The Enbridge Decision and Beyond: Issues to Watch Following Gitxaala Nation v Canada

The length of time that Enbridge Northern Gateway’s oil tankers and pipelines proposal has managed to stay afloat –despite widespread opposition and the lack of any firm commercial contracts for use of its pipelines –once prompted my colleagues here at West Coast Environmental Law to ask, as John Cleese does in the famous Monty Python sketch, whether the Enbridge project was dead or merely resting.

In this vein, the recent Federal Court of Appeal (FCA) decision in Gitxaala Nation v Canada was heralded as a major legal victory for Indigenous peoples opposing the opposing the Enbridge pipelines and tankers proposal, and many hope that we are now on a pathway to put that risky project to rest for good.

However, Canada and Northern Gateway have until September 22, 2016, to apply for leave to appeal to the Supreme Court of Canada. As my colleague and fellow staff lawyer at West Coast Gavin Smith has argued cogently, there are many reasons to believe that Canada and Northern Gateway may not try to appeal.

Yet, even if there is no appeal, this long political and legal story is not quite over yet, and the outfall from it will track some of the hottest button issues on the environmental and Indigenous rights files for the federal government in the coming months.

Gitxaala Nation v Canada – The Enbridge Cases

The Enbridge proposal would have seen diluted bitumen carried by pipeline approximately 1,200 kilometres from northern Alberta to Kitimat BC, across over 1,000 rivers and streams, to a new marine terminal. There, diluted bitumen would be loaded on to tankers for export, thus introducing the risk of oil spills from heavy oil tankers to Canada’s Pacific north coast for the first time. Conditionally approved by federal Cabinet in June 2014, the project was the subject of a barrage of legal challenges brought by eight First Nations (including two co-represented by West Coast and Mandell Pinder LLP), four environmental groups, as well as Canada’s largest private sector union (which represents both oil sands and fisheries workers impacted by the project). The cases were heard together (sequentially) in one of the longest hearings in recent memory in the FCA, and the court issued one set of reasons in all of the proceedings.

In reasons released on June 30, 2016, the FCA quashed the Order in Council and National Energy Board Act certificates granted to the Enbridge project, on the basis that the federal Crown had failed to uphold its constitutional duty to consult and accommodate the applicant First Nations. In their majority judgment, Dawson and Stratus JJ.A held that Crown’s execution of its legal obligations to consult First Nations “fell well short of the mark”, noting that: “The inadequacies—more than just a handful and more than mere imperfections—left entire subjects of central interest to the affected First Nations, sometimes subjects affecting their subsistence and well-being, entirely ignored.” 

So Is It Dead Yet?

In the Enbridge case the Federal Court of Appeal gave Cabinet the option of an “early exit”: to reject Northern Gateway based on submissions on the current record. However, as my colleague Gavin, who was co-counsel for two of the First Nations applicants in the case, notes: “if Cabinet does anything other than take this early exit, then the Court requires fulsome consultation with First Nations, including probable consideration of new evidence and issues.”

If the federal Crown chooses to go the latter route, once consultations consistent with the court’s directions were completed the matter would come back before federal Cabinet and then, within three months, Cabinet would be required to exercise one of three options: (i) reject Northern Gateway; (ii) approve Northern Gateway with the current National Energy Board conditions as well as any additional conditions attached by Cabinet to meet the duty to consult and accommodate Aboriginal peoples; or (iii) send the matter back to the National Energy Board to reconsider its recommendations.

In fact there may be an even more definitive response in the wings: The federal government has mandated responsible ministers to move forward on its commitment to ban oil tankers on the Pacific north coast (a smart move that would allow us to avoid another 10+ year battle should another company seek to open the Great Bear Sea to the risk of heavy oil spills from oil tankers and related pipelines). 

With the commercial viability of the project seriously in doubt and the federal government’s promised legislated tanker ban waiting in the wings, it does feel like this parrot may be on its last legs.

Nevertheless, there are some other significant issues arising from the Enbridge cases that merit attention.

Bad Facts Make Bad Law … and so Does Bad Law

While the relief granted in the Enbridge cases represented a definitive victory for the applicants, the same cannot be said of the outcomes with respect to the statutory interpretation and administrative law issues presented by the cases. In fact, the applications brought by the environmental groups and Unifor on administrative law grounds were dismissed. And it is noteworthy that the 2012 legislative amendments made to the Canadian Environmental Assessment Act and the National Energy Board Act loomed large in this result.

In particular, the FCA reasoned that because the outcome of the environmental assessment and regulatory review (the report of the Joint Review Panel in this case) was merely a recommendation to Cabinet under the new legislative scheme, “no decisions about legal or practical interests had been made” and thus no application for judicial review lay from the report.

The majority decision notes:

Under this legislative scheme, the National Energy Board also does not really decide anything, except in a formal sense. After the Governor in Council decides that a proposed project should be approved, it directs the National Energy Board to issue a certificate, with or without a decision statement. The National Energy Board does not have an independent discretion to exercise or an independent decision to make after the Governor in Council has decided the matter. It simply does what the Governor in Council has directed in its Order in Council (at para 126).

In other words, the politicization of Canada’s environmental assessment and regulatory review process engendered by the 2012 legislated changes may have had even more significant administrative law implications than anyone anticipated at the time.

In the result, given the new legislative scheme, the FCA finds that the proper focus of judicial view is the decision of the Governor in Council (federal Cabinet). But even here, the court determines it “must give the Governor in Council the widest margin of appreciation” because:

[T]he Governor in Council’s discretionary decision was based on the widest considerations of policy and public interest assessed on the basis of polycentric, subjective or indistinct criteria and shaped by its view of economics, cultural considerations, environmental considerations, and the broader public interest (at para 154).

Having thus determined the standard of review, the FCA goes on to find that the Governor in Council’s decision was reasonable on administrative law grounds.

Other Issues to Watch

Ongoing pipeline reviews: While there is a strong argument that the FCA may have applied the wrong sections of the Canadian Environmental Assessment Act, 2012 in Gitxaala (given that the Enbridge Joint Review Panel was operating under transitional rules), the analysis of the FCA is certainly applicable to more recent environmental assessments conducted by the National Energy Board –like those for the Kinder Morgan Trans Mountain and Energy East oil tanker and pipeline projects. This may mean that 10 applicants in recently filed judicial reviews of the National Energy Board’s report recommending approval of the Trans Mountain proposal may have to wait a bit longer for relief, and that, at least for now, the First Nations applicants may be best positioned for success.

Federal reviews of environmental assessment processes and the National Energy Board: The federal government recently announced several long-awaited reviews of environmental legislation including reviews of the Canadian Environmental Assessment Act, 2012 (CEAA), the National Energy Board (NEB) by two independent panels. I have previously expressed the view that these reviews present “a once-in-a-generation opportunity to establish a more inclusive, democratic, just, and science-based framework for making decisions that affect Canadians and the environment”.

But the Enbridge cases remind us that we also need a legislative scheme that ensures that Canadians have the ability to resort to the courts to seek judicial review of environmental assessment outcomes as a safeguard to ensure that statutory and constitutional requirements are being met.