Environmentalists have scored a major court victory over Suncor Energy Inc. that they say will force the federal government to step in and protect Alberta’s environment from new oilsands development.

But Suncor argues that the court decision, involving the company’s new $3-billion Project Millennium oilsands expansion near Fort McMurray, won’t have any effect on either current or future oilsands projects.

Depending on how Ottawa interprets the court ruling, the federal government could decide to take a more active role in regulating oilsands development in the province. That could lead to costly project delays or even cancellation of some of the $51 billion worth of 63 proposed oilsands projects.

The Federal Court of Canada, in a decision handed down late last month, ruled that the federal ministers of environment and fisheries and oceans failed to comply with their duties under the Canadian Environmental Assessment Act in approving Suncor’s Millennium project.

Suncor's Rick George.

Federal Justice Elizabeth Heneghan found that the federal ministers erred in relying on a provincial planning process to ensure that significant and uncertain environmental impacts from the project would be addressed and mitigated.

Justice Heneghan didn’t quash any of Project Millennium’s approvals or licences. But environmentalists and their lawyers are confident that her ruling will compel Ottawa to step in as a regulator to mitigate environmental impacts of future oilsands projects, rather than rely on the Alberta-led planning process.

Ottawa’s voluntary role in the provincial process isn’t sufficient according to the federal court, says Timothy Howard, staff lawyer for the Sierra Legal Defence Fund, which represented three Alberta environmental groups that pressed the case.

“The federal government has been steadily withdrawing from its commitment to sustainable development, and turning over environmental assessment to the provinces,” Howard said. “This decision holds Canada to its legal duty to protect our shared environment on behalf of all Canadians.”

It is the first judicial decision in Canada that says Ottawa has a statutory duty, under federal environmental assessment legislation, to ensure that environmental mitigation measures are put into place within a province, Howard said.

“And if the federal government doesn’t move to take on a stronger regulatory role . . . we’ll be pushing them to do so” in further legal actions.

Suncor’s Millennium Project, which was supposed to cost $2.2 billion, is complete, but will come in almost 50 per cent over budget. Suncor chief executive Rick George praised the project in an interview last year with Business Edge, particularly its track record in hiring aboriginal workers.

Suncor and its lawyers believe the federal court ruling “will have no effect whatsoever on Project Millennium,” says Brenda Erskine, communications manager for Suncor’s oilsands division.

Justice Heneghan did rule that “that the federal ministers had made some legal errors in making their decisions,” Erskine acknowledged. “But according to our (Suncor’s) legal counsel, those legal errors are fact-based, which means that they don’t have precedent in future cases.”

Suncor’s position is that the court ruling doesn’t create a precedent for how future oilsands expansions and new facilities should be regulated, Erskine said.

Suncor wholeheartedly supports the provincial processes and believes they are the “right way” to manage the overall or cumulative environmental impacts of oilsands development in the Athabasca region, she added.

But Rocky Mountain House environmentalist Martha Kostuch says the court ruling makes it clear that the federal government can no longer delegate its legal authority to safeguard the environment in Alberta or any other province.

“This is an important decision,” said Kostuch, a member of the Prairie Acid Rain Coalition, one of the environmental groups that pressed the case.

“It means that the federal government must have a mechanism in place to ensure that the significant and uncertain effects of a project are mitigated.” This isn’t happening now under the provincial processes, Kostuch added.

The provincial processes include the Regional Sustainable Development Strategy, a multi-stakeholder process that manages cumulative environmental impacts in the Athabasca region. The management strategy is carried out by the Cumulative Effects Management Association, to which federal regulators belong.

Edmonton-based Toxics Watch and the Environmental Resource Centre joined the Prairie Acid Rain Coalition in launching the legal challenge in June 2000.

“This decision comes at a critical time in the development of the oilsands,” says Myles Kitigawa of Toxics Watch. “Canada will clearly have to play more of a leadership role in ensuring that oilsands development doesn’t create a huge environmental liability for all Canadians.”

Elaine Dhaussy, a spokeswoman for the federal Canadian Environmental Assessment Agency, says Ottawa is still studying the court ruling and is considering whether to appeal. Federal Environment Minister David Anderson will make a decision by Feb. 7, she said.

An Alberta Energy spokesperson declined to comment until the province has thoroughly reviewed the ruling.