BC Court of Appeal Clarifies Reviewable Projects Regulation

The British Columbia Court of Appeal handed down its Reasons for Judgment in Friends of Davie Bay v. Province of British Columbia (EAO), 2012 BCCA 293 on June 29, 2012. The proceeding, which was originally brought under the BC Judicial Review Procedures Act, deals with the interpretation of the term “production capacity” under BC's Reviewable Projects Regulation and has important implications for project development in British Columbia.

At issue in the case was a proposed development by Lehigh Hanson Materials Ltd. (“Lehigh”), of a limestone quarry in the area of Davie Bay on Texada Island, BC. The proposed quarry has an intended annual production capacity of 240,000 tonnes, which falls short of the 250,000 tonnes/year threshold required to trigger an Environmental Assessment (“EA”) under British Columbia's Reviewable Projects Regulation (the “Regulation”).

The Friends of Davie Bay (the “FODB”), a society opposing the construction of the project, requested an EA be undertaken. The BC Environmental Assessment Office (“EAO”) decided that the proposed quarry did not trigger an EA because the production capacity of the Project fell below the regulatory threshold, above which an assessment would be required. In so finding, the EOA interpreted “production capacity” as the permitted throughput of the proposed quarry.

The FODB sought judicial review of the EAO's decision on the basis that its interpretation of production capacity was incorrect and unreasonable. The FODB argued “production capacity” should be the theoretical maximum production capacity — not the permitted capacity. The FODB submitted that the theoretical maximum approach was the correct and reasonable interpretation because of a perceived loophole in the Regulation relating to project modifications.

Specifically, the FODB argued that proponents could apply for a permitted capacity below the threshold trigger; deliberately overbuild the project and then, at some later date, apply to increase the permitted throughput without triggering an EA under the Regulation. This hypothetical situation would be possible because in order to trigger an EA for a modified project there had to be a certain increase in land disturbance. Therefore, if there was no further land disturbance then a large increase above the original threshold limit was possible.

The BC Supreme Court rejected this argument and found that no such stratagem was being implemented in this case. The FODB appealed. The issues on appeal included the appropriate standard of review and whether the EAO erred in interpreting production capacity as the permitted throughput of the proposed quarry. With respect to the appropriate standard of review, the FODB argued that the question was jurisdictional in nature and therefore merited a standard of correctness. The EAO and Lehigh disagreed, arguing that at the heart of the dispute was the EAO's interpretation of its enabling legislation and, as a result, deference was owed.

Lehigh further argued that the regulatory scheme was designed for proponents to self-assess whether or not their particular project falls within the definition of a reviewable project (and is therefore subject to an EA). Thus, the only reasonable interpretation was one that was simple, straightforward and easily ascertainable — not one that would require a qualitative assessment.

The Court of Appeal dismissed the appeal. It rejected the argument that the interpretation of production capacity was a question of true jurisdiction. The Court found that while the interpretation of the relevant provisions determines whether the proposed quarry is deemed a reviewable project under the Regulation, it has no bearing on the source of the EAO's authority to interpret its home statute or otherwise apply the provisions of its home statute and regulated regulations to the facts of a given case. The question at issue involved the interpretation of an enactment closely connected to the EAO's function and as such, deference was owed.

As to the reasonableness of the decision, the EAO's interpretation of production capacity as being the permitted throughput was reasonable in light of the proponent-centred, self-monitoring approach to environmental regulatory compliance adopted by the Legislature. Further, the Court found that any loophole in the Regulation allowing a proponent to overbuild a proposed project and then later increase the production capacity in excess of the threshold without triggering an EA, was sufficiently addressed when the entirety of the legislated scheme governing such situations is considered.

In particular, the Court noted that there are several safeguards available to fill the perceived loophole including the Minister and the EAO Executive Director's power to classify a project as reviewable even where it does not otherwise meet the legislative threshold. Finally, the Court noted that to read the legislation in the manner advocated by the FODB would require the EAO to undertake a qualitative assessment of every project in BC to determine its respective theoretical maximum production capacity. The Court of Appeal stated that such an approach was impractical and inconsistent with the Legislature's decision to incorporate a proponent-driven assessment at the front end of the environmental regulatory process.

Cliff Proudfoot, Ron Skolrood and Michelle Jones of Lawson Lundell LLP acted for Lehigh Hanson Materials Ltd.

David Perry (now with Stewart & Company) and Debra Rusnak of Singleton Urquhart LLP represented the Friends of Davie Bay.

Nancy Brown of the Ministry of Attorney General acted for British Columbia.