Sierra Club of Canada

The CANDU Court Case

Application for Judicial Review filed on behalf of the Sierra Club of Canada with the Federal Court of Canada.
The Application was filed in connection with the environmental assessment of CANDU agreements with China.


File No. T-85-97

IN THE FEDERAL COURT OF CANADA

TRIAL DIVISION

 

BETWEEN:

 

SIERRA CLUB OF CANADA, a national organization concerned with environmental protection and restoration and a non-profit corporation duly constituted on April 27, 1992 by Letters Patent under the Canada Corporations Act, having its head office at 1 Nicholas Street, Suite 412, Ottawa, Ontario, K1N 7B7

APPLICANT
 

and

THE MINISTER OF FINANCE OF CANADA, having his principal office at the House of Commons, Room 515-S, Centre Block, Ottawa, Ontario, K1A 0A6
 

and

THE MINISTER OF FOREIGN AFFAIRS OF CANADA, having his principal office at the House of Commons, Room 418-N, Centre Block, Ottawa, Ontario, K1A 0A6
 

and

THE MINISTER FOR INTERNATIONAL TRADE OF CANADA, having his principal office at the House of Commons, Room 365, West Block, Ottawa, Ontario, K1A 0A6
 

and

THE ATTORNEY GENERAL OF CANADA, having his principal office at 239 Wellington Street, Ottawa, Ontario, K1A 0H8 and his Montreal office at Guy Favreau Complex, 200 René-Lévesque Blvd. West, East Tower, 9th floor, Montreal, Quebec, H2Z 1X4

RESPONDENTS
 



APPLICATION FOR JUDICIAL REVIEW
(Federal Court Act, ss.18, 18.1 and 44)


I RELIEF SOUGHT

1. You are hereby advised that the Sierra Club of Canada will be making an Application for Judicial Review to the Court, on a day and at a time and place to be set by the Court, for the purpose of obtaining relief as provided for in ss. 2, 18, 18.1 and 44 of the Federal Court Act and Rules 1601 and 1602 of the Federal Court Rules.

2. The relief so sought against the Respondent Ministers, who are federal boards, commissions or other tribunals, is with respect to the matter of their decision to refuse the Applicant's demand that they carry out their public legal duty to ensure that an environmental assessment as legally required pursuant to the Canadian Environmental Assessment Act (hereinafter "CEAA"), including ss. 5, 11 and 13 thereof, is conducted of the "project" as defined in paragraph 3 hereof. The decision of the Respondent Ministers was first communicated to the Applicant late on December 20, 1996.

3. The project is the proposed construction, operation, eventual decommissioning and all other works and undertakings and physical activities in China, Canada and elsewhere in relation to and necessary to fulfil the purpose of the physical works which are two 700 megawatt "CANDU 6" nuclear reactors to be sold by Canada to China and located at the Qinshan facility on the coast at Hangzhou Bay in Zhejiang Province, 126 km southwest of Shanghai. Without restricting the foregoing, the project includes any mining and processing of uranium to fuel the reactors, production and provision of heavy water from Canada, the transport of fuel and heavy water and the storage and disposal of radioactive waste.

4. The said environmental assessment is required because the Respondent Ministers have made or authorized, or are in the process of making or authorizing, loans and providing a guarantee for a loan and other forms of financial assistance from and against the public money of Canada in the Consolidated Revenue Fund for the purpose of enabling the project to be carried out in whole or in part (hereinafter "the financial assistance").

5. The precise relief being sought by the Applicant is as follows:

a. A declaration that the said environmental assessment of the project pursuant to CEAA, including by virtue of ss. 5, 11 and 13 thereof, was required as a legal condition precedent to the financial assistance as early as practicable in the planning stages of the project and, that time being already past, is legally required forthwith and before irrevocable decisions are made.

b. A declaration that the Respondent Ministers are responsible authorities in relation to the project as referred to in subsection 11(1) of CEAA, and as such have a non-discretionary public legal duty to ensure that the said environmental assessment is conducted.

c. A declaration that the project was and is subject to comprehensive study pursuant to CEAA, including as provided in ss. 2 ("comprehensive study"), 13, 21 ff. and 59 (d) thereof, and pursuant to the Comprehensive Study List Regulations, including as provided in s. 3 and Schedule Item 19 thereof.

d. A declaration in the alternative to subparagraph (c) that the project was and is subject to environmental assessment by following the path offered by s. 18 of CEAA (screening).

e. A declaration that under CEAA, including by virtue of ss. 11(2) and 13 thereof, the Respondent Ministers could not legally furnish the financial assistance for the project and that the furnishing thereof was and is invalid, in excess of jurisdiction and contrary to law.

f. A declaration that under CEAA, including by virtue of ss. 11(2) and 13 thereof, the Respondent Ministers cannot take any further steps to give effect to or follow through with the financial assistance and the financial assistance must be suspended unless and until they ensure that the said environmental assessment in accordance with CEAA and its regulations has been carried out and they each take a course of action pursuant to paragraph 37(1)(a) of CEAA.

g. A declaration that by refusing to ensure that the said required environmental assessment is conducted while at the same time taking steps to furnish the financial assistance, the Respondent Ministers refused to exercise and exceeded their jurisdiction, erred in law and acted unlawfully.

h. An order quashing or setting aside the decisions of the Respondent Ministers making or authorizing the financial assistance for the project, and cancelling and prohibiting the provision of that financial assistance.

i. An order requiring the Respondent Ministers to take all necessary steps to end or reverse the financial assistance and requiring them to take no further steps with a view to furnishing it.
j. An order in the alternative to subparagraphs (b)(i) and (ii), suspending said decisions of the Respondent Ministers and there effects, as well as the financial assistance, until such time as the said environmental assessment as legally required is conducted and a course of action is taken by each of the Respondent Ministers pursuant to paragraph 37(1)(a) of CEAA.

k. An order in the nature of mandamus requiring the Respondent Ministers to forthwith ensure that the said environmental assessment is conducted by following one or the other of the paths offered under s. 21 of CEAA (comprehensive study or referral to the Minister of the Environment).

l. An order in the alternative to subparagraph (j), requiring the Respondents to forthwith ensure that such an assessment is conducted by following the path offered under s. 18 of CEAA (screening).

m. Orders providing for such further and other relief as this Honourable Court deems just and appropriate in the circumstances.

II. GROUNDS AND MATTER FOR JUDICIAL REVIEW

6. This Application is based on the grounds set out hereinafter.

7. All of the essential and sufficient elements exist to engage the legal requirement of environmental assessment of the project pursuant to CEAA, including by virtue of s. 5(1) thereof. There is a "federal authority" (more than one), a "project" as defined and a trigger for such environmental assessment in the form of the financial assistance.

Parties and CEAA Federal Authorities

8. The Applicant Sierra Club of Canada is a person entitled in accordance with subsection 18.1(1) of the Federal Court Act to bring an application for judicial review in respect of the matter in respect of which relief is sought herein.

9. Respondent the Minister of Finance of Canada has powers, duties and functions which include the management of the Consolidated Revenue Fund (hereinafter "CRF") comprising the public money of Canada, and the supervision, control and direction of all matters relating to the financial affairs of Canada, including authority to guarantee loans of up to $1.5 billion to be entered into by the State Development Bank of China for the purpose of financing the purchase of nuclear reactors from Atomic Energy of Canada Limited (hereinafter "AECL"), all notably under the Financial Administration Act, including ss. 2, 14, 15 and 29 thereof, and under the Export Development Act, including ss. 23(3) and 23(5) thereof, and under the Appropriation Act No. 4, 1995-96, including under s. 3 and Schedule Vote No. 31b thereof.

10. Respondent the Minister of Foreign Affairs has powers, duties and functions which extend generally to international trade and commerce and exports, responsibility for the finances and spending of the Department of Foreign Affairs and International Trade, including that part of the public money of Canada in the CRF known as the "Canada Account" and carried on the books of his Department, and furthermore his concurrence is required for actions by Respondent the Minister for International Trade, all notably under the Department of Foreign Affairs and International Trade Act, including ss. 2, 5 and 10 thereof and under the Financial Administration Act.

11. Respondent the Minister for International Trade of Canada, assisting and with the concurrence of Respondent the Minister of Foreign Affairs, has powers, duties and functions with respect to Canada's international trade, commerce and export sales, with respect to certain public money of Canada, including the Canada Account, and as the Minister for the purposes of the Export Development Act and the appropriate Minister under the Financial Administration Act, with respect to the affairs of the Export Development Corporation (hereinafter "EDC"), all notably under the Department of Foreign Affairs and International Trade Act, including ss. 3, 5, 10 and 12 thereof, the Financial Administration Act and the Export Development Act, including s. 23(1) thereof.

12. For the purposes of s. 18 of the Federal Court Act, Respondent Ministers are each a federal board, commission or other tribunal with respect to the matter to which this Application relates.

13. Respondents are also each a "federal authority" and "responsible authority" for the purposes of CEAA and notably ss. 2(1), 5(1) and 11(1) thereof.

The Project

14. The project as defined in paragraph 3 hereof is a project for the purposes of CEAA, and notably ss. 2(1) ("project") 5(1), 11 and 13 thereof.

15. The project is not among the projects for which an environmental assessment is not required pursuant to CEAA, including ss. 2(1) ("exclusion list"), 7(1)(a), 11, 59(9) thereof and the Exclusion List Regulations.

16. The project is and has been at least in its planning stages.

The Financial Assistance

17. In the exercise of public powers, duties or functions, the Respondent Ministers as Ministers and as federal authorities have made or authorized, or are in the process of making or authorizing, the financial assistance using or engaging the public money of Canada from the CRF for the purpose of enabling the project to be carried out in whole or in part as contemplated in CEAA, including notably s. 5(1) thereof.

18. Without restricting the preceding paragraph, the powers, duties and functions the Respondent Ministers propose to exercise or are in the process of exercising or have exercised in respect of the project include:

a. Representations, promises and agreements over the last two years by the Respondents Ministers and their officials to and with China and various Chinese, Canadian and other persons and entities respecting the sale of the reactors and the use of the public money of Canada to provide the financial assistance for the project and the sale of the reactors.

b. The determination by Respondent the Minister for International Trade and the concurrence by Respondent the Minister of Foreign Affairs that it is in the national interest to provide the financial assistance including a loan of some $1.5 billion for the project and the export and sale of reactors for the project from the public money of Canada in the CRF, including from the Canada Account.

c. The concurrence by Respondent the Minister of Finance and the authorization of Respondent the Minister for International Trade for the EDC to enter into and administer a transaction with public money flowing through from the CRF and relating to the provision of the financial assistance for the project and the export and sale of reactors for the project, including a loan of some $1.5 billion.

d. The decision of Respondent the Minister of Finance to pay amounts out of or make charges against the public money of Canada in the CRF to provide the financial assistance for the project, including notably for the purposes of subparagraphs (b) and (c) hereof.

e. The decision of Respondent the Minister of Finance to provide and enter into a guarantee or other similar form of financial arrangement for the purpose of the project and the purchase of reactors for the project as part of the financial assistance, including a guarantee for loans or other financial arrangements entered into by the State Development Bank of China for the purpose of financing the purchase of nuclear reactors from AECL.

Environmental Assessment Required Under CEAA

19. CEAA is engaged and a full environmental assessment is required, notably pursuant to s. 5(1)(b) thereof, when as a matter of fact and in practical reality, federal authorities are to exercise or exercise powers, duties or functions with respect to financial assistance for the purpose of enabling a project to be carried out in whole or in part. That is the case here.

20. Subsection 8(2) of CEAA does not apply here to preclude the required environmental assessment pursuant to CEAA, including notably paragraph 5(1)(b) thereof.

21. The Respondents are responsible authorities with the non-discretionary public legal duty to ensure that the said environmental assessment of the project is conducted. The performance of that duty is due, has been demanded and was refused in a decision made known to the Applicant on December 20, 1996. It is a legal pre-condition to the financial assistance for the project.

Project Subject to Comprehensive Study

22. The project is of a type prescribed by the Comprehensive Study List Regulations, including s. 3 and Schedule Item 19 thereof.

23. Therefore, pursuant to CEAA, including ss. 2, 13, 21 ff. and 59 (d) thereof, the environmental assessment of the project is governed by the regime applicable to projects subject to comprehensive study.

24. In concrete terms and pursuant to ss. 21 of CEAA, this means that the environmental assessment of the project must proceed by either: (1) comprehensive study and the preparation of a comprehensive study report; or (2) referral to the Minister of the Environment for further referral to a mediator or a review panel in accordance with section 29.

25. By virtue of paragraph 59(d) of CEAA, projects prescribed by the Comprehensive Study List Regulations are projects of a type which the Governor in Council is "satisfied" are "likely to have significant adverse environmental effects."

26. Only through comprehensive study or referral to the Minister of the Environment in accordance with s. 29 of CEAA can it be assured that the project and the financial assistance to enable the project to be carried out in whole or in part will attract comprehensive, independent and public environmental assessment as a condition precedent in order to ensure that the public money of Canadian taxpayers is spent in an environmentally responsible manner.

27. Unless and until the required environmental assessment as set out above is conducted and a course of action has been taken by each of the responsible authority Respondent Ministers under paragraph 37(1)(a) of CEAA whereby the financial assistance can proceed, it was and remains illegal for the Respondent Ministers to exercise any power, duty or function with a view providing the financial assistance and that financial assistance is suspended, all pursuant to CEAA, including ss. 5(1), 11 and 13 thereof.

Projects Outside of Canada Regulations

28. Full environmental assessment under CEAA clearly applies to projects outside of Canada and has so applied since the coming into force of that Act on January 19, 1995.

29. However, subparagraph 59(i)(iii) of CEAA permits special regulations regarding the environmental assessment process for projects outside of Canada and outside as well of any federal lands abroad.

30. The Project Outside of Canada Environmental Assessment Regulations (hereinafter the "POC Regulations") depart from the consensus draft regulation prepared by the multistakeholder Projects Outside Canada Subcommittee of the Minister of the Environment's Regulatory Advisory Committee on CEAA and as recommended by that Subcommittee and the full Committee. By an unusual expedited procedure and without publication for public comment in draft form, they were adopted on November 6, 1996 to quickly change the legal requirements for environmental assessment for the project at issue here. They came into force the very next day, November 7, 1996.

31. The POC Regulations were only published in the Canada Gazette Part II on November 27, 1996, the day after the contract for the sale of the reactors was signed in Shanghai, China in the presence of the Prime Minister of Canada.

32. The POC Regulations, purport to exclude comprehensive study. The effect of this would be to remove CEAA's statutory guarantee of the right to public participation of Canadians and others in the environmental assessment of projects outside of Canada which receive Canadian public money and which by definition are likely to have significant adverse environmental effects.

33. The POC Regulations and their attempt to exclude comprehensive study are ultra vires the regulation-making powers in CEAA, including in s. 59 thereof, and therefore have no effect to preclude the required environmental assessment of the project from proceeding by way of comprehensive study.

34. In the alternative to the preceding paragraph, the POC Regulations do not apply so as to exclude comprehensive study because the project and the financial assistance had been proposed and were - at least - well into the planning stages when the POC Regulations came into effect. The POC Regulations cannot be given retroactive effect to undo the previously engaged statutory legal obligations of the Respondent Ministers.

In the Alternative, Screening Required

35. In the alternative, and even if the POC Regulations are valid and can apply to the environmental assessment of the project, environmental assessment of the project under CEAA is still required, commencing by way of screening. This is notably pursuant to ss. 2(1) ("screening"), 5(1), 11, 14 and 18 of CEAA and ss. 2 and 3 and Schedule ss. 14 and 18 of the Regulations.

36. The result is that the financial assistance and proceeding with the financial assistance are illegal unless and until the Respondent Ministers have ensured that the required environmental assessment has been conducted, leading to a course of action by each of them allowing the exercise of powers, functions or duties with respect to the project under CEAA, including notably paragraph 20(1)(a) or 37(1)(a) thereof, and the POC Regulations, including notably ss. 2 and 3 and Schedule paragraph 20(1)(a) or 37(1)(a) thereof.
No Other Remedy

37. The Applicant has no remedy available to ensure compliance by the Respondent Ministers with their public legal duties other than seeking the relief sought herein.

III. DOCUMENTARY EVIDENCE

38. This Application will be supported by the following material:

a. The Affidavit of Elizabeth E. May and the attachments thereto.

b. Such other and further affidavits, evidence and materials as counsel may advise and the Court shall permit.

IV. REQUEST FOR MATERIAL

39. Despite sustained efforts, including through Access to Information requests, the Applicant has been unable to obtain many facts, financial records, agreements, contracts, documents and legal instruments relating to the role of the Respondents and their officials with respect to various aspects of the matter to which this Application relates, including the project and the financial assistance using public money.

40. The Applicant in this Application avails itself of Rule 1612 of the Federal Court Rules to obtain material on which it wishes to rely and which is in the possession of the Respondent Ministers.

41. Therefore, the relief sought and the grounds set out herein, as well as the facts alleged and the affidavits, documents and other evidence relied upon by the Applicant are all under reserve of the material to be provided under Rule 1612, to be provided by the Respondents or any other party or otherwise obtained.

42. The Applicant requests the Respondent Ministers to send a certified copy, in hard copy and in electronic data storage, audio or video form where it also exists or where it is only in such form, of the following documentary and electronic data storage, audio or video material that is in their possession to the Applicant and to the Registry:

a. All documents, agreements, contracts, financial instruments, records and accounts, notes, memoranda, minutes of meetings and correspondence:

i. Relating to the matter in respect of which this Application for Judicial Review is brought, including relating to:

(1) the Project
(2) the financial assistance
(3) the planned, proposed or actual sale and export of CANDU nuclear reactors to China,
(4) the planned or proposed exercise or exercise of any powers, duties and functions by the Respondent Ministers and by any other CEAA federal authority or by Crown corporations in respect of the project and the financial assistance, and
(5) the application or non-application of CEAA and of any other in-house, Canadian, foreign, or multilateral or international regimes of environmental assessment in respect of the matters referred to in (1), (2), (3) and (4) above.

ii. Relating to planning for and the initiation of discussions and negotiations to explore the interest of the Government of Canada, its Departments, agencies and Crown corporations and of other Canadian persons and of the Government of China and of its departments, agencies and public enterprises and of other Chinese persons in:

(1) the Project,
(2) the financial assistance, and
(3) the planned or proposed sale and export of CANDU nuclear reactors to China;

iii. Relating to the entering into, by or with the Government of Canada, the Respondent Ministers, other CEAA federal authorities, Crown corporations or others, of discussions and negotiations for the project, the financial assistance and the sale and export of CANDU nuclear reactors by Canada to China, including:

(1) the Memorandum of Understanding signed on November 8, 1994 between CNNC and AECL,
(2) the Canada-China Nuclear Co-operation Agreement of November 1994,
(3) all other documents, contracts or agreements made or signed by anyone at the same time or associated therewith.

iv. Relating to the continuation of negotiations, by or with the Government of Canada, the Respondent Ministers, other federal authorities, Crown corporations or others, for the project, the financial assistance, the sale of and financing of the sale and export of CANDU reactors to China, including:

(1) the Memorandum of Understanding signed October 13, 1995 between the governments of Canada and China,
(2) the Canada-China Nuclear Co-operation Agreement of November 1994,
(3) all other documents, contracts or agreements made or signed by anyone at the same time or associated therewith.

v. Relating to the entering into, by or with the Government of Canada, the Respondent Ministers, other federal authorities, Crown corporations or others, of the final phase of negotiations for the sale, export and financing of the sale and export of CANDU reactors to China, including:

(1) the Memorandum of Understanding signed on October 13, 1995 between AECL and CNNC,
(2) the Canada-China Nuclear Co-operation Agreement of November 1994,
(3) all other documents, contracts or agreements made or signed by anyone at the same time or associated therewith.

vi. Relating to the entering of, by or with the Government of Canada, the Respondent Ministers, other federal authorities, Crown corporations or others of:

(1) the AECL and CNNC Memorandum of Understanding of November 8, 1994,
(2) the documents signed on October 13, 1995 by the Prime Minister of Canada, the Minister for International Trade, AECL and others, as detailed in paragraphs 37 and 38 of the Affidavit of Elizabeth E. May in support hereof,
(3) the Project Award Agreement of July 12, 1996 between CCNC and AECL;
(4) the Canada-China Nuclear Co-operation Agreement of November 1994,
(5) the contract of November 26, 1996 between AECL and CNNC regarding the sale and export of CANDU nuclear reactors to China,
(6) the heavy-water lease agreement entered into between AECL and CNNC or others, on or before November 26, 1996,
(7) the high-level meetings of Canadian officials in Beijing in or around April and May 1996,
(8) all other documents, contracts or agreements made or signed by anyone at the same time or associated therewith.

vii. Relating to:

(1) the provision of heavy water related to the project,
(2) uranium sales associated with the project,
(3) uranium mining in Canada related to the project,
(4) transportation of components of nuclear technology, including heavy water, nuclear fuel bundles, and uranium both within and outside of Canada related to the project,
(5) the disposal of high and low level nuclear waste related to the project, and
(6) arrangements with key subcontractors in Canada related to the project.

viii. (1) Concerning the application of the Organization for Economic Development Consensus Agreement requirements, and any other international or bilateral or multilateral norms, guidelines or requirements for financing of nuclear reactor projects, to the project, to the financial assistance and to the export and the sale of CANDU nuclear reactors by Canada, including by AECL to China,
(2) The text of, and all interpretive and administrative guides regarding, the said OECD Agreement and said other norms, guidelines or requirements.

ix. Relating to:

(1) The planning for, proposal of or providing of the financial assistance as set out in paragraphs 4 and 17 hereof;
(2) The planned, proposed exercise or exercise of the powers, duties and functions detailed in subparagraph 18(a) through 18(e) hereof,
(3) The planned, proposed or actual provision of financial assistance, similar or analogous to the financial assistance as defined herein, by any federal authority or Crown corporation;

x. Relating to the responsibilities of the Respondent Ministers, the EDC and others, for the administration of, and for the keeping of books and records of the use of, the public money of Canada in the CRF, including the Canada Account, to finance export sales, including of nuclear reactors.

xi. Relating to the procedure and guidelines for decisions or approvals to make expenditures of the public money of Canada in the CRF, including the Canada Account, to finance export sales, including of nuclear reactors.

b. All documents, including reports, policies, guidelines and directives relating to Department of Finance, Department of Foreign Affairs and International Trade, EDC and AECL loans, loan guarantees and financial assistance for export sales, including:

i. the Department of Finance 1986 Aide Memoire on Loan Guarantees; and

ii. the Auditor General's Report to the Minister of Finance of March 1, 1990 regarding loans to sovereign states.

c. All documents, including reports, plans and studies, indicating works, undertakings and physical activities being undertaken or to be undertaken for or in relation to the carrying out in whole or in part of the project.

d. All documents or studies assessing or describing the environmental potential or actual environmental impacts and effects of the project, the financial assistance, and the sale and export of the CANDU nuclear reactors to China, including such documents or studies from, by or for:

i. Respondent Ministers,
ii. other federal authorities,
iii. AECL,
iv. EDC,
v. Government of China,
vi. CCNC,
vii. other governments and international agencies providing funding for or participating in the project.

e. All documents, including studies, reports, notes, memoranda, minutes of meetings, and correspondence, concerning the application of OECD and other international or multilateral environmental assessment policies to

i. the project,
ii. the financial assistance,
iii. the financing of the export and sale of CANDU nuclear reactors to China and other countries.

Dated at Montreal, this 20th day of January, 1997
 
 

(sd) Me Franklin S. Gertler
Me Franklin S. Gertler
HUTCHINS, SOROKA &;DIONNE
Attorneys for the Applicant Sierra Club of Canada

Address for service:

HUTCHINS, SOROKA &;DIONNE
245 St-Jacques, suite 400
Montreal, Quebec, H2Y 1M6
Tel.: (514) 849-2403
Fax : (514) 849-4907
 

Certified true copy
 
 
 
 

Me Franklin S. Gertler
HUTCHINS, SOROKA &;DIONNE
Attorneys for the Applicant Sierra Club of Canada
 

Notice to the Respondents

You are required to take cognizance of the within Application for Judicial 3Review and make opposition thereto in accordance with its terms and the appropriate provision of the Rules of this Court.

If you fail to do so, you will be subject to have such judgment given as the Court may think just on the Applicant's own showing.

Note: (1) Copies of the Rules of Court, information concerning the local offices of the Court, and other necessary information may be obtained on application to the Registry of this Court at Ottawa (telephone 613-992-4238) or at any local office thereof.

(2) This Application for Judicial Review is filed by Me Franklin S. Gertler of Hutchins, Soroka &;Dionne, 245 St-Jacques, suite 400, Montreal, Quebec, H2Y 1M6, attorneys for the within named Applicant.


Sierra Club of Canada