Grassy Mountain Chronicles: Legitimate Expectations and Consultation Take the Spotlight

Overview

On February 12, 2024, the Federal Court issued an order[1] setting aside the decisions of the Minister of Environment and Climate Change (the Minister) and Cabinet denying approval of the Grassy Mountain Coal Project (the Project). The Court ordered the matter to be referred back to the Minister for redetermination.

The Applicants, Benga Mining Limited (Benga), the Piikani Nation, and the Stoney Nakoda Nations all supported the Project for its projected economic impact in Alberta, and by 2019 each First Nation had entered into agreements with Benga. Each Applicant commenced separate applications for judicial review after the Minister’s Decision and the Cabinet Decision (collectively, the Decisions) were made public on August 6, 2021.

The Court decision responding to the consolidated applications ultimately allowed those of the Piikani Nation and the Stoney Nakoda Nations (collectively, the First Nations Applicants) and dismissed Benga’s application. The Court held that the First Nations Applicants were not sufficiently consulted before the Decisions were made, contrary to prior representations accompanying the June 17, 2021, issuance of the final report (the Report) by the Joint Review Panel (JRP) of the Alberta Energy Regulator (AER) and the Impact Assessment Agency of Canada (the Agency). Specifically, the Court found that the First Nations Applicants were deprived of procedural fairness on account of the Agency’s unfulfilled representation that further Indigenous consultation would occur prior to the Government of Canada’s decision on the Project.

Significantly, the Court declined to adjudicate the First Nations Applicants’ arguments that they were entitled to be consulted pursuant to the constitutional duty to consult under section 35 of the Constitution Act, 1982. Rather, the Court found the First Nations Applicants’ procedural fairness arguments were determinative of the outcome of their applications for judicial review, and agreed with the Respondents that recourse to constitutional issues was unnecessary and should not be considered as a matter of judicial restraint.[2]

Background

The Project contemplates the construction, operation, and reclamation of a new, open-pit metallurgical coal mine in the Crowsnest Pass. By Benga’s estimates, the Project would produce a maximum of 4.3 million tonnes of coking coal a year. Production would occur over 23 years, followed by four years of active reclamation and decades of passive site management.

The Project required both federal and provincial assessments and approvals. Federally, the Project required an assessment under Canadian Environmental Assessment Act, 2012, SC 2012, c 19 (CEAA 2012) and preparation of a report to the Minister, who was then required to decide under section 52(1) of CEAA 2012 whether the Project was likely to cause significant adverse environmental effects. If so, the Minister’s Decision was referred to the Governor in Council for its decision under section 52(4) as to whether the effects were justified in the circumstances. Section 54 then required the Minister to issue a statement regarding both Decisions.

The JRP was established in 2018 to discharge the federal and provincial environmental assessment responsibilities for the Project, including reviewing Benga’s Environmental Impact Assessment, conducting public hearings between October and December 2020, and preparing and publishing the Report.

On June 17, 2021, the JRP issued the Report denying provincial approval on the basis that the Project was not in the public interest (the Provincial Decision). Specifically, the JRP found the Project was likely to cause significant adverse environmental effects that were not outweighed by the Project’s economic impact. However, the Agency was required to proceed in its federal assessment under CEAA 2012.

On the same day, the Agency issued its news release indicating it had received the Report and, prior to its decision on the Project, would “consult with Indigenous groups on the Joint Review Panel’s report,” and would “consider the results of these consultations before issuing a decision statement and any potentially legally binding conditions.”[3]

On July 22, 2021, the Agency released its own report documenting Indigenous consultation on the Project, which concluded the Agency had fulfilled its duty to consult. On August 6, 2021, both Decisions denying the Project were made public.

Analysis

Benga’s Application for Judicial Review

The Court disagreed with Benga’s argument that the Minister’s Decision was unreasonable, finding instead that the Minister’s agreement with both the Agency’s and the JRP’s analysis of mitigation measures was sufficient to make his decision under section 52(1) of CEAA 2012. The Court also dismissed Benga’s argument that the Cabinet Decision was unreasonable. In doing so, the Court did not agree that the Cabinet Decision was based on both a flawed Report and an inaccurate understanding of the record informing the underlying Minister’s Decision.

The majority of the Court’s analysis centred on whether the Decisions breached the Applicants’ right to procedural fairness. The Court first considered Benga’s argument that the JRP departed from the established information gathering process, depriving Benga of procedural fairness by concluding in its Report that Benga had provided incomplete information without first requesting further information.[4] Benga raised a number of examples of this concern, spanning from the Report’s conclusions on Westslope Cutthroat Trout to Benga’s method in assessing the Project’s economic effects. The Court found details on topics were raised by other participants during the public hearings before the JRP, and as a result, there was no basis to conclude Benga was unaware that this information was of interest and that the process was procedurally unfair.[5]

Benga’s final procedural fairness argument concerned its request on June 26, 2021, that the Minister hold issuance of its statement in abeyance while Benga considered appealing the Provincial Decision. While Benga did not receive a reply to this request prior to the issuance of the Minister’s Decision, the Court found there was no breach of procedural fairness as the request had been considered and rejected, rather than ignored.[6]

Piikani Nation’s and Stoney Nakoda Nations’ Applications

For their part, the First Nations Applicants’ procedural fairness submissions related in part to arguments that the Decisions were unsupported by reasons,[7] and that the Decisions were predetermined based on the record of the decision-making process.[8] The Court disagreed with these arguments, reiterating its characterization of the Report as reasons for both Decisions, and finding it was impossible to infer from the short timelines involved that neither the Minister nor Cabinet turned their minds to the record and properly discharged their decision-making responsibilities.

As noted above, the Court was most persuaded by the First Nations Applicants’ argument that procedural fairness entitled them to an opportunity to make submissions before the Decisions were made.[9] In particular, the First Nations Applicants argued they had legitimate expectations[10] that they would have an opportunity to make submissions after the release of the Report and prior to the Minister’s Decision. These legitimate expectations were based on: (1) established Agency practice of consulting with Indigenous groups following the release of a review panel report, and (2) the express representation by the Agency in its news release of June 17, 2021.

The Court disagreed that there was clear support for the conclusion that the Agency had an established practice of post-review panel report consultation. The Court did, however, agree with the First Nations Applicants’ characterization of the June 17, 2021, news release as a clear and unqualified representation that further Indigenous consultation would occur following the release of the Report. While not a required component of the legitimate expectations analysis, the Court specifically noted subsequent correspondence from the Piikani Nation to the Minister demonstrating the Nation’s reliance on the Agency’s representations and its desire to engage in further consultation regrading lost economic benefits if the Project was not approved.

Accordingly, the Decisions were set aside and referred back to the Minister for redetermination following the required consultation.

Take Away

In this case, the “legitimate expectations” of the Piikani Nation and Stoney Nakoda Nations were determinative of whether the Decisions were aligned with the principles of procedural fairness. The Court acknowledged as much, stating that absent the legitimate expectation created by the June 17, 2021, news release, the duty of fairness analysis may have mirrored the decision and outcome of Benga’s appeal of the Provincial Decision to the Alberta Court of Appeal.[11]

The Federal Court’s decision serves as a clear reminder that consultation with Indigenous stakeholders can originate in the context of both the principles of procedural fairness, as well as section 35 Aboriginal and treaty rights.

Finally, it is of note that the Decisions in question were decided under CEAA 2012, which has since been replaced by Impact Assessment Act, SC 2019, c. 28.