For the second time in two years, the Federal Court of Appeal has struck down the approval of a high-profile pipeline project. It was just over two years ago that the Court helped kill the Northern Gateway pipeline—at one time, a centrepiece of the Harper government’s policy agenda—striking down its approval on the basis of inadequate consultation with Indigenous groups. Last Thursday, it was a pipeline championed by the Trudeau government that was put in jeopardy by a judicial review before the Court. In a unanimous decision written by Justice Eleanor Dawson (co-author of the majority opinion in the Northern Gateway case), the Court quashed Cabinet’s approval of the Trans Mountain pipeline expansion project.

The Court’s decision was based on two primary grounds: the government’s breach of the duty to consult Indigenous groups, and the National Energy Board (NEB)’s exclusion of marine traffic from the scope of its environmental assessment. The approach taken by the Court on Indigenous consultation is especially worth examining, in light of an emerging trend in pipeline cases that has significant implications for the Canadian economy.   

There were four phases of Indigenous consultation on Trans Mountain. During Phase I, Trans Mountain engaged with more than 130 Indigenous communities. Forty-three Indigenous groups eventually concluded impact-benefit agreements supporting the project. Phase II consisted of the NEB hearing process, which included 131 Indigenous communities and culminated in the NEB’s recommendation that the project be approved subject to 157 conditions—many of which related to Indigenous concerns.

At Phase III, federal representatives, including several cabinet ministers, engaged directly with 117 Indigenous communities about their outstanding concerns. The federal government argued that Phase III was specifically implemented to address the shortcomings in the Northern Gateway consultation process. Having acknowledged at the outset of the Trans Mountain process that the Crown owed a duty of deep consultation, the government shared its assessments of Indigenous claims with the affected communities, and compiled a Crown Consultation Report containing a detailed appendix for each Indigenous group. This provided, among other things, a summary of each group’s involvement in the various consultation phases, the group’s interests and concerns, and proposals for accommodation. The report was provided to cabinet in advance of its final decision (Phase IV), which was to approve the pipeline.

While acknowledging the “significant improvements in the consultation process” as compared to consultation on Northern Gateway, and finding that “[w]ithout doubt, the consultation process for this project was generally well-organized, [and] less rushed”, the Court nonetheless found that the government had failed to satisfy the duty to consult at Phase III for two main reasons. First, the government incorrectly advised Indigenous communities that it was unable to impose additional conditions on Trans Mountain, beyond those already recommended by the NEB. In fact, the government’s power to impose additional conditions was confirmed by the Court in the Northern Gateway decision.

Second, the Court held that federal officials failed to engage in an adequate dialogue with Indigenous communities during Phase III. Under the circumstances, it was not enough for officials to report to Cabinet on what they had heard in their discussions and to suggest potential accommodation measures. Instead, officials should have been mandated to “respond meaningfully” in advance of Cabinet’s decision, for instance by offering potential accommodation measures.

The Court’s decision has caused a late-summer political earthquake. Alberta Premier Rachel Notley, whose government is strongly tied to this project, responded to the Court’s decision by pulling Alberta out of Ottawa’s climate plan. This federal government also has a lot riding politically on this pipeline, having committed to purchasing the pipeline with federal funds in order to ensure it gets built.

Indigenous consultation rights are not supposed to amount to a veto, and so it is striking that a federal government with so much at stake would have failed to fulfill its legal obligations. It’s even more striking that this is the second time in two years that a government has been found not to have satisfied the duty to consult with respect to a pipeline project the government regarded as a top priority. Like the Trudeau government in its support of Trans Mountain, the Harper government had every incentive to ensure its approval of the Northern Gateway pipeline would be upheld. Yet in both cases the respective governments were found to have fallen “well short of the mark” on Indigenous consultation.

What might it say about pipelines and the duty to consult that governments seem unable to comply with their legal obligations even when they have so much on the line?

We think that part of the answer lies with the legal uncertainty associated with the duty to consult, which has been compounded by courts’ failure to grasp how projects with geographically dispersed effects, like pipelines, differ from projects with primarily localized effects.

One of the Court’s principal criticisms of the government’s approach is that the face-to-face meetings and other interactions with Indigenous groups were primarily used to gather information about their outstanding concerns and proposed solutions. This information was then conveyed to Cabinet through the Crown Consultation Report, drafts of which were shared with affected groups. The government responded to Indigenous concerns in the report and in an explanatory note it issued with its decision. The Court held that adequate consultation requires more than this. There has to be meaningful two-way dialogue between particular Indigenous groups and empowered government decision-makers.

While this approach may be appropriate for projects that primarily affect a single Indigenous group, it seems ill-suited to pipeline projects, where a government must simultaneously consult with large numbers of communities and stakeholders. It will often be the case that the concerns of different Indigenous groups, and the impacts of proposed accommodation measures, can only properly be assessed once all the relevant information is available. The cabinet inevitably relies on the federal bureaucracy to collect and process the information, and it may not want to commit itself to particular accommodations in advance of meeting to make its decision. Ongoing bilateral discussions with true “decision-makers” may not always be feasible in this context. There are simply too many moving parts. This is especially so when one considers that delay in the consultation process can ultimately render a pipeline project unprofitable, turning a consultation right into a veto for some Indigenous groups even where other affected Indigenous groups support the project.

The Federal Court of Appeal’s vision of a responsive and ongoing two-way dialogue is a laudable one. However, on a complex cabinet decision that affects many different Indigenous groups, this ideal will strike many who have worked in the federal government as unrealistic. It’s no wonder two successive governments have failed to live up to this standard when it really mattered.