of this strategy, the day the FIT Program was announced, Minister of Natural Resources Donna Cansfield sent a standard form letter to every proponent of a wind or waterpower project that had applied for Crown land including the Claimant.342 The letter stated that "[i]n order to maintain priority position within MNR’s site release process, you must submit an application to the FIT Program within the FIT Program launch period."343
158.
After the Minister sent this letter, members of the wind industry sought additional clarification as to how the site release process would work in conjunction with the FIT Program.344 As a result, on October 28, 2009, Ms. Lawrence, met with CanWEA,345 whose President subsequently wrote to Ms. Lawrence. He further outlined the concerns of CanWEA members regarding MNR’s approach to aligning the goals of the GEGEA with existing applications for Crown land sites.346
159.
Ms. Lawrence replied to the CanWEA President on November 24, 2009, explaining the approach that would be implemented to determine the priority of applications for Crown land.347 Her letter stated:

[e]xisting Crown land applicants who apply to FIT during the launch period, and who are awarded contracts by the OPA, will be given the highest priority to the Crown land sites applied for. This means that these applications will take precedence over all others for this site, and will receive priority attention from MNR.348

160.
Ms. Lawrence’s letter further explained that "where application(s) are received for the same grid cell(s), the MNR date and time stamp will determine the priority applicant on that site."349
161.
The Claimant alleges that it understood from the above passages in these letters that if it applied for and was awarded a FIT Contract, it would be awarded land tenure and would receive priority attention from MNR.350 However, as conveyed in the letters, the Claimant’s "priority" status, if it obtained AOR status, would relate to its grid cell applications vis-à-vis other potential applicants for the same grid cells, not to all applications for Crown land. If any applicant, including the Claimant, applied for a particular grid cell location and there was an overlapping application for that particular grid cell from another applicant, priority would go to the applicant awarded a FIT Contract. This meant that if it obtained a FIT Contract, the Claimant’s application for Crown land would be considered before any other application for the same grid cells of Crown land that it had applied for. This did not mean, however, that MNR would expedite or grant its Crown land application.351
162.
Both of the abovea-referenced letters contained express caveats in this regard. First, Minister Cansfield’s letter stated that it did not amount to a representation that Crown land or any other permits or approvals would necessarily be forthcoming:

This letter and the attached mapping information do not in any way constitute any commitment, obligation or approval of your project by the Government of Ontario. Should you decide to proceed with your application(s) it will be necessary for you to follow all processes outlined in any applicable policies, procedures or guidance material and to ensure that you adhere to all applicable federal and provincial legislation as well as relevant local municipal bylaws.352

163.
Second, Ms. Lawrence’s letter reminded wind project proponents that "an application for Crown land does not create a legal entitlement or confer rights", and that access to Crown land is discretionary, stating that "the Minister of Natural Resources has the sole authority to approve or deny any application for the use of Crown land to support wind power testing or development."353

IV. The Federal Approval and Permitting of Renewable Energy Projects in Ontario

164.
In addition to the REA and other provincial permits and approvals, renewable energy projects can require extensive federal permits, approvals and licences.354 For example, depending on the project, approvals and permits can be required under the Fisheries Act,355 the Species at Risk Act356 ("SARA"), the Navigation Protection Act357 ("NPA"), the Coasting Trade Act,358 and the Migratory Birds Convention Act, 1994359("MBCA"). Renewable energy projects must also comply with federal laws on the protection of migratory birds.360 The project proponent has sole responsibility to ensure these federal regulatory requirements are met.361 Federal permits and approvals required under these statutes are not streamlined, and must be obtained separately from the relevant federal departments.

A. The Fisheries Act

165.
The Fisheries Act contains provisions related to fisheries protection and pollution prevention that exist to provide for the sustainability and on-going productivity of commercial, recreational and Aboriginal fisheries.362 In particular, it prohibits any person from carrying on "any work, undertaking or activity that results in serious harm to fish that are part of a commercial, recreational or Aboriginal fishery, or to fish that support such a fishery", except under strict conditions.363 This prohibition extends not only to works, undertakings, or activities that result in the death of fish but also in any permanent alteration to, or destruction of, fish habitat.364
166.
However, it is possible under the Fisheries Act and related regulations365 to obtain authorization to carry on a work, undertaking or activity that would otherwise amount to a contravention. This authorization must be sought from the Department of Fisheries and Oceans, on behalf of the Minister of Fisheries and Oceans.

B. The Species at Risk Act

167.
The SARA prohibits the killing, harming, harassing, capturing or taking of an individual of a wildlife species that is listed as an extirpated species, an endangered species or a threatened species.366 It also prohibits any damage to or destruction of the residence of individuals of endangered or threatened wildlife species, as well as for extirpated species if a recovery strategy has recommended the reintroduction of the species into the wild in Canada.367
168.
Permits are available under SARA and related regulations368 to authorize work that would otherwise be prohibited369 as long as certain pre-conditions are met. To obtain a SARA permit: (1) all reasonable alternatives to the activity that would reduce the impact on the species must have been considered and the best solution been adopted; (2) all feasible measures must be taken to minimize the impact of the activity on the species or its critical habitat or the residences of its individuals; and (3) the activity must not jeopardize the survival or recovery of the species.370

C. The Navigation Protection Act

169.
The NPA prohibits the construction, placement, alteration, repair, rebuilding, removal, or decommissioning of a work in, on, over, under, through or across any navigable water that is listed in the schedule, except in accordance with the NPA or any other federal statute.371 If undertaking these activities in listed waters would substantially interfere with navigation, it is necessary to apply for an approval from the Minister of Transport.372 Such approval is necessary in the case of a wind project sited in Lake Ontario, which is listed in the NPA Schedule of navigable waters.373

D. The Coasting Trade Act

170.
Pursuant to the Coasting Trade Act, foreign ships are prohibited from engaging in coasting trade in Canadian waters without a licence.374 The coastal trade includes the carriage of goods by ship and the engagement by ship in any marine activity of a commercial nature.375 Such a licence is necessary for the construction of an offshore wind project to the extent that the proponent needs to transport components of the structure to the project site using a ship that is not a Canadian ship. To obtain a licence from the Minister of Transport to use a foreign ship, the applicant must demonstrate it has met certain conditions including that no Canadian ship is suitable and available to provide the service or perform the activity required.376

E. The Migratory Birds Convention Act, 1994

171.
Most species of birds in Canada are protected under the MBCA and the Migratory Birds Regulations.377 Pursuant to this statute and regulation, it is an offence in Canada for anyone to kill, hunt, capture, injure, harass, take or disturb a migratory bird or to damage, destroy, remove or disturb a migratory bird nest or eggs without a permit.378 Permits may only be granted for scientific purposes, aviculture, taxidermy, damage or danger, airport safety, eiderdown collection and hunting.379 Permits are not available for "incidental take" of migratory birds, or the inadvertent harming, killing, disturbance or destruction of migratory birds, nests and eggs that may result from industrial activities,380 such as the construction or operation of a wind facility.

V. The Proposed Wolfe Island Shoals Project and Its FIT Contract

A. The Claimant’s Application for a FIT Contract

172.
The OPA opened the FIT Program to applications the day after the release of the standard FIT Rules and FIT Contract, on October 1, 2009.381 On November 27, 2009, Windstream Wolfe Island Shoals Inc. ("WWIS") and the Claimant’s other subsidiaries applied for eleven FIT Contracts: ten for onshore wind facilities and one for an offshore wind facility.382
173.
In addition to the Claimant’s application, only one other proponent, SouthPoint Wind, filed complete and eligible FIT applications for offshore wind projects. However, its projects were on a smaller scale by an order of magnitude.383 Each of SouthPoint Wind’s three applications was for a 10 MW wind project located in Lake Erie, one to 1.5 km offshore of Leamington, Union and Kingsville respectively.384
174.
The fact that only two proponents filed applications for FIT Contracts for offshore wind projects in November 2009 is contrasted by the fact that sixteen different proponents had applied for Crown land by December 2008 to develop 35 offshore wind projects.385 Seven of those proponents had been granted AOR status by the time of the FIT launch period.386 The low proportion of offshore wind proponents that applied for a FIT Contract reflects the highly speculative nature of offshore wind development in Ontario in November 2009, and difficulties proponents knew they would face. Only two proponents out of the entire industry were willing to take on the Supplier risks under the FIT Contract for an offshore wind project. Of those two, only one submitted a project for a wind project over 10 MW-Windstream, with a project 30 times larger, and it had not yet obtained AOR status for its site.

B. The Site and Layout of the Claimant’s Project

175.
According to its FIT application, the Claimant’s proposed Project was an offshore wind facility with a nameplate capacity of 300 MW to be located in Lake Ontario off Wolfe Island.387 As required, the FIT application stated that the proposed Project site was located on Crown land, and identified the specific grid cells of the proposed site by providing the reference numbers for existing Crown land applications the company had filed with MNR.388
176.
The corporate predecessor of WWIS had filed these Crown land applications when the MNR opened a window for accepting wind power applications for Crown land in 2008. Two of the applications (WP-2008-214 and WP-2008-215) were filed on February 20, 2008, and the remaining five (WP-2008-292 to WP-2008-296) were filed on June 30, 2008.389 MNR had confirmed receipt of these applications on May 12, 2008 and July 2, 2008, and had also provided Application Status/Fact Sheets summarizing each of the applications at the time Minister Cansfield wrote to Windstream in November 2009.390
177.
Both the Crown land applications and Application Status/Fact Sheets identified the specific 302 grid cells applied for, which amounted to approximately 42,350 acres of Crown land.391 These grid cells spanned the waters around all of the western shores of Wolfe Island. They also spanned the waters from the northwestern shoreline of Wolfe Island across the St. Lawrence to the eastern tip of Amherst Island (which is located nine km west of Wolfe Island). Part of this span lay between Wolfe Island and the mainland Kingston area. The grid cells also spanned the waters from the southern shores of the centre of Wolfe Island and all along the southern shore of Amherst Island.
178.
The map below illustrates the location of grid cell applications for the Claimant’s Project:

Figure 3: The Crown land applications for the Claimant’s Project392

179.
The Claimant had selected a subset of these grid cells to use for the Project site as proposed in its application for a FIT Contract, specifically the grid cells occupying the area to the southwest of Wolfe Island referred to as the Wolfe Island Shoals. As of June 9, 2010, the Claimant had developed the following 100-turbine layout for its project:

Figure 4: The turbine layout for the Claimant’s Project, as of June 9, 2010393

180.
A company related to the Claimant, OCP South River Inc., had also applied for another area of Crown land on Lake Ontario to the southwest of Amherst Island, represented by application no. WP-2008-213.394 However, the Claimant did not identify this as a part of its planned site area in its application for a FIT Contract.395

C. The Unique Nature and Size of the Claimant’s Project

1. First Offshore Wind Project in North America

181.
Before it signed its FIT Contract, the Claimant had identified the fact that it was the first offshore wind project in Great Lakes and in North America as a "key issue".396 Had it proceeded to development by its original MCOD, the proposed Project would indeed have been the first and only offshore wind project of any kind in Canada or even North America. Despite proposals for offshore wind projects in other Canadian provinces and in the U.S., to date none has been constructed and not a single offshore wind facility is operational in North America.397
182.
For example, the NaiKun Wind Energy Group Inc. began work in 2003 to develop a 110-turbine, 396 MW wind project in the Hecate Strait, an area between Prince Rupert and Haida Gwaii in British Columbia.398 Although it did obtain federal environmental approval eight years later,399 the project is viewed as "excessively risky" and has been in "survival mode" since 2011 due to a lack of financing.400 Outside Ontario, the only other offshore wind development activity in Canada is Beothuk Energy Inc.’s September 2013 announcement of a proposed 180 MW, 30-turbine offshore project in the gulf of St. Lawrence off the western coast of Newfoundland.401
183.
The situation in the U.S. is similar, with no offshore wind projects currently constructed and operational. The most advanced is Energy Management Inc.’s 468 MW, 130-turbine Cape Wind project, located off the coastline of Massachusetts near Cape Cod.402 Billed as "America’s first offshore wind farm", Cape Wind filed federal permit applications in November 2001 and remains under development thirteen years later, waiting for the financing necessary to construct the project and bring it into operation.403 It took Cape Wind nearly a decade to obtain final permits from the U.S. Army Corps of Engineers and the Environmental Protection Agency.404 Additionally, it is worth noting that both the NaiKun and Cape Wind projects are proposed for saltwater and not freshwater environments.

2. First Large-scale Freshwater Wind Project in the World

184.
Not only would the Claimant’s Project have been the first offshore wind project in North America, it would have been only the second offshore wind project located in freshwater in the world. Only nine fully commissioned offshore wind facilities with a capacity of 300 MW or more exist in the world, all of them in Europe.405 The sole freshwater offshore wind project currently in operation is Vindpark Vänern, located in Lake Vänern, Sweden, which came into operation in 2010.406 However, Vindpark Vänern is a much smaller-scale facility of 10-turbines with a capacity 30 MW.407 Moreover, a 22.5 MW extension of this project was recently cancelled.408 The Lake Erie Energy Development Corporation ("LEEDCo") of Ohio has been attempting since 2009 to build what is has called "the first offshore freshwater wind project in North America".409 Like Vindpark Vänern, LEEDCo’s proposed Icebreaker project has a smaller scale of 18 MW and six-turbines.410 Additionally, the proposed location of LEEDCo was 7 miles offshore.411 Nevertheless, Icebreaker has failed to secure the permits or funding necessary to proceed with development.412
185.
Thus, the Claimant’s Project would have been the first and only large-scale offshore wind project located in freshwater anywhere in the entire world.

3. Largest Wind Project in Canada

186.
In addition to being the first offshore wind project in North America and the first large-scale freshwater offshore wind project in the world, the Claimant’s Project would also have ranked as the largest wind project in Canada in general.
187.
Canada currently has 9,219.4 MW of installed wind energy capacity, all onshore.413 The 166-turbine, 298.8 MW Blackspring Ridge Wind Project, located in Vulcan County, Alberta,414 and the 124-turbine, 270.0 MW South Kent Wind Farm, located in the Municipality of Chatham-Kent, Ontario,415 are by far the largest. They are the only projects with capacity greater than 200 MW,416 and they came into operation in 2014, after over two decades of Canadian experience with onshore wind since the first micro and small-scale projects in 1993 (two 0.2 MW projects and one 21.4 MW project).417
188.
Most of the 205 operational wind projects in Canada are much smaller in scale, with 132 (approximately 65 per cent) having capacity of 50 MW or less.418 For all operational wind projects in Canada, the average capacity is approximately 45 MW and the median capacity is 20 MW.419

D. The Offer and Acceptance of the FIT Contract for the Claimant’s Project

1. The Announcement of FIT Contract Offers on April 8, 2010

189.
On April 8, 2010 the OPA issued a press release announcing the first round of contract offers for large-scale renewable energy projects under the FIT Program.420 The OPA awarded over 184 contracts totalling 2,500 MW, including one offshore wind project – the Claimant’s.421 None of the Claimant’s applications for onshore wind projects were offered FIT Contracts.
190.
The Claimant has suggested that during the application review process, the OPA determined its project demonstrated "shovel-readiness", in terms of financial support and experience.422 Yet this is not something the OPA considered in relation to the Claimant’s application. For FIT applications filed during the first sixty days after the launch of the FIT Program, the OPA was willing to consider a project’s shovel-readiness in its ranking of applications, but only if the applicant "bid" for certain shovel-readiness criteria points established by the OPA in the FIT Rules.423 As acknowledged by David Mars, one of the Claimant’s investors, the Claimant did not bid for any of these launch period criteria points because a positive decision by the OPA would have resulted in an earlier MCOD, which Mr. Mars was not confident they could achieve.424 Hence, the reason that the Claimant’s offshore wind Project received an offer of a FIT Contract was because it selected a connection point which had available capacity, not because it was deemed shovel-ready by the OPA. Indeed, by April 2010 Windstream had only obtained initial financing and filed FIT and Crown land applications. The steps remaining in the development process included obtaining additional financing, obtaining AOR status, applying for and obtaining land use permits to conduct on-site testing, conducting field work, meeting the requirements of the REA Regulation and applying for and obtaining a REA, applying for and obtaining federal permits and authorizations in terms of navigation, fisheries, migratory birds and endangered species, and conducting surveys and obtaining land tenure.
191.
The OPA informed the Claimant of its contract award by letter on the same day that the awards were publicly announced.425 This letter reminded the Claimant that pursuant to Section 2.4 of the FIT Contract, the Claimant would not be able to obtain a NTP and begin construction of the Project "until all necessary regulatory approvals and permits are obtained and provided to the OPA", including the REA, federal approvals and any other environmental and site plan approvals required.426 The letter advised the Claimant that if it had any questions on how to obtain regulatory approvals or permits, it should contact REFO.427

2. The OPA’s Offer Notice to the Claimant

192.
On May 4, 2010, the OPA issued the Claimant an Offer Notice for its FIT Contract.428 The notice enclosed a completed FIT Contract Cover Page which incorporated the applicable general terms and conditions, exhibits, and schedules.429 The FIT Contract identified the Contract Date as May 4, 2010, and, consistent with the standard terms, stipulated that the contract imposed on the project a MCOD of four years following the Contract Date (i.e. May 4, 2014).430
193.
The Claimant had ten business days (until May 18, 2010) to accept the Contract and return it to the OPA ("sign back the Contract").431 As discussed below, the Claimant did not sign the Contract and return it to the OPA by this deadline due to the regulatory risk it perceived and sought to resolve.

3. The Claimant’s Reluctance to Sign Back the FIT Contract Due to the Regulatory Uncertainty Around Offshore Wind

(a) The Risk Identified in ORTECH’s Preliminary Project Management Analysis in Advance of the April 19, 2010 Meeting

194.
Soon after the Claimant’s FIT Contract award was announced, but prior to offer of the FIT Contract, Mr. Boysen of MNR proposed a meeting between the Claimant and representatives of the Government of Ontario from MNR, MEI, MOE and MTC.432 Although the Claimant describes the April 19, 2010 meeting as a "kick-off meeting",433 in Mr. Boysen’s words it was a "policy challenge / issues exchange meeting".434 His intention in calling the meeting was for Mr. Baines to "paint them a picture of [his] vision for the project" while identifying the challenges faced by the Government of Ontario.435 When proposing the meeting, Mr. Boysen reminded Mr. Baines that offshore wind was a new area of endeavour for the province.436 Mr. Baines agreed to the meeting and advised that the Claimant’s consultant, Uwe Roeper of ORTECH Consulting, would also attend.437
195.
In advance of the meeting, Mr. Roeper wrote to Mr. and Ms. Baines identifying areas of uncertainty in the regulatory process the Claimant faced and where it should seek clarity from MNR. In particular, he suggested that the Claimant seek clarity: (1) on what Aboriginal consultation was required and with which Aboriginal communities; (2) on what technical issues MNR would raise, so the Claimant could do the field studies in time; and (3) on the land tenure process, which would be "very important for financing as [they got] deeper into the project".438 Mr. Roeper also cautioned of the risk of public opposition to the project.439
196.
The day before the meeting, Mr. Roeper also provided Mr. Baines with a project management analysis that included an analysis of the risks inherent in the Claimant’s Project.440 According to this analysis, the Claimant’s Project had an expected capital cost of [REDACTED] billion, in excess of [REDACTED] million allocated to pre-construction costs including engineering, permitting and security deposits, in excess of [REDACTED] million allocated to construction financing, and the remainder allocated to procurement and construction.441
197.
Mr. Roeper’s analysis acknowledged that while obtaining a FIT Contract had a fundamental business impact on the project by significantly reducing the early development risk borne by the equity sponsor and creating asset value, it carried risk associated with its completion and performance obligations, in particular related to the NTP and MCOD dates.442 Failure to meet these timelines would put the security deposits and sunk development costs at risk.443
198.
[REDACTED]444445446447
199.
With this risk assessment in mind, Mr. Baines and Mr. Roeper attended the April 19, 2010 meeting. At this meeting, Mr. Baines and Mr. Roeper discussed with Government of Ontario representatives the fact that "off-shore permitting is a new area and lacks well defined study criteria."448

(b) The Risk Identified in ORTECH’s Draft Project Management Plan in Advance of the May 13, 2010 Meeting

200.
Following that meeting, in early May Mr. Baines sought a meeting with Michael Killeavy, the OPA’s Director of Contract Management.449 The meeting was scheduled for May 13, 2010.
201.
A few days in advance of the May 13, 2010 meeting, ORTECH provided the Claimant with a draft project management plan, which discussed the project management in greater detail than the initial analysis provided by Mr. Roeper.450 Estimated capital costs remained at [REDACTED] billion, with an allocation in excess of [REDACTED] million for project management, engineering and permitting, in excess of [REDACTED] million on construction financing, and the balance on security deposits, procurement and construction.451 [REDACTED]452
202.
In terms of the uncertainty associated with the REA requirements for offshore wind, ORTECH specifically cautioned that "the regulatory agencies do not have well established guidelines for off-shore projects adding to the uncertainty of the REA process" and that "many of the rules governing off-shore projects have yet to be written."453

(c) The Risk Raised by the Claimant at Its May 13, 2010 Meeting with the OPA

203.
[REDACTED]454 The Claimant also raised as an issue the regulatory uncertainty for offshore wind projects, and asked whether the Force Majeure provisions of the FIT Contract would apply to difficulties the Claimant anticipated could occur in obtaining the permits, certificates, approvals, impact assessments and licences required to develop the Claimant’s Project and bring it into Commercial Operation.455 [REDACTED]456
204.
At the meeting and in an e-mail the next day, Mr. Killeavy stated categorically that "[t]he OPA [was] not in a position to advise Windstream on how it ought to manage the regulatory risk associated with offshore wind energy projects",457 referring Mr. Baines to REFO which would be in a position to provide "the most current information on regulatory approvals for offshore wind projects."458 In other words, FIT Contracts and the OPA were independent from the permitting and approvals processes. Mr. Killeavy also stated that the OPA would not restrict or change its discretion to exercise pre-NTP termination rights under section 2.4(a) of the FIT Contract, and reminded Mr. Baines that the right was mutual.459
205.
Mr. Baines replied by letter on May 16, 2010. This letter provided a summary of the meeting including issues discussed related to regulatory uncertainty. Mr. Baines stated that "[a]s the first off-shore wind facility in Ontario, [the Claimant was] struggling with considerable regulatory uncertainty caused by unknown setback requirements for off-shore wind, uncertainty in the site release process for Crown land, and uncertainty in the detailed requirements of the REA on the other."460 Mr. Baines’s letter also informed Mr. Killeavy that at his suggestion the Claimant had contacted REFO "explaining [its] commitment to working together with the REFO to make the Project a success."461
206.
The letter sent by Mr. Baines to REFO repeated the same statements that the Claimant was struggling with the expectation under the FIT Contract to achieve a four-year MCOD in light of the considerable regulatory uncertainty associated with offshore wind in Ontario.462 Mr. Baines also stated that the Claimant assumed that since it had been awarded a FIT Contract, MEI and related ministries were "all committed to resolving the uncertainty for off-shore wind projects by putting in place the necessary policies in such a time and manner as will not compromise the ability of Windstream to meet its Project commitments under the FIT Contract."463 He asked that REFO advise in writing to correct his assumption if incorrect.464
207.
As explained by Ms. Lo, "REFO was not in a position to provide a response affirming or denying this information since other ministries, such as MOE and MNR, were responsible for developing the regulatory framework for offshore wind".465 Rather than providing any guarantees with respect to the finalization of the regulatory framework, REFO's response to the Claimant on May 21, 2010, "that MEI and MOE were working towards developing the regulatory framework for offshore wind projects was meant only to signal to the proponent to expect additional information from the ministries."466

(d) The OPA’s First Extension of the Signing Date on May 17, 2010

208.
On May 17, 2010, the OPA granted the Claimant an extension on the deadline for signing back its FIT Contract until June 2, 2010.467 Mr. Killeavy explained the rationale for granting this extension as related to the fact that MOE had "not yet published its approvals process for offshore wind", and that given the uncertainty around that approvals process, he thought it would be a good idea to extend the deadline for accepting the offer of the FIT Contract by ten business days.468 This rationale was communicated to the Claimant’s counsel Adam Chamberlain of the law firm Borden Ladner Gervais, LLP who advised Mr. Baines that the OPA had considered the extension reasonable in light of the environmental regulatory uncertainties faced by the Claimant, including around set-back requirements.469
209.
Shortly after the OPA granted this extension, Mr. Roeper wrote to Mr. Baines stating that the lack of responsiveness from the government to resolving the Claimant’s regulatory concerns was creating a "business risk" and that they needed to "step up the contact effort."470 Mr. Roeper then contacted Pearl Ing, Director of MEI’s Renewables and Energy Facilitation Branch, for an update on the status of the regulatory requirements that would apply to the Claimant’s Project.471 Mr. Roeper’s follow-up e-mail indicated that Ms. Ing advised that the MEI had received the Claimant’s May 13, 2010 letter to REFO, that offshore wind REA guidelines were still under development, and that it was not clear when they would be available.472
210.
In the follow up e-mail, Mr. Roeper informed Ms. Ing that the Claimant was concerned about the lack of harmonization of the MNR site release process with the REA permitting process.473 Mr. Roeper stated that if set-back guidelines were going to be imposed, this would cause the Claimant’s Project to lose areas of its Project location based on its original 2008 grid cell applications. Therefore, the Claimant was considering asking MNR to, according to Mr. Roeper, "make up for some of the land using blocks that are further out in the water (but not currently included in the Claimant’s site release applications)."474 Mr. Roeper requested MEI’s assistance in this regard.
211.
As the June 2, 2010 deadline approached, the Claimant’s counsel, Mr. Chamberlain, wrote to the OPA to request an amendment to the Contract Date from May 4, 2010 to June 2, 2010, to account for the signing extension that the OPA had granted.475 Mr. Chamberlain also requested that the Contract Date be amended with any additional extensions granted by the OPA.476

(e) The OPA’s Second and Third Extensions of the Signing Date on June 1, 2010 and June 15, 2010

212.
On June 1, 2010, the OPA granted the Claimant an extension to sign back the FIT Contract until June 16, 2010, without an extension of the Contract Date.477 The following day, Mr. Baines requested a meeting with representatives of MEI, MNR, and MOE for June 15, 2010.478 In his letter, Mr. Baines indicated that to meet the MCOD, it was critical for the regulatory uncertainty to be resolved and for the company to begin field testing in the summer of 2010.479 Mr. Baines stated:

[w]e are unclear about the criteria being considered [for offshore guidelines] and the nature of the constraints [the MOE] may impose on the existing project and related timelines […] MOE guidance is required so that an assessment can be made of how such guidelines might constrain our development area. Depending on the impact of new guidelines, Windstream may need to discuss with the MNR how Windstream could adapt the project layout into a more suitable configuration. Also affected would be the area of focus for our environmental field work. In order to allow us to accommodate any required changes within the timelines of the FIT Contract (especially in view of the fact that the 2010 summer field season is essentially at hand), we require immediate dialog […]

As noted above we urgently need input from MOE, MNR and other agencies regarding the type of field information that will be required to satisfy the REA process. Moreover, field work on Lake Ontario is constrained by wind, weather and seasons. If we do not obtain the necessary regulatory input, our 2010 field data collection program is at risk and could delay our project by an entire year. As noted above, the OPA FIT Contract requirements do not provide flexibility for that sort of delay.480

213.
Mr. Baines also stated that Windstream would need to be awarded AOR status before the risk of taking on the contract would be justified.481
214.
In light of these concerns, the Claimant initiated another meeting which was held on June 15, 2010 with Mr. Baines, Mr. Roeper and Mr. Chamberlain attending for the Claimant along with representatives of MEI, MOE and MNR.482 At this meeting, the Claimant expressed its "[c]oncern regarding the extent that new setback guidance documents […] could result in substantial portions of the proposed Project lands being unavailable for the Project."483 The Claimant also stated that it would need MOE and MNR approval processes to proceed in parallel instead of in series. Typically, Crown land access must be obtained prior to conduct the testing necessary to prepare a complete REA application. In this regard, the Claimant expressed concern "that the normal ‘series’ approach would result in delays that would make the Project very difficult to complete in the 4 year period […] allowed by the OPA."484
215.
At this meeting, Mr. Baines also said that the Claimant was losing the summer season for conducting its studies and that the Project had "already missed key deadlines" for some of the studies.485 However, Mr. Baines was also reminded by MNR that the Claimant did not have any legal or proprietary interest in any of the Crown land required for its project and that it was merely an applicant in the process.486 Out of this meeting, the only commitments from representatives of the Government of Ontario, as reflected by a list of "Action Items" in the meeting minutes recorded by Claimant’s counsel Mr. Chamberlain, were to organize briefings and discussions about the Project for MEI, MNR, MOE and OPA officials.487
216.
The same day as this meeting, the OPA granted the Claimant a third extension of its contract signing date to June 30, 2010.488

(f) The OPA’s Fourth to Seventh Extensions of the Signing Date, from June 25 to August 18, 2010

217.
On June 25, 2010 the Claimant’s counsel Mr. Chamberlain wrote to Perry Cecchini, Manager RESOP/FIT in the Market and Resource Development division at the OPA requesting a further extension on the deadline to sign the FIT Contract.489 Mr. Chamberlain requested an extension to September or at least to the end of July, in order to allow for "adequate time to assess" the upcoming setback requirements.490 Mr. Cecchini responded that he only had authority to provide ten working days from the announcement of the setbacks.491 On June 29, 2010, the OPA granted an extension to the signing deadline to July 12, 2010.492
218.
Subsequently the Claimant met with representatives of MEI and MNR on July 5 and July 7.493 On July 8, 2010 Mr. Chamberlain requested a fifth extension to the signing deadline on behalf of the Claimant due to continuing uncertainty around issues related to MNR’s site release process and how it would interact with MOE’s proposed exclusion zone.494 The OPA agreed and the same day granted a further extension until August 12, 2010.495
219.
On August 9, 2010 the Claimant’s lobbyist, Chris Benedetti of Sussex Strategy Group, wrote to JoAnne Butler, the OPA’s Vice President of Electricity Resources, with a further request to amend the Claimant’s FIT Contract.496 Mr. Benedetti requested that the MCOD be amended and that the Contract Date be changed to a future date when the Claimant obtained AOR status from MNR.497 Ms. Butler replied that the OPA did not intend to amend the MCOD, and reminded Mr. Benedetti that the Claimant had assumed the risk when submitting its FIT application, stating that his client "knew that when they submitted their application that there were many unknowns and they were obviously prepared to take those risks. We do now not intend to pass them to the ratepayers of Ontario. As you know, the FIT program was heavily stake-holdered and the four years for offshore COD, given what was known at the time, was not opposed."498
220.
The next day, Mr. Benedetti repeated his request for an amendment to the MCOD and Contract Date.499 Ms. Butler responded with a compromise, saying that the OPA believed they had identified a mutually agreeable solution, which Mr. Cecchini would inform the Claimant of that afternoon.500 Mr. Cecchini confirmed to the Claimant on August 12, 2010 that the OPA would issue a revised Offer Notice for the Claimant’s FIT Contract, containing a reference to a Schedule 2 providing Special Terms and Conditions.501 Mr. Cecchini also advised that the OPA agreed to change the MCOD from four-years to five-years following the Contract Date, which would remain the same.502
221.
On August 18, 2010 the OPA granted the revision to the Claimant’s MCOD as Mr. Cecchini had described, extending it from four-years to five-years following the Contract Date through a revised Offer Notice and the addition of Schedule 2 Special Terms and Conditions to the Contract.503 With this revision to the contract offer, the OPA also granted the Claimant an additional three business days to sign back the FIT Contract.504

4. The Claimant’s Decision to Assume the Risk and Sign Back the FIT Contract on August 20, 2010

222.
On August 20, 2010, the Claimant executed the FIT Contract.505 By doing so, it accepted all the rights and obligations stipulated in the standard FIT Contract Version 1.3 and FIT Rules Version 1.3, the only variation being Schedule 2 containing the one-year extension to its MCOD. It accepted these obligations despite knowing that the regulatory framework had not been finalized and having expressed serious concerns about this. On August 30, 2010, Mr. Baines’ reported to the Board of Directors, noting expressly that "[t]he REA permitting process […] replaces the former provincial environmental assessment (EA) process", and that "the regulatory agencies as yet do not have well established guidelines for access and control of off-shore property rights available for renewable energy projects, adding to the uncertainty of the REA process."506
223.
Although the Claimant did not sign the FIT Contract until August 20, 2010 its Contract Date remained as the original offer date of May 4, 2010.507 With the additional year it had obtained from the OPA, the Claimant’s MCOD was now May 4, 2015.

VI. The Claimant’s Invocation of Force Majeure under the FIT Contract

224.
Knowing that the REA requirements for offshore wind projects had yet to be set out, and that public consultations were ongoing, the Claimant turned to MNR for approval to swap its Crown land applications for land outside of the projected setbacks, and to proceed with the new area through the site release process, so that it could begin its wind testing.
225.
Shortly after signing the FIT Contract, the Claimant wrote to MNR to request site access at Charity Shoals, a shallow spot seven kilometres west of Wolfe Island where a navigational device was located, and on September 9, 2010, it met with MNR officials.508
226.
MNR officials notified the Claimant of the pending updates to technical guidance documents on coastal impacts, birds and bats, and reminded it that "there was no policy or procedure in place for offshore development."509 MNR informed the Claimant that it was free to apply for permits to commence field studies, such as surveying or sampling, while the public consultations on offshore wind continued and the site release process was on hold. However, officials made clear that the Claimant would proceed with any such studies at its own risk, given that the policy consultations were ongoing.510
227.
Officials also noted that testing facilities would not be permitted. Anchoring a platform, erecting a test turbine, or attaching any other test facility to the lake bed for more than sixteen days required a temporary land use permit, which the Claimant could not obtain without first having had its Site Verification approved.511 The Government of Ontario’s decision on its policy consultations for offshore wind was outstanding, as described above,512 having posted its Offshore Wind Policy Proposal Notice on June 25, 2010 and MNR having posted its own policy proposal notice on the Environmental Registry on August 18, 2010. MNR’s policy notice invited public comment on areas of Crown land that should be constrained from offshore wind development. Since the policy process was ongoing, MNR explained that it would be premature to grant land use rights to a site that may or may not fall outside a setback area and therefore be eligible for offshore wind development.513
228.
Even though the Claimant had not moved beyond the Site Verification stage of the Site Release Process,514 MNR nevertheless provided it with a draft Site Description Package. The Site Description Package had been prepared based on the Crown land grid cells that the Claimant applied for in 2008. It set out the potential stakeholders that would be implicated by the Project, a list of permits and approvals, species at risk, and a variety of other information, as well as gaps in information, applicable to the site. The package was made available with the express caution that it was not assembled in relation to the new grid cells sought by the Claimant which would change its Project site, and therefore did not constitute the final package. Officials made clear that this would only be provided "once the policy framework for offshore wind development is in place."515
229.
During that meeting, and several times throughout September to November 2010,516 the Claimant requested a "grid cell swap", and the response from MNR was consistent. MNR officials said they were open to discussing a potential grid cell swap, but it was not usual practice, and no determination could be made until the policy discussion with respect to setbacks was concluded.517 Since the offshore wind policy review was outstanding, MNR was not able to re-configure the Claimant’s grid cells, and consequently, could not advance the Claimant’s Project through the Applicant of Record process.518 The Claimant was also made aware that since no process existed under MNR’s Crown land policies and procedures for swapping grid cells, it would have to make a formal application.519 Since applications were normally only allowed during windows of opportunity, and given that the Crown land site release process for renewable energy was under review, it was not at all clear what the process of application would entail.
230.
On September 30, 2010, the Claimant wrote asking MNR to reconsider its decision on testing facilities.520 It argued that wind speed testing is separate from the Site Release process and does not provide any land tenure rights. It also pushed for a change to the existing process whereby "testing would occur earlier in the Site Release Process than under the current process".521 The Claimant was aware that MNR was in the process of reviewing its Site Release Policy in order to streamline it with the FIT Program, and it argued that it would not be "inconsistent with the trends emerging in the recent policy review process".522 Without such access, the Claimant was very concerned that it would not be able to satisfy the conditions of its FIT Contract. According to the Claimant, "the only action that might make possible any advancement of the Project would be the further defining of the Project area" and permission "to conduct certain studies and testing."523
231.
On November 22, 2010, Ken Cain from MNR responded to the Claimant’s request, indicating that no decision on new project area or permission to conduct testing should be expected while the government's offshore windpower policy review is still outstanding.524
232.
On December 10, 2010, Windstream submitted a claim for Force Majeure with the OPA.525 Windstream sought to have one year of Force Majeure relief granted to it on account of the lack of regulatory assistance from MNR and MOE.526
233.
The OPA subsequently determined that the delays faced by Windstream with respect to the Crown land site release process constituted a valid Force Majeure event commencing on November 22, 2010 and advised Windstream accordingly.527 The OPA also indicated that it would determine the appropriate relief to be granted following notice of termination of the Force Majeure event.528
234.
On February 9, 2011, the OPA announced that it would offer to amend the contracts of all FIT counterparties who had not yet reached Commercial Operation so that these suppliers could extend their MCOD by up to one year.529 Over February and March 2011, the OPA contacted each FIT supplier, including the Claimant, with an offer to execute an amending agreement that would extend the MCOD by up to one year in exchange for trade-offs by the supplier on certain Force Majeure rights.530 This extension was offered in response to feedback from renewable energy project proponents that they needed more time to prepare the material for a complete submission for a REA, as the new process had meant adjustments for several ministries and a learning curve for proponents.531 Windstream did not accept this offer of a one-year extension.

VII. Ontario’s February 11, 2011 Decision to Defer the Development of Offshore Wind Projects

A. The Discussions on How to Proceed with Offshore Wind Development

1. Offshore Wind Policy Discussions in 2010

235.
Since MOE had responsibility for administering the REA Regulation, it led the discussions on how to finalize the regulatory framework for offshore wind, as described above.532 Early on, MOE had considered a number of regulatory options, [REDACTED]
236.
In its effort to set out clear requirements for offshore wind facilities, MOE recognized, based in part on what it was being told by independent experts at the meetings and workshops discussed above,534 that scientific work was required in a number of areas, including coastal impacts, sediment movement, ice build-up, public safety, water quality, technical standards, and noise.535
237.
MNR and MEI also contributed to the policy discussion around offshore wind. MEI brought the discussions to "Energy Issues Meetings".536 As explained in the witness statement of Sue Lo, "[t]he purpose of these meetings was to serve as a discussion table on a variety of different energy policy issues amongst senior level officials across the relevant ministries, Premier’s Office and Cabinet Office".537
238.
[REDACTED] MOE and MNR officials were also working on new regulatory requirements, including noise setbacks, which were forecasted to be between five and ten kilometres, [REDACTED]539 At the time, officials hoped to be able to make any necessary regulatory amendments by fall 2010.540
239.
MEI brought considerations additional to those raised by the scientific work being steered by MOE. In particular, MEI was concerned about the costs to the ratepayers and transmission constraints that would be caused by the "massive quantities of offshore wind" that would be introduced by proponents that were in the process of developing facilities but had not yet applied to the FIT Program.541 Together, these projects were proposing more than 8,000 MW of generation capacity. At the prevailing FIT price for offshore wind of 19 cents/kWh, if all of the proposed large-scale offshore projects were to proceed, it would have resulted in significant increases in electricity bills.542
240.
In May and July 2010 briefings, MEI advised its Minister’s Office that MOE, MNR, MTC and MEI were working to set out "rigorous provincial approvals" that would address potential concerns, including "noise setbacks, protection of lake ecology, water quality, birds and bats, natural and cultural heritage, safety, shipping routes, commercial fishing and recreation".543 The briefings also flagged that consultations with adjoining U.S. jurisdictions would likely be necessary since "turbines may affect currents and fish habitat in U.S. waters."544
241.
Up until the August 23, 2010 workshop with noise experts,545 MOE officials remained hopeful that the necessary research for noise setbacks could be conducted by the end of the year, allowing for regulatory changes to be made early in 2011. However, as noted above,546 experts strongly discouraged that option. Accordingly, officials sought direction from Deputy Ministers, providing [REDACTED] options for consideration on offshore wind noise requirements.547 [REDACTED]
242.
Upon consulting with MNR and MEI, MOE updated its presentation to Deputy Ministers on September 16, 2010 to include [REDACTED] additional options:548 [REDACTED]
243.
[REDACTED]
244.
[REDACTED]
245.
[REDACTED]
246.
[REDACTED]
247.
[REDACTED] scientific research to be conducted while allowing the Claimant to proceed with the development of its Project.562
248.
[REDACTED]563 Such a project would be a massive undertaking by any measure, and one that had never occurred in freshwater.564 MNR was of the view that a project of 10 or 20 turbines (like the project in Lake Vänern, Sweden) could be contemplated as a pilot, but not one with 130-turbines.565
249.
MNR was also reluctant to proceed with a deferral of offshore wind development on the basis of the need for further scientific research, considering that it had already put a similar deferral in place between 2006 and 2008.566 As Rosalyn Lawrence explains, "MNR was accustomed to undertaking site-specific analysis of issues" so MNR "expressed its concern and highlighted the challenges [it] saw with the one-size-fits-all approach preferred by MOE."567
250.
[REDACTED]570 According to Ms. Dumais, MOE has previously approved pilots "on a smaller scale than the actual proposed project" since it helps to "assess potential environmental impacts" and "avoid costly errors".571 [REDACTED]573
251.
On January 6, 2011, MEI presented [REDACTED]

B. The Decision to Defer the Development of Offshore Wind

252.
On February 11, 2011, the Government of Ontario announced that "Ontario is not proceeding with any development of offshore wind projects until the necessary scientific research is completed and an adequately informed policy framework can be developed."578 This announcement reflected the Minister of the Environment’s decision, based on the information available at the time and applying the precautionary principle, that Ontario lacked the science necessary to inform the regulatory changes required to allow large-scale offshore wind development to proceed while ensuring protection of human health and the environment. As former Minister Wilkinson explains in his witness statement,

I made the deferral decision in the discharge of my duties as the Minister of the Environment and to protect human health and the environment. I believe that my decision in 2011, based on the information in front of me at that time, was both sound and fulfilled my obligations under the Oath of Office I took when sworn in as Minister as the Environment. I stand by it today.579

253.
The Minister based his decision on briefings he received and consultation with the Deputy Minister of the Environment. The briefings and consultation led him to conclude that Ontario lacked the science necessary to inform the regulatory changes required to allow large-scale offshore wind development to proceed while ensuring protection of human health and the environment.580
254.
At the same time, the Minister recognized from the public comments on the Offshore Wind Policy Proposal Notice that the first REA decision relating to an offshore wind project would likely be challenged, meaning that it was particularly important that the regulatory framework be supported by sound science and the precautionary principle.581
255.
The public comments raised a variety of environmental concerns, and consequently the Minister was briefed on noise emissions, disturbance of benthic life forms, navigation, potential structure failure or safety hazards and decommissioning. It was public concern over Ontario’s drinking water that weighed most heavily on the Minister.582 In particular, Minister Wilkinson was concerned about the lack of information on the effect of construction of more than 100 turbines in Lake Ontario might have on Ontario’s drinking water and how long that potential effect might last.583 These concerns were not only an issue for Lake Ontario, but for Lakes Huron and Erie, the latter of which, is a "shallow, sandy-bottomed lake with historically contaminated sediments".584
256.
The concerns regarding drinking water also had cross-jurisdictional implications that were not restricted to Ontario and related to Canada’s international obligations under the Boundary Waters Treaty585 and the Great Lakes Water Quality Agreement.586 Minister Wilkinson was of the view that:

If Ontario allowed wind turbines to be erected on the Canadian side of the lake, we would not be excused from harm caused in U.S. waters. As Environment Minister, it was my responsibility to protect the environment in Ontario, but also not to jeopardize the water resources we share with the U.S. In my view, this was not only a legal but a moral responsibility.587

257.
Based on the foregoing, Minister Wilkinson felt that MOE did not have a sufficient scientific foundation to establish rules and requirements for offshore wind that would adequately protect human health and the environment.588 Consequently, he decided to impose a deferral on offshore wind development.589 This general policy decision was supported by the Ministers of Energy and Natural Resources.590
258.
Sue Lo learned of the preferred option on January 14, 2011. She communicated it to her counterparts at MOE, MNR and MTC as a deferral on offshore wind "for [the] next 3-5 years to provide time to develop the science and create uniform rules and policies in collaboration with the Great Lakes States."591
259.
Subsequently, officials were directed to develop two different options specifically regarding how to proceed with the Claimant’s Project: [REDACTED]592
260.
On February 11, 2011, an MOE news release publicly announced the decision that no offshore wind projects would proceed any further at that time.593 This meant that applications for offshore wind projects in the FIT Program would no longer be accepted and that existing applications were suspended.594The announcement was specifically worded such that the Claimant’s Project would not be cancelled. It was merely "frozen" until the necessary scientific research was completed and an adequately informed policy framework had been developed.595
261.
As further explained in MOE’s decision notice for the Offshore Wind Policy Proposal Notice, which was published on the Environmental Registry on February 11, 2011:

in light of the comments received in response to the two postings and in particular the identified need for further study, Ontario is not proceeding with any development of offshore windpower projects until the necessary scientific research is completed and an adequately informed policy framework can be developed.596

262.
The decision was rooted the strongly held belief that the underpinnings of the regulatory framework for offshore wind had to be based on sound science and research as a general matter of precautionary policy-making, particularly given the heightened public concern with offshore wind and the risk of legal challenges. Based on the Mr. Baines’ summary of events, this fact was communicated to him when he spoke to the Minister of Energy’s Chief of Staff a week after the deferral announcement.597

C. The Conference Call to Communicate the Deferral to the Claimant

263.
Immediately prior to the announcement of the deferral on offshore wind, the Government of Ontario had a meeting with the Claimant’s lobbyist, Chris Benedetti, followed by a call with the Claimant and the OPA to explain the forthcoming announcement and how it would affect the Claimant.598
264.
In an email to Mr. and Ms. Baines, Mr. Benedetti described the forthcoming announcement as follows: "[t]he government will be suspending offshore development, killing everyone but Windstream. However, there is no pilot. MOE will be doing further study that they will walk through, and the timelines involved. They will propose options for the project, but the timelines for development will be significantly extended."599
265.
During the phone call with the Claimant, officials explained that the Government of Ontario had decided that it "will not be moving forward with offshore wind until further science regulatory work and co-ordination with our U.S. partners is complete".600 However, given the Claimant’s unique position as the only FIT Contract holder for an offshore wind project, its contract would be "frozen" until the regulatory framework on offshore was finalized.601 The Claimant’s Project would be on hold until the release of the REA requirements for offshore wind. All other site release applications for lakebed would be cancelled.602
266.
When Mr. Baines stated "what I am hearing very clearly is the project has been terminated by the government," Mr. Cecchini of the OPA responded "no, that is not what you are hearing."603 Instead, both sides recognized that the Project was being put "on hold until such time as the province can establish a regulation under the Ministry of the Environment under REA pertaining to offshore wind."604 So, while it was made clear that "there will be no further movement on offshore wind development for anybody," and that "all other projects are essentially quashed or cancelled", the Claimant’s Project was "deferred" or "frozen".605
267.
During this phone call, Mr. Baines asked how long it would take for the science to be undertaken and the regulatory framework to be in place. In response, and Brenda Lucas, a Senior Policy Advisor for the Minister of the Environment at the time, stated that this was uncertain but she expected that it would be "years".606
268.
The Claimant alleges that it was promised to be "kept whole",607 but Mr. Cecchini confirms that the OPA, as the counterparty of Windstream’s FIT Contract, never made any such representation.608 In fact, the OPA made a conscious decision prior to the February 11, 2011, conference call not to use those words. Its "approach was to tell Windstream that we would work with them to examine the implications of the deferral on the proposed Project and explore ways to effectively ‘freeze’ the Project within the parameters of the FIT Contract until the deferral was lifted."609
269.
The Claimant was invited to meet with OPA representatives to reach a suitable arrangement within the existing framework of the FIT Contract to ensure that its Project was not terminated, but frozen. Officials specifically pointed to contractual flexibility around Force Majeure, security deposits and the termination rights associated with Force Majeure.610

D. The Claimant’s Post-Deferral Negotiations with the OPA

270.
After having been invited to meet with the OPA to agree to contractual changes, including around Force Majeure, security deposits and the termination rights, that would keep the Claimant’s FIT Contract intact, the Claimant made the following requests: [REDACTED]
271.
The OPA informed the Claimant on March 18, 2011 that it was not in a position to grant these numerous and unreasonable requests, some of which would require the action of the Government of Ontario rather than the OPA.612 The OPA had no authority to create new arrangements or bind the Government of Ontario in any way.613 The OPA was not in a position to accept any proposal that required direction or approval from the Minister of Energy.
272.
In light of these limitations, [REDACTED]
273.
The Claimant responded to the OPA’s letter on June 7, 2011 again seeking an [REDACTED]616
274.
The OPA’s final letter on June 24, 2011 reiterated its position [REDACTED]
275.
In the end, the Claimant refused to accept any proposals put forth by the OPA and correspondence fell silent following the OPA’s letter of June 24, 2011,619 the Claimant’s letter of July 5, 2011620 and the OPA’s subsequent correspondence on October 12, 2011.621
276.
In addition to the negotiations over its FIT Contract terms with the OPA, the Claimant also approached the OPA and MEI with several alternative proposals between April 2011 and May 2012, including (1) a 300 MW solar project; and (2) a 300 MW onshore wind project.622 Subsequently, the Claimant also approached political staff in the Government of Ontario with its proposal that the Project be developed as a pilot. None of these proposals were acceptable to the OPA, which did not have the authority to accept them, or to the Government of Ontario.623 This included the Minister of Energy, who determined that it was not appropriate to issue a direction to the OPA to allow the alternative project proposals to go forward.624

VIII. Ontario’s Efforts to Develop the Regulatory Framework for Offshore Wind Development

A. Ontario’s Initial Offshore Wind Development Research Plan Proposal

277.
After the deferral, MOE began developing a proposal for a research plan to study the issues that Ontario had identified as needing to be addressed before it could allow offshore wind development to move forward.625 Emphasizing the novelty of offshore wind, this initial research plan proposal identified the need for further scientific research by MOE in the areas of noise propagation modelling and measurement requirements over water and ice, water quality requirements (including those related to effects from decommissioning), technical design requirements and safety issues for support and foundation structures and submarine cables.626
278.
The initial research plan proposal also noted the need for MNR and MTC to contribute to offshore wind research.627 In particular, it noted that MNR would need to undertake research related to constraint analysis (in terms of defining areas where development should be restricted) as well as ecological impact assessment requirements and coastal engineering study requirements. It also noted that MTC would need to develop marine archaeology study requirements and guidelines.
279.
The Government of Ontario’s initial research plan proposal was to [REDACTED]
280.
Over the spring and summer of 2011, MOE continued to refine the research plan, elaborating research needs and responsibilities in further detail, and establishing a timeline for achieving its goals.630 The plan anticipated that research scoping and coordination of research needs between ministries would take place until the fall of 2011, [REDACTED] Ontario and the [REDACTED] would finalize a research agenda in the fall of 2011 and research would start in 2012, continuing to the end of 2014.632 Following that, Ontario’s regulatory requirements and program development would occur over two years during 2015 and 2016.633

B. [REDACTED]

281.
[REDACTED]
282.
[REDACTED]
283.
[REDACTED]640 The writ of election was dropped on September 7, 2011 and the election was held on October 6, 2011, with the Premier and his party being re-elected to government.641

C. Ontario’s Continuing Development and Finalization of the Research Plan

284.
On January 11, 2012 the Premier’s Office requested an update on the status of research on the impacts of offshore wind, in light of the upcoming anniversary of the deferral imposed by the Minister of the Environment.642 MNR, MOE and MEI provided an update the following day, highlighting the work to date of MNR and MOE.643 Following this briefing, MOE continued work on the research plan, in consultation with MEI, MNR and MTC.644 In late January 2012, MOE briefed the Minister of the Environment with another update on offshore wind development and the path forward, [REDACTED] and a preliminary research agenda.645 The offshore science research plan was finalized in February 2012.646
285.
Under the proposed research plan, MOE would lead a coordinated effort to develop the science required to inform program development decision-making for requirements of offshore wind facilities under the REA Regulation.647 The research plan proposed that Ontario would publicly communicate the current status of offshore wind research and upcoming work, and [REDACTED] complete the research already underway, host technical workshops to discuss completed and upcoming research and seek academic and technical expert input to review and comment on all findings.649 The research plan envisioned that in the medium to longer term (from 2013 to 2017 or longer), Ontario would confirm the scope and timing of its research studies, incorporate academic involvement, and facilitate expert input and validation in the process as studies are completed.650
286.
The research plan identified the following activities to be undertaken by Ontario and [REDACTED], independently and jointly:

Research TopicOntario [REDACTED] Shared
Wind resource characterizationX
Water qualityX
Erosion control/ coastal engineeringX
NoiseX
WildlifeX
Technical standards and safety (load, build-up, drift & throw of ice)X
Infrastructure and construction vessel needsX
Spatial planning and socioeconomic interestsX
International transmission and grid interconnectionX
Technology Assessment (underwater cabling)X
Decommissioning and Financial AssuranceX
Shoreline Heritage and TourismX
Marine archaeological resourcesX

Figure 5: Preliminary research agenda proposed in Ontario’s research plan.651

287.
The preliminary research plan listed Ontario’s intended research activities in these areas in greater detail, allocating activities to immediate, short-term, medium-term and long-term research.
288.
Ontario updated the research plan in May 2012.652 This updated research plan identified the total expected costs associated with offshore wind research at $2.5 to $3.6 million over five to six years (approximately $500,000 to $700,000 annually).653 It further listed Ontario’s completed research projects, as well as its short-term, medium-term and long-term research initiatives.
289.
The following studies were identified as completed in the research plan:

Figure 6: Completed studies of Ontario’s May 2012 research plan654

290.
The following research topics were identified for short, medium and long-term work under the research plan:

Figure 7: Short-term research topics under Ontario’s May 2012 research plan655

Figure 8: Medium-term research topics under Ontario’s May 2012 research plan656

Figure 9: Longer-term research topics under the May 2012 research plan.657

291.
Ontario planned for MOE’s water quality, technical standards and safety, noise and decommissioning studies to begin within two years using funds budgeted to MOE in 2012-2013.658

D. [REDACTED]

[REDACTED]

E. Ontario’s Efforts to Complete the Science Necessary to Develop a Regulatory Framework for Offshore Wind

292.
[REDACTED]

[REDACTED]

294.
[REDACTED], Ontario had to re-consider how to proceed with the necessary research. MOE maintained the lead role under the research plan and continued with its focus on the areas of noise, water and sediment quality, technical standards and safety, and decommissioning and valuation of financial assurance. It developed an updated MOE-specific research plan in March 2013 which indicated that research would not be completed until at least the end of 2016.664
295.
Ontario has now completed numerous research studies related to renewable energy projects and offshore wind.665 The completed research relating to offshore wind specifically includes the following studies commissioned or funded by MNR:

Impacts of electromagnetic fields and Wolfe Island study on fish biodiversity and distribution;666

a 2011 report on offshore wind power coastal engineering that investigates the scientific and technical issues associated with potential offshore wind power development on the Great Lakes;667

a 2011 coastal engineering workshop, which determined that further study on impacts of offshore wind projects to shoreline erosion was required;668

a 2011 report which investigates the potential effects of offshore wind power projects on fish and fish habitat in the Great Lakes, based on existing marine literature and knowledge of Great Lakes ecosystems;669

a 2011 report on background information and science considerations for fish and fish habitat relevant to offshore wind power projects on the Great lakes, which describes ways to prevent the negative effects from offshore wind energy production and to enhance the potential benefits from offshore wind energy production within a Great Lakes context;670

a 2012 biology master’s thesis entitled "Spatial and Temporal Activity of Migratory Bats at Landscape Features", which received MNR funding.671 Contrary to the Claimant’s assertion,672 this study is publicly available; and

MNR’s Renewable Energy Atlas, an interactive online tool that provides a publicly accessible GIS-based mapping tool identifying wind resources, allowing users to create and view maps of wind energy across the province.673 Contrary to the Claimant’s assertion,674 this tool has not been removed from the web and remains accessible to the public.

296.
In addition to these MNR-commissioned or funded studies, MOE completed an in-house study on water quality impacts within the Lake Ontario nearshore in 2012.675 Further, on August 29 and September 3, 2014, MOE released a Request for Proposals ("RFPs") for a preliminary noise study and a decommissioning study.676
297.
The noise study will result in a report based on a technical evaluation of sound propagation modelling methodologies to predict offshore wind facility noise impacts (both over water and at land receptors).677 This report, which will include a literature review and consultation of technical and government specialists, will be used to inform any future rules and requirements related to noise.678 However, additional work relating to field measurements, validation testing and potentially purchasing an offshore wind noise model will remain to be completed after this preliminary noise study.679
298.
The decommissioning study will involve a technical evaluation of decommissioning methodologies for offshore wind facilities to potentially be built in Ontario.680 It "will gather the best available science related to how wind turbines and other equipment should be managed at the end of their lifecycle and identify what type of financial assurance should be established."681 Like the preliminary noise study, the decommissioning study will also be based on a literature review and consultation of technical and government specialists.682
299.
Bidding on these RFPs closed in early October 2014.683 The studies will proceed once MOE completes the RFP process and has selected vendors to conduct them.

The Tribunal Lacks Jurisdiction To Hear Some Of The Claimant’s Claim

I. Summary of Canada’s Position

300.
In its Memorial, the Claimant provides lengthy arguments as to why actions of the OPA are attributable to Canada as a matter of international law.684 In over twenty pages of submissions, the Claimant provides the Tribunal with an incorrect interpretation of the international law surrounding attribution in a failed attempt to demonstrate that the OPA is an organ of the Government of Ontario, or that alternatively the OPA was exercising delegated government authority in its capacity as a state enterprise. However, all of the measures that the Claimant challenges are actually measures of the Government of Ontario, not measures of the OPA. Accordingly, the Claimant’s arguments about whether acts of the OPA can be attributed to Canada for the purposes of Chapter 11 are irrelevant. The Tribunal simply does not need to decide this question in order to assess the merits of the Claimant’s allegations.
301.
In light of the claims that they have made, it is unclear why the Claimant has devoted so much time to the question of whether or not the acts of the OPA can be attributed to Canada. Nevertheless, in the interest of completeness and in light of the errors of international law in the Claimant’s submissions that need to be corrected, the following section will demonstrate that even if the Claimant were challenging measures of the OPA, it has failed to prove that the Tribunal has jurisdiction to consider whether such measures violated Canada’s obligations under the NAFTA. The OPA is not an organ of Ontario. It is a state enterprise and pursuant to Article 1503(2), the Tribunal has jurisdiction only to consider the measures of a state enterprise if those measures were adopted or maintained in the exercise of delegated governmental authority. With respect to the Claimant’s FIT Contract, the Claimant cannot point to a single act or omission of the OPA that was carried out in the exercise of delegated governmental authority. As a result, the Tribunal has no jurisdiction to hear any claims arising out of the conduct of the OPA.

II. The Claimant Is Not Challenging Any Measures Adopted or Maintained by the OPA

302.
In its Memorial, the Claimant alleges that Canada has breached its obligations under the NAFTA as a result of certain omissions by the OPA. For example, the Claimant appears to directly challenge the failure of the OPA to comply with commitments made by MEI to Windstream "to take steps to ensure that Windstream’s investments would not be impacted negatively" by the deferral on offshore wind;685 to "keep Windstream ‘whole’" following the deferral;686 and "to award a solar project to Windstream rather than to Samsung".687
303.
However, when it further discusses these specific measures, the Claimant explains that "the Ontario Government, and MEI in particular, exercise de jure and de facto control over the OPA, and therefore could have caused the OPA to renegotiate Windstream’s contract to protect the value of its investment in WWIS or to take other measures to ensure that Windstream’s investment was not negatively impacted by the [deferral]."688 Similarly, with respect to the alleged failure to award the Claimant a solar contract, the Claimant points to Ontario’s refusal to entertain such a possibility.689 Accordingly, it is clear that the Claimant is actually challenging the failure of the Ministry of Energy to direct the OPA to act in a certain way, not the fact that the OPA failed to adopt or maintain other measures. As such, the question of whether any measures of the OPA can be attributed to Ontario is wholly irrelevant in this arbitration.690

III. The Claimant Has Failed to Meet its Burden of Establishing that this Tribunal Has Jurisdiction to Consider Measures Adopted or Maintained by the OPA

304.
If the Claimant were actually challenging measures adopted or maintained by the OPA with respect to its FIT Contract, then it would have the burden of establishing that this Tribunal has jurisdiction to consider those measures. This fundamental principle was recently confirmed in Apotex v. United States where the tribunal held that "Apotex (as claimant) bears the burden of proof with respect to the factual elements necessary to establish the Tribunal’s jurisdiction in this regard".691 In so holding, the Apotex Tribunal followed earlier NAFTA tribunals, including those in Methanex v. United States, Bayview v. Mexico and Grand River v. United States, which have all consistently affirmed that it is for the claimant to establish that its claims fall within NAFTA Chapter 11 and within the tribunal’s jurisdiction.692 If there is any ambiguity as to whether or not the Claimant has met its burden in this regard, the Tribunal should decline to act.693
305.
For the reasons explained below, the Claimant has not met its burden with respect to the alleged acts and omissions, if any, of the OPA. Accordingly, to the extent such claims are being made, they should be dismissed.

A. The OPA Is Not an Organ of the Government of Ontario

306.
There is no dispute between the parties that this Tribunal has jurisdiction to hear a claim that the acts of an organ of the Government of Ontario, such as MNR, MOE, MEI and the Premier’s Office, are in violation of Chapter 11 of NAFTA. The international responsibility of a State for the acts of the organs of its national and sub-national governments is one of the cornerstones of international law.694
307.
The Claimant alleges that the OPA is also an organ of the Government of Ontario, and that its measures can be attributed to Canada on these grounds.695 The Claimant is incorrect. At customary international law, a person or entity is an "organ" of a State if it is one of the individuals or collective entities that "make up the organization of the state and act on its behalf."696 This definition can be met in one of two ways: (1) if the person or entity has the status of an organ, under the law of the State in question (i.e. it is a de jure organ); or (2) if the person or entity may, for the purposes of international responsibility, be equated with a State organ, even if it does not have that status in the internal law of the State (i.e. it is a de facto organ).697 The OPA is neither a de jure nor de facto organ of the Government of Ontario.
308.
As codified in paragraph 2 of Article 4 of the International Law Commission’s Articles on State Responsibility ("ILC Articles"), a person or entity is a de jure organ of a State at international law if it has the status of an organ in a State’s internal law.698 The OPA does not have this status under Ontario law. There are no Ontario laws which define the organs of the Government of Ontario. The fact is that the OPA (now the IESO) is a non-share capital corporation699 with independent legal personality.700 Its principle purpose is to, among other things, "engage in activities in support of the goal of ensuring adequate, reliable and secure electricity supply and resources in Ontario".701 In so doing, the OPA acts independently, not as an agent of the Crown.702 Contrary to what the Claimant may believe, the mere fact that the OPA is a creature of statute does not make it an organ of the State.703 As explained in the commentaries to the ILC Articles, "[t]he fact that the State initially establishes a corporate entity, whether by a special law or otherwise, is not a sufficient basis for the attribution to the State of the subsequent conduct of that entity."704 Although these corporate entities may be owned by the State, they are "considered to be separate, prima facie their conduct in carrying out their activities is not attributable to the State unless they are exercising elements of governmental authority".705
309.
The OPA is also not a de facto organ of the Government of Ontario. It is only in "exceptional" circumstances that persons or entities without the status of organs at internal law can be considered organs at international law. Indeed, it is only when such persons or entities act "in ‘complete dependence’ on the State, of which they are ultimately merely the instrument", that such status attaches.706 This requires an exceptionally high level of dependence, on the one hand, and control on the other hand.707 The OPA is not in a relationship of "complete dependence" on the Government of Ontario, nor does the Government of Ontario exercise complete control over the OPA. As discussed above, the OPA has independent legal personality, and it is not even funded by government revenues. Such a relationship of dependence and control would be antithetical to the independent nature of the OPA.

B. The Acts and Omissions of the OPA that the Claimant Appears to Challenge Were Not Done in the Exercise of Delegated Governmental Authority

310.
While the OPA is not an organ of government, there is no dispute between the parties that it does qualify as a state enterprise for the purposes of NAFTA.708 Article 1503 establishes the NAFTA Parties’ obligations with regards to state enterprises. Specifically, Article 1503(2) provides that:

Each Party shall ensure, through regulatory control, administrative supervision or the application of other measures, that any state enterprise that it maintains or establishes acts in a manner that is not inconsistent with the Party’s obligations under Chapters 11 (Investment) and Fourteen (Financial Services) wherever such enterprises exercises any regulatory, administrative, or other governmental authority that the Party has delegated to it, such as the power to expropriate, grant licenses, approve commercial transactions or impose quotas, fees or other charges.

311.
Thus, as explained by the tribunal in UPS, Article 1503(2) creates a lex specialis which means that the customary international law rules regarding when the acts of a state enterprise can violate a State’s international law obligations do not apply.709 As the Tribunal noted:

Chapter 15 provides a lex specialis regime in relation to the attribution of acts of monopolies and state enterprises, to the content of the obligations and the method of implementation.710

312.
Accordingly, it is only where a state enterprise acts in the exercise of delegated governmental authority that the obligations in Chapter 11 apply to it. The tribunal in UPS was faced with the task of interpreting Article 1503(2), and in particular, considering whether a state enterprise was acting in the exercise of delegated governmental authority when considering a claim against Canada based on the conduct of Canada Post. The tribunal held that although Canada Post was a creature of statute created to serve the public interest and with "an essential role in the economic, social and cultural life of Canada",711 not all of its acts in the exercise of its statutory mandate were done in the exercise of governmental authority.712 In particular, the Tribunal found that the decisions relating to the use of Canada Post of its own infrastructure were not made in the exercise of public authority.713
313.
Further, while the general rules of customary international law are not controlling because of the lex specialis created by Article 1503(2), the decisions of other tribunals as to the meaning of the similar term "governmental authority" in Article 5 of the ILC’s Articles can be informative.
314.
In Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt, the Tribunal considered a claim against Egypt based on the conduct of the Suez Canal Authority ("SCA"), an entity that the Egyptian government had created by statute to manage maintain and develop the Suez canal.714 The claim in question involved the authority’s exercise of that statutory mandate related to a contract to widen and deepen the southern regions of the canal.715 The tribunal explained that it was irrelevant that the "subject matter" of the disputed conduct "related to the core functions of the SCA", which was acting for the government’s and public’s benefit in managing the Suez canal.716 In particular, it held that "[w]hat matters is not the "service public" element, but the use of "prérogatives de puissance publique" or governmental authority."717
315.
None of the acts or omissions of the OPA that the Claimant identifies in its Memorial involve the use of governmental authority. For example, the Claimant argues that the OPA’s failure to implement the Government of Ontario’s alleged commitment to the Claimant that it would not be negatively affected by the deferral, and the Government of Ontario’s alleged promise to "keep it whole" was an exercise of delegated governmental authority.718 First, the Claimant has introduced no evidence that the Minister of Energy delegated the implementation of this alleged commitment to the OPA.719 Second, even if it had introduced such evidence, the alleged commitment of MEI,720 is not an exercise of governmental authority. There is nothing inherently governmental about the conduct of negotiations to settle a dispute pertaining to a contract between a state enterprise and an investor.
316.
Similarly, the Claimant challenges the OPA’s failure "to award a solar project to Windstream rather than to Samsung".721 Again, the Claimant has not proven that such a decision was made, or if it was, that such a decision constitutes an exercise of "governmental authority." Indeed, the Claimant does not provide any further explanation on how such acts could constitute government authority aside from its mere assertion that the acts are attributable to Canada. That is not enough to meet its burden. As explained above, simply because the OPA is a creature of statute, and is subject to the directions of the Minister of Energy, or the fact that it is implementing government procurement programs, like the FIT Program, does not mean that each and every one of its actions is an exercise of "government authority."722 Simply put, the consideration of how to resolve a contractual dispute within that program is not an issue of exercising "governmental authority."

IV. Conclusion

317.
The Claimant challenges measures of the Government of Ontario, not measures of the OPA. Accordingly, the Claimant’s arguments about whether acts of the OPA can be attributed to Canada for the purposes of Chapter 11 are irrelevant. However, even if the Claimant were challenging measures of the OPA, it has failed to prove that the Tribunal has jurisdiction to consider whether such measures violated Canada’s obligations under NAFTA.

Canada Has Not Violated Its NAFTA Obligations

I. Articles 1102 and 1103 Do Not Apply to the FIT Program by Virtue of the Procurement Exemption in Article 1108

A. Summary of Canada’s Position

318.
The Claimant alleges that certain measures of the Government of Ontario after the February 11, 2011 deferral violated Articles 1102 and 1103. Specifically, the Claimant has alleged that Canada has violated Article 1102 because the Government of Ontario’s decided to keep TransCanada "whole by awarding it a new project and compensating it for its costs associated with the cancellation" following the cancellation of TransCanada’s procurement contract for a gas-fired electricity generation facility but failed to offer a similar deal to the Claimant.723 Second, it argues that Canada has breached Article 1103 because "Ontario offered a FIT contract to Samsung for the very solar project that Windstream proposed following the moratorium as an alternative project."724
319.
The Claimant’s allegations are meritless. Further, the Claimant is factually incorrect. For example, the Government of Ontario’s decision to award a PPA to Samsung for a solar project was made pursuant to a specific investment agreement, the Green Energy Investment Agreement ("GEIA").725 It was not a FIT Contract, and in this regard, the Claimant even admits that it has no information concerning the circumstances surrounding its 1103 arguments.726 The Claimant’s allegations are bare assertions without any substantiation and do not refer to any specific measures. However, to the extent that the Claimant is alleging Canada breached the NAFTA in failing to offer certain treatment in the context of the FIT Program, the Tribunal need not consider the Claimant’s arguments as they are precluded by Article 1108(7)(a). That Article expressly preserves the NAFTA Parties’ right to pursue policy objectives in carrying out procurement programs, even where doing so amounts to discriminatory treatment.
320.
As will be shown below, when interpreted in accordance with its ordinary meaning, it is evident that Article 1108 applies to the measures in dispute, precluding the Claimant’s claim under Articles 1102 and 1103. Ultimately, all of the claims are based on the Claimant’s inability to develop its Project or obtain some other resolution pursuant to the FIT Contract it obtained under the FIT Program. Articles 1102 and 1103 "do not apply" to such measures as they "involve" procurement by a Party or state enterprise.727

B. The Exclusion of Procurement from the Coverage of Chapter 11’s Obligations

321.
In NAFTA Chapter 11, the NAFTA Parties carved out for themselves significant policy space with respect to the use of their procurement powers. In particular, they excluded procurement from the coverage of certain obligations. Article 1108 provides, in relevant part:

7. Articles 1102, 1103, and 1107 do not apply to:

(a) procurement by a Party or a state enterprise […]

322.
Article 1108 thus applies when: (1) the measure involves procurement; and (2) the measure was adopted or maintained by a Party or a state enterprise. When both of these conditions are met, the obligations in Articles 1102 and 1103 do not apply.728 As is shown below, the measures challenged by the Claimant involve procurement by a Party or state enterprise. Accordingly, the Claimant’s Article 1102 and 1103 claims must be dismissed.

C. The FIT Program and the Measures Taken by Ontario with Respect to the Claimant’s FIT Contract Involve Procurement

1. The Ordinary Meaning of "Procurement" in Its Context

323.
The first element that must be met for Article 1108 to apply is that the measure must involve procurement. NAFTA Chapter 11 does not define "procurement". The ordinary meaning of the term has, however, been specifically considered in ADF v. U.S. and UPS v. Canada.729 In ADF,the tribunal was faced with a challenge under Articles 1102 to the domestic content requirements imposed by the U.S. on steel to be used by a foreign investor in a highway interchange project procured by the State of Virginia. The Tribunal looked to the ordinary meaning of the term "procurement" and explained:

In its ordinary or dictionary connotation, "procurement" refers to the act of obtaining, "as by effort, labor or purchase." To procure means "to get; to gain; to come into possession of." In the world of commerce and industry, "procurement" may be seen to refer ordinarily to the activity of obtaining by purchase goods, supplies, services and so forth.730

324.
The tribunal in UPS adopted a similarly broad interpretation of the term "procurement" as used in Article 1108. In that case, the tribunal was faced with a challenge that the Government of Canada paid Canada Post to conduct material handling, data entry and duty collection services, but it required UPS Canada to perform similar services for free.731 UPS did not dispute the government’s right to contract for services, but argued that the contract provided more favourable treatment.732 After analysing the contract, the tribunal held that Article 1102 did not apply to it because it constituted a procurement contract within the meaning of Article 1108(7).733 In coming to this conclusion, the tribunal relied on the fact that the service in question was provided pursuant to a "commercial fee-for-service contract"734 that covered services provided to the government, such as duty collection.735 It came to this conclusion despite the fact that the service was provided for the benefit of, and paid for by, the persons or companies importing goods by mail rather than by the government.736