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On June 30, 2016 the Federal Court of Appeal (“FCA”) released its decision to overturn Canada’s approval of the Northern Gateway Pipelines Project (the “Project”). In the decision, the FCA agreed with what First Nations had been saying all along and found that Canada’s approval of the Project could not stand as Canada had failed to fulfill its constitutional duty to consult. Accordingly, the FCA set aside the Project’s approval and remitted the matter to Cabinet for redetermination.

I.                    BACKGROUND

In June 2014, Cabinet approved the Project, consisting of two 1,178 kilometer pipelines, a marine terminal and oil tanker routes, subject to the fulfillment of 209 conditions. The Project would transport oil by pipeline from Alberta to Kitimat, where the oil would be loaded onto tankers for export, and where condensate would be unloaded from tankers for transport to Alberta along a second proposed pipeline.  The Project would significantly affect a number of First Nations whose territories are near or on the Project’s proposed pipeline and tanker routes. Some of these affected Nations including the Gitxaala Nation, the Haisla Nation, the Gitga’at First Nation, the Kitasoo/Xai’Xais Band Council, the Heiltsuk Tribal Council, the Nadleh Whut’en and Nak’azdli Whut’en, and the Council of Haida Nation (the “Nations”) challenged Cabinet’s approval of the Project. The Nations were joined in this challenge by four non-governmental organizations (the “NGOs”) and UNIFOR. The Nations, the NGOs and UNIFOR each advanced unique and specific legal challenges to the Joint Review Panel’s (the “JRP”) recommendation to approve the Project and Cabinet’s subsequent approval of the Project. These legal challenges were consolidated and considered together by the FCA.  The FCA concluded that Canada failed to fulfill its constitutional duty to consult with and accommodate the Nations.

As part of the Project’s approval process, Canada established a five-phase consultation framework (the “Framework”) to fulfill its duty to consult and accommodate. A similar framework is commonly used by Canada in other environmental assessments of major resource projects. Phase 3 consisted of a hearing process by the JRP (pursuant to the National Energy Board Act and Canadian Environmental Assessment Act). Phase 4 of the Framework called for Canada to engage with Indigenous groups, including the Nations, on any Project-related concerns that could not be adequately dealt with in earlier phases. Phase 4 was the first and only opportunity for Canada to engage in direct consultation and dialogue with the Nations on matters of substance prior to Cabinet’s decision on the Project. The FCA concluded that Canada failed at Phase 4 to meet its constitutional obligations.

II.                  THE DECISION

The FCA began by setting out the relevant legislative scheme and dispensing with a number of preliminary matters including issues around standing, the admissibility of affidavits, and the appropriate decision to be challenged. The FCA concluded that Cabinet was the decision maker, and therefore dismissed the challenges to the JRP’s recommendation to approve the Project.

Cabinet’s Decision

The FCA first considered Cabinet’s decision to approve the Project under the principles of administrative law. That is, was the decision reasonable given the “facts, its choice of policy, its access to scientific expertise and its evaluation and weighing of competing public interest considerations?” The FCA held that it was. However, the FCA also held that this was not the end of the analysis. Canada had a duty to consult with the Nations on the Project. If that duty was not fulfilled, the FCA reasoned, Cabinet’s approval of the Project could not stand.

Duty to Consult and Accommodate

There was no dispute that Canada was obliged to provide deep consultation. Canada argued that its Framework sufficed to fulfill its consultation obligations.

The FCA did not agree.  The Court concluded that Canada had failed to maintain the honour of the Crown and had therefore breached its duty to consult. This failure stemmed from Canada’s “unacceptably flawed” execution of Phase 4 of the Framework.

The FCA found that Canada’s execution of Phase 4 was problematic from the start. The Nations expressed concerns that timelines placed on Phase 4 were “arbitrarily short” and “insufficient to provide for meaningful consultation” and requested that they be extended. The FCA found that there was no evidence that Canada gave any thought to an extended timeline. Additionally, the FCA found that in three instances information put before the Governor and Council to aid in its decision was inaccurate, and Canada was unwilling to hear the Nations’ concerns or to take steps to correct the misinformation. Finally, Canada failed to engage in good faith with the Nations on an individualized basis, choosing to “take notes” rather than to meaningfully engage with the Nations’ concerns that were described as being “specific, focused and brief.”

Rather than consult, the FCA concluded that Canada was more concerned with moving directly to accommodation measures. These measures were not responsive to the specific concerns of the Nations – Canada attempted to craft a “one size fits all” solution without having ever engaged in meaningful dialogue with each Nation, and focusing on Project conditions rather than the rights at issue and Project impacts on those rights. This failure to engage could not be justified by moving directly to accommodation, and was compounded by Canada’s refusal to disclose necessary information relating to the strengths of the Nations’ claims to Aboriginal rights and title. The Court held that such information, vital to an assessment of the required depth of consultation, must be provided as part of the duty to consult. The FCA concluded that the Nations “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.” This did not occur.

As a final point, the FCA addressed the adequacy of Canada’s reasons for approving the Project. Where a duty of deep consultation is owed, government is required to give reasons for its decisions. The FCA held that in situations where government must balance multiple interests, the requirement to give reasons becomes more important so as to ensure other issues don’t displace the issue of impacts on Aboriginal rights.  The FCA concluded that Canada’s Phase 4 consultation efforts fell “well short of the mark” and, accordingly, held that Canada had failed to maintain the honour of the Crown.

Conclusions and Remedy

The FCA concluded that Canada undertook “only a brief, hurried and inadequate opportunity” for consultation in Phase 4. This hurried approach left entire subjects of interest to the Nations completely unaddressed. The Phase 4 consultations did not allow for sufficient dialogue, did not fill gaps, did not empower Canada’s officials to meaningfully engage on subjects of interest to the Nations, was devoid of the free and candid exchange of information, offered no explanations to the Nations and placed insufficient information in front of the Governor in Council prior to the Project’s approval. Because of the foregoing, the FCA held that Canada failed to fulfill its legal obligations.

The FCA set aside Cabinet’s approval of the Project and associated certificates, and sent the matter back to Cabinet for redetermination. The FCA also presented two paths on which the matter could proceed. One, Cabinet can receive further submissions and decide not to approve the Project this time around. Alternatively, Canada can redo Phase 4 consultation with a view to properly fulfilling its consultation duty. In this second scenario, once the duty to consult is properly fulfilled the matter could be placed before Cabinet for redetermination; Cabinet could then decide whether to approve the Project based on the outcome of the consultation process.

III.                POTENTIAL IMPLICATIONS

The FCA confirmed what First Nations have been saying all along: substantive and meaningful consultation with each affected First Nation is necessary. This decision is an indictment of “rubber stamp” consultation and serves as a clear warning with respect to major projects – governments must fulfill the constitutional duty to consult with all potentially impacted First Nations.

The decision stands as a huge victory for First Nations – Aboriginal rights and title are to be recognized and respected; the failure of government to do so and to engage meaningfully with the rights and title holders will be corrected by the courts.  Projects, whether big or small, will not proceed if the duty is not met.

The FCA’s decision focused on one phase of a Framework that was challenged on a number of fronts. The FCA’s conclusion that the Framework was “set up well and operated well” could set the stage for future multi-phased frameworks to be used. However, this is an issue that will no doubt be revisited, and remains a point of contention for many First Nations engaged in consultation processes.

This case summary provides our general comments on the case discussed and should not be relied on as legal advice. If you have any questions about this case or any similar issue, please contact any of our lawyers.