On August 6, 2013, the new Alberta Energy Regulator (AER) released its decision on an application made by Dover Operating Corporation (Dover)1 to construct and operate a bitumen recovery project northwest of Fort McMurray, Alberta. The Project would use steam-assisted gravity drainage (SAGD) technology.

The Community of Fort McKay, which includes the Fort McKay First Nation and the Fort McKay Métis Community Association (Fort McKay), intervened in the AER proceedings and strongly opposed the application. Fort McKay expressed concerns about the effects of the Project on the Moose Lake reserves, two reserves west of the Community of Fort McKay where certain members of the Fort McKay First Nation have practiced traditional activities, and also expressed concerns about the cumulative impact of oil sands development on their traditional land use. Among other things, Fort McKay asked the AER to create a 20 km “buffer zone” to protect the Moose Lake Reserve area.

Fort McKay also made various constitutional submissions, including that:

  • Recognition of the protection of minority rights and the recognition and affirmation of treaty and Aboriginal rights in the Constitution should inform the AER’s public interest test;
  • As a result of the importance of reserve lands under the federal Indian Act, any activity with more than an insignificant effect on reserve lands would be beyond the jurisdiction of the AER as a provincial body and would offend principles of interjurisdictional immunity; and
  • The AER must not approve the Project in a way that would impair the Crown’s power to ensure that resources are developed in a way that affirms Fort McKay’s treaty rights.

AER Rejects Concerns about Impacts on Traditional Activities and Proposed Buffer Zone

Fort McKay submitted evidence of its forecast effects of the Project on traditional land use and the importance of the Moose Lake Reserve to Fort McKay community members. Significant concerns were raised regarding the loss of resources, such as wildlife, fish, and plants, access to harvesting areas, and reduction in quality of life as a result of noise and odours. Many of these effects were not limited to the Dover Project, but also stemmed from the cumulative effects of other resource development projects in the region.

The AER acknowledged that the lands in the Dover Project area are considered to be traditional territory for Fort McKay and recognized the importance of the area to Fort McKay. However, it found that there would be minimal impact on the Moose Lake Reserve lands as a result of the Project and that there would be little or no disturbance of traditional land use. The AER also suggested that its role was generally limited to assessing project-related effects and that cumulative effects could only be addressed in broader regional planning processes.

The AER also declined to provide the 20-kilometre “no development buffer” requested by Fort McKay. The buffer zone would exclude between 1.2 and 1.4 billion barrels of bitumen from production and, even in light of Fort McKay’s interest in the area, this adverse economic impact would be unacceptable given the benefits that would accrue from developing all of the reserves. As a result, the AER determined that the proposed buffer would not be in the public interest.

AER Declines to Decide Questions of Constitutional Law

Fort McKay had submitted an earlier Notice of Questions of Constitutional Law to the Energy Resources Conservation Board, the predecessor to the AER, in which it asked two questions:

  1. Whether the approval of Dover’s application would constitute a prima facie infringement of the rights guaranteed by Treaty 8, section 35 of the Constitution Act, 1982, and the Indian Act, rendering the approval inapplicable because the Province has no jurisdiction over Indians or Land Reserved for Indians pursuant to section 91(24) of the Constitution Act, 1867; and
  2. Whether the Crown had discharged its duty to consult and accommodate Fort McKay with respect to the adverse impacts of Dover’s proposed project.

Ultimately, the AER determined that it did not have the authority to determine these questions and they were dismissed from the proceeding.

The AER also refused to consider the further constitutional arguments raised by Fort McKay in its submissions and closing argument. The AER found that the arguments generally overlapped with the questions submitted in the earlier constitutional questions which had already been dismissed. The AER also found that it did not have the authority to address additional constitutional arguments without proper notice being provided to all parties, which it found had not taken place. The AER also referred to section 21 of the Responsible Energy Development Act which expressly provides that the AER has no jurisdiction with respect to assessing the adequacy of Crown consultation associated with the rights of Aboriginal peoples.

Implications

The AER’s decision continues the practice of the ERCB to avoid answering constitutional questions unless all of the necessary statutory requirements have been complied with. While section 21 of the Responsible Energy Development Act expressly provides that questions on the adequacy of consultation are not within the jurisdiction of the AER, this does not mean that other constitutional questions, properly brought, aren’t within the AER’s jurisdiction. For consultation-related questions, it appears that these questions will only be able to be addressed by the courts.

On the facts, the AER determined that there would be little, if any, impact from the Dover Project on the exercise of Fort McKay’s rights and on the Moose Lake Reserve. Historically, Fort McKay has been generally receptive to oil sands operations, but reported to the media that it took a hard line against Dover’s Project in order to protect remaining culturally and environmentally significant areas. Fort McKay has expressed that it intends to explore its options to appeal the AER’s decision. Given the AER’s findings on the facts, and its determination that proper notice of the further constitutional questions was not properly before it, it will be interesting to see if Fort McKay chooses to do so at this time or whether they wait until Cabinet makes a final decision on the Project.

View the Alberta Energy Regulator’s decision