Regulatory Law Chambers logo

Clyde River (Hamlet) v. Petroleum Geo-Services Inc. (2017 SCC 40)

Download Report

Crown Consultation – Reliance on Regulator to Meet Crown Consultation Obligation – Seismic Testing


In this decision, a companion decision to Chippewas of the Thames First Nation v. Enbridge, Pipelines Inc., 2017 SCC 41 (“Thames”) (summarized above), the Supreme Court of Canada (“SCC”) considered an appeal from a Federal Court of Appeal (“FCA”) decision Hamlet of Clyde River v. TGS-NOPEC Geophysical Company ASA (TGS), 2015 FCA 179, upholding an NEB decision authorizing Petroleum Geo-Services Inc. (the “Proponents”) to conduct seismic testing in Baffin Bay and Davis Strait in Nunavut.

The SCC found that while the Crown may rely on the NEB’s process to fulfill its duty to consult, as also found in Thames, in this case, consultation and accommodation efforts were inadequate.

The SCC therefore allowed the appeal and quashed the NEB’s authorization.

Background

The Hamlet of Clyde River is located on the northeast coast of Baffin Island, in Nunavut. The SCC noted that most residents of Clyde River are Inuit, who rely on marine mammals for food and for their economic, cultural, and spiritual well-being.

The SCC explained that under the Nunavut Land Claims Agreement (1993), the Inuit of Clyde River ceded all Aboriginal claims, rights, title, and interests in the Nunavut Settlement Area, including Clyde River, in exchange for defined treaty rights, including the right to harvest marine mammals.

In 2011, the Proponents applied to the NEB for an authorization under section 5(1)(b) of the Canada Oil and Gas Operations Act (“COGOA”) to conduct seismic testing in Baffin Bay and Davis Strait, adjacent to the area where the Inuit have treaty rights to harvest marine mammals. The proposed testing involved towing airguns by ship through a project area. Those airguns would produce underwater sound waves, intended to find and measure underwater geological resources such as petroleum. The testing was to run from July through November, for five successive years.

The NEB launched an environmental assessment of the project.

Clyde River opposed the seismic testing, and filed a petition against it with the NEB in May 2011. In 2012, the proponents held meetings in communities that would be affected by the testing, including Clyde River.

In April and May 2013, the NEB held meetings in Pond Inlet, Clyde River, Qikiqtarjuaq, and Iqaluit to collect comments from the public on the project. The SCC noted that the proponents attended these meetings. Community members asked basic questions about the effects of the survey on marine mammals in the region, but the proponents were unable to answer many of them. The SCC explained that the Proponents’ failure to adequately answer such questions led the NEB, in May 2013, to suspend its assessment.

In August 2013, the proponents filed a 3,926 page document with the NEB, purporting to answer those unanswered questions. The SCC noted that the vast majority of this document was not translated into Inuktitut. No further efforts were made to determine whether this document was accessible to the communities, and whether their questions were answered. After this document was filed, the NEB resumed its assessment.

In April 2014, representatives for the appellants wrote to the Minister of Aboriginal Affairs and Northern Development and to the NEB, stating their view that the duty to consult had not been fulfilled in relation to the testing. The letter proposed remedying the inadequate consultation by conducting a strategic environmental assessment before authorizing any seismic testing. The appellants submitted that such an assessment was necessary to understand the baseline conditions in the marine environment and to ensure that seismic tests were properly regulated.

In June 2014, the Minister responded, stating that it disagreed that seismic exploration should be put on hold until the completion of a strategic environmental assessment.

A Geophysical Operations Authorisation letter from the NEB soon followed, advising that the environmental assessment report was completed and that the authorization had been granted.

NEB Environmental Assessment Report

In its environmental assessment (“EA”) report, the NEB discussed consultation with Aboriginal groups within the NEB process. It concluded that the Proponents “made sufficient efforts to consult with potentially-impacted Aboriginal groups and to address concerns raised and that Aboriginal groups had an adequate opportunity to participate in the NEB’s EA process.

The NEB also determined that the testing could change the migration routes of marine mammals and increase their risk of mortality, thereby affecting traditional harvesting of marine mammals. The NEB concluded, however, that the testing was unlikely to cause significant adverse environmental effects given the mitigation measures that the proponents would implement.

Legislative Scheme

The SCC explained that COGOA applies to exploration and drilling for the production and transportation of oil and gas in certain designated areas, including Nunavut. Engaging in such activities is prohibited without an operating licence or authorization under COGOA section 5(1). In this case, the NEB was the final decision maker for issuing an authorization under section 5(1)(b) of COGOA.

The SCC further explained that COGOA:

(a) grants the NEB broad powers to accommodate the concerns of Indigenous groups where necessary;

(b) allows the NEB to attach any terms and conditions it sees fit to an authorization issued under section 5(1)(b) and can make such authorization contingent on their performance; and

(c) allows the NEB to require accommodation by exercising its discretion to deny an authorization or by reserving its decision pending further proceedings.

Federal Court of Appeal Decision

Clyde River applied to the FCA for judicial review of the NEB’s decision to grant the authorization. The FCA found that the duty to consult had been triggered because the NEB could not grant the authorization without the minister’s approval (or waiver of the requirement for approval) of a benefits plan for the project. The FCA characterized the degree of consultation owed in the circumstances as “deep” (as that concept was described in Haida Nation) and found that the Crown was entitled to rely on the NEB to undertake such consultation.

The FCA concluded that the Crown’s duty to consult had been satisfied by the nature and scope of the NEB’s processes. The FCA found that the conditions attached to the authorization showed that the interests of the Inuit had been sufficiently considered and that further consultation would be expected. The FCA found that in the circumstances, a strategic environmental assessment report was not required.

SCC Reasons for Allowing Appeal

The SCC characterized the issues arising under the appeal as follows:

(a) Can an NEB approval process trigger the duty to consult?

(b) Can the Crown rely on the NEB’s process to fulfill the duty to consult?

(c) What is the NEB’s role in considering Crown consultation before approval?

(d) Was the consultation adequate in this case?

Duty to Consult

The SCC set out the following general principles regarding the duty to consult:

(a) the duty to consult seeks to protect Aboriginal and treaty rights while furthering reconciliation between Indigenous peoples and the Crown and has both a constitutional and a legal dimension:

(i) its constitutional dimension is grounded in the honour of the Crown, which is enshrined in s. 35(1) of the Constitution Act, 1982, recognizing and affirming existing Aboriginal and treaty rights;

(ii) as a legal obligation, it is based in the Crown’s assumption of sovereignty over lands and resources formerly held by Indigenous peoples (Haida Nation, at para. 53).

(b) the content of the duty, once triggered, falls along a spectrum ranging from limited to deep consultation, depending upon the strength of the Aboriginal claim, and the seriousness of the potential impact on the right;

(c) it is open to legislatures to empower regulatory bodies to play a role in fulfilling the Crown’s duty to consult; and

(d) while the Crown may rely on steps undertaken by a regulatory agency to fulfill its duty to consult in whole or in part and, where appropriate, accommodate, the Crown always holds ultimate responsibility for ensuring consultation is adequate.

NEB Approval Process Can Trigger the Duty to Consult

The SCC explained that the duty to consult is triggered when the Crown has actual or constructive knowledge of a potential Aboriginal claim or Aboriginal or treaty rights that might be adversely affected by Crown conduct.

Contrary to the FCA’s conclusions that only actions by the Crown or its agents can trigger the duty, the SCC found that the NEB’s approval process, in this case, as in Thames, triggered the duty to consult. The SCC explained that while the NEB is not, strictly speaking, the Crown or an agent of the Crown, the NEB acts on behalf of the Crown when making a final decision on a project application. It therefore does not matter whether the final decision maker on a resource project is Cabinet or the NEB. In either case, the SCC explained that the decision constitutes Crown action that may trigger the duty to consult.

NEB Has Powers Necessary to Implement Crown’s Duty to Consult

The NEB has broad powers under both the NEB Act and COGOA to hear and determine all relevant matters of fact and law. The SCC found that there was no provision in either statute to suggest an intention to withhold from the NEB the power to decide the adequacy of consultation. The SCC found that the NEB can determine whether the Crown’s duty to consult had been fulfilled.

The SCC concluded that the NEB has:

(a) the procedural powers necessary to implement consultation;

(b) the remedial powers to, where necessary, accommodate affected Aboriginal claims, or Aboriginal and treaty rights; and

(c) its process can therefore be relied on by the Crown to completely or partially fulfill the Crown’s duty to consult.

The SCC therefore went on to consider whether the NEB’s process did so in this case.

Deep Level of Consultation Required

The SCC explained that deep consultation is required “where a strong prima facie case for the claim is established, the right and potential infringement is of high significance to the Aboriginal peoples, and the risk of non-compensable damage is high”. The SCC found that deep consultation was required in this case.

The SCC found that the appellants had established treaty rights to hunt and harvest marine mammals, as was acknowledged at the FCA as being extremely important to the appellants for their economic, cultural, and spiritual well-being. The SCC also noted that Jerry Natanine, the former mayor of Clyde River, explained that hunting marine mammals “provides us with nutritious food; enables us to take part in practices we have maintained for generations; and enables us to maintain close relationships with each other through the sharing of what we call ‘country food'”.

The SCC found that the risks posed by the proposed testing to these treaty rights were also high. The NEB’s environmental assessment concluded that the project could increase the mortality risk of marine mammals, cause permanent hearing damage, and change their migration routes, thereby affecting traditional resource use. Given the importance of the rights at stake, the significance of the potential impact, and the risk of non-compensable damage, the SCC found that the duty owed in this case fell at the highest end of the spectrum.

Consultation Not Adequate

The SCC found that consultation in this case fell short in the following respects:

(a) First, the SCC found that the inquiry was misdirected because the NEB’s EA report failed to consider the source of the appellants treaty rights to harvest marine mammals, nor the impact of the proposed testing on those rights.

(b) Second, although the Crown sought to rely on the NEB process as fulfilling its duty to consult, the SCC found that this was not made sufficiently clear to the Inuit.

(c) Third, and in the SCC’s view most important, the NEB process did not fulfill the Crown’s duty to conduct deep consultation, as was required in this case.

The SCC explained that deep consultation “may entail the opportunity to make submissions for consideration, formal participation in the decision-making process, and provision of written reasons to show that Aboriginal concerns were considered and to reveal the impact they had on the decision” (citing Haida Nation at para 44).

The SCC found that limited opportunities for participation and consultation were made available to the appellants. The SCC noted that unlike many NEB proceedings, including the proceedings considered in Thames, there were no oral hearings, and while the appellants filed some scientific evidence, they did not receive participant funding.

The SCC concluded that, given the Inuit’s established treaty rights and the risk posed by the proposed testing to those rights, the consultation process was in this case “significantly flawed.”

Decision

The SCC concluded that the Crown breached its duty to consult the appellants in respect of the proposed testing. The SCC allowed the appeal, thereby quashing the NEB’s authorization.

Related Posts

Judd v Alberta Energy Regulator, 2024 ABCA 154

Judd v Alberta Energy Regulator, 2024 ABCA 154

Link to Decision Summarized Download Summary in PDF Appeal – Production of Records Application Michael Judd ("Appellant") appealed a decision by the Alberta Energy Regulator (“AER”) that denied his...