Executive Summary: Key Legal and Evidentiary Issues

• The Federal Court of Appeal dismissed an appeal challenging the Minister of Environment and Climate Change's approval of the Bay du Nord Development Project.
   
• Appellants argued the Impact Assessment Agency's environmental assessment report was unreasonable for failing to consider downstream greenhouse gas emissions and marine shipping impacts.
   
• Binding precedent from Forest Ethics Advocacy Association v. Canada foreclosed the appellants' downstream emissions argument under the applicable legislation.
   
• Geographic distance between the Project site and Mi'gmawe'l Tplu'taqnn Inc.'s traditional territory distinguished this case from Tsleil-Waututh Nation v. Canada.
   
• Justice Stratas found the Crown's duty to consult MTI sat at the low end of the spectrum given minimal predicted impacts on Atlantic salmon.
   
• Equinor's argument that the appellants delayed raising certain issues was found to bear on reasonableness but did not change the outcome.
   

Facts of the case

The Bay du Nord Development Project is a major offshore oil and gas undertaking roughly 500 kilometers east of St. John's, Newfoundland. The respondent Equinor Canada Ltd. holds a 65% interest in the Project, which is expected to supply 300 million barrels of crude oil over 30 years. Before the Project could proceed, the Impact Assessment Agency of Canada conducted an environmental assessment under the Canadian Environmental Assessment Act, 2012 (CEAA 2012) alongside an integrated Crown consultation process addressing potential effects on Indigenous peoples. Following that process, the Agency prepared a report reviewing the Project's environmental impact and consultation outcomes, and approved the Project subject to conditions. On April 6, 2022, the Minister of Environment and Climate Change, relying on that report, decided under subsection 5(2) of CEAA 2012 that the Project was not likely to cause significant adverse environmental effects and imposed extensive mitigation and avoidance conditions. The Minister also found that the consultation process was consistent with the honour of the Crown. Sierra Club Canada Foundation and Mi'gmawe'l Tplu'taqnn Inc. (MTI), an Indigenous group whose traditional and treaty territories lie 640 to 2,000 kilometers from the Project, brought a judicial review application challenging the Minister's decision. Justice Zinn of the Federal Court dismissed that application on June 16, 2023 (2023 FC 849). Sierra Club and MTI then appealed to the Federal Court of Appeal, seeking an order setting aside the Federal Court's judgment and allowing the underlying application for judicial review. The appeal was heard at Ottawa on November 18, 2024, before a panel consisting of Stratas, Mactavish, and Roussel JJ.A., with judgment delivered June 3, 2026.

Policy and legislative provisions at issue

The Minister's decision was made pursuant to sections 27(1), 52(1), 53, and 54 of CEAA 2012. The appellants relied heavily on sections 5 and 19 of that Act in arguing that the environmental assessment should have addressed downstream greenhouse gas emissions and marine shipping effects. The Court noted that CEAA 2012, unlike the subsequent Impact Assessment Act, S.C. 2019, c. 28, contains no express requirement to consider larger, general issues such as climate change. On the Indigenous consultation ground, the appellants invoked the honour of the Crown and section 35 of the Constitution Act, 1982, arguing that the Crown had failed to adequately consult and accommodate MTI's communities. The appellants' Notice of Appeal had asked, among other relief, for an order that each party bear its own costs regardless of outcome, or alternatively that costs in the Federal Court be fixed at an agreed sum of $3,000 as against the Attorney General of Canada and in accordance with column 3 of Tariff B as against Equinor.

Reasoning and analysis

Justice Stratas, writing for the panel, held that the focus of review had to remain on the reasonableness of the Minister's decision, not on whether the Agency's report could have been better. On the downstream emissions issue, the Court found itself bound by its own prior decision in Forest Ethics Advocacy Association v. Canada (National Energy Board), 2014 FCA 245, which held that similar legislation did not expressly require consideration of issues such as climate change; under the doctrine of horizontal stare decisis, only a finding that a prior decision was "manifestly wrong" could justify departure, and no such submission was made. The Court also agreed with the Federal Court that the downstream destinations and uses of the Project's crude oil were unknown, making assessment of that issue speculative. On marine shipping, the Court distinguished Tsleil-Waututh Nation v. Canada, 2018 FCA 153, noting that the transshipment activity in that case occurred within Canadian territorial waters and in habitat frequented by the Southern resident killer whale, whereas the Project here is located roughly 500 kilometers offshore, beyond the legislative authority of Parliament, and involves a species (Atlantic salmon) that migrates over a far larger area not concentrated near the Project site. On the consultation ground, the Court applied a correctness standard to the existence and scope of the duty to consult and a reasonableness standard to the adequacy of the process, per Coldwater First Nation v. Canada (Attorney General), 2020 FCA 34. It held that the duty owed to MTI properly sat at the low end of the spectrum, given MTI's lack of treaty rights in the Project area and the low likelihood of impact on Atlantic salmon, and found that the Agency's process—including four comment periods, funding for submissions, engagement sessions, and consideration of a 2018 Indigenous Knowledge Study—satisfied that duty notwithstanding MTI's continued dissatisfaction with Equinor's response. The Court further addressed, without resolving the appeal on this basis, Equinor's submission that the appellants had delayed in raising the marine transshipment and downstream emissions issues; while rejecting Equinor's suggestion that such delay could ground dismissal of the judicial review under the "clean hands" doctrine, Justice Stratas agreed that a party's delay or lack of responsiveness before an administrative decision-maker can bear on a court's assessment of reasonableness, since it may signal that the issue did not genuinely matter to that party.

Ruling and overall outcome

The Federal Court of Appeal found no reversible error in the Federal Court's decision on either the environmental assessment ground or the Indigenous consultation ground. Justice Stratas, with Mactavish and Roussel JJ.A. concurring, dismissed the appeal with costs. The successful parties were the respondents—the Minister of Environment and Climate Change, the Attorney General of Canada, and Equinor Canada Ltd.—while the appellants, Sierra Club Canada Foundation and Mi'gmawe'l Tplu'taqnn Inc., were unsuccessful. The judgment orders costs in favour of the respondents but does not specify a quantum; the $3,000 figure and Tariff B reference appearing in the record originate from the appellants' 2023 Notice of Appeal as proposed alternative costs positions for the Federal Court proceeding, not from an amount fixed by this Court of Appeal decision.