Trans Mountain Expansion Project -Pipeline – Aboriginal Consultation – Environmental Assessment
Introduction
In this decision, the Federal Court of Appeal (“FCA”) considered consolidated applications for judicial review by Aboriginal groups and two cities (Vancouver and Burnaby) (the “Applicants”), seeking to quash decisions of the NEB and Governor in Council (“GiC”) approving the Trans Mountain Expansion Project (the “Project”), namely:
(a) the NEB decision report dated May 19, 2016 (the “NEB Report”); and
(b) the Order in Council, PC 2016-1069, dated November 29, 2016, made by the GiC (the “Order in Council”).
The Applicants challenged the Order in Council on two principal grounds: (1) the NEB’s process and findings were so flawed that the GiC could not reasonably rely on the NEB Report; and (2) Canada failed to fulfill the duty to consult owed to Indigenous peoples.
The FCA allowed the applications for judicial review of the Order in Council, quashed the Order in Council and remitted the matter to the GiC for redetermination.
The Project
The FCA noted that the Project would increase the number of tankers loaded at the Westridge Marine Terminal in the City of Burnaby from approximately 5 to 34 tankers per month. The Project would increase the overall capacity of Trans Mountain’s existing pipeline system from 300,000 barrels per day to 890,000 barrels per day.
Summary of Conclusions
With respect to the GiC’s reliance on the NEB Report, the FCA’s significant findings included the following:
(a) the NEB unjustifiably defined the scope of the Project under review not to include Project-related tanker traffic;
(b) the unjustified exclusion of marine shipping from the scope of the Project led to successive, unacceptable deficiencies in the NEB’s report and recommendations; and
(c) as a result, the GiC could not rely on the NEB’s report and recommendations when assessing the Project’s environmental effects and the overall public interest.
With respect to the adequacy of Crown consultation with Indigenous groups, the FCA concluded that Canada’s duty to consult was not adequately discharged. The FCA’s findings regarding the adequacy of Canada’s consultation included the following:
(a) Canada acted in good faith and selected an appropriate consultation framework.
(b) However, Canada failed to discharge its duty during the last stage of the consultation process (referred to as Phase III) to engage, dialogue meaningfully, and grapple with the real concerns of the Indigenous applicants, so as to explore possible accommodation of Indigenous groups’ concerns.
Legislative Scheme
The FCA set out the following legislative scheme governing the NEB’s consideration of the Project and the GiC’s Order in Council decision, which relied on findings and recommendations from the NEB Report.
Requirements of the National Energy Board Act
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The NEB must prepare a report setting out its recommendation as to whether a certificate of public convenience and necessity (“CPCN”) should be granted, including the NEB’s recommended conditions of approval [National Energy Board Act (“NEBA”), section 52(1)].
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The NEB’s recommendation is to be based on “all considerations that appear to it to be directly related to the pipeline and to be relevant” and the NEB may consider the enumerated factors, including “any public interest factor that in the Board’s opinion may be affected by the issuance of the certificate or the dismissal of the application” [NEBA, section 52(2)].
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For an application relating to a “designated project,” as defined in section 2 of the Canadian Environmental Assessment Act, 2012, (“CEAA, 2012”), the NEB’s report must set out the NEB’s environmental assessment of the Project [NEBA, section 52(3)].
Requirements of the Canadian Environmental Assessment Act, 2012
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Because the Project included pipeline segments longer than 40 kilometres, it was a designated project (“DP”) under the CEAA, 2012.
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As a result, the NEB was required, as the designated authority under CEAA, 2012, section 15(b), to conduct an environmental assessment as part of its consideration of the Project.
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Section 19(1) of the CEAA, 2012, requires the NEB to consider the enumerated factors listed in that section, including the following:
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the environmental effects and any cumulative environmental effects likely to result from the DP;
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technically and economically feasible mitigation measures; and
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alternative technically and economically feasible means of carrying out the DP and the environmental effects of any such alternative means.
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The NEB must make recommendations to the GiC with respect to its decision about the existence of significant adverse environmental effects and whether those effects can be justified in the circumstances [CEAA, 2012, section 29(1)].
Consideration by GiC of NEB Report
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Once in receipt of the NEB Report prepared in accordance with the requirements of the NEBA and the CEAA, 2012, the GiC may make one of the following three decisions:
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direct the NEB to issue a CPCN for a pipeline and make the CPCN subject to the terms and conditions set out in the NEB Report [NEBA, section 54(1)(a)];
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direct the NEB to dismiss the application for a CPCN [NEBA, section 54(1)(b)]; or
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refer the recommendation set out in the report (including recommended conditions) back to the NEB for reconsideration [NEBA, section 53(1) & (2)].
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With respect to the environmental assessment prepared by the NEB, pursuant to section 31(1) of the CEAA, 2012, the GiC may decide, taking into account the implementation of any recommended mitigation measures specified in the report, that the DP: (i) is not likely to cause significant adverse environmental effects; (ii) is likely to cause significant adverse environmental effects that can be justified in the circumstances; or (iii) is likely to cause significant adverse environmental effects that cannot be justified in the circumstances.
The NEB Report
On May 19, 2016, the NEB issued its report which recommended approval of the Project. The recommendation was based on findings, including the following:
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With the implementation of Trans Mountain’s environmental protection procedures and mitigation measures, and the NEB’s recommended conditions, the Project was not likely to cause significant adverse environmental effects.
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Effects from Project-related increased tanker traffic would contribute to the total cumulative effects on the endangered Southern resident killer whales, and would further impede the recovery of that species.
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The likelihood of a spill from the Project or from a Project-related tanker would be very low in light of the mitigation and safety measures to be implemented. However, the consequences of large spills could be high.
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The NEB’s recommendation and decisions with respect to the Project were consistent with section 35(1) of the Constitution Act, 1982.
The GiC Decision
On November 29, 2016, the GiC issued the Order in Council, accepting the NEB’s recommendation that the Project be approved and directing the NEB to issue a CPCN to Trans Mountain. The FCA noted two recitals in the Order in Council relevant to these applications:
(a) the GiC stated its satisfaction that the consultation process was consistent with the honour of the Crown and the Aboriginal concerns and interests had been appropriately accommodated; and
(b) the GiC accepted the NEB’s recommendation that the Project was required by present and future public convenience and necessity and that it would not likely cause significant adverse environmental effects.
Is the NEB Report Amenable to Judicial Review?
The FCA concluded that applications for judicial review do not lie against NEB reports made pursuant to section 52 of the NEBA recommending whether a CPCN should be issued for a pipeline (citing Nation v. Canada, 2016 FCA 187 at para. 125 (“Gitxaala”)). Under the operative legislative scheme, only the GiC actually decides anything. Any deficiency in an NEB’s report, including its environmental assessment, is to be considered by the GiC and not the Court.
In this case, the City of Vancouver was the only applicant to have challenged the NEB Report, but not the Order in Council. The FCA determined that, as a result, the City of Vancouver was precluded from challenging the Order in Council.
Should the GiC Decision Be Set Aside for Relying on Deficient Recommendations from the NEB Report?
Standard of Review
The FCA concluded that the reasonableness standard of review applied to the question of whether the GiC and the responsible authorities had respected the legislative requirements before determining whether the project at issue was justified despite its adverse environmental effects (citing Gitxaal).
In this case, the FCA explained that the reasonableness standard of review required the Court to be satisfied that the GiC’s decision was lawful, reasonable, and constitutionally valid. To be lawful and reasonable, the GiC must comply with the purview and rationale of the legislative scheme.
The GiC Erred by Relying on the NEB Report as a Proper Condition Precedent to its Decision
The FCA held that the NEB Report was so flawed that it was unreasonable for the GiC to rely on it in making its decision.
The FCA found that the NEB erred by unjustifiably excluding Project-related marine shipping from the Project’s definition, and therefore not including such impacts from its environmental assessment under the CEAA, 2012. While the Board’s assessment of Project-related shipping was adequate for the purpose of informing the GiC about the effects of such shipping on the Southern resident killer whale, the NEB Report was also sufficient to put GiC on notice that the NEB had unjustifiably excluded Project-related shipping from the Project’s definition.
The FCA found that it was this exclusion that permitted the NEB to conclude that:
(a) section 79 of the Species at Risk Act did not apply to its consideration of the effects of Project-related marine shipping; and
(b) notwithstanding its conclusion that the operation of Project-related marine vessels is likely to result in significant adverse effects to the Southern resident killer whale, the Project (as defined by the Board) was not likely to cause significant adverse environmental effects.
The FCA found that the material deficiencies in the NEB Report did not permit the GiC to make an informed decision about the public interest and whether the Project was likely to cause significant adverse environmental effects, as the legislation required.
Should the GiC Decision Be Set Aside on the Ground that Canada Failed to Consult Adequately?
Standard of Review
Citing Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, at paras 61-63, the FCA found that:
(a) the existence and extent of the duty to consult are legal questions reviewable on the standard of correctness, and
(b) the adequacy of the consultation is a question of mixed fact and law which is reviewable on the standard of reasonableness.
In this case, only the question of the adequacy of consultation was subject to dispute, reviewable by the FCA on the reasonableness standard.
Adequacy of the Consultation Process
The FCA found that the consultation framework selected by Canada was reasonable and sufficient. If Canada had properly executed it, it would have discharged its duty to consult. In finding the consultation framework selected to be reasonable, the FCA considered the following:
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the Indigenous applicants were given early notice of the Project, the NEB’s hearing process, the framework of the consultation process and Canada’s intention to rely on the NEB process, to the extent possible, to discharge Canada’s duty to consult;
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participant funding was provided to the Indigenous applicants;
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the NEB process permitted Indigenous applicants to provide written evidence and oral traditional evidence, to question both Trans Mountain and the federal government interveners through information requests and to make written and oral closing submissions;
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the regulatory framework permitted the NEB to impose conditions that were capable of mitigating risks posed by the Project to the rights and title of the Indigenous applicants; and
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after the NEB hearing record closed and before the GiC decision, Canada provided a further consultation phase, Phase III, designed to enable Canada to deal with concerns not addressed by the hearing, the NEB’s proposed conditions, and Trans Mountain’s commitments.
Adequacy of Execution of Consultation Process
The FCA found that in the execution of the consultation process, Canada failed to discharge its duty to consult as a result of following an unreasonable consultation process that fell well short of the required mark. While Canada is not to be held to a standard of perfection, the flaws summarized below thwarted meaningful, two-way dialogue. The FCA found that Canada’s consultation was flawed and inadequate based on the following:
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Missing from the consultation was a genuine and sustained effort to pursue meaningful, two-way dialogue. The FCA found that in response to outstanding concerns raised by Indigenous applicants during Phase III, Canada’s consultation team provided very few responses. When a response was provided, it was brief and did not further two-way dialogue. Too often, in the FCA’s view, the response was that the consultation team would put the concerns before the decision-makers for consideration.
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Missing from Canada’s consultation team was someone representing Canada who could engage interactively. Someone with the confidence of Cabinet who could discuss, at least in principle, required accommodation measures, possible flaws in the NEB’s process, findings and recommendations and how those flaws could be addressed.
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The inadequacies of the consultation process also flowed from Canada’s unwillingness to meaningfully discuss and consider possible flaws in the NEB’s findings and recommendations and Canada’s erroneous view that it could not supplement or impose additional conditions on Trans Mountain.
The FCA found that the above three systemic limitations were then exacerbated by Canada’s late disclosure of its assessment that the Project did not have a high level of impact on the exercise of the applicants’ “Aboriginal Interests” and its related failure to provide more time to respond so that all Indigenous groups could respond.
Remedy
The FCA quashed the Order in Council, rendering the CPCN approving the construction and operation of the Project a nullity. The FCA ordered that that issue of Project approval be remitted to the GiC for prompt redetermination.
In that redetermination, the GiC must refer the NEB’s recommendations and its terms and conditions back to the NEB for reconsideration.
Specifically, the NEB must reconsider on a principled basis whether Project-related shipping is incidental to the Project, the application of section 79 of the Species at Risk Act to Project-related shipping, the NEB’s environmental assessment of the Project in light of the Project’s definition, the NEB’s recommendation under subsection 29(1) of the CEAA, 2012 and any other matter the GiC should consider appropriate.
Further, Canada must re-do its Phase III consultation. Only after that consultation is completed and any accommodation made can the Project be put before the GiC for approval.
Disposition
The FCA allowed the applications for judicial review of the Order in Council, quashed the Order in Council and remitted the matter to the GiC for redetermination.
