April 16, 1998

 To:Works and Utilities Committee

 From:City Solicitor

 Subject:Options to Ban or Grandfather the Operation of Waste Oil Heaters

 Purpose:

 The purpose of this report is to provide information on the identification of options to ban or grandfather the operation of used oil furnaces within the City of Toronto for consideration by Committee in conjunction with the report, dated April 8, 1998, from the Commissioner of Works and Emergency Services.

 Funding Sources, Financial Implications and Impact Statement:

 There are no funding implications of this report.

 Recommendations:

 That this report be received for information.

 Council Reference/Background/History:

 The March 25, 1998 agenda for the Works and Utilities Committee included a communication from Councillor Sgro on the burning of waste oil and requested a staff report to:

 Aidentify options to ban or grandfather the operation of used oil furnaces within the City of Toronto; and identify options to increase the recovery of used motor oil and thereby divert it from burning in space heaters and from fouling the City of Toronto sewage treatment facilities.@

 The Committee will have before it a report, dated April 8, 1998, from the Commissioner of Works and Emergency Services on the matter. This report is intended to be considered in conjunction with that report.

 Comments and/or Discussion and/or Justification:

 The communication from Councillor Sgro is addressing waste oil heaters which are typically used by small businesses such as automobile service stations and car dealerships. The used oil taken from cars in oil changes is utilized as a fuel or fuel supplement in heating the premises of these operations. The concern relates to the toxins that exist in used oil.

 (a)Provincial Regulation of Oil Heaters

 Businesses burning used oil in these heaters must have a certificate of approval (AC of A@) (air) for emissions under the Environmental Protection Act (AEPA@). The issuance of these C of As has been placed on hold and the Ministry of Environment (AMOE@) is now consulting with the public on the environmental impacts of these heaters through the Environmental Bill of Rights Registry. Under the EPA, used motor fuel is considered a waste-derived fuel and a site where such fuel is utilized is defined as a waste derived fuel site. By the EPA, a waste derived fuel site is for the most part exempt from the need to have a C of A for a waste disposal or waste management site.

 (b)Possible Municipal Options

 Three suggestions have been made about the City=s own ability to ban or grandfather the operation of the heaters. The options are:

 1)The use of the Health Protection and Promotion Act

 2)The use of paragraph 156 of section 210 of the Municipal Act (Regulation of Heating Appliances), and

 3)The use of the licensing provisions contained in the Municipal Act.

 1)Health Protection and Promotion Act

 This option exists but requires an order of the Medical Officer of Health on an individual basis.

 2)Regulation of Heating Appliances

 Paragraph 156 of section 210 of the Municipal Act provides for the power of a municipality to pass a by-law as follows:

 A156.For regulating, controlling and inspecting heating and cooking appliances, or any classes thereof, the installation thereof and the storage of fuel for use in connection therewith.

 158. For the purposes of any by-law passed under paragraph 156, for adopting by reference to the Ontario Regulations as amended from time to time the codes and standards or the parts thereof as adopted and changed by regulation under the Ontario Energy Board Act. R.S.O. 1980, c. 302, s. 210, para. 156".

 Under this option, a by-law could be passed regulating the use of waste oil heaters, as a class of heating appliance.

 3)The Licensing Provisions of the Municipal Act

 Section 257.2 of the Municipal Act provides for the general licensing powers of municipalities. By-laws may be passed for licensing, regulating and governing any business carried on within the City. "Business" does not include a manufacturing activity or an industry except to the extent that it sells its products or raw material by retail; nor does it include the selling of goods by wholesale. Classes of businesses may be defined with separate licensing and regulation of each class. The suggestion being made is that the conditions of licensing can be wide-ranging and, in particular, may relate to the regulation of equipment and other personal property used in the business. Public garages and automobile service stations are currently licensed under the City=s Licensing By-law.

 (c)Conflict with Provincial Approvals

 The problem that will exist if either Option 2 or 3 is utlilized, relates to the issue of conflict as enunciated by two Ontario Court of Appeal cases- Superior Propane Inc. and Propane Gas Association v. Corporation of the City of York and Re. Attorney-General for Ontario et al. and City of Mississauga. There may well be conflict in that the purpose of any proposed by-law appears to be the prohibition of the burning of waste-derived fuel. Section 9 of the EPA states as follows:

 A9. (1)No person shall, except under and in accordance with a certificate of approval issued by the Director,

 (a) construct, alter, extend or replace any plant, structure, equipment, apparatus, mechanism or thing that may discharge or from which may be discharged a contaminant into any part of the natural environment other than water; or

 (b)alter a process or rate of production with the result that a contaminant may be discharged into any part of the natural environment other than water or the rate or manner of discharge of a contaminant into any part of the natural environment other than water may be altered.@

 In short, the issue appears to fall squarely within the Mississauga case where the court held there was a conflict between the predecessor of section 9 and a Mississauga by-law banning the burning of PCBs. The Mississauga by-law was based on explicit statutory authority under the Municipal Act (now paragraph 134 of section 210) which provided for by-laws to be passed as follows:

 AFor regulating manufactures and trades that in the opinion of the council may prove to be or may cause nuisances of any kind, and, without restricting the generality of the foregoing, for prohibiting or regulating the erection or continuance of gas works, tanneries or distilleries or other manufactories or trades that, in the opinion of the council, may prove to be or may cause nuisances.@

 Mr Justice Morden of the Court, in holding the Mississauga by-law to be invalid, stated:

 AIn a case where no certificate of approval is issued the two laws practically duplicate each other and there is no room for municipal regulation. Where a certificate had been issued then, it appears to me, the absolute prohibition in the by-law clashes with the legislative scheme embodied in the statute and the proper implementation of this scheme. The two pieces of legislation, in this regard, are at cross purposes. They are repugnant to each other. They both are intended to protect the environment and it cannot reasonably be thought that the issuance of a certificate of approval involves any diminishment of this policy.@

 This statement was also referred to in Superior Propane in holding that a City of York land use by-law restricting and regulating propane storage and dispensing facilities was at cross purposes with regulations under the Energy Act. The Court also held that the by-law was improper, having as its basic and predominant purpose the advancement of safety concerns respecting the handling of propane and not land use planning. The Court also felt there was no reasonable basis for the argument that the by-law merely enhanced a law.

 All of the above principles on conflict enunciated by the Court of Appeal would likely be brought to bear in attacks on either a by-law under paragraph 156 of section 210 (option 2) or section 257.2 (option 3) of the Municipal Act. The fact that there is at present a moratorium on the issuance of new approvals for these facilities does not legally alleviate the conflict on the basis of the principles set forth in the above cases.

 The new Draft Municipal Act (hereinafter referred to as the ADraft Act@) has been released for public consultation. While the Draft Act would confer on municipalities the capacity, rights and powers of a natural person for the purpose of exercising its authority under any Act, there are statutory restrictions surrounding the mandates that are granted. In particular, a by-law would be without effect to the extent of any conflict with a provincial Act, or a regulation or enactment (e.g., approval or permit) made under such an Act. If a matter is subject to Provincial regulation, a by-law (including licensing conditions) would be without effect to the extent that it prohibits or regulates the matter in substantially the same way, or in a more restrictive way, than the provincial regulation. The provisions of the Draft Act, then, may be considered to be a codification of the principles in the Superior Propane case and perhaps more restrictive.

 Subject to the above, option 2 may be preferable to option 3 based on the reasoning that option 2 provides specific authority to regulate any class of heating appliances; an argument could at least be made that it is the equipment which is being regulated not the burning. A regulation would have to prohibit any heating equipment which utilizes used oil. The use of licensing as a regulatory mechanism may be more problematic given the competing interests of section 9 of the EPA and the generality of the licensing provisions.

 One other option that bears mentioning surrounds the utilization of land use regulations under the Planning Act. In 1996 the former City of Toronto enacted an Aanti-incineration@ land use by-law prohibiting incineration of waste within the City of Toronto (it also enacted other Municipal Code by-laws on the basis of its private legislation). Under the by-law, Awaste@ includes waste-derived fuel. The by-law was appealed by a number of persons, including The Municipality of Metropolitan Toronto. The by-law remains in abeyance before the Ontario Municipal Board.

 While the principle of conflict remains an issue in relation to land use regulation (particularly as the Superior Propane case dealt with a York land use regulation), there may be an option of examining the expansion of the by-law, if enacted, as part of the policy review relating to the whole issue of incineration. The advantage of the utilization of the Planning Act is in the fact that it has its own paramountcy clause.

 Conclusions:

 Any regulatory option by the City of Toronto to prohibit the burning of waste oil in space heaters is likely invalid on the basis of conflict with regulatory approvals under the Environmental Protection Act as enunciated in the Superior Propane Inc. and Propane Gas Association v. Corporation of the City of York and Re. Attorney-General for Ontario et al. and City of Mississauga cases. The principle of conflict as enunciated by the Superior Propane case, in particular, would apply notwithstanding the present moratorium on certificates of approvals (air) for the burning of waste oil. The Draft Act expressly incorporates the principle of conflict.

 Contact Name:

 J. Anderson392-8059

Senior Solicitor

 H.W.O. Doyle

City Solicitor

Legal Services