Ottawa’s rescue operation for Muskrat Falls triggers the first nation’s lawsuit

Given the number of natural resource projects that have native support, this type of litigation may become more frequent

Article content

A few disputes in Newfoundland and Labrador and Alberta over indigenous resource projects suggest that federal and provincial governments still do not understand it when it comes to their well-established duty to consult with First Nations.

Advertising

Article content

In Newfoundland, Innu Nation is suing the federal government and the provincial government for failing to consult before negotiating the 824-megawatt Muskrat Falls hydro dam, a $ 5.2 billion aid package aimed at helping the province deal with the massive debt that arises from billions in cost overruns on the project. The agreement is similar to a price reduction agreement that protects newfoundlanders from electricity price shocks as a result of the exceedances.

However, Innu maintains that the agreement could significantly affect the Impact Services Agreement (IBA) signed with Ottawa and the province in 2011. Under its terms, Innu enabled the Muskrat Falls project by allowing Newfoundland to flood Innu territory the size of Delaware. . .

Advertising

Article content

“As compensation for the damage the project would cause, Innuit Nation received five percent of the net cash flow from the project,” said Matt McPherson, a Toronto-based partner at Olthuis Kleer Townshend LLP, which represents Innu. “But the rate reduction scheme will certainly have an impact and perhaps a significant impact on the profits flowing to Innu.”

According to McPherson, Innu was excluded from the rate reduction negotiation process and has not been given sufficient information about its impact.

“We have repeatedly requested information since 2020, but all we received were assurances from the provincial government that they would comply with the obligations of the IBA,” he said.

Advertising

Article content

The Innu first found out about the successful conclusion of a principle agreement on the rescue package at 17:00 on 27 July, the day before the formal announcement.

“No details were given, and the only way the Innu even got basic information was by crashing the party at a technical briefing the next day – to which they had not been invited,” McPherson said.

Eventually, the authorities released further details, but not the economic modeling needed to determine the impact of the trade.

“We know the information was available because the government has publicly stated that the modeling was part of the negotiations,” McPherson said.

Frustrated, Innu filed a lawsuit against the governments on August 10. The claim alleges breach of the duty to consult, breach of the Crown’s honor and breach of the duty of trust. Innu also sees an injunction prohibiting the conclusion of a final agreement before the issues raised in the trial are resolved.

Advertising

Article content

Previous case law suggests that Innu has a strong claim.

In mid-July, Federal Court Judge Henry Brown recognized the Crown’s duty to consult on economic benefits associated with Aboriginal rights. As a result, Brown overturned Federal Environment Secretary Jonathan Wilkinson’s decision to allow Coalspur Mines Ltd. to submit the proposed extension of its Vista thermal coal mine near Hinton, Alberta, to the Federal Impact Assessment Agency.

By the time it ran out, Ermineskin, like Newfoundland Innu, had entered IBAs related to the existing mine. But Wilkinson did not want to contact Ermineskin, let alone consult them. This was wrong, Ermineskin claimed, because the appointment to the agency affected their financial interest in enlargement.

Advertising

Article content

Prime Minister Justin Trudeau makes a statement as he visits Newfoundland and Labrador Prime Minister Andrew Furey at the Confederation Building in St. Louis on Wednesday, July 28, 2021.  John's, NL.
Prime Minister Justin Trudeau makes a statement as he visits Newfoundland and Labrador Prime Minister Andrew Furey at the Confederation Building in St. Louis on Wednesday, July 28, 2021. John’s, NL. Photo by THE CANADIAN PRESS / Andrew Vaughan

Brown agreed, noting that the IBAs were concluded after consultation and provided “valuable economic, societal and social benefits to Ermineskin”, and that they intended to compensate Ermineskin for potential impacts caused by natural resource development on Ermineskin members’ ability to exercise aboriginal rights within their traditional territory. “It followed that they had been” inexplicably frozen out “of a” unilateral process “.

“The court’s conclusion that interference in an IBA may trigger an obligation to consult on economic benefits associated with Aboriginal rights is groundbreaking,” said Dr. Dwight Newman, Canada Research Chair in Indigenous Rights in Constitutional and International Law at the University of Saskatchewan’s. Legal College.

Advertising

Article content

And if confirmed, the precedent-setting effect of the Coalspur case on the Innu interest rate limitation dispute could be significant, as IBAs are central to both cases. It is also clear that Canadian judges prefer consultation over litigation and have cut a wide chunk out of the duty to consult.

“Judges, including the Supreme Court of Canada, have repeatedly said we do not want to deal with these, so please negotiate,” McPherson explains.

According to Thomas Isaac, the Vancouver-based chairman of Cassels Brock LLP’s original law group, the strife stemming from IBAs is a “natural progression” of both indigenous peoples ‘and governments’ attitudes.

“What you see is a very sophisticated First Nations thinking in generational terms and making government-like decisions about taking care of people and building infrastructure,” he said. “On the other hand, you have federal and provincial governments that have not developed a vision of the balance between governing the interests of all Canadians and acting honestly to advance their constitutional obligations to the Aborigines.”

Advertising

Article content

In practical terms, Isaac adds, the government needs to address IBAs with a view to their future implementation.

“Governments need to understand that they have to mean or give effect to every word in every single agreement in IBAs,” he said.

Julie Abouchar, a Toronto-based partner at Willms & Shier, a store for environmental, Aboriginal and energy legislation, agrees that the duty to consult on the impact of projects is a continuing duty.

Advertising

Article content

“Projects affect the ability to exercise native rights, and that does not change over the life of the project,” she said. “That’s why the need to consult continues.”

And this applies both to projects that have and do not have native support.

“We may see indigenous peoples resorting to lawsuits against governments that reject projects they would like to see further,” said Roy Millen, an Aboriginal law partner at Blake, Cassels & Graydon LLP’s Vancouver office. “Given the number of natural resource projects in Canada that have native support, this type of litigation may become more frequent.”

Julius Melnitzer is a Toronto-based author of legal affairs.

______________________________________________________________

If you liked this story, sign up for more in the FP Energy Newsletter.

______________________________________________________________

Advertising

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourages all readers to share their views on our articles. Comments can take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications – you will now receive an email if you receive a reply to your comment, which is an update to a comment thread you follow, or if a user you follow comments. Visit our Community Guidelines for more information and details on adjusting your email settings.

Leave a Comment