Canada: Federal Court Provides Guidance On Adequacy Of Consultation About Environmental Assessments Of Major Resource Projects

On April 23, 2013, the Federal Court of Canada released its decision dismissing an application commenced by the Conseil des Innus de Ekuanitshit (the Applicant) to judicially review the Order in Council (OIC) issued on the advice of the federal Cabinet by the Governor in Council (GIC) releasing Nalcor Energy's Lower Churchill Hydroelectric Generation Project (the Generation Project) from a federal environmental assessment.

The decision in Conseil des innus de Ekuanitshit c. Canada (Procureur général),¹ is significant because it (a) provides guidance on evaluating the adequacy of Aboriginal consultation in the context of the environmental assessment (EA) of major resource projects under the Canadian Environmental Assessment Act, 1992 (CEAA); (b) considers, for the first time, the applicable standard for reviewing GIC decisions made under the CEAA; and (c) concludes that the Applicant was barred from challenging the scoping of the Generation Project due to unreasonable delay.

Background

The Generation Project is the undertaking to construct and operate two hydroelectric generating facilities on the lower Churchill River in Labrador. Registered in 2006, it was subject to a joint review panel environmental assessment under the federal CEAA and the Newfoundland and Labrador Environmental Protection Act (EPA). The panel issued its report in August 2011 (the JRP Report).

In 2009, Nalcor registered a second project – the Labrador-Island Transmission Link Project – which was subject to a separate review process under the CEAA and EPA. In 2010, after the Supreme Court of Canada's MiningWatch Canada v. Canada (Fisheries and Oceans)² decision was issued, the federal government re-evaluated the scoping and tracking of all projects undergoing review under the CEAA. The federal government decided that the Transmission Link and Generation Project would continue to be subject to separate environmental assessments, a decision that was communicated to the public, including the Applicant.

The Applicant was afforded numerous opportunities for Crown consultation before, during and after the EA process. The EA process itself was designed to be an integral component of the Crown's Aboriginal consultation. Prior to issuing the OIC, the Crown failed to expressly communicate to the Applicant how it had considered the Applicant's concerns and how they would be accommodated.

During the regulatory process, the proponent and the Applicant engaged in extensive consultation and had commenced negotiations of a "community consultation agreement," whereby the Applicant would receive funds from the proponent to facilitate consultation in respect of the Generation Project. The parties were unable to reach agreement, and therefore no additional funding was provided by the proponent to facilitate consultation.

On March 15, 2012, the federal government issued its response to the JRP Report and the OIC, concluding that the Generation Project is likely to cause significant adverse environmental effects that are justified in the circumstances.

The Issues

The Applicant sought to, among other things, set aside the OIC on the basis that (a) the Applicant was not adequately consulted and accommodated in relation to the Generation Project; (b) the OIC was unreasonable and taken on the basis of inadequate or incorrect information; and (c) the Generation Project was improperly scoped.

The Decision

Adequacy of Aboriginal Consultation

In determining that the Crown had met its constitutional duty to consult and accommodate the Applicant in respect of the OIC, the Federal Court made three key findings. First, it found that the challenge to the entirety of the Crown consultation process regarding the Generation Project was premature. The Crown had established a five-phase consultation process, which afforded Aboriginal groups opportunities to consult at each phase. The judicial review was initiated following the conclusion of phase four; consultation associated with phase five, the permitting stage, had not yet taken place. For that reason, the Court concluded that it was premature to assess the adequacy of consultation in respect of the entire process. It did, however, evaluate the adequacy of consultation to date.

Second, the Court examined the proponent's efforts to consult with the Applicant, which included a range of activities. The proponent and Applicant had commenced negotiations of a community consultation agreement, whereby the Applicant would receive funds to facilitate consultation in respect of the Generation Project. The parties were unable to reach agreement, and therefore no funding was provided by the Proponent to facilitate consultation. On the facts, the Court found that the proponent was committed to providing the Applicant with meaningful opportunities to consult. One of the reasons that no agreement was concluded was that the Applicant had (a) rejected outright the offer of $87,500 in financial assistance made by the proponent; and (b) made unsubstantiated and unreasonable demands for $600,000. The Court held that if the Applicant believed the offer was insufficient, it was incumbent on the Applicant to present a counter-offer that demonstrated that it was truly engaged in the process. Further, the failure on the part of the Applicant to provide a meaningful counter-offer had frustrated the consultation process. In the context of proponent-Aboriginal group relations, this decision reflects the Supreme Court of Canada dicta in Haida Nation that both parties should commit to a meaningful process of consultation and that Aboriginal claimants must not take unreasonable positions to frustrate consultation efforts.

Third, the Applicant argued that the Crown had failed to adequately consult because it failed to demonstrate that it had meaningfully considered the Applicant's concerns. On the facts, although the Applicant had participated in the consultation process and the process was reasonable, the Crown had not expressly responded to the Applicant's stated concerns, nor did it explain how its concerns were accommodated in the decision that accompanied the OIC. In this regard, the Court noted that responsiveness is a key requirement of honourable consultation. The Court characterized this omission as a "misstep," but it did not invalidate an otherwise reasonable consultation. Moreover, the Crown's failure was mitigated by the fact that the Applicant's concerns were expressly considered in the JRP Report, which was before the GIC, and the province had committed to carrying out the recommendations in this regard.

Governor in Council Decision

For the first time, the Federal Court considered the standard of review for GIC decisions made under subsection 37(1.1) of the CEAA, holding that courts should intervene only if the (a) CEAA statutory process was not properly followed; (b) decision was made without regard for the purpose of the CEAA; or (c) decision had no reasonable basis in fact, which is tantamount to an absence of good faith. In this case, the Court found that the OIC was reasonable and in accord with the CEAA, and that there was no evidence of bad faith or a breach in the statutory process.

This approach affords the GIC a great degree of deference and establishes an evidentiary burden for parties seeking to challenge course-of-action decisions under the CEAA. Although the decision dealt with the CEAA 1992, it is likely that the same standard of review will be applied in future to decisions under section 52 of CEAA 2012.

Project Splitting

Although the Federal Court held that the Applicant could not successfully challenge the scoping decision because of the statutory time limits in the Federal Courts Act, the Court affirmed the (a) federal government's scoping decisions in respect of both the Generation Project and the Transmission Link (which followed two years later); and (b) decision to maintain separate EAs for each project.

While the new CEAA has changed the law on scoping, this decision is important because it rejected an unreasonably delayed attempt to challenge the scoping, which would have caused significant harm to the Generation Project and all the stakeholders that had participated in the regulatory process. Therefore, in future, proponents can likely expect scoping challenges, should they arise, to come earlier in the regulatory process.

Footnotes

1 2013 FC 418. Osler lawyers Maureen Killoran and Thomas Gelbman represented Nalcor Energy in this case.

2 2010 SCC 2.

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