Project Law Blog

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
Comment

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.

Water Use in BC: Water Sustainability Act Receives Royal Assent

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

After 115 years under the old regime, the new Water Sustainability Act received Royal Assent on Friday May 20, 2014: an historic occasion to celebrate?

Not quite yet, perhaps. The fact is the vast majority of the new statute will not have the force of law until authorized by the Lieutenant Governor in Council at an unspecified future date (section 219).   With new water regulations not expected until the spring of 2015, it seems that the new Act will not be binding until that time. The only substantive provisions of the new Act that are already in force (i) amend the Clean Energy Act by making house-keeping changes to the funding eligibility of power projects pursuant to the First Nations Clean Energy Business Fund (section 145);  and (ii)  expand municipal expropriation powers by amending the Local Government Act (section 176).

Meanwhile, the new statute is garnering some early praise for its default “no-compensation” principle for changes to water use rights under long term licenses.

As previously reported, the new statute will repeal and re-enact core elements of the historic Water Act; extends the water use regime to groundwater; provides for a more comprehensive consideration of environmental issues relating to water use; and allows for the prioritization of certain water uses for environmental, domestic and animal purposes.

Water Use in BC: Water Pricing Debate Generates Widely Differing Views

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

The Province’s discussion paper Pricing B.C.’s Water has garnered a wide range of opinions since being released in March.  As part of the public consultation effort regarding the new Water Sustainability Act (now at 2nd reading in the legislature), the public was given until April 8 to provide its views on water pricing and the Province’s water pricing principles.

Although broad in scope, the water-pricing consultation excluded fees and rentals for hydroelectric purposes, by far the biggest source of water fees and rentals for the Province (although as part of its 10-Year Rate Plan for BC Hydro the Province has said it will eliminate the highest level of water rentals in 2019 in regard to annual energy output in excess of 3000 GWh).   Also excluded, by implication, are water utility rates under the Water Utility Act.

The pricing principles in the Province’s discussion paper are:

1. simplicity

2.  fairness and equity

3.  implications for water users – costs distributed in a reasonable manner

4.  impact on water resources – e.g. consumptive uses to be assessed higher than non-consumptive uses

5. cost recovery, where cost refers to the Province’s cost of regulating water resources, including “a fair return to the Crown”

6. efficiency

7. food security and public health

Like the better-known utility rate design principles of James Bonbright, some of the Province’s water pricing principles are in tension with each other (efficiency vs. implications for water users, for example), and internally (fairness in this context meaning non-discriminatory, and equity referring to the value of the particular water use).  These and other issues were picked up on by various commentators on the discussion paper.  Here are some quotes selected to reflect the wide range of views expressed:

As an economist, I suggest that the BC government auction water extraction permits every year to agricultural, industrial and municipal (utility) users.  Every one of these users will have a reason why they should not pay.  That’s not relevant, given their desire for the same resources.”   And from the same commentator:  “Businesses ALL need to pay the same price [for water extraction].  Some businesses will NOT be competitive at these prices.  The solution is NOT to sell them water more cheaply.

From Mister and Missus home owner:  “A fair return to the crown:  Mister and Missus home owner should not be burdened by a further tax increase which may happen with this proposal….  Will this bill see the individuals paying more than their fair share while the business sector laughs all the way to the bank?

One commentator provided a detailed proposal for an independent agency to monitor water and groundwater use, and make the associated data available to the public:  not a bad idea in principle thinks this blogger but why a new government agency would be required to perform this function given the existence of existing agencies whose mandate could be expanded is unclear (e.g. Water Comptroller, BC Utilities Commission, Environmental Assessment Office).

The substantive and process challenges for the Province in its development of a new water pricing regime will be daunting.  The consultation principles and stakeholder feedback are all very high-level, yet will need to meaningfully reflected in a new schedule of fees and rentals under the Water Sustainability Act that will be as detailed and complex as the current scheme set out in Schedule A to the Water Regulation.  It seems quite likely that some time will pass before we will see new enactments regarding water pricing in BC.

The Province’s water pricing principles and stakeholder commentary can be found at:  http://engage.gov.bc.ca/watersustainabilityact/2014/03/14/blog-post-10-pricing-bcs-water-what-do-you-think/

Water Use in BC: BC tables long-awaited Water Sustainability Act

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

On March 11, 2014 the BC government introduced a first reading of the Water Sustainability Act, Bill 18, the culmination of a 4-year initiative to modernize the 100-year old Water Act.  Followers of this blog or BC water issues will know that the government released a comprehensive “proposal” regarding the new statute in the fall of 2013 (see our previous blog post here).   The Water Sustainability Act is no less comprehensive – more than 150 pages long, with 15 pages of definitions alone.  Given its knee-buckling scope, this blog focusses on the new statute in comparison to the fall 2013 legislative proposal, with a more fulsome comparison to the current Water Act to follow when the Water Sustainability Act becomes law.

In general, the Water Sustainability Act repeals most of the 1909 Water Act;  re-enacts the Water Act’s regulatory scheme for the diversion and use of stream water;  extends that regulatory scheme to groundwater; authorizes the establishment of “water objectives” and their consideration in water-use decision-making;  requires the consideration of “environmental flow needs” of streams in issuing licenses; moves certain Fish Protection Act provisions to the new statute; establishes new powers to modify existing precedence of water use to protect streams, aquifers and essential domestic uses of water; and establishes an administrative penalty scheme.

Groundwater

As indicated in the 2013 legislative proposal, the new statute fully addresses the enormous gap in the existing regulatory regime by extending most of the current surface water provisions to groundwater.  For example, groundwater uses will be generally prioritized on the “first in time, first in right” (FITFIR) basis, consistent with surface water use prioritization, subject to certain exceptions including a super-priority for “essential household uses” that is also applicable to surface water use.  “Essential household use” refers to the use of up to 250 litres per day by the occupants of a single private dwelling for human drinking water, food preparation, and sanitation purposes, as well as for animal and pet purposes.

Protection of Water Resources

Consistent with the 2013 proposal, a significant component of the new regime is the protection of water resources.  Water objectives may be set by regulation in regard to watersheds, streams, or aquifers for the purposes of sustaining water quantity, quality and aquatic ecosystems – and can be required to be taken into account by decision makers as well as being the basis of terms and conditions in licenses and other approvals.  Certain rivers in the Province are exempted from the possibility of being dammed, including the Fraser, Adams, Taku and Tatshenshini Rivers.   A division of the new statute deals solely with the regulation of “wells”, which are broadly defined, but exclude wells to which the Geothermal Resources Act and the Oil and Gas Activities Act apply.  Importantly, in deciding applications in relation to streams and hydraulically-connected aquifers, decision makers must consider the “environmental flow needs” of the stream, being the “volume and timing of water flow required for the proper functioning of the aquatic ecosystem of the stream”.  Division 4 of the new statute provides for the establishment of “water sustainability plans”, which would seem to enshrine in law the basic principles of the Province’s 1998 Water Use Plan Guidelines.

30-Year Review of License Terms

As anticipated, the new regime mandates a default review of water licenses at least every 30 years, with three discrete exceptions.  The exceptions are licenses issued for power and power storage purposes; licenses issued under the Industrial Development Act (regarding the establishment or expansion of the aluminum industry in BC); and licenses issued or confirmed in consequence of a review under the 1998 Water Use Plan Guidelines.  Licenses for power and power storage purposes may be issued for up to 10 years during project development and for as long as 40 years from the commencement of operations.

Administrative Penalties

The new statute provides for administrative penalties to be imposed by the Comptroller of Water Rights on persons who have contravened the new statute; failed to comply with an order issued under it; or failed to comply with a license or other authorization.  Administrative penalties are fines that are meant to be civil rather than criminal in nature, although the distinction might well be lost on those subject to significant penalties under the new regime. Maximum penalty amounts are yet to be prescribed by regulation, but can be as high as $1,000,000 per day under the Utilities Commission Act. Parties potentially subject to administrative penalties under the new statute may take some comfort from the fact that they will be entitled to a hearing.

Water Pricing

Under the Water Sustainability Act, non-domestic users of groundwater would be required to pay an application fee and an annual rental, in the same way that surface water users do today.  In other words, the new statute would impose the same pricing structure and rates on groundwater as are currently imposed on surface water.

In a further initiative, the Province is also considering changes to the current rate structure, set out in the Water Regulation.  Today fees and rental rates depend on the purpose of the water use and the amount of water used.  Changes to the rate structure might serve to advance specific objectives including total cost recovery, allocation of costs on a cost-causation basis, and administrative simplicity.  Regardless of rate structure objectives, the Province has already indicated that costs for surface and groundwater users will be increasing in a discussion paper.  Comments on water pricing and rate structures can be made here until April 8, 2014.