The decision of the Federal Court of Appeal (“FCA”) in Tsleil-Waututh Nation v. Canada ("Tsleil-Waututh")¹ took most people by surprise, regardless of whether they supported or opposed the Trans Mountain Expansion Project (“TMX”) it halted—a pipeline expansion that would increase the capacity (from 300,000 to 890,000 barrels of oil per day) and marine shipping potential of the existing Edmonton-to-Burnaby Trans Mountain Pipeline, and which promised to finally deliver on Western Canadian producers’ aspirations to secure new Pacific markets.  For those disappointed by the decision, the first question is how this situation could have been allowed to happen. The second question is how it can be fixed.  

What went wrong?

A natural reaction when something goes wrong is to ask who, or what, is to blame.  In the case of the quashing of the TMX approval, we can round up the usual suspects and assess their fault.

The first suspect is the FCA itself. It is fair to say that governments have struggled to keep up with the evolving constitutional law requirements around the duty to consult and accommodate Aboriginal groups. At times courts appear to have almost intentionally created uncertainty for governments regarding the duty to consult in order to incent them to reconcile Aboriginal interests by entering into comprehensive settlement agreements or modern treaties. So could one blame the FCA? The answer to this question is clearly “no.” The criticisms made of the FCA over the Gitxaala decision quashing the Enbridge Northern Gateway Project approvals² cannot be repeated against the FCA in Tsleil-Waututh. In Gitxaala, there was a strong dissent demonstrating the uncertainty that existed in the law at the time. However, the federal government agreed with the Gitxaala majority judgement, blaming the failure of the Northern Gateway approval on inadequate consultation by the prior federal government. By choosing not to appeal the Gitxaala decision, the current federal government accepted the law on the duty to consult as pronounced by the FCA in that earlier decision, which the FCA has now applied in Tsleil-Waututh. Since Gitxaala has not been overturned by the Supreme Court of Canada (“SCC”), either on appeal or in any subsequent SCC decision, the FCA did not have any option but to apply the law as it had found it. This does not mean that the FCA was correct in Gitxaala—and it may ultimately be found to have been wrong—but until the SCC tells the FCA it was wrong, the FCA’s hands are tied. Any society governed by the rule of law does not want courts to depart from recent precedents. To do so undermines certainty and stability in the law, rather than promoting it.

The second suspect is the statutory law that governed the TMX regulatory process. The main statutes applicable to TMX were the National Energy Board Act ("NEB Act"),³ the Canadian Environmental Assessment Act, 2012 ("CEAA 2012")⁴ and the Species at Risk Act ("SARA").⁵  The federal government has suggested that the existing regulatory framework established by this legislation is to blame, and has proposed repealing or replacing both the NEB Act and CEAA 2012 with new legislation introduced through Bill C-69. There are two problems with blaming the statutory regime currently in place. First, competent and committed regulators and government agencies can, and do, adapt to imperfect legislative regimes to make them work with a high degree of certainty and stability. Likewise, good legislative regimes can be defeated if those administrating them do not do so competently. Further, the FCA and SCC have repeatedly found that the NEB’s decision-making regime can work very well when properly administered and, in particular, in the context of allowing the federal government to meet its constitutional duty to consult.⁶  In Gitxaala and Tsleil-Waututh, the FCA took no issue with the Crown consultation and accommodation framework that had been built using the NEB Act and CEAA 2012. The problems in both cases did not arise from any deficiency in the statutes, but rather mistakes in their application.

This takes us to our third suspect, which is the National Energy Board ("NEB"). The FCA found that the NEB acted unreasonably in not including marine traffic within the scope of the TMX “Project” to be assessed pursuant to CEAA 2012, instead limiting its consideration of the effects of marine traffic to its broader public interest assessment under the NEB Act.⁷  The NEB did this because it believed it lacked jurisdiction to implement mitigation measures regarding the effects of marine traffic—the logic being that if it lacked jurisdiction to enforce mitigation, it should not be considering effects on marine traffic as part of the “Project.” It therefore chose to report on the unmitigated effects of marine traffic under the NEB Act rather than the mitigated effects of marine traffic under CEAA 2012, eventually concluding that the unmitigated effects on Southern resident killer whales were adverse and significant, but leaving the issue of mitigation to be addressed by other federal government departments with jurisdiction over marine traffic.  

The FCA held that this approach was unreasonable on a number of grounds. First, in order to assess the effects of a project, including proposed mitigation, the FCA held it was not necessary for the NEB to have jurisdiction over implementing mitigation measures, which could be left to the Governor in Council (“GIC”).⁸ Secondly, by not including marine traffic within the scope of the project, the NEB saved the federal government from having to make a justification decision under CEAA 2012, which is required wherever a project will result in significant adverse environmental effects.⁹ Finally, the approach of the NEB also avoided the obligation under SARA to take all possible mitigation measures to mitigate adverse effects on Southern resident killer whales. ¹⁰

Although not specifically stated as a ground for finding the NEB's failure to include marine traffic in the scope of the project unreasonable, the FCA (whose Justice Dawson penned both the Tsleil-Waututh and Gitxaala decisions) would have also been well aware that Northern Gateway’s regulatory assessment was scoped to include marine traffic out to the 12-mile limit of Canada's territorial seas. This was done to accommodate, at least in part, concerns raised by Aboriginal groups regarding Northern Gateway. The assessment of these effects and all reasonable mitigation measures in relation them resulted in a finding by the Joint Review Panel that Northern Gateway, including all marine traffic associated with it, would not have any significant adverse effects, including on Northern resident killer whales and other marine mammals.¹¹ As a result, through its change of tack (no pun intended) in TMX, the NEB bears some of the responsibility for the alleged administrative law defects that the FCA relied upon to quash the approval.

This leaves the fourth and final suspect—which is the federal government. The FCA held that the federal government failed to follow its clear direction in Gitxaala on what was required by way of adequate consultation and accommodation in the GIC-managed process following a NEB (or in the case of Northern Gateway, Joint Review Panel) recommendation report’s issuance. The FCA was clear that it was not sufficient for the federal government to passively listen to the concerns of Aboriginal groups regarding the NEB’s report and document the concerns for later consideration by the GIC. Rather, the government’s representatives had to be able to enter into a dialogue and address concerns through accommodation measures.¹²  However, the federal government's approach to consultation, at least in part, was based on its insistence that it lacked jurisdiction to impose new project conditions on the NEB, and could only refer the NEB’s recommendations back to it in order to consider new conditions. This clearly frustrated the FCA, which had in Gitxaala—issued five months prior to the government’s TMX approval decision—found the government to have had possessed such condition-making authority in the analogous regulatory framework applicable to Northern Gateway. The federal government's approach also created a “catch-22” with respect to mitigating marine vessel traffic effects by way of conditions. Since the NEB claimed to lack this authority, there would have been no sense in the government referring the NEB’s report and recommendations back to it to remedy the matter. Yet by denying that it could impose conditions of its own, the federal government made it impossible to mitigate and accommodate the effects in question in the context of TMX.

What is “the fix”?

Clear options are available to fix the problem and set TMX’s approval back in place.

The first “fix” would be a successful appeal to the SCC. This would take at least a year, assuming it could be expedited—and would have no guarantee of success. With respect to the merits of any such appeal, the project scoping issue is a significant one.  It is not clear that the FCA made a mistake based on the record of the NEB's scoping decision. Regarding the inadequacy of consultation by the federal government, even if the FCA were wrong in Gitxaala, it is not so clear that it was wrong in Tsleil-Waututh owing to the NEB’s finding of significant adverse effects on Southern resident killer whales and associated impacts on Aboriginal rights. Both the federal government and the NEB denied the jurisdiction to mitigate these effects through conditions and, thereby, accommodate Aboriginal concerns in relation to them. Effective consultation requires a process in which accommodation of effects is possible—yet the NEB and federal government effectively both threw up their hands when it came to marine traffic effects.

The second “fix” would be to send the NEB’s report and recommendations back to the NEB, which would have to re-do its assessment by including marine traffic effects within the scope of the CEAA 2012 “Project.” It may well be asked to do this not only to assess effects and mitigation for Southern resident killer whales, but to do so for all marine mammals, fish and birds impacted by TMX’s shipping routes. This would be a huge undertaking.  Further, if the same NEB panel could not be constituted, the NEB may have to re-do the entire regulatory process, which would realistically take one to two years to complete. This would only get the NEB back to the report and recommendation stage. There would still, of course, have to be post-report consultation by the federal government, which in turn would take a number of months to complete. All in all, it could easily be two to three years before TMX would see a new approval that could reasonably withstand further judicial challenges.

The last “fix”—which would be by far the quickest and most litigation-proof solution—would be to have Parliament itself fix the problem. Specifically, the government could legislate
TMX’s NEB certificate back into existence and attach new conditions to the certificate to address the concerns raised by Aboriginal groups during Phase III consultation as well as adverse impacts on Southern resident killer whales. The legislation could then limit the potential for further judicial challenges by providing for a right of appeal directly to the SCC on leave. Construction could recommence immediately on the legislation coming into force, and would not be delayed by litigation. Appropriately-drafted legislation, and meaningful responses to the specific Aboriginal concerns raised during Phase III consultation, would also place the approvals on a strong legal footing. Without this type of legislation, the delay to the TMX expansion will go on for years.