12/21/2012 10:27 EST | Updated 02/20/2013 05:12 EST

Federal Court dismisses legal challenge of Muskrat Falls hydroelectric project

ST. JOHN'S, N.L. - The Federal Court has dismissed a request for a judicial review of the environmental approval process used to clear the way for the Muskrat Falls hydroelectric project.

The Sierra Club Canada, one of the groups that launched the challenge, said it will seek legal advice on what other steps it can take, but executive director John Bennett said it's doubtful it will continue the battle in the courts.

In an interview Friday, Bennett said the environmental group will keep raising public awareness because the federal and provincial governments are "rolling the dice on a huge gamble" both financially and environmentally on Muskrat Falls.

The Sierra Club, Grand Riverkeeper Labrador and the NunatuKavut Community Council argued a federal-provincial panel didn't complete its assessment of Muskrat Falls.

Todd Russell, president of the NunatuKavut Community Council, said the group will review with its legal counsel whether to appeal the ruling to the Federal Court of Appeal, but regardless of its legal options it will continue its public campaign against the project.

"This is not a good project for aboriginal people or the people of the province," he said in an interview.

"You can safely bet there will be more on-the-ground action."

The environmental review panel acknowledged in August 2011 that damage to fish and wildlife habitat would be extensive.

The Sierra Club said the panel failed to study the need for the dam and power station or possible alternatives.

Crown corporation Nalcor Energy's plan with private Nova Scotia utility Emera (TSX:EMA) is to bring hydro power from the lower Churchill River in Labrador to Newfoundland and Nova Scotia using subsea cables.

The federal government has already given a loan guarantee to the $7.7-billion project.

The NunatuKavut Community Council, which represents the Inuit-Metis of southern Labrador, has said the province failed to adequately consult its people or include them in Muskrat Falls benefits.

Nalcor Energy applauded the Federal Court decision.

"We are very pleased that the Federal Court confirmed the lawfulness of the panel's report and the decisions made by the government of Canada following the release of the report," Gilbert Bennett, vice-president for the Lower Churchill project, said in a statement.

Russell said the power station, the dam and transmission lines will have an impact on trap lines used by people in his community and the migration patterns of animals in the area.

"These are the lands that have sustained us and we are not giving them up without a fight," he said.