Copyright 2010, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Aboriginal Law/Energy, November 2010
In its recent decision in Rio Tinto Alcan v. Carrier Sekani Tribal Council, the Supreme Court of Canada held that the BC Utilities Commission is required to consider aboriginal consultation in determining whether the sale of electricity is in the public interest. The Court reaffirmed the duty to consult Aboriginal Peoples when the Crown contemplates conduct that may adversely affect an aboriginal claim or right. Importantly, the Court declined to extend that duty to situations where the Crown permits the continuation of a long-established activity that is predicated on a historical impact on aboriginal interests, without new adverse effects on aboriginal use of land or resources. The Court's reasoning is significant for users of land and resources across Canada whose activities could affect aboriginal or treaty rights.
The case arose from the 1950s construction by Alcan, now Rio Tinto Alcan, of a dam on the Nechako River. The dam diverts water from the Nechako River, through a powerhouse, and into the Kemano River system to power Alcan's Kitimat aluminum smelter. The Carrier Sekani First Nations assert aboriginal rights and title in the area, including the right to harvest salmon from the Nechako River. They were not consulted when the dam was built, and claim that the dam affects their rights.
Alcan has been selling excess power from the dam to BC Hydro, the provincial electrical utility, since 1961. In 2007, Alcan entered into a long-term Energy Purchase Agreement with BC Hydro. The Agreement was subject to review by the BC Utilities Commission, to determine whether it was in the public interest. The Carrier Sekani urged the Commission to find that the Agreement was not in the public interest because it would negatively affect their rights, and they had not been consulted.
The Commission determined that the Agreement would not affect water levels in the Nechako River. With or without the Agreement, Alcan operates the dam to optimize power generation, and is obligated to ensure water levels for fish and other non-power uses in accordance with its water licence and a 1987 reservoir management agreement. The Commission concluded that the 2007 Agreement would have no new adverse effects on the Carrier Sekani's asserted aboriginal rights, and thus there was no need to further consider the duty to consult.
The Court of Appeal overturned the Commission's decision, holding that the Commission had prematurely truncated its consideration of the duty to consult issue (see our February 2009 Blakes Bulletin on Aboriginal Law/Energy). Alcan and BC Hydro appealed to the Supreme Court.
The Supreme Court Decision
The Supreme Court of Canada restored the Commission's decision. After reviewing the Commission's key factual conclusions on the potential impacts to the Carrier Sekani's rights, the Court concluded that the Commission acted reasonably in addressing the duty to consult.
The Court reaffirmed the analysis set out in its 2004 decision in Haida Nation v. British Columbia. The duty to consult arises when the Crown has knowledge, actual or constructive, of a potential aboriginal claim or right, and contemplates conduct that might adversely affect that claim or right. The Court affirmed numerous cases decided since Haida Nation which applied the consultation duty to "strategic, higher-level" Crown decisions where the potential impact was not immediate. Thus, even the design of the process to review the environmental impact of the proposed Mackenzie Valley Project required consultation, as did an inquiry into provincial electricity transmission infrastructure and capacity requirements. These are advanced planning decisions about the structure of resource management, well in advance of any Crown decisions permitting physical effects, yet consultation was still necessary.
With respect to the Carrier Sekani claim, the Court affirmed the Commission's conclusion that the 2007 Agreement would not bring about any "organizational, policy or managerial changes" that might impact resource management and, thus, the rights of the First Nations. The Court also rejected the First Nations proposition that consultation was triggered by negative impacts on their ability to negotiate a better water management regime. On this point, the Court stated that the duty to consult may serve "as a tool to achieve longer term compensatory goals", but its purpose cannot "be reduced to giving one side in the negotiation process an advantage over the other."
Likewise, the Court denied the Carrier Sekani claim that the dam's historical and continuing impacts on their interests should affect the analysis. "To trigger a fresh duty of consultation", the Court held, "a contemplated Crown action must put current claims and rights in jeopardy." A "past wrong" in and of itself does not give rise to a duty to consult. However, the Court confirmed the availability of other remedies, including damages, for historical breaches of aboriginal rights and the duty to consult.
The Court held that it was within the Commission's jurisdiction to review the consultation issue, as a matter of law and within the Commission's "public interest" consideration of the 2007 Agreement between Alcan and BC Hydro. The Commission was not legislatively mandated to undertake consultation to discharge the Crown's duty to consult. Having considered the potential effects of the Agreement, the Commission correctly concluded that it would not affect the water resource or its management. Further, the Agreement provides for a Joint Operating Committee involving BC Hydro representatives, who would have to consult Aboriginal Peoples before the Committee makes decisions potentially affecting their rights.
The Court also took the opportunity to speak generically about the role of regulatory tribunals in consultation. Reiterating that a tribunal only has those powers expressly or implicitly conferred on it by statute, the Court held that tribunals considering resource issues touching on aboriginal interests may have a duty to consult, a duty to assess the adequacy of consultation, or no duty at all. The legislated powers of the tribunal to consider questions of law and to take remedial action are relevant to determining the contours of its jurisdiction.
Impacts of the Court's Decision
For current or prospective owners of resource operations in aboriginal territory, the Court's decision means three things. First, if the development activity involves a historical impact on aboriginal interests, for example, via a fixed structure built long ago, a duty to consult will only be triggered by a new adverse impact, not the continuation of the prior impact. Existing pipelines, mines, roads and other infrastructure would likely fall into this category. Similarly, impacts on aboriginal interests that are strictly economic, where there is no physical impact on aboriginal use of land and resources, do not require consultation.
Second, the duty to consult will be triggered by high-level strategic decisions concerning resource management and proposed industrial operations with potential adverse impacts on aboriginal interests, even when those decisions are made at the earliest planning stages. Where the development is only at a preliminary planning stage, it will be important to tailor consultation to the available information, and ensure that consultation evolves along with project planning. While this principle is not new, its affirmation by the Supreme Court enforces its importance for those subject to government decisions on proposed developments.
Third, the Court has clarified that regulatory decision-makers may be legislatively empowered to engage in consultation, to assess the adequacy of consultation, both, or neither. It will be important for governments and parties involved in resource development to identify which decision-makers are responsible for each task. Boards and commissions like the BC Utilities Commission, even if not experienced with considering aboriginal issues in the past, will be increasingly called upon to do so in order to uphold their jurisdictional responsibilities. The Supreme Court emphasized that consultation is a process to "effect compromise and do whatever is necessary to achieve reconciliation of divergent Crown and Aboriginal interests" – a resounding reminder that the purpose of consultation is to implement ongoing reconciliation.
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