Solid Waste & Recycling

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Court Rejects Challenge

A recent ruling of the Ontario Divisional Court in Ontario Waste Management Assn. v. Waste Diversion Ontario has established that courts are not inclined to review matters that don’t involve a decision or action by a tribunal and,...


A recent ruling of the Ontario Divisional Court in Ontario Waste Management Assn. v. Waste Diversion Ontario has established that courts are not inclined to review matters that don’t involve a decision or action by a tribunal and, particularly, where the matter relates primarily to commercial interests (rather than the public interest).

In this case, the matter which the court was asked to review involved a decision by Waste Diversion Ontario (WDO) and Stewardship Ontario (SO) that, according to Ontario Waste Management Association (OWMA), had a significant impact on the municipal hazardous or special waste (MHSW) diversion sector in Ontario.

Previous and new program

The original program for MHSW was approved by the province’s environment minister on February 19, 2008. Under this program, municipalities collected MHSW from households in their jurisdiction and paid service providers to transport and process the waste. Participating municipalities were reimbursed by SO. Municipalities selected service providers based on a competitive bidding process and paid service providers for all post-collection services, including transporting, processing, recycling, and disposing of MHSW.

Service providers invested in the MHSW program and many of them made significant capital investments in waste management infrastructure, research, and personnel, resulting in a waste management sector comprised of over 140 municipal programs serving a population of over 12 million residents — with many waste transporters and processors.

In July 2008, the environment minister required WDO and SO to develop an amended program for MHSW that would require stewards to be responsible for all costs of the MHSW program (from collection through to final diversion). The final program was approved by the minister on September 22, 2009 and service providers again invested in the MHSW program (relying on assurances in the program plan about opportunities for growth, stability of the market, and attractive compensation).

On January 1, 2012, SO implemented an incentive program which, OWMA argued, fundamentally altered the market and compensation of service providers under the existing program. Municipalities no longer had the discretion to procure services by way of tender or request for proposal system. Under the new incentive program, municipalities and service providers were prohibited from directly entering into agreements for services. SO was required to enter into those agreements, which were very specific as to form and terms.

Impacts & concerns

The rates paid by the new program were based on actual costs rather than operational costs for service providers, and were therefore significantly lower than the rates previously paid by municipalities. By capping the rates, OWMA argued, SO set a market price which did not account for market dynamics. OWMA took the position that this had not been discussed in the approved program plan, and wasn’t authorized under the MHSW program.

OWMA also argued that WDO didn’t follow due process by considering how the changes might impact the market, or if they required approval by the environment minister. In doing so, OWMA argued that WDO had failed to provide proper oversight of the program implemented on January 1, 2012, and that SO implemented the incentive program in breach of the Waste Diversion Act and program plan.

OWMA brought an application to the Ontario Divisional Court to review WDO and SO’s decision to implement the new program. OWMA is a not-for-profit organization founded in 1977 that represents approximately 300 independent waste companies and around 60 municipalities and counties that provide residential waste services.

Under the relevant legislation, WDO is required to ensure that waste diversion programs it develops don’t affect Ontario’s marketplace in an unfair manner. SO is responsible for developing and operating certain diversion programs under WDO’s supervision, including the MHSW program, and can impose fees on stewards to pay for the programs.

Once a program created by WDO is approved, the legislation provides that no “material change” may be made to the program without the prior written approval of the environment minister. OWMA argued that the change to the program was a “material change” and contravened the requirements of the WDA, as well as principles of natural justice and procedural fairness.

Court decision

The Divisional Court declined to consider the application and held that the decision made by WDO and SO was not subject to its review. It also held that the OWMA did not have legal standing to bring the application and that, further, it was not prepared to perform the function of a trial court and consider substantial evidence, which it would need to do to decide the matter. As a result, OWMA will need to find another means, legal or otherwise, to advance its position on the new program, failing which there could be significant implications going forward for the waste management sector.

Rosalind Cooper, LL.B., is a partner with Fasken Martineau
DuMoulin LLP in Toronto, Ontario.
Contact Rosalind at rcooper@tor.fasken.com


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