On March 5, 2008, the Federal Court of Canada remitted the environmental assessment for Imperial Oil’s proposed Kearl Oil Sands Project (the Project) back to the joint federal/Alberta review panel that had recommended the Project be approved.

Estimated to cost $7.1 billion, the Project would involve open pit mines and ore preparation, bitumen extraction and tailing management facilities 70 kilometres north of Fort McMurray, Alberta. According to Imperial Oil, the project would be responsible for an average of 3.7 million tonnes of carbon dioxide equivalent per year, equivalent to the emissions from about 800,000 passenger vehicles.

Following an initial environmental impact assessment, the federal Department of Fisheries and Oceans (DFO) recommended that the federal Minister of the Environment refer the Project to a review panel. After holding public hearings, this federal/Alberta panel recommended that DFO approve the Project, concluding that if proposed mitigation measures were implemented, the Project was not likely to cause significant adverse environmental effects.

The Pembina Institute for Appropriate Development, Sierra Club of Canada and other applicants challenged the review panel’s recommendation, submitting that it relied on technically and economically infeasible mitigation measures and failed to provide rationale for its recommendations, contrary to the Canadian Environmental Assessment Act and the panel’s terms of reference. The Court agreed in part, ruling that the panel had provided insufficient rationale for its conclusion that the Project’s greenhouse gas (GHG) emissions would not cause a significant adverse environmental effect. In particular, the Court ruled that the panel must explain why the Project’s proposed mitigation measures, such as its intensity-based targets for reducing its GHG emissions, would reduce these emissions to a level of insignificance.

Outside the courts, some regulators have also shown increasing attention to the climate change implications of their environmental permitting decisions. For example, in October 2007, the Kansas Department of Health and Environment reportedly became the first government agency in the United States to reject a proposed coal-fired generator’s application for an air permit on the grounds that its GHG emissions would threaten public health and the environment.