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Greetings from the Chair
By Jonathan Kahn, Blake, Cassels & Graydon LLP, Toronto
I am honoured and excited to take on the role of Chair of the National Environment, Energy and Resources Law Section (NEERLS) of the CBA. This is an exciting time to practise in the areas of environment, energy and resources law and there is lots going on.
We are under observation
By Katia Opalka, Blake, Cassels & Graydon LLP, Montreal
A foundation established to honour former Governor General Jeanne Sauvé brings young professionals from around the world to Montreal each year, to live in a mansion on Dr. Penfield Avenue, take advantage of McGill’s academic offerings and work on personal projects.
Judgment overturned in major Ontario environmental class action
By Stuart Chambers, McLennan Ross LLP, Edmonton
The Ontario Court of Appeal has set aside a July 2011 ruling against Inco Limited (now Vale Canada Ltd) to pay $36-million to past and present property owners in Port Colborne, Ontario in connection with a class action.
Federal actions on climate change gather steam
By Shauna Finlay, FMC Law, Edmonton
The federal government recently released draft Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations under the Canadian Environmental Protection Act, 1999 (the “Draft Regulations”).
Prosperity Mine decision: What does it mean for tailings impoundment areas?
Patricia Houlihan, Houlihan & Associates
On November 2, 2010, the federal government announced that it was withholding its approval for Taseko Mine Limited’s (“Taseko”) Prosperity Mine, near Williams Lake, British Columbia (BC). Taseko had been seeking approval of the project since 1993.
NEB Arctic Offshore Drilling Review and Roundtable in Inuvik, NWT
By Will Amos, Ecojustice Clinic - University of Ottawa, and
Charles Birchall, Fogler, Rubinoff LLP
The BP disaster in the Gulf of Mexico has yet to impact Canada’s offshore regulatory regime, but reform is in the air. The NEB Arctic Offshore Drilling Review remains in progress, but the main event – the Inuvik, Northwest Territories Roundtable – wrapped up on September 16th after four days of hearings.
Greetings from the Chair
By Jonathan Kahn
I am honoured and excited to take on the role of Chair of the National Environment, Energy and Resources Law Section (NEERLS) of the CBA.
This is an exciting time to practise in the areas of environment, energy and resources law and there is lots going on. One of the primary goals of the CBA, and our Section, is to ensure that membership in the CBA means you are kept informed of cutting edge legal developments. That is why our theme this year is “service to our members.”
As many of you know, NEERLS organizes two of Canada’s leading professional development events. “DOJ Day” is an annual, not-to-be-missed, two-day CLE session presented jointly with Department of Justice lawyers. Those who attend regularly will tell you that this is a very enjoyable networking and learning event. This year's DOJ Day was held in the end of October at the Westin Ottawa.
In April, Vancouver will play host to our annual Environment, Energy and Resources Law Spring Summit. This year’s program focused on transactions and was co-sponsored by our friends from the ABA Section of Environment, Energy and Resources Law. Again, an opportunity to meet other practitioners in our field and pick up valuable knowledge. Those of you who have transactional (and transnational!) environment or energy practices should plan to be there.
We recognize that conference travel may not be possible every year. So we will be rolling out a series of CLE teleconferences, from introductory level surveys to focused programs for specialists. Watch for these.
We also intend to be more timely in our written materials. You will see Ecobulletin more frequently, and we have an ambitious plan to make our website a go-to place for legal updates and news flashes.
We want to bring you the resources you want and need. If there are things we can do to serve you better, please don’t hesitate to contact me or any member of our executive.
Jonathan Kahn is a partner at Blake, Cassels & Graydon LLP, Toronto.
We are under observation
By Katia Opalka
A foundation established to honour former Governor General Jeanne Sauvé brings young professionals from around the world to Montreal each year, to live in a mansion on Dr. Penfield Avenue, take advantage of McGill’s academic offerings and work on personal projects. Four of this year’s scholars are doing environmental work. Hearing about their projects has given me pause.
• The Director of Lake Victoria Sunset Birders has come to learn about Canada’s role in making young people into environmental leaders. Before you can become an environmental leader, he says, during your youth, something or someone needs to spark your interest in the environment. He is studying the origin, functioning and funding of the Katimavik programme.
• A commercial lawyer from Asuncion is looking to the International Joint Commission for examples of successful cooperation on management of shared watersheds. She wants to figure out how Paraguay can strike a fair deal with its much larger Mercosur neighbours to protect the gigantic Guarani aquifer.
• A PhD candidate from Peking University wonders about environmental winners and losers, an idea he came up with when he first travelled to prosperous, cosmopolitan Beijing from his hometown in Inner Mongolia. He has chosen to study the Keystone Pipeline Project.
• A young woman with roots in Newfoundland and France who spent much of her childhood in China will be conducting research aimed at challenging Canadians’ perception that China lags behind Canada on greening the economy.
It seems we are ambassadors for Canada even as we go about our business here at home. Consider yourself briefed!
Katia Opalka practises environmental law at Blake, Cassels & Graydon LLP, in Montreal.
Judgment overturned in major Ontario environmental class action
By Stuart Chambers
In July of 2010, the Ontario Superior Court of Justice ordered Inco Limited (now Vale Canada Ltd) (“Inco”) to pay $36 million to past and present property owners in Port Colborne, Ontario in connection with a class action. This class action alleged an impairment of property value appreciation due to soil contamination arising from Inco’s operation of a nickel refinery in Port Colborne for 66 years (up to 1985). Liability was imposed on the basis of nuisance and Rylands v. Fletcher (whereunder a land user is strictly liable for any damage caused by failing to prevent the escape of a dangerous substance from the property).
The Court’s findings with respect to the timing of the action appeared to have the potential to be far reaching. Although claims based on the Rylands v. Fletcher doctrine must be brought within six years under Ontario limitations legislation, the Court found that it was only after the Ministry of Environment made public concerns with respect to nickel contamination in the soil that residents became aware of the material facts associated with their claims. The trial judge accepted that the limitations period in relation to a claim for impairment of property values commenced in September of 2000, and so the claim against Inco was not time-barred.
The Court of Appeal did not expressly reverse this finding, although it did overturn the trial judge’s decision on a number of grounds. Specifically, the Court of Appeal reversed the trial judge as follows:
The Court of Appeal found that there was no evidence of actual physical harm to the properties of the class members, nor was there any evidence that the class members had experienced an interference with their ability to use and enjoy their property. Rather, the only evidence was of perceived risks of human health impacts from nickel contamination, which perception allegedly impaired property values. The Court found that nuisance required either actual property damage or interference with use.
The claim under Rylands v. Fletcher required the damages to arise from an unintended consequence of a non-natural use of the land. The nickel emissions from the refinery operation accrued over a period of 66 years, and were the natural and ordinary consequence of such operation. That operation was licensed by government regulators, and the risks associated no different than any other industrial operation. Accordingly, there was no unintended consequence, nor any non-natural use of the land, and so the Ryland v. Fletcher claim also failed.
The Court of Appeal found that property values in Port Colborne had actually appreciated as well as or even better than the relevant comparator municipalities, and so there was no evidence of damages, even if the causes of action had not failed.
Lastly, although the Court did not have to comment on the limitations question because of the findings above, the Court did observe that it was not sufficient to find, as the trial judge did, that a majority of class members were not aware of the nickel contamination risks until after the risks of soil contamination became public. Therefore, the Court of Appeal found that the application of limitations legislation was not properly treated as a “common issue” to be determined on behalf of the entire class, but rather was an individual issue to be determined on a member-by-member basis after the common issues trial was over. This raised the possibility of Inco being able to use, as against individual claimants, a limitations defence where there was evidence that that individual claimant had knowledge of the nickel contamination issues prior to September 2000. From a class actions perspective, this is a potentially important development. It may make it more difficult to certify class actions (in particular environmental contaminated site class actions) with limitations issues, if other Courts accept the reasoning that the timing of knowledge of widespread contamination is an individual issue not suitable for certification as a common issue in the class proceeding.
In addition to dismissing the claim, the Court of Appeal further awarded costs of $100,000 payable to Inco by the Plaintiff Class. This decision likely will have a cooling effect on the implications of the trial decision, although it does still leave open the door for long standing contamination claims to be advanced notwithstanding limitations legislation. There is a reasonable likelihood that the Plaintiff class will seek leave to appeal this decision to the Supreme Court of Canada, so the story may not be over yet.
Stuart Chambers is a partner in the Edmonton office of McLennan Ross LLP.
Federal actions on climate change gather steam
By Shauna Finlay
The federal government recently released draft Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations under the Canadian Environmental Protection Act, 1999 (the “Draft Regulations”). The Draft Regulations will require some coal-fired power plants to meet a carbon dioxide (CO2) emissions intensity limit of 375 tonnes of per GWh of electricity per calendar year. Carbon capture and storage (CCS) systems are expected to help achieve compliance: The intensity level chosen (375 tonnes of CO2 emissions per GWh during a calendar year) mirrors the intensity level of Natural Gas Combined Cycle technology, or the performance of an average coal-fired generation plant using CCS that captures approximately 70% of its emissions (See Backgrounder: Key Elements of Proposed Regulatory Approach, published by Environment Canada). Initially, the intensity limit will apply only to new units and units that have reached the end of their useful life. Existing units will not be subject to the intensity limit until they reach the end of their useful life, as defined in the Draft Regulations. The intensity limit will take effect in 2015.
United States and Canada
The timing for the release of the Draft Regulations appears to reflect developments in Canada’s position regarding international commitments on greenhouse gas emissions, a position which is now aligned with that of the United States. In 2009, both countries were among the signatories of the “Copenhagen Accord” and agreed to the same GHG emissions reduction target of 17% from 2005 levels by 2020.
Both Canada and the United States are in the process of revising air emissions standards applicable to coal fired power plants. However, in the U.S., the federal government is dealing with all pollutants coming from such plants, while in Canada, the federal government is focusing on CO2 . The United States Environmental Protection Agency is planning to release stricter standards for emissions of Mercury, Oxides of Nitrogen (NOx), Sulphur Oxides (SOx) and other toxic and smog forming pollutants and to regulate CO2 emissions. In Canada, air pollution standards are being reviewed by the Canadian Council of Ministers of the Environment but as regards new federal regulations, the focus is on targeting CO2 emissions, sector by sector.
CCS
CCS has been criticized as being unproven, unsafe, and expensive. Research and demonstration projects have focused on demonstrating its technical feasibility. The lingering question is whether it can be made to work in a cost effective manner.
Shauna Finlay is a partner in the Edmonton office of Fraser Milner Casgrain LLP (FMC).
Prosperity Mine decision: What does it mean for tailings impoundment areas?
By Patricia Houlihan
On November 2, 2010, the federal government announced that it was withholding its approval for Taseko Mine Limited’s (“Taseko”) Prosperity Mine, near Williams Lake, British Columbia (BC). Taseko had been seeking approval of the project since 1993. The province had already approved it. First Nations and environmentalists were strongly opposed to the proposal, although many local people supported it. Taseko likely expected the federal government to follow the province’s lead.
The proposal involved a 35 square kilometre area in the Fish Creek watershed, including Fish Lake and Little Fish Lake. Fish Lake is a well known trout fishing lake and the area is used by the Tsilhqot’in and Secwepemc Nations for hunting, trapping, fishing and other activities. The proposed project would have destroyed Fish Lake and had significant impacts on the environment, wildlife and First Nations in the area.
Both the federal and provincial environmental assessments led to the conclusion that the project as proposed would lead to significant environmental impacts which would not be effectively mitigated. The province felt that the impacts were justified by anticipated economic benefits. The federal government determined that the impacts were so significant that they could not be justified. In announcing his decision, the federal environment minister noted that the project could not proceed “as proposed.” Perhaps he was suggesting that the project may go ahead at some point in the future if some of the issues identified are addressed - or if enough political pressure is brought to bear on the federal government.
In January 2009, the project was referred to a review panel under the Canadian Environmental Assessment Act. This form of assessment is done when significant environmental impacts are anticipated and/or public concern warrants it. The panels are intended to allow for detailed, impartial review by experts and significant public/First nations participation. In its report, released in November 2010, the review panel concluded that Prosperity “would result in significant adverse environmental effects on fish and fish habitat, on navigation, on the current use of the lands and resources for traditional purposes by First Nations and on cultural heritage and on certain potential or established Aboriginal rights or title.” And that the mine “[…] in combination with past, present and reasonably foreseeable future projects would result in a significant adverse cumulative effect on grizzly bears in the South Chilcotin region and on fish and fish habitat.”
There was much commentary from both sides of the issue since the federal Prosperity decision. Proponents said the economic impacts/losses will be substantial, not just for the area but also for the province and even the country. On the other side of the issue, many hailed this as a great decision for the environment, and one of the rare cases where environmental considerations trumped what may have been significant economic benefits. However, it may premature to conclude that the project will not proceed.
Taseko Mines resubmitted an application that is described on its website as follows:
In February 2011, Taseko revised the proposal and has resubmitted to the Federal Government. The revised plan addresses the concerns identified during the federal review process. The proposal greatly reduces environmental impacts, preserves Fish Lake and its aquatics, and enables all mine operations and related components to be contained within one single watershed, a beneficial feature of the original design.
Prior to the submission, Prime Minister Stephen Harper had indicated that the company would have a hard time overturning the federal government’s decision not to allow the project to proceed. It also appears that the Canadian Environmental Assessment Act lacks a mechanism for reopening a decision on a project proposal. Because environmental assessment decisions are ultimately political, it is hard to say what will happen. In any event, First Nations support will likely be required, if the federal government is to revisit its decision.
Patricia Houlihan is a principal at Houlihan & Associates and a Senior Analyst of Environmental Law and Policy at Dillon Consulting Limited.
NEB Arctic Offshore Drilling Review and Roundtable in Inuvik, NWT
By Will Amos and Charles Birchall
The BP disaster in the Gulf of Mexico, where the Deepwater Horizon drill rig exploded following the Macondo well blowout on April 20th, 2010, has yet to impact Canada’s offshore regulatory regime, but reform is in the air. The National Energy Board (NEB or the “Board”) Arctic Offshore Drilling Review (the “Review”) remains in progress, but the main event – the Inuvik, Northwest Territories Roundtable – wrapped up on September 16th after four days of hearings. The NEB is expected to table its report in December 2011. We participated in the roundtable. This article provides readers with some insights on the proceedings.
By way of context, in the fall of 2009, the NEB initiated a public hearing following an application by Imperial Oil to lift the “same season relief well” (SSRW) requirement. Under SSRW, in the event of a well blowout, a relief well must be up and running before the end of the season. SSRW is among the few prescriptions remaining intact in regulations adopted in the late 1970s to prevent a blowout from continuing under the ice throughout the winter, when drilling is impossible. Imperial Oil maintained that equipment and procedural advances make blowouts highly unlikely, and even if one occurs, new well-kill techniques would be effective. Then the Macondo blowout occurred and modern techniques (top kill, junk shot, containment caps, etc.) failed to stop the blowout. The NEB cancelled the SSRW hearing days after the Macondo blowout, and subsequently announced a broader review.
The NEB Review was informed by the findings of a bipartisan U.S. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, which released its report in January, 2011. The principal finding follows:
“The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur. The missteps were rooted in systemic failures by industry management (extending beyond BP to contractors that serve many in the industry), and also by failures of government to provide effective regulatory oversight of offshore drilling.” (p. 122)
Created in response to events in the Gulf of Mexico, the NEB Review was not a typical regulatory response to a well-drilling application. It was designed as a northern-focused consultation process. The roundtable was aimed at defining filing requirements for future Arctic offshore drilling applications. Organizers sought to gather the best possible technical information on the hazards, risks and safety measures associated with offshore drilling in the Canadian Arctic. This was done using written submissions and commissioned expert reports. The Board also wanted to gather, for the record, the knowledge, desires and concerns of northern residents. Overall, the proceedings achieved this result.
There were one hundred and twenty-five (125) people in attendance. Elders and senior political representatives of Inuit, Inuvialuit and Gwich’in communities were there, as were representatives of co-management bodies, offshore operators, contractors and industry associations, engineering firms, northern youth, scientists, conservation and environmental groups, labour unions, and territorial and federal government departments. Five Board members, including the Chair, were assisted by thirteen staff members but not legal counsel, a testament to the NEB’s non-judicial approach. The overall feel can be described as equal parts Arctic offshore summit, northern community gathering, and prelude to future environmental assessment and drilling authorization processes in the Beaufort Sea. We believe that it is likely that the pace and course of Arctic offshore drilling and spill response will be driven by the consent and participation of the Inuit, Inuvialuit and Gwich’in. In other words, consultation, no matter how deep or extensive, will not suffice when it comes to high-stakes Arctic offshore drilling.
Regulatory issues (questions regarding not whether but how to engage in oil and gas exploration and development) did not always occupy centre stage during the roundtable discussions. However, it is expected that the NEB will address the following matters in its report:
- Limits (if any) on developer legal and financial liability;
- Integration of “worst case discharge” scenarios into federal environmental assessments, noting that offshore drilling authorizations were removed, in 2005, from the Comprehensive Study List Regulations issued under the Canadian Environmental Assessment Act;
- Discrepancies between the environmental / safety requirements that apply to exploration license and drilling authorization applications;
- Integration of federal environmental assessment and the process found in the Inuvialuit Final Agreement; and
- Public access to drilling and contingency plan information, some of which remains confidential under the Canada Oil and Gas Operations Act (COGOA).
The results of the Review will be incorporated into the NEB’s examination of future applications for offshore drilling in the Arctic and may well lead to law and policy reform. The Review is also expected to influence the evolution of drilling regimes that apply off the Atlantic coast and in the Gulf of St. Lawrence. With public awareness of high-risk, low probability disasters at an all-time high, the post-BP era portends greater scrutiny of government oversight in connection with offshore oil and gas activity.
William Amos is the Director of the Ecojustice Clinic at the University of Ottawa, and is counsel to WWF-Canada for the NEB Arctic Offshore Review. Charles Birchall is a partner at Fogler, Rubinoff LLP and represented the Canadian Arctic Resources Committee at the Inuvik roundtable.
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