Altalink ruling underscores Crown’s duty to consider Indigenous groups’ economic interests when making decisions

The ruling can be a roadmap for a win-win relationship with First Nations

By Julius Melnitzer | November 30, 2021

Resource developers are welcoming an Alberta Court of Appeal ruling in October requiring the Alberta Utilities Commission (AUC) to address Indigenous groups’ economic interests in its decisions.

The ruling followed on an appeal by AltaLink Management Ltd., one of the province’s largest regulated electricity transmission companies, challenging the electric utilities regulator’s decision to approve the transfer of electrical transmission lines from AltaLink to limited partnerships controlled by Piikani Nation (Piikani Link LP) and Blood Tribe (KainaiLink LP), but refusing to allow the limited partnerships to recoup the audit and hearing costs of the transfer applications in their rate structures.

“The AltaLink decision creates greater certainty that government decision-makers and administrative tribunals with public interest mandates will prioritize the impact of agreements between project proponents and Indigenous peoples,” says Martin Ignasiak, a partner in Osler, Hoskin & Harcourt LLP’s Calgary office. “It also provides both project developers and Indigenous groups with greater flexibility in structuring their arrangements because it directs legislators to be flexible when applicants are pursuing reconciliation as part of their applications.”

In other words, the AltaLink decision gives proponents an enhanced incentive to include benefits such as preferential contracting, employment opportunities, and equity positions in their agreements with Indigenous peoples.

The timing of the decision is also significant because the federal government has been adamant that neither the ‘honour of the Crown’ nor the principle of reconciliation includes consideration of Indigenous economic interests. Honour of the Crown’ stipulates that servants of the Crown must act with honour, integrity, good faith, and fairness in all of their dealings with Indigenous peoples.

In one such case, Ottawa has appealed a Federal Court decision that recognized the Crown’s duty to consult on economic benefits linked to Aboriginal rights in quashing a June 2020 designation order from then Environment and Climate Change Minister Jonathan Wilkinson. The order subjected Coalspur Mines Ltd.’s proposed open-pit expansion and underground test mine near Hinton, Alberta to review by the federal impact assessment agency.

The AltaLink case originated when the company offered Piikani Nation and Blood Tribe a stake in the project in exchange for consent to route transmission lines over reserve lands. Each band exercised an option for a 51 per cent interest in the portions of the project that ran over their respective lands. The parties effected the deals through limited partnership agreements with AltaLink as the general partner.

In 2017, AltaLink applied to the AUC for approval of the transfers. The application succeeded, but the AUC ruled that the limited partnerships could not pass on auditor and hearing costs related to the application to the limited partnerships’ ratepayers.

“The Commission refused to take into account the $32 million saved by routing the lines through the reserve,” Ignasiak said. “It also would not consider the benefits arising from the partnerships, including access to the First Nations workforce, the benefits to AltaLink’s relationship with other First Nations going forward, and the support the agreements provided to enhance safe and reliable operation of the assets on reserve land.”

As it turned out, the refusal to pass on audit and hearing costs was a marked departure for the AUC.

“It was very different form the regulatory treatment most other parties get in Alberta,” said Scott Schreiner, AltaLink’s vice-president, external engagement.

AltaLink appealed to the Court of Appeal, which decided that the AUC was wrong in excluding the audit and hearing costs from the rate structure.

“The Court of Appeal created a level playing field so that AltaLink’s partnerships with Piikani Nation and Blood Tribe will now be treated like other transmission companies,” Schreiner said. “We’re hopeful that our arrangements can be a template or roadmap for a win-win-win relationship with First Nations that creates benefits for them, a stable rate of return for ownership, and lower costs to ratepayers.”

Indeed, Justices Jack Watson and Thomas Wakeling observed that projects of this kind spurred economic activity and job opportunities for Indigenous peoples and were therefore in the public interest. In turn, job opportunities promoted educational opportunities among reserve residents, improving the quality of reserve life and benefitting Canada as a whole.

“Indigenous communities represent an untapped labour source for Indigenous and non-Indigenous enterprises,” they wrote. “The potential benefits that may be derived from the increased utilization of this pool of talent are considerable. This reminds us of the dramatic movement of large numbers of women into the workforce triggered by World War II.”

Justice Kevin Feehan, the third judge presiding over the case, went further. He stated that the “honour of the Crown” extends to administrative tribunals. Here, the AUC had a duty to consider what was necessary to uphold that obligation.

Feehan also recognized a separate principle of “reconciliation” as a foundational constitutional objective that was part of the broader public interest, and one that tribunals with a public interest mandate were bound to consider. Because reconciliation includes Indigenous interests in participating freely in the economy and having sufficient resources to self-govern effectively, he reasoned, public-interest determinations had to take them into account as part of the process of fostering reconciliation.

According to Ignasiak, regulatory recognition of Indigenous economic interests is long overdue.

“In the past decade, regulators have stepped up their game and really taken a hard look at projects’ impacts on the environment and Aboriginal rights, but they’ve been really deficient in placing sufficient importance on economic benefits,” he said.

However it all turns out, one thing remains clear.

“The honour of the Crown is not going away, although the way in which it impacts particular projects will depend on the particular facts,” says Daniel Johnson, the Calgary-based Borden Ladner Gervais LLP partner who was co-counsel for AltaLink. “The takeaway for industry participants is that they must be prepared to address the issues in the context of cooperative partnerships with First Nations.”

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Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at julius@legalwriter.net or https://legalwriter.net/contact.

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