Energy & The Courts

How Duty to Consult became a Veto

Tom Flanagan
September 23, 2018
The ever-shifting scope of the constitutional “duty to consult” with aboriginal groups increasingly thwarts development in Canada, including resource projects critical to the country’s economic growth and prosperity. The recent court decision against the Trans Mountain pipeline is the highest-profile recent example. University of Calgary professor emeritus Tom Flanagan tracks the jurisprudence that elevated this legal concept into a de facto aboriginal veto and suggests ways that governments, with the support of pro-development aboriginal groups, could move to clearly define and limit its power.
Energy & The Courts

How Duty to Consult became a Veto

Tom Flanagan
September 23, 2018
The ever-shifting scope of the constitutional “duty to consult” with aboriginal groups increasingly thwarts development in Canada, including resource projects critical to the country’s economic growth and prosperity. The recent court decision against the Trans Mountain pipeline is the highest-profile recent example. University of Calgary professor emeritus Tom Flanagan tracks the jurisprudence that elevated this legal concept into a de facto aboriginal veto and suggests ways that governments, with the support of pro-development aboriginal groups, could move to clearly define and limit its power.
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The Federal Court of Appeal’s 70,000-word ruling blocking expansion of the Trans Mountain crude oil pipeline based on its opinion that one phase of the consultation process with First Nations was inadequate took almost everyone by surprise, perhaps most of all the federal Cabinet. In fact, it was a logical outcome of a series of court cases that, like a slow but exceptionally powerful tide, finally washed inland to wreak destruction. In many of these previous cases, the courts ruled expansively, broadening the legal rights of First Nations, increasing the burden on governments, regulatory bodies and project proponents and, even in attempting to resolve the questions before them, creating new uncertainty. Though ostensibly confined to the legal matters at hand, the expanding jurisprudence is sending powerful ripples throughout Canadian society.

In its 2004 Haida Nation decision, the Supreme Court of Canada held that the “honour of the Crown” – an old common law principle that our courts have creatively applied to Indigenous disputes – required government to consult with a First Nation before taking or permitting action that might affect its aboriginal rights or title on lands extending beyond established reserves. It does seem dishonourable for government to alter the nature and value of land by allowing, say, forestry and mining projects without consulting the people whose claim would be affected. But since almost all of British Columbia is subject to unsettled, overlapping claims of aboriginal rights and title, the Haida Nation decision upset the legal status quo throughout the province. It threw virtually all new projects and, ultimately, nearly any property right into doubt.

The next year, the Mikisew Cree decision extended the new consultation framework to lands already surrendered by treaty. According to the Court, the honour of the Crown requires government to consult with a First Nation before exercising its option to “take up” Crown land for other purposes, because hunting and trapping were existing treaty rights protected by s. 35 of the Constitution Act, 1982. Even if such a duty extends “only” to consulting about a project’s effects on hunting and trapping, it could entail holding up a project creating hundreds of jobs to safeguard the interests of a handful of trappers. Following this decision, governments started to consult on major projects on any Crown lands with a nearby First Nation. That means most of Canada.

The right of Canada’s natives to be consulted was not mentioned in any constitutional document or federal legislation. The Court inferred it from its new interpretation of the honour of the Crown. In the post-Charter era, it was no longer surprising for the Court to create new law; it happens all the time. But in this instance the new law was exceptionally vague because the honour of the Crown has no definition. It is, ultimately, whatever the courts say it is. And Canada’s courts, notwithstanding the criticisms levelled by Indigenous groups and academics, have shown a clear inclination to view native rights broadly, creating obligations on governments and regulatory authorities that never existed before.

Since these two decisions, Parliament has passed no legislation to better define the duty to consult. In this legislative vacuum, the courts have acted expansively, making new law as they review specific cases retrospectively. It is a perfect environment for project opponents to conduct a kind of legal insurgency – sometimes dubbed “lawfare”. Months stretch into years as the courts follow their methodical process of hearings and appeal while projects are blocked by unfavourable judicial decisions, terminated by political turnovers, or became unprofitable due to mounting costs or changing markets.

Through the ensuing years of trials and appeals, project proponents have occasionally prevailed. The strongly worded ruling by the Supreme Court in November 2017 unanimously denying one First Nation’s attempt to block the Jumbo Glacier ski resort in B.C.’s East Kootenays declared that consultation does not confer “veto” power. So did the previous Chippewas of the Thames case. If the duty to consult has been fulfilled (and the project has met its other regulatory tests), a project can proceed even over the objections of one or more First Nations. “Section 35 guarantees a process, not a result,” the Jumbo ruling notably stated.

This raised hopes that the court had at last “ring-fenced” consultation which, in turn, could smooth the path for projects such as Trans Mountain. The dismay of project opponents certainly suggested as much. As it turned out, however, the two cases hinged on specific, narrow points of law – freedom of religion, in the Jumbo Glacier case. With no claim of aboriginal title at issue in the Jumbo case, it did not appear to have any bearing on the Federal Court of Appeal’s Trans Mountain ruling. Ring-fencing consultation it certainly did not do, and today consultation still has no clear boundaries.

Flanagan Jumbo Glacier
Members of the Ktunaxa band and supporters protest the proposed Jumbo Glacier development.

In the absence of legislation, judicial decisions have tended to produce confusion. The legislative vacuum allows judges to follow their personal inclinations, which tend to be favourable to Indigenous claims. The lack of clarity has overturned administrative practices, invited further litigation, multiplied the number of decision-makers, and failed to lay down clear guidelines for resolving disputes arising under the new jurisprudence. Instead of bright lines of authority, the court has created shadowy and overlapping fields of jurisdiction. The highlighted words and phrases in the excerpt below from the Haida Nation ruling illustrate the basis of the problem:

Precisely what is required of the government may vary with the strength of the claim and the circumstances. But at a minimum, it must be consistent with the honour of the Crown.

The content of the duty to consult and accommodate varies with the circumstances. Precisely what duties arise in different situations will be defined as the case law in this emerging area develops. In general terms, however, it may be asserted that the scope of the duty is proportionate to a preliminary assessment of the strength of the case supporting the existence of the right or title, and to the seriousness of the potentially adverse effect upon the right or title claimed.

Wording like this, with a succession of vague terms requiring interpretation, each open to varying and conflicting conclusions, and demanding consistency with a never-defined doctrine, is a virtual guarantee of more litigation and judicial second-guessing. It creates an open field for judges to indulge their personal beliefs. No one can know in advance how the multiple analyses will play out in specific cases. Each decision then invites more litigation. Indeed, Chief Justice Beverley McLachlin was aware of this, writing in Haida Nation:

This case is the first of its kind to reach this Court. Our task is the modest one of establishing a general framework for the duty to consult and accommodate, where indicated, before Aboriginal title or rights claims have been decided. As this framework is applied, courts, in the age-old tradition of the common law, will be called on to fill in the details of the duty to consult and accommodate.

This may be one approach for building the common law, but it is fatal for building pipelines because it incorporates too much delay and uncertainty. And even McLachlin, who retired in December 2017, apparently failed to foresee what would happen, for the duty to consult was quickly extended even to areas where Aboriginal title and rights had ostensibly been settled.

Consultation with multiple First Nations over a single issue or project is particularly difficult because the duty to consult was not apparently formulated with complex, multi-partite consultations in mind. Particularly vulnerable are corridor projects, such as Trans Mountain and the Northern Gateway oil pipeline, which would have crossed the traditional territories of dozens of First Nations in Alberta and British Columbia. Any pipeline has to get from point A to point B and, in areas of tortuous geography like B.C., there are typically few if any alternative routes. Even one holdout party threatens the entire enterprise. In any large group of actors, there will always be some who see the world in different terms and will oppose what others see as the common good. Holdout resistance may eventually be overcome, but the delay and added expense may cause the whole project to fail.

A second problem is strategic or psychological. When numerous actors take part in negotiations, many are tempted to hang back to see what others get, then raise the stakes with new demands. This type of “n-person Prisoner’s Dilemma” (a term used in social science to describe a situation in which each of many participants has a choice between cooperating with each other for the “common good” or pursuing their own interests) and the associated delay in decision-making can drive costs so high that a project becomes uneconomic.

In the larger economy, the problem is typically dealt with by the exercise of expropriation. Acting under legislation and legal precedent that defines processes and provides appropriate compensation, regulatory authorities can take possession of land required for essential projects – including corridor pipelines. Expropriation is imperfect, but without it we would not have many pipelines, power lines, roads, bridges, or rapid transit lines – plus any number of non-corridor projects like hospitals and parks – making it difficult even to imagine modern technological society. Oppositionism to projects of all forms has, of course, intensified greatly in recent years, complicating the approval process.

The second attempt to build the Mackenzie Valley gas pipeline in the Northwest Territories, which had been delayed for 30 years by the Berger inquiry and various land claims negotiations, became a dress rehearsal for project-killing aboriginal consultation. In 2005, the pipeline’s second incarnation was finally ready to go, after TransCanada Corp. had offered NWT native groups one-third ownership. But the Dene Tha’, a group of seven bands in northwestern Alberta, remained opposed. They won a ruling from the Federal Court that, in light of Haida Nation and Mikisew Cree, they had not been adequately consulted. While the federal government was working through the consequences of this new delay, the development of shale and other unconventional gas reservoirs across North America was causing the price of natural gas to fall dramatically, and TransCanada withdrew from the project. Delay killed the pipeline as surely as any regulatory denial.

The duty to consult also played a crucial role in killing the $7.9 billion Northern Gateway pipeline. After years of consultation, proponent Enbridge Inc. had negotiated impact and benefit agreements with 45 First Nations and Métis communities along the route. Approval by the National Energy Board (NEB) and the then-Conservative federal Cabinet followed. But the lengthy process overlapped with a change in the federal government in 2015, and the next year Prime Minister Justin Trudeau placed a moratorium on oil tanker traffic in the waters off northern B.C.

Justice Thomas Berger during the Mackenzie Valley Pipeline Inquiry.

On top of that, the Federal Court of Appeal overturned the previous federal Cabinet approval on the grounds that, although the NEB Joint Review Panel had adequately consulted First Nations, the federal government had not done so in a later phase of the process. The second phase had been launched so that the approximately one-dozen First Nations still opposed could raise questions about anything that might have been missed in the original process – creating an additional target for lawfare. Enbridge threw in the towel, writing off ten years of work and about $1 billion incurred in developing the proposal and carrying out consultations.

In 2013 Kinder Morgan, Inc., owner of the Trans Mountain pipeline, applied to the NEB for permitting of the planned expansion of its existing pipeline. This triggered a five-year process of review and consultation, involving all First Nations anywhere near the line’s route. The NEB was responsible for the first phase of consultation, while the proponent carried out a parallel process of negotiation, much of it done personally by company president Ian Anderson. This was followed by a second consultation phase organized by Trudeau’s Cabinet and redesigned using lessons from the Northern Gateway debacle.

As of spring 2018, Trans Mountain could claim the support of 43 Indigenous groups, 10 in Alberta and 33 in B.C. But six holdout First Nations challenged the consultation process in Federal Court, where they lost, appealing to the Federal Court of Appeal. It ruled that the second phase was inadequate because the communication was overly one-way. It wrote:

Canada’s efforts fell well short of the mark set by the Supreme Court of Canada. 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. The duty to consult was not adequately discharged.

The courts keep moving the goalposts. The Federal Court of Appeal in effect declared the redesigned consultation “not yet good enough.” The alleged failing was that federal representatives took notes and conveyed concerns to the Cabinet, but that neither the Cabinet nor its representatives explained why complainants’ concerns, which had already been considered by the NEB, were being rejected. The Federal Court of Appeal thereby created – perhaps unwittingly – yet another new legal doctrine: that the federal Cabinet, whose deliberations are typically confidential, has a legal responsibility to justify its decisions to disappointed complainants. This novel requirement will, at minimum, invite more litigation in which judges are asked to determine whether the Cabinet’s reasons were good enough and its explanations thorough enough. It is suggestive of the philosophical phenomenon of “infinite regress”, in which the truth of a proposition requires the support of a never-ending succession of supporting propositions.

The courts have repeatedly found that the right to be consulted does not confer veto power – and this includes the recent Trans Mountain judgment, which restates this explicitly. If true, this entails that a duly approved project may proceed even if one or more groups remain opposed. Yet the legal process as it has evolved effectively enables a holdout First Nation to stop a project – as the Trans Mountain judgment did. That damages not only the Canadian economy and untold numbers of non-natives (as well as foreign investors), but many First Nations that want economic development to raise their people’s standard of living.

The expanding jurisprudence is already affecting seemingly unrelated projects, governments and organizations, a trend compounded by the current government’s policy of “indigenization” at virtually all levels. Lower-level governments are now consulting with aboriginal organizations over seemingly innocuous projects, taking the “duty to consult” as a moral imperative even in the absence of legal obligations. Such courtesies are bound to raise expectations, establish assumed precedents and transform ad hoc practices into de facto obligations.

In their virtually limitless generosity towards aboriginal litigants, the courts have pushed Canada close to the point of economic development gridlock, something that was not only unnecessary and excessive, but that millions of Canadians will find intolerable. Only Parliament can break the gridlock. Legislation would be aimed at providing a framework for consultation thorough enough to meet current legal standards along with definitions and procedural guidelines precise enough to give project proponents clarity ex ante rather than ex post what is required to gain approval and how long it will take.

Legislation should authorize consultation to be carried out by administrative agencies or specially appointed commissioners. There should be one phase only, not a second phase like those that led to the overturn of the Northern Gateway and Trans Mountain projects. The legislation should set time limits for issuing and responding to notices, filing comments and similar important process steps. It should also include guidelines for oral hearings so these do not deteriorate into circuses. And it should provide a separate mechanism for compensation in cases requiring infringement of aboriginal rights or title.

This does not require drawing on a blank slate. Judicial decisions that have upheld the validity of particular consultations, such as the Jumbo Glacier and Chippewas of the Thames cases, contain useful information. The Northern Gateway and Trans Mountain decisions, although they blocked their respective projects, actually endorsed most of what was done by the NEB and, ironically, could also be useful sources of procedural guidelines. And statutes present in all provinces governing public consultation and expropriation of property could provide practical examples. The legislation would no doubt be controversial, but it should not be particularly difficult in technical terms.

Such legislation cannot, unfortunately, be passed quickly enough to resolve the Trans Mountain impasse. If the government really wants to build the pipeline, it will have to resume consultation under the new guidelines set by the Federal Court of Appeal – something it announced on September 21 that it will do. The court claims renewed consultation on specific topics with the six holdouts could be done in a few months. Considering it took the court 10 months to write its own book-length opinion, this seems naïve. The last 15 years of court decisions have turned this area of the law into a tangled thicket where progress is always painfully slow. While the federal government, which now owns the pipeline, can afford to wait longer than a private corporation, every month of delay compounds the economic damage.

There are no other short-term alternatives, however. Section 33 of the Charter, the “notwithstanding” clause, doesn’t apply in this area. Invoking the federal declaratory power (Section 92(10) of the Constitution Act, 1867, which grants the federal government jurisdiction over interprovincial and international works) could help overcome opposition from B.C. politicians but would not affect the now constitutionalized rights of First Nations. Appeal to the Supreme Court of Canada would be slow and the results would be uncertain. One can never predict how the Supreme Court will decide, but the Federal Court of Appeal decision was unanimous and exhaustively documented. It is, unfortunately, not an aberrant decision, for it represents the contemporary jurisprudence of Aboriginal rights.

The problem is not primarily rogue judges but successive federal governments allowing unchanneled growth of the jurisprudence. While legislation is theoretically the right way to clean up the mess, much would depend on the new law’s content. One should have little confidence in the current government’s ability. This is, after all, the government that is attempting to pass Bill C-69, which will abolish the world-renowned NEB and make the environmental review process unworkably complicated even without the difficulties of First Nations consultation. Passing useful legislation on consultation is likely to require a change in political climate.

Some of the impetus – perhaps even the critical push – might come from the many First Nations whose fortunes have become linked to Canada’s natural resource-related industries through varying combinations of direct participation as producers, providers of a variety of services and/or labour pools, passive investors or beneficiaries of fees and infrastructure spending. The Indian Resource Council now lists 209 First Nations as members. Some of these are major economic players. Routinely lost in the public discussion is that First Nations receptive to economic development have become far more numerous than the dogged opponents who are nonetheless still typically portrayed as speaking for First Nations as a whole. The public, consequently, often misperceives what First Nations really want. The many First Nations that desire economically sustainable betterment, including major participation in development projects, will have to forge more effective alliances with non-native organizations to create a political climate in which consultation is no longer a tortured path to endless gridlock.

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