Canada: A Blueprint For Project Approval: Supreme Court Of Canada Confirms Crown Can Rely On National Energy Board To Fulfill İts Duty To Consult İn Clyde River (Hamlet) v. Petroleum Geo Services Inc. And Chippewas Of The Thames First Nation v. Enbridge

Last Updated: July 31 2017
Article by Harvey L. Morrison QC and Sara Mahaney

A Blueprint For Project Approval: Supreme Court Of Canada Confirms Crown Can Rely On National Energy Board To Fulfill İts Duty To Consult İn Clyde River (Hamlet) v. Petroleum Geo Services Inc. And Chippewas Of The Thames First Nation v. Enbridge Pipelines Inc.

All stakeholders in any major project development already know that adequate consultation before – rather than after – a project is approved is better for everyone than after-the-fact litigation. On July 26, 2017, the Supreme Court of Canada hammered this point home.

In two companion cases, Clyde River (Hamlet) v. Petroleum Geo‑Services Inc. and Chippewas of the Thames First Nation v. Enbridge Pipelines Inc., the Supreme Court confirmed that the process and decision of an independent regulatory body can trigger the Crown's constitutional duty to consult and can also, in some circumstances, fulfill it. But the processes and procedures (for example, oral hearings, participant funding, information requests, closing submissions, Indigenous language translations, written reasons, and so on) necessary to discharge the duty to consult, and whether a body's process is sufficient to do so, are highly circumstance- specific. The result in any case will depend on the precise powers of the particular regulatory body, the nature and scope of the rights claimed and the potential impacts of the project. This means it's even more important that potential Indigenous rights issues be carefully and fully identified by proponents at a project's very earliest stages rather than bolting them on at the end of the regulatory approval process. Otherwise, litigation and project delays will likely ensue.

In both the Clyde River and the Chippewas of the Thames cases, the National Energy Board (NEB) was the final decision-maker for the proponents' project applications. In Clyde River, the application was to conduct offshore seismic testing for oil and gas in Nunavut that could negatively affect the Clyde River Inuit's treaty rights; in Chippewas of the Thames First Nation, the application was to modify a pipeline to reverse its flow, increase its capacity, and enable it to carry heavy crude. In both cases, the NEB approved the projects and the affected Indigenous groups applied to the Federal Court to quash the NEB approvals, and the cases eventually reached the Supreme Court of Canada. The Supreme Court applied the same legal principles to both – but the results differed. The Supreme Court decided the NEB does have the procedural powers necessary to engage in consultation and the remedial powers to, where necessary, accommodate affected Aboriginal and treaty rights. Consequently the Crown could rely on it to fulfill its duty to consult. But the Court reached different conclusions about whether the NEB met that duty in each case: in Chippewas of the Thames, the Court decided the NEB's consultation was "manifestly adequate" in the circumstances and upheld the NEB's approval; in Clyde River, the Supreme Court quashed the NEB's approval because of its "significantly flawed" process in the circumstances. The key differences between the cases: the scope of the projects, the nature of the rights involved and the process the NEB undertook.

The Duty to Consult. Following a number of its earlier decisions, the Court decided that an independent regulatory body with the statutorily delegated executive responsibility to make final decisions on project applications (and specifically, the NEB) is acting on the Crown's behalf. Its decisions therefore amount to Crown action that can trigger the Crown's constitutional duty to consult. The Crown can, in some circumstances, also rely on a regulatory body (or its process) to partly or completely fulfill its duty to consult – but only if:

  • Power. That body has the statutory power in its enabling legislation necessary to do what the duty to consult requires in the particular circumstances.
  • "Notice". The Crown makes clear to affected Indigenous groups, in a timely fashion, that it will be relying on the regulatory body's process to fulfill its duty to consult affected Indigenous groups.

The Consultation Process. Whether a particular regulatory process is adequate to fulfill the Crown's duty to consult depends on the level of consultation the circumstances require. Of particular importance are the strength of the claim for Aboriginal rights and the seriousness of the project's potential impact on the asserted right. The Supreme Court confirmed that the duty to consult does not give Indigenous groups a 'veto' over final Crown decisions. Consequently at the accommodation stage, the regulatory body must balance Aboriginal and treaty rights with competing social, economic and public interest considerations.

The Ultimate Responsibility. Even if the Crown relies on the regulatory body, the duty to consult is always ultimately the Crown's responsibility to discharge. The Crown must provide other avenues and take further measures to fill in the gaps if the regulatory body either does not have the necessary statutory power to provide the proper level of consultation and accommodation, or has the necessary statutory power but its process does not provide for adequate levels of consultation or accommodation. The Crown must fulfil that duty to consult before the regulatory body can approve a project: granting approval where the duty to consult has not been fulfilled cannot be in the public interest. If it is not fulfilled then the regulatory body must not approve the project.

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.

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