Environmental, Indigenous and Natural Resources Blog

On June 29^th, 2012, 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. The case dealt with the interpretation of the term “production capacity” under BC’s Reviewable Projects Regulation and has important implications for project development in BC.

At issue was the Respondent Lehigh Hanson Materials Ltd.’s proposed development of a limestone quarry in the area of Davie Bay on Texada Island. The proposed quarry is to have an 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 the Reviewable Projects Regulation. The BC Environmental Assessment Office (EAO) had held that the proposed quarry did not trigger an EA. In so doing, it interpreted production capacity as the permitted throughput of the proposed quarry.

The EAO’s decision was challenged by the Friends of Davie Bay, a not-for-profit society formed to oppose the proposed quarry. It argued that the EAO’s interpretation of production capacity was incorrect, or in the least unreasonable, because it allowed proponents to overbuild projects and then later apply to increase the permitted throughput without triggering an EA under the Reviewable Project Regulation because no new land was being disturbed. Friends of Davie Bay argued that the EAO should have undertaken a qualitative assessment of the proposed infrastructure, equipment, and operation to determine the theoretical maximum production capacity that the proposed quarry could have produced regardless of the actual amount permitted. The BC Supreme Court rejected this argument and Friends of Davie Bay appealed.

The following issues were raised on appeal:

• What is the appropriate standard of review?
• Did the EAO err in interpreting production capacity as the permitted throughput of the proposed quarry?

The Court of Appeal found:

• The interpretation of production capacity is not a question of “true jurisdiction”. While it bears upon whether the proposed quarry is deemed a reviewable project, therefore triggering an EA, 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 (para. 29). The question at issue involves the interpretation of an enactment closely connected to the EAO’s function and as such, deference is owed (para. 30).
• The EAO’s interpretation of production capacity as being the permitted throughput of the proposed quarry was reasonable in light of the proponent-centred, self-monitoring approach to environmental regulatory compliance adopted by the Legislature.
• Any loophole in the Reviewable Projects Regulation which allows a proponent to overbuild a proposed project and then later increase the production capacity in excess of the threshold without triggering an EA is sufficiently addressed when the entirety of the legislated scheme governing such situations is considered. In particular, there are several safeguards available to fill the perceived loophole including the Minister and the Executive Director of the EAO’s power to classify a project as reviewable.

Having made these findings, the Court of Appeal also noted that to read the legislation in the manner advocated by the Friends of Davie Bay would require the EAO to undertake a qualitative assessment of every project in BC to determine their 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.

Lawson Lundell LLP acted for Lehigh Hanson Materials Ltd. before both the BC Supreme Court and the BC Court of Appeal.