Date: 20080327
Docket: T-460-08
Citation: 2008
FC 382
Ottawa, Ontario, March 27, 2008
PRESENT: The Honourable Mr. Justice de Montigny
BETWEEN:
IMPERIAL
OIL RESOURCES VENTURES LIMITED
Applicant
and
MINISTER OF FISHERIES AND
OCEANS,
ATTORNEY GENERAL OF CANADA
Respondents
REASONS FOR ORDER AND ORDER
[1]
This is an
application for a stay of application or, alternatively, for an injunction
prohibiting the Minister from revoking an authorization given under subsection
35(2) of the Fisheries Act, R.S.C. 1985, c. F-14 (the “Authorization”)
to Imperial Oil allowing work to be done as part of the Kearl Oil Sands (KOS) Project.
The applicant is also seeking an expedited hearing of the underlying
application for judicial review attacking the same decision of the Minister.
I. Facts
[2]
The course
of events leading to the present motion can be briefly summarized. Imperial
Oil wishes to construct the KOS Project, an oil sands mine, in a location
approximately 70 kilometres north of Fort McMurray, Alberta, on the east side
of the Athabasca River. This is a huge project, consisting of four open pit
truck and shovel mines providing for an average of 24,750 tonnes per hour
mining capacity, corresponding ore preparation and bitumen separation
facilities, a cogeneration plant, a bitumen froth processing plant, a terminal
to deliver the oil sands products to a pipeline system, and utilities and
off-site facilities to support the mining and processing operations. The
operations at the KOS Project are expected to continue until approximately 2060
and will be followed by final reclamation of the KOS Project site. The total
project is designed to produce a maximum capacity of 55,000 cubic meters of
partially deasphalted bitumen per day for a period of 50 years.
[3]
The
Project is subject primarily to regulation established by Alberta Environment
pursuant to the Environmental Protection and Enhancement Act, R.S.A.
2000, c. E-12 and by the Alberta Energy & Utilities Board pursuant to the Oil
Sands Conservation Act, R.S.A. 2000, c. O-7. It also falls within federal
jurisdiction as a result of the need for Imperial Oil to obtain an
authorization from the federal Minister of Fisheries and Oceans pursuant to subsection
35(2) of the Fisheries Act. Accordingly, the Project was subject to the
environmental assessment processes of both the Governments of Alberta and Canada.
[4]
A
variation of the Project was first announced to the public in 1997 by Mobil Oil
Canada, now ExxonMobil Canada. Beginning in 2002, Imperial
entered into agreements with ExxonMobil Canada and other holders of oil sands leases to
secure the rights to those leases that now underlie the KOS Project site. Work
on the Environmental Impact Assessment (“EIA”) began in 2003. On April 22,
2004, the Director of Environmental Assessment of Alberta issued the Final
Terms of Reference of the EIA, after receiving input from numerous
stakeholders, including the federal government.
[5]
Imperial
Oil submitted its EIA on July 12, 2005 to the provincial and federal
authorities and filed its application with the Alberta Energy and Utilities
Board to allow for construction and operation of the DOS Project. After
receiving and reviewing the Project Application and all of the supplemental
information provided by Imperial Oil, the Alberta Energy & Utilities Board
determined that, pursuant to Alberta legislation, it would hold a
public hearing to determine whether the KOS Project was in the public interest.
[6]
On January
18, 2006, the Department of Fisheries and Oceans, after consulting with other
federal departments and agencies, recommended to the Minister of Environment
that the KOS Project be assessed under the Canadian Environmental Assessment
Act, S.C. 1992, c. 37 (the CEAA). More specifically, it was to be
referred to a review panel due to the potential for the proposed project to
cause significant adverse environmental effects. On July 14, 2006, Canada
entered into an agreement with the government of Alberta to conduct a joint review panel.
[7]
Twenty
parties filed submissions with the Panel, and a number of them also gave
evidence and were cross-examined by the Panel during the 16 days of public
hearings that took place in November 2006. The Panel issued its Joint Panel
Report on February 27, 2007. With regard to its responsibilities under the CEAA
and to its terms of reference, the Joint Panel concluded that the proposed
Project was not likely to result in significant adverse environmental effects,
provided that the proposed mitigation measures and the recommendations of the
Joint Panel were implemented.
[8]
Subsequent
to the issuance of the Joint Panel Report, the Alberta Department of
Environment and the Alberta Energy & Utilities Board issued the approvals
required in connection with the KOS Project to Imperial Oil. On August 14,
2007, the Government of Canada issued a response to the Joint Panel Report,
stating that it accepts all the conclusions and recommendations of the Joint
Panel as presented in its Report.
[9]
On March
29, 2007, an application for leave and judicial review was filed by various
non-profit organizations concerned about the environmental effects of the KOS
Project (File T-535-07). They submitted that the environmental assessment
conducted by the Joint Panel did not comply with the mandatory steps in the CEAA
and in the Panel’s Terms of Reference. The hearing took place from January 15
to 17, 2008.
[10]
Despite
this challenge to the Joint Panel’s Report, the Minister of Fisheries and
Oceans issued Imperial Oil an authorization under subsection 35(2) of the Fisheries
Act on February 8, 2008.
On the basis of that authorization, Imperial Oil immediately
commenced its work on the Project.
[11]
Madam
Justice Tremblay-Lamer issued her Reasons and Order on March 5, 2008 (Pembina
Institute for Appropriate Development v. Canada (Attorney General), 2008 FC 302). She allowed
the application for judicial review in part, and remitted the matter back to
the same Panel with the direction to provide a rationale for its conclusion
that the proposed mitigation measures will reduce the potentially adverse
effects of the Project’s greenhouse gas emissions to a level of
insignificance. She refrained, however, from requiring the entire Panel review
to be conducted a second time, as the error related solely to one of many
issues that the Panel was mandated to consider.
[12]
In a
paragraph that is very much a bone of contention between the parties in the
present Motion, Madam Justice Tremblay-Lamer wrote:
[79] While I agree that the Panel is not
required to comment specifically on each and every detail of the Project, given
the amount of greenhouse gases that will be emitted to the atmosphere and given
the evidence presented that the intensity based targets will not address the
problem of greenhouse gas emissions, it was incumbent upon the Panel to provide
a justification for its recommendation on this particular issue. By its
silence, the Panel short circuits the two step decision making process
envisioned by the CEAA which calls for an informed decision by a
responsible authority. For the decision to be informed it must be nourished by
a robust understanding of Project effects. Accordingly, given the absence of
an explanation or rationale, I am of the view that the Panel erred in law by
failing to provide reasoned basis for its conclusion as mandated by s. 34(c)(i)
of the CEAA.
[13]
On March
11, 2008, the Chief Executive Officer for Imperial Oil wrote to the Minister of
Fisheries and Oceans, articulating concerns over the impact of the Judgment on
the Project work then underway, and on the Authorization issued on February 12,
2008, pursuant to subsection 35(2) of the Fisheries Act.
[14]
On March
13, 2008, two of the Applicants in the judicial review of the Joint Panel’s
Report initiated a new judicial review application (File T-418-08). Imperial
Oil is named as a Respondent, as is the Minister of Fisheries and Oceans. This
new judicial review application is directed to the Authorization issued on
February 12, 2008, pursuant to subsection 35(2) of the Fisheries Act.
It seeks relief which included an Order quashing the Authorization, and
interlocutory injunctive relief enjoining all or part of the KOS Project until
the final resolution of the issues raised.
[15]
On March
20, 2008, the Department of Fisheries and Oceans delivered a letter to Imperial
Oil, stating their opinion that the Authorization had been rendered a nullity
as a result of the decision of Madame Justice Tremblay-Lamer. On the same day,
Imperial Oil filed Judicial Review Application T-460-08 which underlies the
present motion for a stay of the Minister’s decision to revoke the
Authorization given on February 8, 2008.
[16]
It is
worth adding that, at the time of writing, there has been no appeal from the
decision reached by my colleague Justice Tremblay-Lamer. At the hearing,
counsel for the applicant mentioned that they may seek clarification of Madam
Justice Tremblay-Lamer’s ruling.
II. Analysis
[17]
The test
for issuing a stay of proceedings is well known, and has been set out by the
Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney
General), [1994] 1 S.C.R. 311. The applicant must establish a) a serious
issue to be tried, b) that it will suffer irreparable harm if the stay is not
granted, and c) that the balance of convenience favours the applicant.
[18]
In this
case, I think it is beyond dispute that a serious issue to be tried has been
established. Briefly stated, the arguments of the parties can be summarized in
the following way. The applicant contends there is nothing in the Fisheries
Act allowing the Minister to revoke the subsection 35(2) authorization or
revisit his decision to grant the authorization. As to the argument that the
authorization has been rendered a nullity as a legal consequence of the
judgment of Madam Justice Tremblay-Lamer, the applicant further argues, first
of all, that the Joint Panel’s Report was not quashed or set aside, but was
merely sent back for the Panel to better explain its recommendations with
respect to the problem of greenhouse gas emissions and to provide a basis for
its conclusion on this particular issue. In any event, counsel for the
applicant submits that section 37 of the CEAA directs the Minister to
take into account the Panel Report, not to rely solely on its rationale. While
it was conceded that the result might be different if the Court had quashed the
Report, it is argued that the authorization cannot fall merely because the
reasoning of the Panel was found defective on one aspect of its findings.
[19]
The
respondents, on the other hand, take the view that the Minister has not revoked
the Authorization, but that it has become void as a legal consequence of the
decision made by Madam Justice Tremblay-Lamer. If one is to follow their
argument, the regulatory regime put in place in the CEAA emphasizes that
environmental assessment is a process in which environmental assessment
precedes and informs regulatory decision making. Since there has been a
material flaw in the environmental assessment process which, to use Madam
Tremblay-Lamer’s words, “short-circuits” this sequence, the Authorization is a
nullity. In other words, the CEAA makes it clear that the Minister
cannot proceed until a completed environmental assessment is over, one that
meets all the requirements of the CEAA, and a report that as described
in section 34 has been submitted to the Minister. Since the Court found a
material error in the Panel’s Report, it nullifies the Authorization as a
condition precedent to the exercise of the authority has not been fulfilled.
The responsible authority could not proceed because it could not make an informed
decision.
[20]
It would
be inappropriate, at this stage, to go any further into the arguments presented
by counsel from each side. They are better left to the judge who will be
seized of the underlying Application for Judicial Review, who will be in a much
better position to rule on this legal issue after having considered a full
record and more comprehensive written and oral arguments. Suffice it to say
that, for the purposes of this Motion for a stay of application, I am satisfied
the applicant has a case which deserves to be heard by the Court.
[21]
I am not
convinced, however, that the applicant will suffer irreparable harm if the stay
is not granted, especially if the Application for Judicial review is heard on
an expedited basis. Indeed, counsel for the applicant conceded that much
during his oral submission by teleconference. In his affidavit, Mr.
Christopher Douglas Allard, Senior Project Manager for the KOS Project, stated
that if work is to be stopped, there will be a domino effect on the timeline set
for the work to be completed by 2012. While this is no doubt true, I also note
that there is some vagueness in that schedule. For example, the ditching work
will continue through “the first quarter or half of 2008” (para. 40 of the
affidavit). Dewatering would then commence, and Imperial Oil “believes” it
must start in the summer of 2008, as there are many different factors that can
impact the pace of dewatering (para. 41 of the affidavit). If the ditching
stops and dewatering cannot occur as planned, “that may extend the Project out
one or more years” (para. 44 of the affidavit).
[22]
In light
of these crude estimates, and in the absence of any cross-examination on the
affidavits, it is difficult to assess with any degree of certainty the damage
that would result from a long term stay. Imperial Oil also argued that if it
wishes to commence operation of the KOS Project on schedule, it must order
certain equipment, execute an engineering procurement and construction
management contract and execute an earthworks construction contract. Many
equipment items must be ordered 3 to 4 years prior to delivery, and the cost
and availability of this equipment could change during this time. Moreover,
the hundreds of engineers that have been mobilized for this project would
likely be redeployed to other projects, and it would be impossible to say how
many would be able to rejoin the KOS Project upon recommencement.
[23]
These are
no doubt costs to be taken into consideration, but the amount of which is
difficult to assess. How much of these costs would Imperial Oil be able to
recoup is also difficult to foresee. What appears to be clear, however, is
that a short term delay will most likely not be a major impediment in the
overall schedule of the project. Moreover, Imperial Oil stands to loose a lot
more if they were to do more work and expand further capital investment, only
to see their Application for Judicial Review dismissed by the Court in a year
or so.
[24]
It is true
that from a compensation standpoint, Imperial Oil has committed to a No Net
Loss Plan under the subsection 35(2) authorization such that any fish habitat
that is altered, disrupted or destroyed must be replaced on a ratio of 2 to 1.
I am also mindful of the undertaking given by the applicant as to damages that
may be caused as a result of the granting of a stay. But these are only some
of the considerations that must be taken into account. Of far more
significance, it seems to me, is the crucial importance to resolve all the
uncertainties, legal and otherwise, before embarking upon such an important
project. This can only be done when the issues will have been fully canvassed,
and when all the interested parties will have had an opportunity to be heard.
[25]
For all
these reasons, the application for interim relief shall be denied. I will, on
the other hand, make an order pursuant to Rule 373(3) of the Federal Courts Rules,
SOR/98-106 for this case to receive an expedited hearing. I will also,
pursuant to Rule 104 and 105 of the Federal Courts Rules, make an order
to add as respondents the applicants in file no. T-418-08, Pembina Institute
for Appropriate Development and Sierra Club of Canada, and to partially consolidate
these two cases so that the critical issue raised in file no. T-418-08 can be
addressed at the hearing of this case. This Order shall also be served on the
other two applicants in file no. T-535-07, Prairie Acid Rain Coalition and
Toxics Watch Society of Alberta, so that they may apply to be added as
respondent in this file.
[26]
I conveyed
my Order orally to the parties on March 24, 2008, and invited them to agree on
a proposed timeline for all the steps to be completed in order to bring this
matter to an expedited hearing. Counsel for the applicant and for the
respondent, in consultation with counsel for the applicants in file no.
T-535-07, have agreed on a schedule and on the questions to be addressed by the
Court in the partially consolidated hearing of the applications in file no.
T-460-08 and 418-08. The substance of their agreement is therefore
incorporated in my Order.
[27]
No costs
have been sought, and none will be awarded.
ORDER
THIS COURT ORDERS that:
·
The
application for a stay is denied;
·
The
hearing of the Application for Judicial Review shall be expedited and will take
place in Calgary on May 7 and 8, 2008,
according to the following schedule:
o On March 31, 2008: Affidavit
of the applicant to be filed and served;
o On April 3, 2008: Affidavit of
the respondents to be filed and served;
o By April 7, 2008:
Cross-examinations on affidavits to be completed;
o On April 9, 2008: Applicant’s
Application Record to be filed and served;
o On April 14, 2008:
Respondents’ Application Record to be filed and served.
·
The
following parties are added as respondents: Pembina Institute for Appropriate
Development, and Sierra Club of Canada.
·
This Order
shall be served on Prairie Acid Rain Coalition and Toxics Watch Society of
Alberta, so that they may apply to be added as respondent in this file;
·
Motions
arising from disputes over the admissibility or relevance of evidence, if any,
will be filed and served by the parties in the ordinary timeframes provided for
Motions in the Federal Courts Rules, and will be returnable before the
Court hearing the merits of the application.
·
The issues
to be determined by the Court in the Application for Judicial Review includes
the following:
o What is the effect of the
Federal Court’s judgment in T-535-07 on the validity of the authorization
issued pursuant to section 35(2) of the Fisheries Act by Fisheries and
Oceans Canada (DFO) to Imperial Oil Resources Ventures Limited on February 8,
2008? More specifically, is the Authorization rendered a nullity as a result
of the operation of law?
o If the Authorization is not
rendered a nullity by the Judgment in T-535-07 and the operation of the law,
should this Court determine to grant the relief claimed in Item 2(b) of the
Relief claimed in the Notice of Application in T-418-08 and therefore quash the
Authorization?
o If the Authorization remains
legally valid, does the DFO, or its Minister, have the legal authority to
revoke or rescind the Authorization?
·
The
Application for Judicial Review that is the subject of file no. 418-08 is
consolidated with this file, but only to the extent necessary to address the
second of the three above mentioned questions. Nothing in this Order shall
preclude Pembina Institute for Appropriate Development, Prairie Acid Rain
Coalition, Sierra Club of Canada or Toxics Watch Society of Alberta from
raising any remaining issue in T-418-08 at a later hearing, provided that they
will be bound by its election to place before the Court the second issue as
noted above.
·
All
parties shall bear their own costs and disbursements in this file.
"Yves
de Montigny"
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