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Fort McKay First Nation v. Prosper Petroleum Ltd., 2020 ABCA 163

Link to Decision Summarized

Bitumen Recovery Project – Crown Consultation – Honour of the Crown

In this decision, the Alberta Court of Appeal (“ABCA”) considered an appeal from the Fort McKay First Nation (“FMFN”) of the AER’s approval of an application by Prosper Petroleum Ltd. (“Prosper”) for the Rigel bitumen recovery project (the “Project” or “Rigel Project”). The ABCA allowed the appeal.


The FMFN is an “aboriginal people of Canada” under section 35 of the Constitution Act, 1982 and a “band” within the meaning of the Indian Act, RSC 1985, c I-5 that has Treaty 8 rights to hunt, fish and trap within the Moose Lake Area, part of its traditional territory. Due to the extensive industrial and resource development surrounding Fort McKay, FMFN has been concerned regarding the cumulative effect of oil sands on its members’ ability to pursue their traditional way of life in the Moose Lake Area.

The MLAMP Negotiations

The FMFN began negotiating with Alberta in 2001 to obtain protection for the Moose Lake Area. They began discussing a possible Moose Lake Access Management Plan (“MLAMP”) in 2003 to address the cumulative effects of oil sands development on the FMFN’s Treaty 8 rights. The MLAMP negotiations were delayed while the Lower Athabasca Regional Plan (the “LARP”) was negotiated and implemented.

The LARP is a regional plan under the Alberta Land Stewardship Act to manage the region’s natural resources. It was envisaged that, once finalized, the MLAMP would be adopted as a sub-plan of the LARP.

In March 2015, Premier Prentice and Chief Boucher signed a Letter of Intent to confirm “our mutual commitment and interest in an expedited completion of the [MLAMP].” Despite the 2015 Letter of Intent, characterized by FMFN as the “Prentice Promise,” the MLAMP has still not been finalized and is the subject of ongoing negotiations between Alberta and the FMFN.

Prosper’s Application to the AER

Prosper was the proponent of the Rigel Project, a proposed bitumen recovery project that would use steam-assisted gravity drainage to produce 10,000 barrels a day. On June 12, 2018, the AER found the Project to be in the public interest and approved the Project subject to authorization by Cabinet pursuant to s 10(3)(a) of Oil Sands Conservation Act, RSA 2000, c O-7 (“OSCA”).


The Jurisdiction of the AER

The ABCA noted that tribunals have the explicit powers conferred upon them by their constituent statutes. However, where empowered to consider questions of law, tribunals also have the implied jurisdiction to consider issues of constitutional law as they arise, absent a clear demonstration the legislature intended to exclude such jurisdiction. This is all the more so where the tribunal is required to consider the “public interest”. In such circumstances, the regulatory agency has a duty to apply the Constitution and ensure its decision complies with section 35 of the Constitution Act, 1982. The tribunal cannot ignore that aspect of its public interest mandate.

The ABCA, therefore, found that the AER has the implied jurisdiction to consider issues of constitutional law as they arise in its proceedings. Under section 21 of the Responsible Energy Development Act, SA 2012, c R-17.3 (“REDA”), that jurisdiction is explicitly removed where the adequacy of Crown consultation is concerned. However, the ABCA found that issues of constitutional law outside the parameters of consultation remain within the AER’s jurisdiction, including as they relate to the honour of the Crown.

The ABCA noted that, in determining whether the Project was in the “public interest”, the AER considered the effect on FMFN’s treaty rights generally but declined to consider whether approval would frustrate MLAMP negotiations. It gave three reasons for that narrow approach:

(a)      section 21 of REDA prohibits the AER from assessing the adequacy of Crown consultation;

(b)      section 7(3) of LARP prohibits the AER from “adjourning, deferring, denying, refusing, or rejecting any application” by reason only of incompletion of a LARP regional plan; and

(c)      AER approval of the Project under s 10(3) of OSCA is subject to authorization by Cabinet, which is “the most appropriate place for a decision on the need to finalize MLAMP”.

Section 21 of REDA

The ABCA emphasized that, when an energy project is under consideration in Alberta that could affect the treaty interests of a First Nation, the provincial Crown has a duty to consult and potentially accommodate. This duty stems from the honour of the Crown, a constitutional principle. However, section 21 of REDA provides:

The [AER] has no jurisdiction with respect to assessing adequacy of Crown consultation associated with the rights of aboriginal peoples as recognized and affirmed under Part II of the Constitution Act, 1982.

The ABCA noted that most of the responsibility for managing Crown consultation on AER applications rests with the Aboriginal Consultation Office (“ACO”), a specialized office housed within the Ministry of Indigenous Relations. However, the ABCA found that the matters that FMFN sought to put before the AER in relation to the MLAMP negotiations were not limited to the “adequacy of Crown consultation”. The honour of the Crown can give rise to duties beyond the duty to consult.

The ABCA found that section 21 of REDA does not prevent the AER from considering relevant matters involving aboriginal peoples when carrying out its mandate to decide if a particular project is in the public interest. Accordingly, the ABCA concluded that the AER erred in concluding that section 21 of REDA prevented it from considering whether the MLAMP process was relevant to assessing whether the Project was in the public interest.

Section 7(3) of LARP

Under section 20 of REDA, the AER is required to “act in accordance with any applicable ALSA regional plan”. The LARP is the applicable ALSA regional plan for the area where the Project is proposed. Section 7(3) of the LARP states:

Notwithstanding subsections (1) and (2), a decision-maker or local government body must not adjourn, defer, deny, refuse, or reject any application, proceeding or decision-making process before it by reason only of

(a) the Crown’s non-compliance with a provision of either the LARP Strategic Plan or LARP Implementation Plan, or

(b) the incompletion by the Crown or any body of any direction or commitment made in a provision of either the LARP Strategic Plan or LARP Implementation Plan.

The ABCA noted that the AER interpreted s 7(3) as prohibiting it from delaying or denying approval of the Project because once finalized, MLAMP would be a LARP regional plan. However, the only mention of the MLAMP in the LARP is a statement in the “Introductory Section” that “the Moose Lake Access Management planning initiatives will be assessed for inclusion in the LARP implementation.” The ABCA found that a planning initiative that will be assessed for inclusion in the LARP implementation does not fall within the scope of a “provision of either the LARP Strategic Plan or LARP Implementation Plan” so as to be subject to s 7(3). The ABCA, therefore, found that the AER failed to properly interpret s 7(3) of the LARP when it concluded that it applied to the MLAMP process.

Deferring Consideration to Cabinet

The ABCA noted that section 10(3) of OSCA provides that the AER may “if in its opinion it is in the public interest to do so, and with the prior authorization of the Lieutenant Governor in Council, grant an approval on any terms and conditions that the Regulator considers appropriate “.

The ABCA found that matters that fall within the scope of the “public interest”, within the meaning of section 10(3) of OSCA, must be considered by the AER as part of its public interest mandate; the Regulator is not entitled to decline to address such matters because, in its view, they could be better addressed by Cabinet. However, the ABCA noted that this is not to say that Cabinet cannot also take such matters into account when considering whether to authorize the Project, but that does not relieve the AER of its responsibility.

The need for ultimate Cabinet approval does not provide the AER with a lawful reason to decline to consider the MLAMP negotiations and related issues insofar as they implicate the honour of the Crown.


The ABCA found that the AER’s public interest mandate can and should encompass considerations of the effect of a project on aboriginal peoples, which in this case included the state of negotiations between the FMFN and the Crown. The ABCA held that to preclude such considerations entirely takes an unreasonably narrow view of what comprises the public interest, particularly given the direction to all government actors to foster reconciliation.

The ABCA, therefore, allowed the appeal. The ABCA directed the AER to reconsider whether approval of the Project is in the public interest after taking into consideration the honour of the Crown and the MLAMP process.

Greckol J.A. concurred with the majority that the appeal must be allowed. However, Greckol J.A. made a few additional comments by way of guidance regarding the honour of the Crown and the MLAMP negotiations.

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