Prairie Acid Rain Coalition v. Canada (Minister of Fisheries and Oceans)

Prairie Acid Rain Coalition v. Canada (Minister of Fisheries and Oceans)
Court (s) Database
Federal Court Decisions
Date
2004-09-16
Neutral citation
2004 FC 1265
File numbers
T-213-03
Notes
Digest
Decision Content
Date: 20040916
Docket: T-213-03
Citation: 2004 FC 1265
Ottawa, Ontario, this 16th day of September, 2004
Present: The Honourable Justice James Russell
BETWEEN:
PRAIRIE ACID RAIN COALITION, THE PEMBINA INSTITUTE FOR APPROPRIATE DEVELOPMENT, and TOXICS WATCH SOCIETY OF ALBERTA
Applicants
and
THE MINISTER OF FISHERIES AND OCEANS OF CANADA, and TRUENORTH ENERGY CORPORATION
Respondents
REASONS FOR ORDER AND ORDER
The Application
[1] The Department of Fisheries and Oceans Canada ("DFO") is the Responsible Authority under the Canadian Environmental Assessment Act, S.C. 1992, chap. C-37 ("CEAA") for a project derived for the purposes of CEAA from a proposal of the respondent TrueNorth Energy Corporation ("TrueNorth").
[2] TrueNorth proposes to develop an oil sands extraction mine near Fort McMurray, Alberta. The mine involves the removal of oil-laden soil. A fish-bearing stream, Fort Creek, runs through the area of the proposed mine. The development requires the destruction of Fort Creek. This means that an authorization to destroy fish and fish habitat is required by s. 35 of the Fisheries Act, R.S., c. F-14 ("Fisheries Act").
[3] Section 15 of CEAA gives the Responsible Authority responsibility to determine the scope of the project to be assessed.
[4] For the purposes of the required environmental assessment, DFO identified the scope of the project in relation to which an environmental assessment should be conducted as the destruction of Fort Creek and associated activities. That decision ("Decision") was distributed to the relevant parties by DFO in a letter dated December 13, 2002 and is the subject of the present judicial review application by the Applicants.
BACKGROUND
[5] On August 30, 2000, TrueNorth announced its plans for an oil sands mine. It proposed to construct a surface mining and bitumen extraction operation 90 kilometres north of Fort McMurray, Alberta.
[6] Based on the information available to DFO from various TrueNorth disclosures, it became apparent to DFO that TrueNorth's proposal entailed the de-watering of Fort Creek (a tributary of the Athabasca River), an undertaking that seemed likely to cause a harmful alteration, disruption, or destruction of fish habitat ("HADD"). Under s. 35 of the Fisheries Act, such a HADD is prohibited unless expressly authorized by the Minister of Fisheries and Oceans ("Minister"). Pursuant to ss. 5(1)(d) of CEAA, no authorization may be issued under s. 35 of the Fisheries Act before an environmental assessment is concluded under CEAA.
[7] In anticipation of receipt of an application for a s. 35(2) authorization, on October 2, 2000 DFO declared itself the Responsible Authority for the purpose of the assessment. By virtue of her position as the Area Chief, Habitat with the DFO, Ms. Dorothy Majewski was responsible for ensuring that DFO conducted the regulatory processes under the Fisheries Act and CEAA in accordance with the law.
[8] On April 23, 2001, DFO received a formal application for a s. 35(2) Fisheries Act authorization from TrueNorth. As anticipated earlier, TrueNorth's application confirmed that Fort Creek would be de-watered and diverted. From DFO's review of the TrueNorth application it became apparent that only the destruction of the bed and channel of Fort Creek and the diversion of Fort Creek were works or undertakings that could cause a HADD.
[9] In July 2001, DFO obtained TrueNorth's environmental impact assessment ("EIA"), a document required by the Province of Alberta for the purposes of its review of TrueNorth's proposal. The EIA identified fish tainting as a potential issue of high significance. Fish tainting is a long term declining quality of fish caused either by natural seepage or by the deposit of a deleterious substance into waters frequented by fish. The deposit of a deleterious substance into waters frequented by fish is prohibited by s. 36(3) of the Fisheries Act. This was not subject to an authorization under s. 35(a) of the Fisheries Act. The report contemplated the possibility of the deposit coming from the operations of True North's mine.
[10] The issue of fish tainting turned out to be speculative. On May 10, 2002, TrueNorth provided DFO with a consultant's report that revised its July, 2001 findings contained in the EIA by reducing the potential fish tainting effects to the level of negligible. On July 31, 2002, in response to DFO's earlier request following the consultant's report, Environment Canada provided its expert advice which, while not necessarily disputing TrueNorth's assessment that fish tainting effects would be negligible, urged that further studies be conducted.
[11] In July, 2002, DFO participated as an intervener in the hearings conducted by the Province of Alberta through the Alberta Energy and Utilities Board ("AEUB") in relation to the TrueNorth mining proposal. Unlike under the Fisheries Act, where permitting in relation to the TrueNorth proposal is contemplated only in relation to those works or undertakings that could cause a HADD, the Province of Alberta regulates the totality of the activities contemplated by TrueNorth. Because of DFO's expertise in fisheries matters, DFO's participation in provincial hearings was aimed at assisting the Province of Alberta in addressing potential issues that could arise in relation to fisheries. Environment Canada was another expert federal department that participated in the provincial hearings. DFO's participation necessitated a consideration of those findings that are relevant to the conduct of the federal regulatory and environmental assessment processes.
[12] DFO circulated its preliminary scoping decision in a letter dated August 15, 2002 as follows:
For the purposes of the required environmental assessment, DFO has identified the scope of the project in relation to which an environmental assessment is to be conducted as follows:
1. The destruction of the bed and channel of Fort Creek
2. The construction of temporary or permanent diversions of Fort Creek
3. The construction of site de-watering and drainage works
4. The construction and operation of associated sediment and erosion control works
5. The construction of any Fort Creek crossings and associated approaches
6. The construction and operation of any fish habitat compensation works as required by DFO
7. The construction of camps and storage areas associated with (1) through (7)
8. Site clearing and removal of riparian vegetation associated with (1) through (8).
[13] On September 6, 2002, the Government of Canada served its submissions on the AEUB and the participants in the provincial hearings.
[14] Section 8 of the Regulations Respecting the Coordination by Federal Authorities of Environmental Assessment Procedures and Requirements, SOR/97-181 requires the Responsible Authority to consult with other federal authorities before determining the scope of the project pursuant to s. 15(1) of CEAA.
[15] Parks Canada Agency in a letter to DFO dated August 29, 2002 indicated that it was in agreement with the scope of the project as proposed by DFO in its letter of August 15, 2002.
[16] Natural Resources Canada in a letter to DFO dated November 25, 2002 indicated that, as the Responsible Authority for the project, DFO had full discretion under CEAA to determine the scope of the project and Natural Resources had no opinion on its scoping decision.
[17] On October 8, 2002, Environment Canada recommended as follows:
[T]he scope of the project be expanded beyond that proposed in [DFO's] letter of August 15, 2002, to include the entire project as defined by TrueNorth Energy Ltd. in its combined application to the Alberta Energy Utilities Board and Alberta Environment. This would also ensure an effective harmonized approach to environmental assessment, and would be consistent with the scope of project for which the preparation of the environmental impact assessment report was required under the Alberta Environmental Protection and Enhancement Act.
[18] On October 9, 2002, Applicants' counsel submitted a letter arguing that the proposed scoping was too narrow and that a comprehensive study was required.
[19] On December 13, 2002, DFO issued its final scoping Decision with scoping unchanged from its August 15, 2002 preliminary decision.
[20] In arriving at the final scoping Decision, Ms. Majewski was guided by the principles that the determination must be reasonable and made on a case-by case basis. Ms. Majewski determined the scope of the project to be that which includes the undertakings and activities that require authorization under s. 35(2) of the Fisheries Act and give rise to the application of CEAA and the ancillary works and activities. Accordingly, she scoped in the destruction of the bed channel of Fort Creek because it entails physical activities prescribed to be a "project" for the purpose of CEAA pursuant to Part VII of the Schedule of the Inclusion List Regulations. The remaining elements of her scoping Decision entail the ancillary works and activities, including a Fort Creek diversion channel.
[21] Had the water flows of Fort Creek into a diversion channel exceeded limits shown in s. 9 of the Comprehensive Study List Regulations, a comprehensive study would have been required. Since this was not the case, Ms. Majewski concluded that the environmental assessment under CEAA should be conducted at a screening level.
[22] In reaching her final Decision on scoping Ms. Majewski took into consideration all comments, including those made by the Applicants' counsel, as well as the findings of the provincial hearing.
DECISION UNDER REVIEW
[23] Because its mining project will impact Fort Creek, a fish-bearing water course, TrueNorth was required to obtain authorization from DFO pursuant to s. 35(2) of the Fisheries Act to undertake work that may affect fish habitat. As a result of TrueNorth's s. 35(2) Fisheries Act application ("35(2) Application"), s. 5(d) of CEAA was triggered. This means that the Responsible Authority, in this case DFO, must determine, pursuant to s. 15 of CEAA, the scope of the project to be subject to an environmental assessment under CEAA.
[24] Although DFO, as the Responsible Authority, was engaged in determining the scope of the project to be subject to environmental assessment under CEAA, it continued to be engaged in the process established by the AEUB and Alberta Environment. Environment Canada also continued to be involved in the process established by the AEUB and Alberta Environment.
[25] In respect of TrueNorth's 35(2) Application, by way of letter dated August 15, 2002, DFO advised that it had identified the scope of the project in relation to which an environmental assessment under CEAA ought to be conducted.
[26] Prior to finalizing its determination as to the scope of the project, DFO allowed other federal authorities to comment on its proposed scope of the project. Responses to DFO's letter dated August 15, 2002 were received from Health Canada, Parks Canada, Natural Resources Canada and Environment Canada. All of these federal authorities, except for Environment Canada, agreed with DFO's determination of the scope of the project.
[27] The scoping Decision under challenge is contained in a letter dated December 13, 2002, wherein DFO determined that, having reviewed the responses received from Health Canada, Parks Canada, Natural Resources and Environment Canada, the scope of the project for the purposes of an environmental assessment under CEAA would be the same as set out in its letter of August 15, 2002 ("Scoping Decision").
THE APPLICANTS' INTEREST IN THE PROJECT
[28] Prairie Acid Rain Coalition ("PARC") is a non-profit coalition of environmental organizations in the three prairie-provinces who are concerned about acid rain and acid deposition. The purpose and mandate of PARC are to review the regulatory processes for air emissions, to promote alternative energy sources and the use of the best available technology, and to increase public awareness. PARC was formed in 1982.
[29] Pembina Institute for Appropriate Development ("Pembina Institute") is a non-profit environmental policy research and education organization founded in 1986 in Drayton Valley, Alberta. For the past ten years, the Pembina Institute has researched, reviewed, consulted and presented at formal hearings on a lengthy list of oil sands developments.
[30] Toxics Watch Society of Alberta ("Toxics Watch") is a non-profit society incorporated in 1988. The purposes of Toxics Watch are to promote environmental health in Alberta through public awareness for the safe control of toxic chemicals, to conduct and review research on toxic chemicals, and to promote strategies to avoid or reduce chemical waste. Toxics Watch also has an extensive history of involvement in formal hearings on oil sands developments.
[31] The Oil Sands Environmental Coalition ("OSEC") is a coalition of environmental groups that has represented the interests of the environmental community in reviewing and intervening in oil sands development plan approval processes since 1995. Both Toxics Watch and the Pembina Institute are member groups, each being responsible for particular issues arising from EIAs. OSEC and PARC coordinate their work on oil sands development through OSEC's consultative process.
[32] Each Applicant has demonstrated both a long-term commitment to, and substantial involvement in, the processes by which the monitoring, regulating and abating of the oil sands industry's various environmental impacts are undertaken.
[33] Each Applicant has demonstrated substantial involvement in the review and approval processes undertaken with respect to TrueNorth's Fort Hills oil sands project. Both the Pembina Institute and Toxics Watch, through OSEC, performed a pre-application review of TrueNorth's application and provided written and oral evidence during the AEUB hearing. PARC provided input and assistance to OSEC during the hearing.
[34] Toxics Watch, on behalf of OSEC, also met with federal authorities to discuss the federal assessment process and telephoned DFO twice to follow-up on the scoping Decision. PARC advised OSEC on the federal assessment process.
[35] Each Applicant opposes DFO's Decision to scope TrueNorth's Fort Hills oil sands project as limited to the destruction of Fort Creek. Their shared concerns relate to: the potential for the oil sands project's emissions to contribute to acid rain and greenhouse gas emissions; the cumulative impacts of the project in combination with other oil sands projects; a lack of specificity in proposed mitigation measures; a lack of federal involvement in the mitigation of the project's effects; and the integrity of CEAA assessment process.
PERTINENT LEGISLATION
[36] The decision under review is the scoping Decision made by DFO pursuant to s. 15(1) of the Canadian Environmental Assessment Act, S.C. 1992, c-37, s. 15(1) ("CEAA")which reads as follows:
15. (1) The scope of the project in relation to which an environmental assessment is to be conducted shall be determined by
(a) the responsible authority;
15. (1) L'autorité responsable ou, dans le cas où le projet est renvoyé à la médiation ou à l'examen par une commission, le ministre, après consultation de l'autorité responsable, détermine la portée du projet à l'égard duquel l'évaluation environnementale doit être effectuée.
[37] The Regulations Respecting the Coordination by Federal Authorities of Environmental Assessment Procedures and Requirements, SOR/97-181 ("Regulations") require the Responsible Authority to consult with federal authorities before determining the scope of the project pursuant to s. 15(1) of CEAA. Subsection 8(a) of the Regulations reads as follows:
8. Where a project is subject to a screening or a comprehensive study, the responsible authorities other than a federal authority referred to in section 7 shall, after consulting with all federal authorities that respond pursuant to paragraph 6(1)(c), together determine
(a) the scope of the project pursuant to subsection 15(1) of the Act;
8. Si un projet fait l'objet d'un examen préalable ou d'une étude approfondie, les autorités responsables, autres que l'autorité fédérale visée à l'article 7, doivent, après avoir consulté les autorités fédérales qui ont fait parvenir une réponse en vertu de l'alinéa 6(1)c), déterminer ensemble :
a) la portée du projet en application du paragraphe 15(1) de la Loi;
[38] Project is defined under s. 2 of CEAA as follows:
2. (1) In this Act, "project" means
(a) in relation to a physical work, any proposed construction, operation, modification, decommissioning, abandonment or other undertaking in relation to that physical work, or
(b) any proposed physical activity not relating to a physical work that is prescribed or is within a class of physical activities that is prescribed pursuant to regulations made under paragraph 59(b);
2. (1) Les définitions qui suivent s'appliquent à la présente loi.
« _projet_ » Réalisation - y compris l'exploitation, la modification, la désaffectation ou la fermeture - d'un ouvrage ou proposition d'exercice d'une activité concrète, non liée à un ouvrage, désignée par règlement ou faisant partie d'une catégorie d'activités concrètes désignée par règlement aux termes de l'alinéa 59b).
[39] DFO declared itself a Responsible Authority in anticipation of receipt of a s. 35(2) authorization. Section 35 of the Fisheries Act, R.S., c. F-14, reads as follows:
35. (1) No person shall carry on any work or undertaking that results in the harmful alteration, disruption or destruction of fish habitat.
(2) No person contravenes subsection (1) by causing the alteration, disruption or destruction of fish habitat by any means or under any conditions authorized by the Minister or under regulations made by the Governor in Council under this Act.
35. (1) Il est interdit d'exploiter des ouvrages ou entreprises entraînant la détérioration, la destruction ou la perturbation de l'habitat du poisson.
(2) Le paragraphe (1) ne s'applique pas aux personnes qui détériorent, détruisent ou perturbent l'habitat du poisson avec des moyens ou dans des circonstances autorisés par le ministre ou conformes aux règlements pris par le gouverneur en conseil en application de la présente loi.
[40] Pursuant to s. 5(1)(d) of CEAA, no authorization prescribed by regulations made under para. 59(f) of CEAA may be issued before an environmental assessment is concluded under CEAA. Subsection 5(1)(d) of CEAA reads:
5. (1) An environmental assessment of a project is required before a federal authority exercises one of the following powers or performs one of the following duties or functions in respect of a project, namely, where a federal authority
...
(d) under a provision prescribed pursuant to paragraph 59(f), issues a permit or licence, grants an approval or takes any other action for the purpose of enabling the project to be carried out in whole or in part.
5. (1) L'évaluation environnementale d'un projet est effectuée avant l'exercice d'une des attributions suivantes_:
...
d) une autorité fédérale, aux termes d'une disposition prévue par règlement pris en vertu de l'alinéa 59f), délivre un permis ou une licence, donne toute autorisation ou prend toute mesure en vue de permettre la mise en oeuvre du projet en tout ou en partie.
[41] Subsection 35(2) of the Fisheries Act, under which the authorization sought by TrueNorth would be issued, is a "provision prescribed pursuant to para. 59(f)" (Law List Regulations, SOR/94-636, Schedule I, Part I, Item 6(e)).
ISSUES
[42] The issue on this application is whether DFO committed a reviewable error in the Decision issued December 13, 2002 concerning the scope of the project. The Applicants submit that the Decision, and the reasons supporting it, disclose three errors which they describe as follows:
a. An error in interpretation of the scope of the federal assessment power under the CEAA, reviewable on the standard of correctness;
b. An error in interpretation of the definition of "project" and the Inclusion List Regulation under the CEAA, reviewable on the standard of correctness; and
c. An unreasonable exercise of discretion in determining the scope of the project to be assessed, reviewable on the standard of reasonableness simpliciter.
ARGUMENTS
Applicants
Generally
[43] The Applicants submit that the application of CEAA to the project is straightforward. TrueNorth is planning to build an oil sands project that requires the issuance of a federal permit and this triggers an assessment under CEAA. The destruction of the Fort Creek is an impact of that project, not a separate project in and of itself. Because the oil sands project exceeds two separate thresholds set out in the Comprehensive Study List Regulations, SOR/94-638, a comprehensive study of the project is required.
[44] DFO's Decision defines the project as something other than what it obviously is, thereby avoiding responsibility for the proper assessment and mitigation of the project's full impacts. This attempt should fail because it rests on an erroneous interpretation of CEAA and renders significant portions of CEAA unworkable or absurd.
[45] The Applicants' argument addresses the following issues: the framework of CEAA; the error in interpretation of the scope of the federal assessment power; the error in interpretation of the definition of "project" and the Inclusion List Regulation, SOR/94-637; the unreasonable exercise of discretion; and the implications of DFO's error.
The Framework of CEAA
[46] CEAA governs the environmental assessment responsibilities of all federal departments and agencies. For present purposes, it determines three relevant issues: when does the duty to prepare an assessment arise; what type of assessment must be done; and what are the steps to take after an assessment has been completed.
[47] Section 5, known as the "triggering section," establishes the circumstances under which the duty to prepare an environmental assessment arises. There must be some form of federal involvement in the project to be assessed. The federal authority might be the proponent of the project, or it might provide financial assistance to the project proponent, or it might provide access to, or use of, federal lands to enable the project to be carried out.
[48] In the case at bar, federal involvement is by way of the issuance or a grant a prescribed permit, licence or approval "for the purpose of enabling the project to be carried out in whole or in part" (s. 5(1)(d)). The Law List Regulation lists the prescribed permits, licences and approvals, and includes s. 35(2) authorizations under the Fisheries Act at Part 1, s. 6(e).
[49] Section 5 also refers to a "project" as defined by CEAA. The definition of "project" in s. 2 has two parts:
"project" means
(a) in relation to a physical work, any proposed construction, operation, modification, decommissioning, abandonment or other undertaking in relation to that physical work, or
(b) any proposed physical activity not relating to a physical work that is prescribed or is within a class of physical activities that is prescribed pursuant to regulations made under paragraph 59(b);
« _projet_ » Réalisation - y compris l'exploitation, la modification, la désaffectation ou la fermeture - d'un ouvrage ou proposition d'exercice d'une activité concrète, non liée à un ouvrage, désignée par règlement ou faisant partie d'une catégorie d'activités concrètes désignée par règlement aux termes de l'alinéa 59b).
[50] The Inclusion List Regulation prescribes the proposed physical activities pursuant to ss. (b) of the definition and s. 59(b).
[51] Once the duty to prepare an assessment is triggered, the form of assessment must be determined. CEAA provides for three types of assessment: screenings; comprehensive studies; and mediation or assessment by a review panel. Each ascending level of assessment, moving from screening up to mediation or review panel, entails a more detailed and in-depth examination of a project.
[52] Under s. 18(1) of CEAA, a Responsible Authority must prepare a screening of the project, unless the project is described in the Comprehensive Study List. Screening is, therefore, the default level of assessment. Where a project is described in the Comprehensive Study List, s. 21 of CEAA requires the Responsible Authority to "ensure that a comprehensive study is conducted," or "refer the project to the Minister [of Environment] for a referral to a mediator or a review panel."
[53] The Comprehensive Study List is found in the Comprehensive Study List Regulations, as amended, which at s. 3 lists projects "for which a comprehensive study is required" and specifically mentions the following:
PART IV OIL AND GAS PROJECTS
The proposed construction, decommissioning or abandonment of
(a) a platform, artificial island or any other physical work for the production of oil and gas, where the platform, island or work is located offshore in salt water or fresh water;
(b) a heavy oil or oil sands processing facility with an oil production capacity of more than 10 000 m3/d; or
(c) an oil sands mine with a bitumen capacity of more than 10 000 m3/d.
[54] TrueNorth's project includes a processing facility with a capacity of 30 000 m3/d and a mine with a capacity of 15 000 m3/d and so, in the Applicants' view, requires assessment by comprehensive study.
[55] DFO, in contrast, has chosen to describe the project as the destruction of Fort Creek. It has done so pursuant to its authority under s. 15(l) of CEAA which provides that "the scope of the project in relation to which an environmental assessment is to be conducted shall be determined by the responsible authority." This approach to scoping has two effects. First of all, it narrows the undertakings that DFO will consider to exclude the infrastructure making up TrueNorth's oil sands project and its associated environmental impacts. Secondly, because the destruction of creeks is not listed in the Comprehensive Study List Regulations, DFO will only prepare a screening report which is the lowest level of assessment.
[56] CEAA creates a substantive difference in the content of a screening as opposed to a comprehensive study. Section 16(l) requires that both screenings and comprehensive studies include a consideration of the environmental effects of the project, cumulative environmental effects that may result from the project in combination with other projects, and measures that are technically and economically feasible that would mitigate any significant adverse environmental effects of the project. However, s. 16(2) also provides that comprehensive studies (but not screenings) must consider the purpose of the project, alternative means of carrying out the project and the environmental effects of such alternatives, and the need for, and requirements of, any follow up programs.
[57] The final relevant portions of CEAA govern what happens once an assessment is complete. When a screening report is completed, s. 20(1) provides that the responsible authority may:
a) Exercise any power or perform any function in relation to the project (ie. issue a permit, lease the land, provide the financing etc.), if it concludes that, taking into account the implementation of any mitigation measures identified in the screening assessment, the project will not cause significant adverse environmental effects. The responsible authority must, however, ensure that these mitigation measures are implemented;
b) Not exercise any power or perform any function in relation to the project, if it concludes that, even taking into account the implementation of any mitigation measures, the project would have significant adverse environmental effects that cannot be justified in the circumstances; or
c) Where there is uncertainty whether the project is likely to cause significant adverse environmental effects, or the project is likely to cause significant adverse effects after taking into account appropriate mitigation measures but if the responsible authority cannot determine that those effects are not justified in the circumstances, the responsible authority may refer the project to the Minister for a referral to panel review or mediation.
[58] In contrast, s. 21(a) of CEAA provides that, where a Responsible Authority prepares a comprehensive study report, it shall provide that report to the Minister of Environment and the Canadian Environmental Assessment Agency. Section 22 then provides that the Agency shall make the report available to the public and facilitate the receipt of public input. That input is then provided to the Minister for consideration along with the comprehensive study report. This mandatory receipt and consideration of public input is missing from the screening process.
[59] Section 23 of CEAA further provides that, after taking into account the report, public input and appropriate mitigation measures, the Minister may send the project back to the Responsible Authority for action under s. 37. The Responsible Authority may then take the same courses of action as it may take after completion of a screening report. Alternatively, the Minister can refer the project on for further study via mediation or panel review under s. 29 of CEAA to address, inter alia, outstanding uncertainties or public concern. A project reviewed by comprehensive study, therefore, also receives additional Ministerial consideration that is absent from the screening process.
[60] After the assessment is finished and a project goes ahead, CEAA requires the Responsible Authority to ensure the implementation of identified mitigation measures. This applies to both screenings (ss. 20(1)(a), 20(2)) and comprehensive studies (ss. 37(1) and (2)).
DFO Erred in Adopting a Restrictive Interpretation of the Scope of the Federal Assessment Power
[61] The Applicants say that the DFO's erroneous approach to scoping the project in the case at bar rests on a mistaken interpretation of the intent of CEAA and the scope of the federal assessment power that is subject to review by this Court on a standard of correctness (Friends of the West Country v. Canada (Minister of Fisheries and Oceans) (1999), 31 C.E.L.R. (N.S.) 239 (F.C.A.) at p. 243).
[62] At para. 26 of her affidavit, Ms. Majewski states:
In cases where a regulatory decision such as the decision to issue a Fisheries Act section 35(2) authorization triggers an EA, there are limitations on the scope of the project. In these cases, the scope of the project should be limited to those elements over which the federal government can validly assert authority, either directly or indirectly. The EA scope of project should correspond to the federally regulated undertaking involved in the application.
[63] The Applicants say that at the core of this interpretation of CEAA is the mistaken notion that a federal authority may only look at what it may validly regulate. In the Supreme Court of Canada's landmark decision in Friends of the Oldman River v. Canada, [1992] 1 S.C.R. 3, the Court addressed the assertion that the federal government is restricted to examining only those parts of a project that trigger the federal legislative responsibility. In explicitly rejecting this view, at pp. 62-76, La Forest J. concluded that:
a) The scope of assessment is not confined to the particular head of power under which the federal authority has a decision-making responsibility; and
b) Once the initiating department has been given authority to embark on the assessment, its review must consider the environmental effect on all areas of federal jurisdiction.
[64] DFO's conclusion in the case at bar that the project scope must be restricted to those elements over which it can assert regulatory authority (ie. the fisheries in Fort Creek) is therefore mistaken. DFO's authority to issue a s. 35(2) authorization is a required trigger for the federal assessment, but once the assessment authority under CEAA is engaged, DFO must examine the impacts of the project on all areas of federal jurisdiction, not just fisheries alone.
[65] The Applicants point out that these impacts are not merely academic. Environment Canada and DFO identified issues of federal concern in their submissions to the AEUB, including fish tainting from processing facility effluent, impacts on migratory birds, regional acid deposition and greenhouse gas emissions. These concerns are shared by the Athabasca Chipewyan First Nation which is affected by the project. But if DFO's scoping Decision stands, all such issues will (ironically) be excluded from the scope of the federal assessment itself. This is exactly the impoverished view of the federal assessment authority La Forest J. warns against in Oldman.
[66] The Applicants say that, since Oldman, the law has advanced to affirm that the federal assessment power goes further than looking at aspects of a project with environmental effects on federal areas of jurisdiction. It now requires an examination of all the effects of the entire project. The key is that, while the examination can be broad, the ultimate exercise of authority must be restricted to powers under federal jurisdiction.
[67] The Applicants argue that this more expansive approach is foreshadowed in Oldman, where La Forest J. adopts an Australian High Court decision, Murphyores Incorporated Pty. Ltd. v. Commonwealth of Australia (1976), 136 C.L.R. 1 (H.C.), affirming the constitutional authority of the Australian federal government to look at the environmental impacts of a mining project under state regulation while exercising its state and commerce power in granting an export permit for the mined ore.
[68] This approach is then explicitly confirmed as the law in Canada in the second landmark environmental assessment case of Quebec (Attorney General) v. Canada (National Energy Board), [1994] 1 S.C.R. 159 (the "Hydro-Quebec" case). In a decision upholding the NEB's authority to review the environmental effects of power plants designed to produce, in part, the power that was the subject of the power export certificate application before the NEB, the Supreme Court established three key principles:
a) It is proper for federal authorities to consider in their decision-making processes the overall environmental costs of granting the permits or licences over which they have authority (at pp. 187-200);
b) That undertakings related to the matter under federal jurisdiction may validly be considered in the course of the federal environmental assessment, even if those undertakings are located in a province and primarily under provincial jurisdiction (at pp. 192 and 193); and
c) Any overlap between federal and provincial assessment processes is not an unusual nor unworkable product of federalism, and the federal government must have regard to its unique sphere of responsibilities that complement those of the provinces (at pp. 193 - 194).
[69] The Applicants say that these principles were applied in the Federal Court of Appeal's decision in Friends of the West Country, where the Court concluded that the Coast Guard erred in restricting its cumulative effects analysis under s. 16(1) of CEAA to only environmental effects emanating from sources within federal jurisdiction. Once CEAA is triggered, "the federal responsible authority is to exercise its cumulative effects discretion unrestrained by its perception of constitutional jurisdiction" (at para. 34 and 38).
[70] At p. 254, para. 36 of Friends of the West Country, the Court restricts its comments to the cumulative effects analysis that occurs after a project has been scoped. However, based on the preceding Supreme Court authorities, the same reasoning applies to the scoping of a project under s. 15(1): project components outside federal jurisdiction should be considered, and that consideration will inform the final federal decision over the regulatory instruments within federal power. Only in this way, say the Applicants, will the "overall environmental costs" of a federal decision be accounted for.
[71] The Applicants argue that Parliament adopted this expansive view of the federal assessment power when drafting CEAA. "Environmental effect" is defined in s. 2 as "any change that the project may cause in the environment, including any effect of any such change on health and socio-economic conditions." This broad language lacks any explicit or implied intention to limit the federal assessment to only those environmental effects directly tied to federally regulated undertakings or federal areas of jurisdiction.
[72] Sections 5(1)(a) - (d) of CEAA speak of federal authorities exercising powers that enable the project to be carried out "in whole or in part." This indicates an awareness, say the Applicants, that a federal authority may have a connection to, or regulatory control over, only a piece of a project. Nevertheless, s. 5(1) requires an environmental assessment of "the project" in its entirety, not just the federal portion.
[73] Section 15(3) of CEAA states that "where a project is in relation to a physical work, an environmental assessment shall be conducted in respect of every construction, operation, modification, decommissioning, abandonment or other undertaking in relation to that physical work that is proposed by the proponent." The Applicants say that this indicates that a connection between related undertakings can bring them both within the purview of the federal assessment, as the power plants connection to the power export brought the plants within the scope of the NEB's review in Hydro-Quebec.
[74] In addition, the Applicants point out that the preamble to CEAA refers to the following objectives: to "achieve sustainable development by .... encouraging and promoting economic development that conserves and enhances environmental quality"; and to use environmental assessment as a means of "integrating environmental factors into planning and decision-making processes in a manner that promotes sustainable development." Neither objective can be achieved, say the Applicants, if federal authorities voluntarily blinker themselves to the true impacts of major industrial developments by down-scoping them to comparatively innocuous activities.
[75] Turning to the Regulations, the Applicants point out that Governor in Council must be aware that oil sands projects are carried out on provincial land and are subject to provincial regulation. Hence, they are not in their entirety subject to federal regulation. Nonetheless, oil sands projects were included in the Comprehensive Study List Regulations, indicating an intention to require federal assessments of projects in their entirety in the course of exercising direct regulatory power over only a portion of the project.
[76] The Applicants' position is that CEAA consistently uses language that indicates a broad view of the federal assessment power that encompasses all related works and their environmental impacts.
[77] As the Court of Appeal said in Friends of the West Country, DFO's duty is to perform the required assessment "unrestrained by its perception of constitutional jurisdiction." It should not be cut off at the knees with an erroneously narrow interpretation that finds no support in the language of the scheme.
DFO Erred in Interpreting the Definition of "project" and the Inclusion List Regulation
[78] The Applicants take the position that DFO's decision further relies on an erroneous interpretation of the definition of "project" and the Inclusion List Regulation, which is also reviewable on a standard of correctness.
[79] DFO relies on the listing of activities that harm or destroy fish habitat in Part VII of the Inclusion List Regulation to support its Decision that the dest