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Legal Update

Of Coal and Caribou: Aboriginal Consultation

Kenning Marchant, D. Jur.
The Marchant Practice Legal Update

First Coal Corporation’s advanced exploration of a valuable metallurgical coal property has been put on hold by the courts because the BC government’s aboriginal consultation and accommodation didn’t pass constitutional muster. The BC Court of Appeal released its decision May 25, 2011.

A central issue is a Caribou herd that was reduced to 11 animals by previous developments. The Treaty 8 West Moberly First Nation, population 193, wants the herd not just protected, but rehabilitated. The First Nation has had a self-imposed moratorium on caribou hunting since 1970.

The BC Court of Appeal decision illustrates the strategic vulnerability of a project that depends on accommodating a central aboriginal interest. First Coal indicates it has spent $65M so far on this coal property, including measures to protect Caribou habitat and winter food supply.

The BC government consulted with the West Moberly First Nation and then issued advanced exploration amendments to the First Coal mining permit, together with licenses to cut and clear up to 41 hectares of woodland for advanced exploration purposes.

A BC Supreme Court judge stayed these permissions for 90 days and directed that a program be put in place to protect and augment the Burnt Pine caribou herd.

The BC government appealed, supported by First Coal.

The 3 appeal judges rendered 3 different decisions.

The Chief Justice supported the finding of the Supreme Court judge that there was inadequate consultation and that the caribou herd should be both protected and augmented.

A second appeal justice agreed that there had been inadequate consultation, but disagreed that it was appropriate to order that the caribou herd be augmented, since the reduction in herd size was not a consequence of First Coal’s activities.

The other appeal justice did not agree that the consultation was inadequate. She also disagreed with ordering the augmentation of the caribou herd. She supported the permits and licenses to First Coal.

Any of the parties might consider appealing this decision to the Supreme Court of Canada. In particular, a majority of the appeal judges took away the West Moberly First Nation’s priority objective, to increase the size of the Burnt Pine caribou herd. BC or First Coal would prefer the result advocated by the dissenting judge who would have set aside the Supreme Court judge’s order entirely.

A proponent does not want to be in the position of spending a lot of money on a promising property only to find that there is a potentially irreconcilable conflict with an aboriginal or treaty right. A proponent does not want to be hostage to a court finding that the government did not properly discharge its constitutional duty to consult and, if necessary, accommodate aboriginal interests. A further appeal to the Supreme Court of Canada would take time and money, and the outcome is not certain.

Governments do not provide warranties and indemnifications to support the proper discharge of their consultation activities as required by section 35 of the Constitution Act, 1982. In December 2009, Ontario settled a lawsuit brought by Platinex Inc. with both a payment and a future NSR in respect of a property that could not be developed because there was not an accommodation acceptable to the First Nation. However, this is likely to be a rare exception; and Ontario has since amended its Mining Act to address aboriginal consultation issues.

Strategically, aboriginal issues need to be identified at the very earliest stages of analysis of a claim. If agreement cannot then be reached to include both the Crown and the First Nation, the opinion of the courts can be sought before significant exploration expenses are incurred – if that seems worthwhile. Although that involves delay, it can be better than a project hitting roadblocks or mired in legal uncertainties after significant sunk costs.

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