(February 7, 2020) What’s the difference between the 2018 Federal Court of Appeal decision to quash federal approval of the Trans Mountain Pipeline expansion and the FCA’s 2020 decision to uphold cabinet’s approval of the project? The heroes and villains have changed places. Read between the lines with legal expert Andrew Roman.

For the original version of this posting, see here.

For more analysis by Andrew Roman, check out his blog here:
https://andrewromanviews.blog

Background

In a previous blog post (The Crown’s Duty to Consult First Nations) I criticized the August 30, 2018 Federal Court of Appeal (FCA) decision quashing the Cabinet’s approval of the Trans Mountain Pipeline expansion.  Since then there have been new hearings by the National Energy Board and new consultations with First Nations, resulting in a new Cabinet approval on June 18, 2019.  That new approval was challenged again in the FCA.

On February 4, 2020 the FCA issued its decision (Coldwater Indian Band).  The FCA upheld the Cabinet’s decision as being reasonable, including the Cabinet’s finding that the consultations with the opposed First Nations had been proper.

Two Panels, Two Attitudes

There are some interesting differences between the 2018 FCA decision and this one. The heroes and villains have changed places.  In reading this panel’s thorough and detailed legal analysis I was struck by what I read between the lines.  The critical tone of this panel in describing the posturing in the submissions of some of the First Nations is a sharp contrast to the critical tone of the 2018 panel in describing the Crown’s consulting staff.

As detailed in my previous blog post, the 2018 panel failed to see through the game being played when a few First Nations demanded detailed consultations and further studies on generic issues such as greenhouse gases and the economic need for the project, which don’t affect their aboriginal rights.  The 2018 panel relied on such irrelevant demands to quash the Cabinet decision.  This second panel saw the posturing for what it was, and said so.

The 2018 FCA decision ordered an extensive re-hearing by the National Energy Board and corrective consultation by the government.  Between August 30, 2018 and February 4, 2020 the interest charges on the $4.5 billion federal investment in the pipeline, at 2%, will have cost approximately $130 million.

Trans Mountain had filed for project approval with the NEB in December 2013, to begin construction in 2017, with oil to flow through the pipeline by December 2019.  After six years, and the nationalization of the project by government purchase, approval finality is still in doubt.

Is This Decision Vulnerable on Appeal?

Almost every decision involving First Nations rights is vulnerable on appeal because the law is so unclear. Some of the First Nations have announced that they will seek to appeal this FCA decision to the Supreme Court of Canada (SCC).  They may get permission to appeal, and may even win.  That is because this FCA decision relied on the recent SCC decision in Vavilov (the difficulties of which I have posted here).  The SCC in Vavilov made a number of vague comments that the FCA interpreted in a yet untested and contestable way.

The FCA wrote:

[28]  In conducting this review, it is critical that we refrain from forming our own view about the adequacy of consultation as a basis for upholding or overturning the Governor in Council’s decision. In many ways, that is what the applicants invite us to do. But this would amount to what has now been recognized as disguised correctness review, an impermissible approach [citing the SCC decision in Vavilov, para. 83]

That statement is contentious.  It combines two related but separate decisions: (i) whether the consultation process was adequate, and (ii) whether the approval of the pipeline is in the public interest.

The applicants may have been right that these should be treated as separate decisions.  Proper consultation with First Nations is a constitutional requirement. The constitution is the supreme law of the land. If the consultation wasn’t done properly the Cabinet’s decision must again be quashed.  But the FCA refused to consider whether the consultation was done properly, saying that this would be “impermissible”. Instead, it merely considered the Cabinet’s own opinion of its own efforts at consultation. Arguably, deciding whether the consultation was done as required by the constitution is the court’s job, not the Cabinet’s.

In effect, the Court allowed the Cabinet to be the sole judge of the constitutional issue. But let’s be real about this. How likely is it that any government would judge that it had failed to comply with its constitutional responsibilities?  Does that self-judgement give rise to a reasonable apprehension of bias? Does paragraph 83 in Vavilov really prohibit the Court from deciding a constitutional question?

The FCA may have interpreted the “reasonableness review” described in Vavilov too broadly and the “correctness review” too narrowly where the issue is constitutional. Vavilov did not hold that correctness on constitutional issues no longer matters.  Paragraph 83 of Vavilov starts with the sentence:

“It follows that the focus of reasonableness review must be on the decision actually made by the decision maker, including both the decision maker’s reasoning process and the outcome.”

Note the words “the decision”, implying only a single decision. In Coldwater the Cabinet actually made two decisions. In the Vavilov context there was only a single relevant decision, requiring only statutory interpretation; there was no constitutional duty to be decided.   It is debatable whether the SCC’s administrative law reasoning in Vavilov paragraph 83 should apply to the constitutional law issue in the Coldwater case.  On a constitutional question the Cabinet’s interpretation should be more than just reasonable; it should be correct.  Therefore, for the FCA to review the correctness of the Cabinet’s decision on the constitutional issue is not “impermissible”; it may well be mandatory.

The Law of Consultation Is a Mess That Should Be Cleaned Up

As Vavilov did not deal with First Nations issues the FCA had to refer to other SCC cases about the duty of consultation.  Unfortunately, that case law is a confusing mess.  If everyone knew what the law of consultation required we wouldn’t be having this interminable litigation.

The cases say “the honour of the Crown” must be upheld through appropriate consultation with First Nations if their rights and interests may be affected. But who knows what that “honour” requires in any particular case?  And “consultation” can also have many different meanings.  It is the judicial equivalent of a Rorschach test: you read into it what you want to get out of it.

The SCC has said consultation requirements vary with the circumstances of each case.  That is a judicial euphemism for admitting there is no clear rule and we will just make it up as we go along.  The case law advises judges to avoid extremes, such as demanding perfection on one extreme, and failure to provide meaningful consultation on the other.  The Crown has to be honourable but the First Nations don’t have a veto; they have to consult but the parties don’t have to agree. But between these extremes there is a wide open space, like an 8 lane highway without a median or lane lines.  The numerous SCC comments in the numerous cases go in different directions, allowing a lower court to cherry pick comments to justify almost any position.

This absence of clear law encourages litigation because almost any case is a potential winner.  Look at how many years have been taken up by First Nation issues in this pipeline, and its effect on private investors.  Although the FCA in Coldwater repeatedly said that First Nations do not have an effective veto, it is too late to say that now. The effective veto was already granted in the 2018 FCA decision.  The private sector owners of the pipeline saw it coming, and walked away from their project. The supposedly nonexistent veto was successfully exercised.

But for the unprecedented federal government purchase of the pipeline it would have remained vetoed.  This effective veto creates a toxic environment for investment.  Even with the support of most First Nations a single opponent creates the real risk that its attack on the adequacy of consultation will kill the investment, if not in the court’s decision, then through years of costly litigation uncertainty.  Yet private sector project applicants have no control over how the Crown conducts its consultations, or how seriously it defends attacks on it by First Nations.  The duty of consultation is a costly legal mess that the SCC urgently needs to clean up.  (Parliament can’t easily do this by legislation because it may require a constitutional amendment of an unprecedented type.) Until then, the courts have to do what they can with what they have.  That is why, although I have outlined a potential vulnerability of this FCA decision I am not criticizing the members of this panel; the opposite decision would be equally vulnerable.

Conclusion

I am torn between the need for finality in this pipeline case and the need for the SCC to fix the broken law of consultation.  Approval or denial of this pipeline has been uncertain for so long that Canada’s international reputation for making project decisions in a reasonable time has been damaged. Other democratic countries make project decisions in half the time or less.  Delaying finality for another year or two while this decision is appealed to the SCC adds to that damage. For that reason I would hope that the SCC denies its permission to appeal.

On the other hand, for so long as the consultation requirements remain essentially unknown, investments in projects that could affect any First Nation anywhere in Canada will be deterred. It may be several years before a similar case goes this far up the judicial ladder.  If the Coldwater case is appealed now, the SCC could use the opportunity to repair the consultation mess.  But it could also spend a year or two only to give us more of the “avoid both extremes” and “it varies with the circumstances of each case” kind of advice.  That’s why I am torn.

For more by Andrew Roman: https://andrewromanviews.blog/

Andrew Roman has been an Energy Probe Board member since the organization began.