Indigenous economic interests trigger the Crown's duty to consult

The Federal Court of Canada recently released the decision of Justice Brown in Ermineskin Cree Nation v Canada (Environment and Climate Change), 2021 FC 758 (the Decision). The Decision considers the significance of economic interests as they relate to Aboriginal and Treaty rights, and is likely to have significant impact on natural resource development across Canada.

Of key interest to both Indigenous communities and project proponents is the Court's decision that the Crown must consult with Indigenous groups who hold economic benefits derived from or through their Aboriginal rights.  The Decision expressly recognized that economic benefits negotiated with a project proponent as mitigation for potential impacts on Aboriginal rights trigger the Crown's duty to consult with respect to those economic benefits.

Background

The Ermineskin Cree Nation is a Treaty 6 signatory.  The Ermineskin entered into two impact benefit agreements in 2013 and 2019 with Coalspur Mines (Operations) Ltd. (Coalspur) to mitigate the impacts of Coalspur's Vista Phase I and Vista Phase II thermal coal projects and of a limited underground test mine (UTM) in the Nation's traditional territory where the Nation exercised its Aboriginal rights.  The Court noted that these agreements "provide valuable economic, community and social benefits to Ermineskin … intended to compensate Ermineskin for potential impacts caused by natural resource development on the ability of Ermineskin members to exercise Aboriginal rights within their Traditional Territory."[1]

As with other natural resource projects, a threshold question for Vista Phase II was whether it was subject to a federal impact assessment under the Impact Assessment Act (the Act). The Act applies to physical activities that meet the definition of a designated project set out in the Act.  There are two ways that an activity may all within the definition: (i) if it meets the threshold for either area or volume of coal production; or (ii) where the Minister exercises its discretion and issues an order designating an activity as requiring review.  In the latter case, the Minister is required to provide reasons for the designation.

Vista Phase II did not meet the threshold for a designated project under the Act. In December 2019, however, the Minister of Environment and Climate Change (the Minister) went through an extensive designation review process to determine whether to exercise its discretion and order that Vista Phase required review under the Act.[2] 

As part of the designation review process, the Ermineskin were invited to comment, along with other Indigenous groups.  The Impact Assessment Agency recommended that the Minister not designate Phase II, as in its view, any potential adverse effects could be properly managed through the provincial regulatory process.  The Minister ultimately determined that no designation order was required.

A few months later, however, the Minister received a request from two Indigenous groups, as well as environmental groups, to reconsider issuing a designation order.  Unlike during the initial process, the Minister did not give notice to the Ermineskin or consult with the Ermineskin in any way during the reconsideration process, and heard only from those Indigenous groups seeking to have a designation order for Phase II issued.  The Minister did an "about face"[3] and ultimately issued a designation order pursuant to the Act (the Designation Order).

Ermineskin applied for judicial review of the Designation Order.

As described in detail below, on judicial review, the Court found that the Designation Order would significantly push back the intended start dates of 2020 for the UTM and 2022 for Phase II, thereby delaying the economic and other benefits to be realized by the Ermineskin under the 2019 agreement (assuming that the UTM and Phase II were approved).  The Court further found that if the mining activity is not approved, the valuable benefits negotiated by the Ermineskin would be lost.

The Decision

The starting point for the Decision was the observation that although Aboriginal rights are not absolute, any infringement or denial of those rights must be justified in the circumstances.  To guard against unjustifiable infringement or denial, the Crown has a duty to consult with, and if appropriate, accommodate the interests of Indigenous communities where the contemplated conduct may infringe an Aboriginal right.[4]  The duty to consult is directly linked to the honour of the Crown, which is to be "understood generously and gives rise to different duties to Aboriginal people depending on the circumstances of the potential infringement."[5]  Further, the honour of the Crown is to be interpreted with a view to reconciliation with Indigenous peoples.[6]  The duty to consult is prospective , and is properly exercised in advance of any decision that may have an adverse impact on Indigenous peoples.[7]

Justice Brown noted that the Supreme Court of Canada has set out that the duty to consult "also accommodates the reality that often Aboriginal peoples are involved in exploiting the resource," which is part of reconciliation.[8]  Further, reconciliation requires nothing less than the Crown acting honourably in all aspects its dealings with Aboriginal peoples.

Justice Brown held that the duty to consult had been triggered in this case, having met the factors set out by the Supreme Court of Canada in Haida Nation v British Columbia (Minister of Forests). [9]  The Crown had knowledge of the existence of the Aboriginal rights claimed by the Ermineskin and was aware that those rights would be affected by the Designation Order.  The economic rights impacted by the Designation Order are closely related to, and derive from, the Nation's Aboriginal and Treaty rights.[10]  Specifically, the Ermineskin negotiated agreements with Coalspur to obtain specific economic and other benefits as compensation for the potential impact on their Aboriginal and Treaty rights, which are "entitled to the protection through the honour of the Crown construed generously and purposefully, and through its concomitant duty to consult."[11]

The Court dismissed the position taken by the Minister that lost economic benefits do not give rise to any duty to consult, and that any benefit to be obtained by the Nation was only speculative.  The Court specifically found that a decision that may impact a potential economic benefit that may or may not be realized in the future will trigger the duty to consult, stating that "the fact obligations must be delivered in accordance with contractual terms, some of which may occur in the future, in no way diminishes the fact that the 2019 [agreement] was intended to benefit Ermineskin and its citizens."[12]

Accordingly, Justice Brown quashed the Designation Order.

Key Takeaways

In coming to the Decision, the Court applied a "generous, purposive approach" to the duty to consult.  The fact that in this case, the objectives of a project proponent and an Indigenous group are aligned, does not detract in any way from the duty to consult.  The Court noted that "we are beyond the stage where government officials, even Ministers, may deprecate agreements entered into by First Nations (by describing then as "speculative") and thereby allow the Crown to limit or abrogate completely, as alleged here, the constitutionalized honour of the Crown and its related duty to consult."[13]

The Decision reaffirms the obligation of the Crown to consult with Indigenous groups on project-related decisions, even where those Indigenous groups have negotiated economic benefits in relation thereto, and the entitlement of those groups to be heard on any matter that could potentially impact those economic benefits.  The Decision amply demonstrates that the Crown is not entitled to second guess, minimize or deem benefits accruing to Indigenous groups as insignificant or speculative, but that the Crown is required, as a matter of honour, to ensure that its duty of consultation and accommodation is properly discharged throughout the regulatory process.  The fact that the Indigenous groups affected may be involved in the exploitation of the resource, or stand to benefit from it, does not abrogate in any way from the Crown's duty, which is grounded in the honour of the Crown.