Fort McKay First Nation v Prosper Petroleum Ltd: The Alberta Court of Appeal directs the AER to consider constitutional Aboriginal rights issues outside of the duty to consult

Introduction

On April 24, 2020, the Alberta Court of Appeal (Court) released a noteworthy decision in Fort McKay First Nation v Prosper Petroleum Ltd (Prosper),¹ granting Fort McKay First Nation’s (FMFN) appeal of the Alberta Energy Regulator’s (AER) decision approving Prosper Petroleum Limited’s (Prosper) Rigel oil sands project (Project). 

This appeal arose out of negotiations between the Government of Alberta and FMFN regarding the development of an access management plan to address the cumulative effects of oil sands development on FMFN’s Treaty 8 rights. The Court found that the AER improperly declined to consider those negotiations and whether they engaged the honour of the Crown when deciding whether the Project was in the public interest. The Court vacated the Project approval and directed the AER to reconsider whether approval of the Project is in the public interest after considering FMFN’s Treaty 8 rights in the context of the honour of the Crown and the development of the access management plan. 

This decision directs the AER to make a broader assessment of the public interest where the honour of the Crown is engaged, and to consider project impacts on Aboriginal interests beyond the Crown’s duty to consult and accommodate. The Court found that the AER cannot rely on Cabinet or the Aboriginal Consultation Office to determine such issues. 

One commentator has said “[t]his decision has the potential to be a game-changer in numbered treaty negotiation.”² Whether it is, or is not a “game-changer” largely depends on whether Justice Greckol’s concurring judgement on the duty of honour in treaty implementation is taken up by future courts.

Background

In 2003, FMFN and the Province began discussing the development of a Moose Lake Access Management Plan (MLAMP). When finalized, the intent was to adopt the MLAMP as a sub-plan of the Lower Athabasca Regional Plan (LARP). The creation of the MLAMP was delayed while the Province developed and implemented LARP. In 2015, Alberta’s then-Premier, Jim Prentice, and FMFN signed a Letter of Intent confirming both parties’ commitment to complete the MLAMP. Despite the commitment, the MLAMP remains the subject of ongoing negotiations between the Province and FMFN.³ 

In 2013, Prosper applied to the AER for approval of the Project. The Project would be located within the area covered by the proposed MLAMP.⁴  In 2016, the AER briefly suspended its consideration of the application because of the ongoing MLAMP negotiations, but later resumed the application review process. The AER approved the Project in June 2018 and, in doing so, declined to consider whether approval of the Project would frustrate the MLAMP negotiations.⁵ The AER gave three reasons for this approach:

1. Responsible Energy Development Act⁶ (REDA) s. 21 prohibits the AER from assessing the adequacy of Crown consultation and any consideration of MLAMP would require an assessment on the Crown’s duty to consult; 
2. LARP s. 7(3) prohibits the AER from “adjourning, deferring, denying, refusing, or rejecting any application by reason only of incompletion of a LARP regional plan”; and
3. AER approval of the Project under Oil Sands Conservation Act⁷ (OSCA) s. 10(3) is subject to authorization by Cabinet, which is “the most appropriate place for a decision on the need to finalize MLAMP”.⁸

Decision

FMFN was granted leave to appeal on the issue of whether the AER committed an error of law or jurisdiction by failing to consider the honour of the Crown and, as a result, failed to delay the approval of the Project until the MLAMP negotiations were complete. 

Central to the issue on appeal is the jurisdiction of the AER to determine constitutional issues for which it has not received formal notice under the Administrative Procedures and Jurisdiction Act.⁹  The AER had declined to consider the status of the MLAMP negotiations when it issued its approval of the Project on the grounds that any such consideration would equate to an AER assessment of Crown consultation contrary to REDA, or would constitute some degree of policy decision making more appropriately left with Cabinet pursuant to OSCA.¹⁰ The honour of the Crown was not raised as a constitutional question, and the AER declined to consider it as a constitutional issue in reaching its decision.¹¹ 

The Court held that the AER has implied jurisdiction to consider issues of constitutional law, and is given “broad powers of inquiry to consider the “public interest” in making its decisions”.¹² As such, the AER “has a duty to apply the Constitution and ensure its decision complies with s. 35 of the Constitution Act, 1982“, and must therefore consider such constitutionally protected rights when assessing whether a project approval is in the public interest.¹³ Aboriginal rights under s. 35 of the Constitution may give rise to constitutional issues in a much broader arena than the Crown’s duty to consult and such issues are fully within the AER’s jurisdiction, as REDA s. 21 does not exclude all constitutional issues affecting Aboriginal peoples from the AER’s jurisdiction.¹⁴ 

The Court noted that approximately 70% of FMFN’s traditional territory is leased for oil and gas development, and that FMFN is the “most severely affected of all First Nations by oil sands development in the region”.¹⁵ FMFN argued that the Province’s commitment to expedite the development of the MLAMP to protect FMFN’s Treaty 8 rights in the area of the Project attracted the honour of the Crown through treaty implementation. The majority judgment (Justices Veldhuis and Strekaf) concluded that the AER was obligated to consider the honour of the Crown in relation to the MLAMP negotiations as part of its public interest assessment, yet failed to do so.¹⁶ Justice Greckol’s concurring opinion, discussed below, goes further with respect to treaty implementation.

The Court found that the AER should not have deferred to Cabinet on the MLAMP issue. The AER, as a statutory tribunal, is required to decide the issue of whether the Project is in the public interest; the legislation does not grant the AER authority to sub-delegate this responsibility. While Cabinet has the ability to authorize or set conditions for project approval, only projects definitively deemed to be in the public interest by the AER are statutorily permitted to proceed to this step, and the AER is solely responsible for this determination.¹⁷ As stated by the Court, “[t]o the extent the MLAMP negotiations implicate the honour of the Crown and therefore need to be considered as part of the “public interest”, the AER was under a statutory duty to consider that issue” yet failed to do so.¹⁸

The Court also concluded that the AER improperly interpreted LARP, which did not preclude the AER from delaying its decision until the MLAMP negotiations were completed.¹⁹ 

The Court vacated the approval of the Project, and remitted the application back to the AER with directions that the AER must consider the public interest of the Project in the context of the honour of the Crown and the MLAMP process.²⁰  

Implications

Court decisions interpreting the scope of Canada’s constitutional protections for Aboriginal rights in the context of resource projects have, to date, been focused on the Crown’s duty to consult.

Although much thought is not usually given to the source of the duty to consult, it arises out of the “honour of the Crown”, which is an overarching concept which governs almost all Crown interactions with Aboriginal people.²¹ The duty to consult is not the only obligation imposed on the Government by the honour of the Crown. The honour of the Crown:

1. gives rise to a fiduciary duty when the Crown assumes discretionary control over a specific Aboriginal interest;
2. informs the purposive interpretation of s. 35 of the Constitution Act, 1982, and gives rise to a duty to consult when the Crown contemplates an action that will affect a claimed but as of yet unproven Aboriginal interest;
3. governs treaty-making and implementation, leading to requirements such as honourable negotiation and the avoidance of the appearance of sharp dealing; and
4. requires the Crown to act in a way that accomplishes the intended purposes of treaty and statutory grants to Aboriginal peoples.²² 

In the present case, Justice Greckol found that the AER must consider whether the MLAMP negotiations and the Prentice Letter of Intent gave rise to an obligation to honourably implement the treaty promise to protect the Aboriginal signatories’ right to hunt. Fulfilment of that duty may require the AER to postpone issuing approval of the Project until the MLAMP negotiations are complete.

What is not clear at this point is how broadly or how often the honour of the Crown will be applied in future project reviews. The facts of the Prosper decision are unique in that the Crown made a specific commitment to FMFN (which, as the Court noted, is the most severely affected of all First Nations by oil sands development in the region) to address the cumulative effects of project development through the implementation of the MLAMP. It was the failure to fulfill that promise, and the AER’s refusal to address that issue, that resulted in the vacating of the Project approval. In the absence of such a specific commitment in future cases, or in cases where the impacts on treaty rights are not as substantial, it is possible that the duty to honourably implement treaty promises may not be engaged. For the most part, fulfilment of the Crown’s duty to consult addresses project impacts on treaty rights, and it is unclear what other elements of the honour of the Crown add to the analysis. However, as noted by Justice Greckol, the “piece-meal” approach to addressing concerns about cumulative effects through consultation on individual projects has been ineffective. Justice Greckol’s concurring opinion was not adopted by the majority. If her concurring judgement is followed in future decisions, it is possible that implementation of the treaty right to hunt might be utilized to address the cumulative effects of project development. This potentially gives rise to more detailed consideration by regulatory tribunals when determining whether a project is in the public interest, and could lead to longer hearings, further delays in energy project approvals, and increased uncertainty for resource development.

For further information, please reach out to any of our key contacts.

---

1. 2020 ABCA 163 [Prosper].
2. Nigel Bankes, “The AER Must Consider the Honour of the Crown” (April 28, 2020), online: ABlawg, http://ablawg.ca/wp-content/uploads/2018/07/Blog_NB_FMFN.pdf at PDF p 5.
3. Prosper, supra note 1 at paras 8-15.
4. Ibid at paras 2, 16, 17.
5. Ibid at paras 16-23.
6. SA 2012, c R-17.3.
7. RSA 2000, c O-7.
8. Prosper, supra note 1 at para 44.
9. RSA 2000 c A-3; ibid at paras 41-42.
10. Under REDA s. 21, the AER does not have jurisdiction to assess the adequacy of Crown consultation, and under OSCA s. 10, Cabinet must grant a final authorization for approvals subject to this provision.
11. Prosper, supra note 1 at paras 39-43.
12. Ibid at paras 37, 38.
13. Ibid at para 39.
14. Ibid at paras 56-58.
15. Ibid at para 6 [emphasis in original]. 
16. Ibid at paras 43, 46-58.
17. Ibid at para 64.
18. Ibid at paras 65-67. 
19. Ibid at para 61.
20. Ibid at paras 69-71.
21. Haida Nation v British Columbia (Minister of Forests), [2004] 3 SCR 511.
22. Prosper, supra note 1 at para 53. 
23. Ibid at para 82.