Court Rules That Unquantifiable Climate Impacts Are Not Sufficient to Overturn Project Approval

August 02, 2023

Written By Michael Theroux, Laura Gill and Timothy Ke

In a recent decision, the Federal Court has rejected an attempt by non-governmental organizations (NGOs) to set aside ministerial approval of a significant offshore oil and gas project. The NGOs argued that the Minister failed to take into account downstream emissions and marine shipping risks in approving the project. This case is another example of NGOs using the court process to advance concerns about climate change. The ruling demonstrates that courts may defer to project approvals where downstream impacts are not primary considerations in granting approval.

Background

The project involves an oil production site 500 kilometres offshore from the coast of St. John's, Newfoundland and Labrador. The scope of the project also includes offloading of crude oil to tankers within a designated project zone. An estimated 300 million barrels of crude oil is available for recovery over an operational life span of approximately 30 years.

Two environmental NGOs, Sierra Club Canada Foundation and Équiterre, challenged a decision by the Minister of Environment and Climate Change that the project is not likely to cause significant environmental effects under section 5 of the Canadian Environmental Assessment Act, 2012, SC 2012, c 19. The NGOs argued that downstream greenhouse gas (GHG) emissions and marine shipping risks (such as oil spills) are unavoidable consequences of the project, and that the Minister failed to consider them.

The Court rejected this argument, finding that oil produced from the project may be used by an indeterminate class of parties and purposes, and resulting emissions would be unquantifiable. The Court found the Minister's decision to disregard the topic of downstream GHG emissions to be reasonable. Likewise, it was reasonable for the Minister to disregard marine shipping risks, given the remote location of the project site and the uncertainty of the oil shipments' destination.

The NGOs also alleged a breach of the Crown's duty to consult with Aboriginal groups, asserting the risk of impact on Aboriginal rights posed by potential oil spills and other impacts to traditional marine ecosystems. The NGOs asserted that these risks raised the standard of requisite Crown consultation with Aboriginal groups. The Court rejected this argument, noting the significant distance of the project from Canadian (and Aboriginal) territory and the minimal risk of impact. The "numerous opportunities" for consultation that the Crown provided were deemed sufficient.

Takeaways

In this case, the Federal Court held that the decision to approve the project should not be invalidated merely because the Minister failed to consider broad downstream climate-related consequences. This is true even if those climate risks (such as downstream emissions) form the majority of the project's impact, and are likely to occur. Project managers can show that the decision to disregard was reasonable nevertheless. Relevant considerations include the decision maker's degree of control over environmental consequences, how easily those risks can be verified or quantified, resources available to investigate risks and capacity to respond to risks. While specific and quantified risks should be addressed, speculation over climate impact is not necessary. When it comes to broad, uncertain risks, it may be sufficient simply to show a conscious decision to disregard those risks.

Climate change litigation in Canada remains a burgeoning area. We traced the area's development and the broad nature of such claims in previous blogs: Canadian Municipalities Increasingly Support Climate Change Litigation Against Oil and Gas Companies, Are Climate Change Claims Based on Charter Rights Justiciable? Canadian Courts Render Conflicting Decisions and Climate Change Litigation Comes to Canada. As this most recent case shows, litigation related to climate change is continuing to grow in importance in Canada, especially for energy companies.

If you have any questions about this decision or energy-related disputes, please contact a member of the Bennett Jones Energy Litigation group.

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