Executive Summary: Key Legal and Evidentiary Issues

• Authority of the Environment Canada inspector under the Fisheries Act to issue directions for indirect deposits of deleterious substances through municipal storm sewers.

• Reasonableness of the inspector’s interpretation of “deleterious substance” as it applies to sulfate concentrations in the effluent.

• Logic and practicality of the monitoring requirements imposed by the Direction, particularly regarding toxicity testing and operational feasibility.

• Compliance with procedural fairness and natural justice in the issuance of the Direction and disclosure of evidence.

• Admissibility and weight of affidavit and cross-examination evidence from the decision maker in judicial review proceedings.

• Justification for naming specific individuals as addressees in the Direction based on their roles and authority within Terrapure.

Facts of the case

Terrapure BR Ltd. is the general partner of Terrapure BR LP (formerly Revolution VSC LP). Together, they operate a lead-acid battery recycling facility in Sainte-Catherine, within the Montréal Metropolitan Community. The facility generates process water that, along with storm water, is treated and discharged as effluent into the municipal storm sewer system, which ultimately releases into the St. Lawrence Seaway. Environment Canada, acting under the Fisheries Act, began an inspection in July 2022 after reviewing pollutant data and noting that Terrapure had not previously undergone compliance verification under subsection 36(3) of the Act. Internal laboratory reports provided by Terrapure showed effluent sulfate concentrations of 44,393 mg/L in April 2022 and 51,879 mg/L in May 2022, far exceeding the municipal by-law limit of 1,500 mg/L. On August 23, 2022, following heavy rainfall, Terrapure discharged partially treated effluent and notified Environment Canada, which collected samples. Toxicity testing revealed a 100% mortality rate in all diluted samples.

Events leading to the administrative Direction

Based on these findings, the inspector issued a Notice of Intent on September 22, 2022, and subsequently, on November 24, 2022, issued an Initial Direction under subsection 38(7.1) of the Fisheries Act. The Direction required Terrapure and named employees (Ryan Reid and André Chauvette, later replaced by Andrea Aragon) to cease the discharge of deleterious substances, comply with notification and corrective measure duties, develop an action plan, and implement weekly toxicity testing. The Direction was amended on January 16, 2023, and again on June 23, 2023, to reflect changes in management and monitoring requirements. Terrapure challenged the Direction, arguing that the inspector’s authority did not extend to indirect deposits, that the interpretation of “deleterious substance” was flawed, and that the monitoring requirements were impractical. They also contended that the individuals named lacked the necessary authority over plant operations and that procedural fairness was not observed.

Policy terms and statutory provisions at issue

The dispute focused on the interpretation of sections 34, 36, and 38 of the Fisheries Act. Terrapure argued that the Act distinguishes between direct and indirect deposits and that the inspector’s powers under subsections 38(5), 38(6), and 38(7.1) apply only to direct deposits into waters frequented by fish. The inspector’s position was that the St. Lawrence Seaway qualifies as water frequented by fish and that the effluent constituted a deleterious substance. The applicants also referenced the Compliance and Enforcement Policy for Habitat and Pollution Provisions of the Fisheries Act, asserting that the inspector failed to follow or justify any departure from internal guidelines.

Judicial review and analysis

The Federal Court reviewed whether the inspector’s decisions were reasonable, whether the monitoring requirements were logical and feasible, and whether procedural fairness was observed. The Court found that the inspector’s interpretation of “deleterious substance” regarding sulfate was unreasonable, particularly given the reliance on a “zero discharge” standard and the exclusion of scientific literature and municipal standards. The monitoring requirements were found to be illogical and impractical, as they could require Terrapure to halt operations for up to 14 days while awaiting toxicity test results. The Court determined that procedural fairness was not breached and that it was reasonable to name Ryan Reid and Andrea Aragon in the Direction, but not André Chauvette, who had retired.

Ruling and outcome

The Federal Court granted the application for judicial review, set aside the Direction, and remitted the matter to the inspector for redetermination in accordance with the Court’s reasons. The successful party was Terrapure BR Ltd., Terrapure BR LP, Ryan Reid, André Chauvette, and Andrea Aragon. The Court awarded costs to the Applicants in the all-inclusive amount of $8,958.61. No damages were awarded beyond these costs, and the matter was sent back for further administrative consideration.