Canada: SCC Instructs Federal Authorities On EA Obligations And Confirms Project As Proposed Is Determinative

On January 21, 2010, the Supreme Court of Canada (SCC) issued pointed instructions to federal authorities regarding their obligations in conducting federal environmental assessments (EAs) under the Canadian Environmental Assessment Act (CEAA).

In a unanimous decision, the SCC clarified certain CEAA tracking requirements, and in doing so overturned a Federal Court of Appeal (FCA) interpretation that has been applied in practice to projects in recent years. The immediate implications of this SCC decision are that federal authorities may no longer narrow a project listed on the Comprehensive Study List such that the EA of the project can proceed by way of a screening. A screening is generally a shorter and less intrusive track of federal EA than a comprehensive study.

In MiningWatch Canada v. Canada (Fisheries and Oceans) 2010 SCC 2, six environmental organizations were involved in this test case brought by MiningWatch Canada seeking a declaration on the proper meaning of Section 21 of the CEAA, which reads:

21.(1) Where a project is described in the comprehensive study list, the responsible authority shall ensure public consultation with respect to the proposed scope of the project for the purposes of the [EA], the factors proposed to be considered in its assessment, the proposed scope of those factors and the ability of the comprehensive study to address issues relating to the project....

The issue was whether the reference to "project" (bolded above) in Section 21 means the project as scoped by the responsible authority (RA) pursuant to Section 15, or the project as proposed by the proponent. The SCC held that for purposes of Section 21 (and Section 18), "project" means the project as proposed by the proponent, and that an RA does not have authority under the CEAA to scope a project more narrowly than the project as proposed by the proponent, particularly for purposes of conducting a screening rather than a comprehensive study.

Going forward, if a project as proposed by a proponent appears on the Comprehensive Study List, the federal EA for that project must proceed by way of a comprehensive study, unless elevated to mediation or a review panel by the Minister. This interpretation is reinforced by the Minister's (as opposed to the RA's) decision-making power under the CEAA to elevate the track to mediation or a review panel; the SCC rejected an interpretation that would render such discretion of the Minister subordinate to any scoping decision of an RA that would effectively lower the track to a screening. The SCC held that an RA does not have discretion to narrow the scope of a project from what is proposed by the proponent for purposes of Section 21 of the CEAA. The SCC reasoned that the Comprehensive Study List contains classes of projects that have been pre-determined as likely to have a significant adverse effect on the environment, thus indicating that such projects require no less than a comprehensive study and that Parliament intended the Minister to determine which projects require a comprehensive study, not an RA.

In short, if a project as proposed is listed on the Comprehensive Study List, it must proceed on the comprehensive study track (unless elevated to mediation or a review panel). An RA cannot conduct only a screening if the project as proposed appears on the Comprehensive Study List.

As most readers will be aware, a comprehensive study is a significantly more onerous, time-consuming and intensive track of federal EA than a screening. A comprehensive study involves mandatory public consultation at the outset and throughout, provides for government funding for public consultation, allows the Minister to elevate the track to mediation or a review panel in order to determine if the project will cause significant adverse effects, involves an assessment of the purpose of the project and alternative means of carrying out the project, involves consideration of the capacity of affected renewable resources to meet present and future needs, and may involve a follow-up program.

This SCC decision increases the importance of how a proponent characterizes its project for purposes of the CEAA. For project proponents and their advisors, it may: (i) prompt very careful examination of the defined term "project," and of certain other words built into this definition, such as "physical work," "undertaking," and "physical activity," as well as of the caselaw on these terms; and (ii) cause a project proponent to err on the side of narrowness in describing the proposed project, particularly if there is some uncertainty as to whether the project properly includes elements that appear on the Comprehensive Study List. The SCC has recognized this potential risk and reminded stakeholders that the CEAA allows RAs to both broaden the scope of the project under Section 15(3) and to combine projects under Section 15(2), which is likely to temper any attempted under-inclusiveness or project-splitting.

In addressing the FCA decisions in the Sunpine (2000) and True North (2006) litigation, the SCC stated that the FCA's approach "cannot be sustained," confirming that the SCC's 2010 MiningWatch decision re-writes the law in Canada on an RA's ability to track down. The SCC clarified that tracking and scoping are distinct steps within the CEAA process, and that tracking occurs first without the exercise of discretion by the RA. Once the appropriate track is determined under the CEAA regime, an RA does have limited discretion to broaden the project proposed by the proponent or combine the project with related projects pursuant to Section 15.

The SCC emphasized that duplication of federal and provincial EAs could be minimized by RAs utilizing existing coordination and cooperation agreements, rejecting the notion that projects should be narrowed federally to avoid duplication.

The SCC's decision to permit the RA's decision to stand and the Red Chris mine to proceed without having to re-do a federal EA, despite finding the process upon which it was approved to be flawed, has not gone unnoticed. In exercising its remedial discretion, the SCC was strongly influenced by the facts of this case: an exhaustive provincial EA involving public consultation had been completed; the appellant did not participate in the EA process; the appellant submitted an affidavit indicating it had no proprietary or pecuniary interest in the outcome and was clear that this litigation was merely a test case; there was no evidence of dissatisfaction with the provincial EA process and decision; and the SCC saw no justification in making the proponent repeat the federal EA process in the absence of any challenge to the substantive outcome.

The precedential value of the SCC's decision is its declaration that the RA erred in failing to consider the project as proposed in determining whether a comprehensive study was required pursuant to Section 21 of the CEAA. Proponents should now expect that if elements of a project as proposed appear on the Comprehensive Study List, no less than a comprehensive study will suffice. Careful attention should be given, in the early stages of a project, to the strategy and drafting of the project description in the documents to be filed with provincial and federal authorities.

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.

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