Canada: Mineral Staking And The Duty To Consult

On Monday, February 25, 2013, the Government of the Yukon filed an application seeking leave to appeal to the Supreme Court of Canada the December 27, 2012 decision of the Yukon Court of Appeal in Ross River Dena Council v. Government of Yukon.

According to its press release of February 25, 2013, the Government of Yukon wants direction from Canada's highest court on when the duty to consult with First Nations arises in the context of mineral staking. Yukon's Premier Darrell Pasloski is quoted therein as indicating, "The Government of Yukon believes the Yukon Court of Appeal decision impacts nearly every jurisdiction in Canada and should be addressed by the Supreme Court of Canada".

A case summary of the Yukon Court of Appeal decision is included below.

Case Summary - Ross River Dena Council v. Government of Yukon, 2012 YKCA 14, Yukon Court of Appeal (Groberman, Tysoe, and Hinkson JJ.A.) 27 December 2012

The Yukon Court of Appeal unanimously found that the Government of the Yukon has the duty to consult with an Aboriginal rights and title claimant before recording a mineral claim staked by a private prospector, and that mere notice to the Aboriginal claimant would not necessarily be sufficient to discharge that duty.

The Ross River Dena Council ("Ross River") sought a declaration that the Government of the Yukon had a duty to consult them with respect to the recording of mineral claims under the Quartz Mining Act, S.Y. 2003, c. 14. (the "Quartz Mining Act" or the "Act"). Under the Quartz Mining Act, an individual could acquire mineral rights simply by physically staking a claim and then recording it with the Mining Recorder. Once a mining claim was recorded, the individual was entitled to the minerals within the claim and could conduct certain exploration activities on the land without further authorization or notice to the Government of the Yukon. This system is typically referred to as an "open entry" or "free entry" mineral tenure system.

In the Yukon Supreme Court, Veale J. found that the Government's practices in respect of new mineral claims under the Quartz Mining Act did not measure up to the consultation requirements enunciated in Haida Nation v. British Columbia, [2004] 3 S.C.R. 511; 2004 SCC 73. He considered, however, that those requirements would be satisfied by a scheme under which the Government of the Yukon provided monthly notice to Ross River of newly-recorded quartz mining claims within its traditional territory. (See Ross River Dena Council v. Government of the Yukon, 2011 YKSC 84) Ross River appealed the trial decision, asserting that consultation had to occur before the recording of mineral claims, and that consultation required more than mere notice of new claims.

Under the Quartz Mining Act's "open entry" system, any adult can stake a mineral claim of up to 51.65 acres on land administered by the Government of the Yukon, other than land that was already subject to a mineral claim or otherwise excluded under the legislation. The holder of a mineral claim is entitled to all minerals within the boundaries of the claim. Within 30 days of staking, the mineral claimant is required to "record" the claim with the Mining Recorder under s. 41 of the Act. The Mining Recorder does not possess any discretion to refuse to record a claim that complies with the statutory requirements. A recorded claim must be renewed annually by filing proof that work with a value of at least $100 has been done on the claim or by paying $100 to the Mining Recorder in lieu of doing work on the claim.

Under section 131 of the Act and the Quartz Mining Land Use Regulation, O.I.C. 2003/64, four classes of exploration programs on mineral claims are established. Mineral exploration activities under Classes 2, 3, and 4 are subject to assessment under the Yukon Environmental and Socio-economic Assessment Act, S.C. 2003, c. 7. That statute includes a requirement for consultation with First Nations.

However, a Class 1 exploration program is not subject to such an assessment, nor to any relevant requirement that the mineral claim holder provide notice to the Government of the Yukon or its officials. There is also no requirement that the claim-holder provide notice to, or consult with, First Nations whose claims might be affected by the exploration activities.

The Court of Appeal observed that while Class 1 exploration programs were less intensive and covered smaller areas than Class 2, 3 and 4 programs, they could still have a substantial impact on the land. Such activities include – within prescribed limits – the clearing of land, the construction of lines, corridors and temporary trails, the use of explosives, and the removal of subsurface rock.

Relying upon Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council, 2010 SCC 43, [2010] 2 S.C.R. 650 at para. 31, Mr Justice Groberman reviewed the three elements of the test for triggering the Crown's duty to consult.

There was no doubt that the Crown had knowledge of Ross River's claim. The Council of Yukon Indians, of which Ross River was a member, had negotiated an "Umbrella Agreement" on behalf of all 14 Yukon First Nations in 1993, setting out the basic principles for the settlement of all Aboriginal rights and title claims in the Territory. However, Ross River had subsequently failed to enter into a "Final Agreement" as contemplated in the Umbrella Agreement. Negotiations in that regard had broken off in 2002, and had not been resumed. In consequence, Ross River claimed Aboriginal title to an area of 63,110 sq. km. in southeastern Yukon, comprising approximately 13% of the Territory. During the course of the Umbrella Agreement negotiations, Ross River had identified lands within their claimed territory that they had anticipated securing as "Settlement Lands" in their final agreement. Those lands, comprising about 4800 sq. km. (8% of their total claimed area) were provided "interim protection" by the Government of the Yukon by being withdrawn from disposition by staking under the Quartz Mining Act.

8,633 active mineral claims subsisted in the remainder of the Ross River claim, covering approximately 14% of the claim area. The Government of the Yukon acknowledged that it was aware of Ross River's claim.

There was also no doubt that the recording of a staked mineral claim could adversely affect Ross River's claimed Aboriginal title. Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010 had made it clear that Aboriginal title included mineral rights, and by transferring mineral rights to private holders of staked claims, the Crown engaged in conduct that was "inconsistent with the recognition of Aboriginal title".

The Court also noted that the claimholder's right to engage in Class 1 exploration programs might adversely affect claimed Aboriginal rights. While such programs were limited, they might still "seriously impede or prevent the enjoyment of some Aboriginal rights in more than a transient or trivial manner".

The real issue was the question of whether the second element of the test, the existence of contemplated Crown conduct, was present in the recording of staked mineral claims. The Government of the Yukon argued that there was no Crown conduct because the statute did not give the Mining Recorder any discretion in respect of the recording of such claims. Because the granting of a mineral claim was automatic whenever the statutory requirements were met, the Crown had no duty to consult.

The Court of Appeal rejected this argument:

Accordingly, the Court of Appeal agreed with the trial judge below that the regime for the acquisition of a quartz mineral claim in the Yukon was deficient in failing to provide any mechanism for consultation with First Nations.

However, the Court of Appeal also rejected the Government of the Yukon's argument that the Quartz Mining Act didn't provide for any Crown discretion in the recording of claims. Under section 15 of the Act, the Government had a broad discretion to prohibit the location of quartz mining claims on particular lands, a discretion that the Court considered to be of considerable importance.

The Court of Appeal then considered the conclusion of the trial judge below that the Crown's duty to consult could be met by providing Ross River with a regular report detailing the claims that had been recorded each month. The trial judge had concluded that practical difficulties precluded consultation in advance of the recording of mineral claims. He had pointed out that prior consultation would prevent a mineral claimant from preserving confidentiality with respect to his or her mineral finds, and that consultation on each and every claim would create an administrative nightmare.

The Court of Appeal agreed that "the open entry system continued under the Quartz Mining Act has considerable value in maintaining a viable mining industry and encouraging prospecting". It also acknowledged that "there is a long tradition of acquiring mineral claims by staking, and that the system is important both historically and economically to Yukon". Nevertheless it held that the Yukon's open-entry system had to be modified "in order for the Crown to act in accordance with its constitutional duties".

The Court of Appeal observed that it was neither necessary nor appropriate for it to specify precisely how the Yukon regime could be brought into conformity with the flexible requirements of Haida. It added, however, that what was required was that consultations be meaningful, and that the system allow for accommodations where required, before claimed Aboriginal title or rights were adversely affected.

Mr. Justice Groberman went on to observe that, to some extent, consultation had already taken place. He noted that in 1988 during the negotiation of the Umbrella Agreement, the Crown had given interim protection to lands selected by Ross River to preserve them for potential inclusion in a settlement of claims by way of a treaty. He added that this interim protection covered 4800 sq. km. of Ross River's claim and included the prohibition of the recording of claims. However, it was due to expire on 31 March 2013.

The Court of Appeal was not prepared to express an opinion on whether the 1988 consultations had taken into account all of the appropriate considerations, given that it had occurred before the Haida framework had been formulated by the Supreme Court of Canada. However, it observed that consultation was an ongoing process, and further consultation could be anticipated in light of the looming expiration of the interim order.

The Court added that a "prohibition on locating claims in all or part of the claimed territory is the most obvious method (though, perhaps, not the only method) of accommodating Aboriginal title claims".

The Court recognized that the recording of claims, in and of itself, would not have any impact on asserted Aboriginal rights other than Aboriginal title. However, work subsequently performed on the staked claim by the mineral rights holder might affect other Aboriginal rights. Under the existing legislative scheme, work that fell within Classes 2, 3, or 4 of exploration activities were subject to governmental discretion and environmental review, thus providing opportunities for First Nations to engage in consultations. However, there was no such trigger to initiate consultations in connection with work that fell within Class 1. The Court asserted that:

Over the objections of the Government of the Yukon, the Court suggested that changes to the Quartz Mining Act might be necessary in order to insure that Aboriginal consultation occurred before any work was undertaken on a mineral claim. It noted that it was "possible for the government to meet the requirements of Haida under the current statute by engaging in consultations with a view to using s. 15 of the Quartz Mining Act to exclude from quartz mining claims all areas in which exploration activities would prejudice claimed Aboriginal rights" [Emphasis in original]. However, given the importance of the open entry system to the mining industry and to the Yukon economy, the Government of the Yukon might not see such a drastic approach as the optimum way to meet its consultation obligations. It was open to the Legislature to fashion a more flexible or precise statutory mechanism.

Accordingly, the Court allowed the appeal and granted the following declarations:

At the suggestion of Ross River, the Court suspended these declarations for one year in order to permit the Government of the Yukon to make statutory and regulatory changes.

Although the Yukon Court of Appeal decision is not binding in any jurisdiction outside of the Yukon, the reasoning of this decision may well be persuasive to the courts of other provinces and territories, all of which to a greater or lesser extent rely upon an open entry system. This will be especially true in British Columbia, the jurisdiction in which the justices of the Yukon Court of Appeal perform their day jobs. The Government of Yukon has applied for leave to appeal this decision to the Supreme Court of Canada.

Decision available here and here.

We wish to acknowledge the contribution of Kenneth Tyler to this publication.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.