Canada: Birds, Bitumen and the Role of an Environmental Approval in the Context of Due Diligence

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Environmental Law, July 2010

On June 25, 2010, the decision in R. v. Syncrude Canada Ltd. (Syncrude) was rendered. The decision has brought to the fore the complex interplay between environmental approvals, oil sands mining operations and the protection of migratory birds (and the environment in general) pursuant to federal and provincial statutes.

The decision is interesting on several fronts, including the Crown's evidentiary use of witness statements. However, from an environmental perspective, two issues stand out. First, the decision provides guidance as to what constitutes due diligence, specifically in the context of the protection of migratory birds. Second, from a general operational perspective, and what we consider to be the more important issue, the decision touches upon the purpose and role of an environmental approval (Approval) issued under the Alberta Environmental Protection and Enhancement Act (EPEA) and whether or not compliance with an Approval can constitute due diligence to a charge laid under the very same Act.

FACTS

On April 28, 2008, several hundred migrating ducks died after they landed on a Syncrude settling pond at Syncrude's Aurora Oil Sands operation. Syncrude was charged pursuant to s.155 of the EPEA and s.5.1(1) of the Federal Migratory Birds Convention Act (MBCA). This article is limited to the analysis of the charge laid under the EPEA and will not address the issue arising from the federal charge under the MBCA. Section 155 of the EPEA requires a person keeping or storing a hazardous substance (in this case, bitumen from the oil sands) to do so in a manner that ensures the hazardous substance does not come into contact with or contaminate an animal.

Syncrude sought to establish the defence of due diligence (that it took all reasonable steps to avoid harm to the ducks). The foundation for this defence was predicated upon the virtually unprecedented weather patterns that occurred during April 2008, Syncrude's bird deterrent practices and its internal accounting of relatively low annual bird deaths caused by its settling basins, which indicated to Syncrude that its practices were sound.

DUE DILIGENCE ASPECT OF DECISION

The court found that Syncrude "was not required to achieve a standard of perfection or show superhuman efforts" in meeting the defence of due diligence, but rather must take all reasonable steps to avoid the contravention.

The court provided a detailed analysis of the factors involved in due diligence and paid particular attention to the following:

• Gravity of the Effect – The gravity of potential harm will impact on the efforts that a person must undertake to prevent the harm. In other words, the more severe the potential harm, the greater the efforts that must be undertaken to avoid or prevent the harm. Interestingly, the court also stated that "the evidence indicates that the [bird] loss on April 28, 2008 would probably have occurred even with deterrents in place."
• Complexity of Deterrence – Deterring birds from the bitumen settling pond is complex, requiring a high level of expertise. In this case, the court was critical that the team overseeing the bird deterrence program had no formal training in managing wildlife.
• Preventive System – Syncrude's bird deterrence system during 2008 relied upon the use of sound cannons and human effigies. The court accepted that the "evidence indicates that these devices can be effective". However, owing to a late start in putting in place the bird deterrence system, the sound cannons were found, as fact, not to have been deployed on the perimeter of the tailings pond before the bird landings on April 28, 2008. This was a significant finding that led to the ultimate determination of liability.
• Alternative Solutions – In considering the availability of alternative solutions to those used by Syncrude, the court found that the evidence disclosed "no real industry standard for bird deterrence". Appropriate training and earlier implementation of the bird deterrence system were noted under this heading of analysis as leading to "reasonable and feasible alternatives".
• Foreseeability – Foreseeability does not require clairvoyance. Rather the test is whether a reasonable person would have foreseen that the circumstances leading up to the accident created a hazard that required intervention. Although unusual weather conditions interfered with Syncrude's plans to deploy bird deterrents, the weather may have also increased the probability that waterfowl would land on the settling basin. The court found the incident to be foreseeable, noting that the "prospect that weather would interfere with deployment of deterrents at some times in April was foreseeable" and that "Syncrude did not deploy the deterrents early enough and quickly enough".

DUE DILIGENCE – LESSONS LEARNED

The analysis conducted by the court provides valuable insight for oil sands operators. First, the complexity of bird deterrence around bitumen settling and tailings ponds should be recognized, and formal training for wildlife deterrence staff may help address that complexity. Second, careful study of preventive systems is a must. Early seasonal deployment, prior to bird migration periods, is important to ensure the functionality of a planned deterrence system (even in seasons where inclement weather makes deployment difficult). Third, alternative solutions could be collectively canvassed by oil sands participants. A cross-industry discussion of how to develop industry standards for bird deterrence may assist all operators in establishing best practices to reduce operational impacts on wildlife.

APPROVAL ASPECT OF DECISION

Under the EPEA, certain prescribed activities require an Approval before they can be undertaken. Oil sands mines and oil sands processing facilities fall within the prescribed activity list. All persons are prohibited from commencing or continuing to carry out any oil sands mining and processing without an Approval. The EPEA further confirms that persons are prohibited from changing an activity or the manner in which the activity is carried out unless that person obtains an additional Approval or an amendment to its original Approval. Persons who violate the terms of their Approval, including the release of substances in amounts or concentrations in excess of that expressly set out in their Approval, can be charged with violating the EPEA.

The evidence in the Syncrude trial was that Syncrude had obtained its requisite Approval under the EPEA for its oil sands operations and that it was in compliance with the terms of its Approval as of the date of the incident. Those terms included the requirement by Syncrude to submit a waterfowl protection plan by December 31, 2007, which plan was required to include techniques and procedures for a comprehensive bird deterrent program and monitoring program. Having complied with that requirement, Syncrude argued that the four corners of the Approval and the regime surrounding the issuance of, and compliance with, an Approval, ought to have defined the parameters of its reasonable conduct. Syncrude argued that it was an abuse of process for the Crown to pursue the charge under s.155 of the EPEA, which section makes no reference to Syncrude's Approval, in circumstances where Syncrude's Approval under the same Act arguably governed and authorized the very same activity it was charged with having violated. Syncrude also argued that it should at least be able to assert that its compliance with the terms of its Approval constituted due diligence and was a defence to the charge levied against it under s.155.

The court summarily dismissed both arguments. In respect of the first argument, the court held that the Crown had the prerogative to choose what charges it could lay and was not restricted to laying a charge that only involved violation of the terms of an Approval. In respect of the second argument, the court stated, without any reference to case law or precedent, the following:

The above statement is remarkable, if nothing more than for its brevity. In one sentence, the court has indicated that compliance with an Approval does not constitute due diligence. It also represents a missed opportunity. The court could have expanded upon and provided real and meaningful guidance on the role of an Approval and the interplay between compliance with an Approval and due diligence. Unfortunately, it failed to do so.

Taken outside the confines of this decision, the above statement in Syncrude raises the question as to what comfort, if any, persons can take from strictly complying with the terms of their Approval. If a person can be charged with violating a section of an environmental statute, notwithstanding it is in compliance with the terms of its Approval under the same statute, what is the purpose and effect of the Approval in the first instance? One interpretation of the above statement is that an Approval is of no effect whatsoever.

The Syncrude decision is still subject to a potential appeal. If that occurs, hopefully the court will seize the opportunity to better analyze and explain the role of an Approval in the above context. Additional guidance in this area will be of assistance to all persons who have an Approval, regardless of what jurisdiction they reside in. In the meantime, those same persons should remain cognizant of the fact that compliance with the terms of their Approval may bear no relation to, and be of no assistance to, defending a charge laid under the same environmental statute that their Approval was issued under.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.