On September 13, 2018 the Ontario government posted to the EBR Environmental Registry the policy decision to cancel the Electric and Hydrogen Incentive Program (EHVIP) and the Workplace Electric Vehicle Charging Incentive Program (WEVCIP) funded through the repealed cap and trade program. Notice of the policy proposal was not provided.
The decision to cancel the EHVIP and WEVCIP was made on July 11, 2018. In response to this decision, Tesla Motors brought a judicial review1 of the legality of the government decision to exclude non-franchise dealers (i.e., Tesla Motors) from environmental subsidies during the two-month transition period.
As a result of the decision in Tesla Motors Canada ULC v. Ontario, the government of Ontario has announced the expansion of the wind-down process for the EHVIP. According to the government's August 31 announcement, incentives will be provided as long as the following conditions are met:
- Eligible vehicles were delivered, registered, and plated on or before July 11th; or,
- Eligible vehicles were on dealer lots in Ontario, or on order by dealers or by customers directly from manufacturers on or before July 11th, and delivered to customers, registered and plated on or before September 10, 2018. These vehicles must be on the ministry approved order list from dealers and manufacturers.
- Applications must be submitted within 90 days of vehicle registration, plating and delivery.
Further, charging stations purchased and/or installed before July 11, 2018 will be eligible to receive incentives if the application is submitted within 60 days of July 11, 2018.
The Case
In Tesla Motors Canada ULC v. Ontario, Tesla Motors claimed that the decision to exclude it and its customers from the transition program had "no possible connection" to the conservationist purposes of the environmental laws under which the subsidy program existed, and as such was made without a legitimate justification, and prejudiced its interests in an unfair manner.2 In its decision, the Superior Court found that, while policy decisions on the spending of public funds are not justiciable, the courts do have a role in "inquiring into the propriety or the lawfulness of a payment or withholding of a payment under statutory or regulatory laws."3 The court found that the government engaged in three decisions: (1) the decision to cancel the electric vehicle incentive program, (2) the decision to fund the electric car subsidy program during a two month transition period, and (3) to set terms and conditions on the two month transition period that included franchised dealers and excluded Tesla Motors. The court held that this third decision engaged not in high level policy setting but program administration, and "discretionary decision-mak[ing] under the environmental regulatory regime and discretionary term-sett[ing] under s. 118(2) of the Public Transportation and Highway Improvement Act."4 The court found that the transition program "had a distinct and unique effect on Tesla and that this was known and intended throughout" and that the government treated Tesla "differently than all other vehicle sellers in Ontario because it was not a franchised business – a term that the government had not announced publicly".5 The Court concluded that the decision was "arbitrary and unrelated to the purposes of the statutory or regulatory discretion being exercised" and "egregious" not only because it was "made for an improper purpose, but because the Minister singled out Tesla for reprobation and harm without provid[ing] Tesla any opportunity to be heard or any fair process whatsoever."6 The Court quashed and set aside the Minister's unlawful exercises of discretion to implement the transition program announced July 11, 2018 and awarded Tesla $125,000 on a partial indemnity basis.7
Footnotes
[1] Tesla Motors Canada ULC v. Ontario (Ministry of Transportation), 2018 ONSC 5062.
[2] Ibid, at 48.
[3] Ibid, at 36.
[4] Ibid, at 40.
[5] Ibid, at 59.
[6] Ibid, at 64.
[7] Ibid, at 67-68.
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