On June 21, 2017, the Superior Court of Québec (Court) ruled against Ressources Strateco inc. (Strateco) in a decision that addresses the issue of social acceptability in the context of project approvals in Northern Quebec.

In Ressources Strateco inc. c. Procureure générale du Québec, the Court rejected Strateco’s claim for approximately C$200-million in damages, including punitive damages, against the Attorney General of Quebec, following the refusal of the Minister of Sustainable Development, Environment, and the Fight against Climate Change (Minister) to deliver a certificate of authorization to proceed with the advanced underground exploration phase of the Matoush uranium mining project.

BACKGROUND

Strateco, a mineral prospecting and exploration company, acquired mining claims in the Otish Mountains region of Quebec in May 2005. A few years later, once the region’s uranium potential was confirmed, Strateco decided to proceed with the Matoush Project and begin the approval process in order to undertake advanced exploration activities.

Since the project is located on territory covered by the James Bay and Northern Quebec Agreement (JBNQA) and involves uranium extraction, Strateco was required to carry out an environmental and social impact assessment process involving both the federal and provincial levels of government. The provincial assessment process for such a project that is located in territory covered by the JBNQA south of the 55th parallel is subject to the requirements of Chapter II of the Environment Quality Act (EQA), which provides for criteria that are to be considered that differ from those that would apply to projects located outside of the JBNQA territory.

According to the decision of the Court, the relationship between Strateco and the Cree communities located near the proposed mine site deteriorated as the environmental assessment process and the public consultation progressed. Ultimately, the Cree were opposed to the project and requested that Quebec impose a permanent moratorium on uranium mining on its territory.

Strateco obtained all of the federal government approvals that were necessary for the Matoush project, including a licence issued by the Canadian Nuclear Safety Commission. However, the Quebec government delayed making a decision on the approval required for advanced exploration activities and instead announced a temporary ban on uranium exploration and mining projects in Quebec in March 2013. Later in 2013, the Minister refused to issue a certificate of authorization, primarily on the basis that there was an absence of social acceptability for the project. The claim for damages by Strateco followed the refusal.

DECISION

To address the claim by Strateco, the Court considered three issues:

I. Could the Minister consider social acceptability so as to refuse the issuance of the certificate of authorization requested by Strateco?

Justice D. Jacques concluded unequivocally that the social acceptability of a project located south of the 55th parallel and within the JBNQA territory must be considered by a decision maker, even if there is no express reference to that term in the statute. The Court referred to a list of principles set out in the EQA that are to be considered when making decisions related to project permitting in JBNQA territory and found that social acceptability is to be considered because the concept is “encompassed” within those principles. In addition, the Court found that this conclusion is supported by the fact social impacts are included within the decision-making process of a project covered by the JBNQA.

With respect to projects in southern Quebec that are not located on JBNQA territory, the Court commented that “social acceptability must still be considered” for projects subject to regulatory approval processes despite the fact that the legislation does not reference the social environment.

Although the definition of social acceptability was not analyzed by the Court, the Minister’s decision refers to the following definition that is not found in any statute:

“Social acceptability can be defined as ‘the result of a process whereby the concerned parties build together the minimal conditions to put into place, such that a project, a program or policy can integrate harmoniously, and at a given time, in its natural and human environment’ or as being “the result of a construction and interaction process between the members of a community”. (our translation)

The Court also indicated that its findings on this issue must not be considered as providing a right to the Cree communities to veto projects. It is the Minister who must decide on whether to issue the approval based on a set of factors, including social acceptability.

II. Did the Minister act in bad faith in deciding to refuse to issue the certificate of authorization to Strateco?

The Court concluded that the Minister has broad discretionary powers to make decisions and to attribute relative weight to each of the factors that are to be considered. As a result, the claim of bad faith was rejected by Justice Jacques because the Minister did not state that a certificate of authorization could be issued to Strateco in the absence of social acceptability.

III. Does Strateco have a right to be compensated on the basis that a uranium mining ban constitutes a disguised expropriation?

The Court dismissed Strateco’s claim that the Minister’s decision to impose a ban on uranium mining in Quebec constitutes a disguised expropriation. Justice Jacques stated that mining claims do not, in themselves, confer property rights and moreover, that Strateco was never dispossessed of its rights. Strateco had the ability to remain the holder of the claims by paying the fees or carrying out assessment work required to maintain the claims. The fact that Strateco was fully aware of the risks related to mining exploration and that it retained the ability to explore for other minerals on its claims or even eventually file a new application relating to uranium mining led the Court to conclude that there was no disguised expropriation.

CONTEXT AND IMPACT

The timing of this decision follows an assessment of social acceptability and its place in government decision making carried out by the government of Quebec and the Ministry of Energy and Natural Resources (MERN).

In November 2014, the MERN launched an initiative to consult on social acceptability, followed by the publication of a Green Paper (discussion paper) in March 2016. More recently, in January 2017, the MERN published guidelines on social acceptability and announced the creation of a major projects coordination and economic impacts assessment department so as to better understand the factors influencing social acceptability.

Rather than clarifying the concept, the Strateco decision raises many questions concerning the role that social acceptability is to play in project approval processes.

First, although Justice Jacques specified that Cree communities do not have a right to veto a project, he concluded all the same that “social acceptability is measured by its result” and that it would be inappropriate to arrive at an outcome that would allow the Minister to provide an “endorsement to a project that is clearly rejected by the local community” (our translation). At this stage, and in light of this decision, the extent of discretion that can be attributed to the Minister to approve a project that would not be approved by the local community remains uncertain. Furthermore, the definition of social acceptability used by the Minister, which is not defined in any legislative act, is ambiguous.

Finally, it is also interesting to note that for the first time, following the adoption of Bill 102 amending the EQA, the words “social acceptability” appear in the EQA. Indeed, since March 23, 2017, the EQA specifically provides that conditions related to environmental and social acceptability may be imposed on projects subject to a strategic environmental assessment. For further information, see our May 2017 Blakes Bulletin: Quebec Adopts Bill 102, Overhauls Its Environmental Approval Regime.

Strateco announced on June 27, 2017, that it will appeal the decision.