Canada: Change On The Horizon For Aboriginal Consultation And Involvement In Mining Projects

The rapidly evolving legal landscape for Aboriginal consultation and involvement in mining and other resource development projects in Canada is likely to see a number of significant changes in 2017. In addition to three anticipated Supreme Court of Canada decisions on the duty to consult, 2017 will likely bring legislative and policy changes to the nature and extent of expected Aboriginal involvement in the assessment, permitting and monitoring of resource development projects that require federal approval. Also expect changes to federal and certain provincial Aboriginal consultation policies, as well as the implementation of the Extractive Sector Transparency Measures Act for payments to Aboriginal groups.

Federal Environmental Assessment and Permitting

The first half of 2017 will see the completion of four different reviews of the federal government's environmental assessment and regulatory processes for resource development. There will be four separate reports issued for these reviews, which collectively could result in significant changes to the way and extent to which Aboriginal groups are consulted for mining projects requiring federal environmental assessments or permits.

These four reports stem from election platform commitments of the Trudeau government to modernize the National Energy Board and review Canada's environmental assessment and regulatory processes. This has included the review of a number of contentious changes introduced by the previous federal government, including the introduction of the Canadian Environmental Assessment Act, 2012 and amendments to the Fisheries Act and the Navigable Waters Protection Act (now Navigation Protection Act), which sought to streamline certain regulatory processes and reduce the number of projects subject to federal environmental assessments or requiring federal permits. These changes were widely criticized by Aboriginal groups across the country at the time, as they were seen to reduce federal oversight and associated federal Aboriginal consultation obligations for projects that could adversely impact asserted or established Aboriginal or treaty rights.

The reports for the reviews of the Fisheries Act and the Navigation Protection Act will likely be released first. These reviews were undertaken by two Standing Committees of the House of Commons and were fairly narrow in scope, focused specifically on changes made in 2012 that were perceived to reduce the protection of fish habitat and reduce the number of waterways listed as "Navigable Waters" in the Navigation Protection Act, (although not to the pre-2012 level), which could increase permitting and associated consultation requirements for certain projects. It is also likely that the Fisheries Act review will turn back the clock on the changes to s. 35 of the Fisheries Act. It is questionable whether such changes will have a significant impact on permitting requirements for mining projects.¹ That said, the review could result in an increase in resources for the enforcement and monitoring of such requirements going forward.

The two remaining reports for the reviews of Canada's environmental assessment processes and the National Energy Board are scheduled to be released by March 31, 2017 and May 15, 2017, respectively, and are being undertaken by independent expert panels. The mining industry will likely be most impacted by the environmental assessment review given its broad scope and the way in which mining is federally regulated. That said, principles flowing from the National Energy Board review could influence the way in which the federal government responds to both reports, particularly with respect to Aboriginal consultation issues.

The expert panel for the environmental assessment review was tasked with examining a broad range of issues including several specific issues relating to Aboriginal consultation and involvement in environmental assessment processes. The most closely watched will likely be what the expert panel recommends regarding the incorporation and interpretation of the principle of Free, Prior and Informed Consent (FPIC) in the federal environmental assessment process and how the panel suggests the role of Aboriginal groups be enhanced in the planning, reviewing and decision-making process in federal environmental assessments.

Many Aboriginal groups have long asserted that development projects cannot proceed in their traditional territories without their free, prior and informed consent. This is based largely on the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), a resolution of the U.N. General Assembly, which stipulates that states must obtain the FPIC of Aboriginal groups in a number of situations, including for resource development in their traditional territories. Canada initially voted against UNDRIP in 2007 (along with the U.S., New Zealand, and Australia) but announced its "qualified support" in 2010, noting it was an "aspirational document" that does not change Canadian laws. The main concern in both 2007 and 2010 was around the principle of FPIC, which could be interpreted as an Aboriginal veto over government decision-making.

While it remains to be seen what the expert panel will recommend, it is unlikely that the federal government will ultimately interpret FPIC as a veto or require the consent of affected Aboriginal groups in all circumstances before granting approvals for projects. Indeed, the Trudeau government has already qualified their "unqualified support" for UNDRIP by stating that it would not be adopted "word-for-word" into Canadian law² and that it would be implemented "in accordance with the Canadian Constitution." This latter caveat is particularly significant as it would be inconsistent with the Canadian Constitution³ to interpret Aboriginal consent as an absolute requirement/veto except in cases of unjustifiable infringements of established Aboriginal or treaty rights.⁴ Moreover, the Trudeau government has demonstrated on several occasions that a lack of Aboriginal consent will not necessarily stop a project from being approved or permits being issued, such as the environmental assessment approvals for Trans Mountain Pipeline and the Petronas LNG project, as well as the federal permits issued for the Site C project.

This is not to say that the adoption of UNDRIP will have no consequences for the mining industry. Rather, its influence is more likely to be seen in the panel's recommendations and the government's response to enhancing the role of Aboriginal groups in the planning, review, and decision-making processes for federal environmental assessments. While Aboriginal groups will not have a veto, it is likely that the panel will recommend, and that the federal government will introduce, changes to the environmental assessment process targeted at giving Aboriginal groups a greater say and a more significant spot at the table for the assessment and ongoing monitoring of projects in their traditional territories. As part of this, industry proponents may be expected to do more to minimize impacts on asserted or established Aboriginal or treaty rights, to ensure more meaningful and active involvement of Aboriginal groups during the life of projects, and to gain Aboriginal support where possible. There may also be additional requirements on industry proponents to address capacity barriers of Aboriginal groups to meaningfully participate in the process, which continues to be a frequently raised concern of Aboriginal groups.

Consultation Policy Reviews

The federal, Alberta and Manitoba governments may also release updated consultation policies in 2017, which could have implications for how mining companies are expected to undertake consultation with Aboriginal groups.

The federal government last updated its guidelines on the duty to consult for federal officials in 2012, and it undertook a review of these guidelines, as well as proposed draft guidance for

industry proponents in 2015.⁵ The review culminated in a report to the Minister of Indigenous and Northern Affairs in May of 2016, which contained 47 recommendations on how Canada can improve its approach to the duty to consult.⁶ It is likely that the federal government will move forward with reforming its consultation policies once the four aforementioned federal reviews are completed, given that they also raise issues with respect to Aboriginal consultation.

The current Alberta policy, The Government of Alberta's Policy on Consultation with First Nations on Land and Natural Resource Management, 2013⁷ was introduced on August 16, 2013. In June 2016, the Alberta government began an engagement process with First Nations and industry to develop a new policy that would be responsive to the evolving needs of First Nations and to bring their policy in line with UNDRIP. The Notley government has also committed to implementing UNDRIP with the similar caveat that it would be implemented in accordance with Alberta law. ⁸

While it has only released limited details to date, the Manitoba government has also indicated that it intends to create a new framework for consultation with Aboriginal Peoples for mining and exploration projects. It is unclear how this framework will differ from Manitoba's current policies but the Minister of Growth, Enterprise, and Trade, Cliff Cullen, has pledged to have this framework developed by May 2017.

Supreme Court of Canada to Release Three Duty to Consult Cases

This year we also expect to see the release of three decisions by the Supreme Court of Canada (SCC) on the duty to consult. This will be a record number of duty to consult cases released by Canada's highest court in a single year, since it first set out the framework for the duty to consult in Haida Nation in 2004. These new cases may have significant implications for Aboriginal consultation relating to mining projects.

The first two cases will require the SCC to consider the role of regulatory tribunals in discharging the duty to consult and the extent to which the Crown can rely on regulatory processes and proponents to fulfill the duty (Chippewas of the Thames First Nation v. Enbridge Pipelines Inc. and Hamlet of Clyde River v. TGS-NOPEC Geophysical Company ASA). In both cases, all consultation with potentially impacted Aboriginal groups was conducted by the respective proponents and through the NEB process, with no direct separate consultation conducted by the Crown.

To date, the courts have upheld the Crown's ability to rely on regulatory processes and proponents to fulfill the duty to consult. However, the courts have found that the degree of reliance permitted depends on the facts of each case. This has been an ongoing source of frustration for many Aboriginal groups, which feel they should always be separately engaged by the Crown.

While the Court is likely to reaffirm that the Crown has significant flexibility in designing consultation processes, the Court may develop further principles to assist the Crown and lower courts in determining the circumstances in which the Crown may be required to engage in separate, additional consultation, beyond consultation undertaken through regulatory processes and by proponents. The SCC's determination of these cases will also likely further clarify the role of regulatory tribunals in the consultation process, which remains an area of confusion.

The SCC will also be releasing a decision that may have significant implications for projects that may adversely impact asserted Aboriginal spiritual rights. This case relates to the B.C. government's approval of a master development agreement for a proposed ski resort in the Jumbo Valley (Ktunaxa Nation v. British Columbia). The Ktunaxa alleged both a breach of the duty consult and their freedom of religion to exercise a spiritual practice under s. 2(a) of the Charter, as the Ktunaxa claim that the proposed resort would desecrate a sacred area of spiritual significance. The B.C. Supreme Court and the B.C. Court of Appeal both rejected Ktunaxa's arguments and dismissed their claim.

This appeal is the first time the SCC has been called upon to consider an Aboriginal spiritual rights case and the protections such beliefs attract under both s. 2(a) of the Charter and s. 35. This case could have significant impacts on future development projects in Canada given that there are large tracts of land throughout the country that are subject to asserted Aboriginal spiritual rights claims.

New Reporting Obligations for Payments to Aboriginal Groups

In addition to the above changes relating to Aboriginal consultation, there are also new transparency measures that are scheduled to be implemented later this year, which could impact negotiations, terms, and expectations related to impact benefit agreements with Aboriginal groups. In particular, certain mining companies making payments of $100,000 or more to Aboriginal groups will be required to report such payments to the federal government as of June 1, 2017, unless the implementation is further delayed by the federal government.

These changes are part of the Extractive Sector Transparency Measures Act (ESTMA), which came into force in June 2015 as a part of the previous federal government's attempt to bring Canada in line with global anti-corruption standards. ESTMA requires that all "Reporting Entities" annually report certain specified payments of $100,000 or more to a "Payee." A "Reporting Entity" is broadly defined as any commercial entity engaged in the development of oil, gas, or mineral projects that is either (a) listed on a Canadian stock exchange or (b) has assets or does business in Canada and meets two of the following criteria: (i) at least $20 million in assets (ii) $40 million in revenue or (iii) employs an average of at least 250 employees. A "Payee" is similarly broadly defined to include any government or any body exercising a government function, including an Aboriginal government. The implementation of the reporting requirement for payments to Aboriginal groups was delayed for two years to allow for further consultation with Aboriginal groups.

As of January 2017, the federal government had given no indication that it would be removing or further postponing this requirement. This future disclosure obligation remains a significant and contentious policy change that may affect industry and Aboriginal negotiations. Further complicating matters is that the federal government has given very little guidance regarding how this requirement will be applied to payments to Aboriginal groups, particularly to identify which payments will need to be disclosed. The scope of payments captured will likely be the subject of further guidance or regulation but early consultation documents indicate that certain "social payments" for things like capacity funding and related in-kind payments may be excluded.

All in all, it appears 2017 will be a banner year for change when it comes to Aboriginal involvement in — and consultation related to — mining projects.

Footnotes

1. See, for example, Paul Cassidy, "Fisheries Act Review: Well-intentioned but Misguided?" Environment Policy & Law, May 2016.

2. The Canadian Press, "UN Declaration Can't be Made Law, Minister Says," September 8, 2016.

3. Stephanie Axmann, Selina-Lee Andersen, Bryn Gray and Adam Goldenberg, "Canada announces unqualified support for UNDRIP — suggests Canada's existing constitutional obligations serve to fulfill the principles of 'free, prior, and informed consent,'" Canadian ERA Perspectives, May 11, 2016.

4. See Tsilhqot'in v. British Columbia, [2014] 2 S.C.R. 257 (S.C.C.) at para. 76.

5. Indigenous and Northern Affairs Canada, Updated Guidelines for Federal Officials to Fulfill the Duty to Consult, March 2011; Public Statement — Canada's Approach to Consultation and Accommodation; and Consultation and Accommodation Advice for Proponents.

6. Bryn Gray, Building Relationships and Advancing Reconciliation through Meaningful Consultation — Report to the Minister of Indigenous and Northern Affairs, May 30, 2016.

7. Indigenous Relations Alberta, The Government of Alberta's Policy on Consultation with First Nations on Land and Natural Resource Management, 2013.

8. Premier of Alberta, Letter to Cabinet Ministers.

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