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Alberta Energy Regulator Must Consider the Honour of the Crown Within its Public Interest Mandate

Alberta Energy Regulator Must Consider the Honour of the Crown Within its Public Interest Mandate
By  Terri-Lee Oleniuk, Katie Slipp and Sydney McLauchlan (Articling Student)
May 4, 2020

In its April 24, 2020, decision, the Alberta Court of Appeal (Court) quashed the Alberta Energy Regulator’s (AER) approval of a bitumen recovery project (Project) proposed by Prosper Petroleum Ltd. (Prosper). The Project would be located within 10 km of the Moose Lake Reserves (Moose Lake), an area within Treaty 8 that is culturally significant to the Fort McKay First Nation (FMFN).

The Court concluded that the AER erred in finding that it was precluded from considering Moose Lake Access Management Plan (MLAMP) negotiations in its public interest determination. The Court directed the AER to reassess whether the Project is in the public interest after considering “the honour of the Crown and the MLAMP process.”

MLAMP PROCESS

Moose Lake has been the subject of land management negotiations between Alberta and the FMFN for almost 20 years, with a focus on the development of the MLAMP “to address cumulative effects of oil sands development on the First Nation’s Treaty 8 rights.”

After initially denying the FMFN request for a 10 km buffer zone from oil sands development around Moose Lake, a subsequent review acknowledged that Alberta had “not taken adequate measures to protect [FMFN’s] Treaty and Aboriginal rights, Traditional Land Use and culture.” As a result, former Premier Jim Prentice and Chief Jim Boucher of FMFN signed a Letter of Intent in 2015 confirming their “mutual commitment and interest in an expedited completion of the [MLAMP].” While the letter envisaged that planning and implementation of the portion of the Access Management Plan within 10 km of Moose Lake would be complete by September 30, 2015, and a draft of the MLAMP would be complete by March 31, 2016, the MLAMP has yet to be finalized.

REGULATORY AND LEGAL HISTORY OF THE PROJECT

The Project, which would use steam-assisted gravity drainage to produce approximately 10,000 barrels of bitumen per day, has faced multiple regulatory and legal challenges since it was proposed in 2013. In June 2018, the AER ultimately concluded that the Project was in the public interest and issued an approval, subject to an Order in Council authorization by Cabinet. The AER considered the effect of the Project on FMFN’s Treaty 8 rights in general, yet declined to consider whether Project approval would frustrate ongoing MLAMP negotiations. In its reasons, the AER made three critical findings in this regard:

  1. Section 21 of the Responsible Energy Development Act (REDA) prohibits the AER from assessing the adequacy of Crown consultation

  2. Section 7(3) of the Lower Athabasca Regional Plan (LARP) prohibits the AER from “adjourning, deferring, denying, refusing or rejecting any application” by reason only of incompletion of a LARP regional plan

  3. AER approval of the Project under the Oil Sands Conservation Act is subject to authorization by Cabinet, which is “the most appropriate place for a decision on the need to finalize the MLAMP”

Ultimately, the AER concluded the status of the MLAMP “was not a valid reason to deny Prosper’s application.” Cabinet has yet to authorize or deny the Project, which itself has been the subject of additional litigation.

PERMISSION TO APPEAL

In January 2019, the Court granted FMFN permission to appeal the AER’s decision on the following question: “did the AER commit an error of law or jurisdiction by failing to consider the honour of the Crown and, as a result, failing to delay approval of the Project until the First Nation’s negotiations with Alberta about the Moose Lake Access Management Program were completed?”
 
DECISION AND ANALYSIS

In forming the Court’s decision, Justices Veldhius and Strekaf assessed the AER’s three primary reasons for declining to consider the MLAMP process in its public interest determination. The Court found that the AER erred on each count on the basis of the following:

  1. While section 21 of REDA precludes the regulator from assessing the adequacy of Crown consultation, “issues of constitutional law outside the parameters of the duty to consult remain within the AER’s jurisdiction, including as they relate to the honour of the Crown.” The Court relied on Clyde River (Hamlet) v Petroleum Geo-Services Inc., where the Supreme Court of Canada notes, “[a] project authorization that breaches the constitutionally protected rights of Indigenous peoples cannot serve the public interest” and therefore the AER has “a broad implied jurisdiction to consider issues of constitutional law, including the honour of the Crown” when making a decision on a project. As established in Manitoba Metis Federation Inc. v Canada (Attorney General), the honour of the Crown can give rise to duties beyond the duty to consult.

  2. The AER incorrectly found the MLAMP to be subject to section 7(3) of the LARP. The MLAMP is only briefly mentioned as a planning initiative that will “be assessed for inclusion in the LARP implementation,” and is not a “provision of either the LARP Strategic Plan or LARP Implementation Plan” or a “direction or commitment made in a provision” subject to section 7(3).

  3. The AER has a statutory responsibility to determine whether a project is in the public interest, which include “adherence to constitutional principles like the honour of the Crown,” and only then can a proposed project proceed to Cabinet authorization. Although Cabinet can take public interest matters into consideration, this “does not relieve the AER of its responsibility,” including considering the “MLAMP negotiations and related issues as they implicate the Honour of the Crown.”

The Court rejected Prosper’s argument that the appeal is premature pending a Cabinet decision, as well as Alberta’s argument that the result sought by FMFN would place “the AER in an improper role with respect to government policy decisions.” The Court concluded that “considerations of the effect of the project on aboriginal interests and adherence with constitutional principles are part of the AER’s public interest mandate” and that this does not “relieve the Crown of its ultimate constitutional responsibilities.” Justices Veldhius and Strekaf concluded, “the public interest mandate can and should encompass considerations of the effect of a project on aboriginal peoples, which in this case will include the state of negotiations between the FMFN and the Crown. To preclude such considerations entirely takes an unreasonably narrow view of what comprises the public interest, particularly given the direction to all government actors to foster reconciliation.”

In her concurring judgment, Justice Greckol clarifies the Court’s expectation of maintaining the honour of the Crown, stating that it does not mean that parties must agree to a particular settlement, but that “it does require that the Crown keep promises made during negotiations designed to protect treaty rights. It certainly demands more than allowing the Crown to placate FMFN while its treaty rights careen into obliteration. That is not honourable. And it is not reconciliation.”

IMPACT OF THE DECISION

The decision confirms a regulator’s obligation to consider the effects of a project on Aboriginal peoples, including the honour of the Crown, when considering whether a project is in the public interest. It also emphasizes that a statutory decision-maker must consider all matters relevant to the public interest, and cannot decline to consider issues that fall within its mandate on the basis they might be better addressed by another body.

Importantly for AER-regulated projects, it clarifies that the REDA prohibition against assessing the adequacy of Crown consultation does not insulate the AER from considering the honour of the Crown, or other constitutional considerations, more generally. However, whether or not regulators, proponents, Indigenous communities and other stakeholders will be able to draw a bright line between the honour of the Crown as part of the public interest determination and the adequacy of Crown consultation remains to be seen.

While the facts underpinning the decision are unique, the findings of the Court are important and are expected to have wide-reaching impacts on how regulators discharge their public interest mandates.

For further information, please contact:

Terri-Lee Oleniuk          403-260-9635
Katie Slipp                      403-260-9799

or any other member of our Aboriginal group.