Implications of Northern Gateway decision on Energy East

The Federal Court of Appeal in Gitxaala Nation v. Canada recently quashed the approval of the Northern Gateway Pipeline because of insufficient consultation with First Nations. (Roger Townshend from our firm has recently commented on that decision here.) We would like to explore, though, what then does Gitxaala Nation mean for other pipeline applications currently before the National Energy Board (NEB), such as the Energy East Project?

The short answer: the likely outcome is that Canada will wait to develop the new Crown consultation process for Energy East. The Gitxaala Nation decision affirms the ability of Canada to rely on the NEB process as a regulatory mechanism that can help fulfil the duty to consult. As the focus on the Gitxaala Nation decision was on the later stages of the process, the Crown could put off dealing with the larger consultation process until a time nearer to when the NEB issues its report to Cabinet in March 2018. Canada may also want to wait and see how the Supreme Court of Canada decides two cases involving Aboriginal consultation and the NEB that are due to be heard in November (more on these cases below).

We think taking a wait and see approach is the wrong course of action. Instead, the Crown should take advantage of the lead time it has on the Energy East Project to begin an inclusive approach that embraces the type of meaningful dialogue referred to in the Gitxaala Nation decision and required by reconciliation.

For those First Nations involved in the Energy East process, it is already clear that there are likely to be significant gaps in the NEB process in terms of assessing the impacts of the project on the specific rights of individual First Nations. Several Aboriginal and other intervenors have written to the NEB detailing concerns about major gaps in the proponent’s application and in the process itself for obtaining the necessary information to determine what the impacts are. A parallel Crown consultation process is needed to ensure that any gaps in the NEB process can be filled in a timely manner.

Absent an inclusive approach, Aboriginal groups will find themselves in the same unenviable position with respect to the Energy East Project that they have found themselves in with respect to almost every single energy project brought before the NEB in recent history; forced to expend resources they don’t have to prove potential impacts to their rights to a body that is either ill-equipped or unwilling to deal with them.[1]

At the center of the decision in Gitxaala Nation was a five-phase Crown consultation framework that relied significantly on the NEB regulatory process in the early stages to identify and address impacts to Aboriginal Rights/Title, but that also provided for direct consultations with impacted Aboriginal groups prior to the final decision-making by Cabinet. The Court found that in implementing the direct consultation phase, the Crown did not meet its duty to consult for a number of reasons, including:

• The process was unnecessarily rushed;
• First Nations were not provided with information particularly important to them with respect to the scientific assessment of the risks of oil spills and their mitigation;
• Information provided to Cabinet in the Crown consultation report was inaccurate;
• Canada would not share information as to the strength of Aboriginal claims; and
• Canada had not empowered its officials to engage in real dialogue; enabling them only to collect, rather than share information in any collaborative sense.

The Court went on to say that the Crown could rectify these problems prior to coming to a new decision, and that this might only take four months.

Energy East Pipeline

Energy East is a 4,500-kilometre pipeline proposed to carry 1.1-million barrels of crude oil per day from Alberta and Saskatchewan to refineries in Eastern Canada. The Project includes both the conversion of existing natural gas pipeline to pipeline capable of transporting diluted bitumen, the construction of new pipeline for that purpose, and the construction of associated facilities such as pump stations, tank terminals, and marine facilities. On June 16, 2016, the NEB certified the Energy East application complete, meaning that the 21-month review process required under the National Energy Board Act has now begun.

Unlike the Northern Gateway Project, Canada made it clear very early on that they would be relying on the NEB process to satisfy its consultation obligations, “to the extent possible”. If one were to use past practice as an indication, “to the extent possible” would have meant “entirely.” The Crown did not envision any separate direct consultation process. This meant it was up to Aboriginal groups to participate fully in the NEB process or risk losing the ability to have their concerns with the Project dealt with at all. Letters to the federal government by numerous Aboriginal organizations identifying concerns with the NEB consultation process (available on the NEB registry), and requesting a separate consultation process (potentially similar to the Northern Gateway direct consultations) were met with no reply. Participant funding has been provided to approved interveners, but capped arbitrarily at $40,000 per intervener (a decrease from the originally stated $80,000 amount and far less than the average of $96,000 provided in the Northern Gateway hearings).

Part of the planned NEB process includes the optional gathering of Oral Traditional Evidence (OTE) from Aboriginal interveners at sessions across Canada. This is along with the normal participation afforded to all approved interveners in the NEB process. Sessions for the gathering of such evidence began last fall, several months prior to the application being certified complete by the NEB. Concerns have been raised by numerous Aboriginal groups as to the OTE process, all of which have been dismissed by the NEB. Participant surveys have been sent to all interveners to help inform the Hearing Order (which will set out the NEB process steps specific to this hearing). That order is expected this month and will determine whether interveners will be able to engage in cross-examination of Energy East experts.

There are two appeals currently set to be heard by the Supreme Court of Canada in November, both of which address the proper role of the NEB in Aboriginal consultation (Chippewas of the Thames First Nation v. Enbridge Pipelines Inc. and Hamlet of Clyde River v. Petroleum Geo-Services Inc.) In the Clyde River case, the extent to which the NEB process can be relied upon in instances where “deep consultation” is required is one of the main issues. Whether the Court will choose to provide explicit guidelines applicable to cases such as Energy East and Northern Gateway remains to be seen. It is entirely possible that the process designed by the Crown in Northern Gateway (but ultimately unfulfilled) could be found to be an adequate one under the Supreme Court’s guidance.

Recently, the federal government has indicated that a separate, post-NEB report consultation process, led by the Major Projects Management Office will take place with Aboriginal groups on outstanding issues related to potential or established Aboriginal or Treaty rights. Specific details about this separate process have not been released but one can envision that it might mirror the Northern Gateway process with necessary modifications based on the guidance of the Federal Court of Appeal (and potentially the Supreme Court.)