Two environmental groups and three individuals assert the federal government has failed to enforce provisions in the Fisheries Act by allowing harmful substances to leak from tailings ponds into surface and ground water sources downstream of the oilsands in northeastern Alberta.
They made their complaint in 2010 to the Commission for Environmental Co-operation, an organization through Canada, the United States and Mexico address environmental issues.
On Wednesday, the CEC determined that the submission "warrants requesting a response from the government of Canada" and gave Ottawa up to 60 days to respond.
The news comes as pipeline giant TransCanada Corp. (TSX:TRP) awaits a final decision from the U.S. on whether it can build its controversial Keystone XL pipeline, which would enable oilsands crude to flow to Texas refineries.
The CEC move sends a signal that the concerns have merit and casts doubt on Canada's ability to manage the environmental impacts of the oilsands, said Gillian McEachern, with Environmental Defence.
"The federal government has been hard at work to convince the U.S. government that it's doing its job and this is another example that it's just simply not," she said in an interview.
"This is yet one more serious example of why the U.S. shouldn't buy the line coming from Canada that things are under control when it comes to the environmental impacts of the industry."
The "submission on enforcement matters" was filed to the CEC by Environmental Defence Canada, the Natural Resources Defense Council and individuals in Alberta, Saskatchewan and the Northwest Territories who live downstream of the oilsands.
Once the CEC receives the government's response, it will decide whether a full review is required.
The body doesn't have any teeth to compel governments or companies to act, but it could raise awareness of the problem and exert pressure to improve enforcement, said McEachern.
"What we want out of this is better enforcement and better environmental management of the tailings issue, so we have written to the federal government, written to the Alberta government," she said.
"We'd worked through other processes to try to improve the situation and it hadn't worked, so we went to this NAFTA side body to try to get another set of eyes on it."
Officials from Environment Canada were not immediately available to comment.