Project Law Blog

BC Supreme Court Revisits Issue of Federal Paramountcy

Posted in Aboriginal, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory, Regulatory Compliance
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On January 14, the Supreme Court of British Columbia found that the Province had improperly abdicated its decision making authority with respect to the Enbridge Northern Gateway Project by entering into an Equivalency Agreement with the federal government. Furthermore, the Court found that the Province had breached its duty to consult with First Nations by not consulting with First Nations on the Province’s decision not to terminate the agreement and take steps to impose conditions on the project.

The Enbridge Northern Gateway Project is an interprovincial pipeline, and as such it falls under the exclusive jurisdiction of the Federal government. In order to proceed, the Project requires an environmental assessment under the Canadian Environmental Assessment Act, 2012 (“CEAA 2012”) and a Certificate of Public Convenience and Necessity from the National Energy Board (“NEB”) under the National Energy Board Act (“NEB Act”). The environmental assessment was completed on December 19, 2013 and was approved by the Minister on June 17, 2014, with 209 conditions attached to the Project. The NEB issued a Certificate of Public Convenience and Necessity on June 18, 2014.

By agreement dated June, 2010, the British Columbia Minister of Environment, as represented by the Executive Director of the British Columbia Environmental Assessment Office (“BCEAO”), reached an agreement with the NEB confirming that projects such as transmission pipelines that are within the jurisdiction of the NEB Act would not require an assessment or certificate under the British Columbia Environmental Assessment Act (“BCEAA”). Madam Justice Koenigsberg’s decision in Coastal First Nations v. British Columbia (Environment), 2016 BCSC 34 takes issue with this agreement.

Madam Justice Koenigsberg found that the BCEAA is legislation with a purpose of general environmental regulation that coexists with the federal regulation of interprovincial projects. She found that the BCEAO did not have the authority to abdicate its authority to grant a certificate for the Project and thereby foreclosing its ability to impose conditions on the Project.

In our view, the decision is inconsistent with the recent decision of the BC Supreme Court in Burnaby (City) v. Trans Mountain Pipeline ULC, 2015 BCSC 2140, in which the Court found that the doctrine of federal paramountcy applied to the effect that the NEB Act’s jurisdiction over interprovincial pipelines trumped provincial laws where those laws interfere with the core functioning of a federal undertaking. The Court went on to say that the provincial laws remain valid, but are rendered inoperative where their application would interfere with the federal undertaking. Finally, the Court found that the doctrine of interjurisdictional immunity applied to prevent provincial laws from improperly trenching on a protected core of exclusive federal jurisdiction.

Presumably, the same principles apply in the Coastal case. The Project is a federal undertaking, and as such lies within the jurisdiction of Parliament. To the extent that any provincial laws interfere with that jurisdiction, federal paramountcy renders the provincial laws inoperative. Furthermore, the doctrine of interjurisdictional immunity applies to prevent the provincial law from interfering with interprovincial pipelines – which are a protected core of federal jurisdiction pursuant to the NEB Act.

With respect to the duty to consult, the Court found that the Province was not required to consult with First Nations in entering into equivalency agreements, but would be required to consult where the operation of those agreements had the potential to adversely affect First Nations’ claims or rights. Under the circumstances, the Court found that it was a breach of the duty to consult for the Province not to consult with First Nations with respect to its decision not to terminate the Equivalency Agreement and impose conditions on the project. This issue is arguably moot, given the Court’s declaration on the requirement for a provincial certificate summarized above.

Implications

In the absence of an appeal, the result of the decision is that all projects that meet the thresholds of reviewable projects under the BCEAA require an Environmental Assessment Certificate, regardless of whether those projects are federal undertakings subject to exclusive federal jurisdiction. While the Province may consider a federal assessment in determining whether or not to issue a Certificate, the project may nevertheless be subject to potentially inconsistent conditions imposed by federal and provincial regulators. It remains to be seen whether the decision will have practical implications for the Northern Gateway Project, which is fully authorized to proceed under federal jurisdiction.