1. INCREASING RISK OF SUFACE ACCESS FOR THE OIL AND GAS INDSUTRY THE ROLE OF ABORIGINAL CONSULTATION Petroleum Joint Venture Association Luncheon April 28, 2005 Sandy Carpenter Fasken Martineau DuMoulin LLP

2. OVERVIEW Summary of Current Law Recent SCC Decisions Upcoming Events Implications and Challenges Forecast

3. LAW PRE-HAIDA AND TAKU Section 35 Constitution Act, 1982 The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed Aboriginal peoples include the Indian, Inuit and Métis peoples of Canada

4. LAW PRE-HAIDA AND TAKU Sparrow (SCC 1990) Existing aboriginal rights are constitutionally protected under section 35 Aboriginal rights are not absolute – can be infringed by government Government must be able to justify infringement

5. LAW PRE-HAIDA AND TAKU Infringement Analysis Has the aboriginal group established a section 35 right? Will there be a “prima facie infringement”? Meaningful diminution Can the infringement be “justified”? Priority, compensation, consultation and accommodation

6. LAW PRE-HAIDA AND TAKU Badger (SCC 1996) Alberta Treaty 8 hunting case Existing Treaty rights are constitutionally protected Government must also justify infringement of treaty rights Subject to Mikisew (FCA 2004) “taking up” of lands (?)

7. LAW PRE-HAIDA AND TAKU Delgamuukw (SCC 1997) Aboriginal title exists where proof of exclusive use and occupation Aboriginal title has an economic component Government must justify infringement of aboriginal title – Sparrow test applies Consent may be required

8. LAW PRE-HAIDA AND TAKU Powley (SCC 2003) Métis are aboriginal people – section 35(2) Métis rights are constitutionally protected Government must also justify infringement Distinct formula for determining rights

9. LAW PRE-HAIDA AND TAKU Consequences of Failure to Satisfy Obligations Crown obligation, but … Industry bears primary consequences Taku – quashing of project certificate Mikisew Cree (trial level) – quashing of road construction permit Halfway River – quashing of cutting permit …

10. HAIDA AND TAKU Taku River/Haida (BCCA 2002) Consultation required whenever reasonable prospect that government actions may infringe aboriginal rights arising out of the Crown’s fiduciary duty No previous recognition of aboriginal rights required (Taku) Imposed a legal duty to consult on industry (Haida)

11. HAIDA AND TAKU (SCC) Haida v. B.C. (Overview) Source of duty When duty arises Scope and content Whether extends to third parties

12. HAIDA AND TAKU (SCC) Haida v. B.C. (Source of Duty) Applies to Crown conduct Grounded in the honour of the Crown Necessary to achieve reconciliation Assertion insufficient to give rise to fiduciary duty but may require consultation and accommodation

13. HAIDA AND TAKU (SCC) Haida v. B.C. (When Arises) Obligation arises (1) when the Crown has knowledge of the potential existence of rights (credible but unproven claim) and (2) contemplates conduct that might adversely affect them May be early in resource allocation Crown may continue to manage resource pending resolution of claim

14. HAIDA AND TAKU (SCC) Haida v. B.C. (Scope and Content – Consultation) Distinction between knowledge sufficient to trigger duty and the scope of the duty Content of the duty varies with the strength of the claim and the seriousness of the potential impact – spectrum “Consult and, if appropriate, accommodate” (Cont’d)

15. HAIDA AND TAKU (SCC) Haida v. B.C. (Scope and Content – Consultation – cont’d) At all stages “good faith” is required Continuing duty The intention of substantially addressing aboriginal concerns as they are raised, through a meaningful process First Nations must define right and alleged infringement with clarity May “delegate” procedural aspects to industry but not the legal liability itself

16. HAIDA AND TAKU (SCC) Haida v. B.C. (Scope and Content – Accommodation) Consultation may lead to accommodation (a level of responsiveness to First Nation concerns) Requires good prima facie case and significant adverse impacts (Cont’d)

17. HAIDA AND TAKU (SCC) Haida v. B.C. (Scope and Content – Accommodation – cont’d) Avoid irreparable harm or minimize effects of infringement pending resolution of the final claim Does not require agreement No sharp dealing, but hard bargaining permitted May establish “regulatory” schemes to discharge

18. HAIDA AND TAKU (SCC) Haida v. B.C. (Whether Extends to Industry) No independent duty on industry Crown may “delegate” procedural aspects of consultation to industry, but cannot delegate the duty itself Industry may still be liable if other wrongs

19. HAIDA AND TAKU (SCC) Taku v. B.C. Followed Haida Acceptance in BC Treaty process indicated prima facie claim of title Had also demonstrated prima facie case for exercise of aboriginal rights in area Proposed road had potential to cause a serious infringement on rights and title

20. HAIDA AND TAKU (SCC) Taku v. B.C. (cont’d) Environmental assessment process provided consultation Through that process changes were made to accommodate the Taku’s interests No need for separate process (but voluntary participation) Restored Project Approval Certificate issued under BC environmental assessment process

21. UPCOMING EVENTS Mikisew Cree First Nation v. Minister of Canadian Heritage (FCA 2004) “And Her Majesty the Queen hereby agrees with the said Indians that they shall have right to pursue their usual vocations of hunting, trapping and fishing throughout the tract surrendered as heretofore described, subject to such regulations as may from time to time be made by the Government of the country, acting under the authority of Her Majesty, and saving and excepting such tracts as may be required or taken up from time to time for settlement, mining, lumbering, trading or other purposes” (Treaty 8 – 1899)

22. IMPLICATIONS AND CHALLENGES Haida decision is balanced, no radical shift Likely to require earlier consultation Greater focus on process Broader scope of matters requiring consultation (activity-based permits plus tenure) Uncertain application in treaty context pending SCC decision in Mikisew

23. IMPLICATIONS AND CHALLENGES Crown (BC) Clarification of duty. Duty arises early in the process – may be at “strategic” rather than “operational” level Greater need for documentation (or “post- consultation” communication) Court’s suggestion to set up a regulatory scheme

24. IMPLICATIONS AND CHALLENGES First Nations Must outline claims with clarity, focusing on the scope and nature of the rights and on the alleged infringements Must consult in good faith Cannot attempt to frustrate Crown’s attempt to consult No “veto”

25. IMPLICATIONS AND CHALLENGES Industry In industry’s interests to ensure that Crown observes its obligations Distinction between government and industry (delegation) Need to fully document efforts and provide information to government Accommodation offers

26. FORECAST Mikisew Cree (SCC) “Consultation” litigation Increase in frequency Involvement of broader range of government agencies Focus on earlier stages of process Rights-based practices

27. Fasken Martineau DuMoulin LLP Barristers and Solicitors Patent and Trade-mark Agents 3400 First Canadian Centre 350 – 7 th Avenue SW Calgary, Alberta T2P 3N9 Phone: (403) 261-5350 Fax: (403) 261-5351 Sandy Carpenter (403) 261-5365 scarpenter@cgy.fasken.com Peter Feldberg (403) 261-5364 pfeldberg@cgy.fasken.com