On January 13, 2016, the Coastal First Nations, an alliance of eight First Nations on British Columbia's North and Central Coast and Haida Gwaii, received a favourable decision from the British Columbia Supreme Court inCoastal First Nations v. British Columbia (Environment). At issue was the role of British Columbia in the environmental assessment process for Enbridge's Northern Gateway Pipeline Project (the "Project"). The court struck down a provision in an Equivalency Agreement between the British Columbia Environmental Assessment Office and the National Energy Board that permitted British Columbia to abdicate its ultimate decision-making authority to determine whether to approve the Project after an environmental assessment. This decision is significant in light of the numerous proposed interprovincial and transcontinental oil and gas pipelines, including TransCanada's Energy East, and other major projects requiring both federal and provincial approval. For these projects, the court has now cautioned provincial governments against giving up involvement in the corresponding review and approval processes. Additionally, the court has reminded provincial governments that strategic high level decisions are subject to the constitutional obligation to meaningfully consult and accommodate First Nations.

Background

The Equivalency Agreement sets a framework for a joint federal-provincial environmental assessment process and applies to projects that require approval under both the British Columbia Environmental Assessment Act("EAA") and the National Energy Board Act. Enbridge’s conditionally-approved Northern Gateway Pipeline, located on "purportedly provincial Crown lands," is the first Project that the Equivalency Agreement applies to. Notwithstanding the joint federal-provincial review, the Project requires approximately sixty permits, licences and authorizations from British Columbia. For reviewable projects, these types of operational approvals cannot be issued until an Environmental Assessment Certificate ("EAC") is obtained and a project meets the criteria set out in the provincial statutory framework.

Coastal First Nations challenged section 3 of the Equivalency Agreement, which removed the requirement to obtain an EAC, on two grounds. First, Coastal First Nations argued that while British Columbia may enter into the Equivalency Agreement, it must retain its decision-making powers and responsibilities under its own provincial environmental assessment review and approval process. Second, Coastal First Nations asserted that the Minister of Environment was required to consult affected First Nations before entering into the Equivalency Agreement as well as when deciding not to terminate the Equivalency Agreement, a necessary step under the Agreement in order to require that a decision on the EAC be made pursuant to section 17 of the EAA. The court decided in favour of Coastal First Nations on both grounds.

In finding that British Columbia acted inconsistently with both its statutory duties and constitutional obligations, the court issued the following declarations:

  1. The Equivalency Agreement is invalid and is set aside to the extent it attempts to remove the need for British Columbia to carry out its own environmental assessment for the Project.
  2. Ministers are required to exercise section 17 authority under the EAA in relation to the Project.
  3. British Columbia's participation in the environmental assessment process for the Project was not in keeping with the honour of the Crown. In particular, British Columbia failed to fulfill its consultation and accommodation obligations that it owed to Coastal First Nations when it made a decision, pursuant to the Equivalency Agreement, that had the potential to adversely affect constitutionally-protected Aboriginal rights and interests.
  4. British Columbia is required to consult with the Gitga'at First Nation about the potential impacts of the Project on areas of provincial jurisdiction and how those impacts may affect the Gitga'at First Nation's Aboriginal rights.

In making these declarations, the court was required to determine (1) whether the EAA applies to interprovincial pipelines; (2) whether the Minister could abdicate its powers and responsibilities under the EAA; and (3) whether the Crown failed in its constitutional duty to consult First Nations.

Does the EAA apply to Interprovincial Pipelines?

Northern Gateway Pipelines took the position that section 17 of the EAA as it applies to interprovincial pipelines is an unconstitutional exercise of provincial power. The court concluded that regulation of the environmental impacts of the Project is not within the exclusive jurisdiction of the federal government and thus the EAA may apply to interprovincial pipelines. Importantly, the court observed that prohibiting provincial environmental regulation over the Project would severely limit British Columbia’s ability to protect the social, cultural, and economic interests in its lands and waters. Indeed the court suggested that establishing provincial conditions for the Project, over and above federal conditions and imposed through an EAC, would "fall squarely in line with the purpose of federal environmental protection legislation governing the Project." However, the court accepted that constitutional concerns could arise if British Columbia imposed conditions on the Project under the EAA but that such a determination could not be made unless and until specific conditions are imposed.

Can the Minister Abdicate its Powers and Responsibilities under the EAA?

Coastal First Nations asserted that British Columbia must maintain its authority to make an ultimate decision whether to issue an EAC approving a Project with or without conditions and thus asked the court to find the Equivalency Agreement invalid to the extent that it permitted British Columbia to abdicate its responsibilities. The court agreed with Coastal First Nations and dismissed British Columbia's argument that it no longer had any authority to approve, refuse or issue conditions in accordance with s. 17 of the EAA unless either party terminates the Equivalency Agreement.

The court emphasized that British Columbia has "unique objectives, political and social goals, and legal obligations"when it comes to protecting the environment. By giving up the authority under section 17 to review all projects to which the Equivalency Agreement applies, British Columbia also lost the ability to ensure that those projects meet the objectives of the EAA. The court determined that the legislature could not have intended such an absurd result. While British Columbia can partner with the federal government to avoid duplication of environmental assessments, it must still review the results of such assessments and decide whether and how to approve projects that fall under its jurisdiction.  

Did the Crown fail to Act in Accordance with the Honour of the Crown?

After finding that the Equivalency Agreement invalidly removed the need for an EAC, the court turned to Coastal First Nations' claim that the Crown breached its duty to consult. Coastal First Nations claimed that the duty to consult arose both prior to entering into the Agreement and at the time that British Columbia decided not to terminate the Agreement so that an EAC could be issued. Again, the court found in favour of Coastal First Nations on this issue. While the court determined that British Columbia was entitled to enter into the Agreement without consultation, it held that the Province failed to act in accordance with the honour of the Crown before deciding not to terminate the agreement.

The court acknowledged that decisions made pursuant to the Agreement that have the potential to adversely impact Aboriginal rights and interests do indeed trigger the Crown's duty to consult and accommodate. Important to the court's holding was the fact that British Columbia was aware of the concerns of First Nations, which were consistent with the concerns expressed by British Columbia during the Joint Review Panel regarding the inadequacy of NGP’s spill response.

The court rejected British Columbia's assertion that it was not required to engage in meaningful consultation with First Nations in this instance because of its own initiatives to address the spill response flaws. The court reminded British Columbia not to take a "paternalistic" approach to consultation:

Consultation . . . entails early and meaningful dialogue with First Nations whenever government has in its power the ability to adversely affect the exercise of Aboriginal rights. Consultation does not mean explaining, however fulsome, however respectfully, what actions the government is going to take that may or may not ameliorate potential adverse effects. Such a means of dealing with an admittedly difficult issue looks very like "we know best and have your best interests at heart". First Nations, based on past experience, quite rightly are distrustful and even offended at such an approach.

The court also noted that by failing to terminate the agreement, the Province had given up its ability to accommodate affected First Nations by imposing conditions on the Project. The court found that without retaining its section 17 authority, British Columbia could do no more than ask the federal government or Enbridge to protect First Nation’s rights and interests. As the duty to consult is rooted in the honour of the Crown at both levels, the Provincial Crown is required to act honourably and in good faith in all of its dealings. This means that consultation must be meaningful and requires that the Crown decision-maker retain its ability to make decisions, accommodate First Nation concerns and effect compromise. Clearly, British Columbia was not in a position to meaningfully consult Coastal First Nations under the Equivalency Agreement.

What are the Implications of this Decision?

The court’s decision as it now stands has implications both for Enbridge's Northern Gateway Pipeline Project and implications that extend to other projects subject to the Agreement.

  • The court made clear that its decision in no way purports to tell the Province what to do regarding the Project. The court firmly stated that the Province retains ultimate discretion under section 17 to issue an EAC with or without conditions. In so doing, the court presumably wished to highlight that it was not taking a position on the merits of the Project or the environmental concerns associated with it.
  • Provinces are required to maintain an ability to be meaningfully involved in the review and approval of projects. Participating as an intervener is not sufficient and will only lead to increased uncertainty for companies seeking approval of interprovincial, transcontinental or other major projects in Canada requiring both provincial and federal approval.
  • Meaningful consultation necessarily means being able to accomplish meaningful accommodation. This means retaining the authority to impose conditions over and above those imposed by the federal government.
  • Provinces cannot rely on Canada to discharge its constitutional duties of consultation and accommodation in circumstances of jurisdictional overlap.
  • The duty to consult will be triggered even in cases where there are no immediate impacts. The potential for adverse impacts is sufficient.
  • However, the duty to consult is not triggered when a province enters into agreements, like the Equivalency Agreement, because at that point, the connection between the agreement and possible adverse effects on Aboriginal rights is too weak and attenuated.

Moving forward, it will be important to keep an eye on whether or not British Columbia issues an EAC for the Project with or without conditions.