​​Against the backdrop of the recent jurisdictional turmoil in approving interprovincial market access pipelines for Alberta's oil and gas resources, the Alberta Energy Regulator (the "AER") in its first decision of the year approves TransCanada Pipelines Limited's ("TCPL") Applications for the White Spruce Pipeline Project in the Fort McKay Area of Alberta, 2018 ABAER 001. While this is not an interprovincial pipeline, it is an important link that would carry oil from Canadian Natural Resources Limited's ("CNRL") Horizon processing plant to the Grand Rapids Pipeline GP Ltd.'s MacKay Terminal (the "MacKay Terminal") for onward delivery to markets. A major consideration in this decision was measuring cumulative effects of extensive industrial development in the Fort McKay area on Fort McKay's exercise of treaty and aboriginal rights. Similar arguments have been made in the context of interprovincial pipelines in certain areas of British Columbia. The AER held in this decision that it requires specific legislative or regulatory limits or thresholds for cumulative effects of development on treaty and aboriginal rights to direct and guide it in determining such issues. In the absence of such direction or specific evidence, the AER was unable to make direct findings of impact or give meaningful direction to eliminate or mitigate such alleged effects. The AER's decision offers direct lessons to many stakeholders, especially the Government of Canada on crucial considerations for Bill C-69 and decision-makers that have roles to play in interprovincial pipeline approvals.

Background

TCPL applied to the AER for land dispositions and approvals under the Pipeline Act1 or Public Lands Act2 to construct two crude oil pipelines (the "Project") to deliver synthetic crude oil from CNRL Horizon processing plant to the MacKay Terminal for delivery to markets. The Project would be located within Fort McKay First Nation's ("Fort McKay") traditional territory and 7 km of Fort McKay's residential settlement. Fort McKay holds treaty rights under Treaty 8 and aboriginal rights that include rights to hunt, fish, trap, and gather culturally important natural resources for social, cultural, and consumption purposes as well as to use and enjoy their reserve lands. Extensive industrial development exists within Fort McKay's traditional territory including oil sands mines, in situ oil sands projects, upgraders, roads, pipelines, and transmission lines. The Project would be co-located with other linear disturbances but would enlarge the environmental footprint. It would involve multiple water crossings, including at the Dover and Mackay Rivers, which are important to community members for fishing, hunting, harvesting, and general enjoyment. Fort McKay was most concerned about watercourse crossings, wildlife and habitat, herbicide use, and cumulative effects of industrial development on exercising their treaty and aboriginal rights. Other concerns raised included construction, effects on historical resources, and trails and access to traditional land-use areas.

Issues

One of the key issues is the potential adverse effects of the Project on aboriginal participants and whether such effects can be adequately mitigated. Of particular consideration on this issue, among many others, was measuring the cumulative effects of industrial development on exercising treaty and aboriginal rights.

Decision

The AER approved the Project with conditions. It determined that the impacts of the Project, after implementation of TCPL's commitments and mitigation plans and the AER's conditions imposed, can be mitigated to a level consistent with responsible development.

Aboriginal Consultation and Assessment Framework

The Government of Alberta ("GoA") is required to consult with aboriginal groups when energy decisions under its jurisdiction may adversely affect treaty and aboriginal rights. This obligation is carried out by the Aboriginal Consultation Office ("ACO"). While none of the Responsible Energy Development Act ("REDA") and other legislation administered by the AER expressly required it to do so, the AER as a statutory decision maker is required under common law to consider potential adverse impacts of energy resource activities on the existing rights of aboriginal peoples and the exercise of those rights. The Aboriginal Consultation Direction, Energy Ministerial Order 105/2014 and Environment and Sustainable Resource Development Ministerial Order 53/2014, and the Joint Operating Procedures for First Nations Consultation on Energy Resource Activities direct how the AER must deal with proceedings where First Nations consultation is required by the ACO.

The direction applies to TCPL's applications under the Public Lands Act. Under section 21 of REDA, the AER has no jurisdiction to assess the adequacy of Crown consultation associated with the rights of aboriginal peoples. However, the AER cannot make a decision on an energy application requiring aboriginal consultation until it has requested and received the ACO's advice on consultation adequacy and on any required action to address potential adverse effects on treaty and aboriginal rights or traditional uses. The ACO usually provides this advice through a project specific report to the AER. Where the AER holds a hearing on a project, the ACO may provide a second report to address any impacts raised in the hearing that were not previously addressed in the consultation process. The ACO made two consultation reports about the project. The first addressed the project consultation and potential adverse impacts on Fort McKay's treaty and aboriginal rights. The second took into account the evidence filed and arguments made in this hearing and dealt with matters that were not previously addressed in the consultation process. The ACO found consultation with Fort McKay to be adequate but made recommendations to reduce impact on wildlife.

The Parties' Positions

In respect of this Project, Fort McKay asserted that, in combination with other industrial development in its traditional territory, it would result in adverse cumulative effects on their treaty and aboriginal rights. The alleged cumulative effects on the Project rights include: (a) reduction of the area where they can exercise treaty and aboriginal rights in a culturally relevant way; (b) negative effects on food and resource gathering; (c) reduced connection to community, history, and knowledge about traditional land use; (d) reduced enjoyment of traditional land-use activities; (e) potential health and safety risks; and (f) uncertainty about ability to access reserve lands and traditional territory. Fort McKay relied on the AER Decision 2013 ABAER 011: Shell Canada Energy, Jackpine Mine Expansion Project and the Fort McKay specific assessment study submitted therein. The joint review panel in that decision found that there were cumulative adverse effects on some elements of Fort McKay's cultural heritage. Fort McKay also relied on the 2015 review panel report on the Lower Athabasca Regional Plan ("LARP"). The report considered whether LARP adversely affected Fort McKay's rights and concluded that cumulative effects were not being properly managed in the Lower Athabasca region. Fort McKay also raised concerns about herbicide use to control vegetation growth along the right-of-way and its effects on their exercise of treaty and aboriginal rights. Fort McKay required a traditional land-use study for the Project to be funded by TCPL.

TCPL submitted that co-locating the Project route with existing pipelines, together with mitigation measures in its environmental protection plan, would minimize environmental disturbance and limit the impacts on Fort McKay. TCPL distinguished Decision 2013 ABAER 011 and argued that the AER's obligation is to act in accordance with LARP and not to assess whether LARP is accomplishing its cumulative effects objective. TCPL also disagreed with the request for traditional land-use study for the Project. TCPL set out a number of alternate vegetation control methods it could use near these sites, including spot spraying, wicking, mowing, or hand picking. TCPL insisted that that the Project's route and effects on Fort McKay's rights have been examined through consultation, a helicopter flyover and map review, and studies carried out for previous development of the Northern Courier and McKay East pipelines.

Findings of the Regulator

The AER agreed with TCPL that the AER is only required under section 20 of REDA to act in accordance with LARP. While LARP is Alberta's vehicle to address cumulative effects in the Lower Athabasca region, it does not currently set any specific limits or thresholds related to the cumulative effects of development on aboriginal rights. The AER found that as there is no other legislative or regulatory limits for cumulative impacts on aboriginal rights and no evidence was provided to make a sound comparison of cumulative effects, neither the LARP review panel report nor the Jackpine mine expansion decision provide guidance on this issue. The AER concluded that concerns about cumulative effects on treaty and aboriginal rights raised by Fort McKay were general in nature and not supported by evidence specific enough to allow direct findings of impact or give meaningful direction to eliminate or mitigate such alleged effects. LARP sets out plans to develop a biodiversity management framework and regional landscape management plan for public land in the Green Area. While these frameworks will consider how the region's Aboriginal peoples can continue to exercise their constitutionally protected rights within reasonable distances of the main population centers, they are not yet completed or in effect. It is expected that such frameworks would provide clearer direction and guidance to the AER in determining cumulative effects issues raised by Fort McKay. The AER encouraged the GoA to complete and put into effect a biodiversity management framework and a regional landscape plan for the Lower Athabasca region.

The AER also found that while a traditional land-use study can be an important source of information for identification of specific traditional land-use sites where resource development is proposed, it is not statutorily required for applications under the Pipeline Act or Public Lands Act. The AER also found that the Fort McKay community database, represented as the most accurate recorded data available for the community's land use and relied upon by Fort McKay, has sufficient information to provide specific traditional land-use site information to TCPL. The AER refused Fort McKay's request for a traditional land-use study for the Project and instead accepted TCPL's commitment to restrict general application of herbicides near traditional land-use sites together with its more general mitigation measures on herbicide use set out in its environmental protection plan.

Implications

The AER Decision 2018 ABAER 001 appears to have lessons for all stakeholders, including the provincial and federal governments, Aboriginal peoples, regulators, other decision-makers, and industry proponents. A major consideration in this decision was measuring cumulative effects of extensive industrial development on treaty and aboriginal rights and similar arguments have been made in the context of interprovincial pipelines in certain areas of British Columbia. However, we note that cumulative effect issues transcend aboriginal rights.

The AER held in this decision sends a message to governments that regulators and decision-makers approving projects require specific legislative or regulatory limits or thresholds for cumulative effects of development to direct and guide them in deciding such issues. The message to right-holders that may allege such impacts, including aboriginal peoples, is that in the absence of such legislative direction, regulators and decision-makers require specific evidence to allow them to make direct findings or give meaningful direction to eliminate or mitigate such alleged effects. The message to regulators and decision-makers is that in the absence legislative or regulatory direction from government and specific evidence from right-holders, a decision cannot be made on cumulative impacts of a project. Lastly, the message to project proponents is that cumulative impacts should be thoroughly addressed in project application whether or not specific thresholds and limits exist.

Of particular importance is the lesson to Government of Canada on crucial considerations for Bill C-69 as a vehicle to address cumulative effects of projects that fall within that jurisdiction.