May 2010

Eye on Business

The Supreme Court of Canada Red Chris ruling may impact mine developments

By C. Kazaz

On January 21, 2010, the Supreme Court of Canada handed down a long awaited decision in Mining Watch Canada v. Canada (Fisheries and Oceans).  The Court unanimously decided that the nature and extent of an environmental assessment (EA) conducted under the Canadian Environmental Assessment Act is based on the description of the project proposed by a proponent and not on the description of the project once it is scoped by a federal government authority.

The decision puts a damper on the practice of segmenting a project in order to accelerate the EA process and instead encourages the coordination of federal and provincial EA processes to make the process more efficient. The decision will influence the scope and timing of federal EAs.


Generally, under the Canadian Environmental Assessment Act, an environmental assessment is triggered when: (i) the federal government undertakes a project; (ii) the project is carried out on federal lands; (iii) the federal government provides funding so a project can proceed; or (iv) where the federal government is required to issue certain permits for the project.

An EA will proceed either by way of a screening level assessment or a comprehensive study. A comprehensive EA is a more intensive process where there are greater procedural requirements for public consultation, government funding to facilitate public participation and ministerial oversight. A comprehensive EA is triggered if the project is described in a list found in the Comprehensive Study Regulation. If listed, the Minister of the Environment decides whether to refer the project to a responsible authority for a comprehensive study, a mediator or a panel review.

The decision involved the development of a copper and gold open pit mining and milling operation in northwestern British Columbia proposed by the Red Chris Development Company (Red Chris). The project triggered an EA under the Canadian Environmental Assessment Act because it required permits under the federal Fisheries Act and Explosives Act. As a result, the Department of Fisheries and Oceans and Natural Resources Canada were responsible authorities for conducting an EA.

The Red Chris project

In its application, Red Chris described the project as an open pit mine with associated infrastructure including a tailings impoundment area, access roads, water intake, transmission lines and accessory buildings. The proposed mine exceeded the 3,000 tonne-per-day threshold for metal mines established under the Comprehensive Study Regulation for triggering a comprehensive EA. After reviewing the Red Chris submission, the Department of Fisheries and Oceans scoped the project to exclude the mine and mill, which put the project outside a comprehensive review.

The court analyzed whether the track for an EA (screening level or comprehensive review) is determined based on the project that is submitted by the proponent or the project as scoped by the responsible authority.

The Supreme Court decision

The Supreme Court concluded that the procedural track is determined based on the project description as submitted by the proponent. The court also determined that the responsible authority has no discretion to determine the procedural track but does have some discretion to determine the scope of the project. That said, the responsible authority cannot reduce the scope of project to something less than what the proponent has proposed.

Therefore, if a proposed project triggers a comprehensive review, it cannot subsequently become a screening-level assessment. On the other hand, if the project submitted by the proponent does not fall within a comprehensive review, the responsible authority has the discretion to expand the scope of the project so that it falls within the comprehensive review.

In its decision, the court discourages project splitting, where a proponent represents part of the project as the whole or segments the project into parts. The court appears to be sending the message that projects should be scoped broadly such that all components of the project are included within the EA. In response to the concern that the federal EA coupled with a provincial EA process is unnecessary, costly and inefficient, the court takes the view that efficiency can be achieved not by reducing the scope of the EA but by the coordination of federal and provincial EAs.

Possible implications

By concluding that a project can be scoped up to a comprehensive review but not down, the natural reaction may be to describe a project as narrowly as possible so as to attempt to avoid a comprehensive EA. The court addresses this concern by indicating that the Canadian Environmental Assessment Act assumes that a proponent will represent the entirety of a project. Project proponents will need to carefully consider how they submit their proposals to regulators. A broad description may trigger a comprehensive EA while a narrow description may result in the responsible authority broadening the scope or litigation challenging the responsible authorities’ decision.

As a result of the Red Chris decision, we may see projects scoped more broadly by responsible authorities to the extent where a comprehensive EA is triggered. For projects that fall within the comprehensive EA, permitting will be subject to greater public consultation, take longer to complete and be more costly.

The decision also provides greater opportunity for litigation as proponents and third parties may challenge the scoping of a project by a responsible authority as being too broad or not broad enough. That said, one hopes that federal and provincial authorities follow the recommendation of the court and coordinate EAs to avoid duplication and achieve efficiency in the process.

Charles Kazaz is a partner at Fasken Martineau DuMoulin LLP and specializes in the area of environmental law.

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