Many businesses that develop natural resources depend on compliance with statutory and regulatory regimes to acquire a secure, exploitable, interest in Crown lands. A recent decision by the Yukon Court of Appeal indicates that, unless those regimes have allowed for consultation with First Nations before industry acquires an interest in Crown lands, development or exploration activities on those lands could be challenged.

“ statutory regimes that allow industry to acquire interests in Crown lands... may not meet the duty to consult if they do not allow for consultation with First Nations before...acquisition of those interests”

“ For consultation to be meaningful, it must take place before claimed aboriginal rights are affected.”

On December 27, 2012, the Yukon Court of Appeal (composed of three judges of the BC Court of Appeal) issued its decision in Ross River Dena Council v Government of Yukon, concluding that the Yukon has a duty to consult with First Nations before recording a mineral claim. This decision will likely affect free-entry mining regimes across Canada. It could also affect other legislative schemes under which government officials grant interests in Crown lands without exercising any discretion.

Under the Yukon’s Quartz Mining Act, a person can acquire a mineral claim by physically staking a claim and recording it. If the person complies with all the statutory requirements, the mining recorder must record the claim. Once the claim is recorded, the person can undertake Class 1 exploration activities on the claim -- including the use of explosives, removal of trees, clearing of trails and removal of subsurface rock -- without further permission or notice.

The Ross River Dena Council applied to the Yukon Supreme Court for a declaration that the Yukon had a duty to consult with First Nations before recording mineral claims. That Court concluded that the Yukon had such a duty and was not meeting it; but could do so by providing post-registration notice of the claims to First Nations. The Council appealed.

The Court of Appeal began its analysis by re-iterating the established test for whether the duty to consult has been triggered:

  1. Does the Crown have knowledge, real or constructive, of a potential claim to aboriginal rights or title?
  2. Is there contemplated Crown conduct?
  3. Can the contemplated Crown conduct adversely affect the claimed aboriginal rights or title?

The parties agreed that the first element was present. The Crown had real knowledge of a claim to aboriginal rights and title.

The Court of Appeal found that the third element was also present. Registration of a mineral claim is not consistent with recognition of aboriginal title. Class 1 exploration activities, while limited, can still affect claimed aboriginal rights or title, in more than a trivial manner.

The key issue was the second element: whether the recording of a mineral claim was “Crown conduct.” The Yukon argued that the mining recorder was not exercising any discretion in recording claims and so there was no Crown conduct to trigger the duty to consult. The Court of Appeal rejected this argument forcefully:

“[37] The duty to consult exists to ensure that the Crown does not manage its resources in a manner that ignores Aboriginal claims. It is a mechanism by which the claims of First Nations can be reconciled with the Crown’s right to manage resources. Statutory regimes that do not allow for consultation and fail to provide any other equally effective means to acknowledge and accommodate Aboriginal claims are defective and cannot be allowed to subsist.

[38] The honour of the Crown demands that it take into account Aboriginal claims before divesting itself of control over land. Far from being an answer to the plaintiff’s claim in this case, the failure of the Crown to provide any discretion in the recording of mineral claims under the Quartz Mining Act regime can be said to be the source of the problem.” [Emphasis added.]

The Court of Appeal acknowledged that the Supreme Court of Canada has left open the question of whether “Crown conduct” includes legislative action. But it held that, even if parliamentary sovereignty does exempt legislatures from consulting with First Nations before enacting legislation, it cannot justify a lack of consultation in implementing a statutory regime. In effect, the Court of Appeal concluded that governments cannot avoid their duty to consult by passing legislation that eliminates government discretion.

The Court of Appeal also disagreed with the Yukon Supreme Court that post-registration notice of the recorded claims would be sufficient to discharge the duty to consult. For consultation to be meaningful, it must take place before claimed aboriginal rights are affected.

The Court of Appeal concluded that the legislative design of the Yukon’s mining regime was inadequate, because it did not provide the opportunity for the Crown to discharge its duty to consult. The Court suspended its decision for one year, to allow the Yukon to bring its mining regime into compliance with its duty to consult. This need to change statutory mining regimes to ensure they allow for consultation with First Nations is not unique to the Yukon. In response to a similar decision, Ontario amended its Mining Act in November 2012 so that affected First Nations could be consulted before industry could begin exploration work.

Although this decision will likely prompt the re-examination of free-entry mineral tenure regimes across the country, its effects might not be limited to the mining industry. Other statutory regimes that allow industry to acquire interests in Crown lands by complying with statutory and regulatory requirements may not meet the constitutional duty to consult if they do not allow for consultation with First Nations before industry’s acquisition of those interests.