'The duty to consult' ... Financial Post, National Post

'The duty to consult'

Julius Melnitzer, Financial Post · Wednesday, Aug. 18, 2010

Aboriginal rights issues are cutting a wide swath in the energy sector, touching everything from resource extraction to liquefied natural gas facilities, transmission lines and pipelines. So much so that one industry pundit has maintained that all of Canada's new supply sources for oil and gas have at some point been "tied up" with aboriginal rights claims.

Among the projects affected are the $50-billion oil sands development in Alberta, the $500-million Kitimat liquefied natural gas terminal project in British Columbia, and the Maritime pipelines project.

There's also the multi-billion-dollar Mackenzie Valley natural gas project on which may hinge the future of Canada's north. Originally expected to come online in 2007, it remains uncertain as to when gas will begin to flow.

Environmental concerns, political squabbling, cultural differences and divisions among the aboriginal groups became so acute that Imperial Oil stopped work in April 2005, citing "unreasonable demands" from the Deh Cho. The impasse ended later in the year, but only after the federal government promised $500-million to address aboriginal social and economic concerns.

The Supreme Court of Canada's "consultation trilogy" in 2004 and 2005 has been the prime catalyst for the emergence of aboriginal rights issues. The trilogy -- which consists of legal cases involving the Haida, Taku River Tlingit, and Mikisew Cree -- established that both federal and provincial governments had a duty to consult with aboriginal groups before making decisions that might adversely affect their asserted but unproven aboriginal rights.

"The duty to consult is triggered when the Crown knows or should know that its actions might affect constitutionally protected rights," says Wally Braul, an aboriginal and environmental lawyer at Fraser Milner Casgrain's Calgary office. "And the courts have made it clear that consultation is not just about blowing off steam. It's a results-oriented process that includes both information and response components focused on accommodating the competing interests at stake."

That means governments cannot -- without prior consultation -- grant or renew licences, leases or other privileges to third parties or take action on their own that could infringe on potential aboriginal rights. While governments can delegate the implementation of their duties to third parties in the private sector, the ultimate burden of ensuring that meaningful consultation occurs remains with the Crown. What is meaningful depends on the circumstances, including the strength of the aboriginal claim and the seriousness of the adverse effects on that claim.

"With the trilogy, resource harvesters became aware that aboriginal rights had a direct impact on the way they did business," says Tom Isaac, an aboriginal rights lawyer at Mc-Carthy Tetrault's Vancouver office.

Indeed, allocation of Crown rights and the development process proceed fairly simultaneously nowadays. Currently it is rare for Canadian governments to allocate resources without consideration of how the resource will be developed and whether the development will affect aboriginal rights.

In the real world, this means that the Crown off-loads the consultation process to those seeking the grants to access resources.

"Applicants requiring government approval for a permit or licence may not know if aboriginal consultation is required," says Ken Clark, an aboriginal lawyer at Lang Michener's Vancouver office. "They may also not know what aboriginal groups should be consulted; when the consultation should occur; what information they should provide; how long the consultation process might take; whether the consultation will result in approval; what changes might be required, and whether an approval, if granted, might be set aside by a court." So unless they get the right advice, project developers may find themselves on a slippery slope.

"In the last few years, the adequacy of the consultation process has been challenged in court by various aboriginal groups," Mr. Clark explains. "A frequent result is a determination that the consultation process was not adequate, and a direction that the Crown go back and consult some more."

Companies wishing to avoid dilemmas of this kind must make sure not only that they get the delegated consultation process working properly, but also that the Crown has done its job by putting a proper process in place.

"After all, the Crown bears the ultimate responsibility for ensuring that consultation occurs, but if the process is one that isn't fair and transparent and doesn't withstand judicial scrutiny, it's the developer who suffers the consequences," Mr. Isaac says.

The courts have made it clear that they would prefer to see some kind of policy guiding the consultation process, but governments have not been quick to respond.

"The feds tried and created some interim guidelines but they remained interim and are not generally followed," Mr. Clark says. "Alberta has made an effort but without much success. Earlier this summer, Saskatchewan did come up with guidance that looks reasonable and providesclarityandcomes closest to the kind of regulatory regime that the Supreme Court of Canada has been referring to in its decisions."

Meanwhile, the legal rulings are evolving rapidly.

"It's very important to align a project with the very latest guidance that comes from the courts," Mr. Braul says.

At the same time, First Nations' and other aboriginal groups are increasing their expectations and becoming more sophisticated in their approach to the issues. "It's no longer just a matter of respecting aboriginal rights and traditions," Mr. Isaac says. "Rightly or wrongly, there is a growing expectation of some form of economic benefit flowing from projects to First Nations."

The practical challenge for the resource and other sectors, then, is how to measure, manage and mitigate the risk in the consultation and accommodation process.

"Every jurisdiction in the country is different in its approach, every sector is different, and the First Nations, Metis and Inuit are all different in their approaches. So you're not going to get cookie-cutter answers, and that won't change until we get the kind of political leadership that will lend greater clarity to the process," Mr. Isaac says.

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