Project Law Blog

Alberta Energy Regulator and Aboriginal Consultation Office Release Operating Procedures for First Nations Consultation on Energy Resource Activities

Posted in Aboriginal, Environmental, Oil & Gas Law, Project Development, Project Permitting
Comment

On February 4, 2015, the Alberta Energy Regulator (“AER”) and the Aboriginal Consultation Office (“ACO”) released the Joint Operating Procedures for First Nations Consultation on Energy Resources Activities (the “Operating Procedures”).

The Operating Procedures set out a framework to administer and coordinate the operations of the ACO and AER on matters relating to First Nations consultation for energy resource activities in Alberta. The Operating Procedures are required under the revised Aboriginal Consultation Direction (Ministerial Order 105/2014) issued on October 31, 2014, which applies to applications made to the AER under specified enactments, including the Environmental Protection and Enhancement Act, the Public Lands Act, the Mines and Minerals Act (part 8), and the Water Act. The Operating Procedures are to work in conjunction with The Government of Alberta’s Policy on Consultation with First Nations on Land and Natural Resource Management, 2013 and The Government of Alberta’s Guidelines on Consultation with First Nations on Land and Natural Resource Management.

The Operating Procedures outline four processes for consultation and coordination between the proponent, the AER, the ACO and First Nations. These processes are triggered by the level of consultation required by the ACO, ranging from no consultation, streamlined consultation, and standard consultation to extensive consultation, and the type of application to be submitted by the proponent. For applications where the ACO requires consultation, proponents must submit to the AER a “First Nations Impacts and Mitigation” table, which is to identify and describe potential adverse impacts to the rights of aboriginal people and proposed mitigation measures.

In clarifying the ACO’s role in the consultation process, the Operating Procedures state that the ACO’s determination of consultation adequacy is required before the AER can make a final decision under the specified enactments. Further, the ACO may provide advice to the AER in cases where the ACO believes impacts to Treaty rights and traditional uses need to be considered by the AER. In the event the AER holds a hearing to consider an application, the ACO may attend, observe, and produce a “hearing report” containing advice to the AER on impacts to Treaty rights and traditional uses raised during the hearing.

The Operating Procedures also require that a “First Nations Consultation Declaration” be completed and submitted to the AER as part of the application process. The declaration requires proponents to swear that the First Nations Impacts and Mitigation table “…accurately documents the potential adverse impacts on the existing rights of aboriginal peoples … or their traditional uses”.  The declaration is to be completed and submitted to the AER as part of any application for which the ACO determines consultation is required, and is to include the First Nations Impacts and Mitigation table described above.

The Operating Procedures come into effect on March 2, 2015.

 

Federal Government Approves Meliadine Gold Mine

Posted in Environmental, Mining, Project Development, Project Permitting
Comment

On January 27, 2015, the federal government accepted the Nunavut Impact Review Board (NIRB)’s recommendation — submitted in October 2014 and supported  by 127 terms and conditions — to approve Agnico Eagle’s Meliadine planned gold mine in the territory’s Kivalliq region. “It is evident that the board met its primary objectives … to protect and promote the existing and future well-being of the residents and communities of Nunavut, to protect the eco-systemic integrity of the Nunavut settlement area and to take into account the well-being of residents of Canada outside of the Nunavut settlement area,” Bernard Valcourt, Minister of Aboriginal Affairs and Northern Development, said in a Jan. 27, 2015 letter to the NIRB.

The Meliadine project, about 24 kilometers north of Rankin Inlet, will consist of one underground mine and five open pits, with a network of access roads, including, eventually, a two-lane all-weather road to the nearby Kivalliq community.  During its construction phase, the project would employ about 1,000 people, and about 750 people after mining operations start up. Following issuance of the NIRB Project Certificate, Meliadine will proceed to the operational permitting phase.

Lawson Lundell was counsel to Agnico Eagle during the environmental assessment process, including the public hearings held before the NIRB in Rankin Inlet, Nunavut during August 2014, with a team which included Brad Armstrong, Q.C., Christine Kowbel, Toby Kruger, Jennifer Nyland and Mia Chung.

Tervita v. Canada (Commissioner of Competition): Supreme Court of Canada Merger Analysis Case

Posted in Uncategorized
Comment

It has been quite some time since the Supreme Court of Canada considered the merger provisions contained in the Competition Act. On January 22, 2015, the SCC issued its decision in Tervita v. Canada (Commissioner of Competition), overturning the decision of the Federal Court of Appeal that had required Tervita to divest its interest in Babkirk Landfill Services Inc., a company it had acquired in 2011.  The Court agreed with the Commissioner of Competition’s position that the merger was likely to prevent competition substantially.  However, the Court concluded that the efficiencies defence in s. 96 of the Act had been made out, in large part because the Commissioner had not met her burden of proving quantitative anti-competitive effects to offset the efficiency gains established by the merging parties.

The case involves the operation of secure landfills in northeastern British Columbia for the disposal of hazardous waste generated by oil and gas operations in that region.  Landfills are regulated and operators require permits.  The provincial government had issued four permits for the region: two were held by Tervita (including through predecessor companies) for two operating facilities; one was held by a First Nations community, but not in connection with an operating facility; and one was held by Babkirk.  Babkirk had operated its site as a hazardous waste landfill but application had been made to operate a bioremediation facility at the same site.  The owners of Babkirk put the facility up for sale.  Tervita made an offer after an initial accepted offer had fallen through due to lack of financing.  Based on the size of the transaction, the merger was not notifiable under the Competition Act.  Although the merger was not notifiable, the Commissioner of Competition, upon receipt of a complaint from an unsuccessful bidder for the Babkirk business, opposed the transaction on the basis that it would prevent competition for secure landfill services in northeastern BC.

The case provides some clarity on the approach that should be taken to assess whether a potential competitor would have entered a market.  More significantly, the case addresses the efficiencies defence under s. 96 of the Act.  It explains the onus on the Commissioner to quantify all anti-competitive effects that can be quantified, so that they can be weighed against the asserted efficiencies.  The judgment also establishes that merging parties putting forward an efficiencies argument in a proposed merger will need to develop the quantitative and qualitative evidence of the positive effects of the merger that will offset any anti-competitive effects of the merger.

The outcome of the case was highly fact dependent; in particular, the majority judgment turned on the finding that the Commissioner had not presented evidence of the quantifiable effects of the anti-competitive results of the merger.

While fact-dependent, there are some key take-aways from the decision:

The Court confirmed that the Competition Bureau may assess a merger under s. 92 on the basis that it will prevent future competition.  Such assessment is made using a ‘but for’ analysis that addresses on a quantifiable basis what the competitive market would look like if the merger did not take, or had not taken, place.  The assumption under the ‘prevention’ branch of merger analysis is that a dominant player in a market will acquire an entity to stop competition from entering the market.

Prevention of competition analysis is forward-looking and the Competition Bureau must look at a discernable time-frame in which competition might reasonably have been expected to occur which would affect the existing market power of the merged entity.  The longer that time-frame, however, the less predictive it is and therefore the less likely such competition is to occur.  Such time-frames may vary from industry to industry depending upon factors such as barriers to entry, regulatory requirements, and the pace of change in a particular product or service delivery model.  The Commissioner must review whether, ‘but for’ the merger, a potential competitor would not only enter the relevant market, but would have the ability to impact the market power of the merging parties or either of them.

Prevention of competition analysis is necessarily predictive.  However, there must be some reasonable basis upon which the determination of the parties’ own behaviour can be evaluated – the analysis should not be based on pure speculation on the part of the Tribunal.  Such evidence would come from the merging parties’ own plans and evaluation of market conditions and must establish on a balance of probabilities that it is more likely than not that the merger would result in a substantial prevention of competition.  It should be noted that the Tribunal accepted somewhat speculative theories about the potential failure of a certain business strategy.

Where the efficiencies defence is raised by the merging parties, an assessment of the efficiency gains of the merger resulting from the integration of resources of the merging entities must be found to outweigh the anti-competitive effects of the merger for it to succeed.

The Commissioner of Competition has the burden of demonstrating the anti-competitive effects of the merger.  In the absence of such evidence, the merging parties’ evidence of efficiencies will be given weight, and the anti-competitive effects of the merger will be given zero weight, with the effect being that, on balance, the merger will create efficiencies that outweigh any anti-competitive effects.  While the Court found in this case that the Commissioner had not established her case and therefore this decision may have limited utility to future contested mergers, there are certain key principles that arise from the Court’s assessment of the efficiencies defence:

  • The Commissioner must quantify all quantifiable anti-competitive effects of the merger.  Estimates of quantifiable effects may be made, but they must be presented based on evidence that can be reviewed, weighed and challenged by the merging parties.
  • Non-quantifiable anti-competitive effects, such as the impact of the merger on product quality or service responsiveness, may be presented, but will generally carry less weight.
  • Quantifiable anti-competitive effects that are not supported by evidence will not be considered in the weighting given to qualitative effects by default.

There is no minimum threshold for the establishment of efficiencies by the merging parties; the efficiencies may be marginal but the defence will still succeed if the marginal efficiencies outweigh the anti-competitive effects established by the Commissioner.  Therefore, the Court set a low bar for the potential success of the efficiencies defence.

Based on the outcome of the decision, parties who have any concern that a proposed merger will result in a potential determination of a substantial lessening of competition under s. 92 might more readily consider using the efficiencies defence, particularly if they believe that the Commissioner could  have difficulty establishing quantifiable anti-competitive effects of the merger.

Shortly after the decision was released, the current Commissioner of Competition issued a statement that, “The Bureau will consider the guidance provided on efficiencies and any changes to our analysis and information gathering that may be required during merger review.” (italics added).  Going forward, the Commissioner may ask for significantly more information in respect of his review in any merger where the efficiencies defence might be raised.

The majority of the Court noted that while Parliament may have intended that there be a minimum threshold that merging parties had to meet in terms of efficiency gains resulting from the merger, the language of the statute did not set any such threshold.  Accordingly, amendments to s. 96 might also be on the horizon.

Court strikes down Yukon’s Peel watershed land use plan

Posted in Aboriginal, Constitutional Law, Consultation, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory
Comment

On December 2, 2014, the Yukon Supreme Court struck down the Yukon government’s Peel watershed regional land use plan because of the government’s failure to follow the process for developing that plan under final agreements (modern treaties) with the Na-Cho Nyak Dun, Tr’ondek Hwech’in and Vuntut Gwichin First Nations. The case marks the first time that a court has been asked to consider the meaning of land-use planning provisions contained in the Umbrella Final Agreement between Canada, Yukon and Yukon First Nations, which forms part of eleven final agreements across Yukon. Among other things, the final agreements provide First Nations with the right to participate in land and resource management decision-making processes for Crown lands, including land use planning processes, in exchange for the release of claims to Aboriginal rights or title to those lands.

While the decision deals specifically with the Peel watershed in northeast Yukon, the case will have direct implications for land use planning throughout the Yukon, and could have indirect impacts on consultative requirements under modern treaties for other governmental land and resource use decision making.

Background

The Peel watershed is a vast area covering 14% of Yukon. While it is almost entirely undeveloped and there are no mines in the area, as of summer 2011, there were nearly 8,500 active mining claims in the area. The area is considered to harbour a large portion of the Yukon’s oil and gas potential.

In 2004, the Peel watershed regional planning commission was established under the relevant final agreements to develop a regional land use plan for the Yukon portion of the Peel watershed. The mandate of the Commission was limited to land use planning for the Yukon, however, the final agreements all made provision to protect the interest of the Tetlit Gwich’in who live in the Northwest Territories but have traditional territory in the Yukon.

As set out in the judgment, land use planning under the final agreements follows six basic steps:

Step 1: the Commission forwards its Recommended Plan to the government of Yukon.

Step 2: the government of Yukon must Consult[1] with any affected Yukon First Nation and any affected Yukon community before approving, rejecting or proposing modifications to the Plan.

Step 3: the government of Yukon, if it rejects or proposes modifications to (but not if it accepts) the Recommended Plan, must provide written reasons to the Commission for rejection or modification.

Step 4: the Commission is to reconsider the Recommended Plan and make a “final recommendation” to the government of Yukon with written reasons. This is the Final Recommended Plan.

Step 5: the government of Yukon, before rejection, modification or approval, of the Commission’s “final recommendation”, must Consult with any affected Yukon First Nation and any affected community.

Step 6: the government of Yukon may approve, reject or modify the Final Recommended Plan as it applies to Non-Settlement Land.

Following years of background work and information gathering from First Nations, government and the general public, the Commission proposed a land use plan for the Peel watershed and recommended it to the government under Step 1. Under Steps 2 and 3, the government proposed modifications to the Plan and sent it back to the Commission. Under Step 4, the Commission then made some modifications and resubmitted the “Final Recommended Plan” back to the government. The controversy in the case arises from what the government did with the Plan after receipt of the Final Recommended Plan.

After receipt of the Final Recommended Plan, the government introduced further changes to the Plan beyond those it raised at Step 3, and approved a final Plan that, among other things, opened 71% of the Peel watershed for mineral exploration with 29% protected, compared to 80% protected and 20% open for mineral exploration under the Final Recommended Plan.

The Yukon government’s position was that the final agreement gave it the final word on approving a plan on non-settlement lands. The First Nations argued that the government had gone off on a “frolic of its own” and essentially replaced the Final Recommended Plan with its own plan, contrary to the consultative process set out in the final agreements.

The Decision

The Court specifically emphasized that its role was not to determine whether more or less protection for the Peel watershed is appropriate. Rather, its job was to interpret whether the planning process envisioned in the final agreements had been followed. The overriding issue, as stated by the Court, was “whether the Government of Yukon acted honourably and interpreted its constitutional obligations under the Final Agreements broadly and purposively rather than narrowly, divorcing the words of the Final Agreements from their purpose.”

In drawing on previous jurisprudence from the Supreme Court of Canada in Little Salmon/Carmacks and Manitoba Metis, including direction that modern treaties must be interpreted in a manner that fosters a positive long-term relationship between First Nations and government as well as between Aboriginal and non-Aboriginal communities, the court concluded that the process adopted by the Yukon government to enact the plan was not based upon a contextual interpretation of the final agreements, nor did it enhance the goal of reconciliation. In the words of the Court, “It was an ungenerous interpretation not consistent with the honour and integrity of the Crown”, resulting in the government usurping the Commission’s role and the planning process by introducing new land use planning tools and concepts at the final stage of the process.

As a result, the Court quashed the Yukon government’s approved plan, and directed that the government return to Step 5 and consult on the Final Recommended Plan. As much of the consultative process had already been undertaken and the government already had an opportunity to make submissions at Step 3 of the process, the Court held that, should the Yukon government wish to make any modifications to the Final Recommended Plan, it would have to do so in a manner consistent with its initial comments provided at Step 3.

Implications

While the decision does not challenge the Yukon government’s ultimate power to make decisions regarding management and use of Crown lands in the Yukon, it reminds governments – and project proponents relying on authorizations given by governments – that treaty rights contained in modern land claim agreements are to be given a large and liberal interpretation consistent with the objectives of the treaty and in a manner that upholds the honour of the Crown.  Proponents – particularly in the north where many modern treaties have been entered into – are reminded that treaty rights can apply to Crown lands and that First Nations may have a right to participate in decision-making for the management of public lands and resources.  The decision is yet another in a line of cases showing that courts will not allow governments to take a narrow, restrictive view of their obligations under modern treaties, and will step in where they feel that government actions are not consistent with the honour of the Crown.  Project proponents and governments must therefore pay close attention to any applicable treaties in areas where they wish to work and must ensure that the processes set out in the treaties are being observed in a manner that reflects ongoing Aboriginal interests in decisions affecting Crown lands within their traditional territories.


[1] “Consult” is a defined term in the Final Agreements. 

Federal Government Introduces Disclosure Law for Oil, Gas and Mining Companies

Posted in Aboriginal, Mining, Oil & Gas Law, Project Development
Comment

On October 23, 2014, the Government of Canada introduced the proposed Extractive Sector Transparency Measures Act into Parliament.  The proposed Act, which is contained with the omnibus budget Bill C-43, is intended to deter and detect corruption by requiring companies to report payments they make to governments in Canada and abroad.  The federal government is implementing the measures as part of international efforts to improve transparency surrounding payments made by companies in the oil and gas and mining sectors to governments.

The Reporting Requirement

The reporting requirements will apply to any company that is publicly traded in Canada, as well as any other company doing business in Canada that meet two of the following three criteria: it has at least $20 million in assets; it has at least $40 million in revenue; or it has at least 250 employees.  The federal government will be able to expand the reporting requirement to other companies by regulation.  Those companies will be required to report payments to governments in specified categories, including taxes, royalties, fees, production entitlement, bonuses, dividends and infrastructure improvement payments.  The federal government will have the power to expand the list of reportable payment categories by regulation.

Companies will be required to disclose payments within a category of payment that are made to the same government, if the total of all payments during the financial year is at least $100,000 (including the value of payments in kind), or any other amount specified in regulations.  The $100,000 threshold is lower than the US$100,000 applicable in the United States and the 100,000 euro threshold applicable in the European Union.  Companies which are subject to reporting requirements in the United States and Europe will have to keep these differing thresholds in mind.  The proposed Act does allow the federal government to deem compliance with other jurisdictions’ reporting requirements to meet requirements under the proposed Act, if the responsible Minister believes that the other jurisdiction’s reporting requirements meet the purposes of the proposed Act.

Companies are to report payments by filing reports within 150 calendar days of their financial year end.  Companies will be required to keep records related to reports for a period of seven years after filing.  In addition, the federal government will have the power to order companies to provide information, including audit results, needed to confirm that reporting requirements have been met.

The proposed Act provides significant penalties for contraventions, including fines of up to $250,000 for failure to report payments and for deliberately structuring payments so as to avoid triggering reporting obligations.  Any official, director, or agent of a company that directs, authorizes, assents to, acquiesces in or participates in a contravention of the reporting requirements will also be guilty of an offence and liable to a fine of up to $250,000.

Application to Aboriginal Governments

 

The proposed Act will apply to payments made to Aboriginal governments in Canada, but not for two years after the Act comes into force.  At that time, companies will be required to report payments made to First Nations, Metis settlements and other Aboriginal governments (for example those north of 60º) that are within the listed categories.

At present, the categories of reportable payments do not include consultation capacity funding payments, nor are “social” payments for training and education, employment, and community development purposes expressly included in the reporting requirements.  However, the scope of the “infrastructure improvement payments” category is undefined, and could potentially capture community investment payments made by companies to Aboriginal governments under impact benefit agreements, depending on the purpose or intended use of the payment.

Coming Into Force

There are no defined timelines for bringing the proposed Act into force.  However, the spring 2014 federal consultation paper on establishing mandatory reporting standards for the extractive sector states that Canada has committed to implementing the measures by June, 2015.  Assuming the proposed Act is passed by Parliament along with the other provisions of Bill C-43, the Act will come into force on a date or dates to be determined by the federal government.  Resource companies will want to monitor the implementation of the proposed Act, and ensure that appropriate internal tracking and compliance measures are in place prior to the proposed Act coming into force.

Water Use in BC: Recurrent short-term water use approvals are lawful

Posted in Administrative Law, Environmental, Oil & Gas Law, Project Permitting, Regulatory
Comment

In yet another indication of the increasing prominence of water use issues in BC, the Supreme Court of British Columbia recently upheld the practice of the BC Oil and Gas Commission to grant recurrent short-term water approvals for oil and gas activities under the Water Act. In Western Canada Wilderness Committee v British Columbia (Oil and Gas Commission), 2014 BCSC 1919, (a case we first reported on here) the petitioners, Western Canada Wilderness Committee and Sierra Club of British Columbia Foundation, alleged that the Commission’s practice of granting recurrent short-term water use approvals to the same oil and gas companies for the same location was in violation of the Water Act. The Court disagreed, holding that there was nothing illegal about the Commission’s practice of evaluating each successive application for an approval on a fresh basis and according to established criteria.

Facts

Under the Water Act, the ownership of all water in British Columbia, as well as the right to use it, is vested in the Crown. The government, through various agencies, may issue licences or short-term approvals to use water. In this case, the narrow issue was the Commission’s practice of issuing recurring short-term approvals.  However, because the Ministry of Forests, Lands and Natural Resources Operations (FLNRO) employs a similar practice of issuing short-term approvals to various users (land or mine owners, municipalities, water users’ communities, federal and provincial ministries, and so on), the case has implications that go beyond the oil and gas industry.

As set out by the Court:

In order to consider an application for a s.8 [short term] approval, the applicant must provide FLNRO with information, such as the proposed source of the water, the point(s) of diversion of the water, the total volume of water to be used, the maximum rate of withdrawal, the time frame for the diversion and the purpose for which the water is to be used. FLNRO considers the application in terms of whether there are conflicting users, whether there is any environmental impact, how much water is available and the interests of third parties. Approvals normally restrict the amount of water, set the term of the approval and impose other appropriate conditions.

Similarly, pursuant to section 8(1) of the Oil and Gas Activities Act, the Commission has the authority to grant short-term approvals of no more than 24 months to oil and gas operators for the use or diversion of surface water sources in relation to “oil and gas activities”. In this case, the Commission had issued a number of short-term approvals to Encana in relation to the exploratory stages of its oil and gas plays in northeast British Columbia. Encana said that at the exploratory phase its water use would be of a short-term nature, and that its water use would change as its operations change throughout the life cycle of its operations, such that it may acquire a more permanent water use licence at more mature stages of the play.

Discussion

The crux of the Petitioners’ argument was stated as follows:

The Commission grants repeated Section 8 Approvals that combine to authorize companies to use or divert water for more than one term and for more than 24 months. While no Section 8 Approval singularly exceeds one term or the statutory limit, multiple approvals are routinely granted over multiple years to the same company, for the same purposes, at the same locations and thereby violate s. 8 of the Water Act.

Accordingly, the issue before the Court was whether the Commission has the power to grant section 8 approvals that extend for more than one term or more than 24 months.

The Court approached the issue by setting out the process that the Commission and FLNRO follow in granting an approval in any given case:

Each application for a s. 8 approval undergoes a risk rating by the Commission. Section 8 approvals all have an expiry date and that date may not be extended or continued. If the approval has expired, the operator must re-apply for a new approval. It is the Commission’s policy, as confirmed by the applicable application manual, that any re-application is to be considered as a new or “fresh” application with updated field information and documentation being required from the applicant, consistent with what is outlined above. This new application is then fully reviewed afresh by Commission staff with all relevant and up to date data and input from relevant persons.

After conducting an extensive analysis of whether the Petitioners had standing to bring the case (they did) and the applicable standard of review (reasonableness), the Court dismissed the Petitioners’ argument by stating:

On a plain reading of section 8 of the Water Act, in context with the scheme of the Act, the object of the Act, and the intention of the legislature, there is simply no prohibition relating to consecutive short term water use approvals or even recurrent approvals lasting in total in excess of 24 months. I agree with Encana that, to the contrary, when read in context with the entire Act, this provision gives FLNRO, or the Commission in respect of oil and gas activities under the Oil and Gas Activities Act, broad discretion to provide for effective and efficient processes for the review of applications for short term water use approvals and to ensure that applications that are approved are in the public interest having regard to environmental, economic and social factors.

The Court went on to say that there is no basis in either the Act itself or from a public policy perspective to prevent someone who had previously received an approval from re-applying for the same or similar permission – the situation would be no different if a third party came along and applied for the same or similar approval.  In either case, FLNRO or the Commission would have the statutory authority to consider the application and make a decision based on the present information before it.

Implications

The case provides clarity and reassurance to all those relying on short-term water approvals issued under section 8 of the Water Act and reassures regulators such as FLNRO or the Commission that the practice they have been following is a sound one. It is important to keep in mind though, as previously noted, that the Water Act is soon to be overtaken by the Water Sustainability Act, which expressly provides that approvals for both water and ground water may be recurrent. In the meantime, however, those seeking recurrent approvals under the existing Water Act are reminded that the Court was very clear that a recurrent approval is considered to be a new application and subject to the same application process as a new approval – meaning that existing approval holders will not be “grandfathered” or favoured in respect of an application for a recurrent renewal.

New Regulations Issued by BC OGC for LNG Facilities

Posted in Aboriginal, Environmental, Oil & Gas Law, Project Development, Regulatory
Comment

On July 21, 2014, the new Liquefied Natural Gas Facility Regulation, BC Reg 146/2014, was enacted by the BC Oil and Gas Commission (“OGC”). As the name suggests, the regulation is intended to address regulation of LNG facilities, and also updates LNG-related provisions previously in the Pipeline and Liquefied Natural Gas Facility Regulation, BC Reg 281/2010, which has been renamed the Pipeline Regulation. The OGC has also issued version 1.0 of its Liquefied Natural Gas Facility Permit Application and Operations Manual, which provides guidance for applicants wishing to construct an LNG facility in accordance with the new regulation.

Province Releases Kitimat Airshed Study

Posted in Environmental, Oil & Gas Law, Project Development, Project Permitting
Comment

On July 18, 2014 the Province of British Columbia released the long-awaited Kitimat Airshed Study (though completed on April 25, 2014, the study was not previously released pending review).

The study is an independent assessment intended to assist the Province’s regulatory decision-making process by providing information that will be used to ultimately determine how many industrial facilities can be added to the Kitimat airshed without causing unacceptable impacts to human health and the environment. The study area spans the length of the Douglas Channel from its entrance near Hartley Bay, includes Kitimat, and continues up the Kitimat River towards Terrace. This area, covering some 6,772 km2, is of great importance to a number of projects due to its attractive location for industries seeking a marine terminal along BC’s Pacific Coast in order to access foreign markets.

The study provides an assessment under various scenarios of the likely effects on human health and the environment of SO2 and NO2 emissions from existing and proposed facilities in the area, namely the existing Rio-Tinto Alcan aluminum smelter, projected emissions from four proposed LNG terminals (Kitimat LNG, Douglas Channel LNG, Triton LNG, and LNG Canada), a proposed oil refinery, and gas turbine powered electrical generation facilities, as well as related marine transportation sources.

While the study does identify potential risks to human health (especially in relation to SO2 emissions in proximity to industrial areas) and environmental impacts (particularly impacts to soil and lakes), BC’s Environment Minister, Mary Polak, says:

“This study tells us that with proper management there is significant capacity in the Kitimat airshed to safely accommodate industrial growth, while still protecting human health and the environment.”

Notably, the study does not propose absolute limits on the amount of emissions that would be acceptable in the Kitimat airshed.

This study will likely provide guidance for project proponents with respect to the Province’s approach to regulation of air emissions not only in the Kitimat area, but also in nearby Prince Rupert and Grassy Point, where results from this study are also intended to help inform regulatory decision making.

Supreme Court of Canada Confirms Provincial Power to Take Up Lands under Treaty – Grassy Narrows First Nation v Ontario (Natural Resources), 2014 SCC 48

Posted in Aboriginal, Constitutional Law, Consultation
Comment

Today, the Supreme Court of Canada released another important Aboriginal law decision, Keewatin v. Ontario (Natural Resources), 2014 SCC 48. The decision confirms the power of Ontario, along with other provincial governments, to manage natural resources over lands subject to numbered treaties. Treaty 3 is one of the historical, numbered treaties entered into between Canada and First Nations in the late 1800s and early 1900s whereby signatory First Nations surrendered their Aboriginal rights and title to lands they traditionally used in return for treaty rights, including the right to hunt and fish.

Treaty 3 sets out the Grassy Narrows First Nation’s right “to pursue their avocations of hunting and fishing throughout the tract surrendered” except on tracts “required or taken up for settlement, mining, lumbering or other purposes by [the] Government of the Dominion of Canada” (the “taking up” clause).

The central issue in the case was whether the reference to the “Dominion of Canada” in the taking up clause meant that Ontario did not have the power to take up lands to issue forestry licences over treaty lands. The Grassy Narrows First Nation argued that the reference to the Dominion of Canada in the taking up clause meant that only the federal government could exercise that power.  Today’s decision clearly confirms Ontario’s power to take up lands under Treaty 3. The decision also reiterates that taking up of lands by Ontario and other provinces remains subject to the duty to consult and accommodate First Nations.

The decision provides welcome confirmation of provincial powers to manage their natural resources, and confirmation that the federal government has no supervisory role in that process.

Judicial History

As summarized in a previous post, the Ontario Superior Court of Justice held that, based on a literal reading of the taking up clause, only the federal government had the power to authorize activities which significantly interfere with Treaty 3 harvesting rights. The trial judge found that Treaty 3 required a two-step process whereby the Province of Ontario was required to seek approval from the federal government before taking up land.

The Ontario Court of Appeal disagreed and reversed the trial decision. The unanimous court emphasized that the treaty partner is the Crown, and not any particular level of government. Crown responsibility devolved to Ontario when the ceded Treaty 3 lands were transferred to the Province, and Ontario had the right to manage and regulate activities on harvesting lands. For a summary of the Ontario Court of Appeal decision, please see our previous post.

Supreme Court of Canada Decision

Canada or Ontario?

Today’s decision provides a clear and firm answer to the question of whether the taking up clause allows Ontario to take up lands under Treaty 3. The Supreme Court stated clearly and unequivocally that “Ontario and only Ontario” has the power to take up lands under Treaty 3.

While Treaty 3 was negotiated by the federal government, the treaty was between the First Nations and “the Crown”. The implementation of the Crown’s rights and duties under the treaty is to be carried out in accordance with the division of powers between federal and provincial governments under the Constitution. As Ontario has exclusive authority under the Constitution Act, 1867 to take up provincial lands for forestry, mining, settlement and other provincial matters, only Ontario has the right to take up lands under Treaty 3.

The decision also put to rest the argument that Canada has a supervisory role in taking up of lands by provincial governments. The Supreme Court firmly rejected that argument, holding that if the drafters of the treaty wanted Canada to have a continuing supervisory role in taking up lands under the treaty, the treaty would have said this.

Duty to Consult

The decision confirms that the Crown’s right to take up lands under numbered treaties is subject to the duty to consult and accommodate as set out in Mikisew. In summary, the Crown must inform itself of the impact its action will have on the First Nation’s exercise of rights under the treaty and communicate with the First Nation. The Crown must deal with the First Nation in good faith and with the intention of substantially addressing their concerns.

Not every taking up of lands will constitute an infringement of a First Nation’s treaty rights. It is only where a First Nation is left with no meaningful right to harvest in territories over which they traditionally harvested that a potential action for treaty infringement will arise. This confirms the law as previously set out by the Supreme Court in Mikisew Cree First Nation v. Canada, 2005 SCC 69.

Implications of Keewatin

As shown in the map below, the language of the taking up clause under Treaty 3 is replicated in or similar to several of the other numbered treaties in Manitoba (Treaty 5), Saskatchewan (Treaty 6), and Alberta (Treaty 6 and 7). Treaty 3 is circled in blue, and numbered treaties with similar “taking up” clauses are circled in red:

This work, “Numbered Treaties with Taking Up Clause Similar to Treaty 3” is a derivative of “Creative Commons Numbered Treaties Map” by Themightyquill, licensed under CC BY-SA 3.0.

In other numbered treaties, the taking up clause is not limited to “the Dominion of Canada”, but rather refers to “the government of the country”. Given the different wording in the taking up clauses, the trial decision raised the prospect of very different processes for taking up of lands for natural resource development within the same province. The Supreme Court’s clear statement that it is the provincial government, and only the provincial government, that has the power to take up provincial lands under numbered treaties ensures that this outcome will be avoided. The decision provides welcome confirmation of the competence of provincial governments to issue tenures and approvals for development of provincial natural resources for logging, mining, oil and gas, and other similar matters.

The decision also firmly rejects any notion of a federal supervisory role over the exercise of provincial powers under the numbered treaties. Grassy Narrows affirms that it is the level of government with the power to regulate that must consult and accommodate, and that the involvement of both levels of government is not required if the matter is purely within one level of government’s jurisdiction.

The decision reminds provincial governments that their power to take up lands under numbered treaties is subject to obligations rooted in the honour of the Crown. Where treaty rights may be affected by provincial decisions to take up land, the Provinces will have to ensure that the Crown’s duty to consult and accommodate has been discharged.

The Grassy Narrows decision follows shortly after the Supreme Court’s decision in the Tsilhqot’in Aboriginal title case. While the two cases deal with separate and distinct issues — provincial powers to take up lands under treaties (Grassy Narrows), vs. Aboriginal title in areas where no treaties have been signed (Tsilhqot’in) — in both cases the Supreme Court has confirmed the power of provincial governments to enact legislation within their constitutional sphere of natural resource management, subject to their constitutional duties to First Nations. Therefore, while the two cases arose in very different contexts, both cases confirm ongoing provincial powers over lands even where subject to Aboriginal claims and interests.

Supreme Court of Canada Grants Tsilhqot’in Nation a Declaration of Aboriginal Title

Posted in Aboriginal, Administrative Law, Constitutional Law, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Public Law, Public Utility, Regulatory, Regulatory Compliance
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Introduction

On June 26, 2014, the Supreme Court of Canada (“SCC”) released its much anticipated decision on Aboriginal title in the Tsilhqot’in case and surprised many by granting the Tsilhqot’in Nation a declaration of Aboriginal title to approximately 200,000 hectares (2,000 km2) of land.

The Tsilhqot’in case is the first case decided by the SCC granting Aboriginal title to an Aboriginal group.  The case is of particular importance to resource-rich British Columbia where much of the provincially-owned land is subject to asserted, and often competing, claims to Aboriginal title and where many First Nations have not entered into treaties resolving their land claims with Canada.

This post will summarize the SCC’s ruling regarding the test for Aboriginal title, the nature of Aboriginal title, and the power of government to justifiably infringe on established Aboriginal title.  Future posts will address the applicability of provincial and federal laws to lands held under Aboriginal title.

Judicial History

For an overview of the decisions of lower courts, please see our previous Project Law Blog posts regarding the British Columbia Supreme Court decision and the British Columbia Court of Appeal decision.

Supreme Court of Canada Decision

The Test for Aboriginal Title

In Delgamuukw, the SCC stated that the test for Aboriginal title requires exclusive occupation and control of the land.  In Tsilhqot’in the significant debate was whether semi-nomadic Aboriginal groups could satisfy this test in claims over broad territories, or if exclusive occupation was limited to definite tracts of land or settlement sites occupied by Aboriginal groups at the time of Crown sovereignty.

The Court affirmed Delgamuukw, but provided clarification on how the test applies to semi-nomadic indigenous groups.

In short, “occupation” of the land must be “sufficient, continuous (where present occupation is relied on) and exclusive.”  Courts should compare Aboriginal culture and practices in a culturally sensitive way to the common law requirements necessary to establish possession over land.

When considering the Aboriginal group’s ability to satisfy the sufficient occupation standard, the Aboriginal group’s size, manner of life, material resources, technological abilities, and the character of the lands claimed must be considered.  Though the exercise is context-specific with respect to the manner of life of the people and the nature of the land, the Aboriginal group must ultimately show that they have historically acted in a way that would communicate to third parties that they held the land for their own purposes.

While the Court of Appeal required “intensive” use of the land to meet the sufficiency threshold, the Supreme Court of Canada ruled that a culturally sensitive approach found on the facts of the Tsilhqot’in case that the regular use of territories by semi-nomadic indigenous groups for hunting, fishing, trapping and foraging was sufficient to ground Aboriginal title.

 What Does Aboriginal Title Mean?

In Delgamuukw, the SCC held that Aboriginal title “encompasses the right to exclusive use and occupation of the land held pursuant to that title for a variety of purposes.”  Aboriginal title is not limited to traditional uses of the land; however the use and occupation of the land must be reconciled with the collective nature of the group’s interest in the land.

In Tsilhqot’in, the Court confirmed that Aboriginal title is a unique and beneficial interest in the land that cannot be equated to other forms of property ownership.  Aboriginal title confers ownership rights similar to fee simple, including the right of enjoyment and occupancy of the land and the right to:

  • decide how the land will be used;
  • possess the land;
  • reap the economic benefits of the land; and
  • pro-actively use and manage the land.

However, Aboriginal title is not absolute and must be held collectively for the present and future generations.  It cannot be alienated except to the Crown, nor encumbered in a way that would prevent future generations of the group from using and enjoying it.

Tsilhqot’in stipulates that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders.  If consent cannot be obtained, then the government can still “justify” an incursion onto the land under section 35 of the Constitution Act, 1982 if the test for justification can be met.

            The Test for Justification of Infringement

Tsilhqot’in has not changed the law with respect to consultation and accommodation for asserted claims to Aboriginal title as established in previous cases such as Haida, but has articulated a test for determining when government can take action on lands over which Aboriginal title has been proven.

Where Aboriginal title is established rather than merely asserted, governments and others seeking to use the land must obtain the consent of the Aboriginal title holders.  Absent consent from the Aboriginal title holders, a government that wishes to take action on Aboriginal title lands must show that:

  • it discharged its procedural duty to consult and accommodate as articulated in Haida;
  • its actions were in pursuit of a compelling and substantial objective; and
  • the action is consistent with the Crown’s fiduciary obligation to the Aboriginal group.

The compelling and substantial objective is to be considered from both the Aboriginal perspective and the perspective of the broader public and must further the goal of reconciliation of Aboriginal interests with those of the broader interests of society.  The development of agriculture, forestry, mining, and hydroelectric power, as well as the economic development of the province, can be consistent with the goal of reconciliation and can, in principle, be “compelling and substantial objectives” capable of justifying an infringement of Aboriginal title.

If there is a compelling and substantial objective, then the government must also establish under section 35 that its actions are consistent with its fiduciary duty towards Aboriginal peoples.  To be consistent, the government must not act in a way that would substantially deprive future generations of the benefit of the land.  Further, in order to justify the infringement, the Court has created a proportionality test that requires the consideration of the following:

  • whether the incursion is necessary to achieve the government’s goal (rational connection);
  • that the government is not going further than necessary to achieve its goal (minimal impairment); and
  • that the benefits that may be expected to flow from that goal are not outweighed by adverse effects on the Aboriginal interests (proportionality of impact).

While this section 35 test has its roots in established Canadian constitutional jurisprudence, the test has the potential to be difficult to apply.

Unanswered Questions

While providing greater clarity in some cases, there are a number of remaining questions that the SCC’s decision did not address.  Some of the real practical concerns for government and industry going forward are:

  • Whether consent has been obtained from the right person or group.  Government and industry will have to be sensitive and alive to traditional political structures and legal systems when seeking authorizations from Aboriginal groups.
  • The significance of overlapping and competing claims to Aboriginal title over the same territory.
  • The significance of internal disputes within Aboriginal groups with respect to land use planning and development, recognizing that Aboriginal title is held collectively for the benefit of present and future generations.

What Happens Now?

In most of British Columbia, claims for Aboriginal rights and title are still unresolved either through court declarations or under treaties.  In those areas of British Columbia, the consultation requirements under the Haida case remain applicable.  The depth of consultation required is dependent on: (1) the strength of the claim, and (2) the potential impact of proposed land use or project proposals.  The immediate effect of the Tsilhqot’in decision is that the strength of claims in many cases will likely increase, thereby increasing the depth of consultation required.  This will affect the consultation obligations of government, as well as the consultation efforts of project proponents.

As a result of the Tsilhqot’in decision, we may see many more First Nations bringing forward their court claims for declaration of Aboriginal title.  The case will also affect the positions of both First Nations and government at the treaty negotiation tables.

The Court has stated that once Aboriginal title is granted, development cannot proceed on that land absent consent or before establishing a justified intrusion under the Constitution Act, 1982.  Further, the Court has stated that it may be necessary for the Crown to reassess prior conduct in light of declaration of Aboriginal title and halt projects and suspend the applicability of legislation if consent was not first obtained from the Aboriginal title holder.  For proponents looking to develop resource projects in British Columbia, this decision means there are compelling reasons to continue the now well established practice of early engagement with Aboriginal groups and the negotiation of impact benefit agreements.

In a later bulletin we will address the findings of the Court that provincial laws of general application (forestry laws, environmental laws) will continue to apply to Aboriginal title lands, with certain limitations.