Canada: From Whales To Caribou: Species Protection Could Impact Economic Development

Copyright 2012, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Environmental Law, February 2012

The Federal Court of Appeal (the Court) has issued its decision regarding a protection statement for the Northern and Southern Resident populations of the Killer Whale under the federal Species at Risk Act (SARA). The Court upheld the lower court finding that SARA creates strict, non-discretionary protections for the critical habitat of aquatic species. More significantly, the Appeal Court's conclusions that the federal government cannot permit the destruction of critical habitat for aquatic species potentially sets a far-reaching precedent for the management of activities in areas designated as critical habitat for endangered or threatened species across the country.

The permitting scheme under SARA

SARA follows the classic "command and control" structure used under most environmental statutes in Canada. Under this model, certain behaviour is prohibited except under prescribed circumstances enumerated in permits or regulations.

SARA has extensive prohibitions against impacts to endangered and threatened species and their residences, and to habitat that has been identified as critical in recovery strategies or action plans. SARA then provides for permits or agreements to allow impacts to species or their critical habitat, and, in some instances, recovery strategies or action plans. The ministers who are responsible for the administration of SARA (the Competent Ministers) may issue permits for activities affecting species or their critical habitat (s. 73). The Competent Ministers may also issue permits under other federal statutes which they administer for activities affecting species or critical habitat (s. 74). SARA also allows for reliance on provincial or territorial permits which authorize activities affecting species, provided there is an agreement between the federal government and the province under SARA (s. 78). All of these permits are required to meet strict conditions before they can be issued.

None of the permitting provisions explicitly excuses the permittee from the prohibitions against destroying critical habitat. However, under section 83, these prohibitions do not apply to activities which are carried out under section 73, 74 and 78 permits. Thus, SARA allows for the destruction of critical habitat, as long as the activity is carried out in accordance with the conditions in the permit. There are also a number of other exceptions to the application of SARA's prohibitions set out in section 83, including that activities can be carried out if authorized in recovery strategies, action plans, management plans and SARA regulations.

SARA also allows federal ministers, other than the Competent Ministers, to include activities which affect species or critical habitat in permits under other federal legislation (s. 77). This provision contains an added condition that the prohibition on destroying critical habitat for aquatic species, migratory birds or any species on federal land, still applies. It is also not included in the list of permits to which the prohibitions will not apply in section 83.

The Appeal

The background to this case was discussed in our December 2010 Blakes Bulletin on Environmental Law. As set out in that bulletin, the Federal Trial Court made findings with respect to protection statements and protection orders which apply to aquatic species under SARA. The appeal only dealt with the decision regarding protection statements. The appeal focused on the issue of whether the government can rely upon other legislation to protect critical habitat of aquatic species if that legislation provides the government with the discretion to authorize harm to that habitat.

The Trial Court had held that any protection provided by other federal instruments must be a legal protection and equivalent to the protection provided under SARA, and that an analysis of that equivalency must include consideration of what the relevant legislation allows in terms of permitting harm to the critical habitat. Thus, any instrument to be relied on instead of SARA must 1) prohibit the destruction of the critical habitat, and 2) must not grant discretion to the relevant ministry to allow for the destruction of that habitat, unless that discretion is limited in the same manner as SARA's permitting provisions. The Trial Court had gone on to find that because of the discretion given to the government to authorize harm to habitat or deposits of deleterious substances under the Fisheries Act, it could not act as a "surrogate" to protect the critical habitat of the Killer Whale.

The Department of Fisheries and Oceans (the DFO) made two arguments on the substance of the Appeal, both of which were rejected.

First, the DFO argued that while the Fisheries Act does allow for discretion to authorize harm, the Minister would not actually exercise this discretion to lessen the protection of the Killer Whale. The Court held that there was no way that it could meet the requirement in SARA for legal protection as the Minister could change his mind and exercise discretion under the Fisheries Act to destroy critical habitat.

Second, the DFO argued that SARA itself allows for flexibility in the manner in which activities which affect critical habitat can be authorized. In considering this argument, the Court reviewed the permitting provisions in SARA to determine what impacts the government can allow with respect to critical habitat. The Court went on to find that SARA's protection of critical habitat is non-discretionary and compulsory. The Court also held that critical habitat of aquatic species "cannot be destroyed or detrimentally affected through a permit or other authorization issued in application of section 74 or 77 of SARA".

The Court went even further, concluding that a textual, contextual and purposive analysis of SARA shows that Parliament "is precisely seeking to avoid the destruction of identified critical habitat of listed endangered and threatened aquatic species through any means, including through activities authorized under discretionary permits or licences". From this statement, it is possible to conclude that any instruments under SARA which can be issued to allow activity affecting critical habitat cannot specifically authorize the destruction of that habitat.

In reaching its decision, the Court appears to have read into section 74 a requirement that only appears in section 77, that the destruction of critical habitat for aquatic species is still applicable, despite the permit. Of greater concern, the Court appears to have not reviewed or given any weight to the provisions in section 83 of SARA which provides explicit exemptions from the prohibitions against destroying critical habitat, provided the activity is carried out in accordance with permits issued under sections 73, 74 and 78 of SARA. Nor has the court recognized that the prohibitions against destroying habitat do not apply a number of other circumstances, including compliance with a recovery strategy or regulation under SARA, which are not subject to the same conditions as the permitting provisions.

The inherent contradiction in this decision is that if permits are issued under SARA for activities which affect critical habitat (but do not destroy it), the prohibitions against destroying critical habitat will nonetheless not apply to that activity because of the language in section 83. With respect to the Court, we believe this leaves the government and permittees with a confusing and potentially unworkable permitting scheme. The real danger here is that the government will simply refuse to issue any permits for activities which have the potential to destroy critical habitat.

The ultimate conclusion of the Court was that section 35 of the Fisheries Act cannot protect critical habitat to the same degree as SARA as, unlike SARA, the discretion of the Minister to authorize destruction to the habitat is unfettered in the Fisheries Act. This conclusion could have been reached without the Court going so far as to find that there is no way under SARA that destruction of critical habitat can be authorized, as all of the provisions in SARA, which we would argue may allow for such authorization, have some form of non-discretionary conditions. But the Court did not confine itself to such an analysis, and consequently, in our view, has created a serious conundrum for the federal government as to whether it should appeal the decision, amend the legislation to clarify what can and cannot be permitted, or leave things as they are and simply refuse to issue any permits for destruction of critical habitat. If the government takes the latter route, it will put many activities on the land base, including agriculture, resource development, manufacturing, and power generation in serious jeopardy of non-compliance with SARA, even for facilities that pre-exist the identification of critical habitat.

It is worth noting that the Court did disagree with the lower court's decision that section 36 of the Fisheries Act could not be used to protect critical habitat. The Court found that section 36 is different from section 35 in that the manner in which deposits for deleterious substances into fisheries waters can be authorized is by regulation made by the Governor in Council. While this is helpful, it only serves in the very limited circumstances where the attribute of critical habitat to be protected is the water quality.

The Court also made some interesting comments regarding the use of management techniques to protect critical habitat. One of the attributes of habitat that is protected under SARA in this case is the availability of prey (i.e., salmon). The Court held the DFO's assertion that it could protect this particular aspect of critical habitat through its management of the fishery to be incorrect. The Court also suggested that permits under SARA could be used for management of the salmon outside the critical habitat area. This is also confusing since it is unclear as to why a SARA permit would be needed outside a critical habitat area where there is no prohibition for which a permit would be required.

Implications for critical habitat across Canada

There are a number of aspects of the decision that are likely to impact how the federal government approaches critical habitat that has been identified in a recovery strategy. First the government may not be prepared to issue any permits for destruction of critical habitat under any circumstances. This would prove extraordinarily problematic for those entities which have existing or proposed operations which impact areas identified as critical habitat for aquatic species or on federal lands.

Second, the Minister of the Environment may be forced to recommend protection orders for the critical habitat of migratory birds which are not on federal lands. While such orders are at the discretion of the federal cabinet, rejecting such recommendations could prove to be a political hot potato for any government. And, if such protection orders are made, it could be impossible to get a permit for activities in such areas.

Third, as explained in our December 2010 bulletin, the federal cabinet can order SARA's prohibitions be extended to other species' critical habitat not on federal land if the federal Minister recommends it. This recommendation is mandatory if the Minister is of the view that a province or territory is not effectively protecting a species' critical habitat. If the Minister (or the courts) determine that the test for effective protection is that a province or territory must have non-discretionary and compulsory protection of critical habitat of endangered species, it may be very difficult for the Minister not to recommend a broader application of SARA's prohibitions. This is because there are very few (if any) provincial or territorial laws that can currently meet this stringent test. Given the current proposal for identification of critical habitat for boreal caribou over approximately 25% of Canada's land mass, this creates the potential for a fundamental impact on resource management, as the broader application of SARA's prohibitions could significantly fetter the provinces' ability to make decisions regarding the use of their natural resources.

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