Category Archives: Mining

Consultation and Accommodation Deemed Adequate in Latest BC Mine Decision

In the Fort St. John area of British Columbia, Canadian Kailuan Dehua Mines Co. Ltd. (“CKDM”), a Chinese company, is planning to execute the Gething Bulk Sample Project (the “Project”). The Project:

“involves the excavation of two underground declines (ramps) of approximate length 337m and 360m to access the target coal seam, and the extraction of a 100,000 tonne coal bulk sample…”

The Project is also situated within the Treaty 8 reserve lands of the West Moberly First Nations (“WMFN”). Once again, a B.C. court has been asked to determine whether there was adequate consultation and accommodation before the decisions were made to allow the Project to proceed.

Treaty 8 promises WMFN the right to pursue their usual vocations of hunting, trapping and fishing, but that right is “subject to such regulations as may from time to time be made by the Government … and saving and excepting such tracts as may be required or taken up … for mining…”

One issue that the B.C. Supreme Court had to address was an earlier decision (West Moberly No. 1 (2011)) in which a similar coal development program was put on hold after the B.C. Court of Appeal held that there had been inadequate consultation. Would West Moberly No. 1 be applied or distinguished in this case?

While both matters concerned small herds of caribou that are at risk of extirpation, the project under consideration in West Moberly No. 1 was found to be located in an area integral to the life of the caribou. In distinguishing West Moberly No. 1, the B.C. Supreme Court held, in this case, that the Project was at a lower elevation and further north and that, unlike in West Moberly No. 1, no government expert had expressed any concerns about the welfare of the caribou.

Justice MacIntosh ultimately found that consultation and accommodation had been adequate in this case. Once again, there was evidence that a First Nation had been “reluctant or simply slow in bringing their information to the table” and the court again identified the principle that “[c]onsultation is a two-way exercise”. For more on that, see my earlier post: here.

In his concluding remarks, Justice MacIntosh summarized some principles of the duty to consult, as follows:

[146] Consultation and accommodation are called for to ensure that the Crown honours its treaty and other obligations with First Nations, instead of merely paying lip service to First Nation rights. Honourable consultation and accommodation are the protectors against the Crown barging ahead as if treaty rights were only cosmetic.

[147] In addressing allegations that the Crown has breached its duties, a court must look beyond only the allegations, and see what the facts demonstrate as to inadequate or dishonourable Crown participation. Of course, that exercise, in essence, is the task of a court in almost every case coming before it, i.e., to look beyond mere allegations. I raise the point in the context of consultation-accommodation cases because these cases raise a particular difficulty in relation to judicial review. The fact that more study, more consultation and more accommodation would nearly always be possible raises the risk of inadequate consultation being found simply from the fact that the further consultation could have been carried out when it was not. The analysis has to refine itself, to asking whether some relevant block of data was omitted, or some particular, reasonable, First Nations’ request was ignored, as two examples.

[148] From my assessment of the evidence, placed in its context by the parties’ submissions, I was unable to see a material deficiency in the consultation or the accommodation. Nor did the evidence show anything in the nature of dishonourable Crown conduct. Consultation is a two-way exercise. From time to time in the consultation exercise here, the West Moberly were reluctant or simply slow in bringing their information to the table. The Crown cannot be faulted for that, provided the Crown carried on, and assured itself that it had obtained the information it required in order to know the circumstances and consult adequately.

I suspect that, should the Project reveal a viable mining opportunity for CKDM, we should not be surprised to see these parties before the courts again.

By James Early

Environmental Protection Order issued by Alberta Government

Earlier this month, Alberta issued an environmental protection order to Locke Stock & Barrel Company Ltd. that outlined necessary steps to reclaim an oil and gas wellsite in the Municipal District of Foothills No. 31.

Under the environmental protection order, Locke Stock & Barrel Co. Ltd. must:

– conserve and reclaim the site in accordance with the 2010 Reclamation Criteria for Wellsites and Associated Facilities;

– remediate any contamination on site, or off-site which originated from the well or any of its activities;

– undertake soil and/or groundwater sampling at appropriate intervals to demonstrate acceptable remediation;

– submit a final report to Environment and Sustainable Resource Development (“ESRD”) summarizing all work that has been undertaken to remediate any contamination;

– apply to ESRD for a reclamation certificate for the well; and

– conduct weed spraying and maintenance on the site at least twice a year until ESRD issues a reclamation certificate to the company.

As the Environmental Law Centre recently noted, though, there were 16,975 wells abandoned between 1963 and 2002, and an additional 35,856 since 2002 in Alberta. Hopefully we will begin to see a lot more remediation orders issued in the coming months, and with greater diligence than in the past.

That begs the question: what is the effect of an environmental protection order in the case where the company or entity required to remediate declares bankruptcy? A recent Lexpert article noted:

“Many a stakeholder has been stunned by the broad powers of the Companies’ Creditors Arrangement Act (“CCAA”) to stay – and then compromise – nearly all clams against an insolvent company. This power has recently been confirmed to extend even over remediation orders issued by provincial ministries of environment (“MOEs”)…

“[The issue of insolvency vs. remediation orders is s]o hot that counsel for MOEs have suggested that CCAA is in danger of becoming a “regulatory car wash,” arbitrarily cleansing debtors of environmental obligations and leaving taxpayers to pick up the tab.”

The decision reached by the Supreme Court of Canada in Abitibibowater in 2012 set a worrying precedent. In that case, the Supreme Court held that there are three requirements orders must meet in order to be considered claims that may be subject to the insolvency process.

First, there must be a debt, a liability or an obligation to a creditor. The first criterion was met because the MOE had identified itself as a creditor by resorting to environmental protection enforcement mechanisms.

Second, the debt, liability or obligation must be incurred as of a specific time. This requirement was also met since the environmental damage had occurred before the time of the CCAA proceedings.

Third, it must be possible to attach a monetary value to the debt, liability or obligation. The Supreme Court determined that it was possible.

In Nortel Networks v MOE, litigation that has been working its way through the Ontario courts, the Ontario Court of Appeal lifted stays of remediation orders that had been put in place pursuant to the CCAA. Nortel applied for leave to appeal this decision to the Supreme Court, but last week Nortel’s application for leave was dismissed.

In assessing the Supreme Court’s reasoning in Abitibibowater the Ontario Court of Appeal summarized its interpretation of the ruling as follows:

“In determining whether a regulatory order is a provable claim, a CCAA court must apply the general rules that apply to future or contingent claims. As I read it, the Supreme Court’s decision is clear: ongoing environmental remediation obligations may be reduced to monetary claims that can be compromised in CCAA proceedings only where the province has performed the remediation work and advances a claim for reimbursement, or where the obligation may be considered a contingent or future claim because it is “sufficiently certain” that the province will do the work and then seek reimbursement.” [my emphasis]

In other words, if a province wishes to avoid the ‘car washing’ of its remediation order against a bankrupt polluter, it should not take steps to remediate the contaminated site itself, nor show any intent to remediate.

In terms of the Locke Stock & Barrel Co Ltd. environmental protection order, it is good to see Alberta utilizing some of the tools available to it to fix environmental problems. In some circumstances, however, it could be all for naught if the party subject to a remediation order declares bankruptcy and the obligation to remediate is “car washed” away by the CCAA. Remediation would likely then be left to the province in question, and, consequently, taxpayers like you.

By James Early

Freedom of Speech vs. Blockade

The Mathias Colomb Cree Nation (“MCCN”), located in Manitoba, disputes the right of Hudson Bay Mining & Smelting Co., Limited (“Hudson Bay”) to conduct certain mining operations because it claims it was not consulted and has not consented to those operations.

In response to Hudson Bay’s continued operation, protests were held at Hudson Bay’s ‘Lalor Project’. MCCN also takes issue with Hudson Bay’s ‘Reed Project’ operations.

Hudson Bay applied for, and obtained, an interlocutory injunction against MCCN to prevent further interference with its access rights to the Lalor and Reed Projects. The injunction was appealed by MCCN and, on January 20, 2014, the Manitoba Court of Appeal dismissed MCCN’s appeal.

MCCN had argued that Section 57 of the Court of Queen’s Bench Act (Manitoba) prevented the Court from issuing an injunction where to do so would restrain a person from exercising the right to free speech. The Appeal raised two primary issues:

            (i) did Section 57 prevent the issuance of an injunction; and

            (ii) did the judge err in exercising discretion to grant the injunction?

Background

The first of the MCCN protests occurred on January 28, 2013 at the Lalor Project. It lasted for almost five hours, during which time Hudson Bay closed the gate to its operations. A peaceful protest ensued, and the protestors were not asked to leave. The RCMP had been notified of the protest and Chief Arlen Dumas, of MCCN, advised the RCMP that he would allow access to the site in an emergency. Chief Dumas also allowed staff to leave the site on two occasions. Finally, Chief Dumas delivered a Stop Work Order to staff at the site.

On March 5, 2013, Chief Dumas delivered a Stop Work Order to the Reed Project, before participating in a protest during the afternoon of March 5, 2013 at the Lalor Project. Once again, Chief Dumas delivered a Stop Work Order and the protestors restricted access to the Lalor Project.

Hudson Bay commenced its legal proceedings on March 11, 2013. The judge concluded that, although the protests were of short duration, they constituted a blockade and, as such, awarded the injunction. The judge found that the injunction was necessary as Hudson Bay would suffer irreparable harm without it owing to MCCN’s limited financial resources to properly compensate Hudson Bay for any damages.

The Appeal

The granting or refusal of an interlocutory injunction is a discretionary order and, as such, an appeal court will only interfere with an earlier order if the decision was “clearly wrong”, “unreasonable” or a “palpable and overriding error” was made.

Based upon the evidence available, the Court of Appeal found that there was sufficient evidence to establish that the protests at the Lalor Project constituted a blockade. The bigger question, however, was whether blockades are a permissible exercise of the right of freedom of speech.

The Court of Appeal noted that it had no concerns with the protestors objectives of raising public awareness, nor any concerns as to the truth of the statements being made by the protestors. It was the conduct of the protestors that was in question. That conduct consisted of three things:

            (i) assembly and demonstration with signs at the Lalor Project;

            (ii) leafleting (Stop Work Orders) at the Lalor and Reed Projects; and

            (iii) blocking ingress and egress at the Lalor Project.

Quite quickly, the Court of Appeal found that both (i) and (ii), above, were permissible actions during the course of a protest and, as such, there should be no limitation of free speech.

With regard to (iii), the Court of Appeal equated a blockade during a protest to a blockade during a labour dispute and strike. The Court of Appeal noted that, in the context of a labour dispute, a blockade is an unacceptable method of dissent. While protestors do not have to be “rational or polite”, the Court of Appeal found that the actions of the MCCN protestors amounted to a substantial and unreasonable interference with Hudson Bay’s use or enjoyment of the Lalor Project.

The Court of Appeal did allow a part of the appeal as it related to the Reed Project. An injunction should impose only such restraint as is necessary to stop the mischief complained of and preserve the status quo and, as MCCN had not blockaded (or even protested) at the Reed Project, the scope of the injunction was found to be too wide. The injunction as it related to the Lalor Project, however, was upheld.

Of the three injunction criteria (serious issue to be tried; irreparable harm to the moving party; balance of convenience) the appellants only contested the irreparable harm strand. In dismissing this argument, the Court of Appeal opined that “a finding of a complete blockade of a lawful business strongly suggests irreparable harm”. The appellants conceded that MCCN had insufficient resources to compensate Hudson Bay for any harm caused.

The Lesson?

While your protest need not be rational or polite, and while your protest can involve signs, leaflets and other written documents, it cannot equate to a blockade. Freedom of speech is guaranteed in Manitoba legislation, but does not extend to peaceful blockades of business premises.

To read the full decision, see: Hudson Bay Mining & Smelting Co. v Dumas et al 2014 MBCA 6.

By James Early.