Environmental rights groups took the Newfoundland and Labrador petroleum board to court Monday, arguing the regulator broke federal law by granting a company a new licence to explore an area in the Gulf of St. Lawrence after the company's rights to the site had already expired.

Ecojustice, acting on behalf of clients including the Suzuki Foundation, Nature Québec and the Sierra Club, filed a lawsuit in 2017 alleging that the Canada-Newfoundland and Labrador Offshore Petroleum Board illegally granted Corridor Resources another offshore drilling licence after time ran ran out on its first one in January 2017.

Lawyers for Ecojustice, the petroleum board and the company appeared in the provincial Supreme Court on Monday.

Under its original licence, Corridor had a maximum of nine years, from 2008 to 2017, to explore an area of the Gulf known as the "Old Harry."

The dispute is over an area of the Gulf of St. Lawrence seabed known as Old Harry. (The Gazette)

It did not drill during that time. In 2017, a day after its licence expired, the petroleum board approved a new one, Ecojustice said.

Ecojustice is contesting that move amounts to an unlawful extension of the company's rights to the land, arguing the company has essentially become a squatter, occupying valuable public lands while not using them and paying nothing.

Exploratory licences for oil and gas drilling legally cannot exceed nine years.

"This is about respect for rule of law and resource management, and a clear nine-year limit the law imposes for resource companies to either show that they can explore in an environmentally responsible manner, or get off the land," Ecojustice lawyer Josh Ginsberg said outside the courtroom Monday.

Project halted

The Old Harry project was halted last year, after Corridor Resources failed to attract business partners. The company also cited data showing the site may not be oil-rich as previously hoped.

The Old Harry site, located about 80 kilometres off the southwest tip of Newfoundland in an area that straddles the N.L.-Quebec border, had been speculated to hold significant oil and gas reserves.

Ecojustice says the area within the licence's boundaries is home to endangered species such as the North Atlantic right whale, pictured here in the Gulf of St. Lawrence. (Peter Duley/NOAA Fisheries Northeast Fisheries Science Center)

Environmental groups have long been opposed to drilling in the Gulf of St. Lawrence, which Ecojustice says is inhabited by more than 4,000 species, including blue whales and leatherback sea turtles.

A successful challenge, Ecojustice says, would create an opportunity to set a new course, away from resource development in the area and towards conservation.

"Let's remember what's at stake here, which is the future of one of Canada's most fragile ecosystems," said Ginsburg. "This is about what happens in the Gulf of St. Lawrence, which is home to a plethora of endangered species, which is important for fishing and important for tourism. So the future of that region is in the balance."

In court, the C-NLOPB maintained it did nothing wrong by granting the company a new exploration licence, arguing that it had the authority to extend the licence and that its interpretation of the law was reasonable.

The case was put on hold due to incoming bad weather in St. John's. Lawyers for the company and the province will resume arguments Tuesday.

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