Written By Deirdre Sheehan, David Bursey, Keely Cameron and Micaela Zila
In Fort McKay First Nation v Prosper Petroleum Ltd, 2020 ABCA 163 (Prosper) the Alberta Court of Appeal set aside the Alberta Energy Regulator's (AER) approval of Prosper Petroleum Ltd.'s application for the Rigel bitumen recovery project. The Court decided that the AER interpreted its public interest mandate too narrowly by failing to consider issues raised by the Fort McKay First Nation (FMFN) about how the approval of the Rigel Project may affect their efforts with the Government of Alberta to develop a land use plan to respond to FMFN concerns about the cumulative effects of oil sands development on FMFN treaty rights.
Although the AER's legislative scheme explicitly excludes the AER's jurisdiction to consider the adequacy of Crown consultation (REDA, s 21), the Court held that the AER's power to consider the "public interest" establishes an implied jurisdiction and "duty" to apply the Constitution to ensure its decisions comply with s 35 of the Constitution Act, 1982. As a result, the AER was obliged to consider other aspects of the honour of the Crown, and in this case Alberta's actions related to reconciling project development with the implementation of FMFN treaty rights.
This decision has important consequences for tribunals that must consider the public interest when deciding on project applications that may implicate actions by other Crown agencies related to reconciling aboriginal and treaty rights with project development. The Court's expanded interpretation of public interest may create additional challenges for applicants seeking project approvals before a tribunal where the honour of the Crown may be an issue.
It also comes in the wake of the 2018 Federal Court of Appeal decision on Trans Mountain in which the FCA found that the National Energy Board (now Canada Energy Regulator) failed to adequately consider the impact of project-related marine shipping in the scope of its review (and the impacts on Southern resident killer whales, in particular).
Both decisions tend to broaden the scope of issues that administrative tribunals must consider when exercising approval power over natural resource and infrastructure projects.
Before Prosper filed its application in 2013, FMFN had begun negotiations with the Government of Alberta to develop a Moose Lake Access Management Plan (MLAMP). MLAMP was to respond to the cumulative effects of oil sands development on the Treaty 8 rights of the FMFN, and obtain protection for the Moose Lake area. In the MLAMP, the FMFN sought a 10-kilometer buffer zone surrounding the Moose Lake area in which no oil sands development would be permitted. In 2015, the then-Premier of Alberta and the Chief of the FMFN entered into a letter of intent to confirm the parties' "mutual commitment and interest in an expedited completion of the [MLAMP]" and which contemplated the draft MLAMP be completed and approved by March 31, 2016 (Letter of Intent). The FMFN characterized the Letter of Intent as the "Prentice Promise." The MLAMP has not been finalized and remains the subject of ongoing negotiations.
The Rigel Project is proposed to be located within the area sought by FMFN to be covered by the MLAMP. In the absence of the MLAMP, or any indication it would be imminently finalized, the AER proceeded to hear Prosper's application for the Rigel Project.
On June 12, 2018, the AER issued its decision approving the Rigel Project subject to authorization by Cabinet. The AER determined that the Rigel Project was in the public interest and that the potential for frustration of the MLAMP negotiations was insufficient to tip the public interest against the approval of the Rigel Project. The AER further found that s 21 of the Responsible Energy Development Act (REDA) prevented it from assessing the adequacy of Crown consultation and that the Cabinet, not the AER, was the appropriate forum for finalizing the MLAMP.
Decision of the ABCA
The Court ruled that the matter should be returned to the AER for reconsideration on the appropriate record. In coming to this decision, the Court determined:
- The AER erred in concluding that Section 21 of REDA prevented it from considering whether the MLAMP process was relevant to assessing whether the Rigel Project was in the "public interest";
- The AER failed to properly interpret section 7(3) of the Lower Athabasca Regional Plan when it concluded that it applied to the MLAMP process; and
- The AER failed to uphold its statutory duty to consider the MLAMP negotiations and the honour of the Crown as part of the "public interest".
The Court noted that "where empowered to consider questions of law, tribunals also have the implied jurisdiction to consider issues of constitutional law as they arise" (in the absence of express exclusion) and that "this is all the more so where the tribunal is required to consider the "public interest".
While the Court recognized that the AER did not have the ability to assess the adequacy of crown consultation, it explained that the honour of the Crown can give rise to duties beyond the duty to consult. Citing the Supreme Court of Canada in Manitoba Metis at para 73, the Court observed that the "duty to consult" is only one of four situations recognized "thus far" where the honour of the Crown arises. One of the recognized situations includes requiring the Crown to act in a way that accomplishes the intended purposes of treaty and statutory grants to Aboriginal peoples.
FMFN argued that the MLAMP process and the Letter of Intent give rise to additional obligations stemming from the honour of the Crown related to treaty implementation.
The Court agreed that the AER should have considered those issues within the scope of its public interest review of the application. The Court explained as follows:
 Section 21 does not prevent the AER from considering relevant matters involving aboriginal peoples when carrying out its mandate to decide if a particular project is in the public interest. The issues raised here are not limited to the adequacy of the consultation on this project, but raise broader concerns including the Crown's relationship with the FMFN and matters of reconciliation. These issues engage the public interest and their consideration is not precluded by the language of s 21.
The Court further explained that "a project authorization that breaches the constitutionally protected rights of Indigenous peoples cannot serve the public interest" and that the AER cannot ignore or pass off aspects of its public interest mandate, including the honour of the Crown.
The Court rejected the AER's view that Cabinet alone was responsible for handling issues regarding the MLAMP. The Court noted: "[a] conclusion that legislation precludes considering certain matters does not relieve the decision-maker of its obligation if that legislative interpretation proves incorrect. Nor can a decision-maker decline to consider issues that fall within its legislative mandate because it feels the matter can be better addressed by another body".
The Court held that "public interest" also includes adherence to constitutional principles like the honour of the Crown, and the AER is no less responsible for considering the Crown's constitutional obligations than is Cabinet."
While the Prosper decision establishes that tribunals with public interest decision-making mandates may be required to consider various aspects of the Crown's constitutional obligation to act honourably in its dealings with Aboriginal peoples, the "public interest" mandate is not open-ended in its scope.
The Court in this case (at para 45), and the line of Supreme Court of Canada cases that the Court relies on, are clear these additional constitutional questions must relate to the primary questions established by the tribunal's enabling legislation. "Public interest" must take its context from that legislation, and the constitutional s. 35 issues must relate to the questions properly before the tribunal. (Rio Tinto Alcan Inc. v Carrier Sekani Tribal Council, 2010 SCC 43 at paras 60, 62 and 69.)
Further, the Court noted (at para 54) the statements of the Supreme Court of Canada in the Haida case 2004 SCC 73 that "While the honour of the Crown is always at stake in its dealings with Aboriginal peoples, it is not engaged by every interaction" and "It will give rise to different duties in different circumstances". The circumstances in the Prosper case presented a unique set of facts, involving a specific government commitment to an expedited completion of the MLAMP and a project proposed to be located within the specific area sought to be included in the MLAMP. Therefore, the extent to which aspects of the “honour of the Crown” other than the duty to consult will arise in a project review by an administrative tribunal will necessarily be assessed on a case-by-case basis, subject to the particular facts and circumstances at issue.
Going forward, it will be also important for project proponents to be alive to "honour of the Crown" issues that might arise in the context of its project approval process. For example, proponents should consider in pre-application planning if the project location is affected by any broader government-to-Indigenous group reconciliation initiatives. Direct engagement with regulatory agencies and Indigenous groups who may be affected remains an essential part of project planning.
If you have any questions about these issues and how they may affect your business, please contact: Deirdre Sheehan, Dave Bursey, Keely Cameron or Micaela Zila.