‘Ottawa’ Reevely: U.S. Wind Power Company Seeks $475M in NAFTA Claim
Canadian taxpayers are facing a $475-million free-trade claim from an American company that alleges the Ontario government invented scientific pretexts to stop wind farms in the Great Lakes.
That’s on top of a $500-million lawsuit against the province by Ontario-based Trillium Power Wind Corp. over the same “temporary” ban (now five years old and counting), and an Ontario Provincial Police investigation into whether government officials destroyed emails and documents that should have been kept as evidence.
It all stems from a decision the government made in 2011 to cancel numerous proposals for “offshore” wind farms in the lakes, ostensibly so it could commission more scientific research into how to build them properly.
The trade claim is under the North American Free Trade Agreement, and it comes from an American company called Windstream Energy.
Like Trillium Power, Windstream wanted to build a large array of windmills in Lake Ontario off Kingston. Windstream’s proposed site was just northeast of Trillium’s — if both had been built, they’d have been neighbours.
Like Trillium, Windstream alleges it was wronged by that 2011 decision, which scrapped every project then in development and froze applications for new ones, and deserves to be compensated.
But unlike Trillium, Windstream has an enormous amount of evidence, hundreds of pages’ worth, in the public record, filed with a tribunal in The Hague.
Those filings include extracts from numerous emails government officials sent each other, complaining about how frustrating it was to try to come up with scientific explanations for things the politicians had chosen to do for political reasons.
The emails were obtained by Windstream through access to information and during the course of document production as part of the legal proceedings.
For instance, in spring 2010, the government considered an “exclusion zone” that would have forced all windmills in the Great Lakes to be built at least five kilometres from shore. That would have pacified some people who just didn’t want to look at windmills out on the water, but according to Windstream’s evidence that wasn’t what the government wanted to say.
“(W) e are to work backwards from the number to provide a rationale for it. But this can’t be about aesthetics, or there will be a similar cry for exclusion zones on land,” Windstream quotes an email from Eric Boysen, the director of the Ministry of Natural Resources’ renewable energy program, to another ministry staffer in April 2010.
“The real challenge now begins,” Boysen wrote in a separate email. “Although we have messaged to (the Ministry of the Environment) that there is nothing in our data to support an exclusion zone, they continue to want to base this on ecological reasons.”
There might be reasons to forbid wind farms in particular spots closer to shore, but no justification for a blanket ban. “That being said, this is the approach that government is taking and MNR will have to be reserved in how it messages its story lines and be seen to be supporting the broader government agenda,” wrote Ken Cain, another manager handling renewable-energy policy.
A five-kilometre setback would have killed outright most of the offshore wind projects then planned for the lakes and imperilled most of the rest. But it appears the government found it hard to justify with the science it had on hand.
(The government briefly considered using the need to get the electricity produced by offshore wind farms into the provincial grid to create “no-go zones” for windmills in the water. No windmills could be built if there was nowhere to plug them in, the idea went. An assistant deputy minister in the natural-resources ministry wrote to Boysen that the plan would make his head “explode in anger,” the filing says.)
Then in January 2011, the Ontario government decided to impose a total moratorium on the grounds that the government didn’t know enough to approve any wind farms in lakes at all.
“The Ontario government settled on scientific uncertainty despite the repeated assertions … from staff at (Natural Resources) that they were confident that existing regulatory mechanisms were sufficient to deal with site-specific problems as they arose and despite the fact that (the ministries of energy, environment and natural resources) had all planned to have the requisite rules for offshore wind energy projects in place by January 1, 2011,” the Windstream filing says. “It had not been suggested at the time that there was any uncertainty that would prevent that work from going forward.”
Windstream’s filing includes evidence of government staff contemplating the extra scientific studies they’d do, but observing that not enough money had been allocated to do them. They even sat on three studies the Ministry of Natural Resources commissioned when they were completed later in 2011.
Those studies stayed under wraps for years because officials were worried that releasing them would draw attention to the fact that no others were being done, the filing says, quoting pieces of other emails.
“The reality is that MNR’s work is the only science/research that the province of Ontario can put forward — other ministries did not undertake any research, even though the February 2011 government rational(e) said that more science was needed,” said one 2012 email from Natural Resources’ Ken Cain.
Because it’s an international case, Ontario’s interests are represented by federal-government trade lawyers, and the federal government will have to pay the penalty if they lose. Windstream had a speculative project and was treated no worse than anybody else, they argue.
Everyone knew Ontario was still developing its wind-farm rules, and NAFTA doesn’t protect investors from normal risks, Canada’s filings say. They reject Windstream’s claims comprehensively and accuse the company of inflating its claim for damages, considering its project never got beyond the planning stage.
They do not deal in detail with Windstream’s version of all the wrangling over how to stop wind farms that had become a political problem. They do say that in Ontario, ministers have the right to decide whether they have enough information to make policy decisions, and it was Ontario’s environment minister, John Wilkinson by then, who decided he didn’t.
Any wind farm on the Great Lakes would surely be the subject of a legal challenge, Canada argues.
“Having these projects bogged down for long periods in litigation solely because the government did not take sufficient time to understand the science and develop an appropriate regulatory framework would have been a highly undesirable result and clearly not a prudent course of action for any government,” its filing says.
Like Trillium in its lawsuit, Windstream’s lawyers found a lack of material in the premier’s office explaining the wind-farm moratorium and argue that must be because somebody deleted it. Documents they got from individual ministries note that people from the top levels of the government were involved but those people seemed to have zero relevant documents of their own, for instance.
The company asks the NAFTA tribunal to take that, findings by Ontario’s information and privacy commissioner, and the fact that two aides to former premier Dalton McGuinty are facing criminal charges related to document erasings, and “draw an adverse inference that such emails would have contained information detrimental to Canada’s case.”
(The aides deny wrongdoing. McGuinty himself was never the subject of any investigation.)
Canada’s lawyers responded that actually they delivered 54 emails from people in the premier’s office to Windstream. Anyway, people who worked there often talked rather than writing things down, so “there are simply no more documents for Canada to produce in this regard.”
After years of paper filings and counterfilings, the tribunal is preparing a ruling on Windstream’s claim.