Canada: Applying The Reasonableness Standard To Indigenous Consultation Requirements

Assessing the implications of Coldwater v. Trans Mountain on major resource project approvals in Canada

On February 4, 2020, the Federal Court of Appeal released its decision in Coldwater v. Trans Mountain, 2020 FCA 34 ("Coldwater"), considering legal challenges to the federal Cabinet's second approval of the Trans Mountain Expansion Project (the "Project"). The Court found that the Cabinet's decision to approve the Project and, in particular, its determination that Canada fulfilled its duty to consult Indigenous peoples in relation to the Project, was reasonable in light of the outcome reached on the facts and law, and the justification offered by the Governor in Council.¹

In reaching this conclusion, the Court relied heavily on the recent Supreme Court of Canada decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 ("Vavilov") to inform its analysis on the reasonableness of Cabinet's decision to approve the Project. The Court departed from its past practice of assessing the reasonableness of the consultation process itself as a basis for upholding or overturning the Project approval, focusing instead on whether Cabinet reasonably concluded that Canada discharged its duty to consult Indigneous peoples in the unique factual and legal circumstances of this case. It remains to be seen whether this approach will be applied by reviewing courts moving forward.

Factual Background

On December 16, 2013, Trans Mountain Pipeline ULC ("Trans Mountain") filed an application with the National Energy Board (the "Board") for a Certificate of Public Convenience and Necessity ("CPCN"), authorizing the construction and operation of the Project. On May 19, 2016, the Board released a report recommending that the federal Cabinet (as represented by the Governor in Council) approve the Project based on the Board's conclusion that the Project is in Canada's public interest and is not likely to cause significant adverse environmental effects.²

On November 29, 2016, the Governor in Council accepted the Board's recommendation and issued Order in Council P.C. 2016-1069 directing the Board to issue a CPCN to Trans Mountain.³ As set out in the Order, the Governor in Council concluded that "the consultation process undertaken [for the Project was] consistent with the honour of the Crown and the [Aboriginal] concerns and interests have been appropriately accommodated."

A number of Indigenous groups, environmental groups and two municipalities challenged the Project approval by filing applications for judicial review in the Federal Court of Appeal. On August 30, 2018, the Court issued its decision in Tsleil-Waututh v. Canada (Attorney General), 2018 FCA 153 ("Tsleil-Waututh"), which quashed the Governor in Council's decision to approve the Project due to two critical flaws in the Project assessment process. First, the Court found that the Board made a "critical error" by not properly including Project-related marine shipping in its environmental assessment of the Project. As a result, the Governor in Council erred by relying on the NEB Report in assessing "the Project's environmental effects and the overall public interest."⁴

Second, the Court found that Canada's execution of the last stage of the consultation process, Phase III, was unacceptably flawed and fell short of the standard required by the Supreme Court of Canada. Phase III "was to focus on outstanding concerns about the Project-related impacts upon potential or established Indigenous or treaty rights and on any incremental accommodation measures that Canada should address." The Court found that during Phase III, Canada failed to "engage, dialogue meaningfully and grapple with the real concerns of the Indigenous applicants so as to explore possible accommodation of those concerns."⁵ In reaching this conclusion, the Court identified three systemic limitations that prevented Canada from executing a mandate to engage and dialogue meaningfully, resulting in an unreasonable consultation process that fell short of the required mark.⁶

On September 20, 2018, the Governor in Council instructed the Board to reconsider its recommendation to approve the Project, taking into account the effects of Project-related marine shipping. On October 5, 2018, Canada announced that it would reinitiate Phase III consultations with Indigenous groups impacted by the Project. On February 22, 2019, the Board released its reconsideration report and recommendation that the Governor in Council approve the Project a second time. On June 18, 2019, the Governor in Council accepted the Board's recommendation and issued Order in Council No. P.C. 2019-820, which again directed the Board to issue a CPCN to Trans Mountain. In this Order, the Governor in Council concluded that Canada's reinitiated Phase III consultations with Indigenous peoples addressed the flaws identified by the Court in Tsleil-Waututh and that Canada's duty to consult and accommodate Indigenous peoples had been adequately discharged.

The Decision

Several parties applied for leave to challenge the second Project approval on environmental grounds and on the grounds of Canada's continued failure to fulfill the duty to consult. On September 4, 2019, the Court granted leave to six Indigenous applicants involved in the Tsleil-Waututh proceedings. Two of the six applicants subsequently discontinued their applications. The Court's decision granting leave (the "Leave Decision") restricted the scope of the judicial review to the issue of whether Canada's re-initiated Phase III consultations from August 30, 2018 to June 18, 2019 were adequate to address the consultation flaws identified by the Court in Tsleil-Waututh.⁷

Five parties applied for leave to appeal the Leave Decision in the Supreme Court of Canada. The Supreme Court of Canada dismissed all five applications in a decision posted on March 5, 2020. The Supreme Court of Canada did not provide reasons for its decision.

In a unanimous decision, the Court in Coldwater dismissed the applications for judicial review, having concluded that there were no legal grounds to interfere with the Governor in Council's decision. As explained in the Court's summary of its decision, the Court's review "focused on the reasonableness of Cabinet's decision to approve the Project a second time, specifically Cabinet's conclusion that the Government of Canada had remedied the flaws in consultation earlier identified by this Court and had engaged in adequate and meaningful consultation with Indigenous peoples."

Standard of Review

The Court relied heavily on the recent Supreme Court of Canada Vavilov decision to inform its analysis on the reasonableness of the Governor in Council's decision. In Vavilov, the Supreme Court of Canada set out a revised framework for determining the standard of review applicable to judicial review of administrative decisions, having as a starting point the presumption that reasonableness is the standard in all cases.⁸

Vavilov also provides additional guidance on the proper application of the reasonableness standard. Regarding the test for unreasonableness, the Court in Vavilov pointed to "two types of fundamental flaws" that will render a decision unreasonable: (i) the decision maker's reasons include fatal flaws in its overarching logic; and (ii) the decision is in some way untenable in "light of the relevant factual and legal constraints that bear on it."⁹

The Court in Vavilov also confirmed that the onus is on the party challenging an administrative decision to identify flaws in the reasoning process or outcome that are sufficiently central or significant to render the decision unreasonable.¹⁰

The Vavilov decision was released after the Court concluded the oral hearing in Coldwater, and the parties were invited to make written submissions on the impact of the Vavilov decision to the applications before the Court. It is worth noting that the Vavilov decision did not involve the duty to consult and the Supreme Court of Canada did not opine on the application of the reasonableness standard in circumstances where the adequacy of consultation is at issue.

As will be described in further detail, one major impact of the Vavilov decision, at least in the unique circumstances of the Coldwater case, is that the Court in Coldwater conducted its reasonableness review in the context of the duty to consult by focusing on the reasonableness of the Governor in Council's assessment of the adequacy of consultation while the Court in Tsleil-Waututh focused on the reasonableness of the consultation process itself. Due to the unique factual circumstances of this case, it remains to be seen whether this approach will be applied by reviewing courts moving forward.

Applying the Reasonableness Standard

Following Vavilov, the Court in Coldwater emphasized the distinction between a reasonableness review and a correctness review, explaining that "the court conducting a reasonableness review must focus on the decision the administrative decision maker actually made, including the justification offered for it," and not undertake a de novo analysis on the question or "seek to determine the correct solution to the problem.'"¹¹

While the Court in Tsleil-Waututh assessed the reasonableness of the Governor in Council's decision by "examin[ing] the [original Phase III consultation process] in exhaustive detail,"¹² the Court in Coldwater refrained from forming its own view on the adequacy of consultation as a basis for upholding or overturning the Project approval.¹³ Instead, the Court considered whether the Governor in Council's decision and reasons for making the decision set out in Order in Council No. P.C. 2019-820 were "acceptable and defensible in light of the governing legislation, the evidence before the Court and the circumstances that bear upon a reasonableness review."¹⁴

As a starting point, the Court held that the Governor in Council's evaluation of the reinitiated Phase III consultation process was a fact intensive assessment that called for deference and that the Governor in Council was entitled to measure the adequacy of consultation in light of what was possible in the circumstances.¹⁵ The Court placed particular significance on the fact that the reinitiated Phase III consultations were conducted pursuant to the Tsleil-Waututh decision, which identified specific systemic flaws in Canada's consultation mandate and provided directions to Canada on how to address these flaws, noting that the second round of consultations could be "specific and focused" and could be accomplished through a "brief and efficient process."¹⁶

Ultimately, the Court in Coldwater found that the Governor in Council's conclusion respecting the adequacy of consultation was reasonable based on the evidence in the record, the law concerning the duty to consult, the applicable legislation and the justification offered by the Governor in Council.¹⁷ In reaching this conclusion, the Court found that the Governor in Council's analysis and conclusions on the adequacy of the second round of consultations in Order in Council No. P.C. 2019-820 did not suffer from either of the two fundamental flaws identified in Vavilov. The Court also found that the applicants failed to meet the burden necessary to establish that the Governor in Council's decision was unreasonable.¹⁸ The Court criticised the applicants for focusing their submissions on the merits of the decision itself, which the Court found to be outside the scope of its reasonableness analysis in accordance with Vavilov.¹⁹

Duty to Consult

Having concluded that the Governor in Council's decision was reasonable, the Court went through the unnecessary step of demonstrating that the decision also met the higher standard of correctness. In reviewing the adequacy of consultation, the Court was highly critical of the applicants and found that their submissions amounted to an assertion that the Project could not be approved "until all of their concerns [were] resolved to their satisfaction."²⁰ With respect to the applicants' participation in the reinitiated consultation process, the Court noted that "much time [during the consultation process] was taken up [by the applicants] by unnecessary delay, posturing and insisting on matters of form rather than substance."²¹

In the remaining 60 pages of the decision, the Court systematically rejected every argument raised by the applicants in respect of their outstanding concerns, emphasizing that Indigenous peoples could not "tactically use the consultation process as a means to try to veto [a project]."²² In particular, the Court noted that:

• A meaningful process becomes unworkable when "the only compromise acceptable to [the Indigenous group] is to abandon the entire project," and "insisting that the only acceptable accommodation is selecting an alternative to the Project amounts to seeking a veto over the Project, which forms no part of the duty to consult"²³;
• While the duties of consultation form part of the process of reconciliation, the process itself does not dictate any particular outcome²⁴;
• "There is no duty to agree, and the duty to consult does not require a particular outcome."²⁵ The duty to consult "guarantees a process, not a result," and there is no guarantee that "specific accommodation sought will be warranted or possible", nor is there "assurance that proposed accommodation measures will result in an agreement between the parties"²⁶;
• Accommodation does not guarantee outcomes and cannot be dictated by Indigenous groups²⁷; and
• Failure to accommodate in any particular way, including by way of abandoning the Project, does not necessarily mean that there has been no meaningful consultation.²⁸

The Court further noted that where there is disagreement about whether a project is in the public interest, the law does not require that the interest of Indigenous peoples prevail.²⁹ It is worth noting that the Court in Tsleil-Waututh also considered the notion of "competing societal interests," taking a somewhat different approach:

Conclusion

With respect to the application of the reasonableness standard in the duty to consult context, it is unclear whether the Coldwater decision represents a permanent departure from the Court's past practice of examining the evidence on record in order to assess the reasonableness of the Crown's consultation process. To that end, it is important to remember that the Court's review of the consultation undertaken and its conclusions respecting the adequacy of consultation were constrained by a number of factors specific to the unique circumstances of this case. First, the Court in Tsleil-Waututh previously assessed the adequacy of the Crown's consultation with the applicants at length, identifying specific systemic flaws in the consultation process and directions to address such flaws. Second, the Leave Decision limited the scope of the Court's review to whether the specific flaws identified by the Court in Tsleil-Waututh had been remedied. Third, the Court found that the applicants failed to advance any arguments relating to the reasonableness of the Governor in Council's decision and, as such, failed to identify fundamental flaws that would render the Governor in Council's decision unreasonable as required under the Vavilov framework.

It also remains to be seen whether the Court's findings in Coldwater represent a substantive departure from the well-established legal principles underlying the scope and content of the duty to consult. Regarding the limits of the duty to consult, it is fair to say that the Court emphasized the well-established principle that Indigenous consent is not a requirement of the duty to consult. While the Court in Coldwater certainly placed greater emphasis on the limits of the duty to consult doctrine, the Court in Tsleil-Waututh similarly noted that the consultation process does not dictate a particular outcome, give Indigenous groups a veto over land use or equate to a duty to agree.³¹ Although not discussed in this article, the Court's comments on what may constitute adequate accommodation measures for impacts to Aboriginal rights and title arising from major resource projects is likely to receive further attention in future duty to consult cases.

para. 494.

Footnotes

1. Coldwater, at para. 64.

2. Tsleil-Waututh v. Canada (Attorney General), 2018 FCA 153, at para. 1.

3. Tsleil-Waututh, at para. 2.

4. Tsleil-Waututh, at para. 5.

5. Tsleil-Waututh, at para. 6.

6. Tsleil-Waututh, at paras. 761-763.

7. Raincoast Conservation Foundation v. Canada (Attorney General), 2019 FCA 224, at para. 65.

8. Vavilov, at para. 10.

9. Vavilov, at paras. 101 to 102.

10. Vavilov, at para. 100.

11. Coldwater, at para. 28.

12. Coldwater, at para. 13.

13. Coldwater, at para. 28.

14. Coldwater, at para. 29.

15. Coldwater, at paras. 16 and 17.

16. Coldwater, at para. 32.

17. Coldwater, at paras. 64, 68, 76 and 83.

18. Coldwater, at paras. 82 and 83.

19. Coldwater, at para. 83.

20. Coldwater, at para. 86.

21. Coldwater, at para. 20.

22. Coldwater, at para. 55.

23. Coldwater, at para. 188.

24. Coldwater, at para. 53.

25. Coldwater, at para. 161.

26. Coldwater, at para. 174.

27. Coldwater, at para. 58.

28. Coldwater, at para. 51.

29. Coldwater, at para. 53.

30. Tsleil-Waututh, at para. 507.

31. Tsleil-Waututh, at para. 494.

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