On December 19, 2016, the British Columbia Court of Appeal allowed the appeal in Fort Nelson First Nation v. British Columbia (Environmental Assessment Office), 2016 BCCA 500. CSI Industries Inc. (“CSI”) is the proponent behind a potential frac sand operation in the Fort Nelson area of northeastern British Columbia, and was one of the parties challenging an earlier decision by Mr. Justice Davies. The Court of Appeal held that the interpretation of the threshold made by the Environmental Assessment Office (“EAO”), determining whether a sand and gravel mine requires an environmental assessment pursuant to the Reviewable Projects Regulation[1](“Regulation”), is a non-binding opinion that is not susceptible to judicial review. The Court of Appeal also went on to deal further with the decision of the Court below, not wanting to leave it as a precedent on these issues. The Court of Appeal therefore considered the merits of the judicial review and held that the EAO’s interpretation of the threshold was reasonable, that no duty to consult the Fort Nelson First Nation (“FNFN”) existed and even if such a duty to consult had existed, it would have been met by the EAO.

Kevin O’Callaghan and Dani Bryant were counsel for CSI on the Appeal.

Background

The Reviewable Projects Regulation sets out thresholds for different categories of projects which, when met by a project, make that project a “reviewable project” under the Environmental Assessment Act (“EAA”). Reviewable projects must receive an environmental assessment certificate prior to commencing the project unless the EAO determines that an environmental assessment is not necessary.[2]

CSI proposes to develop a silica sand mine in northeastern British Columbia near Fort Nelson, producing very specific sand for the oil and gas industry process known as fracking. CSI interpreted the term “production capacity” in the sand and gravel mine threshold to mean sand and gravel excavated for sale or use and wrote to the EAO to confirm that this interpretation was consistent with the EAO’s interpretation of the threshold. The EAO replied to CSI confirming that it agreed with CSI’s interpretation and that, in its opinion, the project to meet the threshold.

The FNFN brought a judicial review of the EAO’s interpretation of the sand and gravel threshold and its opinion of whether the CSI project met that threshold, alleging that the EAO’s interpretation was unreasonable and that the EAO breached its duty to consult with the FNFN. The FNFN proposed that all sand or gravel excavated on a site, regardless of whether it would be used or returned as waste, must be included in determining “production capacity”.

The Chambers Judge agreed with the FNFN’s interpretation of the threshold; that the EAO’s interpretation attracted the duty to consult and that the EAO did not discharge that duty. The EAO and CSI appealed the Chambers Judge’s decision.

Analysis

The Court of Appeal held that the EAO’s letter is a non-binding opinion which is not reviewable. The opportunity to challenge the interpretation or application of a reviewable project threshold arises when a statutory authorization granting approval to proceed is issued (such as a Mines Act permit). Prior to that point, the scheme of the EAA does not contemplate the EAO exercising a statutory power in respect of whether a threshold is met and there is no decision to review.

Prior to a statutory authorization being issued, it is the proponent’s responsibility to decide for itself whether a project is reviewable. At the point of issuing a statutory authorization for the project, the obligation moves to the regulator because section 9 of the EAA prohibits any regulator from issuing an approval for a project over the thresholds until it has received an environmental assessment certificate for the project.

In addition to allowing the appeal on this preliminary issue, the Court of Appeal provided reasons on the merits of the judicial review to resolve the issues between the parties, conserve judicial resources and address the effect of chambers judgment.

The Court of Appeal determined that the EAO’s interpretation was reasonable: it is consistent with the statutory scheme and objectives of the EAA; it is consistent with the information provided in applying for other project authorizations such as a Mines Act permit; it is consistent with the interpretation of production capacity in the Regulation’s thresholds for other types of mining projects; and the plain meaning of the term production capacity supports the EAO’s interpretation.

The Court of Appeal also held that the EAO’s opinion on the interpretation of the threshold and its applicability to CSI’s proposed project did not attract the duty to consult the FNFN and that even if a duty to consult did exist, the EAO discharged such a duty because the FNFN expressed its views to the EAO on the proper interpretation, the EAO considered the FNFN’s position, and the EAO provided the FNFN with reasons why it did not adopt the FNFN’s position and rationales for its interpretation.

Conclusion

This decision reinforces the fact that the process under the EAA at the outset is proponent driven. The proponent of a project is responsible for determining whether that project meets the thresholds in the Regulation and, if so, must engage the environmental assessment process -– which is then led by the EAO. The Court of Appeal helpfully went beyond what was strictly required in this case to provide some guidance to proponents on how the thresholds should be interpreted. The Court of Appeal came down strongly on the side of thresholds that are simple to understand and mesh with existing regulatory approaches and requirements – which is good news for proponents trying to determine whether the thresholds apply.