Canada: Meaningful Consultation Requires Grappling With Indigenous Concerns

On August 30, 2018, the Federal Court of Appeal (the Court) issued a decision that quashed the Governor-in-Council (GIC) approval for the Trans Mountain Expansion Project (the TMX). See Tseil-Waututh Nation v Canada (Attorney General) 2018 FCA 153. One of the reasons the approval was quashed was that the federal government failed to fulfill its duty to consult and accommodate Indigenous peoples potentially impacted by the TMX. The Court held that the government failed to "engage, dialogue meaningfully and grapple with the real issues raised by the Indigenous peoples so as to explore accommodation of those concerns" ( at para 6).

The Court's other ground for the quashing the approval was that the National Energy Board (NEB or Board) unjustifiably defined the scope of the project to exclude project-related tanker traffic such that the government could not rely on the NEB's report. We have already discussed the NEB's "critical error" in not including project-related tanker traffic in an earlier post A Triumph of Form over Substance? The Federal Court of Appeal's Decision to Quash the Trans Mountain Expansion Approval. In this post, we will focus on the Court's analysis of the government's duty to consult obligation.

Consultation Process Adequate

The Court commenced its review of federal consultation for the TMX by examining the well-established jurisprudence of the Supreme Court of Canada (SCC) on the scope and content of the duty to consult. With respect to the standard to which Canada is to be held to in fulfilling its duty, the Court concluded that this standard is not one of perfection. The Court noted that so long as "every reasonable effort was made to inform and to consult" its efforts would suffice (at para 226). Further, agreement of all parties is not necessary to fulfill the duty.

The Court also reiterated the well-established principle that meaningful Crown consultation can be carried out wholly or in part through a regulatory process. Where the regulatory process relied upon does not achieve adequate consultation or accommodation, then the Crown is expected to take further steps to meet its duty to consult by, for example, filling in any gaps in consultation on a case-by-case basis.

The Court then proceeded to examine the design of the consultation process set out by the federal government at the outset of the TMX, which basically set out four phases:

• Phase I – early engagement, from the submission of the TMX description to the start of the NEB hearing;
• Phase II – commencing with the start of the NEB hearing and continuing until the close of the hearing record;
• Phase III – commencing with the close of the hearing record and continuing until the GIC rendered its decision in relation to the TMX; and
• Phase IV – commencing with the decision of the GIC and continuing until the issuance of all regulatory authorizations, if approved.

Canada's stated objective for Phase III was to fill the gaps left by the Phase II regulatory process and, in particular, to focus on outstanding concerns about the TMX-related impacts upon potential or established Indigenous or treaty rights, and any incremental accommodation measures that Canada should address. Of note to the Court was that Phase III was the first opportunity for the Indigenous applicants to directly engage with the Crown about matters of substance, not process.

Upon review of the record, the Court found that the Crown's consultation process was appropriate for the task at hand on the basis that, inter alia:

• Indigenous groups received early notice of the Project and the NEB's hearing;
• participant funding was provided;
• the Board's process permitted written evidence and oral traditional evidence;
• the regulatory framework permitted the Board to impose conditions capable of mitigating risks to the rights and title of the Indigenous groups; and
• that after the Board's hearing record closed, a further consultation phase was provided to enable Canada to address those concerns not addressed by the hearing or the Board's proposed conditions.

The Court concluded that the consultation framework selected was "reasonable and sufficient". The Court commented that if Canada had properly executed it, Canada would have discharged its duty to consult (at para 753). However, in the Court's view, this did not happen.

Failure to Execute Phase III

In a detailed examination of the evidence presented by the Indigenous applicants, the Court concluded that the federal Crown failed in the execution of Phase III of consultation. Specifically, the federal Crown failed to "engage, dialogue meaningfully and grapple with the real concerns of the Indigenous applicants so as to explore possible accommodation of those concerns" (at para 6).

The Court acknowledged that the Canada's consultation team worked in good faith to understand and document the concerns, and to report those concerns to the GIC in its Crown Consultation report. However, the Court heavily criticized the Crown because, in its view, the consultation team failed to engage in a "considered, meaningful two-way dialogue" with the Indigenous applicants (at para 559). In support of this conclusion, the Court identified three major shortcomings:

1. Missing was a genuine and sustained effort to pursue meaningful, two-way dialogue. Very few responses were provided by Canada's representatives in the consultation meetings. Too often the response was that the consultation team would put the concerns before the decision-makers for consideration;
2. The inadequacies of the consultation process flowed from the limited execution of the mandate of the Crown consultation team. The mandate of the team was essentially one of "note-taking" and the team did not engage in any active and meaningful dialogue with the Indigenous applicants. Missing from the team was someone with the confidence of Cabinet who could discuss, at least in principle, required accommodation measures; and
3. The inadequacies also flowed from Canada's unwillingness to meaningfully discuss and consider possible flaws in the Board's findings and recommendations and its erroneous view that it could not supplement or impose additional conditions on TMX.

The Court found that these three systemic limitations thwarted meaningful, two-way dialogue and concluded that the Phase III consultation for TMX was unacceptably flawed and fell short of the required mark for reasonable consultation. The Court opined that Indigenous applicants:

This conclusion is similar to the Court's decision on the Northern Gateway project in Gitxaala v. Nation 2016 FCA 187 (Gitxaala) where the Court found that the Crown also failed to execute at the same stage of consultation. In Gitxaala – a 2016 decision also written by Dawson JA – the Court also quashed the GIC's Order-in-Council on the basis of inadequate consultation, thereby rendering the approval for the Northern Gateway a nullity. The ultimate result being that the Northern Gateway did not proceed.

What's Next for the TMX?

The TMX cannot proceed for GIC approval until consultation is adequate. The Court suggests that there are some distinctions between the TMX and Northern Gateway projects in that the TMX consultation deficiencies can be rectified in fairly short order. In particular, the Court found that the federal government may "specify a time limit" for the NEB to reconsider and that the Court's concerns over consultation are "specific and focused" such that this "may serve to make the corrected consultation process brief and efficient while ensuring it is meaningful".

In addition, the Crown has sixty (60) days to appeal this decision to the SCC. The Government of Canada has not yet announced whether it will seek leave to appeal the decision to the SCC, or attempt to remedy the deficiencies identified by the Court instead.

What's Next for Crown Consultation?

The Court's conclusions on the sufficiency of consultation may be viewed as disconcerting given the Court's finding that the framework was reasonable and that the Crown's consultation team worked in "good faith and assiduously" to understand and report concerns to the GIC. It can also be argued that the Court, in effect, imposed a standard of perfection on the Crown in its fulfilment of its duty to consult and therefore that the case was wrongly decided. This may be so. On the other hand, this may be an unfair criticism of the decision given the ample and specific evidence that the Court reviewed and used to support its findings.

There is also no question that Crown consultation over a long, linear project with dozens of Indigenous communities is a huge and difficult task. The Court expressed some sympathy for the exercise. However, the bottom-line message from the Court to the federal government is either consult meaningfully or don't bother; and by consult meaningfully we mean get in there and grapple with the difficult issues. The days of "record and report" are over.

In our view, resource development in Canada cannot afford any more of these decisions. The legal framework on the duty to consult and accommodate is clear; the SCC constructed it in 2004 with the trilogy of cases (Haida, Taku River and Mikisew Cree). These subsequent cases are almost all about the implementation of that legal framework. The federal Crown simply needs to start getting this right. It would go a long way towards creating the regulatory certainty that is needed here in Canada.

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.