High court backs regulators on Red Chris

The Supreme Court of Canada ruled Jan. 21 that federal regulators must confine their mine project review scoping decisions to alternatives allowed under provisions of the Canadian Environmental Assessment Act.

But in a unanimous decision, Canada's high court declined to set aside the federal regulatory decision that prompted the legal challenge - an environmental assessment of the Red Chris copper-gold porphyry project in northwestern British Columbia.

The case arose when MiningWatch challenged the environmental assessment, which federal and provincial regulators completed more than three years ago. After hearing arguments in October, the Canadian Supreme Court upheld an appeals court ruling that had overturned a trial court decision. The lower court had set aside the federal and provincial actions and ordered a full screening of the proposed mine project.

Red Chris, acquired by Imperial Metals Corp. in 2007, is a 17,254-hectare, or 66.6-square-mile, copper-gold property in the Tahltan traditional territory of northwest British Columbia, 18 kilometers southeast of the village of Iskut. Access to the property from pavement at Highway 37 is six kilometers along the Ealue Lake Road, and 17 kilometers, or 10 miles, along the newly constructed Red Chris access road.

No significant environmental impact

In 2007 Imperial's subsidiary, Red Chris Development Company Ltd., completed a successful deep drill program. Results revealed the potential for high grades beneath the current pit design. Exploration tested the vertical continuity of mineralization in the East and Main zones with encouraging results from six deep holes. East zone drill hole RC07-335 is the longest mineralized intersection in the company's history. The hole graded 1.01 percent copper, 1.26 grams per metric ton gold and 3.92 g/t silver over 1,024.1 meters, and bottomed in strong mineralization.

The planned pit at Red Chris is about 1.8 kilometers long and up to 1,000 meters wide with two main zones; the East and the Main. Drilling indicates the deposit is still open for expansion both laterally and vertically, and the adjacent Gully and Far West are two of the exploration targets which may also host significant near-surface copper-gold mineralization.

A (2005) feasibility study for Red Chris indicated positive economics with assumed copper at US$1.10 per pound and gold at US$400 per ounce with total mineable reserves of 276 million metric tons grading 0.349 percent copper and 0.266 g/t gold, over a 25-year mine life.

Imperial Metals, seeking to develop a copper and gold open pit mining and milling operation at Red Chris, submitted a project description to the BC Environmental Assessment Office.

Public comment was sought and the BC office subsequently determined that the project was not likely to cause significant adverse, environmental, heritage, social, economic or health effects and issued a provincial environmental assessment certificate.

The mining company also submitted to the federal Department of Fisheries and Oceans applications for dams required to create a tailings impoundment area.

Initially, Fisheries and Oceans said a comprehensive study would be required because the project fell within provisions of the Comprehensive Study List Regulations under the Canadian Environmental Assessment Act. The federal ministry subsequently scoped the project, excluding the proposed mine and mill, and concluded that a comprehensive study was no longer necessary and that an environmental assessment would proceed by way of screening. No further public comment was sought; instead, the screening relied on information collected through the cooperative federal-provincial environmental assessment process.

Fisheries and Oceans concluded that the project was not likely to cause significant adverse environmental effects and made the decision to allow the project to proceed.

Judicial review requested

MiningWatch filed an application for judicial review of the federal decision to conduct a screening rather than a comprehensive study.

The lower court allowed the application, concluding that the ministry breached its duty under the CEAA by scoping the environmental assessment so that it only required a screening. The court quashed the decision to issue permits and approvals and prohibited further action by Fisheries and Oceans until it had conducted public consultation and completed a comprehensive study pursuant to section 21 of the CEAA. On appeal, Canada's Federal Court of Appeal set aside the ruling.

In its review, the Canadian Supreme Court said tracking and scoping are distinct steps in the CEAA process.

"While (Fisheries and Oceans) does not have the discretion to determine the assessment track, once the appropriate track is determined, it has the discretion to determine the scope of the project for the purposes of assessment under section 15(1)(a) of the CEAA. In the event that the project is referred to a mediator or a review panel under s.

21.1(1)(b), the scope of the project is determined by the minister after consulting with the responsible authority pursuant to s.

15(1)(b).

The presumed scope of the project to be assessed is the project as proposed by the proponent but, as an exception to this general proposition, the responsible authority or minister may enlarge the scope in the circumstances set out in s.

15(2) or (3).

The responsible authority or minister cannot reduce the scope of the project to less than what is proposed by the proponent.

For a project subject to a comprehensive study, the responsible authority can, and should, minimize duplication by using the coordination mechanisms provided for in the CEAA. In particular, federal and provincial governments can adopt mutually agreeable terms for coordinating environmental assessments."

In the case of Red Chris, the high court said the federal assessment should have been conducted for the project as proposed by the proponent.

"Since the proposed project was described in the CSL, the requirements of s. 21 applied. The responsible authority was free to use any and all federal-provincial coordination tools available, but it was still required to comply with the provisions of the CEAA pertaining to comprehensive studies. By conducting a screening, the responsible authority acted without statutory authority," the justices wrote.

Trial judge ruling too broad

In exercising his discretion to grant the relief he did, the trial judge did not take into account a number of relevant and significant considerations and granted broader relief than was appropriate, they concluded.

"MiningWatch has no proprietary or pecuniary interest in the outcome of the proceedings and did not participate in the environmental assessment conducted by the provincial authority. No evidence of dissatisfaction with the environmental assessments conducted by the BC Environmental Assessment Office or the responsible authority and no evidence of dissatisfaction with the assessment process from anyone else was brought forward," the justices wrote.

They noted that the watchdog group sought the judicial review as a test case of the federal government's obligations under section 21 of the CEAA. "They made a strategic decision not to challenge the substantive scoping decision.

When all the relevant considerations are taken into account, the appropriate relief is to allow the application for judicial review and declare that the responsible authority erred in failing to conduct a comprehensive study.

No further relief is warranted.

The focus of MiningWatch's interest as a public interest litigant is the legal point to which the declaration will respond and there is no justification in requiring the proponent of the (mine) project to repeat the environmental assessment process when there was no challenge to the substantive decisions made by the responsible authority," the justices wrote.

As a result, the ruling is prospective and will not affect development of the Red Chris Project.

Federal regulatory authorities remain authorized to issue approvals for mine development at Red Chris. Completion of mine development will be subject to compliance with the Metal Mining Effluent Regulations and habitat authorizations under the Fisheries Act.

Industry welcomes ruling

The Association for Mineral Exploration of British Columbia and the Mining Association of British Columbia welcomed the Supreme Court's decision Jan. 21, saying it allows the Red Chris project to proceed to permitting and construction.

The industry groups also said they welcomed the high court's recognition that the respective environmental assessment processes of the federal and provincial governments can and should operate so as to minimize duplication.

"We are pleased that the Supreme Court has indicated that the ruling will not impact Red Chris, which means this important B.C. mining project can proceed to permitting and construction, creating jobs and opportunities in northern B.C. at a time when they are most needed," said MABC President and CEO Pierre Gratton. "The project was subject to a robust environmental assessment with full public participation, facts that were not questioned by the Court. At the same time, the Supreme Court has emphasized that that federal and provincial governments should avoid duplication and can act in a cooperative and coordinated fashion."

Gavin Dirom, president and CEO of AME BC, said, "The impact of (the Jan. 21) ruling emphasizes that governments must act to ensure that environmental assessments advance the principles of avoiding duplication and therefore wasting resources."

"Canada faces many environmental challenges; we must meet those with efficiency at every turn," Dirom added.

MABC and AME BC were joint interveners in this case. The associations argued that sustainable development and effective environmental review requires governments to maximize resources through better coordination and harmonization, as was done in the case of Red Chris.