Calgary, Alberta (GLOBE-Net) - The failure of a joint federal and provincial regulatory panel to provide a clear reason for concluding that greenhouse gas emissions would have insignificant environmental effects when it approved an oil sands project last year could delay the project. The decision that cleared Imperial Oil Ltd’s C$8 billion Kearl oil sands project was based on was based on flawed data argued the Federal Court in a decision that may have lasting implications on how oil companies regard the environment in future planning.

Madame Justice Daniele Tremblay-Lamer of the Federal Court sided with the environmental groups on the emissions issue, writing that “The panel must, in my opinion, explain in a general way why the potential environmental effects, either with or without the implementation of mitigation measures, will be insignificant,

The ruling comes after four Prairie environmental groups - Pembina Institute, Sierra Club of Canada, Prairie Acid Rain Coalition, Toxics Watch Society of Alberta - represented by environmental law firm, Ecojustice, went to court in January to try to stop Imperial Oil’s Kearl project. The groups claimed the federal-provincial review panel that approved it had not adequately assessed the potential environmental damage.

The operation, approved in 2007 by federal and provincial regulators, is located in Northern Alberta is expected to generate 300,000 barrels of oil per day in an area of 200 square km northern of boreal forest. The company, which is majority-owned by ExxonMobil Corp., has not yet decided if it will go ahead with the project.

The approval came with a long list of conditions. The board also said the cumulative effects of Kearl and the other projects should be monitored by and subject to the findings of the Cumulative Environmental Management Association, composed of a wide variety of stakeholders.

Opponents of the project argue that the panel that approved the project was lax in overlooking concerns over mine tailings, water contamination, the project’s effect on endangered species and carbon dioxide emissions.

“The Kearl project was approved in spite of continued failure to identify precautionary, science-based ecological thresholds for the Athabasca Oil Sands Region,” says a release from Ecojustice, one of the groups bringing the lawsuit against Imperial, which also names several federal departments. “In the absence of defined ecological thresholds a true assessment of the environmental impacts associated with the proposed projects cannot occur.”

Among other concerns, Ecojustice also says Imperial’s land reclamation strategy is based too heavily on computer modelling without any practical results to back up its projections.

Imperial said that it has met current Canadian law and that the parties suing are exaggerating the level of certainty needed for compliance. In documents filed with the court, Imperial also points to evidence and testimony that the board took into consideration before making its determination.

“The panel heard and considered considerable evidence with respect to environmental effects and cumulative environmental effects and proposed mitigation of these effects,” said an affidavit from Mark Little, Kearl Oil-Sands Development Manage of Imperial Oil.

Tremblay-Lamer ruled it would be inappropriate to reconvene the panel because of the emissions issue. However it must “provide a rationale for its conclusion that the proposed mitigation measures will reduce the potentially adverse effects of the project’s greenhouse gas emissions to a level of insignificance.”

“All it’s asking or directing the joint panel to do is to provide its rationale for how it came to a conclusion in one area. [It] doesn’t direct Imperial to undertake or ask us to refrain from taking any particular course of action,” said Gordon Wong, a spokesman for Imperial Oil.

Environmental groups feel differently. “This decision pretty clearly says the panel needs to go back and do a better job of assessing the environmental impacts of the Kearl oilsands project,” said Sierra Club spokesman Jean Langlois. “They have failed to do so to a standard that meets the law.”

The Kearl case highlights the growing division between those eager to develop Alberta’s massive oil sands resources and those concerned about the associated environmental and social consequences. Regardless of the outcome of the case, the decision against the oil sands project by Canada’s top court may set a standard for energy companies to more carefully observe the environmental aspects and impacts of future oil sand operations.