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The honour of the Crown and cumulative impacts on treaty rights

Energy Newsletter
23.06.20
By Mike Chernos (Student-at-Law)

Fort McKay First Nation v Prosper Petroleum Ltd, 2020 ABCA 163

The Alberta Court of Appeal (ABCA) has overturned the Alberta Energy Regulator's (AER) approval of Prosper Petroleum Ltd.'s (Prosper) Rigel bitumen recovery project. The Court found that the AER should have considered the honour of the Crown in the context of treaty implementation and the extent to which cumulative impacts of oil sands project development in the Fort McKay First Nation (FMFN) territory have affected the FMFN's ability to exercise Treaty 8 rights.

The decision emphasizes that considering project-based assessments without regard for the cumulative effect cannot fully discharge the obligations demanded of the honour of the Crown. Although the AER is specifically prohibited from considering the adequacy of Crown consultation, it is responsible for considering other strands of the honour of the Crown, including treaty implementation. Oil sands developments like Prosper's Rigel project are subject to Cabinet's approval, but that does not allow the AER to defer consideration for the honour of the Crown to Cabinet.

The Moose Lake Access Management Plan and commitment to a "10 km buffer zone"

The FMFN has Treaty 8 rights to hunt, fish and trap within the Moose Lake Area, north-west of Fort McKay. The Moose Lake Area is of cultural importance to the FMFN and makes up part of its traditional territory. 70% of FMFN's traditional territory is leased for oil sands purposes and the FMFN is concerned that the extensive industrial resource development surrounding Fort McKay will affect its members' ability to pursue their traditional way of life in the Moose Lake Area.

In 2001, the FMFN began negotiating with the province to obtain protection for the Moose Lake Area. In 2003 the FMFN and Alberta started discussions for a Moose Lake Access Management Plan (MLAMP) to address the cumulative effects of oil sands development on FMFN's Treaty 8 rights. When finalized, MLAMP would be implemented as a sub-plan of the Lower Athabasca Regional Plan (LARP). When negotiating the LARP, the FMFN requested that a 10km buffer zone surrounding two reserves in the Moose Lake Area be implemented, but Alberta denied this request. The LARP was implemented in 2012.

A report released in 2015 found that the LARP provides inadequate protection for the Treaty Rights of the FMFN, and that "in the not-too-distant future FMFN will not be able to utilize any of their Traditional Land". In response, Premier Prentice and Chief Boucher signed a Letter of Intent in March 2015 to confirm their commitment to completing MLAMP by March 31, 2016. The letter stated an intention to implement a plan for the 10km buffer zone by September 2015.

The Letter of Intent has been referred to as the "Prentice Promise". The MLAMP has yet to be implemented.

Prosper's Rigel project application before the AER

In 2013, Prosper applied for approval of an oil sands project located within the 10 km buffer zone surrounding the Moose Lake Reserves. In 2018, the AER found the project to be in the public interest and approved Prosper's application subject to certain conditions and Cabinet authorization required under s. 10(3)(a) of the Oil Sands Conservation Act (OSCA). In arriving at its decision, the AER did not consider the MLAMP negotiations and the 10km buffer zone, the Prentice Promise, or whether the facts implicated the honour of the Crown.

The AER's position

The AER initially delayed its decision due to ongoing MLAMP negotiations, but in 2016 the AER resumed the approval process on the Rigel project because there was no indication the MLAMP negotiations were near a conclusion. The AER declined to consider whether approving the Rigel project would frustrate the MLAMP negotiations for three reasons:

  1. The AER is not permitted to assess the adequacy of Crown Consultation due to s. 21 of the Responsible Energy Development Act (REDA);
  2. The AER is not permitted to delay a project assessment on the basis that a LARP regional plan is incomplete under s. 7(3) of LARP;
  3. Cabinet must authorize any oil sands development under s. 10(3)(a) of the OSCA and is the most appropriate body to determine the need to finalize the MLAMP.

The question on appeal

The question raised by FMFN's appeal is whether the AER should have considered the honour of the Crown in relation to the MLAMP negotiations as a part of the Rigel project assessment.

Discussion

Section 21 of REDA does not prevent the AER from considering the honour of the Crown

The AER declined to assess the adequacy of the Crown's consultation for the Rigel project, but the duty to consult is just one of four previously recognized situations where the honour of the Crown may arise:

  1. A fiduciary duty when the Crown assumes discretionary control over a specific Aboriginal interest;
  2. A duty to consult when the Crown contemplates an action that will affect a claimed but unproven Aboriginal interest;
  3. The honour of the Crown governs treaty making and implementation;
  4. To act in a way that accomplishes the intended purposes of treaty and statutory grants to Aboriginal peoples.

As the Court notes, "Section 21 of REDA does not prevent the AER from considering other relevant matters involving Aboriginal peoples when carrying out its mandate to decide if a particular project is in the 'public interest'".

The FMFN argued that the MLAMP and the Prentice Promise attract additional obligations arising from the honour of the Crown in the context of treaty implementation. The Court agreed, holding that the issues on appeal go beyond the adequacy of consultation, and affect the broader issue of reconciliation.

In her concurring opinion, Justice Greckol emphasized that treaty implementation is not a one-off event. The Crown must have concern for the "cumulative effects of numerous developments over time". Treaty promises are easy to fulfill at first and become more difficult to uphold as development increases. The "piece-meal approach" through consultation on individual projects "does not adequately consider the cumulative effects of development" on the FMFN territory.

The AER is not barred from delaying its decision due to the LARP

The Court did not agree that that the AER was prohibited from delaying its decision on the Rigel project until the MLAMP could be finalized because of s. 7(3) of the LARP. The MLAMP is a planning initiative that will be assessed for inclusion in the LARP, and does not fall within the scope of s. 7(3) of the LARP:

"A planning initiative that will be assessed for inclusion in the LARP implementation does not fall within the scope of a “provision of either the LARP Strategic Plan or LARP Implementation Plan” or a “direction or commitment made in a provision of either the LARP Strategic Plan or Implementation Plan” so as to be subject to s 7(3)."

The AER cannot defer its responsibilities to Cabinet

The Court disagreed with the AER's reasoning that it could defer consideration for the MLAMP to Cabinet. The AER has an obligation to consider any matter that falls within the scope of "public interest" according to its mandate. The AER is not entitled to defer judgement on these matters because they "could be better addressed by Cabinet".

The public interest includes the honour of the Crown and to the extent that the MLAMP negotiations implicate the honour of the Crown the AER has a statutory duty to consider that issue.

Conclusions

The AER and other statutory bodies with a public interest mandate have an implied jurisdiction over constitutional issues to the extent that it has not been fettered by legislation. This includes engaging with the honour of the Crown as it relates to the implementation of numbered treaties. Where the AER has a statutory duty to consider an issue, it cannot defer judgment to Cabinet because it believes that Cabinet is in a better position to decide the issue.

Decision makers such as the AER cannot fully discharge the honour of the Crown by evaluating projects in isolation – they must consider the cumulative effects of the many projects over time.

The impact of this case on future applications before the AER and other regulatory bodies remains to be seen. The Prentice Promise and the extent to which FMFN territory has already been developed are unique facts that elevated the Crown's obligations in this case. Future applicants must consider the extent to which the honour of the Crown is engaged, and the extent to which other developments in the surrounding area have impacted treaty rights, but the degree to which these factors may affect the AER's public interest determination is still uncertain.

References can be found in PDF attached at the top of the page.