Canada: From Social License To Class Action – Climate Change Litigation Has Come To Canada, Project Proponents Beware

The bold move towards climate change litigation is progressing in Canada as seen in last year's Voters Taking Action on Climate Change v. British Columbia (Energy and Mines), 2015 BCSC 471 ("VTACC"). Examples of similar litigation in other jurisdictions around the world are outlined below. The Alberta Environmental Law Center noted that at the end of 2013, there were 420 climate change cases in the United States and 173 in the rest of the world out of which approximately 10 cases are in Canada. It has been observed that some of the cases are brought pursuant to common law tortious causes of actions while others challenge decisions of regulatory authorities pursuant to specific legislation and are aimed at driving the course of climate change regulation. Further, some of the cases arise in the context of specific project approvals and others are petitions affecting a particular industry sector. While climate change litigation in Canada is in its infancy and, as in other jurisdictions faces significant legal challenges to its success, it poses a tangible risk to development projects.

Recent Climate Change Court Decisions

In VTACC v. British Columbia (Energy and Mines), VTACC challenged two decisions regarding the proposed expansion of Texada Quarrying Ltd.'s (TQL's) coal handling and storage operation on Texada Island. The two decisions under review related to the Minister of Energy and Mines' (MEM) issuance of a permit and the Minister of Environment (MOE) refusal to exercise its statutory power to require TQL to obtain a permit for the proposed expansion. TQL is a subsidiary of Lafarge Canada Inc. VTACC attempted to characterize the primary argument as a jurisdictional one. They argued that because the Mines Act does not regulate bulk coal storage and handling operations the Chief Inspector did not have the power to authorize such operations. VTACC asserted that the jurisdiction over TQL's operation rested with the MOE under the Environmental Management Act ("EMA"). In the alternative, VTACC argued that the Chief Inspector breached his duty of procedural fairness and natural justice by not making new material that had been received, that was relevant to issues raised by the public, publically available.

The Court upheld the decisions of the MEM and the MOE. However, the portion of the decision which will be relevant to future climate change litigants is the Court's reasons for denying VTACC public interest standing. VTACC's self-described mission is to urge governments to take meaningful action to address climate change through reduced reliance on carbon intensive fuels such as coal. They argued that TQL's stored coal would eventually be exported and burned and would therefore contribute to greenhouse gas emissions that drive climate change, and that climate change is an issue of paramount importance on an international, national and local level. Granting public interest standing requires the court to weigh three factors: whether the case raises a serious justiciable issue; whether the party bringing the action has a real stake or a genuine interest in its outcome; and whether, having regard to a number of factors, the proposed suit is a reasonable and effective means to bring the case to court.

The Court found that the question raised was not a serious justiciable issue as it did not raise a constitutional issue and was not a question of public importance that transcends the interests of those directly affected. VTACC's issue was that the Mines Act is intended to regulate mines, not coal storage and handling facilities, and that the EMA is the applicable statutory regime because it applies to bulk storage facilities. The Court did not take a position on the seriousness of climate change. The issue before the courts was found to be very narrow, despite VTACC 's attempts to broaden the scope. The Court found that the proposed litigation would be a poor use of limited judicial resources and that it did not engage the issue that VTACC was pursuing, which was to urge governments to take meaningful action to address climate change. The Court further noted that the residents of Texada Island, who are more directly affected, were not represented by VTACC and that Sliammon First Nations, did not oppose the project. While standing could be an obstacle for climate change litigants, the Court did not rule out climate change as a potential support for public interest standing.

Similar to the objectives of VTACC is the Dutch Urgenda Foundation, a citizens' platform which develops plans and measures to prevent climate change. The Urgenda Foundation represented 886 individuals in the August 2015 case of Urgenda Foundation v The State of the Netherlands (Ministry of Infrastructure and the Environment) [summary of the English translation]. The Hague District Court had a different view of climate change than the British Columbia Supreme Court. The Dutch Court ruled that in the Netherlands, the State must take more action to reduce the greenhouse gas emissions. The District Court held that the State must do more to avert the imminent danger caused by climate change, given its duty of care to protect and improve the living environment. Since the State is responsible for effectively controlling the Dutch emission levels, the costs of the measures ordered by the court were not unacceptably high. The District Court rejected the argument that solution to the global climate problem does not depend solely on Dutch efforts. In that Court's view, any reduction of emissions contributes to the prevention of climate change. The Court insisted that it had not entered the domain of politics as it must provide legal protection also in cases against the government while respecting the government's scope for policymaking.

There are notable examples in the United States of cases similar to VTACC and Urgenda Foundation in the category of climate change litigation aimed at driving the course of climate change regulation by challenging actions or inactions under specific legislation. In Massachusetts et al v Environmental Protection Agency et al, (2007) 549 U.S. 497 (US Supreme Court), cited as the leading climate change case in the U.S. on standing, a group of environmental organizations with states and local governments intervening, petitioned for review of an order of the Environmental Protection Agency ("EPA") denying a petition for rulemaking to regulate greenhouse gas emissions from motor vehicles under the U.S. Clean Air Act. The group alleged that EPA had abdicated its responsibility under the United States' Clean Air Act to regulate greenhouse gases. The U.S. Supreme Court held that the State of Massachusetts had standing, considering that EPA's refusal to regulate presented a risk of harm to Massachusetts from rise in sea levels associated with global warming that was both "actual" and "imminent," and that there was a substantial likelihood that judicial relief requested would prompt EPA to take steps to reduce that risk. The Court held that the EPA could not avoid taking regulatory action based on scientific uncertainty and policy judgments that a number of voluntary executive branch programs already provide an effective response to the threat of global warming. However, in Washington Environmental Council v. Bellon, 732 F.3d 1131 where environmental advocacy organization also brought action under Clean Air Act against state and regional environmental agencies, alleging that agencies failed to enforce state implementation plan ("SIP") that required them to define reasonably available control technology ("RACT") for greenhouse gases and to apply RACT standards to oil refineries. The Court of Appeals Ninth Circuit held that the causal nexus between failure of environmental agencies to define emissions limits was too attenuated to harms suffered by environmental organizations, for purposes of constitutional standing, and that there was no evidence that the imposition of emissions limits would curb a significant amount of greenhouse gas emissions.

In Canada, obiter comments of judges in judicial decisions are being quoted as examples of judicial notice of climate change causes of action. The Federal Court in Syncrude Canada Ltd. v Attorney General of Canada [(2014) FC 776 para. 83] has been cited as recognizing a real and measured reasonable apprehension of harm resulting from the enabling of climate change through the combustion of fossil fuels. The context of this comment however was a response to Syncrude's assertion, in its constitutional challenge of the federal Renewable Fuel Regulations, that the production and consumption of petroleum fuels are not dangerous and do not pose a risk to human health or safety. Based on these comments, the Environmental Law Center concludes that as climate change litigation accelerates in Canada, Courts should remain alert to the fact that significant scientific consensus on the existence, mechanisms and impacts of climate change is already reasonably established.

Apart from challenges under specific statutes, there is the category of climate change cases pursuant to common law tort actions in respect of specific projects which we have not yet seen in Canada. American Electric Power, Inc v Connecticut et al, (2011), 564 US No 10-174 9 US SCt) was a clear nuisance case wherein eight states, New York City, and three land trusts separately sued the same electric power corporations that owned and operated fossil-fuel-fired power plants in twenty states, seeking abatement of the defendants' ongoing contributions to public nuisance of global warming. The US Supreme Court held that while the Plaintiffs had standing under Massachusetts v. EPA, the Clean Air Act and EPA actions it authorize have displaced any federal common law right to seek abatement of carbon dioxide emissions from fossil-fuel fired power plants. The Court did not decide the availability of a claim under state nuisance law. Similarly, in Comer v Murphy Oil USA, 839 F Supp (2d) 849 property owners brought action individually and on behalf of all persons similarly situated, against oil companies, asserting public and private nuisance, trespass, and negligence claims. They alleged that oil companies' release of by-products that increased global warming led to development of conditions that formed hurricanes and resulted in higher insurance premiums and caused sea level to rise. Granting the oil companies' motions to dismiss, the Court held that the case presented non-justiciable political questions, where there were no judicially discoverable and manageable standards for resolving the issues presented, and the case would require the court and jury to make initial policy determinations, including whether companies' emissions were reasonable, which had been entrusted to the EPA by Congress.

In Native Village of Kivalina v ExxonMobil Corp, 696 F 3d 849 (9th Cir 2012), residents brought action for damages under federal common-law claim of public nuisance, and dependent civil conspiracy claim, against multiple oil, energy, and utility companies, alleging that companies' massive greenhouse gas emissions had resulted in global warming which in turn severely eroded land upon which the city was situated. The District Court for the Northern District of California granted companies' motions to dismiss for lack of subject matter jurisdiction. The Court of Appeal held that the Clean Air Act and EPA action authorized thereunder displaced federal common law, precluding claim for public nuisance. Apart from standing and justiciability issues, proof on evidentiary standards and causation have been difficult even where such claims are framed as straightforward tort claims. The Court in Comer v Murphy Oil USA held that it was not substantially likely that the companies' particular emissions, rather than other manmade and naturally-occurring sources, caused global warming, which caused sea temperatures to rise, which in turn caused glaciers and icebergs to melt, which caused sea levels to rise, which may have strengthened Hurricane Katrina, which damaged owners' property.

Relevance of Climate Change Litigation in Interjurisdictional Pipeline Development in Canada

While climate change litigation is novel in Canada, the implications for Canadian pipeline and other development projects are significant as citizens continue to demand for climate change considerations in regulatory proceedings and actively seeking judicial review of regulatory decisions on those grounds. More recently, the National Energy Board ("NEB") finds itself in new territory with public demands for dealing with climate change and upstream and downstream Green House Gas management in four major interprovincial pipelines: (a) TransCanada Keystone Pipeline GP Ltd. OH-1-2009, March 2010 ("Keystone XL"); (b) Application for the Enbridge Northern Gateway Pipeline Project (OH-4-2011) ("Northern Gateway"); (c) Application for Trans Mountain Expansion Project (OH-001-2014) ("Trans Mountain Pipeline"); and (d) Application for the Energy East Project and Asset Transfer ("Energy East"). The NEB has held that it assesses Greenhouse Gas emissions from pipelines to the extent that they contribute "meaningfully" to provincial or national inventories. [TransCanada Keystone Pipeline GP Ltd Facilities and Toll Methodology, Reasons for Decision OH-1-2009, March 2010 at 75 ("KeystoneDecision")] Pipeline certificate conditions have included GHG emission assessment, monitoring and mitigation measure reporting, though this was done by consent of the applicant in the 2010 Keystone Decision. But relative to cumulative impact assessment requirements, the NEB insists that it is required to consider only the direct Greenhouse Gas emissions from the specific project. The test, the NEB said, is whether there is a nexus or direct connection between the upstream production facilities and the pipeline under consideration.

The Federal Court of Appeal upheld the decision of the NEB on this point in Forest Ethics Advocacy Association v. Canada (National Energy Board) [2014 FCA 245. See also 2015 FCA 26.]. Litigants will face similar issues of nexus or causation in the context of climate change litigation. In City of Vancouver v National Energy Board, and TransMountain Pipeline ULC, the Federal Court of Appeal denied the City of Vancouver's application for leave to appeal NEB's scoping decision refusing to consider Trans Mountain's impact on global climate change. To provide guidance on this issue, Canada has recently announced interim rules for federal decision-making on natural resource projects. For more information on the Government of Canada's interim rules please see a recent blog post, In Process? New Federal Rules for Pipeline Approvals.

General Implications for Litigants and Project Proponents

There are key legal challenges to the success of climate change litigation in all jurisdictions whether pursuant to specific legislation or under common law. These include, but are not limited to, standing, justiciability, jurisdiction, causation, proof on evidentiary standards, forum, duty of care, and apportionment of liability. While these challenges exist, the risk to project development of climate change litigation is real. The delay and financial costs raised by such suits are capable of rendering a project uneconomic. The rise in environmental awareness serves an important societal purpose. However, like most litigation, the costs of climate change litigation to development and, more broadly, investment may be high including reputational cost.

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