On January 27, 2006, the Federal Court of Appeal (the "Court") released its decision in the matter of Prairie Acid Rain Coalition v. Minister of Fisheries and Oceans Canada (the "PARC Decision"). The decision provides additional certainty for project proponents concerning the scoping of projects ("EIA") under the Canadian Environmental Assessment Act (the "CEAA"). The decision is important for all proponents of projects that involve an environmental impact assessments ("EIA") under the CEAA, but particularly important for proponents of oil sands projects. The Court confirmed that a responsible authority has broad discretion to set the scope of a project to be assessed under the CEAA. In the case of an oil sands mining project, the Department of Fisheries and Oceans (the "DFO") may limit the scope to the activities authorized by an approval under section 35(2) of the Fisheries Act, without the need to assess other aspects of an oil sands project that are not regulated under the Fisheries Act. The fact that oil sands mining projects are listed in the Comprehensive Study List Regulations (the "CSR Regulations") does not mean that a comprehensive study of the entire oil sands project must be undertaken.
The PARC Decision concerns a judicial review application by PARC in respect of the Fort Hills Oil Sands Project which consisted of an open pit mine, a crude bitumen extraction plant, a bitumen froth processing plant and related facilities (the "Project"). PARC argued, among other things, that the DFO erred in law by limiting the scope of the project to be assessed under the CEAA to the destruction of a creek (requiring an approval under section 35(2) of the Fisheries Act), and by failing to include within the assessment all other aspects of the oil sands project. The appeal was from the Federal Court Trial Division, who had previously upheld the decision of the DFO and dismissed PARC's application.
The Court concluded, in accordance with prior decisions of the Federal Court, that the DFO had discretion under section 15(1) of the CEAA to limit the scope of the project to the destruction of the creek and not to include other aspects of the oil sands project. The Court reasoned that if PARC was correct in its assertion that the DFO was required to include the entire project, then such would deprive the DFO of discretion concerning the scoping decision which could not be correct.
PARC also argued that DFO was required to scope the project to include the oil sands project because oil sands projects are listed in the CSR Regulations. The Court held that a responsible authority does not have to set the scope of a project in accordance with the CSR Regulations. If the project is scoped to include a project that is under the CSR Regulation, then a comprehensive study is required—if not, then only a screening is required. Therefore, the scoping decision will drive whether or not the CSR Regulation is applicable, not the converse. Moreover, the Court noted in this case, that the oil sands project is under provincial jurisdiction and the CSR Regulations "do not purport to sweep under a federal environmental assessment undertakings that are not subject to federal jurisdiction".
Finally, the Court commented on the fact that it is sensible to avoid duplication where EIAs are required under both provincial and federal jurisdictions. It noted that, in this case, an extensive EIA had been undertaken in respect of the oil sands project under provincial laws. The Court stated "it was both legally appropriate and efficient from a policy perspective for the DFO to rely on Alberta's performance of an environmental assessment."
The PARC Decision is helpful for proponents whose project timetables are subject to litigation risk where there is uncertainty concerning EIA requirements. The decision is particularly helpful for proponents of oil sands mines and oil sands processing facilities. Since both of these project types are listed in the CSR Regulation, there was previously some uncertainty as to whether a responsible authority was required to scope the project broadly. The PARC Decision makes it clear that this not the case. The DFO is free to scope a project to include only those undertakings and activities that trigger the need for a section 35(2) approval under the Fisheries Act. The fact that these undertakings and activities may be related to a project that is listed under the CSR Regulations would appear to be of no consequence to the scoping decision.
We understand that PARC may seek leave to appeal to the Supreme Court of Canada. The decision, however, is tightly reasoned, from a well-regarded court, lessening the prospects of PARC's success.