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Duty to Consult – Order in Council – Facilities – Pipeline

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The Federal Court of Appeal (“FCA”) received nine applications for judicial review of Order in Council (“OIC”) P.C. 2014-809. The OIC ordered the NEB to issue two certificates of Public Convenience and Necessity on specific conditions for the Northern Gateway Project proposed by Northern Gateway Pipelines Inc. and Northern Gateway Pipelines Limited Partnership (collectively, “Northern Gateway”). Northern Gateway would transport oil and condensate from Bruderheim, Alberta to Kitimat, British Columbia. Included in the FCA’s consideration of the applications were five applications for judicial review of the Joint Review Panel’s (the “JRP”) report recommending approval of Northern Gateway, acting under the National Energy Board Act and the Canadian Environment Assessment Act, 2012.

The Gitxaala Nation, Gitga’at First Nation, Haisla Nation, the Council of the Haida Nation, the Katasoo Xai’Xais Band Council, the Heiltsuk Tribal Council, the Nadleh Whut-en Band, and the Nak’azkli Whut’en Band (the “OIC Appellants”) appealed the OIC on the basis that the Crown in Right of Canada (“Canada”) had not discharged its duty to consult with Aboriginal groups.

UNIFOR, ForestEthics Advocacy Association, Living Oceans Society, Raincoast Conservation Foundation and the Federation of British Columbia Naturalists (the “JRP Appellants”) appealed on the basis that the JRP’s conclusions were unreasonable or incorrect.

The FCA summarized Canada’s consultation process as follows:

• Phase I: Preliminary Phase. Consisting of consultation on the draft JRP agreement and information would be provided to Aboriginal Groups on the mandates of the National Energy Board and the Canadian Environmental Agency and the Joint Review Panel process

• Phase II: Pre-hearing Phase. Information would be given to Aboriginal groups concerning the JRP process

• Phase III: The Hearing Phase. During this time, the JRP would hold its hearings. Aboriginal groups would be encouraged to participate and to provide information to help the Joint Review Panel in its process and deliberations.

• Phase IV: The Post-Report Phase. Following the release of the Report of the JRP, the Crown was to

• engage in consultation concerning the Report and on any project-related concerns that were outside of the JRP’s mandate.

• Phase V: The Regulatory/Permitting Phase. During this phase, further consultation was contemplated concerning permits and authorizations to be granted for the Project, if approved.

The FCA concluded that the OIC was acceptable and defensible on the facts and law, and was therefore reasonable, being within the wide margin of discretion afforded to the Governor in Council. However, the FCA held that the Governor in Council could not make the OIC unless Canada had also fulfilled its duty to consult with Aboriginal peoples.

The FCA noted that in February 2009, the JRP accepted submissions and public comments from Aboriginal groups, and discussed how consultation would be carried out. The FCA noted that the Gitga’at, Gitxaala and Haisla each met with Canada at this time. The result of this process was that Canada would engage in a “whole of government” approach to Aboriginal consultation and engagement, including reliance where possible on the consultation efforts of Northern Gateway and the JRP itself.

In 2010, the JRP issued procedural directions seeking comment from the public, including Aboriginal groups, concerning a draft list of issues. This culminated in the hearing order from the JRP, which gave notice that hearings would commence in January 2012.

At that time, the FCA noted, Canada consulted with representatives of some of the OIC Appellants. Most of the OIC Appellants also intervened in the proceedings before the JRP, along with Natural Resources Canada, Aboriginal Affairs and Northern Development Canada, Fisheries and Oceans Canada, the Canadian Coast Guard, Transport Canada, and Environment Canada.

The Canadian Environmental Assessment Agency also provided funding to public and Aboriginal groups to facilitate their participation in both the JRP process and consultation with Canada.

It was at this time, the FCA noted, that the Jobs, Growth and Long-Term Prosperity Act came into force, repealing the 1992 version of the Canadian Environmental Assessment Act. Proceeding under the amended legislation, the JRP had two main tasks: to provide a report pursuant to section 52 of the National Energy Board Act; and to include recommendations flowing from the environmental assessment conducted under the Canadian Environment Assessment Act, 2012, section 29(1).

The JRP held its hearings from September 2012 through to June 2013, where parties asked questions and filed arguments.

The FCA found that overall, the parties had ample opportunities to participate in the JRP process, and generally availed themselves of that opportunity.

The JRP released its report on December 19, 2013, finding that Northern Gateway was in the public interest, and recommended that the applied-for certificates be issued subject to 209 conditions. The conditions included ongoing and enduring opportunities for affected Aboriginal groups to have input into the planning construction and operation of Northern Gateway through various programs and benefits. The JRP recommended to the Governor in Council that:

• potential adverse environmental effects from Northern Gateway alone are not likely to be significant;

• adverse effects of the Project, in combination with effects of past, present and reasonably foreseeable activities or actions are likely to be significant for certain woodland caribou herds and grizzly bear populations; and

• the significant adverse cumulative effects in relation to the caribou and grizzly bear populations are justified in the circumstances.

Following the release of the JRP’s report, Phase IV of the consultation framework took place. This was the main focus of the FCA’s review of the consultation process.

Canada began Phase IV by sending letters to Aboriginal groups, seeking input on how the JRP’s recommendations and conclusions addressed their concerns. Canada also met with representatives from Aboriginal groups to discuss their concerns. Following these meetings, Canada issued the Report on Aboriginal Consultation Associated with the Environmental Assessment.

On June 17, 2014 the OIC was issued, and later published in the Canada Gazette on June 28, 2014. In July 2014, Canada wrote to a number of Aboriginal groups, offering explanations for certain comments made and explaining the OIC itself.

Approach to Judicial Review

The FCA outlined its approach to the judicial review sought in this case by dealing with preliminary issues, determining the standard of review, assessing the administrative decision against the standard of review to see if the FCA should interfere, and if so, what the appropriate remedy is.

Legislative Scheme

The FCA found that this was the first case to consider the legislative schemes of the National Energy Board Act and the Canadian Environmental Assessment Act, 2012 paired with the substantial decision making by the Governor in Council. Accordingly, the FCA held that cases considering other legislative schemes were not relevant to its analysis.

The FCA summarized the legislative scheme broadly speaking in the following manner:

• the proponent of a project applies for a certificate approving the project;

• In response, an environmental assessment is conducted and recommendations are prepared and presented to the Governor in Council in a report; and

• From this information, the Governor in Council decides whether the certification should or should not be issued.

In this specific circumstance, there were two stages in the decision making process: a report stage and a decision stage.

In the report stage, the report of the JRP included an environmental assessment prepared in fulfillment of the requirements of the National Energy Board Act and the Canadian Environmental Assessment Act, 2012. The report stage set out a recommendation as to whether the certificates sought by the applicant should be granted and, if so, on what conditions. The FCA noted that, once made, the report is final and conclusive subject only to section 53 and 54 of the National Energy Board Act which empower the Governor in Council to consider the report and decide what to do with it.

Notably, the environmental assessment itself is not submitted to the Governor in Council, only the report of it with recommendations concerning its subject matter.

Once the report is completed with recommendations, the FCA explained that the Governor in Council has three options to dispose of the report:

• It can “direct the Board to issue a certificate in respect of the pipeline or any part of it and to make the certificate subject to the terms and conditions set out in the report” pursuant to section 54(1)(a) of the National Energy Board Act. If this option is pursued, the Board has no discretion. It must grant the certificates within seven days. As part of its consideration, the Governor in Council is obligated to consider whether adverse environmental effects will occur and whether such effects may be justified, and may further impose conditions that must be complied with through a “decision statement” it can cause the Board to issue. The NEB must thereafter issue the decision statement (which forms part of the certificate) within seven days.

• It can “direct the Board to dismiss the application for a certificate” pursuant to section 54(1)(b) of the National Energy Board Act. If this option is pursued, the NEB must dismiss the certificates within seven days.

• It can remit the matter to the NEB to reconsider its recommendations or terms and conditions, and within a specific time limit if need be. After reconsideration the NEB re-submits its report, and the Governor in Council decides again among these three options.

The FCA dismissed the applications for judicial review of the JRP report, holding that the report itself was not a “decision” under the legislative scheme, and that any deficiency in the report was to be considered solely by the Governor in Council, not the Courts.

In a similar vein, the FCA held that the NEB does not make any real decisions under the legislative framework, holding that the NEB is directed to issue the certificates, either with or without a decision statement, and has no real discretion to exercise after the Governor in Council has rendered its decision. The NEB simply does what the Governor in Council directs.

In the FCA’s determination then, the primary attack must be against the Governor in Council’s OIC, as the issuance of the certificates follows automatically from the OIC.

Standard of Review

Many of the appellants argued that the relevant standard of review had already been established in Council of the Innu of Ekuanitshit v. Canada (Attorney General), where the FCA determined that a failure to follow processes under the Canadian Environmental Assessment Act could invalidate the relevant OIC.

However, the FCA dismissed this argument on the grounds that the decision of the Governor in Council in that instance was reviewing a decision made by others based on an environmental assessment. The FCA held instead that the decision of the Governor in Council balanced a broad variety of matters, including matters that fall within the role of the executive in government. The FCA held that executive authority is vested in the Crown, which is also subject to the duty to consult Aboriginal peoples.

The FCA noted that the factors that the Governor in Council may take into account are so broadly worded that they may include “literally anything relevant to the public interest.” Accordingly, the FCA held that given the very broad margin of appreciation and discretion afforded to the Governor in Council in rendering its decision, the decision would be reviewed on a standard of reasonableness – that is, whether the decision falls within a range of acceptable and defensible decisions on the facts and the law.

Review of the Decision

The FCA held that the OIC was reasonable on the basis of the facts and law before it. The FCA found that the Governor in Council was entitled to assess the sufficiency of the information and balance the economic, cultural, environmental and other considerations in coming to its conclusions. The FCA determined that, to rule otherwise would be to second guess the Governor in Council’s appreciation of the facts, its choice of policy, weighting of competing public interest considerations, and its access to scientific expertise. The FCA found that these matters were outside of the purview of the courts.

However, the FCA also held that Canada owes a duty of consultation to Aboriginal peoples concerning Northern Gateway, and that if that duty were unfulfilled, that the OIC could not stand. All of the parties to the action conceded on this point.

Duty of Consultation

Following on principles of statutory interpretation, the FCA held that although the National Energy Board Act does not list the duty to consult among the factors to be considered by the Governor in Council, such silence cannot be intended to oust the duty to consult. The FCA found that Parliament is presumed to wish its legislation to be valid, and does not intend any absurd, inequitable or unconstitutional results.

The FCA explained that the duty to consult arises when the Crown has actual or constructive knowledge that Aboriginal rights or title may be adversely affected by some act. This duty, according to the FCA, is ground in the honour of the Crown, and the extent of the duty is commensurate with the strength of the claim or rights being asserted and the seriousness of potential impacts. The FCA explained that consultation requirements are essentially a spectrum, citing that a weak Aboriginal interest or minor infringement might only attract a requirement to give notice. In contrast, where the potential infringement is of high significance, and the risk of non-compensable damage is high, a deep consultative process is required. Such a consultation process might require an opportunity to make submissions, participation in the formal decision making process, or an entitlement to reasons showing how Aboriginal concerns were considered and factored in the ultimate decision.

The FCA explained that the Crown may rely on a regulatory or environmental process to fulfill the duty to consult. However, the FCA also pointed out that the consultation process did not dictate a particular substantive outcome, nor did the consultation process equate to a duty to agree.

The standard to which Canada was held, in the determination of the FCA, was not perfection in fulfilling its duty to consult, but rather reasonableness. Accordingly, the FCA stated the relevant test as whether reasonable efforts to inform and consult were made.

However, even on this standard, the FCA held that Canada fell well short of the mark.

In respect of the consultative process, Canada submitted that it consulted using its five phase process, through:

• Direct engagement by Canada with affected Aboriginal groups, both before and after the Joint Review Panel process.

• Participation by Canada in the JRP process in order to effectively and meaningfully:

  • gather, distribute and assess information concerning the Project’s potential adverse impacts on Aboriginal rights and interests;

  • address adverse impacts to Aboriginal rights and interests by assessing potential environmental effects and identifying mitigation and avoidance measures; and

  • ensure, to the extent possible, that specific Aboriginal concerns were heard and, where appropriate, accommodated.

• The provision of almost $4,000,000 in participant funding by Canada to 46 Aboriginal groups to assist their involvement in the Joint Review Panel process and related Crown consultations.

• The provision of written reasons to Aboriginal groups explaining how their concerns were considered and addressed.

The OIC Appellants alleged a number of following flaws with Canada’s consultation process, a number of which are examined in the following subheadings.

The Governor in Council prejudged the approval of Northern Gateway

The Gitxaala submitted that statements by the Minister of Natural Resources made in the Globe and Mail on July of 2011, wherein he stated that Northern Gateway “is in the national interest” was evidence of bias which prejudged the approval of Northern Gateway.

The FCA did not accept this statement as evidence of bias, as a comment by one Minister made several years prior to the final decision was insufficient to establish a prejudgment of the outcome. The FCA held that the decision maker in this case was the Governor in Council, and that the approval of Northern Gateway was not a judicial or quasi-judicial decision. Accordingly, the duty of impartiality was not co-extensive with that imposed on judicial or quasi-judicial decision-makers.

Canada’s consultation framework was unilaterally imposed on the First Nations; there was no consultation on it

The Haisla Nation argued that while it was given opportunity to comment on the JRP process, it was not consulted on the Crown consultation process itself. Numerous other OIC Appellants made similar submissions about the five phase review process.

The FCA held that as a matter of law, the Crown holds discretion as to how it structures the consultation process and how the duty to consult is met. The FCA also noted that Canada significantly changed aspects of the JRP process in response to consultation efforts with Aboriginal groups, and provided ample opportunity for participation.

Accordingly, the FCA dismissed this alleged flaw in the consultation process, holding that Canada’s efforts were reasonable.

The consultation process was over-delegated: the JRP was not a legitimate forum for consultation and it did not allow for discussions between Canada and affected First Nations

The Haisla asserted that consultation was a two-way dialogue, and that the JRP process, as a quasi-judicial forum, was inappropriate for use as a tool of direct consultation and engagement.

The FCA held that reliance on an administrative or regulatory tribunal can fulfill Canada’s duty to consult. However, the FCA held that because Canada planned further consultations beyond the FCA process, Canada had not inappropriately delegated or relied on the JRP process to fulfill its duty to consult.

Accordingly, the FCA dismissed this alleged flaw in the consultation process, holding that Canada’s efforts were reasonable.

Canada either failed to conduct or failed to share its assessment of the strength of the First Nations’ claims to Aboriginal rights or title

The Gitxaala argued that, despite repeated requests, Canada did not assess the strength of their claims to governance and title rights during the consultation, not did the Gitxaala receive Canada’s assessment of the strength of its claims. Several other OIC Appellants made similar supporting submissions.

The Haisla pointed to a letter from Canada which stated that “the federal government is currently updating its strength of claim and depth of consultation assessment and will provide a description of this analysis to the Haisla Nation once this work is completed and ready to be released.” The Haisla submitted that it never received such an analysis from Canada.

The FCA determined that Canada did not, in fact make a commitment to provide its actual legal analysis of the strength of claim. Rather, in the FCA’s determination, Canada committed to providing a description of the analysis as an informational component. The FCA further held that the Haisla were provided with a preliminary strength of claim assessment which supported the Haisla Nation, in Canada’s view, as having a strong prima facie claim to both Aboriginal rights and title within the lands claimed as part of its traditional territory.

Accordingly, the FCA rejected the assertion that Canada failed to assess the strength of the Aboriginal groups’ claims to rights and title. Furthermore, the FCA held that Canada was not obliged to share its legal assessment of the strength of claim, holding that such information is subject to solicitor-client privilege.

The FCA however, reiterated that the strength of claim is a critical component to the content of the duty to consult. As such, Canada must disclose information on this, but was not obligated to share its legal analysis.

The Crown consultation did not reflect the terms, spirit and intent of certain agreements between Canada and the Haida

The Haida submitted that they had entered into five separate agreements with Canada which in their submission reinforced and individualized Canada’s obligation to engage in a deep and specific level of consultation. However, the Haida submitted that Canada engaged in only a generic consultation process.

The FCA determined that Canada correctly acknowledged its obligation of deep consultation with the Haida, but rejected the assertion that entering into agreements modified or added to that obligation in any sense.

Remaining flaws in the consultation process

The remaining alleged flaws of the consultative process were viewed by the FCA as interrelated, and were therefore considered together. The grounds are as follows:

• The Report of the JRP left too many issues affecting Aboriginal groups to be decided after Northern Gateway was approved;

• The consultation process was too generic. Canada and the JRP looked at Aboriginal Groups as a whole and failed to address adequately the specific concerns of particular Aboriginal groups;

• After the Report of the JRP was finalized, Canada failed to consult adequately with Aboriginal Groups about their concerns; it also failed to give reasons showing that Canada considered and factored them into the Governor in Council’s decision to approve Northern Gateway; and

• Canada did not assess or discuss Aboriginal groups’ title or governance rights, nor was the impact on those rights factored into the Governor in Council’s decision to approve Northern Gateway.

The FCA noted that the above four flaws were to be addressed under an assessment of Canada’s Phase IV of its consultation plan. The FCA ultimately held that this portion of the process was unacceptably flawed and fell well short of the mark, and further failed to maintain the honour of the Crown.

The common thread for Canada’s part must be, in the FCA’s determination, the intention of substantially addressing Aboriginal concerns as they are raised. The FCA stated the controlling question in this instance as being “what is required to maintain the honour of the Crown and to effect reconciliation between the Crown and the Aboriginal peoples with respect to the interests at stake.”

The Kitasoo and Heiltsuk submitted that deep consultation must lead to a demonstrably serious consideration of accommodation, manifested by the Crown’s consultation-related duty to provide reasons.

Accordingly, where Canada knew or ought to have known that its conduct might adversely affect each Aboriginal group’s rights and title, each group was therefore entitled to consultation based on the circumstances and facts specific to it.

Phase IV of the consultation framework was described as very important in the overall consultation framework by the FCA. And while the JRP report provided specific evaluations on a great number of matters, each evaluation called for a specific response and due consideration by Canada. The FCA noted that the JRP report also did not cover all of the subject matter on which consultation was required.

The FCA noted that Northern Gateway itself made no assessment of its impact on Aboriginal title, confining its assessment instead on the impact of Northern Gateway on rights to harvest and use land and resources in a general sense (although the FCA made clear that Northern Gateway met and continues to meet and consult with affected Aboriginal groups.) The FCA also noted that the JRP made no determination regarding the strength of any Aboriginal group’s claim to Aboriginal right or title.

The FCA noted that Canada allotted 45 days to meet with all affected Aboriginal groups, and that Aboriginal groups were given 45 days to advise Canada in writing of their concerns by responding to three questions:

• Does the Panel Report appropriately characterize the concerns you raised during the Joint Review Panel process?

• Do the recommendations and conditions in the Panel Report address some/all of your concerns?

• Are there any “outstanding” concerns that are not addressed in the Panel Report? If so, do you have recommendations (i.e., proposed accommodation measures) on how to address them?

The FCA further noted that Canada requested that responses to the above three questions not exceed 2-3 pages in length, and had to be received prior to April 16, 2014. The FCA noted that representatives for Canada also informed Aboriginal groups of the following constraints on the consultative process:

• Canada’s representatives were working on the assumption that the Governor in Council needed to make the decision by June 17, 2014;

• Canada’s representatives were tasked with information gathering, so that their goal was to get the best information to the decision-makers;

• Canada’s representatives were not authorized to make decisions; and

• Canada’s representatives were required to complete the Crown Consultation Report by April 16, 2014.

The OIC Appellants argued that the timelines set by Canada were arbitrarily short and were insufficient in providing for a meaningful consultation. The OIC appellants submitted that they had asked for a deferral on the decision on Northern Gateway.

The FCA noted that while the Governor in Council was subject to a deadline pursuant to section 54(3) of the National Energy Board Act, the Governor in Council was able to extend the deadline at its discretion. The FCA found that there was no evidence that Canada gave any thought to asking for an extension from the Governor in Council.

The OIC Appellants submitted evidence of testimony from Canada’s representatives in the consultation that many items and concerns raised by, for example, the Haisla, were not addressed in consultation meetings. The Kitasoo also submitted evidence that Canada provided inaccurate information to the Governor in Council, and that Canada failed to correct the inaccuracies after the Kitasoo had requested that such information be corrected. The Heiltsuk, Nadleh and Nak’axzkli also submitted that the Governor in Council did not have sufficient information to make a decision, submitting that the lack of discussion or response on key concerns and impacts regarding the risks of oil spills rendered the information before the Governor in Council prior to rendering a decision insufficient.

Canada submitted that it sent two letters to affected Aboriginal groups on June 9, 2014 and July 14, 2014, and relied on the content of these letters as evidence that it had discharged its duty to consult.

However, the FCA found that the letters could, at best, be characterized as “summarizing at a high level of generality the nature of some of the concerns expressed” by the affected Aboriginal groups. The FCA noted that the letters did not set out which specific concerns were raised, nor what any specific mitigation measures, if any, would be.

The FCA held that the short timelines were not dispositive of a failure to consult properly. However, the FCA determined that the confined role of Canada’s representatives, combined with the short timelines, resulted in Canada’s conduct falling well short of the conduct necessary to meet the duty to consult. The FCA noted a large number of instances where Canada either failed to respond to concerns raised by Aboriginal groups, failed to provide a suggestion as to how any impacts may be avoided or accommodated, or where Canada simply failed to discuss the subject at all with affected Aboriginal groups. The FCA also held that the July 14, 2014 letter could not be considered to contribute to fulfilling Canada’s duty to consult, as the decision to approve Northern Gateway had occurred prior to the transmission of this letter, and any consultation must be completed prior to a decision being made.

Based on the above, the FCA held that Canada failed in Phase IV to engage, dialogue and grapple with the concerns raised in good faith by the Aboriginal Groups and the OIC Appellants. The FCA found that there was no indication of an intention to amend or supplement the conditions imposed by the JRP, to correct any errors or omissions in its report, or to provide meaningful feedback in response to concerns raised.

As a result, the FCA held that a real and sustained effort to pursue meaningful two-way dialogue was missing, noting also that Canada failed to disclose necessary information it had about the strength of claims to rights and title claimed by various Aboriginal groups.

While the FCA pointed out that the duty to consult is not co-extensive with a duty to determine unresolved claims, providing such information strongly informs the level and depth of consultation. The FCA stated that case law made clear that when acting under the duty to consult, Canada must “dialogue concerning the impacts that the proposed project will have on affected First Nations and to communicate its findings.” However, the FCA held that Canada repeatedly told Aboriginal groups that it would not share a matter fundamental to identifying any of the relevant impacts; that being information on Canada’s assessment of the strength of such claims to rights and title.

Disposition

The FCA accordingly quashed the OIC, rendering the NEB’s Certificates OC-060 and OC-061 a nullity.

The FCA ordered that the matter be remitted to the Governor in Council for a redetermination. The FCA ordered that if the Governor in Council wished to reconsider the matter further, that Phase IV consultation be redone promptly with a view to fulfilling the duty to consult with Aboriginal peoples in accordance with the FCA’s determinations herein.