Litigating Climate Change: An Update on a Strengthening Trend

by Nathaniel Brenneis and Stuart Chambers

Climate change litigation is becoming an increasingly effective tool for influencing policy outcomes and corporate behaviour. In truth, it has already become something of a global trend. According to a recent report from the Grantham Research Institute on Climate Change and the Environment, there were 154 climate change lawsuits filed in the United States between 2017 and 2019, while there were over 300 such claims filed in 27 other different countries across the world.[1] 

The majority of climate change litigation is actually driven by young people, as well as NGOs, seeking to hold public bodies accountable for climate change and press national governments to undertake increasingly ambitious mitigation efforts.[2] However, a rising number of claims have begun targeting private actors – such as energy and fossil fuel companies.[3]  

Climate change litigation is gaining momentum with some recent successes. This past summer in the Netherlands, the Hague Court of Appeal upheld an order requiring the Dutch government to reduce its greenhouse gas emissions by at least 25% by the end of 2020.[4] In September 2019, 16-year-old climate activist Greta Thunberg and 15 other young people from around the world filed a legal complaint against five of the world's biggest global carbon polluters - Brazil, France, Germany, Argentina, and Turkey. Thunberg and her peers filed the complaint under the 1989 UN Convention on the Rights of the Child, which stipulates a set of inalienable rights for all children worldwide, including life, health, and peace. The complaint alleges that accelerating climate change puts those rights at risk.[5]

It is against this backdrop that climate change litigation has arrived in Canada. Specifically, there are currently at least two ongoing class-action suits against the Government of Canada, and a group of BC municipalities is considering filing claims against large conventional energy companies.

Litigation Against the Canadian Government


On November 26, 2018, the Quebec-based environmental group ENvironnement JEUnesse (ENJEU) filed a class action lawsuit against the Government of Canada. In short, ENJEU claimed that the federal government’s failure to adopt certain greenhouse gas emission targets violates the rights and freedoms of the purported class, being all Québec citizens aged 35 and under.

ENJEU argues that the government’s inaction on climate change constitutes bad faith and is an unlawful and intentional interference with the right of class members to life, liberty and security of the person as well as their equality rights. It also contends that the future socio-economic costs of climate change will disproportionately burden younger generations. In response, the government argued the courts were not the proper place to determine this issue and that allowing it to proceed would constitute an unjustified interference by the courts.

On July 11, 2019, the Quebec Superior Court held that, while the issues raised by ENJEU were justifiable (appropriate for court review), the proposed class of individuals (Quebeckers under 30) was too arbitrary. Recognizing the overall importance of the issues at hand, Justice Morrison wrote “[a]lthough the mission and objectives of [the group] are admirable on the sociopolitical level, they are too subjective and limiting in their nature to form the basis of an appropriate group for the purpose of exercising collective action.”[6]

ENJEU has appealed the court’s decision and is awaiting an outcome as of the date of writing. However, even if this appeal is unsuccessful, it is worth noting that the Quebec Superior Court left the door open for a properly constituted class or individual to proceed with bringing a claim related to government inaction on climate change.

On October 25, 2019, a group of 15 children and youths, aged 10 to 19, from across Canada filed a lawsuit in the Federal Court of Canada against the federal government. Similar to ENJEU’s class action, these plaintiffs claim that the federal government failed to maintain a stable climate system capable of sustaining human life and individual liberties, thereby violating the Canadian Charter of Rights and Freedoms, and failing to protect public trust resources and Canadian children. They seek declaratory relief, as well as an order requiring the federal government to implement an enforceable Climate Recovery Plan to achieve emission reductions. It is worth noting that these plaintiffs are supported by various NGOs, including Our Children’s Trust, the David Suzuki Foundation and the Pacific Centre for Environmental Law and Litigation.[7]

McLennan Ross previously provided an in-depth look at the ENJEU class action on our blog, which can be found here.

Potential Litigation Against Corporations


In January 2019, the City of Victoria became the first municipality in Canada to support the filing of a class action lawsuit against Alberta-based oil and gas producers so as to recover costs for climate-related harms. Victoria’s City Council resolved to support such a class action and asked other municipalities in British Columbia to examine the possibility of initiating the lawsuit at their annual meeting in September.[8]

The justification offered for the contemplated class action was that suing oil and gas companies would help municipalities offset the prevention and clean-up costs associated with damage caused by climate change linked events, such as floods and wildfires.  While the City of Victoria later withdrew its motion in support of such a claim, other municipalities in British Columbia and elsewhere in Canada are still continuing to consider this type of litigation.[9]

Implications


It is anticipated that the Canadian claims described above, like the lawsuits that have come before them in the United States and around the world, will face significant obstacles.  However, now that climate litigation has arrived in Canada, it is important to acknowledge that the public pressure these types of actions foster could have a knock-on effect on Canada’s operating landscape.

As a result, companies should not only take adequate steps to prepare for potential climate change lawsuits, but also remain mindful that the regulatory regime may be subjected to significant changes as well, driven by societal pressures which now include the increased risk of litigation against government and industry.

For further information about climate change litigation and risk mitigation strategies, please contact any member of our Energy, Environmental and Regulatory Practice Group.


[1] Joana Setzer and Rebecca Byrnes, Global trends in climate change litigation: 2019 snapshot (The Grantham Research Institute on Climate Change and the Environment, London, 2019) [“Setzer”] at 2-4. Available Online: <http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2019/07/GRI_Global-trends-in-climate-change-litigation-2019-snapshot-2.pdf>.
[2] Setzer, supra at 4-7.
[3] Setzer, supra at 8-9.
[4] Urgenda Foundation v. The Netherlands [2015] HAZA C/09/00456689 (June 24, 2015); aff’d (District Court of the Hague, and The Hague Court of Appeal (on appeal))
[5] UNICEF, Press Release, “16 children, including Greta Thunberg, file landmark complaint to the United Nations Committee on the Rights of the Child” (23 September 2019) online: <https://www.unicef.org/press-releases/16-children-including-greta-thunberg-file-landmark-complaint-united-nations>.
[6] Environnement Jeunesse c. Procureur général du Canada, 2019 QCCS 2885 at para 136.
[7] Climate Case Chart, “Case Summary: La Rose v. Her Majesty the Queen” (25 October 2019), online: <http://climatecasechart.com/non-us-case/la-rose-v-her-majesty-the-queen/>; and David Suzuki Foundation, Press Release, “15 Canadian youth launch Canada’s first federal youth climate lawsuit to protect their charter and public trust rights” (25 October 2019), online: <https://davidsuzuki.org/press/15-canadian-youth-launch-canadas-first-federal-youth-climate-lawsuit-to-protect-their-charter-and-public-trust-rights/>.
[8] Alastair Spriggs and Francis Bula, “The City of Victoria recommends class-action lawsuit against the oil and gas industry”, The Globe and Mail (21 January, 2019), online: <https://www.theglobeandmail.com/canada/british-columbia/article-city-of-victoria-recommends-class-action-lawsuit-against-the-oil-and/>.
[9]Municipal officials reject divisive legal action in favour of collaboration on climate change action”, Cision in Canada (27 September, 2019), online < https://www.newswire.ca/news-releases/municipal-officials-reject-divisive-legal-action-in-favour-of-collaboration-on-climate-change-action-827935375.html>; and Geoffrey Morgan, “B.C.’s rural municipalities warn Victoria not to forget 'resource roots' as city eyes lawsuit against Big Oil”, Financial Post (2 October, 2019), online: < https://business.financialpost.com/commodities/energy/b-c-s-rural-municipalities-warn-victoria-not-to-forget-resource-roots-as-city-eyes-lawsuit-against-big-oil>.

New Indian Oil and Gas Regulations To Modernize On-Reserve Regime



The modernization of the Indian Oil and Gas regulatory regime - a federal government initiative that began over a decade ago - appears to finally be materializing. The new Indian Oil and Gas Regulations (“New Regulations”) were introduced on May 19, 2018 and will replace the current Indian Oil and Gas Regulations, 1995 (“1995 Regulations”), The New Regulations are intended to be the final step towards modernizing the on-reserve regulatory environment and to align the on-reserve regime with that which exists off-reserve.

Background

Substantive steps to amend the governing legislation have not been made since May 14, 2009, when amendments to the Indian Oil and Gas Act, (1974)(“IOGA”) received royal assent. The IOGA, 2009 is not currently in force, as it requires the coming into force of the New Regulations. 

Indian Oil and Gas Canada, a special operating agency of Indigenous and Northern Affairs Canada, administers the IOGA. Indian Oil and Gas Canada worked with the Indian Resource Council to find ways to modernize the IOGA, as well as held extensive direct consultations with most of the oil and gas producing First Nations and Tribal Councils from over one hundred First Nations.
The Government of Canada states that consultations for the modernization of the on-reserve regulatory regime were among the most comprehensive ever conducted by Indigenous and Northern Affairs Canada. During the consultations, some First Nations expressed broader jurisdictional aspirations for the management and control of their natural resources. While the realization of some of these aspirations are not captured in the New Regulations, the Government of Canada has committed to exploring options for greater First Nations control over natural resource development on-reserve, and is actively engaging these First Nations to determine how this goal may be realized.

Challenges under the current regulatory regime

As the current regime stands, there are barriers on First Nation reserves to investment in the oil and gas industry, as well as a lack of modern tools and initiatives for the federal government to meaningfully ensure and encourage industry compliance. For instance, there is presently an absence of consistent rules for the on and off-reserve regimes, which makes investment in oil and gas development on-reserve less attractive and creates more uncertainty for industry. This results in duplicative processes for investors:  one for on-reserve projects and one for those on all other lands in the province. To further exacerbate these issues, the current 1995 Regulations do not have compliance or enforcement mechanisms, resulting in the cancellation of contracts or court action becoming the principle form of recourse for addressing issues.

The federal government also presently lacks the necessary authorities to audit companies doing business on-reserve. Given the substantially large amount of money involved in oil and gas projects, this represents a serious deficiency in oversight abilities, as auditing is a critical tool used to ensure that First Nations are in fact receiving what they are rightfully owed in exchange for their natural resources.

Key provisions of the New Regulations

So, what do the New Regulations look like, and will the proposed new on-reserve regulatory regime truly assist in modernizing access to and participation in the oil and gas market on-reserve?

The proposed New Regulations are intended to provide a predictable regulatory environment for First Nations in which First Nations and third parties can make investment decisions. The New Regulations are divided into the following themes:
  1. Drainage and compensatory royalty
  2. Subsurface tenure
  3. Surface tenure
  4. Exploration
  5. Environment
  6. Enforcement
  7. Conservation
  8. Money management
  9. Royalty

Some of the provisions have been carried over from the 1995 Regulations to minimize any regulatory gaps once the New Regulations are brought into force. New provisions address key areas such as First Nations’ audits, and royalty reporting requirements to facilitate royalty verification. The New Regulations also aim to incorporate modern federal drafting standards and to reflect some of the IOGC’s current practices and policies, such as the requirement for environmental reviews to accompany applications for exploration programs, surface agreements and bitumen projects.

Other notable changes include those that were made to subsurface tenure. Going forward, both the Chief and Council and the Minister must approve any contracts issued for the exploration or exploitation of oil and gas on reserve lands. The New Regulations set out the criteria the Minister must use, in consultation with the First Nation, to evaluate a contract. First Nations will have the ability to negotiate drilling commitments, earning provisions, and the contract depth of earning wells. Leases will have an initial term of 3 years and permits will have an initial fixed term between 2 and 5 years depending on the region in which the contract is located. First Nations will be able to grant an initial term up to 5 years or amend the term to a maximum of 5 years. The New Regulations will also allow oil and gas production to occur from permit lands, and earned permit lands to qualify for a three-year intermediate term, though the First Nation will have the flexibility to increase the intermediate term to five years.

The New Regulations also provide for a compensatory royalty when reserve lands are drained of their resources by drilling in adjoining areas, following the existing provincial drainage laws. Further, the New Regulations make it possible for First Nations to ensure that all applications for surface activities include an environmental review to ensure no irreparable, adverse impacts are caused to reserve lands.

The IOGC has stated that another benefit the New Regulations will bring is an improved investment climate as the on-reserve regulatory regime is brought more in line with that of the rest of the province. This improvement should be felt by the oil and gas industry as a whole, as well as by involved First Nations. The abolishment of the duplicative processes for on and off-reserve oil and gas development is expected to reduce the cost of doing business on-reserve, to the tune of $55.6 million in total present value over the next ten years, which is an annualized savings of $7.86 million.

Next Steps

The long overdue implementation of the New Regulations will enable the IOGA, 2009 to finally be brought into force. The modernization of this legislation will not only create greater certainty for all stakeholders, it will allow the federal government to better fulfill its obligations to effectively and efficiently manage the oil and gas resources on reserve lands. The amendments to the legislative framework will also bolster First Nations’ ability to protect the environment in the course of oil and gas development, to increase and ensure regulatory compliance, and to more effectively facilitate the collection of the royalties due to them.

A comment period for the New Regulations is open until August 17, 2018. McLennan Ross will continue to closely follow the progress of the coming into force of the New Regulations, and provide further updates as they arise.