03/16/2012 12:03 EDT | Updated 05/16/2012 05:12 EDT

Environmental groups launch challenge of Muskrat Falls hydroelectric project

HALIFAX - A coalition of environmental groups have filed an application for a judicial review of the proposed Muskrat Falls hydroelectric project, saying Ottawa should not proceed with the development because its environmental assessment was incomplete.

The groups, represented by lawyers for Ecojustice, filed the application with the Federal Court in Montreal seeking to block the federal government from issuing any permits or financial backing for the $6.2-billion project.

They are also asking the court to overturn the federal government's endorsement of the development.

A spokesman for Sierra Club Canada, one of the groups behind the application, said the environmental assessment doesn't look at alternatives to the project or make any final recommendations to approve or reject it.

Bruno Marcocchio said his group and Grand Riverkeeper Labrador Inc. want the court to send the review back to the joint panel that oversaw the environmental review.

"We feel confident that if that's done ... the panel will decide that this project is not justified," Marcocchio said from Sydney, N.S., on Friday.

The judicial review was filed Dec. 20, but the groups were advised by their lawyers not to go public about their case until now, he said.

The Muskrat Falls project passed federal and provincial environmental assessments Thursday, and Ottawa and Newfoundland and Labrador say they will now proceed to issue the required federal authorizations for the project while trying to finalize a promised federal loan guarantee.

Nalcor Energy, Newfoundland and Labrador's Crown utility company, declined comment.

Natural Resources Canada declined an interview request, but said in an email that the federal government remains committed to the project.

"It's unfortunate that certain radical environmental groups can't even support hydro power," read the email from communications director Patricia Best.

"While these groups claim to want to reduce (greenhouse gas) emissions, it would seem they refuse to take any practical steps to achieve these goals."

The Newfoundland government was unavailable for comment.

The joint panel review report released last August concluded that Nalcor Energy had not proven the viability of the project. It also said Muskrat Falls would likely have several "significant adverse" effects on fish, wetland and terrestrial habitats, as well as the Red Wine Mountain caribou herd.

Those concerns are echoed by the environmental groups. But the federal and provincial governments said Thursday they will implement measures to address some of those concerns, though they added that overall, the project's benefits outweigh any risks.

Newfoundland and Labrador Premier Kathy Dunderdale has faced criticism in her province from opposition parties who say Muskrat Falls should undergo greater scrutiny before it is sanctioned. But Dunderdale has dismissed their concerns, saying the project has been thoroughly reviewed and should proceed because it would provide the province with a clean, renewable source of energy for generations.

Under the conditions of a term sheet announced in 2010 to develop the project, Nalcor Energy would spend $2.9 billion to build a power generating facility at Muskrat Falls capable of producing 824 megawatts of electricity.

A transmission link from Labrador to Newfoundland would cost $2.1 billion, $600 million of which would be provided by Nova Scotia-based private utility Emera (TSX:EMA). It would include a 30-kilometre subsea connection across the Strait of Belle Isle.

Emera would also fund a 180-kilometre subsea link between Cape Ray, N.L., to Lingan, N.S., at a cost of $1.2 billion.

If it proceeds, the project would provide Nova Scotia with 170 megawatts of energy annually — about eight to 10 per cent of that province's total power needs — for 35 years.

Proponents say they hope to have energy flowing by 2018.

The project has been on the drawing board in one form or another for decades. In 1980, it passed an environmental assessment but was set aside due to concerns over market access and financing.

Concerns over the loss of habitat that would result from the development of the project have also stalled its progress in the past. But Nalcor Energy has promised to develop a compensation plan to make up for that.

The idea of building more power plants on the Churchill River in central Labrador can be traced back to 1972, when the Churchill Falls hydroelectric dam was finished.