Supreme Court clarifies duty to consult on projects

In separate decisions Wednesday, the Supreme Court of Canada has clarified to what degree oil and gas companies have a duty to consult with Aboriginal communities, while also detailing the role of the national energy regulator within the consultation process.

The SCC ruled in favour of the Inuit hamlet of Clyde River, Nunavut, in its years-long bid to stop a Norwegian consortium from conducting seismic testing near its traditional territory in Baffin Bay. In a separate ruling, the court upheld the National Energy Board’s approval of Enbridge Inc.’s expansion and reversal of its Line 9 pipeline, which was appealed by the Chippewas of the Thames First Nation in southern Ontario.

Both decisions provided some clarity around what is an adequate level of consultation in oil and gas project proposals. They also bolstered the NEB’s ability to carry out consultations in so-called “expedited” review processes for smaller project proposals under which the federal cabinet does not have the final say.

Supreme Court Justices Andromache Karakatsanis and Russell Brown said the NEB is compelled to have clear and reciprocal discussions with local communities, and give locals the opportunities to ask questions and respond to proposals. The justices ruled the NEB failed to meet that standard in Clyde River, but successfully met that expectation during consultations over the Line 9 project.

The decisions come amid a growing expectation that private companies and the national regulator engage in deeper consultations with local people affected by oil and gas development.

It also comes as Ottawa conducts consultations in its attempt to restructure the NEB, which could soon be saddled with a far broader mandate, including the need to consider total upstream emissions in its approval process.

Tom Isaac, a partner in Aboriginal law at Cassels Brock & Blackwell LLP, said the ruling provides some clarity around the extent to which the NEB is required to carry out its own consultations.

The ruling signals a willingness to override the approval of projects by regulatory bodies if duty to consult is not met. The justices wrote that the Crown “always holds ultimate responsibility for ensuring consultation is adequate” as part of the rationale for its decision.

In the Clyde River case, the court said its ruling was not due to environmental risk, but because consultations did not properly address Inuit treaty rights that allow locals to hunt large mammals and fish.