SCC Confirms Regulatory Authority’s Broad Scoping Discretion

The Supreme Court of Canada has denied leave to appeal in the Prairie Acid Rain Coalition v. Canada (Minister of Fisheries and Oceans) ¹ (PARC) case.  The original Federal Court of Appeal decision had provided some clarity on the Canadian Environmental Assessment Act (CEAA) scoping provisions with regard to how a federal Responsible Authority characterizes a project within its jurisdiction. 

As a result of leave being denied, the Federal Court of Appeal’s decision is the latest (but perhaps not the last) word on the CEAA scoping provisions. The decision means that the proponents of major projects should carefully consider the scope of what they are proposing and how it might be characterized by the federal regulators.  There may be more certainty for projects that are narrowly scoped.

The PARC decision confirms a responsible authority (RA) has broad discretion in scoping a project under CEAA.  It also confirms that the scope of a project under CEAA may be limited.  An RA is not required to assess an entire project, but only those parts of the project that fall within its legislative mandate.

There remains, however, a risk that an RA, in considering a project’s scope, must look at how the project affects all matters within its jurisdiction.  An RA’s characterization of those aspects of the project will influence whether the federal review might still end up as a comprehensive study.

The original decision arose from the Prairie Acid Rain Coalition’s (the Coalition) application for judicial review of the Department of Fisheries and Oceans’ (DFO) scoping decision of the Fort Hills Oil Sands Project (the Project).  The Project was primarily subject to provincial regulation, with an Environmental Impact Assessment (EIA) being conducted under the Alberta Environmental Protection and Enhancement Act.  The Project also involved the destruction of a small fish-bearing creek, and thus the proponent had to apply for a HADD (Harmful Alteration, Disruption or Destruction) authorization from the Minister of Fisheries pursuant to the Fisheries Act.   The application triggered CEAA pursuant to s. 5(d) of that Act.

The DFO determined that the scope of the project, subject to a federal EIA, was restricted to the destruction of the creek and related activities.  The Coalition sought judicial review of that decision on the basis that the EIA under the CEAA should cover the entire oil sands undertaking, and not be scoped so as to consider just the destruction of fish habitat.

The Coalition’s main argument was that the DFO was obligated to scope the project to include an assessment of the entire oil sands undertaking.  The Coalition also argued that the CEAA provision requiring an EIA to be done prior to the DFO granting authority for the purpose of enabling the project to be carried out in whole or in part, required that the project be scoped so as to consist of the entire physical work or activity.  The Coalition finally argued that since oil sands projects are included in the Comprehensive Study List Regulations (the CSL Regulations), that the entire oil sands project must be subject to a Comprehensive Study. 

The Court ultimately rejected each of these arguments, instead ruling in favour of broad scoping discretion on the part of federal RAs.   The Court held that obligating an RA to scope every project so as to include an assessment of the entire oil sands undertaking ignored the text in s.15(1) of the CEAA, which states that the scope of projects to be assessed is to be determined by the RA.  Denying an RA such discretion would be contrary to the CEAA. 

The Court held that this discretion allows an RA to limit its assessment to only part of an oil sands project, and this discretion extends to an RA’s decision regarding the appropriate mitigation measures to be applied by the proponent.  The Court expressly stated that the CSL Regulations do not require broad scoping, but only require that once a project has been scoped, and that project is in the CSL Regulations, that the RA perform a comprehensive study. 

Specifically, the Court stated that the CSL Regulations do not purport to extend federal EIA powers to undertakings that are not subject to federal jurisdiction.  The court also stressed that efficiency requires that projects be subject to only one EIA and, in this case, Alberta was already assessing the entire project.

The Supreme Court gave no reasons in denying leave to appeal.

This decision can be used by proponents of major projects to support a narrow scoping to avoid federal review of projects that are primarily within provincial jurisdiction.  It should be noted, however, that RAs have broad discretion to scope "what the project is" in respect of a particular permit requirement.  For example, the DFO could scope the de-watering of a mining project as a water diversion project.  If such a diversion was of sufficient quantity, the project would be brought back under Part III of the CSL regulations.  Proponents need to ensure projects are configured, to the extent practical (provided business objectives permit), to avoid these types of triggers.

The decision of the Supreme Court denying leave to appeal provides a degree of certainty to an area of environmental law that has, in the past, been the subject of considerable debate.  The PARC decision makes it clear that once CEAA is triggered by the need for a federal permit or authorization, the responsible authority is free to scope the project for which the EIA will be conducted as encompassing only those physical works and undertakings related to the legislative mandate of the responsible authority. 

This will result in a greater degree of administrative certainty for project proponents.  The court also appears to have put a premium on the efficiency of the EIA process by recognizing the importance of an extensive provincial environmental review and the requirement in CEAA to avoid duplication.  It does not relieve proponents from carefully considering the scope of what they are proposing and how that might be characterized by the federal regulators.

Shawn Denstedt is a partner in the firm’s Calgary office, his practice focuses on environmental, regulatory and aboriginal law issues. Dan Kolenick is an associate in the Energy Department of the firm's Calgary office.

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