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Quashed: The verdict is in. Now what?

September 12, 2018

7:29am, Thursday, August 30th, 2018:
We’re in a boardroom high above downtown Vancouver, not far from Robson Street where I’m told there used to be a great hunting path. I’m on the Federal Court of Appeal’s website, refreshing my web browser obsessively.

The nervous tension in the air is palpable. Members of Tsleil-Waututh Nation’s leadership and staff are gathered around, some at their computers, others pacing, and others sitting and looking out the window at Burrard Inlet and the North Shore mountains.

7:30am:
As the 272-page decision is loading on my computer, my phone starts dinging and buzzing. The first text message says: “Holy Sh**!” I’m not sure whether that’s good or bad. One second later, another text comes in: “Holy Sh**! Congrats!” Now I’m feeling better.

Then, someone in the room reads aloud these beautiful words: “Accordingly, for the following reasons, I would quash the Order in Council and remit the matter back to the Governor in Council for appropriate action.” We erupt into cheers, hugs, high fives and tears.

“We won!”

Moments after we heard the word “quash” (Photo: Eugene Kung)

What did the court say?

The highly anticipated decision of the Federal Court of Appeal (FCA) regarding the Trans Mountain pipeline and tanker project is a decisive win for First Nations and the environment. It presents yet another opportunity for Canada to turn the page on a new chapter in its relationship with Indigenous peoples and fix its gutted regulatory process. Whether that happens or not remains to be seen – the ball is now in Canada’s court.

The three-judge panel of the Federal Court of Appeal unanimously decided that the federal Cabinet’s (Governor in Council or GIC) approval of the Kinder Morgan Trans Mountain Pipeline Expansion Project was so flawed that it quashed (or set aside) the decision.

We had previously written about the FCA hearings and set out a number of possible outcomes. For those following along, the FCA’s decision is a mix of the first two possible outcomes we identified: the Cabinet decision was quashed due to flawed consultation, and while the National Energy Board (NEB)’s report itself wasn’t reviewable, the NEB’s decision to exclude marine shipping made their report so deficient that Cabinet was not legally able to rely on it to make its decision.


The decision made for some great Labour Day weekend reading while waiting for ferries to cross the Salish Sea. (Photo: Eugene Kung)

The court, of course, was much more specific and detailed about how it got to this conclusion. And while the judges upheld the finding in Gitxaala Nation v. Canada (the Enbridge Northern Gateway case) that the NEB’s recommendation was not reviewable by the court because it wasn’t the final decision, they found that the NEB made a fatal error that prevented its report from being valid:

“…the unjustified exclusion of Project-related marine shipping from the definition of the Project resulted in successive deficiencies such that the Board’s report…[was] so deficient that it could not qualify as a ‘report’ within the meaning of the legislation and it was unreasonable for the Governor in Council to rely upon it.”
(para 470)

In other words, because it did not properly review marine shipping, the NEB’s report did not qualify as a report. Cabinet’s failure to address the deficiencies of the invalid report contributed to their decision being quashed. Specifically, NEB and Cabinet failed to apply the Canadian Environmental Assessment Act 2012 to marine shipping and the Species at Risk Act for the critically endangered Southern Resident Orcas.

The second ground for quashing the Cabinet approval was the federal government’s failure to adequately consult and accommodate impacted First Nations.

While the court found that the consultation framework Canada selected was reasonable, it found that Canada failed “to engage, dialogue meaningfully and grapple with the concerns expressed to it in good faith by the Indigenous applicants so as to explore the possible accommodation of these concerns.” (para 754) This resulted in “an unreasonable consultation process” (para 762) that fell “well short of the mark set by the Supreme Court of Canada.” (para 6)

The FCA ruling emphasized the Supreme Court’s position that in order to fulfill the constitutional duty to consult, “dialogue must take place and must be a two-way exchange.” (para 559) However, the court identified “three significant impediments” to this two-way dialogue.  

First, the federal government primarily sent note-takers without any decision-making power to the consultation meetings. First Nations were repeatedly told that the role of the consultation team was to accurately note the concerns and pass them along to the decision-makers – in this case, Cabinet. This meant that there was no opportunity for the federal government and the First Nations to collaboratively develop solutions to the problems raised.

Second, the federal government incorrectly held the position that it could not depart from the NEB’s findings and recommended conditions, or impose its own additional conditions. This severely limited the government’s ability to address concerns about Aboriginal Rights and Title – despite having previously told First Nations that the NEB review would not be the forum where Rights and Title would be addressed.

Third, the federal government didn’t share important documents with First Nations in time to allow for meaningful responses before Cabinet publicly approved the Project. These documents included Canada’s assessment of the Project’s impact on the Indigenous applicants, which were an important starting point for meaningful dialogue, shared shortly before the approval was announced. (see paras 562-753)

As a result of these problems, Canada failed in its constitutional obligations to meaningfully consult and accommodate First Nations.

Quashed

Due to the legal deficiencies described above, the FCA quashed (or cancelled) the federal approval of Trans Mountain, and any permits flowing from that approval were nullified. This brought construction to an immediate halt.

The FCA sent the decision back to Cabinet for redetermination. That means, at a minimum, re-doing parts of the environmental assessment and re-doing consultation.

The environmental assessment must be done in a way that properly examines marine shipping and applies the Species at Risk Act. The court left some flexibility about whether this should be done by the NEB, or its soon-to-be replacement, the Canadian Energy Regulator, or another body.

Further, consultation must be re-done in a way that meets the standard set by the Supreme Court of Canada. That means engaging in a meaningful two-way dialogue, grappling with the concerns raised by First Nations and making changes to address these concerns. Indeed, the courts have held that:

Only after that consultation is completed and any accommodation made can the Project be put before the Governor in Council for approval.
(para 771)

Analysis: How did it happen?

There are a number of important factors that contributed to this decision by the Federal Court of Appeal.

Process was grounded in gutted environmental laws

Firstly, the regulatory regime that resulted from the 2012 gutting of Canada’s environmental laws under Prime Minister Harper set the table for the NEB’s flawed process. As we have written before, under the new regime, the NEB became the sole regulator for the Project, and struggled to implement its new mandate to conduct environmental assessments for energy projects under the Canadian Environmental Assessment Act, 2012 (CEAA 2012). The critical exclusion of marine shipping flowed directly from that change.

The NEB also had to limit public participation and the meaningful testing of evidence, and even manipulated the space-time continuum in order to meet its legislated 15-month timeline.

It is worth noting that complaints over the exclusion of marine shipping were brought to the NEB and Canada’s attention way back in 2014. After requesting to cooperate on the environmental assessment – a request that was ignored by the NEB – the Tsleil-Waututh Nation appealed the NEB’s scoping decision, noting the failure to include marine shipping from the review. In that case, the FCA dismissed the appeal on procedural grounds (for being too early), while preserving the legal issues for a future case.

Cabinet should also have been aware of this error, if not at the outset then certainly by the time the NEB’s report was released. Indeed, in reviewing the November 2016 Order in Council approving the Project, the court found that “the Governor in Council was fully aware of the manner in which the Board had assessed Project-related marine shipping under the National Energy Board Act.” (para 440)

Canada aimed for the floor again, and fell short again

The consultation that fell “well short of the mark” represents a larger systemic failure by Canada that dates back long before this Trudeau government. For decades, Canadian federal and provincial governments have been guided by an approach that viewed engagement with First Nations as a burden, rather than a constitutional (and moral) duty. More often than not, this resulted in governments seeking to do the least possible, and nothing more.

This approach relied on the hope that minimally consulted First Nations would not bring their grievances to court, and the cost of litigation likely kept many cases out of the courts. However, for the fraction of cases that have been filed, the majority have been successful.

Resource lawyer Bill Gallagher has been tracking these cases and wrote recently “Now at 250 legal wins, it’s the biggest win cycle in Canadian legal history. They’re redrawing the map of Canada one ruling at a time.”

Indeed, in its handling of Trans Mountain, Canada argued repeatedly that it had studied Gitxaala and applied the lessons from that case in its consultation:

While in Gitxaala this Court found that the consultation process followed for the Northern Gateway project fell well short of the mark, Canada submits that the flaws identified by the Court in Gitxaala were remedied and not repeated. Specific measures were taken to remedy the flaws found in the earlier consultation. (para 551)

 And while the court acknowledged improvements in the consultation process compared to Gitxaala, it still held that “Canada’s execution of Phase III of the consultation process was unacceptably flawed and fell short of the standard prescribed by the jurisprudence of the Supreme Court.” (para 557)

Many First Nations expressed the view that the government had already made up its mind about approving the project before consultation was complete. Indeed, we learned in April that Canadian government bureaucrats were instructed “to give cabinet a legally-sound basis to say ‘yes’” while the so-called consultations were ongoing.

So, in spite of clear attempts to follow directions of the courts, Canada still failed to meet the mark. This is entirely because they viewed the legal minimum, or the floor, as their goal.

As the FCA pointed out in its decision, Canada, in fact, did not learn all of the lessons from Gitxaala. For example, Canada’s view that it could not deviate from the NEB’s recommended conditions, or add its own conditions, was expressly contradicted in Gitxaala:

This was incorrect. In Gitxaala … this Court explained that when considering whether Canada had fulfilled its duty to consult, the Governor in Council necessarily had the power to impose conditions on any certificate of public convenience and necessity it directs the National Energy Board to issue.

In the oral argument of these applications Canada acknowledged this power to exist, albeit characterizing it to be a power unknown to exist prior to this Court’s judgement in Gitxaala.

Accepting that the power had not been explained by this Court prior to its judgment in Gitxaala, that judgment issued on June 23, 2016, five months before Canada wrote to the Stó:lō advising that the Governor in Council lacked such a power and five months before the Governor in Council approved the Project. The record does not contain any explanation as to why Canada did not correct its position after the Gitxaala decision. (para 634-636, emphasis added)

To be fair, the courts have also made it clear that there is no ‘one size fits all’ approach to consultation. The extent or content of the duty to consult is specific to the First Nation and the project. However, it is clear that Canada did not learn all of the lessons from Gitxaala or other Supreme Court jurisprudence, so the floor it was aiming for was already deficient.

But as someone used to say a lot, “In Canada, better is always possible.” And there is no reason that the aim of Canada’s consultation with Indigenous peoples should be simply to achieve the bare minimum legal standard. As we have been saying repeatedly,

“In the age of reconciliation, but also if the federal government is looking to avoid future appeals, they need to start aiming for something higher than the floor.”

It is important to note that the consultation re-do does not only apply to the six Indigenous litigants who brought the case. That duty applies to each one of the 140 First Nations on or near the Trans Mountain pipeline and tanker route. As the Supreme Court of Canada held in Clyde River (at para 40): “project authorization that breaches the constitutionally protected rights of Indigenous peoples cannot serve the public interest.”

It is also important to recognize that the FCA did not create any new law in this decision. The judges simply applied the law as set out by the Supreme Court of Canada and FCA in cases such as Haida, Gitxaala, Chippewas of the Thames and Clyde River, among others. Had Canada followed those decisions, its approval of Trans Mountain might not have been quashed.

What happens next?

A fresh decision

The ball is in Canada’s court to set out its next move. It is possible that the government will appeal the decision to the Supreme Court of Canada, and they have 60 days to do so.

If Canada does not appeal, and follows the court’s decision, it must make a fresh decision after correcting the errors – first in the environmental assessment, and secondly in consulting the 140 First Nations. Doing so could take years, if done properly.

If Canada wants to aim for more than the floor, officials may want to proactively address some of the concerns raised by the First Nations in the previous consultation. They should have good notes, at least.

Stale evidence

Another way for the government to aim higher than the floor when making a fresh decision could be to re-do the economic need analysis of the project. Much has changed in the world of energy economics since the project was first introduced in 2013. The price of oil plummeted in 2014, and while it has recovered somewhat, it will not likely get back to 2013 levels. That’s because renewable energy is disrupting conventional oil and gas markets.

In fact, the FCA specifically identified that the economic need of the project was questioned during consultation by both the Tsleil-Waututh Nation and Upper Nicola Band, and Canada did not respond (paras 626 and 642).

The same approach could be applied to many other areas of stale (or non-existent) evidence. Squamish, for example, had a number of unanswered questions about the behaviour of diluted bitumen; Coldwater was concerned about impacts on its aquifer; Sto:lo about impact of fishing rights and sacred sites; and Stk'emlupsemc Te Secwepemc Nation (SSN) about impacts on sacred sites and governance rights, among many other things.

Aiming for higher than the floor of consultation should include revisiting the regulatory processes with new, fresh evidence on key outstanding questions. Conveniently, six of those questions were already identified by the federal government’s own Ministerial Panel that was struck as part of the interim measures to restore the public’s faith in the regulatory process.

Unfortunately, these six questions were ignored and unanswered in the Cabinet approval of the project. In making its fresh decision on Trans Mountain, be it through a regulatory process or through consultation, Cabinet should consider these questions seriously.

The six questions are:

  1. Can construction of a new Trans Mountain pipeline be reconciled with Canada’s climate change commitments?
  2. In the absence of a comprehensive national energy strategy, how can policy-makers effectively assess projects such as the Trans Mountain Pipeline?
  3. How might Cabinet square approval of the Trans Mountain Pipeline with its commitment to reconciliation with First Nations and to the UNDRIP principles of “free, prior, and informed consent?”
  4. Given the changed economic and political circumstances, the perceived flaws in the NEB process, and also the criticism of the Ministerial Panel’s own review, how can Canada be confident in its assessment of the project’s economic rewards and risks?
  5. If approved, what route would best serve aquifer, municipal, aquatic and marine safety?
  6. How does federal policy define the terms “social licence” and “Canadian public interest” and their inter-relationships?

Respecting Indigenous law and decision-making

The federal government has repeatedly stated that it is committed to respecting Indigenous rights and to implementing the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Aiming for higher than the floor means that the starting point of consultation should be the recognition of the inherent rights, never extinguished by Canadian law, for Indigenous peoples to make decisions about what happens to their homelands and territories. It also means respecting free, prior and informed consent.

This is consistent with the guidance of the Supreme Court of Canada, which spelled out very clearly how to ensure adequate consultation in the 2014 Tsilhqot’in decision, when it said (at para 97):

Governments and individuals proposing to use or exploit land, whether before or after a declaration of Aboriginal title, can avoid a charge of infringement or failure to adequately consult by obtaining the consent of the interested Aboriginal group.

More meaningful consultation also means including First Nations in the design of the consultation process, something that First Nations governments have been telling Canada for years. Not only would this avoid or reduce future appeals, it would also result in better decisions.

Conclusion

The Federal Court of Appeal’s decision on August 30th was big news across the world because the Trans Mountain pipeline has come to symbolize so many larger issues: climate change, Indigenous rights and reconciliation, and the nature of Canadian federalism, to name a few. With this decision, Canada has the opportunity yet again to fundamentally change the way it approaches Aboriginal rights in decision-making.

First, in making its new decision, the government has an opportunity to re-assess the merits of the project – because you can’t make a fresh decision with stale evidence. Secondly, the government should start aiming for higher than the floor when it comes to consultation with Indigenous peoples. That means respecting Indigenous laws and decision-making, and free prior and informed consent.

Author: 
Eugene Kung, Staff Lawyer