On January 17, 2008, the Federal Court of Appeal, in Canada (Environment) v. Imperial Oil Resources Ventures Ltd., 2008 FCA 20, upheld two decisions of the Federal Court Trial Division. First, the Federal Court of Appeal upheld the March 9, 2006 decision of Mr. Justice Phelan which dismissed a motion by the Ministers of Environment, Fisheries and Oceans, Indian and Northern Affairs, and Transport (the “Ministers”) to stay the Federal Court proceedings (2006 FC 307) between the parties. Second, the Federal Court of Appeal upheld Mr. Justice Phelan’s November 10, 2006 decision in which he granted the application for judicial review and, as a result, suspended the Judicial Review Panel (“JRP”) hearings in respect of the Mackenzie Gas Project (“Project”) (2006 FC 1354).

Background

The Dene Tha’ are an aboriginal group with approximately 2500 members, the majority of whom reside on seven reserves located in northwestern Alberta. They define their “traditional territory” as lying primarily in Alberta, but also extending into northeastern British Columbia and the southern Northwest Territories. The Dene Tha’ are signatories to Treaty 8.

The Project anticipates the creation of a pipeline corridor originating in Inuvik in the far north of the Northwest Territories and terminating 15 metres south of the Northwest Territories-Alberta border. Although none of the pipeline runs directly through Dene Tha’ reserves, the Connecting Facilities (to be built by NOVA Gas Transmission Ltd.) pass through a Dene Tha’ trap line and run through territory over which the Dene Tha’ has Treaty 8 rights to hunt, trap, fish and gather plants for food.

On August 3, 2004, the federal Minister of the Environment (“MOE”), the Mackenzie Valley Environmental Impact Review Board (“Board”) (composed of delegates from the Gwich’in, Sahtu, and the Deh Cho), and the Inuvialuit Game Council concluded an Agreement for an Environmental Impact Review of the Project. The agreement created the JRP, a body specifically established to deal with the environmental assessment of the Project. The JRP had no mandate to conduct aboriginal consultation (nor does it appear that any other Crown entity had responsibility for aboriginal consultation). The JRP Agreement specified the mandate of the JRP and the scope of the environmental impact assessment it would conduct. It also provided that the Board, the MOE, and the Inuvialuit Game Council would each appoint members of the panel.

The Dene Tha’ had met with representatives of the federal government’s Crown Consultation Unit (“CCU”) and made known its aboriginal and treaty rights as well as its need of financial assistance to facilitate meaningful consultation efforts. However, on July 14, 2004, the CCU delivered the draft Environmental Impact Terms of Reference and draft JRP Agreement from the CCU. This was the first time that the Dene Tha’ were formally made aware of the proposed JRP process. The Dene Tha’ were given until the following day to respond to these documents.

In response to the Minister’s decisions relating to the design and creation of the regulatory and environmental review process for the Mackenzie Gas Pipeline, the Dene Tha’ applied for judicial review. On March 9, 2006, Justice Phelan rendered a judgement dismissing a motion by the Ministers to stay the Federal Court proceedings. On November 10, 2006, he rendered a further judgement granting the application for judicial review.

In this latter decision, Mr. Justice Phelan held that the Ministers had a duty to consult with the Dene Tha’ First Nation when making decisions relating to the Project and that the Ministers had failed to discharge that duty. He enjoined members of the JRP from considering any aspect of the Project that affected either the treaty lands or the aboriginal rights of the Dene Tha’ or from issuing any report of its proceeding to the National Energy Board.

The Ministers appealed both judgments.

Decision

The Appellate Court decided to hear the matter and issue a decision on its merits despite the fact that the parties had, at that time, settled the dispute.

I. Motion to Stay the Proceedings

The Federal Court of Appeal upheld the Trial Division decision to dismiss the motion to stay the proceedings. The Court held that Justice Phelan had committed no error in law and that he had not exercised his discretion improperly in dismissing the motion. As such, the Court disposed of the first of the Minister’s appeals in short order, stating simply that, “we find no basis for intervention in this case.” [5]

II. Application for Judicial Review

The Court provided more detail in its reasons for upholding Justice Phelan’s decision to allow the application for judicial review. Again, the Court held that Justice Phelan had committed no error in law and had made no palpable or overriding error of fact.

The Court found that:

[9] This case turns entirely on its own facts. Having regard to the evidence on the record, it was open to Justice Phelan to find as a fact that, given the unique importance of the Mackenzie Gas Pipeline, and the particular environmental and regulatory process under which the application for approval of the Mackenzie Gas Pipeline would be considered by the Joint Review Panel and the National Energy Board, the process itself had a potential impact on the rights of the Dene Tha’. It was also open to him to find as a fact that, at some point during the period during the period from 2002-2004, it was sufficiently certain that there would be an application for approval of the Mackenzie Gas Pipeline that the obligation to consult was triggered. He was not required, as a matter of law, to conclude that no consultation obligation arose until the formal application for approval was filed (emphasis added).

The Court commented that, based on the flexibility in the tests found in Haida Nation, Taku River, and Mikisew Cree, the decision did not change the law with respect to when the duty to consult is triggered or what that duty requires of the Crown. As such, the Court found that Justice Phelan’s decision did not create a different and more onerous duty than what was supported in previous Supreme Court of Canada jurisprudence.

It should be noted that the Federal Court of Appeal took issue with Justice Phelan’s suggestion that the Crown must have the ability to assess the validity of the asserted Aboriginal right in order to determine how to conduct an adequate consultation process. The Court also disagreed with the assertion that this case was “on all fours’ with Mikisew Cree. However, both of these discrepancies were viewed as minor and did not warrant the reversal of the Trial Division’s decision.

Summary

This decision affirms that the law on the duty to consult has not changed in principle. Private parties must be aware that it can arise at a “strategic” level, early in the planning process for a project, and may involve issues such as the process for project review that are beyond the direct impact of project-related activities on the exercise of aboriginal and treaty rights. It confirms the importance of ensuring that the Crown discharges its obligations to consult with respect to Crown conduct upon which private parties rely in order to proceed with a project. If the Crown fails to discharge its duty, private parties will be impacted and so it is imperative for private parties that the Crown recognizes and adequately discharges its duty to consult.