On June 30, 2016 the Federal Court of Appeal (“FCA”) released its decision in Gitxaala Nation v. Canada, 2016 FCA 187, a judicial review of an Order in Council requiring the National Energy Board (“NEB”) to issue two Certificates of Public Convenience and Necessity for the Northern Gateway Pipelines project. In a split decision, two of the three judges found that Canada failed to fulfill its duty to consult. As a result of this find, the majority of the FCA quashed the Order in Council and the NEB certificates and remitted the matter back to the Governor in Council for prompt redetermination.

Background

The Northern Gateway project consists of two pipelines and associated facilities intended to transport oil and condensate between Bruderheim, Alberta and Kitmat, British Columbia. Associated facilities in Kitmat include tank and marine terminals for delivery of oil to export markets.

In 2005, Northern Gateway submitted a preliminary information package to the NEB the Canadian Environmental Assessment Agency. In 2006, the Minister of the Environment referred the Project to a review panel conducted jointly under the Canadian Environmental Assessment Act, 2012 and the National Energy Board Act. Between 2006 and 2010, preliminary steps were taken to establish the Joint Review Panel and develop a framework for consultation.

Canada established a five-phased consultation framework. Phases I-III involved consultation and participation in the preliminary, pre-hearing and hearing phases of the Joint Review Panel process. Phase IV was to begin following the release of the Joint Review Panel report and involved consultation on concerns outside of the Joint Review Panel’s mandate and with respect to the Report itself. The final phase, Phase V, included consultation on permits and authorizations to be granted following the Governor in Council’s decision whether certificates for the Project should be issued under the National Energy Board Act.

In 2012 the Joint Review Panel conducted public hearings, hearing written and oral argument from various groups and members of the public. On December 19, 2013, the Joint Review Panel issued its report. The report found that the Project was in the public interest and recommended that the certificates be issued by the NEB, subject to 209 conditions.

On June 17, 2104, the Governor in Council issued Order in Council P.C. 2014-809, approving the Project under the Canadian Environmental Assessment Act, 2012. One the same day, the NEB issued its decision statement under the National Energy Board Act. The next day, the NEB issued two certificates for the Project, one for each pipeline.

Summary

Although the matter was in the FCA, it was a judicial review in the first instance of various decisions. It was not an appeal from a judgment of the Federal Court and findings of fact in the first instance were made by the Court.

The appeal considered a consolidation of a number of different challenges by Aboriginal and environmental groups to three different decisions related to the Project. These decisions included:

  • the Joint Review Panel Report, which recommended the project proceed and set 209 conditions;
  • the Governor in Council’s Order in Council issued under CEAA 2012 approving the Project; and
  • the certificates of public convenience and necessity issued by the National Energy Board (NEB) under the National Energy Board Act.

The FCA focused on the Order in Council in their judgment, noting that the NEB’s role was to follow the direction of the Governor in Council following the issuance of the Order in Council. With respect to the Joint Review Panel Report, the Court held that deficiencies in the Report ought to be considered by the Governor in Council, not by the court on judicial review.

The Order in Council was challenged on both administrative law grounds and on the basis that Canada failed to fulfill its duty to consult. The three judges unanimously agreed there were no administrative law failings with respect to the Order in Council. However, two of the judges found that Canada failed to fulfill its obligation to consult First Nations during Phase IV, the phase that began after the Joint Review Panel report was released and before the decision of the Governor in Council.

Administrative Law Grounds

The FCA found that the decision of the Governor in Council was not be reviewed on a reasonableness standard and in that review was entitled to “a very broad margin of appreciation in making its discretionary decision upon the widest consideration of policy and public interest”. The Court unanimously found the Governor in Council’s decision to be reasonable.

Majority - Duty to Consult

With respect to consultation, the Court stated the question before it was whether “reasonable efforts to inform and consult” were made, acknowledging that “perfect satisfaction is not required”. In this case, the majority found that Canada’s efforts to inform and consult during Phase IV fell “well short of the mark”.

In making this determination, the Court observed that this was not a case where the proponent failed to deal with Aboriginal groups. Northern Gateway engaged with over 80 different Aboriginal groups, using many methods of engagement, providing $10.8 million in capacity funding, and $5 million on a traditional knowledge program.

The failure to adequately consult found by the majority was limited to Phase IV. While the proponent participated in consultation in Phases I to III, only the Crown consulted on Phase IV. The majority concluded that the Phase IV consultation was inadequate. This phase was meant to provide an opportunity for dialogue on the Panel report and to “fill gaps” of matters outside the Panel’s mandate: it did neither. There were five issues that the majority focused on in reaching its decision that consultation during Phase IV was inadequate:

  1. The consultation was hurried – Although the timeframe to issue a decision is mandated by the National Energy Board Act, the Governor in Council has the power to issue an order to extend the time. The majority noted that the Crown did not seek an extension of time despite comments from First Nations that the timeframe was too short to adequately address their concerns. The majority further held that a short extension would have been sufficient to provide a meaningful dialogue.
  2. Inaccurate information was provided to the Governor in Council - The majority observed that in at least three instances information in the Crown Consultation Report did not accurately portray concerns of the affected First Nations. Even though these inaccuracies were brought to Canada’s attention, there is no evidence that they were corrected.
  3. Lack of meaningful dialogue - The majority’s main complaint was that the Crown did not engaged in any meaningful discussion or consideration of issues raised by Aboriginal groups during Phase IV. The majority pointed to a number of examples where Aboriginal groups raised concerns in relation to the impact of the project on hunting, trapping, herring roe on kelp and marine safety to which the Crown representatives responded with generic, unresponsive answers, commenting that they themselves were not the decision-makers, or they had to accept the findings of the Joint Review Panel.
  4. Strength of claim information was not provided to Aboriginal groups - the Court found that Canada’s decision not to disclose its views of the Aboriginal groups’ strength of their asserted claims was legally unacceptable. The majority found that factual information relating to the strength of claim and depth of consultation assessment are a “necessary part of meaningful consultation”.
  5. Failure to provide reasons - The Court stated the Crown had an obligation to provide reasons in these circumstances where deep consultation was required.

Dissent – Duty to Consult

The dissenting judge (Ryer JA) disagreed with the majority with respect to the adequacy of consultation during Phase IV. Ryer JA, focused on the entirety of the consultation process in reaching the conclusion that consultation during Phase IV was not inadequate. At the beginning of his reasons, Ryer JA also noted that only harvesting rights (which he called “usage rights”) were engaged. This is in contrast to the majority who took assertions of title into account as well.

Conclusion

Decisions regarding the adequacy of consultation are fact specific; however, the decision of the majority does highlight the importance of direct, meaningful Crown engagement with Aboriginal groups more generally. It also highlights the risks faced by proponents where technical questions are posed to the Crown, which the proponent would likely be able to answer, but the Crown does not respond and the proponent is not involved. While direct engagement by the Crown is legally required, the decision highlights the important part proponents can play in all phases of the consultation process, especially where technical concerns are raised by Aboriginal groups that can be answered by proponents but are not answered by the Crown.