The controversial Northern Gateway pipeline project – which would carry diluted bitumen from Alberta to Kitimat, BC, from where it would be shipped through coastal waters and out into the Pacific – sparked litigation by a number of First Nations and environmental groups. In two important recent cases, First Nations have succeeded in their arguments that the provincial and federal governments could not so extensively rely on the National Energy Board (“NEB”) to satisfy the Crown’s duty to consult and accommodate affected
First Nations.

In Coastal First Nations v British Columbia (Environment), 2016 BCSC 34, the petitioners challenged the Province of British Columbia’s (the “Province”) abandonment of its powers under the Environmental Assessment Act (the “EAA”) to regulate aspects of the pipeline project – a project the province later vigorously opposed before the Joint Review Panel (“JRP”), which included the NEB. The provincial Environment Minister and the NEB had signed an “equivalency agreement” to the effect that, where the NEB would conduct an environmental assessment of a project within its jurisdiction, the Province would not make its own decision as to the terms and conditions on which the project could proceed. Accepting the arguments of the First Nations petitioners, the court held that the Province did not have the statutory authority to give up its decision-making function and that the Province breached the honour of the Crown when it later failed to consult with First Nations on whether it should terminate the agreement and regain its regulatory powers. The court rejected Northern Gateway’s argument that, because the project is an interprovincial pipeline, it is an exclusive federal enclave over which the Province has no regulatory powers at all. The court held instead that, while the Province could not constitutionally block the project from proceeding, it could legitimately add regulatory requirements to mitigate the pipeline’s risks to the environment and First Nations.

In the second recent decision – Gitxaala Nation v Canada, 2016 FCA 187 – the Federal Court of Appeal set aside the federal approval for the project on the basis that the federal Crown had failed to satisfy its constitutional duty to consult and accommodate. That approval was made on the basis of a long adversarial hearing before the JRP, followed by a brief period of direct consultation by the Crown. The court did not find serious defects in the JRP process, but it did hold that the Crown too greatly relied on that quasi-judicial process in making its decision and did not sufficiently engage in direct consultation with affected First Nations. The court quashed the federal approval as a result.

These judgments will obviously have direct impacts on the Northern Gateway project. The Province has already announced its own review process, and the federal government will need to reconsider whether the project should be approved. The prospects of Northern Gateway proceeding now appear considerably dimmer, as both the federal Liberals and the BC Liberals have opposed the project.

The judgments will also affect another proposed interprovincial oil pipeline – the Trans Mountain Expansion Project. The Province will need to make its own environmental assessment decision with respect to that project, and the federal government will need to engage in far more direct consultation with First Nations than it did regarding Northern Gateway.

Narrowly, these judgments reveal limits on the Crown’s ability to rely on independent regulatory processes to satisfy its duty to consult. But more broadly, they further demonstrate the centrality of First Nations in decision making over their territories.