In Gitxaala Nation v Canada (“Northern Gateway”, or “FCA decision”)2, a 2-to-1 majority of the Federal Court of Appeal quashed the June 2014 Order in Council that required the National Energy Board (“NEB” or “Board”) to issue Certificates of Public Convenience and Necessity (“CPCNs”) for the Northern Gateway Project. The regulatory approval process and the decision of the then Governor in Council to approve the Northern Gateway Project had been challenged on a number of administrative grounds and on the basis that consultation with Aboriginal groups at various stages had been inadequate. All of the administrative law challenges and a majority of the consultation challenges were rejected. However, two judges (the “Majority”) concluded that the Order in Council and the CPCNs should be quashed on the grounds that Canada had not discharged its duty to consult in the period following the regulatory process but prior to the Governor in Council decision. A dissenting judge of the Court would have upheld the approval.
The decision is important for the light it sheds on the interplay of the Crown’s duty to consult Aboriginal groups and a regulatory review/environmental assessment process. The decision brings into focus the legislative scheme arising from the 2012 changes to the National Energy Board Act3 and the Canadian Environmental Assessment Act, 20124. The Court focused on the Governor in Council as the “only meaningful decision-maker” and zeroed in on the government consultation process that preceded the Governor in Council decision. The approach reflected in this decision has important practical implications for participants in the review and decision-making processes for major projects in Canada.
The Project
The proposed Northern Gateway Project (“Project”) consists of two pipelines (and associated facilities) between Bruderheim, Alberta and Kitimat, British Columbia. One 36-inch pipeline would transport an average of 525,000 barrels per day of petroleum west from Alberta to Kitimat—where it would be loaded onto tankers for delivery to export markets. The second 20-inch pipeline, in the same right of way, would carry an average of 193,000 barrels per day of condensate east from Kitimat to Bruderheim. The associated facilities include storage tanks and marine terminals facilities.
The Regulatory Review and Hearing Process
The proposed Project triggered the federal environmental assessment process and the two inter-provincial pipelines triggered a requirement to obtain CPCNs. In 2006, the NEB and the Canadian Environmental Assessment Agency (“Agency”) each referred the Project to a joint review panel (“JRP” or “Panel”) to conduct a review under the National Energy Board Act, and an environmental assessment under the (then-current 1992 version of the) Canadian Environmental Assessment Act5.
In 2009, the CEA Agency released a document that outlined the Government of Canada’s “whole-of-government approach” to Aboriginal consultation. This framework laid out a five phase consultation process:
- Phase I: Preliminary Phase — The Agency consults on the JRP Agreement and the Agency and the NEB provide information on their respective mandates and the JRP process.
- Phase II: Pre-Hearing — The Agency and the NEB continue to provide information on the JRP process and encourage Aboriginal groups to participate in the JRP process.
- Phase III: Hearing — Aboriginal groups and federal agencies with regulatory responsibilities in the Project participate in the hearing.
- Phase IV: Report/Decision — Crown consultation carried out on the report of the JRP prior to consideration of the response by Governor in Council.
- Phase V: Regulatory/Permitting — Consultation on permits or authorizations which other federal departments are requested to issue.6
In 2010, the Proponent filed its application for the Project. In 2011, the JRP issued a Hearing Order that contemplated both “community hearings” and “final hearings”. The community hearings got underway in early-2012. The Panel heard oral statements from 1,179 individuals in 17 communities.7
In mid-2012, the Jobs, Growth and Long-Term Prosperity Act8 entered into force, enacting the Canadian Environmental Assessment Act, 2012, and amending the National Energy Board Act. (The impact of these amendments is discussed further below.)
In late-2012, the “final hearings” began. A total of 206 intervenors and 12 government participants registered for the formal hearing process. Final arguments were heard in Terrace, BC in June 2013. In addition to the Proponent, 56 parties submitted written final arguments.9
In December 2013, the JRP issued its two volume report recommending approval of the Project, subject to 209 conditions. The Panel concluded that the Project would be in the public interest and found that the “potential benefits for Canada and Canadians outweigh the potential burdens and risks.”10
Starting in December 2013 and continuing into early 2014, Canada undertook “Phase IV” consultation with Aboriginal groups. (This process is discussed further below.)
On June 17, 2014, the Governor in Council issued its decision by Order in Council accepting “the Panel’s finding that the Project, if constructed and operated in full compliance with the conditions …, is and will be required by the present and future public convenience and necessity” and that “the Project is not likely to cause significant environmental effects.”11
On June 18, 2014, the NEB issued two CPCNs—one for the oil pipeline and associated facilities and one for the condensate pipelines and associated facilities.
The Legal Proceedings
The above regulatory review and decision-making process led to 18 separate legal challenges12:
- Five notices of application for judicial review challenging the December 2013 Report of the Joint Review Panel;13
- Nine notices of application for judicial review challenging the June 2014 decision of the Governor in Council;14 and
- Four notices of appeal against the National Energy Board’s issuance of the Certificates.15
All of these separate proceedings were consolidated resulting in “one of the largest proceedings ever prosecuted” in the Federal Court of Appeal.16
The Majority Decision (Dawson and Stratas JJ.A.)
In broad terms, the Court considered: (i) whether the administrative decisions should be quashed under administrative law principles, and (ii) whether the Order in Council and the CPCNs should be quashed because Canada has not fulfilled its duty to consult with Aboriginal peoples.
The Administrative Law Issues
The Court reviewed in detail the legislative scheme arising from the National Energy Board Act and the Canadian Environmental Assessment Act, 2012 and characterized it as “a complete code for decision-making regarding certificate applications.”17
The Court concluded that “for the purposes of review the only meaningful decision-maker is the Governor in Council” and that, in this legislative scheme, “no one but the Governor in Council decides anything.”18
The other administrative steps in the process (i.e. the JRP Report and the NEB decision) were not seen to be the focus of review.
- Regarding the Report of the Joint Review Panel, the Court concluded that applications for judicial review did not lie since “[n]o decisions about legal or practical interests had been made.”19 Accordingly, these five applications for judicial review were dismissed.
- Regarding the issuance of the CPCNs, the Court conclude that the NEB “also does not really decide anything, except in a formal sense” and “does not have an independent discretion to exercise or an independent decision to make after the Governor in Council has decided the matter.”20 Accordingly, since the Order in Council was quashed, the CPCNs were also quashed.
In the Court’s view, under this legislative regime, “the primary attack must be against the Governor in Council’s Order in Council.”21 Having narrowed the focus to the one decision, the Court then reviewed it on administrative law principles. The Court concluded that the standard of review for decisions such as this—discretionary decisions founded upon the widest considerations of policy and public interest—is reasonableness and that the Governor in Council is entitled to “a very broad margin of appreciation” in making its discretionary decision. 22 Given this conclusion and based on the record before the Governor in Council, the Court was ultimately not persuaded that the Governor in Council’s decision was unreasonable on the basis of administrative law principles.23
The Duty to Consult Issues
Notwithstanding that it survived review on administrative law grounds, the Court found that, under this legislative scheme, the Governor in Council must consider whether Canada has fulfilled its duty to consult when considering a project under the National Energy Board Act. The Court reviewed the ‘most salient’ concerns about the nature of the consultation process.24 In the interest of time and space, this comment will focus only on a limited number of these issues that most keenly highlight the interplay of the regulatory tribunal process and the Crown’s duty to consult.
Phase I – Consultation about the regulatory process
A key concern raised was that Canada’s consultation framework was unilaterally imposed on the First Nations. The Court disagreed. It found that “from the outset Canada acknowledged its duty of deep consultation with all affected First Nations” and, in Phase I, provided information, sought and obtained comments on the proposed consultation process, and reasonably addressed concerns expressed by First Nations.25
Phase III – Over-delegation by reliance on the Joint Review Panel process
A further key c oncern was that the consultation process was “over-delegated” and that it was unreasonable for Canada to integrate the Joint Review Panel process into the Crown consultation process. It was argued that meaningful consultation requires a two-way dialogue whereas the Panel process was a quasi-judicial process and that the formalities of that process were not conducive to meaningful consultation. The Court disagreed. It found that “Canada did not inappropriately delegate its obligation to consult to the Joint Review Panel – as evidenced by the existence of Phase IV of the consultation process in which there was to be direct consultation between Canada and affected Aboriginal groups following the Joint Review Panel process and before the Governor in Council considered the Project.”26 This process “provided affected Aboriginal groups with the opportunity to learn in detail about the nature of the Project and its potential impact on their interests, while at the same time affording an opportunity to Aboriginal groups to voice their concerns.”27
Thus, up to the issuance of the JRP report—essentially the end of the public hearing process—no member of the Court found flaws with the regulatory review and/or consultation process. However, when looking at the consultation process that followed the JRP report and leading up to the Governor in Council decision, the Majority and the dissenting judge took a different view of the adequacy of Canada’s consultation process.
Phase IV – Consultation prior to the Governor in Council decision
While the concerns about the creation, structure and early stages of the regulatory process were dismissed, the Majority found that Canada’s execution of the Phase IV consultation process was “unacceptably flawed and fell well short of the mark.”28 The Majority noted that Phase IV was “a very important part of the overall consultation framework”—especially given that the Report of the Joint Review Panel covered only some of the subjects on which consultation was required.29 Phase IV was “Canada’s first opportunity—and its last opportunity before the Governor in Council’s decision—to engage in direct consultation and dialogue with affected First Nations on matters of substance, not procedure, concerning the Project.”30
The Majority then reviewed Canada’s execution of the process of consultation under Phase IV and characterized the process as “falling well short of the minimum standards prescribed by the Supreme Court in its jurisprudence.”31
- Timeline for Consultation
The Majority was particularly critical of the timelines imposed for Phase IV consultation. 45 days were allotted to meet with all affected Aboriginal groups and affected First Nations were given 45 days to advise Canada in writing of their concerns by responding (in submissions that “must not exceed 2-3 pages in length.”) to the following 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?
While noting that the Governor in Council was subject to a deadline for its decision under subsection 54(3) of the National Energy Board Act, the Majority observed that the subsection allows the Governor in Council, by order, to extend that deadline: 32
The importance and constitutional significance of the duty to consult provides ample reason for the Governor in Council, in appropriate circumstances, to extend the deadline. There is no evidence that Canada gave any thought to asking the Governor in Council to extend the deadline.
The Majority found that a further problem in Phase IV was that, in at least three instances, inaccurate information was put before the Governor in Council. “Canada was less than willing to hear the First Nations on this and to consider and, if necessary, correct the information.”33 In some cases, notice of the inaccurate information about the concerns of First Nations was conveyed to Canada, but was only received on the same date the decision to approve the Project was made. The Majority found that the record before it did not demonstrate that these errors were corrected or brought to the attention of the Governor in Council.
- Lack of Meaningful Dialogue
Given the focus on meeting timelines and information gathering, the Majority found that it was “no surprise” that a number of concerns raised by Aboriginal groups were left unconsidered and undiscussed:34
Canada failed in Phase IV to engage, dialogue and grapple with the concerns expressed to it in good faith by all of the applicant/appellant First Nations. Missing was any indication of an intention to amend or supplement the conditions imposed by the Joint Review Panel, to correct any errors or omissions in its Report, or to provide meaningful feedback in response to the material concerns raised. Missing was a real and sustained effort to pursue meaningful two-way dialogue. Missing was someone from Canada’s side empowered to do more than take notes, someone able to respond meaningfully at some point.35
The Majority found that two letters sent to each affected First Nation – one sent roughly a week before the Governor in Council approved the Project, the other after – were insufficient to discharge Canada’s obligation to enter into a meaningful dialogue.36
- Failure to Disclose Strength of Claim Information
Earlier in the decision, the Court had disagreed with the complaint that the Crown had not shared the legal assessment of the strength of the various claims to Aboriginal rights or title on the basis that such a legal assessment is subject to solicitor-client privilege.37 However, the Majority differentiated the need to disclose necessary information the Crown had about the affected First Nations’ strength of claims to rights and title:38
First Nations were entitled to a meaningful dialogue about the strength of their claim. They were entitled to know Canada’s information and views concerning the content and strength of their claims so they would know and would be able to discuss with Canada what was in play in the consultations, the subjects on which Canada might have to accommodate, and the extent to which Canada might have to accommodate.39
The Majority found that “Canada was obliged at law to give reasons for its decision directing the National Energy Board to issue the Certificates.” This obligation arose from both a common law obligation (where a requirement of deep consultation existed) and a statutory obligation (under subsection 54(2) of the National Energy Board Act).40 The Majority found that the reasons set out by Canada were sufficient to comply with the statutory requirement, but “fell well short of the mark” in respect of the independent duty to consult.41 (Notably, the information before the Governor in Council when it made its decision, was the subject of Canada’s claim to Cabinet confidence under section 39 of the Canada Evidence Act42 and thus did not form part of the record.) The Order in Council itself contained only a single recital indicating that a process of consultation was pursued, but did not state a conclusion on whether Canada had fulfilled the duty to consult. The Majority found that this raised the serious question whether the Governor in Council actually considered and concluded that it was satisfied that Canada had fulfilled its duty to consult, which the Majority found to be “a troubling and unacceptable gap.”43
- The Majority’s Conclusion on Phase IV
Summing up its view on the Phase IV consultation process, the Majority concluded:
Canada offered only a brief, hurried and inadequate opportunity in Phase IV—a critical part of Canada’s consultation framework—to exchange and discuss information and to dialogue. The inadequacies—more than just a handful and more than mere imperfections—left entire subjects of central interest to the affected First Nations, sometimes subjects affecting their subsistence and well-being, entirely ignored. Many impacts of the Project—some identified in the Report of the Joint Review Panel, some not—were left undisclosed, undiscussed and unconsidered.44
The Majority offered its view that a short extension of time–in the neighbourhood of four months—might have been enough to solve the problems faced in Phase IV.45
The Dissenting Opinion (Ryer J.A.)
In relatively brief dissenting reasons, Mr. Justice Ryer disagreed that the Order in Council should be set aside on the basis that the Crown’s execution of the Phase IV consultations was inadequate. He listed the flaws reviewed by the Majority, but stated “even assuming that these imperfections have been established, it is my view that taken together, in the context of such a large and complex project that has taken over 18 years to reach the present stage, they are insufficient to render the Phase IV consultations inadequate.”46
- In respect of the timelines for the Phase IV consultations, he noted that these were statutorily imposed and the Crown had no obligation to request an extension from the Governor in Council.47
- In respect of the inaccurate information, he noted that, given the claim of Cabinet confidence, the Court is unaware of the entirety of the materials that were before the Governor in Council. He expressed the view that any inaccuracies in the Crown Consultation Report were insufficient to render the Crown’s Phase IV consultations inadequate.48
- In respect of the lack of meaningful dialogue, he opined that “the requested information, by and large, related to matters that were considered by the Joint Review Panel or, in some instances, matters that were never placed before the Joint Review Panel, but should have been.”49
- In respect of the failure to disclose strength of claim information, he opined that “there is little, if anything, to distinguish between the Crown’s ‘legal’ assessment of a First Nation’s claim and ‘information’ the Crown has about the strength of such a claim” and that solicitor-client privilege extends to the Crown’s information upon which its legal assessment is based.50
- In respect of the adequacy of the reasons, he opined that there was no error in the Governor in Council’s reasons that would warrant the Court’s intervention and that the Crown’s reasons for concluding that it had met its duty to consult were “readily apparent.”51
Remedy
Given the conclusion of the Majority, the Court quashed the Order in Council (and the CPCNs that followed) and remitted the matter to the Governor in Council for redetermination.52 This presents the Governor in Council with the same three options it had before it first issued the Order in Council. As discussed by the Majority53, the Governor in Council 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”54;
- “direct the Board to dismiss the application for a certificate”55; or
- ask the Board to reconsider the recommendations in its report or any terms and conditions, or both.56
The Majority emphasized that the Governor in Council was entitled to make a “fresh” decision “on the basis of the information and recommendations before it based on its current views of the broad policies, public interests and other considerations that bear upon the matter.”57 However, if the Governor in Council decides to direct the Board to issue CPCNs, “it can only make that decision after Canada has fulfilled its duty to consult with Aboriginal peoples, in particular, at a minimum, only after Canada has re-done its Phase IV consultation.”58
Discussion/Comment
The Court’s approach in the Northern Gateway decision underscores the significance of and the extent of the shift in the respective roles of the NEB and the Governor in Council resulting from the legislative amendments of 2012.
The table below compares the former version of section 52 and the revised version (considered by the Federal Court of Appeal in the Northern Gateway case) with the material changes highlighted.
Former and revised version of section 52
National Energy Board Act, R.S.C. 1985, c. N-7, section 52 (former version)
52. The Board may, subject to the approval of the Governor in Council, issue a certificate in respect of a pipeline if the Board is satisfied that the pipeline is and will be required by the present and future public convenience and necessity … |
National Energy Board Act, R.S.C. 1985, c N-7, section 52 (as amended)
52. (1) If the Board is of the opinion that an application for a certificate in respect of a pipeline is complete, it shall prepare and submit to the Minister, and make public, a report setting out (a) its recommendation as to whether or not the certificate should be issued…
|
The Majority’s characterization of the legislative scheme places very considerable emphasis on the role of the Governor in Council—characterizing it as “the only meaningful decision-maker” for the purposes of review.59 There would appear to be a direct connection between the Majority’s characterization of the legislative scheme; and the heightened expectations on Canada’s Phase IV consultation process.
This is a considerable change from the approach taken in judicial challenges under the former version of section 52 of the National Energy Board Act where there appeared to be much less emphasis on the consultation, if any, undertaken by Canada prior to the “approval” issued by the Governor in Council. For example, in the Brokenhead Ojibway decision,60 the Federal Court dismissed judicial review proceedings brought by First Nations challenging the three Orders in Council (that approved the three NEB decisions) in respect of three interprovincial pipelines—the Keystone Pipeline Project61; the Southern Lights Pipeline Project62; and the Alberta Clipper Pipeline Expansion Project.63 The Court in that case was prepared to consider “whether and to what extent the duty may be fulfilled by the NEB acting essentially as a surrogate for the Crown.”64 The Federal Court stated:
“In determining whether and to what extent the Crown has a duty to consult with Aboriginal peoples about projects or transactions that may affect their interests, the Crown may fairly consider the opportunities for Aboriginal consultation that are available within the existing processes for regulatory or environmental review: … Those review processes may be sufficient to address Aboriginal concerns, subject always to the Crown’s overriding duty to consider their adequacy in any particular situation.”65
The Federal Court found the NEB process alone to be sufficient, even in the absence of any separate Crown consultation to support the Order in Council.66
The increased focus on the role of the Governor in Council results in a de-emphasis on the role of the regulatory tribunal—in this case the JRP. Instead of viewing the NEB as “acting essentially as a surrogate for the Crown,” the Court in Northern Gateway considered the Report of the Joint Review Panel as “nothing more than a guidance document”67 under the current legislative scheme. The challenges to both the JRP report and the CPCNs were dealt with very shortly and the vast majority of the analysis focuses on the details of the action taken (or not taken) by Canada in the post-report consultation process.
Again this is a considerable change from the approach taken in judicial challenges under the former version of section 52 of the National Energy Board Act where the outcome of the NEB process generally formed the primary target of Aboriginal groups seeking to challenge pipeline approvals.68 However, under the current legislative scheme—as interpreted by the Majority in Northern Gateway—this is no longer a “decision” that can be challenged.
Obviously, the approach taken by the Majority may have implications for other pending review processes such as the Trans Mountain Expansion Project. In May 2016, the NEB issued a report recommending that the Governor in Council approve the Trans Mountain Expansion Project, subject to 157 conditions.69 In June, 2016, shortly after the Northern Gateway decision, various Aboriginal groups and other parties commenced judicial review seeking to challenge the “decision” of the NEB. In July 2016, Trans Mountain Pipeline ULC filed Notices of Motion seeking to strike the applications for judicial review.70 At the time of writing, these motions are still pending.
Reframing the NEB/JRP report as a mere recommendation greatly diminishes the role of the regulator and importance of the regulatory hearing process. This seems regrettable. The regulatory processes for such major project typically occupy a lengthy period of time and require enormous effort from a large number of participants. In contrast, the consultation process that has (historically) followed the regulatory hearing/report process has been much shorter, with a narrower focus and involving far fewer participants in a less transparent process.
In the 2009 framework document outlining its approach to Crown consultation, Canada stated its intention that “the Crown will rely on the consultation efforts of the proponent and the Joint Review Panel (JRP) process, to the extent possible, to meet the duty to consult.” 71 However, in the wake of the 2012 amendments, the Court scrutinized in great detail the Phase IV consultation process that followed the issuance of the JRP report. From the Federal Court of Appeal’s decision in this case, it appears that Courts may be reluctant to allow governments to place excessive reliance on the work done by an administrative tribunal when certain issues that arise during the consultation process may be beyond the mandate of the tribunal and, more importantly, the ultimate, meaningful decision-making authority is reserved to the government. The lesson appears to be that to the extent that decision-making power is going to be reserved to the Governor in Council, then the consultation processes put in place will have to be robust enough to adequately underpin and inform the Governor in Council decision. This will also have implications for the ongoing review of the regulatory process itself that has been initiated by the federal government. Regarding the Crown’s duty to the consult, the Supreme Court of Canada has been clear that:
- it is open to governments to set up regulatory schemes to address the procedural requirements appropriate to different problems at different stages;72 and
- the duty on an administrative tribunal to consider consultation and the scope of that inquiry depends on the mandate conferred by the legislation that creates the tribunal.73
There would appear to be two routes forward:
- If the decision-making authority is to remain with the Governor in Council, then the consultation process employed by Canada will have to be enhanced (and likely lengthened).
- Alternatively, if the Crown wishes to rely (to a greater extent) on the environmental assessment and regulatory review processes, then the role of the regulator must be more than a mere “guidance document.”
In the Northern Gateway decision, the Majority observed: “It is not for us to opine on the appropriateness of the policy expressed and implemented in this legislative scheme. Rather, we are to read legislation as it is written.”74 However, the decision has laid out the implications of the current regulatory scheme. It remains to be seen what the current Governor in Council will do in terms of the Northern Gateway project specifically and/or what the government may propose in respect of the role of the regulatory process more generally.
- Keith Bergner, a partner with the law firm of Lawson Lundell, LLP, practices Aboriginal and regulatory/energy law. http://www.lawsonlundell.com/team-Keith-Bergner.html
It is the policy of the Energy Regulation Quarterly to disclose when a contributor acted as counsel or co-counsel in court cases and/or regulatory hearings discussed in an article or case comment. In the spirit of full disclosure, it is noted that Keith B. Bergner of Lawson Lundell acted as counsel for the Canadian Association of Petroleum Producers as an Intervenor before the Joint Review Panel and Lewis L. Manning, Keith B. Bergner and Toby Kruger of Lawson Lundell acted as counsel for the Canadian Association of Petroleum Producers as an Intervenor before the Federal Court of Appeal.
- Gitxaala Nation v Canada, 2016 FCA 187 [FCA Decision].
- National Energy Board Act, RSC 1985, c N-7 [NEBA].
- Canadian Environmental Assessment Act, 2012, SC 2012, c 19.
- Canadian Environmental Assessment Act, SC 1992, c 37.
- Canadian Environmental Assessment Agency, Approach to Crown Consultation for the Northern Gateway Project, (Ottawa: CEAA, February 2009), online: CEAA < http://www.ceaa.gc.ca/050/documents_staticpost/cearref_21799/83452/Vol1_-_Part07.pdf>.
- National Energy Board & Canadian Environmental Assessment Agency, Connections: Report of the Joint Review Panel for the Enbridge Northern Gateway Project, vol 1 (Calgary: NEB, 2013) at 14 [JRP Report].
- Jobs, Growth and Long-Term Prosperity Act, SC 2012, c 19.
- JRP Report, supra note 7 at 15.
- Ibid at 71.
- PC 2014-809, (2014) C Gaz I, 1645.
- There was a further legal proceeding commenced in the BC Supreme Court where the petitioners sought and obtained, by judicial review, a number of declarations setting aside, in part, the Equivalency Agreement entered into between the Province of British Columbia, by way of the Environmental Assessment Office and the National Energy Board. See: Coastal First Nations v British Columbia (Environment), 2016 BCSC 34. The implications of this decision are beyond the scope of the current case comment.
- Filed by the Federation of British Columbia Naturalists (A-59-14), ForestEthics Advocacy Association et al. (A-56-14), Gitxaała Nation (A-64-14), Haisla Nation (A-63-14); and Gitga’at First Nation (A-67-14).
- Filed by the Federation of British Columbia Naturalists (A-443-14), Gitxaała Nation (A-437-14), ForestEthics Advocacy Association (A-440-14), Gitga’at First Nation (A-445-14), The Council of the Haida Nation (A-446-14), Haisla Nation (A-447-14), Kitasoo Xai’Xais Band Council (A-448-14), Nadleh Whut’en Band (A-439-14), and Unifor (A-442-14).
- Filed by ForestEthics Advocacy Association (A-514-14), Gitxaala Nation (A-520-14), Haisla Nation (A-522-14), and Unifor (A-517-14).
- FCA decision, supra note 2 at para 71.
- Ibid at para 119.
- Ibid at paras 120-121.
- Ibid at para 125.
- Ibid at paras 126-127.
- Ibid at para 127.
- Ibid at paras 128-155.
- Ibid at para 156.
- Ibid at para 191(f).
- Ibid at paras 201-208.
- Ibid at para 215.
- Ibid at para 216.
- Ibid at para 230.
- Ibid at paras 239-40.
- Ibid at para 242.
- Ibid at para 244.
- Ibid para 251.
- Ibid at para 255.
- Ibid at para 265.
- Ibid at para 279.
- Ibid at para 280.
- Ibid at paras 218-225.
- Ibid at para 288.
- Ibid at para 309.
- Ibid at para 311.
- Ibid at para 313.
- Canada Evidence Act, RSC 1985, c C-5, s 39.
- Supra note 2 at paras 320-23.
- Ibid at para 325.
- Ibid at paras 328-29.
- Ibid at para 354.
- Ibid at para 355.
- Ibid at para 356.
- Ibid at para 357.
- Ibid at para 358.
- Ibid at paras 360-63.
- Ibid at para 333.
- Ibid at para 113.
- NEBA, supra note 3, s 54(1)(a).
- Ibid, s 54(1)(b).
- Ibid, s 53(1).
- FCA decision, supra note 2 at para 334.
- Ibid at para 335.
- Ibid at para 120. While it is a split decision on the consultation issues, it is notable that the Court appears to be unanimous on the administrative law issues. Without commenting further, Mr. Justice Ryer states that he agrees that “the Order in Council is unimpeachable from an administrative law perspective.” Supra note 2 at para 347.
- Brokenhead Ojibway First Nation v Canada (Attorney General), 2009 FC 484 at para 16 [Brokenhead Ojibway].
- TransCanada Keystone Pipeline GP Ltd (September 2007), OH-1-2007, online: NEB <https://docs.neb-one.gc.ca/ll-eng/llisapi.dll/fetch/2000/90464/90550/554112/915551/1060220/2453041/2565524/B86-24__-21_OH-1-2007_Reasons_for_Decision_-_A4F3Z8.pdf?nodeid=2558001&vernum=-2> ; PC 2007-1786 dated November 22, 2007.
- Enbridge Southern Lights GP on behalf of Enbridge Southern Lights LP and Enbridge Pipeline Inc (February 2008), OH-3-2007, online: NEB < http://publications.gc.ca/collections/collection_2008/neb-one/NE22-1-2008-1E.pdf>; PC 2008-856 dated May 8, 2008.
- Enbridge Pipeline Inc- Alberta Clipper Expansion Project (February 2008), OH-4-2007; PC 2008-857 dated May 8, 2008.
- Brokenhead Ojibway, supra note 60 at para 16.
- Ibid at para 25; emphasis added. This statement was adopted by the Alberta Court of Appeal in Tsuu T’ina Nation v Alberta (Environment), 2010 ABCA 137 at para 104.
- The Court in Brokenhead Ojibway did state that the requirement may be different in other circumstances (that seem to reflect the circumstances in Northern Gateway): “I have no doubt, however, that had any of the Pipeline Projects crossed or significantly impacted areas of unallocated Crown land which formed a part of an outstanding land claim a much deeper duty to consult would have been triggered. Because this is also the type of issue that the NEB process is not designed to address, the Crown would almost certainly have had an independent obligation to consult in such a context.” Brokenhead Ojibway, supra note 60 at para 44.
- FCA Decision, supra note 2 para 317.
- See for example Standing Buffalo Dakota First Nation v Enbridge Pipelines Inc, 2009 FCA 308, leave to appeal to the Supreme Court of Canada dismissed. See also the discussion of Standing Buffalo in the two judgements in Chippewas of the Thames First Nation v Enbridge Pipelines Inc, 2015 FCA 222, leave to appeal to the Supreme Court of Canada granted. See the case comment on the latter decision by Nigel Bankes, “The Supreme Court of Canada Grants Leave in Two Cases Involving the National Energy Board and the Rights of Indigenous Communities” (2016) 4:2 ERQ 35.
- National Energy Board, National Energy Board Report: Trans Mountain Expansion Project, OH-001-2014. (Calgary: NEB, May 2016), online: NEB <https://docs.neb-one.gc.ca/ll-eng/llisapi.dll/fetch/2000/90464/90552/548311/956726/2392873/2969696/2969867/National_Energy_Board_Report_-_OH-001-2014_-_A5A9H1.pdf?nodeid=2969681&vernum=-2>.
- See for example the Notice of Motion and Written Submissions (paras 22 and 23) dated July 5, 2015 filed Court File No. A-217-16 seeking to strike the notice of application for judicial review filed by the Squamish Nation.
- Supra note 6 at 1.
- Haida Nation v British Columbia (Minister of Forests), 2004 SCC 73, [2004] 3 SCR 511 at para 51.
- Rio Tinto Alcan Inc v Carrier Sekani Tribal Council, 2010 SCC 43, [2010] 2 SCR 650 at para 55.
- FCA Decision, supra note 2 at para 123.
In Gitxaala Nation v Canada (“Northern Gateway”, or “FCA decision”)2, a 2-to-1 majority of the Federal Court of Appeal quashed the June 2014 Order in Council that required the National Energy Board (“NEB” or “Board”) to issue Certificates of Public Convenience and Necessity (“CPCNs”) for the Northern Gateway Project. The regulatory approval process and the decision of the then Governor in Council to approve the Northern Gateway Project had been challenged on a number of administrative grounds and on the basis that consultation with Aboriginal groups at various stages had been inadequate. All of the administrative law challenges and a majority of the consultation challenges were rejected. However, two judges (the “Majority”) concluded that the Order in Council and the CPCNs should be quashed on the grounds that Canada had not discharged its duty to consult in the period following the regulatory process but prior to the Governor in Council decision. A dissenting judge of the Court would have upheld the approval.
The decision is important for the light it sheds on the interplay of the Crown’s duty to consult Aboriginal groups and a regulatory review/environmental assessment process. The decision brings into focus the legislative scheme arising from the 2012 changes to the National Energy Board Act3 and the Canadian Environmental Assessment Act, 20124. The Court focused on the Governor in Council as the “only meaningful decision-maker” and zeroed in on the government consultation process that preceded the Governor in Council decision. The approach reflected in this decision has important practical implications for participants in the review and decision-making processes for major projects in Canada.
The Project
The proposed Northern Gateway Project (“Project”) consists of two pipelines (and associated facilities) between Bruderheim, Alberta and Kitimat, British Columbia. One 36-inch pipeline would transport an average of 525,000 barrels per day of petroleum west from Alberta to Kitimat—where it would be loaded onto tankers for delivery to export markets. The second 20-inch pipeline, in the same right of way, would carry an average of 193,000 barrels per day of condensate east from Kitimat to Bruderheim. The associated facilities include storage tanks and marine terminals facilities.
The Regulatory Review and Hearing Process
The proposed Project triggered the federal environmental assessment process and the two inter-provincial pipelines triggered a requirement to obtain CPCNs. In 2006, the NEB and the Canadian Environmental Assessment Agency (“Agency”) each referred the Project to a joint review panel (“JRP” or “Panel”) to conduct a review under the National Energy Board Act, and an environmental assessment under the (then-current 1992 version of the) Canadian Environmental Assessment Act5.
In 2009, the CEA Agency released a document that outlined the Government of Canada’s “whole-of-government approach” to Aboriginal consultation. This framework laid out a five phase consultation process:
In 2010, the Proponent filed its application for the Project. In 2011, the JRP issued a Hearing Order that contemplated both “community hearings” and “final hearings”. The community hearings got underway in early-2012. The Panel heard oral statements from 1,179 individuals in 17 communities.7
In mid-2012, the Jobs, Growth and Long-Term Prosperity Act8 entered into force, enacting the Canadian Environmental Assessment Act, 2012, and amending the National Energy Board Act. (The impact of these amendments is discussed further below.)
In late-2012, the “final hearings” began. A total of 206 intervenors and 12 government participants registered for the formal hearing process. Final arguments were heard in Terrace, BC in June 2013. In addition to the Proponent, 56 parties submitted written final arguments.9
In December 2013, the JRP issued its two volume report recommending approval of the Project, subject to 209 conditions. The Panel concluded that the Project would be in the public interest and found that the “potential benefits for Canada and Canadians outweigh the potential burdens and risks.”10
Starting in December 2013 and continuing into early 2014, Canada undertook “Phase IV” consultation with Aboriginal groups. (This process is discussed further below.)
On June 17, 2014, the Governor in Council issued its decision by Order in Council accepting “the Panel’s finding that the Project, if constructed and operated in full compliance with the conditions …, is and will be required by the present and future public convenience and necessity” and that “the Project is not likely to cause significant environmental effects.”11
On June 18, 2014, the NEB issued two CPCNs—one for the oil pipeline and associated facilities and one for the condensate pipelines and associated facilities.
The Legal Proceedings
The above regulatory review and decision-making process led to 18 separate legal challenges12:
All of these separate proceedings were consolidated resulting in “one of the largest proceedings ever prosecuted” in the Federal Court of Appeal.16
The Majority Decision (Dawson and Stratas JJ.A.)
In broad terms, the Court considered: (i) whether the administrative decisions should be quashed under administrative law principles, and (ii) whether the Order in Council and the CPCNs should be quashed because Canada has not fulfilled its duty to consult with Aboriginal peoples.
The Administrative Law Issues
The Court reviewed in detail the legislative scheme arising from the National Energy Board Act and the Canadian Environmental Assessment Act, 2012 and characterized it as “a complete code for decision-making regarding certificate applications.”17
The Court concluded that “for the purposes of review the only meaningful decision-maker is the Governor in Council” and that, in this legislative scheme, “no one but the Governor in Council decides anything.”18
The other administrative steps in the process (i.e. the JRP Report and the NEB decision) were not seen to be the focus of review.
In the Court’s view, under this legislative regime, “the primary attack must be against the Governor in Council’s Order in Council.”21 Having narrowed the focus to the one decision, the Court then reviewed it on administrative law principles. The Court concluded that the standard of review for decisions such as this—discretionary decisions founded upon the widest considerations of policy and public interest—is reasonableness and that the Governor in Council is entitled to “a very broad margin of appreciation” in making its discretionary decision. 22 Given this conclusion and based on the record before the Governor in Council, the Court was ultimately not persuaded that the Governor in Council’s decision was unreasonable on the basis of administrative law principles.23
The Duty to Consult Issues
Notwithstanding that it survived review on administrative law grounds, the Court found that, under this legislative scheme, the Governor in Council must consider whether Canada has fulfilled its duty to consult when considering a project under the National Energy Board Act. The Court reviewed the ‘most salient’ concerns about the nature of the consultation process.24 In the interest of time and space, this comment will focus only on a limited number of these issues that most keenly highlight the interplay of the regulatory tribunal process and the Crown’s duty to consult.
Phase I – Consultation about the regulatory process
A key concern raised was that Canada’s consultation framework was unilaterally imposed on the First Nations. The Court disagreed. It found that “from the outset Canada acknowledged its duty of deep consultation with all affected First Nations” and, in Phase I, provided information, sought and obtained comments on the proposed consultation process, and reasonably addressed concerns expressed by First Nations.25
Phase III – Over-delegation by reliance on the Joint Review Panel process
A further key c oncern was that the consultation process was “over-delegated” and that it was unreasonable for Canada to integrate the Joint Review Panel process into the Crown consultation process. It was argued that meaningful consultation requires a two-way dialogue whereas the Panel process was a quasi-judicial process and that the formalities of that process were not conducive to meaningful consultation. The Court disagreed. It found that “Canada did not inappropriately delegate its obligation to consult to the Joint Review Panel – as evidenced by the existence of Phase IV of the consultation process in which there was to be direct consultation between Canada and affected Aboriginal groups following the Joint Review Panel process and before the Governor in Council considered the Project.”26 This process “provided affected Aboriginal groups with the opportunity to learn in detail about the nature of the Project and its potential impact on their interests, while at the same time affording an opportunity to Aboriginal groups to voice their concerns.”27
Thus, up to the issuance of the JRP report—essentially the end of the public hearing process—no member of the Court found flaws with the regulatory review and/or consultation process. However, when looking at the consultation process that followed the JRP report and leading up to the Governor in Council decision, the Majority and the dissenting judge took a different view of the adequacy of Canada’s consultation process.
Phase IV – Consultation prior to the Governor in Council decision
While the concerns about the creation, structure and early stages of the regulatory process were dismissed, the Majority found that Canada’s execution of the Phase IV consultation process was “unacceptably flawed and fell well short of the mark.”28 The Majority noted that Phase IV was “a very important part of the overall consultation framework”—especially given that the Report of the Joint Review Panel covered only some of the subjects on which consultation was required.29 Phase IV was “Canada’s first opportunity—and its last opportunity before the Governor in Council’s decision—to engage in direct consultation and dialogue with affected First Nations on matters of substance, not procedure, concerning the Project.”30
The Majority then reviewed Canada’s execution of the process of consultation under Phase IV and characterized the process as “falling well short of the minimum standards prescribed by the Supreme Court in its jurisprudence.”31
The Majority was particularly critical of the timelines imposed for Phase IV consultation. 45 days were allotted to meet with all affected Aboriginal groups and affected First Nations were given 45 days to advise Canada in writing of their concerns by responding (in submissions that “must not exceed 2-3 pages in length.”) to the following three questions:
While noting that the Governor in Council was subject to a deadline for its decision under subsection 54(3) of the National Energy Board Act, the Majority observed that the subsection allows the Governor in Council, by order, to extend that deadline: 32
The importance and constitutional significance of the duty to consult provides ample reason for the Governor in Council, in appropriate circumstances, to extend the deadline. There is no evidence that Canada gave any thought to asking the Governor in Council to extend the deadline.
The Majority found that a further problem in Phase IV was that, in at least three instances, inaccurate information was put before the Governor in Council. “Canada was less than willing to hear the First Nations on this and to consider and, if necessary, correct the information.”33 In some cases, notice of the inaccurate information about the concerns of First Nations was conveyed to Canada, but was only received on the same date the decision to approve the Project was made. The Majority found that the record before it did not demonstrate that these errors were corrected or brought to the attention of the Governor in Council.
Given the focus on meeting timelines and information gathering, the Majority found that it was “no surprise” that a number of concerns raised by Aboriginal groups were left unconsidered and undiscussed:34
Canada failed in Phase IV to engage, dialogue and grapple with the concerns expressed to it in good faith by all of the applicant/appellant First Nations. Missing was any indication of an intention to amend or supplement the conditions imposed by the Joint Review Panel, to correct any errors or omissions in its Report, or to provide meaningful feedback in response to the material concerns raised. Missing was a real and sustained effort to pursue meaningful two-way dialogue. Missing was someone from Canada’s side empowered to do more than take notes, someone able to respond meaningfully at some point.35
The Majority found that two letters sent to each affected First Nation – one sent roughly a week before the Governor in Council approved the Project, the other after – were insufficient to discharge Canada’s obligation to enter into a meaningful dialogue.36
Earlier in the decision, the Court had disagreed with the complaint that the Crown had not shared the legal assessment of the strength of the various claims to Aboriginal rights or title on the basis that such a legal assessment is subject to solicitor-client privilege.37 However, the Majority differentiated the need to disclose necessary information the Crown had about the affected First Nations’ strength of claims to rights and title:38
First Nations were entitled to a meaningful dialogue about the strength of their claim. They were entitled to know Canada’s information and views concerning the content and strength of their claims so they would know and would be able to discuss with Canada what was in play in the consultations, the subjects on which Canada might have to accommodate, and the extent to which Canada might have to accommodate.39
The Majority found that “Canada was obliged at law to give reasons for its decision directing the National Energy Board to issue the Certificates.” This obligation arose from both a common law obligation (where a requirement of deep consultation existed) and a statutory obligation (under subsection 54(2) of the National Energy Board Act).40 The Majority found that the reasons set out by Canada were sufficient to comply with the statutory requirement, but “fell well short of the mark” in respect of the independent duty to consult.41 (Notably, the information before the Governor in Council when it made its decision, was the subject of Canada’s claim to Cabinet confidence under section 39 of the Canada Evidence Act42 and thus did not form part of the record.) The Order in Council itself contained only a single recital indicating that a process of consultation was pursued, but did not state a conclusion on whether Canada had fulfilled the duty to consult. The Majority found that this raised the serious question whether the Governor in Council actually considered and concluded that it was satisfied that Canada had fulfilled its duty to consult, which the Majority found to be “a troubling and unacceptable gap.”43
Summing up its view on the Phase IV consultation process, the Majority concluded:
Canada offered only a brief, hurried and inadequate opportunity in Phase IV—a critical part of Canada’s consultation framework—to exchange and discuss information and to dialogue. The inadequacies—more than just a handful and more than mere imperfections—left entire subjects of central interest to the affected First Nations, sometimes subjects affecting their subsistence and well-being, entirely ignored. Many impacts of the Project—some identified in the Report of the Joint Review Panel, some not—were left undisclosed, undiscussed and unconsidered.44
The Majority offered its view that a short extension of time–in the neighbourhood of four months—might have been enough to solve the problems faced in Phase IV.45
The Dissenting Opinion (Ryer J.A.)
In relatively brief dissenting reasons, Mr. Justice Ryer disagreed that the Order in Council should be set aside on the basis that the Crown’s execution of the Phase IV consultations was inadequate. He listed the flaws reviewed by the Majority, but stated “even assuming that these imperfections have been established, it is my view that taken together, in the context of such a large and complex project that has taken over 18 years to reach the present stage, they are insufficient to render the Phase IV consultations inadequate.”46
Remedy
Given the conclusion of the Majority, the Court quashed the Order in Council (and the CPCNs that followed) and remitted the matter to the Governor in Council for redetermination.52 This presents the Governor in Council with the same three options it had before it first issued the Order in Council. As discussed by the Majority53, the Governor in Council can:
The Majority emphasized that the Governor in Council was entitled to make a “fresh” decision “on the basis of the information and recommendations before it based on its current views of the broad policies, public interests and other considerations that bear upon the matter.”57 However, if the Governor in Council decides to direct the Board to issue CPCNs, “it can only make that decision after Canada has fulfilled its duty to consult with Aboriginal peoples, in particular, at a minimum, only after Canada has re-done its Phase IV consultation.”58
Discussion/Comment
The Court’s approach in the Northern Gateway decision underscores the significance of and the extent of the shift in the respective roles of the NEB and the Governor in Council resulting from the legislative amendments of 2012.
The table below compares the former version of section 52 and the revised version (considered by the Federal Court of Appeal in the Northern Gateway case) with the material changes highlighted.
Former and revised version of section 52
52. The Board may, subject to the approval of the Governor in Council, issue a certificate in respect of a pipeline if the Board is satisfied that the pipeline is and will be required by the present and future public convenience and necessity …
52. (1) If the Board is of the opinion that an application for a certificate in respect of a pipeline is complete, it shall prepare and submit to the Minister, and make public, a report setting out (a) its recommendation as to whether or not the certificate should be issued…
The Majority’s characterization of the legislative scheme places very considerable emphasis on the role of the Governor in Council—characterizing it as “the only meaningful decision-maker” for the purposes of review.59 There would appear to be a direct connection between the Majority’s characterization of the legislative scheme; and the heightened expectations on Canada’s Phase IV consultation process.
This is a considerable change from the approach taken in judicial challenges under the former version of section 52 of the National Energy Board Act where there appeared to be much less emphasis on the consultation, if any, undertaken by Canada prior to the “approval” issued by the Governor in Council. For example, in the Brokenhead Ojibway decision,60 the Federal Court dismissed judicial review proceedings brought by First Nations challenging the three Orders in Council (that approved the three NEB decisions) in respect of three interprovincial pipelines—the Keystone Pipeline Project61; the Southern Lights Pipeline Project62; and the Alberta Clipper Pipeline Expansion Project.63 The Court in that case was prepared to consider “whether and to what extent the duty may be fulfilled by the NEB acting essentially as a surrogate for the Crown.”64 The Federal Court stated:
“In determining whether and to what extent the Crown has a duty to consult with Aboriginal peoples about projects or transactions that may affect their interests, the Crown may fairly consider the opportunities for Aboriginal consultation that are available within the existing processes for regulatory or environmental review: … Those review processes may be sufficient to address Aboriginal concerns, subject always to the Crown’s overriding duty to consider their adequacy in any particular situation.”65
The Federal Court found the NEB process alone to be sufficient, even in the absence of any separate Crown consultation to support the Order in Council.66
The increased focus on the role of the Governor in Council results in a de-emphasis on the role of the regulatory tribunal—in this case the JRP. Instead of viewing the NEB as “acting essentially as a surrogate for the Crown,” the Court in Northern Gateway considered the Report of the Joint Review Panel as “nothing more than a guidance document”67 under the current legislative scheme. The challenges to both the JRP report and the CPCNs were dealt with very shortly and the vast majority of the analysis focuses on the details of the action taken (or not taken) by Canada in the post-report consultation process.
Again this is a considerable change from the approach taken in judicial challenges under the former version of section 52 of the National Energy Board Act where the outcome of the NEB process generally formed the primary target of Aboriginal groups seeking to challenge pipeline approvals.68 However, under the current legislative scheme—as interpreted by the Majority in Northern Gateway—this is no longer a “decision” that can be challenged.
Obviously, the approach taken by the Majority may have implications for other pending review processes such as the Trans Mountain Expansion Project. In May 2016, the NEB issued a report recommending that the Governor in Council approve the Trans Mountain Expansion Project, subject to 157 conditions.69 In June, 2016, shortly after the Northern Gateway decision, various Aboriginal groups and other parties commenced judicial review seeking to challenge the “decision” of the NEB. In July 2016, Trans Mountain Pipeline ULC filed Notices of Motion seeking to strike the applications for judicial review.70 At the time of writing, these motions are still pending.
Reframing the NEB/JRP report as a mere recommendation greatly diminishes the role of the regulator and importance of the regulatory hearing process. This seems regrettable. The regulatory processes for such major project typically occupy a lengthy period of time and require enormous effort from a large number of participants. In contrast, the consultation process that has (historically) followed the regulatory hearing/report process has been much shorter, with a narrower focus and involving far fewer participants in a less transparent process.
In the 2009 framework document outlining its approach to Crown consultation, Canada stated its intention that “the Crown will rely on the consultation efforts of the proponent and the Joint Review Panel (JRP) process, to the extent possible, to meet the duty to consult.” 71 However, in the wake of the 2012 amendments, the Court scrutinized in great detail the Phase IV consultation process that followed the issuance of the JRP report. From the Federal Court of Appeal’s decision in this case, it appears that Courts may be reluctant to allow governments to place excessive reliance on the work done by an administrative tribunal when certain issues that arise during the consultation process may be beyond the mandate of the tribunal and, more importantly, the ultimate, meaningful decision-making authority is reserved to the government. The lesson appears to be that to the extent that decision-making power is going to be reserved to the Governor in Council, then the consultation processes put in place will have to be robust enough to adequately underpin and inform the Governor in Council decision. This will also have implications for the ongoing review of the regulatory process itself that has been initiated by the federal government. Regarding the Crown’s duty to the consult, the Supreme Court of Canada has been clear that:
There would appear to be two routes forward:
In the Northern Gateway decision, the Majority observed: “It is not for us to opine on the appropriateness of the policy expressed and implemented in this legislative scheme. Rather, we are to read legislation as it is written.”74 However, the decision has laid out the implications of the current regulatory scheme. It remains to be seen what the current Governor in Council will do in terms of the Northern Gateway project specifically and/or what the government may propose in respect of the role of the regulatory process more generally.
It is the policy of the Energy Regulation Quarterly to disclose when a contributor acted as counsel or co-counsel in court cases and/or regulatory hearings discussed in an article or case comment. In the spirit of full disclosure, it is noted that Keith B. Bergner of Lawson Lundell acted as counsel for the Canadian Association of Petroleum Producers as an Intervenor before the Joint Review Panel and Lewis L. Manning, Keith B. Bergner and Toby Kruger of Lawson Lundell acted as counsel for the Canadian Association of Petroleum Producers as an Intervenor before the Federal Court of Appeal.