MD Legacy Lecture, International Law, and the IAA Reference

December 14, 2023 Sara Seck Leave a Comment

On November 23, 2023, MELAW and the College of Sustainability hosted the first annual Meinhard Doelle Legacy Lecture, featuring former colleagues and collaborators of Meinhard including myself, Bill Lahey (now President and Vice-Chancellor of the University of King’s College), and Lisa Mitchell (Executive Director and Senior Lawyer, East Coast Environmental Law). Moderated by CoS faculty Steve Mannell who worked closely with Meinhard at CoS, our roundtable discussion was centred around reflections on the past, present and future of environmental law, in light of our individual experiences working collaboratively with Meinhard in diverse contexts. The aim of this event and future legacy lectures is to inspire the next generation of Dalhousie students, whether in law or sustainability, to learn more about the possibilities of environmental law for contributing solutions to local, national and global sustainability challenges facing people and planet. A video link to the lecture can be found here, which begins with a short video clip featuring Meinhard.

One topic that Meinhard and I often discussed was the relationship between international and domestic law. Meinhard was a key thought leader in environmental assessment law, and also an expert in climate law. With this in mind, and as the COP28 negotiations come to an end, I am sharing some thoughts on a topic that would have been high on our list of conversations.

Reference re Impact Assessment Act, 2023 SCC 23: how principles of international environmental and human rights law could (and should) inform the interpretation of the IAA

By Sara Seck Sara.Seck@dal.ca

In October 2023, the Supreme Court of Canada released its eagerly – or fearfully – awaited decision in the Reference re Impact Assessment Act, 2023 SCC 23. Not surprisingly, the work of Meinhard Doelle featured prominently in the analysis of both majority and dissent. Were Meinhard still with us, we would no doubt be engaged in spirited debate over how the majority could have reached the (mistaken) conclusion they did, and what steps should now be taken. Given Meinhard’s interest and expertise in international law, however, we might also have been exchanging ideas on the topic of this blog post – whether explicit engagement by the court with principles of international environmental law as well as human rights might have led to different interpretations of the IAA, and so, different conclusions on the federalism questions.

As is by now well known, the majority of the court (Chief Justice Wagner with Justices Côté, Rowe, Martin and Kasirer) concluded that the designated projects scheme of the IAA was unconstitutional, as its ‘pith and substance’ – “to assess and regulate designated projects with a view to mitigating or preventing their potential adverse environmental, health, social and economic impacts” (para 109) – overstepped federal constitutional competence (paras 134, 204). This was for two reasons. First, the decision-making processes were not directed at regulating effects that were within federal jurisdiction. Second, the IAA’s definition of effects within federal jurisdiction did not, in the view of the majority, align with the actual legislative jurisdiction of the federal government. By contrast, Justices Karakatsanis and Jamal, dissenting in part, concluded that the pith and substance is more precisely understood as “to establish a transparent information-gathering and decision-making environmental assessment process which is focused on whether physical activities or designated projects have adverse federal effects, and if so, whether they should be permitted in the public interest, subject to any conditions” (para 257). In their opinion, the IAA and its regulations, including the entirety of the designated project scheme, is intra vires federal powers, and the IAA’s definition of federal effects is inherently sound (para 354).

The result, and implications, are being carefully analyzed in many environmental law blogs, including a particularly clear overview by colleagues at ABlawg.ca (“Wait, What!? What the Supreme Court Actually Said in the IAA Reference”). Key conclusions include that, as this decision was the outcome of a reference, the IAA still stands. Moreover, the IAA could easily be modestly amended to address the concerns of the majority. Nevertheless, some are of the view that going back to the original CEAA triggering process would be better and result in more reviews (Elizabeth May: Good Riddance to the Impact Assessment Act). There are also questions about the regional and strategic assessment processes, which are ignored in the decision (“Two wins, a loss, and a question mark: What the Impact Assessment Act reference case means for the environment”) as well as whether more attention should be paid to what actually goes on under IAA sections 81-91 which were upheld as constitutional and provide the process for assessments of projects carried out or financed by federal authorities on federal lands or outside Canada. Ultimately, the federal government has committed to amending the legislation, although exactly how remains to be seen. In the meantime, interim guidelines have been released to provide certainty for the projects currently under review under the IAA system.

Relevance of International Law?

The purpose of this blog post is somewhat different. As someone who researches at the intersection of international and domestic law, and at the intersection of environment and human rights law, one of the most striking things about the decision is that international law is entirely absent from it. This is (unfortunately) not a surprise. This fact has been commented on in an excellent blog by Robert Hamilton reflecting on missed opportunities for Indigenous peoples resulting from the SCC’s failure to clarify the scope of federal 91(24) powers, and to show how legislation can and must be interpreted in light of Canada’s international law commitments. A notable source of international law in relation to Indigenous peoples is, of course, the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), much of which, as Hamilton demonstrates, reflects customary international law. In this blog, I suggest that the failure of the majority to consider both the history of impact assessment in international law and its present-day context is problematic. Although the dissent also does not explicitly consider international law, its deeper engagement with the reasoning of Justice La Forest in the 1992 Supreme Court of Canada decision in Oldman River led to a better conclusion, in the process integrating several key international environmental law principles into the analysis albeit at times implicitly.

Curiously, the majority decision did choose to reference the right to a safe environment (as taken from a 1995 SCC decision, that cited a 1985 Law Reform Commission report) in its first paragraph. One could read this as simply an endorsement of the importance of the environment drawing upon previous precedent. But, given that Canada voted in favour of the July 2022 United Nations General Assembly resolution A/RES/76/300recognizing the right to a clean, healthy and sustainable environment as a human right (while expressing uncertainty as to its content), it equally suggests a different question – might some justices on the Supreme Court have been waiting for – hoping for – more arguments that cited sources of international law, but were left wanting?

As eloquently explored by Natasha Affolder in the McGill Law Journal some years ago with a focus on international biodiversity law, situations have arisen in the past where lawyers have argued for the relevance of international (biodiversity) law, yet judges have failed to grapple with these arguments. On the other hand, situations have also arisen in the past where it appears that judges were waiting for lawyers to clearly articulate the relevance of international (biodiversity) law, but the lawyers did not do so. Could either or both of these scenarios have arisen in the case in the IAA Reference? I do not claim to know. Nevertheless, I propose to sketch out why international law is relevant to this case, even though it is a decision on a seemingly domestic law question squarely focused on the constitutional division of powers. I will reflect on what may have been missed in the process.

Both majority and dissent in the IAA Reference refer often and favourably to Justice La Forest’s majority SCC decision in Oldman River. For those who study international environmental law and international sustainable development law, it is notable the Oldman River upholding the federal Environmental Assessment and Review Process (EARP) Guidelines Order dates from 1992, the same year as the United Nations Conference on Environment and Development (UNCED) about which more will be said below. Notably, in Oldman (p37), Justice La Forest makes the following observation:

I cannot accept that the concept of environmental quality is confined to the biophysical environment alone; such an interpretation is unduly myopic and contrary to the generally held view that the “environment” is a diffuse subject matter; see R. v. Crown Zellerbach Canada Ltd., [1988] 1 S.C.R. 401. The point was made by the Canadian Council of Resource and Environment Ministers, following the “Brundtland Report” of the World Commission on Environment and Development, in the Report of the National Task Force on Environment and Economy, September 24, 1987, at p. 2:

Our recommendations reflect the principles that we hold in common with the World Commission on Environment and Development (WCED). These include the fundamental belief that environmental and economic planning cannot proceed in separate spheres. Long-term economic growth depends on a healthy environment. It also affects the environment in many ways. … Economic and environmental planning and management must therefore be integrated.

Surely the potential consequences for a community’s livelihood, health and other social matters from environmental change are integral to decision-making on matters affecting environmental quality …

Two key points of continued relevance emerge from this passage. First, environmental quality in itself means more than the biophysical; the environment cannot be understood as separate from economy or society both of which depend on a healthy environment. Second, environmental decision-making must integrate livelihood and social dimensions (but also comply with the constitutional division of powers).

Rio Declaration on Environment and Development: Principles

The ideas evident in Justice La Forest’s text above are also reflected in the principles of the 1992 Rio Declaration on Environment and Development, one key outcome of the UNCED held in Rio that year. The Rio Declaration is comprised of 27 Principles, including Principle 17: “Environmental assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant effect upon the environment and are subject to a decision of a competent national authority.” Not surprisingly, the first federal environmental assessment legislation, CEAA dates from 1992. But this is not the only principle, nor were these principles merely stated in 1992 then forgotten. Indeed, the international community has repeatedly re-affirmed the principles of the Rio Declaration at international meetings and in UN General Assembly resolutions over the years, including in 2002 at the World Summit on Sustainable Development in Johannesburg, in 2012 at the Rio +20 Summit in the outcome document the Future We Want, and most recently, at Stockholm +50. International environmental treaties routinely incorporate Rio Principles into their preambles or substantive provisions, and the July 2022 UN General Assembly resolution A/RES/76/300 recognizing the right to a clean, healthy and sustainable environment also reaffirms the Rio Declaration. Many of these principles are already found in Canadian environmental law statutes, whether in preambles or as stand-alone substantive provisions or as considerations in decision-making. While the Rio Declaration is not a treaty, some of the principles may or do reflect customary international law. These principles must surely, then, be relevant to statutory interpretation given that Canadian laws are to be interpreted in conformity with Canada’s international legal obligations. At a minimum, the principles of the Rio Declaration are part of the international context in which existing domestic environmental laws have come to be, and so are relevant to a purposive approach to statutory interpretation.

One famous Rio principle is the precautionary principle, and both majority and dissent do consider it in their analysis. However, this is no surprise as it is explicitly incorporated into the IAA’s purposes as detailed in s6(2). Notably, the dissent in the IAA Reference invokes the SCC’s 2002 decision in Spraytech which cited the arguably stronger Bergen Ministerial version of the principle and used it as an interpretative aid – the dissent further interprets the legal effects of the IAA’s s7 prohibitions in light of the precautionary principle (para 286), something that the majority fails to consider.

The Rio Declaration also makes repeated reference to sustainable development, of importance for understanding the references to sustainability in the IAA. This is especially so in light of Rio Principle 4 on integration: “In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it.” It is certainly the case that Justice La Forest’s decision in Oldman River incorporates the principle of integration as noted from the passage quoted above, and the dissent in the IAA Reference clearly draws upon this principle in its analysis (which also features strongly in a passage quoting Meinhard on the importance of an integrated decision process (para 330)). The majority, on the other hand, is clearly troubled by references to sustainability as if this adds something unacceptable into the analysis, rather than simply being the way in which environmental decision-making has been understood since at least 1992. This leads the majority to propose two nonsensical hypotheticals (paras 170 – 175) that presume it is possible to consider federal environmental effects without considering sustainability at the same time – the principle of integration would suggest that what the majority demands is not acceptable as an environmental decision-making process. While Principle 4 clearly states that environmental protection cannot be considered in isolation from sustainable development, this is arguably what the majority insists federal decision-makers must do.

Procedural rights and the 2018 Framework Principles

There is much more that could be said about the way in which principles of international environmental law found in the Rio Declaration inform the structure of the IAA and how they should inform its interpretation. For example, Rio Principle 10 speaks to procedural environmental rights (access to information, public participation in decision-making and access to justice). As a planning tool, the essence of environmental assessment is of course all about information gathering and effective public participation in the process (see eg para 160). Beyond the Rio Declaration is the question of whether and if so how the UNGA recognition of the right to a clean, healthy and sustainable environment – and Canada’s vote in favour, albeit with uncertainty over its meaning – could have informed the analysis in the IAA Reference. It is clear that since the adoption of UNDRIP in a UNGA resolution in 2007, much has changed in the Canadian legal landscape even if much remains to realize Indigenous self-determination and the resurgence of Indigenous ecological laws. An ideal approach to the interpretation of the IAA would be one that situates it in the broader landscape of clarifications of procedural environmental human rights evident in the work of special experts of the Human Rights Council, perhaps especially the 2018 Framework Principles on Human Rights and the Environment. The 2018 Framework Principles reflect diverse sources of existing international law and include not only Framework Principle 8 (impact assessment) but also Principle 4 (ensuring the safety of environmental human rights defenders), Principle 5 (freedom of association, expression and peaceful assembly), Principle 6 (education and public awareness), Principle 7 (access to information), Principle 9 (public participation), Principle 10 (access to effective remedies), Principles 3 (anti-discrimination) and 14 (protecting the rights of those most at risk) and Principle 15 (obligations to Indigenous peoples). A key point is that a decision-making function that focuses on public interest (something the majority views to be problematic) does not seem out of step if one understands that a fundamental component of effective environmental assessment is public participation in order to inform the decision-making process … one that should consequently result in a decision that is ‘in the public interest’.

The Do No Harm Principle, Climate Change and the Marine Environment

Finally, there is Rio Principle 2 which embodies both ‘sovereignty over natural resources’ and the ‘do no harm’ principle, elaborated in jurisprudence of international courts and tribunals that have explored expectations of due diligence in the prevention of transboundary and global environmental harms. Principle 2 could and should inform an interpretation of the gaps in Canada’s woefully underdeveloped jurisprudence on jurisdiction over the prevention of transboundary interprovincial environmental harms (para 189 – being limited to date to marine pollution and interprovincial rivers – but does no jurisprudence mean no federal jurisdiction, or is it simply that these issues have not yet come before the courts?) Principle 2 could and should also help to overcome Canada’s ‘head-in-the-sand’ failure to acknowledge responsibility to prevent (and remedy) contributions to global environmental harms including but not limited to climate change (crisis). While it is beyond the scope of this post to delve further into the implications of this observation, I note that the fallout of the IAA Reference for greenhouse gas (GHG) emissions regulation is explored in a recent blog by David Wright, with reference to climate impacts on Indigenous peoples, among other considerations. Moreover, in a Climate Law paper in honour of Meinhard that was published earlier this year, Adebayo Majekolagbe, David Wright and I explored the relationship between impact assessment law, the social cost of carbon, and climate loss and damage. In short, there is more work to be done both to unpack the linkages between climate impact assessment and remedy for climate harms, and the SCC’s IAA Reference is not helpful. In my view, SCC federalism jurisprudence and especially the Carbon Pricing References must be understood narrowly given its focus on regulation of GHG emissions through pricing. It is not about regulating other climate issues such as climate adaptation or climate loss and damage, nor is it about regulation of non-emissions reduction mitigation activities – such as regulation of carbon dioxide removal technologies – an emerging and controversial topic including ocean-based approaches.

At least until Canada’s adoption of its federal climate adaptation strategy just this past year, one would be forgiven for assuming that climate change law was only about reduction of GHG emissions. In fact, GHG emisssions do indeed contribute to and cause harms – within the jurisdiction of the emitter, as well as transboundary (including interprovincial, or province to territory) and global harms. This includes harm to the marine environment, a recognized head of federal power under the POGG national concern doctrine as determined by the SCC in Crown Zellerbach and acknowledged by both majority and dissent in the IAA Reference. The majority’s narrow understanding of federal environmental effects and obligations in the IAA Reference (paras 182-189) seems remarkably distant from international environmental law guidance on responsibilities across borders, even as international cooperation to address liability and compensation (Rio Principle 13) remains unmet. Importantly, several Advisory Opinions aimed at clarifying the obligations of states in relation to climate change are before international courts and tribunals (see ICJ, ITLOS, IACHR), and linkages between climate change and oceans governance – notably the UN Convention on the Law of the Sea (UNCLOS) and obligations to protect the marine environment – will be clarified in some of these, while some will draw attention to human rights dimensions. In this light, it is interesting to note Canada’s submission to the International Tribunal on the Law of the Sea on due diligence under UNCLOS (para 59):

Canada encourages the Tribunal to find that under Part XII, States Parties have a due diligence obligation to protect and preserve the marine environment in relation to climate change, which includes preventive measures to avoid and reduce pollution of the marine environment from GHGs. In addition, given the significant risks associated with climate change, including acidification, oxygenation, adverse impacts on biodiversity, and exacerbated sea-level rise, Canada believes that the standard of due diligence in relation to marine pollution from climate change should reflect those risks accordingly.

It would have been nice to see the SCC IAA Reference considering the broader international context in which its decision arose, including insights from international law. Beyond ‘nice’, it is a requirement. Canadian statutes must, at a minimum, be interpreted so as not to undermine Canada’s international legal obligations. I believe that the failure to engage in this interpretive exercise even while considering seemingly domestic challenges like the division of powers has implications for the analytical process, although there is more work to be done beyond these preliminary reflections to determine exactly what consequences flow from such a failure.

The Just Transition Impact Assessment Framework: A Doelle Lens

January 19, 2023 Sara Seck 2 Comments

The Just Transition Impact Assessment Framework: A Doelle Lens

Written by: Adebayo Majekolagbe, PhD – Fellow, the African Sovereign Debt Justice Network, and the Marine and Environmental Law Institute, Dalhousie University

(This blog is dedicated to the memory of Meinhard Doelle who co-supervised my PhD thesis on just transition and impact assessment.)

“Be careful not to present sustainability transition and climate transition as the same thing.” – Meinhard Doelle (Feedback on PhD thesis on Just Transition Impact Assessment)

Meinhard Doelle’s body of work on international climate change law, environmental law, shipping and maritime law, climate policies in Canada, and impact assessment is embedded in an ambitious yet pragmatic outcome-oriented and applied vision of sustainability. From his doctoral thesis published as a monograph on climate change and international environmental law in 2005 to the 2021 co-edited work on the Next Generation of Impact Assessment, the importance of the integration of relevant regimes for sustainability is manifest in Meinhard’s scholarship. His more recent project on the incorporation of climate change into impact assessment (IA) brings the emphasis on integration further to the fore. It was within this project on climate change and impact assessment that my work on the just transition impact assessment (JTIA) framework found an intellectual home with Meinhard as PhD supervisor. In its design, the JTIA framework immensely benefited from the inputs of Meinhard (and Sara Seck who served as co-supervisor). In this blog, using several marked-up drafts of the JTIA framework, I highlight Meinhard’s key contributions to and criticisms of the framework.

The Just Transition Impact Assessment Framework

Climate change is fundamentally a justice issue. It impacts communities least responsible most, and measures to mitigate and adapt to climate change, at times, create or worsen socio-ecological vulnerabilities. Recent developments in climate change and IA scholarship and policies have primarily focused on how to effectively assess the impacts of projects on climate change. As in the case of Canada, this emphasis is often interpreted as the emission potential of projects and how that impacts on a country’s nationally determined contribution under the Paris Agreement. Such narrow framing, however, often results in a technocentric, and expert-focused approach to climate change and impact assessment, which leaves out the issues of justice implicated in climate change-oriented decision making. The JTIA Framework is for the explicit consideration of justice in the incorporation of climate change into IA. Central to developing the framework is the adoption of a wellbeing-centric understanding of just transition, consideration of how just transition can be operationalized through conventional IA, and the specific principles for explicit consideration of justice in IA. Each of these components are reflected on below in the light of Meinhard’s feedback.

A Wellbeing Focused Just Transition

Within climate change discourse, various emphases of justice are addressed through diverse concepts including climate justice, energy justice, and the Common but Differentiated Responsibilities (CBDR) principle. Comparatively, just transition is a more recent concept, most relevant in the consideration of the adverse impacts of response measures in mitigating or adapting to climate change. The transformative potential of just transition has been stressed by several scholars; however, just transition is, in practice, mostly operationalized as ‘jobs transition’. The emphasis on ‘jobs’ is a testament to the historical rootedness of just transition in the labour movement. Also, this narrow understanding of just transition primarily aims to ‘redistribute’ the ‘losses’ and ‘benefits’ of the transition. The evidence that this narrow framing of just transition leads to actual just outcomes is, however, almost non-existent. In fact, evidence is beginning to emerge that a jobs-centric understanding of just transition often leaves socio-ecological injustices unaddressed and at times create new ones. In addition, jobs-centric just transition is primarily domestically scoped, and emphasises the allocation of resources (e.g., to compensate, retrain, or relocate workers) and trilateral social dialogue (between the State, employers, and employees).

“You will want to make sure you articulate as clearly what needs to be included and how. So far, the message is clear that a focus on jobs is too narrow, it is less clear what exactly you are looking for and how this can/should be achieved.” – Meinhard Doelle

Generally, Meinhard agreed that a narrow jobs-centric understanding of just transition is problematic. He, however, noted the need for clarity on what just transition should focus on if not ‘jobs.’ Amartya Sen provides an alternative to the resource allocation based distributive theory of justice which underpins the dominant narrow rendering of just transition. Sen argues that it matters if we focus on the means rather than the outcome of justice. The primary outcome of justice is the attainment of capabilities for human (and ecological) wellbeing. My rethinking of just transition is, at its core, inspired my Sen’s reasoning. It does matter if we are merely focusing on the means of justice (replacement jobs, compensations, relocation, etc.), rather than the end of justice (what do the various interventions mean for actual socio-ecological wellbeing – the wellbeing of humans, communities, and nature). This basic rethinking fundamentally alters where just transition analysis starts from. The operative question is not – what does a transition decision mean for jobs and workers? Such narrowly scoped question does not only confer pre-eminence on jobs over other non-job justice concerns implicated by the transition, but often gives paramountcy to certain types of jobs (mostly workers in the fossil fuel sector) and balkanizes and selectively reifies the identity of individuals as ‘workers’ neglecting other vital ‘identities’ that make the individual (see Sara Seck on the flawed prevalence of the bounded autonomous individual in legal analysis).

The important question when thinking about justice in transition decision-making, is – what does the decision mean for socio-ecological wellbeing (the wellbeing of humans, communities, and nature). The principle is straight-forward: transition decisions should result in improved wellbeing. Martha Nussbaum’s combined basic capabilities (e.g., life, bodily health, integrity, imagination and thought, affiliation, emotion, practical reason, relationship with other species, play, and control over one’s (political and material) environment) are useful in concretely describing the vital constituents of wellbeing that the transition must ensure. The languages of human rights and sustainable development goals are also helpful in establishing the contours of a wellbeing-outcome oriented notion of just transition. Focusing on wellbeing also expands the bracket of the potential beneficiaries of just transition interventions. The question moves from being ‘which workers are impacted’ to ‘whose wellbeing is adversely impacted by a transition decision’? While a subject-scoping analysis based on the latter question might yield ‘workers’ as an answer, it will not always be so, or at least, jobs-related needs of the ‘worker’ will not always be the automatic priority of just transition. Vulnerability, therefore, becomes a key determinant of whose and what interest is prioritised when justice is factored into transition decision making.

“I think I may have mentioned this before, but the UN climate regime did make an effort to get agreement on equity principles at some point. My recollection was that it all centered around a series of workshops in Bonn around 2008, but I could be wrong. Ultimately, neither OECD nor OPEC was willing to come to the table in a meaningful way.” – Meinhard Doelle

Wellbeing-focused just transition is also not constrained by artificial geographical delineation. It is the wellbeing of ‘whoever’ (or ‘whatever’ as in the case of nature) regardless of where they are domiciled. Meinhard shared the view that climate change measures have the potential of resulting in unjust outcomes in third States. He, however, appeared less sold on addressing these unjust impacts through the UN climate regime, more so as previous efforts had failed. Despite recent developments, the possibility of an effective and equitable fossil fuel non-proliferation agreement is limited. As Meinhard suggested, neither the global south nor north has an appetite for such regime. My argument simply is that a deliberate and broadly scoped interpretation and application of the common but differentiated responsibilities (CBDR) principle when crafting transition decisions could go a long way in ensuring that such initiatives are just to third countries, particularly countries most vulnerable to the impacts of climate change and response measures. For example, paying attention to responsibility, capability, and circumstance in designing a carbon border adjustment policy could, in theory, result in a fundamentally more just policy as against what is currently obtainable under the EU Carbon Border Adjustment Mechanism.

Conventional IA as an Interstitial Space for Just Transition

Now to the second part of Meinhard’s first comment (see box 1 above) – how can a wellbeing focused understanding of just transition be achieved? Just transition scholarship is beginning to pivot towards more applied narratives. Robins, Brunsting, and Wood’s just transition guide for investors, Bright and Buhmann’s work on risk-based due diligence and just transition, and the EU’s Just Transition Mechanism are examples of how researchers and policy makers are attempting to convert just transition from theory to application. I have argued that impact assessment is an important piece of the applied just transition puzzle. Unsurprisingly, Meinhard gave his most extensive comments on this section of the work.

“I very much enjoyed reading this chapter, Bayo. Very well done … Overall, my 2 main points are these:

The lines between the various different types of IA are not always clear to me … So, when you talk about how EIA differs from social, human rights, gender, … impact assessment, you might make this clear from the start, that these more specific forms of social impact assessment have to some extent been incorporated into EIA or IA.
The other area I think could use more clarity is the tiering of assessments and the implications all that has for the role of impact assessment as a just sustainable transition tool. I would certainly think that the effective integration of well-done regional assessments would offer significant opportunities, but even the opportunities offered by strategic assessments could be explored more.” – Meinhard Doelle

Meinhard’s first point, in some sense, accentuates the argument that conventional IA is only relevant to just transition to the degree that the various relevant strands of IA are holistically integrated. Meinhard correctly noted that seemingly different modes of IA – from social impact assessment to gender impact assessment – have over time been considered as valued ecosystem components (VECs) in environmental impact assessment (EIA). These VECs have, however, grown into distinct IA modes given the inadequacy of consideration when subjected under generic EIAs. The nature and underpinning assumptions that actuate these IA modes also differ. For example, while biophysical EIA is often approached as a dominantly expert-centric and technical venture; the ‘public’ is, however, deemed more central to interest and right-based IAs. Nevertheless, for conventional IA to be relevant to just transition, various modes of IAs must necessarily be ‘holistically’ integrated. Holistic integration requires not just the consideration of ‘other’ impacts, but the synthesis of fundamental principles and approaches. For example, it is not enough to simply consider human right impacts in an EIA. Key principles like a broad scoping of human rights using international instruments and the inherence of rights which makes trade-offs generally unacceptable, must be embedded in the IA process. Ecological IAs (EIA, strategic environmental assessment etc.), interest and right-based IAs (social impact assessment, human rights impact assessment, gender-based assessment plus etc.), and dimensional IAs (life cycle assessment, cumulative effects assessment, life cycle assessment, transboundary impacts assessment etc.) all address different aspects of a vision of just transition focused on socio-ecological wellbeing.

Meinhard believes that high-level assessments like strategic and regional assessment “offer significant opportunities” for just transition. His position is supported by theories of change and the scholarship, studies, and emerging anecdotal evidence on just transition policies. The most successful just transition policies are those founded on well-crafted long-term plans. The more sudden a ‘transition’, the more likely that it will be unjust. Indeed, this is one of the attractions of IA as a just transition tool. Elementarily, IA is an ex-ante predictive and planning mechanism. Strategic assessment, in theory, is a tool for articulating long-term vision for sustainability. It is, generally, unmoored from the deep-seated and vested interests that limit the sustainability-value of project assessment. Strategic assessment could be as broad as focusing on climate change and pathways for addressing it (for example, Canada’s Strategic Assessment on Climate Change (SACC) could have achieved this end except that it was crafted as a ‘Guidance’ for assessing climate change), or more narrowly to focus on a specific sector (for example, Canada’s prematurely terminated strategic assessment on thermal coal). At this strategic level, contesting visions and values could be accommodated; transformative learning can be achieved; and equity and effectiveness can be more intentionally made the essential footholds of transition decisions.

“I could be wrong about this, but my sense is that you need to consider anything that is done under the heading of ‘impact of response measures’ through the lens of how this is perceived within the UN climate regime. Essentially, this is seen by most developed countries as a money grab and/or stall tactic by Saudi Arabia and other OPEC countries opposed to climate action.” – Meinhard Doelle

More specifically, on the consideration of just transition when climate change is incorporated into IA, Meinhard did not dispute the argument that, so far, efforts to incorporate climate change into impact assessment fall short of the standard needed to address climate change effectively and equitably. He, however, was not too sold on my argument that the expectation that the ‘impact of response measures’ would be assessed under the international climate regime translate to an expected standard of conduct for countries. This is more so as the language of ‘impact of response measures’ has been coopted by fossil fuel dependent economies (FFDEs) as ‘a money grab and/or stall tactic’. However, other than the difference in nomenclature ‘just transition’ substantially focuses on similar concerns as the ‘impacts of response measures’ framework under international climate regime. The bottom line is that transition decisions are not without impacts, and for transition to be just, there is at least an expectation under international climate law that such impacts will be assessed. More importantly, for climate change and impact assessment to be truly effective it must align with key characteristics of climate change including – the global and multi-sectoral nature of the sources and impacts of climate change; climate change adaptation and loss and damage (locally and globally); delayed and cumulative nature of climate impacts and the causation challenge; and need for ambitious and immediate climate action.

A JTIA Framework for an Explicit Consideration of Justice in Impact Assessment

Although conventional IA holds opportunities for the consideration of just transition impacts, the JTIA framework consists of principles to guide such consideration. To reiterate, socio-ecological wellbeing is at core of my conception of just transition. The first and overarching principle of the JTIA framework is, therefore, the adoption of ecological and human wellbeing as the primary objective of transition decision making. Meinhard, however, identified the anthropocentricity of just transition as a potential barrier to just transition being a useful site for the integrated consideration of ecological and human wellbeing.

Guiding Principles for Just Transition Impact Assessment

Adopt ecological and human wellbeing as the objective of transition activities.
Ensure that transition decisions are sensitive to vulnerability.
Consider the principle of differentiation in decision making.
Ensure that life cycle, cumulative, regional, and transboundary impacts are considered.
Adopt a rights-based approach to social dialogue and ensure participatory parity.

While the conventional narrowly scoped understanding of just transition might very well fall under Meinhard’s criticism, the socio-ecological wellbeing emphasis of my vision of just transition is, in part, developed to address such pushback. In any case, as others have argued, human wellbeing and ecological wellbeing are fundamentally connected. Transition decisions should be considered in the broader context of their contribution to the diversity and resilience of ecosystems. This is what Meinhard meant when he cautioned that climate transition should not be conflated with sustainability transition, as the former does not always lead to the latter; but it should. As already noted, human rights and sustainable development goals, while limited, are useful proxies for considering the impacts of transition decisions on human wellbeing.

“Isn’t “just transition” also quite anthropocentric? Does JT do a better job integrating ecosystem wellbeing with human wellbeing?” – Meinhard Doelle

With wellbeing as an objective, it is essential that decision makers pay particular attention to vulnerability and apply the principle of differentiation in transition decision making. Common but differentiated responsibilities (CBDR) is a core principle of international climate change law for the equitable allocation of the obligations and benefits of the transition. There is an argument to be made for a CBDR mindset within States. It is a mindset that recognizes responsibility, capability, and circumstances in IA and eventual transition decisions. The differentiation principle also applies in the context of considering the transboundary impacts of transition decisions. In addition, as Meinhard had noted, high level assessments like regional and cumulative assessment are very important to understanding the interconnected nature of transition impacts both temporally and spatially.

“I am not sure how helpful the Strategic Assessment of Climate Change (SACC) example is, given how far removed that is from any form of shared decision making or consensus-based decision making … as a result, the example seems disconnected from the points you are trying to make.” – Meinhard Doelle

Meinhard highlighted the importance of “shared decision making or consensus-based decision making” to any meaningful application of impact assessment for just transition ends. This is one of his primary criticisms of the Canadian SACC; a critique that equally applies to Canada’s policy statement on thermal coal mining. While all just transition schools of thought accept social dialogue has a central element, standards of dialogue differ. In the JTIA context, rights-based and parity-sensitive dialogue is emphasized. Rights-based dialogue not only elevates social dialogue for transition decision to the status of a legal duty, but it also embraces the reality of dialogue as a spectrum ranging from consent to information depending on the nature of rights and potential harm. Social dialogue is parity sensitive when the issue of power is explicitly addressed, parity impeding norms are identified and revoked, and the independence and agency of parties are protected and supported.

As far as the potentials of impact assessment for real and meaningful climate action in Canada goes, only a few have contributed as much as Meinhard. He was cleareyed about the limitations of the practice of IA, yet he clearly saw the possibilities in IA and led the charge in making IA a more useful tool for sustainability. His work with John Sinclair on the next generation of impact assessment is proof. I am one of the lucky few to benefit directly from the beauty of Meinhard’s mind and heart. But many more will yet benefit from systems which have gotten better because of his contributions.

Reflections on COP 26 in Glasgow

November 13, 2021 Meinhard Doelle 1 Comment

The just completed COP 26 in Glasgow, Scotland, took place over the first two weeks of November, 2021, delayed by a year because of COVID, and still very much under the shadows of the pandemic. Health concerns, unequal vaccine access, and travel restrictions exacerbated the pre-existing “have and have not” reality for climate negotiators and observers from the global south.

Expectations for COP 26 were high. The phrase “our last best chance” to avoid the worst impacts of climate change was a common way to frame the significance of COP 26. Among the key issues on the formal agenda were the completion of the Paris Rulebook to enable the effective implementation of the Paris Agreement and the status of loss & damage in the UN climate regime, along with high expectation for new pledges to increase the ambition of nationally determined contributions (NDCs) and efforts to achieve them. Commitments to increase ambition were expected to focus on GHG emission reductions and on funding for vulnerable developing nations, with divergent views on whether or how much of the funding should be for mitigation, adaptation and loss & damage.

It is easy to get lost in the detail when sorting through the many elements of the COP 26 outcome. Before offering an assessment, it is perhaps helpful to consider how to measure success. It is important, particularly in light of the incremental approach of the Paris Agreement, to separate the assessment of progress at COP 26 from the more fundamental question of the adequacy of current commitments and actions.

It is important to keep in mind that while time clearly is quickly running out, the Paris Agreement never demanded that nations would commit to and take action to meet the collective goals of the Paris Agreement in one step, but rather that nations would work in cycles of making commitments, taking action to meet and exceed those commitments, and increasing the ambition of their commitments over time until the collective goals of the Paris Agreement are met. This basic architecture of the Paris Agreement calls for a nuanced approach to assessing the outcomes of COP 26. It is not enough to add up the global temperature impact of revised NDCs (currently somewhere around 2.4 degrees assuming full implementation of commitments) and assesses them against the collective goals of the Paris Agreement (well below 2 degrees, aiming for 1.5). Such an approach to measuring success would miss a number of important nuances:

It would miss the nuance that even meeting the 1.5 degree goal of the Paris Agreement will not equal success for particularly vulnerable populations and nations. It is clear that many will be drastically affected by climate change even if the 1.5 goal is met. There is no guarantee in the Paris Agreement that those affected will receive the help they need and deserve. Inequities can of course be addressed through capacity building, funding, adherence to the SDGs and human rights, and measures to ensure a just transition. However, even under such an equitable approach to the implementation of the Paris Agreement, which is far from the current reality, there will be severe impacts on some, and those adversely affected will be disproportionally those who have done little to cause the problem, including citizens of Least Developed Countries (LDCs), Small Island Developing States (SIDS), and Indigenous populations.
It would miss the nuance that our understanding of the implications and adequacy of the collective goals of the Paris Agreement is still evolving. There is still considerable uncertainty, for example, about major tipping points and how they relate to the temperature goals in the Paris Agreement.
It would miss the nuance that it is important to distinction between commitments and actions, and to consider both in light of what would be a fair national contribution to the collective goals. A number of research institutions, such as the Climate Action Tracker, offer analysis of nations’ actions by exploring these three separate elements of climate action:

- The first element is the level of effort that would amount to a fair national contribution to the collective goals of the Paris Agreement.
- The second element is the level of ambition of a country’s current NDC. For nations that have clearly communicated their commitments in their NDC using accepted methodologies, this is a straightforward exercise.
- The third element is whether the actions a country has taken are sufficient to meet its NDC commitments.

The equity element of this analysis has yet to be formally carried out under the Paris Agreement, and are not likely to be part of the official Global Stocktake in 2023. There are still divergent views on how to determine the fair contribution of a country, as efforts to agree on equity principles have eluded negotiators. However, principles incorporated into the UN climate regime, such as CBDR and precaution do offer a solid basis for analysis, lending credibility to the efforts made by civil society organizations and research institutes, while leaving room for debate.

With respect to the gap between commitments and actions, it is of course fair for nations to point out that they plan to build on existing policies and measures to meet their commitments, it is important to assess how realistic and plausible such claims are given the scale of the gap, the time remaining to close it, and the track record of each nation to meet its past commitments. There was no expectation that COP 26 would resolve these issues, but there was an expectation that nations would come to Glasgow with enhanced mitigation and funding commitments and actions in hand.

A number of nations, including Canada, announced their intention to increase their NDCs well head of COP 26. The most significant announcement of an increase in ambition at COP 26 came from India. India announced early during the COP that it intends to be carbon neutral by 2070, an ambitious goal for India given its state of development. While this was an announcement rather than a formal submission of a revised NDC, it was an unexpected and significant commitment. Comments during the later parts of the COP suggest that it is a commitment that is conditional on India receiving significant funding to assist with its decarbonization efforts. Overall, commitments on emission reductions by 2030 are still well short of what is needed according to the IPCC’s 1.5 report. The pressure for large emitters to up their 2030 targets will therefore undoubtedly continue at COP 27. Of note in this regard is that China and the United States announced their intention to cooperate in finding ways to achieve further emission reductions, though without offering any new targets or measures at COP 26.

The ability and likelihood of nations to meet and exceed their commitments and otherwise work toward the collective goals of the Paris Agreement will be influenced by many factors beyond national policies and measures. Such other factors include the cooperation of sub-national governments, private sector leadership, and coordination among key nations on critical issues, such as funding fossil fuel extraction and power production, supporting solutions in key sectors such as transportation and agriculture, and the commercialization of key technologies. An assessment of COP 26 should consider progress in these areas as well, even if they are not formally under the umbrella of the Paris Agreement.

A number of announcements were made in this regard. Over 100 nations, including Canada, committed to reducing methane emissions by 30% by 2030. About 40 nations, including Canada, committed to phasing out the use of coal for power production, with deadlines ranging from 2030 to 2040. Costa Rica and Denmark, with varying levels of support from a few other nations, went further and committed to phasing out all forms of fossil fuels, including oil and gas. Canada has not signed on to this commitment, but the province of Quebec has supported it. Another significant commitment relates to funding of fossil fuel projects. Over 20 nations, including Canada, committed to phasing out international funding of fossil fuel projects by the end of 2022. Finally, 6 major car manufacturers, but not including the two largest, VW and Toyota (with support from 30 nations), have committed to phasing out gasoline cars by 2040.

What can be said about all these commitments is that for each, there are key nations that have not yet joined. Many of the most significant contributors to methane have not yet joined the methane commitment. The same goes for the phase out of coal, which would require the inclusion of major coal users such as China and India to be truly effective. Very few have so far supported the phase out of fossil fuels, or the funding of fossil fuel projects. For now, each of these campaigns makes a modest but significant contribution to narrowing the gap between commitments and the action needed to meet the collective goals of the Paris Agreement. More importantly, perhaps, each holds the potential of being the start of a movement toward global cooperation on a key element of the decarbonization effort. The success of these campaigns should be measured in terms of what happens next. Who else signs on to each? Will those who have signed on comply? Do these initiatives result in more ambitious NDCs and in nations meeting and exceeding their NDC commitments?

A final word about these commitments in light of the focus on the language in the final decision text about the phase down of coal and the elimination of fossil fuel subsidies. Rather than place an unrealistic expectation of the consensus based approach under the UN climate regime, it is much more telling and important whether a growing number of key countries commit to and implement each of these commitments outside the UN climate regime. It is fair to be disappointed by the refusal of some countries to formally commit to the elimination of fossil fuel subsidies and the phase out of fossil fuels within the UN climate regime, but it would not have been realistic to expect global consensus on these in Glasgow. Much more important, and constructive, is to track and support those who commit to doing it, and to try to build momentum around the coalition of the willing. We don’t need everyone on board, we need a critical mass.

An assessment of COP 26 would not be complete without a look at the Paris Rulebook and related elements of the formal COP 26 decision text. Among the most controversial issues on the agenda were the rules for market mechanisms under Article 6 of the Paris Agreement, finance and loss & damage. Of course, there were other issues addressed in the process of completing the Paris Rulebook, from common timeframes to the transparency framework under Article 13. A more detailed assessment of these elements will have to wait for another day.

With respect to Article 6, among the most contentious issues were the fate of CDM projects and CDM credits from the Kyoto regime, allocating a share of the proceeds from emissions trading to vulnerable nations, and safeguarding against negative social and environmental impacts of climate mitigation efforts under Article 6. The final text contains some potential protections against social and environmental impacts, such as a reference to an unspecified independent grievance process. The text does include reference to a share of proceeds for adaptation in particularly vulnerable nations from Article 6.4 activities, but not for Article 6.2. With respect to the CDM, the text allows the carry over CDM projects and credits. Requests must be filed by 2023, and apply only to CDM projects registered after 2013, along with a few other restrictions.

In reviewing the Article 6 rules, I am reminded of the failed efforts to ensure the environmental and social integrity of the CDM and emissions trading in the final days of the Kyoto negotiations. The tradition of compromising environmental and social integrity in the name of economic efficiency appears to have continued, but so will the effort to prevent Article 6 from undermining the goals of the Paris Agreement. Let’s not forget that as a result of effective civil society campaigns after the weak Kyoto trading rules were negotiated, many nations refused to make use of controversial credits to meet their commitments under Kyoto. I think it is likewise doubtful that Article 6 will play a significant role in the decarbonization effort of many nations. The final result of the Article 6 negotiations may be disappointing, but it is an outcome we can work with.

With respect to finance, negotiations had focussed on ensuring the commitment to provide $100 billion per year from 2020 to 2025 would be met, on ensuring a better balance between mitigation and adaptation funding, and on setting a post 2025 funding target. The final text notes with concern that the $100 billion commitment from developed nations has not yet been met, and provides for a continuation of the process to ensure developed nations honour their 2020 – 2025 finance commitment. With respect to post 2025 finance, parties agreed to continue in the form of an ad hoc work program to address quantity, quality, scope and access, and conclude in 2024. As with Article 6, the outcome, while far from ideal, is one that we can work with.

With respect to loss & damage, efforts to bring loss & damage more fully under the Paris Agreement as a third pillar along with mitigation and adaptation continued at COP 26, but with limited progress yet again. This issue has a long history under the UN climate regime, one that threatened agreement on the Paris Agreement in 2015. Compromise language in the Paris Agreement and the accompanying decision text has resulted in loss & damage remaining a divisive issue in the negotiations, and COP 26 was no exception. Among the unresolved issues were the inclusion of loss & damage under the funding mechanisms, inclusion under the reporting mechanisms, and inclusion in the upcoming Global Stocktake. The final decision is still largely about technical assistance in the form of the Santiago Network on Loss & Damage, with no clear reference to funding for loss and damage. The continued resistance to funding loss & damage is disappointing, but far from surprising.

Concluding Thoughts

Ultimately, there are outcomes from COP 26 to celebrate. Efforts by a number of nations to increase the ambition of their mitigation and finance commitments under the NDCs are among those, as are commitments by some nations to reduce methane emissions, to phase out coal, to phase out oil and gas, and to phase out fossil fuel funding. On a more technical note, the finalization of the Paris Rulebook marks the end of the design of the overall Paris architecture, though adjustments and refinements will undoubtedly be needed from time to time. The substance of the final rulebook can best be described as a basket of compromises, but while far from ideal, they seem workable, and further delay would only distract from the real job of decarbonizing.

With this in mind, it is important to be clear about the task ahead, which remains largely unaltered by COP 26. First, and foremost, each and every country has a critically important job of taking the actions needed to meet their current commitments. At the same time, it is also clear that we are still some distance from closing the gap between the commitments made, and what is needed to meet the collective goals of the Paris Agreement. The gap has narrowed modestly, but time is running out, so nations will have to work in parallel on implementing measure to meet current commitments while at the same time looking for ways to increase the ambition of their commitments. Addressing the production gap and eliminating all forms of subsidies for the extraction and use of fossil fuels clearly have to be priorities for nations still struggling with decarbonization.

For Canada, the challenge at hand is similarly clear and unchanged. We have to finally come to grips with the disconnect between decarbonization and fossil fuel extraction. We have to take efficiency and conservation of energy seriously in all aspects of our energy systems. We have to complete the task of decarbonizing electricity in order for electrification of transportation, heating and suitable commercial and industrial activities to contribute to our decarbonization efforts. We have to tackle methane and nitrous oxide emissions as immediate priorities, including from fossil fuels, waste, and from agriculture. We have to do more to protect natural systems essential for natures efforts to stabilize our climate systems, including forests and oceans. Finally, we have to recognize the many inequities associated with the climate crisis, and take the steps necessary to address them.

Meinhard Doelle,

Professor, Schulich School of Law

Associate Dean, Graduate Studies

Dalhousie University

The Climate Emergency and Human Rights: Reflections on the Report of the Special Rapporteur on Extreme Poverty

July 23, 2019 Meinhard Doelle Leave a Comment

By Professors Sara Seck and Meinhard Doelle, and Killam Post Doctoral Fellow, Lisa Benjamin.

On June 25^th, 2019, the Special Rapporteur on extreme poverty and human rights, Philip Alston, released a report on climate change and poverty. This much-anticipated report offers an opportunity to focus on an often neglected aspect of climate change, the disproportionate, devastating impact of unmitigated climate change on those living in poverty. While heatwaves in Europe have attracted attention, it is the existing climate-induced impacts on vulnerable communities in the Global South which are often overlooked. The water crisis in India and ongoing migration crises are just recent examples of what is to come.

The report starts out with some shocking statistics. It estimates that hundreds of millions of people will face food insecurity, forced migration, disease and death. The report classifies the human rights impacts of climate change as an emergency without precedent, and emphasizes that the scale of the emergency very much depends on the level of effort the global community puts into mitigation. The difference between a 1.5-degree and a 2-degree increase above pre-industrial levels is estimated to expose an additional 457 million people to climate related risks, including risks related to sea level rise, flooding, droughts, forest fires, damage to ecosystems, food production, and the availability of drinking water.

A 2-degree world would put an additional 100-400 million people at risk of hunger, and 1-2 billion may not have access to adequate water. 140 million people in the poorest parts of Africa, Asia and Latin America could be displaced by climate change by 2050. Already, in 2017, more people were displaced by disasters than by conflict, with most of the displacement affecting those living in poverty in developing countries.

Of course, current mitigation commitments are likely to result in an approximately 3-degree or higher world. Unfortunately, the report does not offer the same level of detail of the human impacts resulting from the path the world is currently on, either based on commitments under the Paris Agreement, or based on current policies. While this is understandable given the commitment of the global community in the Paris Agreement to collectively work toward “well below 2 degrees”, current nationally determined commitments (or NDCs) leave a significant gap, and many countries are not yet on target to meet their existing NDC commitments.

The scale of the overall impact, even at 1.5 degrees, is unprecedented, and the report estimates that developing countries will bear 75-80 percent of the costs and impacts. In short, climate change will exacerbate existing poverty and inequality, between developed and developing countries, but also within countries. The higher the global impact, the worse the plight of the world’s poor. The report details incidents of loss and damage, or effects which exceed the adaptive capacity of communities and states, with the impacts of loss and damage being more drastic in the Global South. The authors of this blog have researched the legal and policy implications of climate-induced loss and damage, with two of the authors editing a Research Handbook on Loss and Damage along with existing work on the topic.

Of course, the inequity of this disproportionate impact is exacerbated by the fact that those in poverty have to date and will continue to contribute the least to the problem. The poorest half of the global population is responsible for only 10% of global GHG emissions, and a person in the top 1% (which includes most middle-class citizens in developed countries) is on average responsible for 175 times more emissions than a person in the bottom 10%. In short, the problem is created by the world’s affluent (many of whom do not consider themselves to be affluent), and it disproportionately affects the world’s poor. These urgent issues of climate justice have been a constant refrain by many vulnerable, developing countries during the climate negotiations, with particularly difficult negotiations around loss and damage. The report paints in stark language the unjust position of those in the Global South watching as developed countries grew rich by burning an irresponsible amount of fossil fuels, and the failure of treaty bodies to determine the responsibility of wealthier countries to provide financial and technical assistance to developing countries for climate action.

Having set the stage with a troubling account of the expected impact of climate change on the most vulnerable, the report proceeds to take stock of the human rights community to date. The report covers efforts by the Human Rights Council, the Office of the High Commissioner for Human Rights, the Committee on Economic, Social and Cultural Rights, the Human Rights Committee, regional human rights bodies, reports from a variety of other Special Rapporteurs, and civil society. The inevitable conclusion is that awareness of the scale of the crisis is low, and that actions have been inadequate, including by key human rights NGOs Human Rights Watch and Amnesty International, although there are signs of change.

Not well covered in the report are actions by state actors and the business community, though the inadequacy of actions to date are pointed out. The report points to the persistence of government subsidies to the fossil fuel industry and the failure to take effective steps to fundamentally transform the global economy as the most obvious signs that governments and the business community are failing to tackle the issue. The report also points out the shameful history of many in the fossil fuel industry of denying the science of climate change and thereby delaying action, and also warns of the dangers of climate-induced privatization of natural resources in the future which may exacerbate negative impacts for those living in poverty.

However, the report fails to mention the significant role of state owned corporations and nation states in the fossil fuel industry. Richard Heede’s groundbreaking report notes that of 914 billion of CO2 equivalent emitted by 90 oil, coal, natural gas and cement producers, roughly one third was emitted by investor-owned companies, and the remaining two-third by state-owned entities and nation states. While it is clear that developed countries are largely responsible for historic emissions, some of the major emitters listed in Heede’s report are located in the Global South, including in countries such as Saudi Arabia, Iran, China, India, Venezuela, Mexico, Kuwait, Abu Dhabi, and Algeria. This activity accumulated vast wealth for these industries and countries (or at least their governments), but has contributed to devastating climate-induced impacts for others in the Global South.

The report also points to the gaps in transnational environmental governance, with states agreeing to binding international agreements on investor protection and trade, but no correlative enforceability of commitments to reduce carbon emissions. The same can be said in the transnational corporate governance sphere, with no binding international legal obligations currently imposed on companies to reduce emissions. However, the report fails to mention important Human Rights Council developments on business responsibilities for human rights or to consider how these developments apply to climate-induced harms.

The Alston report proceeds on the assumption that states have obligations under international human rights law, but that businesses, including fossil fuel companies, do not, absent state regulation. This is contrary to the OHCHR’s own Key Messages on Climate Change and Human Rights, developed as a submission to the Paris Agreement negotiations, which states in part that ‘businesses are also duty-bearers’ and that businesses must ‘be accountable for their own climate impacts’ . The OHCHR’s position is consistent with that adopted by the Committee on Economic, Social and Cultural Rights in its 2018 statement on climate change which expressly notes that ‘Corporate entities are expected to respect Covenant rights regardless of whether domestic laws exist or are fully enforced in practice’ . These claims are not surprising, as they reflect the endorsement by the UN Human Rights Council in 2011 of the Guiding Principles on Business and Human Rights , the implications of which are also noted in the 2016 Report on Climate Change produced by the Special Rapporteur on Human Rights and the Environment [see here at para 66].

Various non-UN initiatives have attempted to grapple with the implications of the business responsibilities for human rights for climate change harms, including the International Bar Association’s 2014 Report on Climate Justice , the 2015 Oslo Principles and the 2018 Principles on Climate Obligations of Enterprises , although none are entirely consistent with the business responsibility to respect human rights under the Guiding Principles [see here and here]. Other initiatives such as the recommendations of the Task Force for Financial Disclosures on Climate Change are also gaining traction. Notably, some corporate actors have taken significant actions to reduce their emissions consistent with an acceptance of their social responsibility, and the activities of some of these largest actors can fill temporal and governance gaps under the Paris Agreement, whether or not more transformative global climate regulations are agreed upon.

The report does point to signs of hope, such as the decoupling of economic growth from GHG emissions in 23 countries while reducing poverty faster than other countries. This has been achieved through a combination of green subsidies, carbon pricing, and regulation driving a transition from fossil fuels to renewable energy. The report also details some of the ongoing climate litigation activity against both governments and companies, but misses some important cases in Global South which are driving climate ambition in those countries, and which are also allocating innovative legal rights to natural resources such as rivers.

The report concludes with some recommendations on how to move forward with decarbonization in a manner that is more attentive to the connection between climate change and poverty. It is here that the report fails to impress, as while the report calls for radical, transformative changes it does little more than repeat the need to decarbonize while ensuring a just transition. A key question may be whether international human rights law already provides underutilized and frequently overlooked tools that could be called upon to harness state and non-state actors to take effective climate action both to reduce GHG emissions and to remedy climate harms. It is crucial that all Special Rapporteurs take seriously the independent responsibilities of businesses, as organs of society, and not inadvertently propagate the message that business conduct that contributes to the violation of human rights including climate harms is somehow acceptable in the absence of state regulation. The report rightly points out that urgent action is needed by governments, businesses as well as the human rights community, but it is now time to move from outlining the risks to crafting and implementing global solutions which benefit the most vulnerable.

Ontario Court of Appeal Holds Federal Government Can Set National Climate Mitigation Standards

June 30, 2019 Meinhard Doelle Leave a Comment

On June 28, 2019, the Ontario Court of Appeal released its much-anticipated ruling on the constitutionality of the federal Greenhouse Gas Pollution Pricing Act (GHGPPA). It is the second reference case involving this Act, following the previous Saskatchewan Court of Appeal ruling that the Act was a valid federal exercise of jurisdiction under the national concern branch of POGG. Both cases, while also dealing with other issues (such as whether the pricing mechanism amounts to a tax, or whether it may be justified under the emergency branch of POGG), focus on the question whether greenhouse gas (GHG) emissions, or some other appropriate subject matter, meet the national concern test under POGG so as to grant the federal government jurisdiction to pass the GHGPPA. The Saskatchewan case upheld the GHGPPA on the narrow basis that the pith and substance of the Act is the “establishment of minimum national standards of price stringency for GHG emissions”.

With the two cases clearly heading to the SCC in December, 2019, a key question with respect to the Ontario Court of Appeal is whether it offers any new perspectives on the application of POGG’s national concern branch to GHG emissions. Ultimately, the short answer to this question is yes. The decision offers three perspectives on how the POGG national concern analysis should be carried out. One of the three follows the majority of the Saskatchewan Court of Appeal. The other two offer new perspectives that may be helpful to the SCC as it grapples with the issue.

There is little doubt that the applicable test for the national concern branch of POGG is as set out by Le Dain J. in the SCC decision in Crown Zellerbach, at pp. 431-32:

1. The national concern doctrine is separate and distinct from the national emergency doctrine of the peace, order and good government power, which is chiefly distinguishable by the fact that it provides a constitutional basis for what is necessarily legislation of a temporary nature;
2. The national concern doctrine applies to both new matters which did not exist at Confederation and to matters which, although originally matters of a local or private nature in a province, have since, in the absence of national emergency, become matters of national concern;
3. For a matter to qualify as a matter of national concern in either sense it must have a singleness, distinctiveness and indivisibility that clearly distinguishes it from matters of provincial concern and a scale of impact on provincial jurisdiction that is reconcilable with the fundamental distribution of legislative power under the Constitution;
4. In determining whether a matter has attained the required degree of singleness, distinctiveness and indivisibility that clearly distinguishes it from matters of provincial concern it is relevant to consider what would be the effect on extra-provincial interests of a provincial failure to deal effectively with the control or regulation of the intra-provincial aspects of the matter.

As was the case in previous environmental cases that considered the national concern test under POGG, a critical issue in the analysis of all three judgements by the Ontario Court of Appeal (two for the majority, one dissenting judgement) was how they define the “subject matter” to which they then proceed to apply the Le Dain test.

• Minimum standards to reduce GHG emissions (Strathy C.J.O.)
• Minimum national GHG emissions pricing standards to reduce emissions (Hoy A.C.J.O.)
• GHG emissions (Huscroft, J.A.)

The majority (Strathy C.J.O., Hoy A.C.J.O., MacPherson, and Sharpe JJ.A.), in two separate judgements, applies the first two subject matters to the Le Dain test to conclude that the federal government has jurisdiction under the national concern branch of POGG to enact the GHGPPA. The dissenting judge, Huscroft, J.A., applies the third subject matter to conclude that the federal government does not have jurisdiction under POGG to enact the GHGPPA.

The choice of subject matter, of course, has important implications. It drives the POGG analysis with respect to the third and fourth part of the Le Dain test, and has particular implications for the singleness, distinctiveness, and indivisibility test and the impact on the distribution of power between federal and provincial governments. A more narrowly defined subject matter will more easily pass the requirements of the POGG test. At the same time, however, the choice of subject matter also has implications for the ultimate ability of the federal government to take effective measures to control GHG emission in Canada. The more narrowly defined the subject matter, the more limited the federal power to control GHG emissions.

In this post, I briefly explore the implications of this fundamental choice, and offer some perspectives on the choices made and the analysis applied, particularly with respect to parts three and four of the Le Dain test in the three sets of reasons offered by the Ontario Court of Appeal.

Strathy C.J.O. concludes that the subject matter that offered the most appropriate basis for the POGG analysis was “the setting of minimum national standards to reduce GHG emissions”. He differs from the Saskatchewan majority ruling in defining the subject matter more broadly than the specific subject matter of the GHGPPA. The starting point for this determination is the pith and substance of the legislation being challenged. Clearly the pith and substance is setting a minimum national price for carbon. While the Saskatchewan Court of Appeal proceeded to also accept this as the subject matter for purposes of the POGG analysis, it is clear from the case law that this is not necessary, and that the question of the subject matter is a separate determination that flows from, but is not prescribed by the determination of the pith and substance of the impugned Act.

Having selected minimum national standards for GHG emission reduction efforts, the majority then went on to conclude that this subject matter met the third and fourth parts of the Le Dain test.

Hoy A.C.J.O., who agreed with Strathy C.J.O. and the rest of the majority on the ultimate outcome, reached her conclusion on the basis of the same subject matter as the Saskatchewan Court of Appeal. She appears to apply the narrower subject matter based on case law that has suggested that the subject matter should be defined as narrow as reasonably possible to prevent unnecessary intrusion into provincial areas of jurisdiction. Having selected the narrow subject matter of setting a minimal national carbon price, she had little difficulty concluding that the subject matter met the third and fourth parts of the Le Dain test.

The dissenting judge, Huscroft, J.A., applied the broadest subject matter, and proceeded to conclude that the GHGPPA was not valid federal law. He defined the subject matter to be the reduction of GHG emissions. He did so on the basis that the reference to minimum national standards and a minimum national carbon price went beyond defining a subject matter to defining the tools that could be used to address the subject matter. Huscroft, J.A. concluded that while it was appropriate to seek to define the subject matter narrowly to avoid any unnecessary intrusion into provincial areas of jurisdiction, this did not allow the court to define the subject matter with reference to a particular method or other tool to address the subject matter.

Having concluded that the subject matter is the reduction of GHG emissions, Huscroft, J.A. concluded that this subject matter did not meet parts three and four of the Le Dain test. He did so on the basis that the reduction of GHG emissions does not have a sufficient singleness, distinctiveness and indivisibility to be a federal head of power separate from existing provincial heads of power, and that the scale of impact on provincial jurisdiction was not reconcilable with the distribution of powers under the Constitution. In other words, the impact on provincial jurisdiction of granting exclusive federal jurisdiction over the subject matter in question was too high.

The case raises three key questions with respect to the application of the POGG test to GHG emissions:

1. What is most the appropriate way to choose the subject matter for purposes of the POGG test?
2. How should the court determine whether the subject matter meets the singleness, distinctiveness and indivisibility requirement under part three of the Le Dain test?
3. How should the court determine whether the scale of impact on provincial jurisdiction is reconcilable with the distribution of powers under the Constitution?

With respect to the first issue, the reasoning of justice Huscroft has some attraction. It certainly does seem preferable to narrowing the federal government’s ability to address the subject matter to the single issue of carbon pricing. The more difficult question is whether justice Huscroft is correct in suggesting that limiting the subject matter to setting minimum national standards of efforts to reduce GHG emissions more broadly is also an inappropriate way to narrow the subject matter. What is interesting is that he criticizes the majority for narrowing the subject matter by limiting the tools at the federal government’s disposal, while at the same time criticizing Strathy C.J.O. for not specifying the type of standard. A reasonable interpretation of the subject matter defined by Strathy C.J.O. is that it actually addresses Huscroft’s concern, as it narrows the scope of the subject matter to setting minimum national standards of mitigation, but it does not limit what the federal government can do, as it does not limit what type of standard the government can set. Rather than limiting the tools available, as the focus on carbon pricing would do, justice Strathy’s reasoning allows the federal government to use any tool, but only for the purpose of setting minimum standards, thereby allowing flexibility for provinces on how to meet the standard, and, perhaps more importantly, to exceed the standard. Under the subject matter as defined by Strathy, the government can set a minimum carbon price, or any one of a range of emission, efficiency, performance, or technology standards.

Presumably, it would also be within the range envisaged by justice Strathy for the federal government to set a carbon budget for each province, and leave it to each province to determine how to stay within the budget. This was raised by the court in oral arguments, with the lawyer for the province of Ontario suggesting he had less difficulty with such an approach than with the approach in the GHGPPA. By defining the subject matter as the power to set minimum national standards of mitigation, Strathy C.J.O. has given the federal government the tools to ensure emissions are reduced sufficiently to meet international commitments or otherwise ensure Canada makes a fair contribution to the global effort, while allowing the provinces still lots of room to act in the field of GHG emission reductions.

In short, while perhaps a bit more difficult to defend in light of the details of the legal test as expressed by Le Dain in Crown Zellerbach, the approach taken by Strathy C.J.O. appears most consistent with cooperative federalism, and with the underlying goals of the Le Dain test of ensuring the federal government can act on subject matters of national concern that provinces individually are unable to address effectively. It is also consistent with La Forest’s urging in R. v. Hydro Quebec of a flexible approach to the interpretation of the division of powers to ensure both levels of government have the ability to address what he called “one of the great challenges of our time”. Strathy C.J.O. eloquently points out the need for national jurisdiction over the level of effort by pointing to the discrepancy between emissions and impacts felt in some provinces and the territories.

Strathy C.J.O. and Hoy A.C.J.O. take a similar approach to the application of the Le Dain test to the subject matter. The approach seems sound, as is the conclusion that the subject matter as they have defined it meets the test. This leaves the question whether justice Huscroft’s approach, applying the broader subject matter of GHG emissions, is sound. His reasoning on the singleness, distinctiveness and indivisibility of the subject matter is difficult to follow. As is the case with other decisions on this part of the Le Dain test, he seems to be confusing the singleness, distinctiveness and indivisibility with the impact on provincial powers. A factual comparison with the Crown Zellerbach case is helpful here. In that case, justice La Forest for the dissent pointed to the difficulty of separating marine pollution from fresh water pollution, given that the transition from fresh to marine waters in river estuaries is very gradual. There is no similar difficulty in delineating GHG emissions. Through the UN climate regime, there is clarity on the 6 gases that are included. As a result, the subject matter is easy to delineate and separate from other subject matters.

The impact on provincial jurisdiction would appear to be the real issue. It is unfortunate that none of the three separate reasons actually carry out a detailed analysis. While the majority can be excused for not going into too much detail, as the outcome seemed clear based on their narrower definition of the subject matter, justice Huscroft really needed to deal with the issue given his broader definition of the subject matter. As clear from the oral arguments before the court, no current conflict was ever identified. No examples of a potential future conflict were discussed by justice Huscroft in his reasons. Rather, he seems to assume that because GHG emissions are connected to most human activities, this necessarily meant that giving the federal government control over the reduction of GHG emissions would take away too much power from the provinces.

So what would the impact be? Under the double aspect rule, provinces could still regulate the many activities that contribute GHG emissions for other purposes, such as air pollution or economy or social considerations. What the province could not do is to take action to ensure activities that violate federal GHG rules can still go ahead. More concerning, under justice Huscroft’s definition of the subject matter, provinces might not be able to pass stricter GHG emission reduction laws than those imposed by the federal government, unless they could do so using the double aspect principle or the SCC deviates from the current understanding that the national concern branch of POGG creates exclusive federal jurisdiction. That is the real problem with the broader subject matter applied by justice Huscroft.

The SCC has two reasonable options. It can accept the majority’s approach and define the subject matter as setting minimum standards for GHG mitigation action. Alternatively, it can apply the broader subject matter suggested by the dissent, and clarify that the national concern branch of POGG does not create exclusive federal jurisdiction, but permits provinces to continue to legislate subject only to federal paramountcy. Either approach would result in both levels of government retaining the ability to contribute to addressing the climate crisis, and both approaches would be consistent with the cooperative federalism model, and with justice La Forest’s plea in R. v. Hydro Quebec for pragmatic application of constitutional law principles in the environmental field.

Meinhard Doelle,

Professor, Schulich School of Law

Canadian Chair, Marine Environmental Protection, World Maritime University, Malmö, Sweden

Reflections on Orphan Well Association v Grant Thornton Ltd, 2019 SCC 5

February 22, 2019 Meinhard Doelle Leave a Comment

This post has been prepared jointly by Lisa Benjamin (Killam Post-doctoral Fellow, Schulich School of Law), and Meinhard Doelle, Colin Jackson and Sara Seck (all Faculty Members, Schulich School of Law, Dalhousie University)

The recently released Supreme Court of Canada decision in Orphan Well Association v Grant Thornton has been warmly welcomed by those who are concerned that the burden of environmental remediation too often falls upon taxpayers when companies run into financial difficulties and seek bankruptcy protection. In this post, we will examine the decision itself, and reflect upon its implications for oil and gas development in a climate vulnerable world and for environmental liability more broadly.

Factual Background

At the heart of the case is the relationship between the provincial regulatory system for oil wells and other oil infrastructure and assets in Alberta and federal Bankruptcy and Insolvency Act (BIA). Part of the provincial regulatory system seeks to prevent companies from walking away from depleted oil wells without proper abandonment, which includes the proper capping of the well and remediation of the surface.

The Licensee Liability Rating Program is a key part of the provincial effort to ensure proper abandonment of oil wells. Under this program, the Regulator creates a Liability Management Rating (“LMR”) for each company operating in Alberta. The LMR is the ratio between a company’s licensed assets and the liability attributed by the Regulator to the eventual cost of abandoning and reclaiming those assets. When the LMR drops below the acceptable ratio between assets and liability, the company will be required to take action to satisfy the regulator that it has the ability to ensure the proper abandonment of its well, usually by paying a security deposit.

Redwater was an oil company that operated 84 wells, 36 pipelines, and 7 facilities in Alberta. Redwater began to experience financial difficulties in 2014. By the time Grant Thornton Limited (“GTL”) was appointed as trustee in bankruptcy in 2015, Redwater owed its major creditor, the Alberta Treasury Branches (“ATB”, now called ATB Financial), approximately $5.1 million. By this time, 72 of the 84 wells were inactive or spent, but, since Redwater’s LMR did not drop below the prescribed ratio until after it went into receivership, it never paid any security deposits to the Regulator.

GTL decided to only take possession of the active, profitable wells, and to disclaim the inactive wells. Its plan was to sell the assets it deemed profitable and distribute the proceeds to secured and preferred creditors in accordance with the provisions of the BIA, leaving nothing for the proper abandonment of the inactive wells. The regulator, in turn, ordered GTL, as Redwater’s trustee in bankruptcy, to properly abandon the inactive wells, which would require GTL to apply the proceeds to properly abandon any inactive wells, leaving nothing for secured and preferred creditors, such as ATB. This action was justified under provincial law on the basis that Redwater’s LMR was below the ratio deemed acceptable, allowing the regulator to step in and demand action, including the abandonment of the inactive wells.

The key issue in the case, ultimately, was whether GTL was required to use the remaining assets of Redwater to properly abandon the inactive wells, or whether it was entitled to disclaim Redwater’s inactive wells, distribute the proceeds from the sale of the profitable wells and other assets to secured and preferred creditors without spending money on the abandonment of inactive, unprofitable wells.

A previous decision of the SCC involving the province of Newfoundland and Labrador and AbitibiBowater loomed large over this case. In that case, the SCC had established the following three-part test for when a provincial regulator’s actions amount to a provable claim under the BIA and therefore would rank below secured and preferred creditors of the bankrupt company.

• First, there must be a debt, a liability or an obligation to a creditor.
• Second, the debt, liability or obligation must be incurred before the debtor becomes bankrupt.
• Third, it must be possible to attach a monetary value to the debt, liability or obligation.

Where this three part test was met, the SCC in Abitibi found that the principle of federal paramountcy would apply to hold provincial law inoperative to the extent that it was in conflict with federal bankruptcy law.

The Lower Courts’ Decisions

Applying this test, the lower courts in the Orphan Wells case held that the provincial energy regulator was a creditor whose liability was incurred before Redwater became bankrupt, and that it was possible to attach a monetary value to the debt. Essentially, the trial judge and the Alberta Court of Appeal both took the position that the provincial regulator’s true purpose in ordering the trustee to properly abandon the inactive wells was to avoid having to spend public funds on the abandonment of these wells.

At the Alberta Court of Appeal, Justice Martin dissented, taking the position that the regulator was not a creditor of the company, and that there was no obvious or clear monetary value attached to the claim, in part because it was not clear that the regulator would ever spend any money on the proper abandonment of the wells. Rather, this was left to an independent, though underfunded entity, the Orphan Well Association, which was funded by the industry and would decide on how to spend its limited resources to abandon orphan wells. The dissent further concluded that while the BIA does protect the trustee from personal liability, it disagreed with the majority that the protection extended to the bankrupt company. On that basis the dissent found that there was no conflict between the BIA and the order of the provincial regulator ordering the trustee to properly abandon the inactive wells.

The Majority Opinion

Ultimately, the majority of the SCC largely agreed with Justice Martin’s dissent at the Alberta Court of Appeal. At the first stage of the Abitibi test, the Court pointed to the scholarship of the University of Calgary’s Fenner Stewart and the University of Alberta’s Anna Lund to help draw a distinction between a creditor collecting a debt and a regulator enforcing the law. Here, the regulator was seeking to have the corporation perform duties it owed to the public, and so the court concluded that it was not a creditor. On the third step of the Abitibi test, the Court found that the obligation the regulator seeks to enforce is not a monetary one. Generally, future and contingent claims can be provable claims in bankruptcy, so long as the possibility of the claim actually coming due is not too remote or speculative. In the context of environmental liabilities, this was reframed in Abitibi to ask whether there is sufficient certainty that the regulator will perform the environmental remediation and seek reimbursement. In this case, the Court found that there was not the sufficient certainty that the obligation to properly abandon the wells would “ripen into a financial liability.” Redwater’s abandonment obligations, therefore, remain non-monetary obligations rather than provable claims that would be dealt with within the bankruptcy framework.

Furthermore, the majority of the SCC agreed with Justice Martin’s analysis of the applicable provisions of the BIA and concluded that they did not allow the trustee to disregard the company’s liability with respect to the inactive wells. The trustee was protected from personal liability, not shielded from having to deal with the companies’ liabilities.

The Dissenting Opinion

In dissent, two members of the court expressed complete disagreement with the analysis and result of the majority. The dissent highlighted that GTL had assessed Redwater’s valuable assets at just over $4 million, while GTL’s assessment of the abandonment and reclamation liabilities of the non-producing properties put their net value at -$4.7 million. (para 173) This valuation made it impossible for GTL to comply with the conditions that the regulator had imposed before agreeing to allow GTL to sell any of the valuable assets. As the net value of the properties was negative, it would be impossible for GTL to find a single buyer. Moreover, GTL could not complete the abandonment and reclamation work itself as the environmental liabilities exceeded the estate’s value. (paras 166-167) The practical result of the regulator’s attempt to get GTL to “comply with its obligations as a licensee, including the obligation to abandon the non-producing properties” must be understood, according to the dissent, as “an effort to hold GTL personally liable. Where else would the money required to abandon the disclaimed properties come from?” (para 228) Yet this is precisely what the BIA provision at issue was designed to avoid.

Of equal concern to the dissent was that if all of the value of the valuable assets would be required for abandonment and reclamation, this would create a disincentive for insolvency professionals ever agreeing to serve as receivers and trustees as there would be no money available even to cover their administrative costs. (para 221) It would also, the dissent suggested, lead to an increase in the number of orphan wells as debtors and creditors would not bother to petition for bankruptcy and “none of a bankrupt’s estate’s assets will be sold – not even an oil company’s valuable wells.” (para 221). This result would be contrary to the 1997 BIA amendments which were designed to encourage greater acceptance of mandates by insolvency professionals by ensuring that bankruptcy trustees would not be subject to personal liability for environmental remediation costs. (The majority contested these claims in paragraph 113).

Analytically, the dissent came to an entirely different conclusion in its interpretation of the relevant statutory provisions of the BIA, and as a result concluded that there was both an operational conflict and frustration of purpose between the federal statute and the provincial regulatory regime. The dissent took issue with the majority’s conclusion that the regulator was not a creditor under the Abitibi test, and concluded that it was sufficiently certain that the regulator (whether AER or the OWA) would “ultimately perform the abandonment and reclamation work and assert a monetary claim for reimbursement.” (para 225). As a result, the dissent found the third Abitibi test was met in its entirety.

Notably, the dissent concluded by framing the problem as one that necessitates a balance between “environmental protection and economic development” (para 289). It then provided a list of alternate regulatory measures that could be implemented to avoid the problems at issue here, including “up-front bonding” as found in some US jurisdictions, or increased industry levies to properly resource the orphan well fund. (paras 289-290). The dissent’s penultimate paragraph claims that the majority’s decision displaces the ‘polluter pays’ principle enacted in the BIA, “in favour of a ‘lender-pays’ regime’.”

Ultimately, however, the question may be whether it is possible to ensure both that the polluter pays and that creditor financial institutions fully anticipate future environmental remediation costs and so integrate these costs into financing. While the effect in the case of Redwater’s bankruptcy may be that the lender pays, we can reasonably expect that lenders will take the Orphan Well decision into account as they make decisions around loan amounts, collateral requirements and interest rates. In other words, if lenders are forced to pay in bankruptcy, we can expect that polluters will be forced to pay before bankruptcy. As discussed below, the potential environmental costs would ideally include not only the costs of remediating environmental damage, but also the costs of climate change.

Implications for the ability of regulators to go after companies in receivership or bankruptcy

While the outcome of the case in the majority opinion is described by most commentators as aligning with the polluter pays principle, the reasoning is more nebulous. Part of the SCC’s reasoning relied heavily on the assumption that the regulator and the OWA would not necessarily foot the bill for end of life obligations for these inactive wells. The background to this reasoning may have been the considerable backlog of orphans’ wells remediation due to OWA’s lack of funding. If the regulator had declared the wells orphan wells and triggered OWA’s clean up responsibility, the regulator or OWA would likely have been categorized as a creditor, and its claims would then be subsumed into the bankruptcy process. The case therefore encourages regulators to not convert, or at least delay converting, a regulatory claim into a financial claim.

The Court is clear that trustee’s status as “licensee” in the regulatory scheme and the obligation to abandon the wells can survive the commencement of bankruptcy; however, it is less clear how the abandonment obligations can be enforced. If the regulator attempts to enforce them by collecting money, the regulator likely becomes a creditor, the obligation becomes a debt, and the regulator is left with an unsecured claim in bankruptcy—precisely the result that the regulatory in Orphan Well sought to avoid. No penalties can stick against the corporation itself, which, in most cases, will soon be wound up or dissolved. The judges in the case all agree that the subsections 14.06(2) and 14.06(4) of the BIA protect the trustee from personal liability for environmental damage or failure to perform environmental remediation.

The answer, at least in the context of the Alberta energy sector, may lie in the regulator’s continued control over the transfer of licenses. While Redwater would have other assets that a trustee could liquidate—mineral rights, surface rights, drilling equipment, contractual rights—it seems that much of Redwater’s value was tied to the licences to extract oil or gas. The SCC’s affirmation of the regulator’s continued power to deny the sale of the licences forces the trustee in bankruptcy to find a solution that satisfies the regulator or be prevented from realizing much of the estate’s value. Alternatively, broader financial arrangements for licensees could be contemplated to ensure financial recourse for the regulator, such as increasing the LMR or securing up-front bonds.

Implications for fossil fuel industries in Alberta and beyond

The number of ‘orphan wells’ in Alberta is increasing dramatically, up from 80 in 2013 to almost 700 in 2015. In addition, as the balance of energy sources shifts away from coal, oil and gas, and traditional energy companies become less profitable, some will enter bankruptcy. In 2016, a number of coal companies entered into bankruptcy, including Arch Coal Inc., Patriot Coal Inc., Walter Energy Inc., and Peabody Energy. The impact of bankruptcy law on environmental law will likely gain a higher profile as the question of who foots the bill for bankrupt companies’ environmental liabilities becomes more pressing. In Canada, insolvency law prioritizes the repayment of secured creditors and gives preferential treatment to certain claims of other creditors, including employees, municipalities, and landlords. However, its treatment of environmental liability has been rightfully criticized. The BIA’s preference scheme thus risks leaving more of the bill for the clean-up of environmental damage in the hands of regulators, and therefore taxpayers.

But local environmental costs and liabilities are not the only part of the equation in the bankruptcy and energy field. Alberta’s oil and gas industry is 8th largest in the world, and contributes a significant amount of greenhouse gas emissions globally. As the impacts and costs of climate change mounts, in particular loss and damage due to climate change, claims against fossil fuel intensive corporations are exploding. In 2017, three municipalities in California sued a number of fossil fuel corporations, including Peabody Energy, for abatement costs due to the impacts of climate change. Their claim against Peabody was dismissed as the company was shielded from climate impacts incurred before its 2016 bankruptcy filing under its bankruptcy plan. In 2019, one of the largest electricity utilities company in California, PG&E, filed for bankruptcy due to the costs incurred from the catastrophic wildfires last year which were exacerbated by years of drought. As global temperatures continue to increase, so will the impacts of climate change, and with them liabilities for energy and utility corporations. Bankruptcy law, as currently interpreted in the Orphan Well case, does not provide a secure legal footing for the prioritization of repayment and remediation of environmental liabilities for the public benefit.

Saskatchewan Case on Federal Jurisdiction over Climate Change Going to Court

February 12, 2019 Meinhard Doelle Leave a Comment

In Saskatchewan this week, the first of two reference cases to challenge federal jurisdiction over climate change is going to court. The two cases, brought by the governments of Saskatchewan and Ontario respectively, both involve the federal Greenhouse Gas Pollution Pricing Act. The key aim of the Act is to impose a federal carbon price for provinces that either do not have one at all, or who have developed a carbon price that does not meet the minimum federal requirements. The federal pricing mechanism distinguishes between large industrial emitters and emissions that result from the use of gasoline, heating oil and similar uses at the individual level. The price imposed on individuals starts at $10 per ton and goes up to $50 by 2022. Notably, most of the revenues generated will be returned to citizens on the basis that the price will encourage individuals to reduce emissions where they can, and the rebate will compensate them for the additional cost, while still creating an incentive to reduce emissions where possible.

The province of Saskatchewan is going to court to argue that the federal carbon pricing backstop is an invasion of provincial jurisdiction. The case has attracted an unprecedented number of intervenors, with almost 20 in support of the federal position and 6 in support of Saskatchewan’s position. The immense interest in this case is not surprising. Constitutional arguments have been at the center of efforts to undermine strong environmental laws in Canada for a long time. Some have been resolved through court cases, cases which the federal government has mostly won. Others, such as the jurisdiction of the federal government to regulate greenhouse gas emissions, have lingered in the background of efforts at federal-provincial cooperation on this issue for the last two decades. As I have explored in previous posts, we have gone through cycles of federal leadership with provincial resistance, followed by federal apathy with some provinces leading the way. Questions over the limits of federal jurisdiction to deal with climate change have brewed below the surface every time the federal government has sought to lead on this issue. This, however, is the first time the legal issue is going to court.

There is such broad interest in this case, because the stakes are high. In the past two decades of lack of effective cooperation and action on climate change, we have lost valuable time in ensuring a smooth and just transition to a carbon free world. The longer these battles continue, the less we will be able to take advantage of the economic opportunities associated with the transition, the more our economy will suffer from the unplanned and abrupt loss of the jobs of the past, and the harder the transition will be for the workforce that currently relies on jobs in sectors in need of transition.

There are different ways the court can resolve the case. It may just decide narrowly whether the federal government has jurisdiction to implement the specific carbon pricing backstop it has introduced through the Greenhouse Gas Pollution Pricing Act. It could, however, also answer more general questions about federal jurisdiction over climate change. This is in part because the federal government has a number of arguments it can make. They include the federal government’s power over taxation, the federal criminal law power, and the power of the federal government to legislate in case of matters of national concern and emergencies. Some of these federal powers offer opportunities to clarify that the federal government has broad powers to regulate greenhouse gas emissions. Declaring climate change to be a matter of national concern or an emergency would be a way for the court to grant broad powers to the federal government. Federal powers to regulate greenhouse gas emissions would be more narrow if the court decided to grant federal jurisdiction using the federal taxation power or the criminal law power.

What is least likely is that the courts will depart from the well-established principle of cooperative federalism in dealing with this case by holding the federal government has no power to regulate greenhouse gas emissions. The court will be looking for ways to ensure the federal government has the legislative power to deal with climate change, while not excluding provinces from sharing this responsibility. One way to do that would be for the court to limit the federal power to a specific tool, such as the taxation power or the criminal law power. Another option for the court would be to grant broad federal jurisdiction based on federal national concern or emergency powers, but to clarify that those powers do not take away from the ability of provinces to also regulate the same activities.

A final option would be for the courts to reverse old case law in Canada and decide that the federal government has the power to implement international treaties, such as the Paris Climate Agreement. This would bring Canada in line with countries with similar constitutions, such as Australia, and avoid jurisdictional squabbles over the implementation of Canada’s international commitments and obligations.

Ultimately, whatever the specifics of the outcome, there is every reason to expect that the guiding principle for the courts will be cooperative federalism. This was emphasized most recently in the Orphan Wells decision of the SCC on the relationship between federal bankruptcy law and provincial environmental regulation, and it is a point the SCC has made again and again on environmental cases over the past few decades. The courts will be looking for ways to ensure both levels of government have the ability to address climate change, the greatest environmental emergency of our time. It is hard to see how a court will find that the federal government, after 20 years of efforts at a common approach, was unreasonable in imposing a carbon price on provinces unwilling to set their own.

The stakes are high, but the court, with the active involvement of well over 20 intervenors from all segments of Canadian society, has the opportunity in this case to remove a long-standing barrier to the effective regulation of greenhouse gas emissions, and thereby ending a two decade long stalemate on one of the most critical issues facing Canada and the world.

Meinhard Doelle,

Professor, Schulich School of Law

Negotiating the Paris Rulebook: Compliance in Transition

November 19, 2018 Meinhard Doelle Leave a Comment

In December, 2018, Parties to the UN Climate Regime are set to negotiate a Rulebook on how to implement the Paris Agreement. The Rulebook will cover a broad range of issues, from market mechanisms, to finance, reporting, and the 5 year review cycles build around the global stocktake. Key among the elements of the Rulebook is the compliance system. In this post, my intention is to briefly highlight some of the issues before negotiators of the compliance system. A more detailed assessment of the draft negotiating text is available in my article entitles “Compliance in Transition: Is Facilitative Compliance Finding Its Place in the Paris Climate Regime?”. It is published in CCLR, and a draft is available at SSRN: https://ssrn.com/abstract=3228766.

In the transition from the Kyoto Protocol to the Paris Agreement, some parties took great lengths to distance themselves from the architecture and institutions of the Kyoto Protocol. Key among this architecture was the Kyoto compliance system, which was seen as a departure from the norm for multilateral environmental agreements (MEAs). The system included an enforcement branch that applied automatic consequences in case of non-compliance with key obligations of developed country parties. It is therefore not surprising to see a focus on facilitation in Article 15 of the Paris Agreement and specific direction that the compliance system is to be non-adversarial and non-punitive.

The differences between the Kyoto compliance system and that to be developed under the Paris Agreement are, of course, also driven by substantive differences between the two agreements. Most notable among these differences is that the Paris Agreement establishes a much broader range of commitments and obligations covering mitigation, adaptation, funding, technology access, education, capacity building, and loss and damage. The commitments, furthermore, have been made by a much broader range of parties, including all developing countries, in particular the least developed countries and small island states. Many of the commitments are self-determined in the form of nationally determined contributions (NDCs) to be updated by parties every five years.

While there are many important differences, some of the core challenges of ensuring compliance are, on closer examination, remarkably similar to the Kyoto Protocol. Both agreements include a range of commitments from voluntary to binding. Both include provisions for market mechanisms, which will be dependent on compliance to be effective. Both include a range of reporting obligations that are fundamental to the functioning of the regime. These parallels suggest parties would be well advised to draw on the compliance experience under the Kyoto Protocol in negotiating the design of the Paris compliance system.

This post assesses the state of play in the negotiations under Article 15 heading into the COP 24 negotiations in Poland from December 2-14, 2018. The negotiations are taking place in the context of the provisions of Article 15 itself as well as provisions 103 and 104 of the Paris COP decision. Before delving into the current state of the negotiations, it is helpful to identify the key relevant elements of the agreement parties reached in Paris.

The overall purpose of the compliance process under Article 15 is to facilitate the implementation and promote compliance with the provisions of the Paris Agreement. It is important to highlight that Article 15 refers to “the provisions”, not just some provisions, and not just obligations. It seems clear, therefore, that the mandate of the compliance committee should be broad in scope, include individual and collective commitments, and include binding obligations as well as non-binding commitments.

Another set of provisions in Article 15 clarify the overall approach to be taken in the design of the compliance system. They refer to the facilitative, non-adversarial and non-punitive nature of the process, and the principle of transparency. These elements offer important guidance to negotiators on the design of the compliance process and the measures the compliance committee should have at its disposal to facilitate implementation and promote compliance.

A key message in Article 15 relates to the “respective national capabilities and circumstances of the Parties”. This reference to the revised principle of common but differentiated responsibilities (CBDR) in the Paris Agreement signals that the process needs to be sensitive to the capacity challenges of the least developed countries in particular. Article 15 is clear that with respect to compliance, differentiation based on capabilities and other relevant circumstances is the job of the compliance committee. This suggests that the compliance modalities and procedures should provide flexibility for the committee to apply certain aspects of the compliance system to parties that have capabilities and circumstances that may warrant either relaxing process requirements or warrant the application of different measures at the conclusion of the compliance proceedings.

The agreement reached in Paris offers considerable direction on the process to be designed. Included is the composition of the compliance committee (12 members, two from each of the 5 UN regions plus one each from a least developed country and a small island developing state), required areas of expertise, and the importance of gender balance on the committee. The committee is to report annually to the Conference serving as the Meeting of the Parties to the Paris Agreement (CMA). This is the context within which parties are now negotiating the modalities and procedures for compliance. Among the key issues are the following:

Purpose, Principles and Nature of Compliance Procedures
Functions of the Compliance Committee
Institutional Arrangements
Scope of Work of the Compliance Committee
Initiation of Proceedings before the Committee
Process to be followed by the Committee
Measures and Outputs at the Committee’s Disposal
Identification of Systemic Issues (ie beyond individual party issues)
Sources of Information for the Committee’s Work
Relationship with and Accountability to the Conference of the Parties (COP)
Who Carries out Reviews of the Modalities and Procedures
Secretariat Support for the Work of the Committee

A particular source of complexity in the negotiations is that the compliance modalities are being negotiated in parallel with the overall Paris Rulebook. Not only is there uncertainty about the nature of substantive rules on mitigation, emissions trading, and finance, but as discussed elsewhere in this special issue, the Paris Agreement contemplates a comprehensive 5 year review cycle that consists of parties reporting on their efforts to implement their NDCs, review of those efforts and reports, a global stocktake of progress against the long term goals, and revised NDCs. Even though the Paris Agreement clearly provides for a compliance system, it seems that some parties would prefer to subsume the compliance effort under the work of the transparency framework and the global stocktake.

To be effective, the compliance process under Article 15 will have to find its place within the Paris Climate Regime, both substantively (i.e. its role with respect to mitigation, emissions trading, finance, adaptation, technology, capacity building, coordination among institutions and connection among commitments) and in relation to the overall institutional structure being developed. The aim must be to complement the bottom up NDC approach with appropriate top down elements to help close the significant ambition gaps that currently exist in all key areas of the Agreement. A key contribution of the compliance process will be its relative independence and its resulting opportunity to impartially assess compliance with individual and collective commitments. This will help inform the broader discussion about the effective implementation of the Paris Agreement.

There is much to be resolved in developing an effective, efficient, and fair compliance process under Article 15. Key among them are effective triggers for the compliance process, an adequately broad mandate to be able to effectively facilitate implementation and promote compliance with all important commitment in the Paris Agreement whether binding or not and whether made by a developed or a developing country Party. The inclusion of “implementation and compliance” and the language of “the provisions” in Article 15(1) clearly enables the process to deal with all important commitments. Any differentiation between binding and non-binding and differentiation among parties should focus on applying appropriate measures in the circumstances. This can be assured through an appropriate combination of general direction to the committee and appropriate discretion. A fair and effective process will depend on the full implementation of the commitment to transparency and on procedural fairness to any Party being investigated.

It will be important to keep the focus of the committee on technical issues and to avoid having it dragged into political issues and equity judgement calls. This seems particularly important and tricky when it comes to the assessment of systemic issues. The committee will be well advised to stick to assessing whether the collective goals are on track and to technical assessments of the causes, without being seen to point fingers at any particular party or group of parties unless they have clearly failed to meet their individual commitments. This means the focus should be on commitments that allow for a technical assessment of compliance or implementation, rather than political consideration or judgements. Committee has the potential to make an important contribution to progress on collective commitments, particularly those that involve all parties or a clearly identified group of parties, as this can be assessed without getting to any assessment of who within the group of parties needs to do more. Having said this, to ensure the committee has the full opportunity to pursue important systemic issues as they arise, the triggers for systemic issues should include the CMA, the Article 13 outcomes, and the committee based on its own assessment of reports generated under the PA.

It will be important to properly integrate the work of the committee with Article 13 and 14. Not much can be said about the details of how to ensure this is done until there is more clarity on the review process under Article 13 and the global stocktake under Article 14. However, it is clear that the compliance committee can benefit greatly from the work proposed under Article 13, and its conclusions and recommendations have the potential to be important for the global stocktake.

For binding commitments, it will be important for the committee to make a finding of compliance/non-compliance and to apply other appropriate consequences including a compliance action plan, and other non-punitive measures. It would be helpful for negotiators to recognize in this regard that compensatory measures are different from punitive measures, and that for markets under Article 6 to function, it may be important to include compensatory measures in the toolbox of the compliance committee. Special access to support should be limited to LDCs and SIDS.

Conclusion

It is too early to say whether the compliance system is finding its place among the many institutions and processes under the Paris Regime. There are still many issues unresolved within the compliance negotiations, and many more issues to be worked out on other key aspects of the Paris rulebook, such as the reporting, transparency and global stocktake provisions. In the absence of significant progress in other areas in advance of COP 24, negotiators may be well advised to develop the modalities and procedures for compliance at a fairly high level, and to leave some of the detail for the compliance committee to work out after there is more clarity on how other aspects of the Paris Agreement, including Articles 6, 13 and 14, will be implemented. As a result, while this year’s COP should be an important milestone in the development of the Paris compliance system, it is unlikely to mark the end, as much of the detail will inevitably have to be finalized later, either by the CMA or by the compliance committee once it is established.

Meinhard Doelle,

Professor, Schulich School of Law

Reflections on the IPCC’s Report on 1.5 °C

October 17, 2018 Meinhard Doelle Leave a Comment

On October 6^th, 2018, the Intergovernmental Panel on Climate Change (IPCC) released its much anticipated report on the implications of the 2015 Paris Climate Agreement’s goal of keeping global average temperature increases to 1.5 °C. This IPCC Report was commissioned by the Parties to the Paris Agreement because when they agreed to the 1.5 °C goal, only limited analysis on 1.5 °C had been done by the scientific community, and none by the IPCC. Until then, the IPCC’s scenarios had been based on 2 °C and higher, pointing to the increasingly disastrous consequences of these higher temperature scenarios. It is through this higher temperature scenario work that it gradually became clear that 2 °C was not an adequate goal to ensure a stable climate.

The 1.5 °C Report offers a first opportunity for Parties to the Paris Agreement to assess how their current “Nationally Determined Commitments” (NDCs) and their national efforts (such as the Pan Canadian Framework) stack up against the 1.5 °C goal they all accepted in Paris in 2015. In this post, I will offer highlights of the key conclusions of the IPCC Report (http://www.ipcc.ch) and consider its implications for Canada.

What the IPCC Report Says

The report starts by providing important context for the consideration of the 1.5 °C goal. It points out that the Earth is already experiencing over 1 degree of warming, will reach 1.5 °C between 2030 and 2050 at the current rate of increase ( ~0.2 °C per decade). It also points out that global average temperature increases are not distributed evenly. They tend to be higher over land than over oceans, higher inland, and higher in polar regions. Regions at disproportionately higher risk from the effects of climate change include northern regions, inland dryland regions, small-island developing states at risk from sea level rise, and least developed countries because they lack resilience. Many of these regions are already experiencing significant impacts and losses from crop failures, erosion, storm damage, water shortage, and loss of biodiversity.

The Report offers the following key conclusions on its assessment of the 1.5°C goal:

Impacts on health, livelihoods, food security, water supply, and human security will be less for 1.5 °C than for 2 °C, and the global economy will be harmed less by climate change impacts at 1.5°C than at 2°C.
Unless we are prepared to rely on risky, expensive, and/or unproven removal technologies to meet the 1.5°C goal, global emissions have to decline by about 45% by 2030, and reach net zero around 2050.
In addition to reducing CO2, we need deep reductions in emissions of methane and black carbon.
Pathways limiting global warming to 1.5°C require rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings), and industrial systems. These systems’ transitions are unprecedented at a global scale, but are doable. They imply deep emissions reductions in all sectors, a wide range of mitigation options and a significant upscaling of investments in those options. Carbon pricing is an important part of this effort, but much more that a price on carbon is needed.
The lower the emissions are by 2030, the more likely it is that the challenge in limiting global warming to 1.5°C after 2030 will be manageable.
There are many synergies between 1.5 °C pathways and the 2015 UN Sustainable Development Goals, but there are also significant risks of trade-offs, particularly with respect to large scale efforts to enhance sinks and other efforts to remove carbon from the atmosphere.

What the IPCC Report Means for Canada

First, I think it is important to recognize that the IPCC Report would have important implications for Canada even if we decided not to change our GHG emission reduction targets or increase our domestic effort to decarbonize. I say that because the Report makes it clear that regardless of our actions, somehow preserving the status quo is a practical impossibility. Even if we don’t decarbonize, the world around us will change in significant ways. If we don’t act, and in the process discourage others from acting, climate change will accelerate, causing economic, social and environmental hardship for all.

Even if we were to free ride, meaning we decided not to act on climate change while other countries do act, we would lose export markets for the GHG intensive products we currently rely on for our economic wellbeing. Even in that scenario, we would need to transition our economy, something that will not happen without domestic markets for the solutions to climate change. Domestic markets for these products and services in turn depend on investor friendly policy and regulatory environment for decarbonization solutions.

The basic message in the report is that GHG emissions come at a high cost in terms of human health, future economic growth, human security, and our ability to meet our basic needs of food and water. The cost at 1.5 °C may be manageable, but the cost increases significantly if temperatures are allowed to go higher, and may quickly become unmanageable. The time delay between emissions and impacts means that by the time we know for sure the impacts will be unmanageable, it will be too late to prevent them from becoming unmanageable.

It is clear that a significant part of the global community is committed to the transition that is needed, though we are at a critical time to ensure the global action will be at the scale needed to avoid worst-case scenarios. The transition is well under way in many countries. A key message from the IPCC is that it needs to be accelerated, and that there are global economic (among many other) advantages to accelerating the transition. All Parties to the Paris Agreement will be challenged, starting in Poland this December, to increase their targets, and to match the more ambitious targets with more ambitious action at home and internationally. This means that industries dependent on fossil fuels and other sources of significant GHG emissions are increasingly at high risk of becoming unprofitable. It also means that there are huge economic opportunities for those who find ways to accelerate the decarbonization of societies around the world.

For Canada, the message of the IPCC Report, therefore, is that we need to decarbonize from a domestic consumption perspective, and we need to prepare for export markets drying up for our fossil fuel based (and other GHG intensive) products. We should, over the next year, set new targets for 2030 and 2050 that are in line with the IPCC report and with our commitment under the Paris Agreement to make a fair contribution to the global effort to keep global temperature increases to 1.5 °C. We should increase our domestic efforts to decarbonize in line with our revised targets. We should continue to diversify our economy by supporting industries that are part of the solution, and stop investing public resources or otherwise subsidizing industries that are not part of the solution. Finally, we should make every effort to ensure the transition of our society from a fossil fuel based one to a carbon neutral one is fair. A priority in this regard is to ensure a transition of the workforces that are currently working in sectors that we will lose (such as the production of fossil fuels), and to help other sectors to thrive through the transition (by doing everything we can to support a shift to carbon neutral agriculture, manufacturing, and buildings, for example).

As importantly, the IPCC report means that we have to change the nature of the discourse on climate change in Canada. We have to change from trying to protect the status quo to accepting the need for the transition. Rather than continue to fight or delay the inevitable, we need to ensure that the transition that we need to make is fair, and that we thrive economically and socially through the transition. This is not accomplished by trying to hang on to what “we have” for as long as possible, and then face the collapse of our economy along with the collapse of the climate system. Rather, it is accomplished by taking seriously both the climate threat and the challenges and opportunities associated with the transition that is now so clearly inevitable.

Priority Actions for Canada

The following are priority actions the IPCC Report demands of Canada:

We need to update our Nationally Determined Contribution (NDC) under the Paris Agreement by 2020 in light of the findings in the IPCC Report.
We need to significantly accelerate the electrification of transportation and heating and any other significant uses of energy, and develop our own manufacturing capacity along the way (such as leading on the manufacture on electric vehicles, and on innovative approaches to carbon neutral buildings).
We need to make the production of electricity itself carbon neutral, by completing the shift to renewables, through investment in production capacity along with storage, demand management, and smart grid approaches. We are well on our way on this front in many provinces, but do need to accelerate this effort, especially if the electrification of transportation and heating is to accelerate decarbonization.
We need to continue to improve the efficient use of energy, particularly in buildings, transportation and energy intensive industries.
We need to stop subsidizing and otherwise supporting the exploration and use of fossil fuels, and shift that support to industries and technologies that are part of the solution
We need to prepare for the phase out of fossil fuels by diversifying our economy around the solutions to climate change.
We need to protect and enhance our carbon sinks in a manner that supports biodiversity, indigenous cultures, and food production.
We need to transition our food production and diets to low-carbon or carbon neutral food sources.

Continuing to fight this inevitable transition will exhaust us as a country, and leave us ill prepared for the challenges ahead. It is time to put our energy into embracing the transition, and thriving through it. Swimming upstream in the hope that the current will weaken (when we know better) is not the way to avoid the waterfall downstream. It is time instead to stand up and get out of the water while we still can make it to shore, and before we are swept downstream by the growing current. Perhaps, in the process, we will learn that living on dry land is not so bad after-all.

Meinhard Doelle,

Professor, Schulich School of Law

Implications of Federal Court of Appeal Decision to Quash Trans Mountain Approval

September 6, 2018 Meinhard Doelle 2 Comments

From a narrow legal perspective, the August 30, 2018 Federal Court of Appeal decision in Tsleil-Waututh Nation v. Canada 2018 FCA 153, is about compliance with the Canadian Environmental Assessment Act, 2012, the Species at Risk Act, and the federal duty to consult under section 35 of the Constitution Act, 1982. Its implications are, of course, much broader. Even more than the Keystone, Northern Gateway and Energy East pipelines, the Trans Mountain Pipeline Expansion Project has become a flash point over economic, energy and climate policy in Canada.

On one side of the debate are those who continue to ignore the climate crisis itself, and the social, economic and environmental implications of a continuation of an economic and energy policy that is centered around the extraction of fossil fuels. The governments of Ontario and Saskatchewan, as well as conservative opposition parties in Alberta and at the federal level are clearly in this camp.

A second camp in the debate would continue with the exploration of Canada’s fossil fuel resources, while making various levels of effort to decarbonize other elements of the Canadian society, such as electricity and transportation. Many in this camp have made their commitment to addressing climate change in other sectors conditional on continued support for the fossil fuel extraction industry. The federal government and the government of Alberta are clearly in this camp, but so are other mainstream parties in Canada. Members of this camp have yet to demonstrate a commitment to meeting Canada’s 2015 Paris climate commitments.

A third camp advocates for the complete decarbonization of Canadian society as quickly as reasonably possible, including a transition away from the production of fossil fuels. This camp takes the view that Canada has delayed action on climate change too long to be able to implement an approach that separates the fossil fuel industry from the decarbonization of other sectors of the economy, and that nothing short of best efforts to decarbonize is an adequate response to the climate crisis we are in. This camp also points out that nothing short of this level of effort is consistent with Canada’s commitments under the 2015 Paris Climate Agreement.

Ultimately, the first two camps essentially advocate for continued investment in the fossil fuel industry, while the third camp views the continued investment in this industry as counter-productive to the economic, energy and environmental prosperity of Canada. The Trans Mountain Pipeline Expansion Project has been at the center of this debate because it represents a major investment in the fossil fuel industry. For advocates, it represents an opportunity to grow the industry and to increase the revenues generated from Canada’s vast fossil fuel resources. For opponents, it represents at best a stranded asset, as it will have to be abandoned as we transition away from fossil fuels, and at worst, a failure to take seriously the commitments Canada made under the 2015 Paris Climate Agreement, an agreement Canada ratified only two years ago, and that will require the vast majority of the remaining global fossil fuel resources to remain in the ground.

The recent Federal Court of Appeal decision is the latest step in a drawn-out battle over the expansion of this pipeline among these three camps. The public debate over this project started in 2013, when the proponent, Kinder Morgan, applied for approval to significantly increase the capacity of the existing pipeline, an approval that was granted in 2016 following an environmental assessment under the much-criticized Canadian Environmental Assessment Act, 2012. In its decision, the Federal Court of Appeal quashes that approval, putting the future of the pipeline expansion into question.

The Court reached three key conclusions that led it to quash the federal approval of the pipeline expansion project. It found that the federal approval did not comply with the Canadian Environmental Assessment Act because the assessment failed to include the increased tanker traffic resulting from the pipeline expansion. The court also found that the federal government did not comply with section 79 of the Species at Risk Act in failing to identify mitigation measures to avoid or lessen the impact of the project on endangered species, particularly the effects of increased tanker traffic on an affected killer whale population. Finally, the court found that the federal government failed to comply with its constitutional duty to consult with affected First Nations communities by failing to engage in a two-way dialogue to seek to accommodate reasonable concerns raised by a number of affected First Nations communities.

On the third issue, the Court concluded that the federal government made the following key errors with respect to its duty to consult:

• It failed to engage in a meaningful two-way dialogue with affected indigenous communities to explore solutions to the concerns they had raised
• It was not enough for the NEB to conclude that the project would have minor impacts on First Nations communities. In fact, such a finding triggered the need for consultation.
• It was not enough for the Crown to take First Nations concerns back to the NEB; the Crown has to engage in meaningful two-way discussions with First Nations on how to address the concerns leading to reasonable efforts to accommodate the concerns
• It was wrong for Cabinet to suggest that it could not or would not alter or add to the terms and conditions proposed by the NEB when deciding whether to accept the recommendations of the NEB to approve the project based on public convenience and necessity. Rather, the cabinet as the ultimate project decision maker has the power and responsibility to make its own adjustments, as needed, to meet its duty to consult and accommodate.

In the days following the decision, the federal government has made it clear that it intends to proceed with the pipeline expansion project in spite of the court decision. It has two options in this regard. It can seek leave to appeal the decision to the Supreme Court of Canada. This option would most certainly delay any further action on the project beyond the next federal election. The alternative would be to comply with the decision by correcting the errors the court has identified. A detailed assessment of the outcome of an effort to comply with the court decision is not possible without more detailed information about the impact of increased tanker traffic and the various impacts on First Nations communities along the pipeline corridor, but some preliminary comments on each of the three issues the court identified can be offered.

With respect to section 79 of the Species at Risk Act, the key task will be to identify mitigation measures to protect endangered species affected by the increased tanker traffic resulting from the pipeline expansion, and to monitor the effectiveness of these measures. An implication of this requirement is that it will likely result in restrictions and other conditions imposed on tanker traffic, which will likely affect the cost and timing of shipping, and could affect the volume of product that can be shipped.

With respect to the failure to include the increased tanker traffic as part of the project to be assessed, the key implication is that by including tanker traffic, the conclusion that the project will not cause significant adverse environmental effects is no longer defensible. This means the federal cabinet will have to grapple with whether the significant adverse effects of increased tanker traffic, such as its impact on the endangered killer whale population, are justified in the circumstances.

The most difficult problem with the federal approval identified by the Federal Court of Appeal is the federal government’s failure to engage adequately with affected First Nations communities. The Court is clear that what is required is a two-way dialogue with each affected community that represents a genuine effort to accommodate the specific concerns of that community. It seems clear that the concerns of each community have been adequately documented, so the starting point for the two-way dialogue seems well established. Nevertheless, a meaningful two-way dialogue to seek to identify ways to accommodate reasonable concerns will take time, and must be expected to result in significant changes to the project.

Of course, none of these efforts will necessarily do anything to resolve the underlying divide over the future of economic, energy and climate policy in Canada. An assessment under the proposed Impact Assessment Act (IAA), recently passed by the House of Commons, and currently before the Senate, would have brought these issues squarely within the four corners of the assessment process. There are those who are happy that this assessment largely avoided the issues of climate change, energy policy and fossil fuel exploration. However, other than a strategic or regional assessment of the broader issues, a well-run project assessment process offers perhaps the best hope of a reasoned and well-informed debate in Canada on this critical issue.

We have, for too long, had this debate in Canada without the scientific rigour and independence that a thorough assessment carried out by an impartial expert review panel (not the industry regulator) would bring to the debate. A well-designed independent assessment would offer an opportunity for mutual learning of all who decide to actively engage in the assessment, and thereby an opportunity to develop more common ground and gradually diminish the divisiveness of this critical debate over the economic, energy and environmental future of our country. It would publicly test arguments about how to integrate economic well-being, energy security, indigenous concerns and environmental protection where possible, and balance among them where necessary. Good assessments help build common ground, respect and understanding, whereas poorly designed assessments tend to be divisive.

We need a much more nuanced assessment and public discussion of the relationship between climate policy and the fossil fuel industry than what we have seen in recent years. The discussion needs to be about a just, and an environmentally and economically responsible transition to full decarbonization, not a debate that ignores the climate crisis, and not a debate that ignores the economic challenges associated with the full decarbonization of our society. That does not necessarily mean no more fossil-fuel-based Infrastructure, but it does mean no more fossil-fuel-based infrastructure without asking and answering critical questions, such as the fate of such infrastructure through the transition to full decarbonization, and the implications of this for the economic viability of such infrastructure. This was missing from the Trans Mountain EA, and this has been missing from the public discourse on the pipeline debate in Canada. We need an honest discussion of what our climate commitments mean for fossil extraction in this country in 2030, 2040 and 2050, we need to consider the economic viability of new infrastructure so they do not become stranded assets, and if we approve new infrastructure while we transition away from fossil fuels, we need to impose terms and conditions that ensure that new infrastructure does not become an obstacle to this transition. This is what a well designed and implemented EA should have contributed to the public discourse and to decision makers.

We only need to look to projects such as Muskrat Falls in Labrador and Site C in British Columbia to know that taking the time to fully explore, understand and consider the economic, social and environmental benefits, impacts, risks and uncertainties is time and money well spent. Those are just two recent examples of project decisions that were rushed because decision makers were blinded by certain obvious benefits, and as a result made multi-billion dollar decisions that very quickly proved to be short sighted and not in the public interest.

An assessment under the new IAA would not have magically resolved all these issues, but it could have made an important contribution. It could have helped us all to better understand the issues. Essentially, the assessment would have determined whether the project would contribute to or hinder efforts to meet Canada’s climate commitments, and whether it will contribute to sustainability. To be clear, an assessment under the new IAA would not have prescribed whether the conclusion on this point would result in the project being approved or not. The debate about the approaches advocated by the three camps identified at the start, however, would have been better informed by independent analysis and credible information, and less dominated by politics and rhetoric.

Meinhard Doelle,

Professor, Schulich School of Law

Category: Climate Change