Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council

In Haida Nations v. British Columbia (Minister of Forests), [2004] 3 S.C.R. 511 and Taku River Tlingit First Nation v. British Columbia (Project Assessment Director), [2004] 3 S.C.R. 550, the Supreme Court of Canada (the “SCC”) held that the Crown has a duty to consult when it contemplates action that could adversely affect Aboriginal rights. In Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), [2005] 3 S.C.R. 388, it was held that there is also a duty to consult where the Crown’s conduct could adversely affect treaty rights. The duty to consult is based upon the requirement that the Crown conduct itself honourably in all of its dealings with Aboriginal peoples – referred to as “the honour of the Crown”.  

On May 21, 2010, in Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council, the SCC will be called upon to decide whether regulatory bodies are obligated to consider Crown consultation issues in the course of determining whether an approval would be in the public interest.  

At issue in that case is the decision by the British Columbia Utilities Commission (the “Commission”) to refuse to consider whether First Nations consultation was required and if so, whether it was sufficient, in the context of approving an Energy Purchase Agreement (the “EPA”) between British Columbia Hydro and Power Authority (“B.C. Hydro”) and Rio Tinto Alcan Inc. (“Alcan”). Under the EPA, B.C. Hydro agreed to purchase Alcan’s surplus electricity generated at its Kemano facility until December 31, 2034. For the EPA to be approved, the Commission was required to determine whether the EPA was in the public interest under section 71 of the Utilities Commission Act, R.S.B.C. 1996, c. 473. On a reconsideration of the issue, the Commission held that it was not required to consider the consultation issues, as they were not relevant to the public interest issue before it. The Commission concluded that no duty to consult had been triggered because there were no “new physical impacts” created by the EPA. The EPA was found to be in the public interest and was approved.

The British Columbia Court of Appeal, in allowing an appeal brought by the Carrier Sekani Tribal Council, held that the Commission was obligated to determine the consultation issues in the context of a full hearing, which it had not done (see Carrier Sekani Tribal Council v. British Columbia (Utilities Commission), 2009 BCCA 67, per Donald J., Huddart and Bauman JJ. concurring). The matter was remitted back to the Commission for this purpose.  

The British Columbia Court of Appeal held:  

  • that B.C. Hydro, as a Crown corporation, was taking commercial advantage “of an assumed infringement on a massive scale, without consultation”, which was sufficient to put the Commission on inquiry as to whether the honour of the Crown was upheld in the making of the EPA;  
  • that defining “public interest” solely in economic terms was too narrow a construction, as was assessing the issue on the basis of whether there were any “new physical impacts” created by the EPA – as stated, “How can a contract formed by a Crown agent in breach of a constitutional duty be in the public interest?”;  
  • that the Commission, being a quasi-judicial tribunal with authority to decide questions of law, not only has the jurisdiction but the obligation to decide the constitutional question of whether the duty to consult exists and, if so, whether it has been discharged, since “the honour of the Crown obliges it to do so”; and  
  • that the Commission was the only appropriate forum to decide the issue in a timely way, and that the existence of the duty to consult and the alleged breach of this duty must form part of the public interest inquiry.  

Alcan successfully sought leave to appeal to the SCC. The appeal is scheduled to be heard May 21, 2010.  

On April 12, 2010, leave to intervene was granted by the SCC to a number of entities, including the Attorneys General of Canada, Alberta, Ontario and Newfoundland and Labrador, and two Aboriginal Bands having reserves in central and northwestern Alberta - the Duncan’s First Nation (the “DFN”) and the Horse Lake First Nation (the “HLFN”). Intervener status was sought by those two Bands in the face of mounting oil sands development in Alberta. Chief Don Testawich of the DFN has been quoted as saying:  

Our traditional territory is being overrun and cut to pieces by oil sands, major pipelines, gas fields and major power projects. Companies such as Royal Dutch Shell, Trans Canada Pipelines and Bruce Power are proposing massive projects that will fuel unsustainable oil sands growth. Development on this scale is making our Treaty Rights meaningless and threatens our traditional way of life. The governments of Alberta and Canada sit back and refuse to address our concerns. We are intervening before the Supreme Court because it is abundantly clear that neither the environment nor First Nations can expect to receive a fair hearing within Alberta, where oil sands revenues are at stake. We need help now and help fast.

Chief Rick Horseman of the HLFN has been quoted as saying:  

To date, it’s been like watching a game of musical chairs where everyone is saying they are addressing our concerns, rights and interests but no one actually gets down to it and does it. We need a referee in Alberta that will deal with First Nations in a serious and impartial way and blow the whistle when our rights are being trampled  

At issue before the SCC will be whether the Commission had a duty to decide, in the context of a full hearing, whether the Crown adequately consulted and accommodated First Nations’ concerns before finding that the EPA was in the public interest and approving it. It is anticipated that the decision will also impact other proceedings involving the development of natural resources before other regulatory boards in Alberta and elsewhere, including those before the National Energy Board (the “NEB”) and the Alberta Energy Resources Conservation Board (the “ERCB”).  

Based upon the application materials filed by the DFN and the HLFN in support of their joint application for intervener status, it is anticipated that they will argue before the SCC that: 1) contrary to the Alberta Court of Appeal decision in Dene Tha' First Nation v. Energy And Utilities Board (Alta.) (2005), 363 A.R. 234, which was expressly rejected by the British Columbia Court of Appeal in this case, the ERCB, NEB and other regulatory bodies in Alberta have the duty to decide Crown consultation issues – parties should not be obligated to seek this determination in lengthy and costly court proceedings; 2) the determination as to what is in the public interest should properly include consideration as to the adequacy of Crown consultation; and 3) consultation duties should not be strictly confined in all cases to "the new physical impacts of the specific proposed project at issue" but should also include "the First Nation's concerns about historic infringements that would be perpetuated by further approvals". As stated by Chief Donald Testawich in his Affidavit sworn March 11, 2010, "If the Court says that tribunals have a duty to decide whether the Crown has satisfied its consultation duties before they issue approvals, I believe it will be a watershed for First Nations in Alberta. For the first time, we will have a clear and effective way to raise our consultation rights".

In the course of rendering its decision, it is anticipated that the SCC will provide guidance on numerous issues regarding Crown consultation, as well as how the concept of “public interest” should be assessed and what factors should be considered in that assessment. Any comments made will potentially have far reaching effects having regard to the numerous natural resource and infrastructure development contexts in Alberta and elsewhere in which the public interest test is utilized. In any event, it is anticipated that the decision will have significant legal implications for the future development of projects within Alberta, including oil sands development and pipelines, especially in light of intervener status having recently been granted to the DFN and the HLFN.

In order to avoid potential delays in the regulatory process, project proponents are well advised to ensure (even more so now) that Crown consultation commences in the earliest of the project development planning stages. As in the past, care must be taken to ensure that all consultation efforts, including the mitigation of any adverse impacts, are well documented so that cogent evidence may be placed before the regulator as part of the application process. Following the SCC’s decision, there may be a significantly heightened focus by regulators and First Nations on Crown consultation issues.