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Counter-Memorial PUBLIC IN THE MATTER OF AN ARBITRATION UNDER CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT AND THE UNCITRAL ARBITRATION RULES BETWEEN: WINDSTREAM ENERGY LLC Claimant AND: GOVERNMENT OF CANADA Respondent GOVERNMENT OF CANADA COUNTER-MEMORIAL January 20, 2015 Department of Foreign Affairs, Trade and Development Trade Law Bureau Lester B. Pearson Building 125 Sussex Drive Ottawa, Ontario K1A 0G2 CANADA Windstream Energy LLC v. Government of Canada Canada’s Counter-Memorial January 20, 2015 TABLE OF CONTENTS INTRODUCTION..........................................................................................................................1 I. Overview ................................................................................................................................1 II. The Roles and Mandates of the Ministries of the Ontario Government and the Ontario Power Authority Relative to Renewable Energy Projects in Ontario .....................11 III. Materials Submitted by Canada............................................................................................13 THE FACTS .................................................................................................................................15 I. Background on Renewable Energy Policy in Ontario ..........................................................15 A. Ontario’s Early Renewable Energy Initiatives 2003-2008 .........................................15 B. The Green Energy and Green Economy Act, 2009 .....................................................18 II. The FIT Program ..................................................................................................................19 A. The Creation of the FIT Program ................................................................................19 B. The FIT Rules .............................................................................................................21 C. The Standard FIT Contract .........................................................................................23 1. Term and Pricing ...............................................................................................24 2. The Milestone Date for Commercial Operation ................................................24 3. Force Majeure ....................................................................................................25 4. The OPA’s Termination Rights .........................................................................26 (a) Supplier Default Termination ..................................................................26 (b) Force Majeure Termination......................................................................26 (c) Pre-Notice to Proceed Termination ..........................................................27 5. Domestic Content ..............................................................................................28 D. The Steps Remaining in the Development of FIT Projects Following FIT Contract Award ...........................................................................................................29 III. The Provincial Approval and Permitting of Renewable Energy Projects in Ontario ...........30 A. The Renewable Energy Approval (REA) Process ......................................................30 1. The Development and Establishment of the REA Regulation ..........................31 2. The Approvals Process under the REA Regulation...........................................32 (a) REA Requirements...................................................................................33 (b) REA Exemptions ......................................................................................34 (c) Pre-Submission Activities ........................................................................35 (i) Pre-Submission Consultation Meeting and the Draft Project Description Report ..........................................................................35 -i- Windstream Energy LLC v. Government of Canada Canada’s Counter-Memorial January 20, 2015 (ii) The REA’s Consultation Requirements..........................................37 (iii) The REA’s Cultural Heritage and Natural Heritage Requirements ..................................................................................39 (iv) The REA’s Water Assessment Requirement ..................................42 (d) Submission and Review of REA Applications ........................................42 (e) Decisions on REA Applications ..............................................................43 (f) Appeals of Decisions on REA Applications ............................................44 3. The REA Regulation and Offshore Wind Projects ............................................44 (a) Ontario’s Lack of Experience with and Precautionary Approach to Offshore Wind Projects ........................................................................44 (b) MOE’s Offshore Wind Policy Proposal Notice, June 25, 2010 ...............49 (c) MOE’s Jurisdictional Review and Relevant Great Lakes Considerations ..........................................................................................52 (d) MOE’s Technical Workshops, Summer 2010 .........................................55 (i) Noise ...............................................................................................56 (ii) Water Quality and Sediment Management .....................................58 (iii) Federal-Provincial Collaboration ...................................................59 (iv) Technical Specifications and Safety Issues ....................................59 (e) The Continued Uncertainty with Respect to Offshore Wind Projects in the Great Lakes ......................................................................60 B. Access to Crown Land for Wind Projects in Ontario .................................................60 1. MNR’s Policies on Access to Lakebed Crown Land ........................................60 2. The Procedure for Obtaining AOR Status and the FIT Program ......................63 IV. The Federal Approval and Permitting of Renewable Energy Projects in Ontario ...............66 A. The Fisheries Act ........................................................................................................67 B. The Species at Risk Act ...............................................................................................67 C. The Navigation Protection Act ...................................................................................68 D. The Coasting Trade Act ..............................................................................................68 E. The Migratory Birds Convention Act, 1994 ................................................................69 V. The Proposed Wolfe Island Shoals Project and Its FIT Contract .........................................69 A. The Claimant’s Application for a FIT Contract ..........................................................69 B. The Site and Layout of the Claimant’s Project ...........................................................70 C. The Unique Nature and Size of the Claimant’s Project ..............................................73 1. First Offshore Wind Project in North America .................................................73 -ii- Windstream Energy LLC v. Government of Canada Canada’s Counter-Memorial January 20, 2015 D. ............116 E. Ontario’s Efforts to Complete the Science Necessary to Develop a Regulatory Framework for Offshore Wind .................................................................................116 THE TRIBUNAL LACKS JURISDICTION TO HEAR SOME OF THE CLAIMANT’S CLAIM .............................................................................................................119 I. Summary of Canada’s Position ..........................................................................................119 II. The Claimant Is Not Challenging Any Measures Adopted or Maintained by the OPA ....120 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 ...........................121 A. The OPA Is Not an Organ of the Government of Ontario ........................................122 B. The Acts and Omissions of the OPA that the Claimant Appears to Challenge Were Not Done in the Exercise of Delegated Governmental Authority ...................124 IV. Conclusion ..........................................................................................................................127 CANADA HAS NOT VIOLATED ITS NAFTA OBLIGATIONS .......................................127 I. Articles 1102 and 1103 Do Not Apply to the FIT Program by Virtue of the Procurement Exemption in Article 1108 ............................................................................127 A. Summary of Canada’s Position .................................................................................127 B. The Exclusion of Procurement from the Coverage of Chapter 11’s Obligations ................................................................................................................129 C. The FIT Program and the Measures Taken by Ontario with Respect to the Claimant’s FIT Contract Involve Procurement .........................................................129 1. The Ordinary Meaning of “Procurement” in Its Context ................................129 2. The FIT Program and the Measures Adopted Relating to the Claimant’s FIT Contract Involve the Procurement
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