Earlier this year, the Alberta Court of Appeal released its decision in Fort McKay First Nation v Prosper Petroleum Ltd., 2020 ABCA 163 ("Prosper") holding that the Alberta Energy Regulator ("AER") is required to consider the honour of the Crown when determining whether the Prosper Petroleum oil sands project is in the public interest. The AER is now meeting with the parties to determine the scope of a redetermination hearing,1 anticipated to be held in the spring, 2021.2

What is the "Honour of the Crown"?

Canadian courts have long held that the "honour of the Crown" is a constitutional principle that governs the relationship between the Crown and Aboriginal peoples. The ultimate purpose of the principle is to reconcile pre-existing Aboriginal interests with the assertion of Crown sovereignty dating as far back as the Royal Proclamation, 1763.

The honour of the Crown gives rise to a number of duties and obligations including:

  • a fiduciary duty when the Crown assumes discretionary control over a specific Aboriginal interest;
  • the Crown's duty to consult when the Crown contemplates an action that will affect a claimed but unproven Aboriginal interest under section 35 of the Constitution Act, 1982;
  • a requirement that the Crown act in a way that accomplishes the intended purposes of treaty and statutory grants to Aboriginal peoples; and
  • a principle governing treaty-making and implementation, which includes honourable negotiation practices and the avoidance of sharp dealings.

To date, the honour of the Crown has generally been raised in the context of regulatory proceedings to argue that the duty to consult has been triggered and that the tribunal must take steps to adequately fulfill the duty. In Prosper, the AER was asked to consider the honour of the Crown in the context of determining whether the proposed oil sands project was in the public interest.

Background to Prosper Case

The Fort McKay First Nation ("FMFN") holds treaty rights to hunt, fish, and trap within the Moose Lake Area that forms part of its traditional territory. The FMFN has long been concerned about preserving its ability to exercise its Treaty 8 rights as over 70% of its traditional territory is leased for oil sands purposes.

In 2003, negotiations began between the Government of Alberta and the FMFN to obtain protection for the Moose Lake Area in order to address the cumulative effects on FMFN's treaty rights. It was envisioned that the resulting Moose Lake Area Management Plan ("MLAMP") would be adopted as a sub-plan under the Lower Athabasca Regional Plan ("LARP"). These negotiations were eventually put on hold while LARP was negotiated and implemented.

As part of the LARP process, FMFN sought a 10 km buffer zone around its Moose Lake Reserve, which was later rejected by the Government of Alberta. As part of a formal review of the LARP, the review committee found that the plan failed to take adequate measures to protect the FMFN's treaty rights. This report revived the MLAMP negotiations, with Premier Prentice and Chief Boucher signing a Letter of Intent in 2015 with a commitment to expedite the completion of the MLAMP.

The AER Decision

In 2013, Prosper applied for the Rigel bitumen recovery project located within 5 kilometers of the FMFN's Moose Lake Reserve. On May 6, 2016, the AER suspended its consideration of the application due to resumption of the MLAMP negotiations. On November 6, 2016, the AER resumed processing the application on the basis that finalization of the MLAMP remained uncertain.

In January, 2018, the AER held a public hearing to consider the application, which the FMFN fully participated in. The FMFN requested the application be denied because of its location within the 10 km buffer and because the MLAMP was still not in place.

The AER approved the Rigel project in June, 2018. In its written reasons, the AER found the project to be in the public interest when impacts to treaty rights were weighed against other social, economic and environmental rights. The AER declined to consider the MLAMP negotiations contemplating the 10 km buffer and whether the negotiations implicated the honour of the Crown for a number of reasons including that section 21 of the Responsible Energy Development Act ("REDA") precluded it from considering the adequacy of Crown consultation.

The Court of Appeal Decision

On appeal, the majority of the Court found that the AER, as a public agency, has a general duty to apply the Constitution Act, 1982 and that this duty extends to ensuring that its decision complies with section 35, which explicitly protects and upholds Aboriginal and treaty rights. The Court reiterate the finding from Clyde River3

[A] project authorization that breaches constitutionally protected aboriginal and treaty rights of Indigenous peoples cannot be in the public interest.4

Further, the Court found that section 21 of REDA does not carve out the AER's jurisdiction to consider constitutional law issues, including the honour of the Crown. Section 21 of REDA reads:

The Regulator has no jurisdiction with respect to assessing the adequacy of Crown consultation associated with the rights of aboriginal peoples as recognized and affirmed under Part II of the Constitution Act. [Emphasis added.]

Accordingly, while the AER does not have jurisdiction to determine the adequacy of Crown consultation pursuant to section 21, the AER does have a broad implied jurisdiction to consider the honour of the Crown and whether or not it was engaged. In the case before it, the AER was required to address the honour of the Crown as part of its consideration of whether the Rigel project was in the public interest giving credence to the specific context of the MLAMP negotiations.

Further, the AER incorrectly determined the MLAMP to be encompassed by the larger regional plan, which would prevent the AER from taking into consideration the ongoing MLAMP negotiation process. Finally, the Court held that the AER could not defer the consideration of these issues to Cabinet as the AER is no less lawfully responsible for considering this matter than is Cabinet.

In the result, the Court granted the appeal and held that the AER is required to consider the MLAMP process as part of its assessment of the public interest.

Additionally, Greckol JA proffered a concurring judgment that offers guidance on how the implementation of treaties engages the honour of the Crown. Greckol found that the 2015 Letter of Intent signed by Premier Prentice supporting the negotiation of the MLAMP fell within treaty implementation as it was designed to ensure fulfillment of the Crown's obligations. The obligation here was the FMFN's ongoing right to hunt under Treaty 8, which requires negotiation and just settlement of disputes outside the context of individual projects. This is required in order to address the cumulative effects of land development on First Nation treaty rights.

Implications of the Case

The Prosper case affirms that treaty implementation is a contemporaneous issue spanning across all Canadian jurisdictions and decision-making processes. In particular, the decision sheds light on the obligation of a tribunal to consider the honour of the Crown in its decision-making process unless expressly carved out by governing legislation.

Going forward, the AER and other tribunals must be mindful of the ways in which its obligation to uphold the Constitution Act, 1982 may impact consideration of whether an individual project is in the public interest. As such, this case may pave a new way for Indigenous groups to hold governments, and their regulatory tribunals, accountable for implementation of treaty obligations.


1 Fort McKay First Nation, "Prosper Rigel Project and the Re-determination Hearing", Red River Current (November 2020), online (pdf): < https://www.fortmckay.com/app/uploads/2020/11/november-2020.pdf>.

2 Alberta Energy Regulator, "Application 1778538 Notice of Hearing - Prosper Rigel Project" (28 July 2020), online: < https://www.aer.ca/regulating-development/project-application/notices/application-1778538-hrg>.

3 Clyde River (Hamlet) v. Petroleum Geo-Services Inc., 2017 SCC 40 (Clyde River).

4 Ibid at 40.

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