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Federal Court Suspends Mackenzie Gas Project Joint Review Panel

Fasken
Reading Time 14 minute read
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On Nov. 10, 2006, in a decision that may have broad practical and legal consequences, Mr. Justice Phelan of the Federal Court Trial Division accepted arguments brought forward by the Dene Tha’ First Nation and enjoined members of the Joint Review Panel (the “JRP”) reviewing the Mackenzie Gas Project (the “MGP”) from considering any aspect of the MGP that affects either the treaty lands or the aboriginal rights of the Dene Tha’ First Nation. Phelan J. also enjoined the JRP from issuing any report of its proceedings to the National Energy Board (the “NEB”). The interim injunction is in effect until a hearing on permanent remedies takes place. 

Mr. Justice Phelan found that the federal Ministers of Environment, Fisheries and Oceans, Indian and Northern Affairs, and Transport (the “Ministers”) were under a duty to consult with the Dene Tha’ in respect of the MGP, including the facilities to be built in north-western Alberta to connect with the MGP (the “Connecting Facilities”). The Court found that the Ministers had breached this duty.

FACTS

The Dene Tha’ are an aboriginal group with approximately 2500 members, the majority of whom reside on seven reserves located in north-western Alberta. They define their “traditional territory” as lying primarily in Alberta, but also extending into northeastern British Columbia and the southern Northwest Territories. The Dene Tha’ are signatories to Treaty 8.

The MGP anticipates the creation of a pipeline corridor originating in Inuvik in the far north of the Northwest Territories and terminating 15 metres south of the Northwest Territories-Alberta border. Although none of the pipeline runs directly through Dene Tha’ reserves, the Connecting Facilities (to be built by NOVA Gas Transmission Ltd.) pass through a Dene Tha’ trap line and run through territory over which the Dene Tha’ has Treaty 8 rights to hunt, trap, fish and gather plants for food.

The process that the Court reviewed in this case was unique, and was established for the MGP project.

On Aug. 3, 2004, the federal Minister of the Environment (MOE), the MVEIRB (composed of delegates from the Gwich’in, Sahtu, and the Deh Cho), and the Inuvialuit Game Council concluded an Agreement for an Environmental Impact Review of the Mackenzie Gas Project. The agreement created the JRP, a body specifically established to deal with the environmental assessment of the MGP. The JRP had no mandate to conduct aboriginal consultation (nor does it appear that any other Crown entity had responsibility for aboriginal consultation). The JRP Agreement specified the mandate of the JRP and the scope of the environmental impact assessment it would conduct. It also provided that the MVEIRB, the MOE, and the Inuvialuit Game Council would each appoint members of the panel.

The scope of the JRP’s environmental assessment and the proponent’s Environmental Impact Statement (EIS) included the MGP and the Connecting Facilities for the purposes of the JRP process, that is, for the purposes of the environmental assessment. On July 18, 2005, the JRP concluded it had received sufficient information from the proponent to commence the public hearing process. Commencing on Feb. 14, 2006, the hearings are scheduled to continue into next year. The JRP Report will inform the NEB decision with respect to whether to recommend the issuance of a Certificate of Public Convenience and Necessity. The NEB will then continue its hearings, allowing the public an opportunity to respond to the contents of the report.

The Dene Tha’ had met with representatives of the federal government’s Crown Consultation Unit (“CCU”) and made known its aboriginal and treaty rights as well as its need of financial assistance to facilitate meaningful consultation efforts. However, on July 14, 2004, the CCU delivered the draft Environmental Impact Terms of Reference and draft JRP Agreement from the CCU. The Court found that this was the first time that the Dene Tha’ were formally made aware of the proposed JRP process.

The Dene Tha’ were given until the following day to respond to these documents.

ARGUMENTS OF THE DENE THA’

The Dene Tha’ alleged that based on their treaty and aboriginal rights, the Ministers had a duty to consult with them in respect of the MGP, and that the Ministers had breached that duty. In particular, the Dene Tha’ argued that the breach had occurred in the decision to exclude them from discussions and decisions regarding the design of the regulatory and environmental review processes related to the MGP.

ARGUMENTS OF THE MINISTERS

The Ministers denied that any duty to consult with the Dene Tha’ arose in respect of the design of the regulatory and environmental review processes and argued that, in any event, the Ministers’ behaviour was sufficiently reasonable to discharge any such duty.

The Ministers justified their differential treatment of the Dene Tha’, in comparison to other aboriginal groups, on two basic grounds. First, they argued that since different First Nations have different rights, it is reasonable to treat each individually in accordance with these differences. The Ministers argued that the Dene Tha’ were dissimilar in that they did not have a settled land agreement, they were not negotiating such an agreement, and that their uncontested territory lies south of the Northwest Territories-Alberta border. Second, the Ministers argued that since the Dene Tha’ were parties to Treaty 8, their aboriginal rights and title north of the 60th parallel had been extinguished.

DECISION

Review of Duty to Consult

The Court found that a duty to consult with the Dene Tha’ arose as a result of the honour of the Crown and the fact that the Dene Tha’ were parties to Treaty 8. The Court said that it did not need to consider the Dene Tha’ claims of aboriginal rights north of the 60th parallel in concluding that the Crown had a duty to consult with the Dene Tha’. In a useful review of previous consultation cases, the Court noted that a specific infringement of an aboriginal right is no longer necessary for the Crown’s duty to consult and, potentially, accommodate aboriginal interests to be engaged. Relying on the Supreme Court of Canada’s decision in Haida, the Court found that the Crown’s duty to consult is triggered when there is an existing or potentially existing aboriginal right that might be affected adversely by the Crown’s contemplated conduct, when the Crown has knowledge (subjective or objective) of this right and when the Crown contemplates conduct that might adversely affect such a right.

Still following Haida, the Court noted that the content of the duty to consult and accommodate is “inherently variable” and dependant upon the strength of the case supporting the asserted right and the seriousness of the potential impact on the right. The Court noted that in assessing whether the Crown has fulfilled its duty of consultation, the goal - reconciliation - must be “firmly kept in mind” and is not to be narrowly interpreted as the mitigation of adverse effects on aboriginal rights or title. Rather, the consultation is to be given a broad interpretation in light of the context of the Crown-aboriginal relationship.

Finally, the Court held at the low end of the spectrum the duty to consult requires the Crown to give notice, disclose information, and discuss any issues raised in response to this notice. On the high end of the spectrum, the duty requires the opportunity to make submissions for consideration, formal participation in the decision-making process, and the provision of written reasons that reveal that aboriginal concerns were considered and affected the decision.

Application to the Facts

The Court said:

[3] This Court’s conclusion is that the Ministers breached their duty to consult the Dene Tha’ in its conduct surrounding the creation of the regulatory and environmental review processes related to the MGP from as early as the first steps to deal with the MPG in late 2000 through to early 2002 and continued to breach that duty to the present time. The Dene Tha’ had a constitutional right to be, at the very least, informed of the decisions being made and provided with the opportunity to have its opinions heard and seriously considered by those with decision making authority. The Dene Tha’ were never given this opportunity, the Ministers having taken the position that no such duty to consult had arisen yet.

Given the scope of the MGP and its impact throughout the area in which it would function, the Court held that it was “hardly surprising that the parties are in agreement that the construction of the MGP itself triggers the Crown’s duty to consult”. The Court noted that a public forum process is not a substitute for formal consultation and the right to consultation takes priority over the rights of other users, stating:

[14] The Court was not asked to determine the legitimacy of the Dene Tha’s claim to Aboriginal rights in the NWT. Moreover, as the Dene Tha’s Treaty 8 rights in Alberta are sufficient to trigger a duty to consult, there is no need to make such a determination in order to resolve this judicial review.

[100] Dealing with the third question first, the conduct contemplated here is the construction of the MGP. It is not, as the Crown attempted to argue, simply activities following the Cooperation Plan and the creation of the regulatory and environmental review processes. These processes, from the Cooperation Plan onwards, were set up with the intention of facilitating the construction of the MGP. It is a distortion to understand these processes as hermetically cut off from one another. The Cooperation Plan was not merely conceptual in nature. It was not, for example, some glimmer of an idea gestating in the head of a government employee that had to be further refined before it could be exposed to the public. Rather, it was a complex agreement for a specified course of action, a road map, which intended to do something. It intended to set up the blue print from which all ensuing regulatory and environmental review processes would flow. It is an essential feature of the construction of MGP.

[101] Turning now to the first question, the right in question is the Dene Tha’ Treaty 8 right. As it is a signatory to the treaty agreements, the federal government has imputed knowledge of the existence of treaty rights (Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), [2005] 3 S.C.R. 388). There is no dispute that the Dene Tha’ has Treaty 8 rights in the territory in which the MGP and Connecting Facilities will run, and the federal government has knowledge of these rights. At the time of the Cooperation Plan, all versions of the proposed routing of the pipeline envisioned it going through Dene Tha’ Treaty 8 territory in Alberta.

Additionally, the Court found that the federal government contemplated that the construction of the MGP had the potential of adversely affecting aboriginal rights. As a result, the Crown was deemed to have constructive knowledge of the fact that setting up a Cooperation Plan to coordinate the environmental and regulatory processes was an integral step in the MGP, which the Crown admitted had the potential to adversely affect the rights of the Dene Tha’. Therefore, the duty to consult was found to arise somewhere between the contemplation of the Cooperation Plan and its finalization in 2002. The Court held:

[109] There can be no question that the Crown had, at the very least, constructive knowledge of the fact that the setting up of a Cooperation Plan to coordinate the environmental and regulatory processes was an integral step in the MGP, a project that the Crown admits has the potential to affect adversely the rights of the Dene Tha’.

[110] The duty to consult arose at the earliest some time during the contemplation of the Cooperation Plan – that is, before its finalization in 2002. At the latest before the JRP Agreement was executed. For purposes of this case, nothing turns on the fixing of a more precise date as no consultation occurred during the creation of the Cooperation Plan or indeed the other regulatory processes through to July 15, 2004….

[114] By depriving the Dene Tha’ of the opportunity to be a participant at the outset, concerns specific to the Dene Tha’ were not incorporated into the environmental and regulatory process. Among the concerns cited by the Dene Tha’, two stand out: its concern over the enforceability of the federal review process’ conclusions vis-à-vis the Alberta portion of the pipeline (the “Connecting Facilities” to be operated and owned by Nova Gas Transmission Limited) and the absence of funding to be able to engage in meaningful consultation.

The Court held that consultation cannot be meaningful if it is inadvertent or de facto. Furthermore, by depriving the Dene Tha’ of the opportunity to be a participant at the outset, concerns specific to them were not incorporated into the environmental and regulatory process. The Court held that even though the parties agreed that the highest level of consultation was required, “not even the most minimal threshold of consultation was met”. Again, the Court pointed to the fact that the Dene Tha’ were not even notified of the creation of the Cooperation Plan.

The Court compared the treatment of other First Nations in relation to the Dene Tha’. In summary, the Court held that unlike the Inuvialuit, the Sahtu, and the Gwich’in, the Dene Tha’ has no settled agreement with Canada, which created new regulatory agencies assigned to the task of managing the land and resources within the respectively defined territories. Through these Boards and their representatives, the majority of the other First Nations were able to consult meaningfully with Canada about the anticipated effects of the MGP. In contrast, the Dene Tha’ has no settled land claim agreement, no regulatory Board, and no representation on any Board.

It is important to emphasize that the Court was dealing with a unique body, the JRP, that was set up to deal with an environmental assessment, which was scoped to include portions of the project within the Dene Tha’ treaty area. The Court held that not including the Dene Tha’ at this early stage was a breach of the duty to consult. Even if the duty to consult did not arise until the point at which the JRP process was being created and finalized, providing the Dene Tha’ with 24 hours notice to respond did not fulfill the duty.

At the very least, the Court held, the Dene Tha’ had a constitutional right to be informed of the decisions being made and provided with the opportunity to have their opinions heard and seriously considered by those with decision-making authority.

The Standard of Review

The Court found that the question as to the existence of a duty to consult and accommodate is one of law, for which the appropriate standard of review is correctness. However, where the duty is premised on factual findings that cannot be extricated from the legal question, more deference is warranted and the standard should be reasonableness. The standard of review for assessing whether the government’s actions or efforts complied with the duty is that of reasonableness. In other words, the process adopted by government does not need to be perfect. 

Declaration of Duty to Consult and Order for Remedies Hearing

In the result, the Court issued a declaration that the Ministers are under a duty to consult with the Dene Tha’ in relation to the MGP, including the Connecting Facilities. The Court further declared that the Ministers breached their duty to consult. Perhaps uniquely, at least in terms of the Court’s express requirement for such a process, the Court ordered that a further “remedies hearing” take place and that certain issues be addressed at that hearing including:

  • whether the Crown should be required to appoint a “Chief Consulting Officer” (similar to a Chief Negotiator in land claims) to consult with the Dene Tha’; 
  • the mandate for any such consultation;
  • the provision of technical assistance and funding to the Dene Tha’ to carry out the consultation;
  • the role, if any, that the Court should play in the supervision of the consultation; and
  • the role that other entities, including the JRP and NEB, should have in any such consultation process.

The Court indicated that it would issue final orders of declaration and an order to consult upon terms and conditions to be stipulated following a remedies hearing. To preserve the situation until the issuance of a final remedy, the Court enjoined the members of the JRP from considering any aspect of the MGP that affects either the treaty lands of the Dene Tha’ or the aboriginal rights claimed by the Dene Tha’. The Court also enjoined the JRP from issuing any report of its proceedings to the NEB. 

SUMMARY

At one level, the Court’s decision simply applies previously determined principles in respect of the Crown’s obligation to consult from Haida and Mikisew to the facts regarding the MGP and the Dene Tha’, including when the Court determined that the Crown’s duty arose. In this context, the decision reinforces that the duty to consult can arise at a “strategic” level, early in the planning process for a project, and may involve issues such as the process for project review that are beyond the direct impact of project-related activities on the exercise of aboriginal or treaty rights. 

The Court’s requirement for a “remedies hearing”, and its identification of specific issues to be addressed at that time, appear to contemplate a potential departure from the Court’s normal role. While there have been numerous previous cases where rather than make an order setting aside the government authorization in question, courts have directed that further consultation take place, the issues identified by the Court in this case potentially suggest the Court ordering that a specific consultation process take place. 

Fundamentally, as far as private parties are concerned, this decision, like many others in this area, reinforces the practical requirement of ensuring that the Crown discharges its obligation to consult with respect to Crown-conduct upon which private parties rely in order to proceed with a project. Where the Crown fails to discharge its duty, private parties will suffer. It is, therefore, in the interest of private parties that the Crown recognizes and discharges its duty to consult.

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