More interjurisdictional disputes over the environment expected in Canada, law conference hears

Author: Mark Lowey


Publish Date: Thursday, June 23, 2016

Canadians should brace themselves for more interjurisdictional disputes – especially between Ottawa and the provinces – amid a fast-changing, often-contentious environmental regulatory landscape, experts told a conference in Calgary.

With the Justin Trudeau Liberal government asserting jurisdiction over climate change, interprovincial pipelines and species at risk, and the provinces pushing back in those areas and others, more interjurisdictional battles are likely, speakers told The Canadian Institute’s 20th Annual Conference on Environmental Law and Regulation.

“I’m seeing a lot of interjurisdictional issues” in three main areas, lawyer Sander Duncanson, who specializes in environmental, regulatory and aboriginal law at Osler Hoskin and Harcourt LLP, said during a panel session on “Best Practices When Dealing with Interjurisdictional Issues.”

The first area involves interprovincial pipelines, which are regulated mainly by the federal government through the National Energy Board (NEB), he said.

For example, the City of Burnaby refused to issue local permits, under the city’s bylaws, needed to plan the route of Kinder Morgan’s planned Trans Mountain oilsands pipeline expansion from Alberta to the West Coast. B.C. Supreme Court Judge George Macintosh, in ruling against the city last November, said that the NEB’s rules take precedence over the city.

Another example Duncanson cited was a B.C. Supreme Court ruling in January that the B.C. government, in an agreement with Ottawa that gave the NEB sole authority over the environmental assessment process, thereby breached the provincial duty to consult the Gitga’at and neighbouring First Nations on the proposed Enbridge Northern Gateway pipeline.

Another example of interjurisdictional conflict is Saskatchewan Premier Brad Wall’s stiff opposition to the idea of federal carbon tax to help reduce greenhouse gas emissions. Wall said if Ottawa wanted to come with “some sort of unilateral carbon tax plan, we think they’re constitutionally restricted from taxing other governments.”

In another sign of mounting interjurisdictional frictions, the federal government announced this month it is undertaking a wholesale review of the environmental rules for approving major resource projects.

The Liberals will appoint expert panels to review a series of laws, including the National Energy Board Act, the Canadian Environmental Assessment Act, the Fisheries Act, and the Navigation Protection Act. The panels are due to report next January.

The federal announcement came as the City of Vancouver launched a court challenge against the NEB’s review of the proposed $6.7-billion Trans Mountain pipeline expansion.

In a statement, Vancouver Mayor Gregor Robertson called the NEB review “flawed and biased,” as city lawyers argued the regulatory panel failed to adequately consult communities along the pipeline’s path and ignored scientific evidence, The Globe and Mail reported.

But Duncanson, at the Calgary environmental law and regulation conference, said in response to a question from EnviroLine that he thinks the federal Liberals’ characterization of the NEB’s process as flawed was unfair, and has undermined public confidence in the regulator.

The NEB has a comprehensive and thorough process that’s based on evidence, he said, speaking personally rather than on behalf of his law firm. “The process is pretty good and it’s been unfairly characterized, I think.”

“We do a very good job in the country developing resources” and Canadians should be proud of that, he added. “We have way better [environmental and regulatory] standards than a lot of other places internationally.”

Duncanson acknowledged that the way consultation is done with Aboriginal communities across Canada, especially in Alberta and British Columbia, is “very disjointed . . . I think there’s lots of room for improvement.”

Alberta, for example, consults Aboriginal communities through the province’s Aboriginal Consultation Office. Duncanson said he personally is not sure whether the office is the best approach.

Alberta’s NDP government has said it will repeal legislation – which has sparked two lawsuits – concerning Aboriginal consultation on resource projects that created a levy to fund the Aboriginal Consultation Office.

Duncanson said from a project developer’s perspective, the most important thing is to work directly with the Aboriginal communities involved and effectively manage that relationship.

The second area in which he sees many jurisdictional issues is around joint review panels for environmental assessment of major resource projects. The federal government often has no oversight through such panels for assessing in situ oilsands projects, he noted. Yet the feds are represented on joint review panels reviewing oilsands mining projects, such as Imperial Oil’s Kearl project and Teck ResourcesFrontier oilsands project.

Canadian legislation provides any citizen the right to request a joint review panel process for a proposed project, so there could be more such requests that might succeed under the Trudeau government regime, Duncanson said.


Species at risk a “big issue”

The third area in which he sees a lot of interjurisdictional issues is with the federal Species At Risk Act (SARA), which he called a “big issue” for projects that have federal environmental assessment requirements.

There is currently a lot of uncertainty about whether and how a proposed project can proceed if it impacts a species at risk listed under SARA, he said.

For example, this month, Calgary junior oil and gas company L-G-X Oil Plus Gas blamed an order aimed at protecting a rare Prairie bird for the company’s insolvency. The company maintained its daily operations and drilling plans were severely disrupted when an emergency order under SARA took effect in February 2014.

Duncanson said a “security blanket” provision under SARA allows the federal government to intervene to project a designated species at risk if Ottawa believes that a province is failing to do so. However, Ottawa had never used the provision without a province’s consent – until now.

This week, the Liberal government issued an “emergency order” under SARA, blocking part of a residential project south of Montreal to protect the habitat of the tiny western chorus frog, The Globe and Mail reported.

David Heurtel, Quebec’s Environment Minister, responded by stating that Ottawa’s move “raising serious questions about a potential intrusion in Quebec’s jurisdiction.”

The federal department of Environment and Climate Change said the order was necessary to “prevent the loss or degradation of the habitat the western chorus frog needs to grow and reproduce.”

It is the first time SARA has been used to block a private real estate development, said Marc Bishai, a lawyer at the Quebec Environmental Law Centre. The previous Conservative government had failed to take any action on the file, despite its legal obligations, he said.

In the past, the federal government hasn’t used the emergency provision under SARA unilaterally even with Canada’s boreal forest woodland caribou, which is one of 492 species listed under SARA as a threatened species and which requires a federal recovery strategy.

The steepest declines in caribou herd numbers are in Alberta, mainly due to the disturbed and increasingly industrialized landscape. On two herds’ range (the Little Smoky-A La Peche herds in west-central Alberta), only five per cent of the habitat is undisturbed and on another herd’s range (Cold Lake Air Weapons Range herd in the Athabasca region), only 15 per cent of habitat is undisturbed.

None of Alberta’s 14 caribou ranges – home to about 3,500 caribou – meet the federal recovery strategy requirement that 65 per cent of the ranges should be undisturbed habitat.

Last August, the province’s NDP government removed about 24 square kilometres of caribou range from an auction sale of energy exploration leases, but didn’t rule out future sales of such leases on some caribou ranges – pending completion of range plans. The previous Tory government declared moratoriums on new lease sales in some areas and delays in others.

As for advice for resource development companies when it comes to dealing with interjurisdictional issues, Duncanson said that business should be aware that public expectations about environmental law and regulations are changing, and that courts are reluctant to exclude one level of government from regulating – in its own way.

Julia Loney, a lawyer at McMillan LLP, said she often sees interjurisdictional issues arise when helping American companies based in the U.S. try to expand into Canada.

Loney offered a list of things companies wanting to engage in cross-border projects need to check, including:

  • foreign investment requirements

  • employment and labour law

  • taxes

  • competition law

  • real property issues

  • environmental responsibility

  • government level of permits

  • litigation regimes

  • audit processes

  • operational issues

  • filing requirements.

There is a lot of variance among provinces on requirements for U.S. companies wanting to expand into Canada, said, Loney, who called for more transparency and cooperation among provinces to encourage such business.

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