Imperial in Kearl showdown; Green Challenge

Claudia Cattaneo, May 7, 2008, Financial Post -- A showdown between the environmental movement and Imperial Oil Ltd. over the $8-billion Kearl oilsands project returns to the Federal Court today, amid vows by green groups they will step up the legal pressure against oilsands development.

Imperial Oil sought an expedited hearing in the case to challenge the federal government's withdrawal of a key water permit it needs to move forward with the project.

The permit, which deals with fish habitat, was withdrawn by the federal Department of Fisheries and Oceans on March 20, after the court asked for a clarification regarding the project's environmental approvals by a federal-provincial panel that reviewed it.

Imperial Oil spokesman Gordon Wong said his company will ask the court to uphold the permit.

"We feel that we did conduct a detailed environmental-impact assessment and we believe that the project can move ahead without significant adverse effect on the environment," said Mr. Wong.

"But what we are seeking is some clarification on whether the project's [water] authorization is legally valid or not," Mr. Wong said.

Led by Ecojustice, four green groups -- the Pembina Institute, the Sierra Club of Canada, the Prairie Acid Rain Coalition and Toxics Watch Society of Alberta -- said they will argue the federal government did the right thing by pulling Imperial's water permit.

They also said they are going to court to defend their "precedent-setting court victory" -- the request that the panel provide more information. It was their only successful argument in a broader lawsuit before the federal court against Imperial's project.

Late yesterday, the federal-provincial panel, representing the Canadian Environmental Assessment Agency and the Alberta Energy and Utilities Board, provided the rationale requested by the court. It said the project will produce substantial greenhouse-gas emissions, but "there was very little evidence ... to suggest that this release will result in significant adverse environmental impact."

Simon Dyer, director of the oilsands program at the Pembina Institute, said green groups have taken oilsands companies to court before. However, the Kearl legal challenge is indicative their campaign against the oilsands industry is expanding.

"You are going to see more legal challenges for a whole host of issues unless we start to see some real change on the ground," he said. "Unfortunately, industry and government talk about improvement, but the pace of development is outstripping those improvements. All we are asking for is that oilsands development occurs responsibly and environmental impacts are mitigated according to the law."

Ecojustice said it is opening an office in Alberta in the next few months to provide free legal services to the province's environmental community, a response to the "growing need for a legal advocate for the environment."

Shawn Denstedt, a Calgary lawyer with Osler, Hoskin & Harcourt LLP who is active for oilsands proponents, said the case is being watched, but is not a "bellwether case" that points to greater court interference in decisions taken by boards and joint review panels.

"The court essentially said: 'Panel, you missed making a decision on this one piece, you need to go back and make that decision and send it back to us,' " Mr. Denstedt said. "Legal challenges are one thing, and then the judgments are another thing, and [the green groups] are being disingenuous if they are suggesting that this judgement is the death knell of the oilsands industry, because the court essentially accepted the vast majority of the joint review panel's recommendations."

But Bob Schultz, a professor of strategic management at the University of Calgary's Haskayne School of Business, said water use and the oilsands are front-and-centre because of last week's widely publicized duck deaths in a tailings pond at the Syncrude Canada Ltd. plant, increasing interest in Imperial's water permit case.

"This is the start of even more [activism] in the oilsands," he said. "It's also likely to result in delays until the job is done properly."