2004 BCCA 286 Chief Apsassin v. B.C. Oil and Gas

Before:	The Honourable Madam Justice Ryan
	The Honourable Mr. Justice Braidwood
	The Honourable Mr. Justice Low

Oral Reasons for Judgment

R.J.M. Janes and R. Freedman	Agent for the Appellant
A.W. Carpenter and K. O'Callaghan	Counsel for the Respondent: Vintage Petroleum Canada Inc.
J.E. Gouge, Q.C.	Counsel for the Respondent: B.C. Oil and Gas Commission
K. Horsman	Counsel for the Attorney General of British Columbia
Place and Date:	Victoria, British Columbia
May 14, 2004

[1] RYAN J.A.: This is an appeal by Chief Apsassin on his behalf and on behalf of the members of the Saulteau First Nations, from the order of Mr. Justice Cohen pronounced January 27, 2004, dismissing their application for judicial review. I will refer to the appellants, as did their counsel, as “Saulteau”, or “the Saulteau people”.

[2] The application for judicial review sought to quash a decision of the British Columbia Oil and Gas Commission, made March 14, 2003, under sections 83-90 of the Petroleum and Natural Gas Act, R.S.B.C. 1996, c. 361, which authorized Vintage Petroleum Canada Ltd. to construct a sour gas test well site within the traditional territory of the Saulteau people.

[3] The Saulteau people raise two grounds of appeal which are stated by counsel in this way. The learned Chambers Judge erred in:

(i) failing to properly apply a standard applicable to fiduciaries to the question of whether the Commission properly discharged its constitutional and fiduciary obligations to the Saulteau to ensure that the substance of their concerns about their Treaty rights had been addressed; and

(ii) failing to find that the unstructured discretion to infringe treaty rights contained in the legislative scheme in question unjustifiably infringed Saulteau’s treaty rights.

[4] The Oil and Gas Commission Act, S.B.C. 1998, c. 39, establishes the Oil and Gas Commission. The Commission consists of a Board of two directors: one serves as the Commissioner and the other as the Deputy Commissioner.

[5] Section 2(5) of the Oil and Gas Commission Act provides that the Commission is an agent of the government.

[6] Section 3 sets out the purposes of the Commission as follows:

3 The purposes of the commission are to

(a) regulate oil and gas activities and pipelines in British Columbia in a manner that

(i) provides for the sound development of the oil and gas sector, by fostering a healthy environment, a sound economy and social well being,

(ii) conserves oil and gas resources in British Columbia,

(iii) ensures safe and efficient practices, and

(iv) assists owners of oil and gas resources to participate equitably in the production of shared pools of oil and gas,

(b) provide for effective and efficient processes for the review of applications related to oil and gas activities or pipelines, and to ensure that applications that are approved are in the public interest having regard to environmental, economic and social effects,

(d) participate in planning processes, and

(e) undertake programs of education and communication in order to advance safe and efficient practices and the other purposes of the commission.

[7] Section 4 provides the following:

4 For greater certainty, the provisions of this Act are intended to respect aboriginal and treaty rights in a manner consistent with section 35 of the Constitution Act, 1982.

[8] Section 10 provides the following:

10(1) The commission may, and at the request of the Lieutenant Governor in Council, must, at the places, at the times and in a manner it considers advisable

(a) make inquiries and investigations and prepare studies and reports on any matter within the scope of this Act, and

(b) recommend to the Lieutenant Governor in Council any measures the commission considers necessary or advisable in the public interest related to oil and gas activities or pipelines.

(2) Subsection (1) does not apply to a matter that is before the commission.

[9] Sections 83, 89, and 93 of the Petroleum and Natural Gas Act, supra, provide:

s. 83 A person must not begin to drill, or drill or operate, a well except under a subsisting well authorization.

s. 89 A person must not begin to drill or drill a test hole except under a subsisting test hole authorization under this Act.

s. 93(1) The commission may grant, subject to conditions, restrictions and stipulations, or refuse to grant a well authorization or test hole authorization.

(2) The commission must keep a record of each well authorization and test hole authorization.

[10] Pursuant to s. 1 of the Petroleum and Natural Gas Act, the “commission” referred to in these sections is the Oil and Gas Commission.

[11] Section 90 of the Petroleum and Natural Gas Act, supra, provides that the application for a test hole authorization must be made to the Commission and is not valid unless it is accompanied by a fee and a statement setting out certain particulars of what is intended to be done. A formal hearing is not anticipated by the legislation.

[12] In the case at bar, the Commission delegated to James Gladysz, an employee of the Oil and Gas Commission, the responsibility of deciding whether to issue a test hole authorization to Vintage.

[13] For purposes of the judicial review Mr. Gladysz filed an affidavit containing the written reasons he issued March 14, 2003, granting the authorization; copies of written material he considered; and, a recitation of the oral comments made by staff members and members of the Saulteau people that he took into account in making his decision.

[14] The Commission’s order reads in part:

[17] "Additional Conditions of Approval for WA 15861, Vintage Gates 1-3-81-25 W6M",:

1. The Operator shall submit to the Commission prior to the commencement of construction activities associated with the subject well, an access management plan including the proposed pipeline corridor and any all-season access roads anticipated in relation to the subject well.

2. The Operator shall submit to the Commission prior to the commencement of drilling the subject well, a reclamation plan for this well location and the associated disturbances.

3. The wellsites shall be adequately dyked and trenched to contain any escaping formation water, oil, drilling fluid, waste, chemical substances, or refuse to ensure that no hazardous fluid or material leaves the location, and potentially migrates into nearby watercourses.

4. The Operator shall ensure wildlife trails are kept open where possible during the construction and reclamation phases of the well site project in order to minimize the impacts to their travel corridors.

5. The Operator shall temporarily fence the perimeters of all drilling sump sites, on, or off the well site, in order to restrict wildlife access onto those areas during the drilling and completion operations of this well. The sump locations shall be closely monitored throughout the operations and, if necessary, additional fencing may be required to further restrict animal access to these sites.

[15] The evidence disclosed that Saulteau, together with its closest neighbour, the West Moberly First Nation, had for many years expressed concern about the encroachment of oil and gas development in the territory in question. They advised both the provincial and federal governments that their Treaty 8 rights were being eroded without meaningful consultation. With respect to the application of Vintage to drill a test well site, Saulteau believed that wildlife and habitat data used by the Crown was unreliable or incomplete. The Saulteau were also concerned that the incremental nature of the oil and gas approval process meant that the cumulative effects of development on their ability to exercise Treaty 8 rights were not being addressed.

[16] Saulteau says that because of these legitimate concerns, the Commission erred in failing to order a “cumulative effects” study before it considered Vintage’s application for a test well. The Commission was bound to do so, says Saulteau, because without such a study, the Commission was unable to fully discharge its fiduciary duties to consult with and accommodate the Saulteau people before permitting activity which potentially infringed upon their traditional rights.

[17] The Chambers Judge concluded that the Commission did not breach its constitutional duty under the Act to consult and accommodate the Saulteau people.

[18] As I understand the reasoning of the Chambers Judge, it was this. The analysis begins with s. 35(1) of the Constitution Act which provides:

35(1) The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and confirmed.

[19] Section 35(1) rights are not absolute. They may be infringed by the federal and provincial governments in the exercise of their powers. However, if the aboriginal people in question can establish a potential prima facie infringement of their rights, the governmental power must demonstrate that it has consulted and accommodated them before the infringement takes place. As Lambert J.A. stated in Haida Nation v. B.C. (Ministry of Forests) (2002), 99 B.C.L.R. (3d) 209 (C.A.) ("Haida (No. 1)"), (leave to appeal to S.C.C. granted) at para. 55:

The discharge of the obligation to consult, as expressed in Sparrow, Gladstone, and Degamuukw, has been framed as an element among the circumstances which would justify a prima facie infringement of the aboriginal title or aboriginal rights. As I have said, the consultation must take place before the infringement. But where there are fiduciary duties of the Crown to Indian peoples it is my opinion that the obligation to consult is a free standing enforceable legal and equitable duty. It is not enough to say that the contemplated infringement is justified by economic forces and will be certain to be justified even if there is no consultation. The duty to consult and seek an accommodation does not arise simply from a Sparrow analysis of s. 35. It stands on the broader fiduciary footing of the Crown’s relationship with the Indian peoples who are under its protection.

[20] The Chambers Judge concluded that throughout the decision making process, the Commission, including Mr. Gladysz, had a fiduciary and constitutional obligation to engage in good faith consultation with the Saulteau people.

[21] The Chambers Judge said this:

I turn then to my consideration of whether the Commission in arriving at its decision on the application discharged its duties to the Saulteau First Nation. The key to my conclusion turns on whether I accept the petitioner’s position that the Commission had a legal obligation to accommodate the Saulteau First Nation’s request to complete a cumulative effects assessment before granting the Well authorization.

[22] In the end the Chambers Judge concluded that it was not incumbent on the Commission to complete a cumulative effects assessment before granting the Well authorization.

[23] Before stating the reasons for this finding the Chambers Judge referred to a number of cases which outline the scope of the duty to consult. For the purposes of this appeal it is necessary to refer to only two of those cases. First, in Delgamuuk v. British Columbia, [1997] 3 S.C.R. 1010, the Chief Justice said this at para. 168:

... There is always a duty of consultation. Whether the aboriginal group has been consulted is relevant to determining whether the infringement of aboriginal title [here, treaty rights] is justified, in the same way that the Crown’s failure to consult an aboriginal group with respect to the terms by which reserve land is leased may breach its fiduciary duty at common law ... The nature and scope of the duty of consultation will vary with the circumstances. In occasional cases when the breach is less serious or relatively minor, it will be no more than a duty to discuss important decisions that will be taken with respect to lands held pursuant to aboriginal title. Of course, even in these rare cases when the minimum acceptable standard in consultation, this consultation must be in good faith, and with the intention of substantially addressing the concerns of the aboriginal peoples whose lands are at issue. In most cases, it will be significantly deeper than mere consultation. Some cases may even require the full consent of an aboriginal nation, particularly when provinces enact hunting and fishing regulations in relation to aboriginal rights. (My emphasis.)

[24] And, in R. v. Marshall (No. 2) (1999), 179 D.L.R. (4th) 193 (S.C.C.), the court noted at para. 43:

... This variation [in the nature and scope of the duty to consult] may reflect such factors as the seriousness and duration of the proposed restriction, and whether or not the Minister is required to act in response to unforeseen or urgent circumstances. As stated, if the consultation does not produce an agreement, the adequacy of the justification of the government’s initiative will have to be litigated in the courts.

[25] The Chambers Judge summed up his conclusions in this way:

[155] First, I am mindful that the SFN [Saulteau First Nation] did not categorically object to the Application. Their objection was based on the ground that the Application should not be granted until the Commission had first undertaken a cumulative effects assessment. However, I am also mindful of the principle that the duty on the Crown to consult and accommodate is informed by the level of interference with the First Nation's treaty rights. In the instant case, the factual context in which the Decision Maker concluded that, notwithstanding the SFN's concerns, the Commission should grant the Application is, as follows:

1. At no time during the consultation process leading up to the Well Authorization did the SFN identify to the Commission any direct or indirect impacts that the activities associated with the Application would or might have upon plants, fish, birds or wildlife.

2. Commission staff reported that there was no concern with the activities associated with the Application from the land and habitat point of view.

3. Commission staff reported that the Commission through consultation with the SFN, the Ministry of Water Land and Air Protection and the MSRM, was entering into an agreement to produce pilot studies of wildlife and habitat capability in the area, and that site specific conditions would be considered to mitigate some of the cumulative effects.

4. Many of the SFN's concerns expressed throughout the consultation process leading up to the Well Authorization were about the potential effects of large scale oil and gas development on the exercise of their treaty rights. The purpose of the Well is to locate potential hydrocarbons. Thus, activities associated with the development of Vintage's oil and gas holdings in the area if a successful well is drilled will necessarily engage a further approval process with the Commission, including a process of consultation with the SFN.

[156] In my opinion, to accept the petitioner's position on this issue, in light of the above circumstances, would be contrary to the fundamental principles reflected in the authorities. I am satisfied that faced with the evidence available to him in the absence of any contradictory information from the SFN, the Decision Maker took into account all of the relevant factors: he considered the consultation process; he clearly set his mind to the direct and indirect environmental, cumulative and socio-economic effects flowing from the Application; he recognized the importance of the ongoing ability of the SFN to undertake and practice their Treaty 8 rights; he recognized that it was vital to protect the SFN's treaty rights through the establishment of a planning process; and, finally, he imposed conditions on the Well Authorization.

[157] In my opinion, the SFN's insistence that the Commission did not listen to or try to seriously accommodate their legitimate concerns is unfounded. I find that the Commission met its constitutional and fiduciary obligations to the SFN in its consideration of the Application and the Petition must be dismissed on this issue.

[26] On this appeal the appellant submitted that in these paragraphs the Chambers Judge did not apply the proper test in determining whether the Commission had properly fulfilled its obligations. Counsel for the appellant submitted that the Chambers Judge applied a “prudent person” test to the decision of Mr. Gladysz, rather than asking what a fiduciary would do in the circumstances.

[27] I am of the view that given his findings, the Chambers Judge did not err. He found that the Commission had a fiduciary obligation to the Saulteau people, that this obligation required the Commission to consult with the Saulteau before determining whether to issue the test well authorization, and that the scope of the duty was met by the nature of the consultation. The Chambers Judge thoroughly analyzed the evidence and the arguments before him. I cannot say that he was wrong in reaching the conclusion that Mr. Gladysz properly discharged any fiduciary duty that he may have owed to the appellants.

[28] To this I would add that Mr. Gladysz did not simply listen to the concerns of the Saulteau people, the evidence shows he investigated them to a certain degree and issued an authorization which contained a number of conditions which sought to address their concerns. I have reproduced those conditions in paragraph [15] of these reasons for judgment. In my view, this further supports the conclusion of the Chambers Judge that the authorization minimally affected the treaty rights of the Saulteau people.

[29] Before leaving this ground of appeal, I should mention that counsel for the Commission urged this court to find that while the Commission owed a fiduciary duty to the Saulteau people in its fact-gathering process, it did not owe them such a duty in its adjudicative process, that is, when it came time to determine whether the applicant, Vintage, ought to receive a test well authorization. Counsel submitted, in effect, that to say that the Commission owed a fiduciary duty to the Saulteau people at the adjudication stage would create an impediment to a fair resolution of the issue as between the parties. Given my findings, it is not necessary to resolve that issue on this appeal.

[30] I would dismiss the first ground of appeal.

[31] The second ground of appeal is that the Chambers Judge erred in dismissing the appellant’s constitutional challenge to the Act. The Chambers Judge fully addressed the arguments of the appellant on this ground with which I am in substantial agreement. I would dismiss the second ground of appeal.

[32] In the result I would dismiss the appeal.

[33] BRAIDWOOD, J.A.: I agree.

[34] LOW, J.A.: I agree.

[35] RYAN, J.A.: The appeal is dismissed.

“The Honourable Madam Justice Ryan”

Citation:	*Chief Apsassin v. B.C. Oil and Gas Commission,*
	2004 BCCA 286