On July 11, 2014, the Supreme Court of Canada (“SCC”) issued its decision in Grassy Narrows First Nation v Ontario, 2014 SCC 48 (“Keewatin”) and confirmed that Ontario has the exclusive power to “take up” treaty lands located in the Keewatin area of Treaty 3 within Ontario for development purposes.

The Keewatin decision is significant because this historical treaty is one of 11 historical numbered treaties across Canada that were instrumental in securing title and opening up the country for settlement. Several of these historical numbered treaties contain similar terms in respect to the Crown’s ability to take up lands for development.

In those circumstances where the beneficial interest in the affected treaty lands is held by the province, the SCC has confirmed that the province will have the power to take up the lands and regulate the resources associated with such lands, subject to the duty to consult and accommodate, if appropriate, with the Aboriginal group. Any infringement of treaty rights must be justified in accordance with the “Sparrow/Badger” analysis under section 35 of the Constitution Act, 1982 articulated in earlier decisions of the SCC.

While this decision is different from the recent Tsilhqot’in Nation v British Columbia, 2014 SCC 44 (“Tsilhqot’in”) decision because it involves treaty lands and not Aboriginal title, the SCC has now sent a strong message that the province is the decision maker when regulating lands and natural resources within its jurisdiction. For the resource sector, this provides a level of certainty in undergoing project development in significant parts of Canada where historical numbered treaties are applicable and lands are under provincial jurisdiction.

Background of Keewatin Decision

Grassy Narrows First Nation (“Grassy Narrows”) originally commenced litigation to challenge Ontario’s issuance of a forestry licence (the “Licence”) for an area of the Keewatin region governed by Treaty 3. The federal government had entered into Treaty 3 with the Ojibway in 1873, establishing certain reserve lands retained by the Ojibway, and identifying other areas in which the Ojibway could harvest the non-reserve lands (which included the Keewatin lands) until such time as they were taken up for settlement, mining, forestry, or other purposes by the federal government. Canada subsequently annexed the Keewatin lands to Ontario through the Ontario Boundaries Extension Act, S.C. 1912, c. 40 (“1912 Legislation”).

Grassy Narrows, a descendent of the Ojibway signatories, challenged the Licence, asserting that Ontario was not authorized to take up Treaty 3 lands without the consent of Canada. Whether Ontario had such unilateral authority was the first of two threshold questions put to the trial judge. If the answer to that question was no, the second threshold question became whether Ontario alone had the authority under the Constitution Act, 1867 to justifiably infringe the Grassy Narrows’ treaty rights.

The Ontario Supreme Court held that Treaty 3 required a two-step process for Ontario to take up lands, which involved obtaining federal authorization. The Court of Appeal overturned the trial judge’s finding, and held that no two-step process or federal authorization was contemplated by Treaty 3.

SCC Analysis: Reasons Behind the Keewatin Ruling

The SCC dismissed the appeal, upholding the Court of Appeal’s finding that Ontario had the authority to take up the lands. In reaching this conclusion, the Court noted the following:

  • All treaties are entered into on behalf of the Crown, and are therefore binding on whichever level of government (federal or provincial) has a beneficial interest in the lands, irrespective of which was signatory to the treaty;
  • There was no evidence that the participants in the negotiation for Treaty 3 intended a two-step process;
  • A provisional boundary agreement between Canada and Ontario in 1894 reflects the agreement that the beneficial owner of the land had the right to take up those lands, and this was incorporated into relevant legislation that had been enacted in 1891;
  • For over 100 years, the Ojibway did not challenge the authority of Ontario to take up lands;
  • Canada annexed the Keewatin lands to Ontario through the 1912 Legislation, resulting in a transfer of beneficial interest, not a transfer of Crown rights and obligations;
  • The 1912 Legislation included language confirming that Ontario would recognize the rights of the Aboriginals and obtain any necessary surrenders in the same manner that Canada had prior;
  • As a result of sections 109, 92(5) and 92(A) of the Constitution Act, 1867 Ontario has the exclusive power to take up lands under Treaty 3; and
  • Powers under treaties are bound by the duties of the Crown, including those fiduciary responsibilities attached to the Crown when dealing with Aboriginal interests.

SCC Affirms Province Must Consider Project Impacts on Aboriginal Groups

Although the SCC answered the first threshold question in the affirmative, it went on to confirm that Ontario had the authority to justifiably infringe Grassy Narrows’ treaty rights, provided it could meet the test under s. 35 of the Constitution Act, 1982. The SCC affirmed that where a province intends to take up lands for a project within its jurisdiction, it must consider the impact of the project on the Aboriginal group’s treaty rights, and deal with the group in good faith with the intention of substantially addressing their concerns (citing Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, at para 52, and 55, and Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, at para. 168). The adverse impact of the Crown’s project and therefore, the extent of the duty to consult and accommodate is a matter of degree.

Finally, not every take-up will necessarily constitute an infringement of treaty rights. However, where the take-up leaves the Aboriginal group with no meaningful treaty right over their traditional territory where such rights were exercised, then a potential action for treaty infringement will arise. Whether the infringement is justifiable will be decided in accordance with the “Sparrow/Badger” analysis under section 35 of the Constitution Act, 1982. Interjurisdictional immunity, or the theory that federal powers trump provincial powers where there is competing jurisdiction, will not prevent a province from justifiably infringing on treaty rights (Tsilhqot’in.)

Implications on Natural Resource Industries in Canada

The SCC confirmed that while the federal government may remain responsible for Aboriginals and reserve lands under section 91(24) of the Constitution Act, 1867, the authority to take up non-reserve treaty lands lies with the level of government with a beneficial interest in those lands. Provinces have a beneficial interest in those lands within their boundaries that are subject to provincial jurisdiction and also have the authority to make laws and regulate natural resources in relation to such lands.

Under Treaty 3 and similarly worded historical numbered treaties across Canada, the Crown is permitted to take up the treaty lands for development purposes. Thus, the Crown (being the province where lands are within its jurisdiction) is able to take up lands without the consent of the federal government. However, provinces are still responsible for upholding the honour of the Crown and the accompanying fiduciary obligations to Aboriginals, and, therefore, the Crown is still subject to the requirement to consult and accommodate with the Aboriginal group, where appropriate. If the province’s actions infringe the Aboriginal group’s meaningful treaty rights, those actions will need to be justifiable under section 35 of the Constitution Act, 1982, just as is required of infringements on Aboriginal rights that are not governed by treaties.

Where project proponents seek to develop resource projects on lands within provincial jurisdiction, it is the province that will regulate these projects, without the necessity of obtaining the consent of the federal government even where treaty rights might be at issue. This should result in a more streamlined process for project proponents when the lands are solely within provincial jurisdiction.