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The Supreme Court of Canada recently released two decisions – Clyde River (Hamlet) v. Petroleum Geo-Services and Chippewas of the Thames First Nation v. Enbridge Pipelines Inc. – dealing with the National Energy Board’s role in consultation on energy projects. This case comment will begin with a “nutshell” analysis of what the decisions mean, followed by a discussion of the issues they raise for aboriginal communities facing NEB regulated project applications. It then provides a more detailed summary of the decisions for readers with more time and interest.

Nutshell analysis

There are two primary outcomes from these decisions:

  • Any application to the NEB that has the potential to adversely affect proven or asserted aboriginal rights, or treaty rights, will trigger the Federal Crown’s duty to consult. A distinct decision-making role by a Federal Minister, department or agency is not required. For legal purposes, the NEB is acting for the Federal Crown, and it must therefore exercise its powers consistent with the honour of the Crown and the duty to consult.
  • The NEB’s regulatory processes, if properly administered, may be sufficient to fulfill the Federal Crown’s duty. Canada may fully delegate both the procedural and substantive aspects of the duty to the NEB. This is subject to one important proviso: the NEB’s process will only be sufficient if the NEB can meaningfully address all the issues raised in the consultation process. If issues are raised that are outside the NEB’s jurisdiction, or the NEB fails to offer an adequate process for meaningful consultation, Canada must establish a separate process to address these shortcomings.

The decisions also offer guidance on what will constitute adequate consultation through the NEB. The board must correctly identify the aboriginal rights and interests at issue, give them proper and fair consideration consistent with their unique constitutional status, and address and accommodate legitimate concerns and impacts. It must also generally provide written reasons explaining how it addressed impacts to aboriginal peoples. For major projects with significant impacts, participant funding and a formal hearing process may be required. The NEB is not, however, required to do a Haida-style strength of claim/significance of impact analysis in every case.

In addition, the SCC reaffirmed some limits to the duty to consult stated in earlier decisions. Consultation does not give aboriginal communities a veto, nor is it a vehicle to address “historical grievances”. The historical context may inform an understanding of the implications of a new action, but the Crown’s inquiry should remain focused on the current decision under consideration.

Implications for aboriginal communities

These decisions answer the question of whether Canada can rely on the NEB to fulfill its consultation duties for Federally regulated energy projects like interprovincial pipelines. The answer is yes. This means that opting out of, or minimally participating in, a NEB process comes with significant legal risks. Aboriginal communities have a reciprocal obligation to participate in a consultation process when it is offered, and the courts will likely interpret a decision to not participate in a NEB application review as a waiver of the right to contest the result.

Aboriginal communities are not, however, simply stuck with whatever process the NEB offers. These decisions indicate that, for projects of any significant size, the NEB will be required to offer aboriginal communities meaningful participation in a formal hearing process. This should include participant funding, the opportunity to submit expert and other evidence, the opportunity to test the proponent’s evidence, and a chance to make submissions. The NEB must also demonstrate that it correctly understands the nature of the aboriginal interests at stake, and that it has turned its mind to how to protect and accommodate those interests. What remains to be seen, however, is the extent to which the NEB can or will modify its current processes and tailor them to meet aboriginal needs. As a quasi-judicial body, the NEB must act in a procedurally fair manner. This generally includes requiring all substantive input to be on the public record, so that all parties can have a chance to respond, and also ensuring that every party is offered the same opportunity to participate. These rules do not fit well with the unique constitutional protections and status afforded aboriginal and treaty rights. Nor do they always offer the most effective way to advance meaningful understanding and discussion, which can sometimes require a degree of confidentiality. There is therefore a tension built into the NEB’s dual roles of quasi-judicial body and consultative arm of the Crown, and we should expect to see a next wave of cases in which the details of how the NEB can operate in both roles will be worked out.

Canada is also not entirely relieved of its consultation obligations. If Cabinet receives a NEB report and then considers making a decision that differs from what the NEB recommends, the Federal Crown should (at a minimum) consult on that proposed change. And Federal agencies will also have to step forward to fill any gaps left by the NEB process. It will therefore be important, at a strategic level, to seek clarity from the NEB on whether any issues are outside its scope of review. This will then position communities to follow up with the relevant Federal agency.

Turning to the potential outcomes of NEB applications, these decisions support the view that accommodation, properly understood, requires more than simply complying with existing laws, policies and practices. Where a risk of impact to aboriginal or treaty rights is made out, the NEB needs to turn its mind to how to mitigate or accommodate for that impact through measures that are specifically designed for that purpose. Aboriginal participants in NEB hearings may therefore push for outcomes that go beyond the baseline of measures proposed in the project application or existing regulatory requirements.

Finally, a troubling aspect of these decisions is the extent to which they put the NEB in the position of judging its own actions. The NEB now carries out dual functions: it will do the consultation, and it will then determine whether the consultation has been sufficient. This creates an obvious conflict of interest, and raises the risk of aboriginal parties losing confidence (or, more accurately, losing confidence even more) in the integrity of the NEB process. How, they may ask, can the board be charged with doing the consultation and then be expected to objectively assess whether that work has met the legal standards? Expect to see future cases that delve into this thorny issue.

Detailed summary

Hamlet of Clyde River and Chippewas of the Thames both involve legal challenges by aboriginal communities to NEB decisions authorizing oil and gas activities or facilities. In Hamlet of Clyde River, the Inuit of Clyde River were concerned that a proposed offshore oil and gas seismic testing program would impact the marine mammals they depend on. Their right to hunt these animals is protected by the Nunavut Settlement Agreement, and the evidence showed a risk that the seismic testing could, among other things, disrupt migration patterns and cause hearing damage to marine mammals. The NEB conducted an environmental assessment, which included community meetings at which Inuit members asked for specific information on the risk of impacts to marine mammals. Neither the NEB nor the proponent could answer the questions at the time. The proponent subsequently filed a 3,962 page document purporting to provide the requested information. Community residents could not access the document electronically (due to limited internet access), and only a small part of the document was translated into Inuktitut. Notwithstanding the community’s repeatedly stated concerns, the NEB approved the seismic program, and the community launched an appeal to the Federal Court of Appeal.

Chippewas of the Thames involved an application by Enbridge to reverse the flow of, and expand, an existing pipeline to enable it to carry heavy crude oil. The pipeline was built in 1976, and crossed through lands and waterways subject to aboriginal and treaty rights of the Chippewas of the Thames, a community of the Anishinaabae Nation. In contrast to the process followed in Hamlet of Clyde River, the NEB held a form of hearing into the pipeline application. It granted the Chippewas of the Thames intervenor status, provided funding to support their participation, and provided all intervenors with an opportunity to test Enbridge’s evidence through written information requests as well as present oral and written argument. The Chippewas of the Thames opposed the application, expressing concern that, among other things, the conversion of the pipeline to carry heavy crude greatly increased the risks and impacts of a spill. They also raised the fact that there had never been any consultation or discussion prior the pipeline being built.

The main legal issue in both cases is the role tribunals like the NEB have in fulfilling the Crown’s duty to consult with and accommodate aboriginal peoples. The SCC’s 2010 decision Rio Tinto Alcan v. Carrier-Sekani Tribal Council partially answered that question. In that case, the question was whether the BC Utilities Commission had the power to review the adequacy of Crown consultation before making a decision that may affect aboriginal title and rights. The SCC found that it did. As a quasi-judicial tribunal, the BCUC has the power to decide issues of law related to applications before it. This implied a power to also consider constitutional issues, including whether the Crown’s duty, grounded in s. 35 of the Constitution Act, 1982, had been fulfilled.

What Rio Tinto Alcan did not decide, however, was whether tribunals such as the NEB can (or must) go a step further and actually step into the shoes of the Crown and do the consultation and accommodation. That is the key issue decided in Hamlet of Clyde River and Chippewas of the Thames.

The SCC concluded that the NEB is acting in the role of the Federal Crown when it reviews a project application. It must therefore uphold the Crown’s legal duty to consult and accommodate before it approves (or recommends approval of) an application. The legal analysis in support of these conclusions boils down to two key points:

  • The NEB has the jurisdiction to address consultation issues: the NEB exercises powers given to it by Parliament through legislation, and those powers include deciding issues of law. As in Rio Tinto Alcan, this means that the NEB has the implied power to decide constitutional issues, including whether the Federal duty to consult and accommodate has been fulfilled.
  • The NEB is itself responsible for ensuring the Crown’s duty is upheld: Parliament’s decision to delegate regulatory powers to the NEB means that the NEB is, for legal purposes, acting for and as the Federal Crown when it reviews project applications. The NEB’s powers must therefore be exercised in conformance with the Constitution, and it must ensure that the duty to consult and accommodate, if triggered, has been met. It does not matter if the applicant is a private company, and there is no direct Federal involvement (other than the NEB’s role) in either the project or the regulatory review of the project. Because Parliament has delegated its regulatory and, in some instances, decision-making powers over Federally regulated energy projects to the NEB, a NEB decision is itself an exercise of Federal Crown authority that triggers the duty.

The flipside of this conclusion is that Canada, having delegated its authority to the NEB, may rely on the NEB to fulfill both the procedural and substantive aspects of the duty. The SCC found that the NEB has a wide array of powers that will, in many cases, be sufficient to enable it to meet the legal duty. It can order production of evidence, provide funding support, establish hearings, receive and decide both legal and factual arguments, and impose conditions on its approvals that, if done properly, may be sufficient to accommodate for impacts to aboriginal rights. These powers are sufficient, the SCC found, to fulfill even the requirements of deep and meaningful consultation if they are properly administered.

The SCC made the following additional observations:

  • The NEB’s process will only be sufficient if it actually has the power and intention to address the full scope of aboriginal interests affected by an application. If an application raises issues that exceed the scope of the NEB’s authority, or the agency fails to provide an adequate process, the Federal Crown “must provide further avenues for meaningful consultation and accommodation in order to fulfill the duty prior to project approval” (Chippewas of the Thames, para. 32).
  • The NEB must do more than conduct an environmental assessment that considers the physical impacts of a project. It must directly consider and address the asserted aboriginal rights or treaty rights at issue: “the consultative process is not properly into environmental effects per se. Rather, it inquires into the impact on the right.” (Hamlet of Clyde River, para. 45).
  • Aboriginal rights and treaty rights are not simply one form of public interest on par with other interests. They are a special form of right that require special consideration: “the duty to consult, being a constitutional imperative, gives rise to a special public interest that supersedes other concerns” (Hamlet of Clyde River, para. 40).
  • That said, consultation does not amount to a veto, and the NEB may balance aboriginal interests against competing societal interests (Chippewas of the Thames, para. 59).
  • The NEB does not have to do a formal Haida-style strength of claim and seriousness of impact analysis in each instance in order to fulfill the duty. Its decision-making process must, however, disclose that it correctly identified the aboriginal interests at stake, and properly considered and addressed those interests.
  • This includes an obligation to give written reasons in response to consultation concerns raised by aboriginal parties: “When affected indigenous groups have squarely raised concerns about Crown consultation with the NEB, the NEB must usually address those concerns in reasons.” (Hamlet of Clyde River, para. 41).

Turning to the outcomes of the two cases, the SCC found that the NEB had discharged its duty to the Chippewas of the Thames, but not to the Inuit of the Hamlet of Clyde River. There appear to be three key reasons for this distinction. The first is that the evidence of the impacts of the seismic program at issue in Hamlet of Clyde River was arguably more compelling than the evidence of impacts at issue in Chippewas of the Thames. The evidence showed a serious risk that the seismic testing could physically harm and even drive away the marine mammals the Inuit have depended on since time immemorial, whereas the conversion of an existing pipeline to carry heavy oil raised the more speculative risk of potential future damage if a spill was to occur. The immediacy and potential significance of the impacts to culturally significant Inuit harvesting practices clearly influenced the court’s analysis as to the scope and content of the duty owed to the Inuit.

The second point is that the Inuit were relying on rights that are defined and protected by treaty, and there was a clear connection between those rights and the environmental effects of the seismic program. This enabled the court to focus more clearly on the specific issues that ought to have been properly addressed by the NEB. The evidence before the court in the Chippewas of the Thames, in contrast, appears to have been more generalized, with less clear and immediate connections between defined rights and project impacts.

The third point is that the NEB took two different approaches to aboriginal engagement. In Chippewas of the Thames, it held a full hearing (minus the oral evidentiary portion where witnesses take the stand and are cross-examined). It provided intervenor funding, received expert evidence, allowed that evidence to be tested through written information requests, and received written and oral argument. It also specifically addressed impacts to aboriginal and treaty rights in its reasons for decision. These procedural steps were sufficient to meet the Crown’s duty in the context of the pipeline conversion and expansion application. In Hamlet of Clyde River, in contrast, the NEB did not hold a hearing. It limited its review to an environmental assessment, and failed to administer that process in a way that enabled meaningful Inuit participation. Key failings include:

  • A failure by the NEB and the proponent to answer straightforward questions from the community about impacts to marine mammals at the community information sessions.
  • A subsequent “paper dump” of a massive technical report that was not translated into Inuktituk, and was not even available to the community because they could not download it from the NEB site.
  • No participant funding to support Inuit involvement and scientific review of the project, no opportunity to present or test evidence, and no formal opportunity to present argument or views.
  • A failure by the NEB to specifically identify, address and accommodate the treaty right at issue.

The court also reviewed the purported accommodation measures offered by the NEB, and found them to be inadequate. In particular, the court found that implementing an existing applicable policy (in this case, standards for conducting offshore seismic testing) is not a real accommodation measure. This indicates that the NEB may generally have to show that it went above and beyond existing standards, rules and regulations in addressing aboriginal interests.

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