A Case Study in Resource Management: Energy on Public Lands

• Author: Elaine L. Hughes, Arlene J. Kwasniak, Alastair R. Lucas
• Pages: 221-256

221

CH AP TER 11

A CASE STUDY

IN RESOURCE

MANAGEMENT:

ENERGY ON

PUBLIC LA NDS

Alastair R Lucas and Luis Pando Lopez*

A. PUBLIC OWNERSHIP OF ENERGY

RESOU RCES

Energy resource extraction and energy production are now the most

valuable public land uses. This was not always so. Through over two

centuries of westward-moving Canadian settlement, prime use moved

from wildlife, to agriculture and forestry (with water for expanding

agricultural use and urban development), to increasing importance of

mineral and energy re source extraction — particularly oil and gas. The

importance of the latter has accelerated in the last half century.

This pattern is apparent in the mineral reservation policies for

grants of public land as settlement moved across the western prov-

inces.1 Apart from the northern territories, provinces were, under the

constitutional division of property, the owners of these public energy

* Luis Pando Lope z (LLM, Alberta) is a Senior Ma rket Analyst-Regulatory A ffairs,

Off‌ice of the Utilit ies Consumer Advocate, Calg ary.

1 Nigel Bankes & Be nnett Jones Verchere, eds, Canadian Oil an d Gas, 2d ed

(Markham, ON: Lex isNexis, 1991) (loose-leaf revision 139 – 3/14) vol 1, Com-

ment ary at pa ras 1.37–1.3 8.

PUBLIC LANDS A ND RESOURCES LAW IN CA NADA222

mineral resources.2 Grants with no mineral reser vations were followed

by reservations of coal (by the Crown and by the CPR from its Railway

Belt lands), then by reservations in Saskatchewan and Alberta of “coal

and petroleum” (leaving the status of natural gas unclear), and eventu-

ally reservations in northern and western Alberta and in British Col-

umbia of “all mines and minerals.”

Ownership of offshore energy resources was largely determined

through a series of Supreme Court of Canada reference cases.3 Sub-

sequently, federal–provincial negotiations led to joint management

and revenue sharing for East Coast resources.4 A moratorium on West

Coast offshore drilling that dates from 1972 remains in effect.5

Hydro power has been important from the early days of Can-

adian settlement. This led provinces to retain hydroelectric sites as

Crown lands and formed the basis of the Crown hydro authorities that

emerged, particularly in Br itish Columbia, Manitoba, Quebec, New

Brunswick, and Newfoundland and Labrador in the second half of

the twentieth century.6 Over the past several decades, the previously

integrated Crown corporation utilities have seen f‌irst, moves towards

more complete public utility regulation, and then, unbundling, to some

degree, of generation, transportation, and distribution functions. The

objective has been to facilitate wholesale power competition.

1) Energy Resources and Legislative Powers

In jurisdictional terms, energy resources, like other public lands and

resources, were vested in the provinces by the Constitution Act, 1867.7

Ownership of resources in the northern territories and the offshore mar-

ine belts remains with the federal government. The federal government

2 Constitution Ac t, 1867 (UK), 30 & 31 Vict, c 3, s 109, reprinted in RSC 1985, Ap-

pendix II, No 5.

3 Reference re: Ownership of Of f Shore Mineral Rights (British Columbia), [1967]

SCR 792 [Off Shore Mineral Rights]; Reference re: Owne rship of the Bed of the Strait

of Georgia and Related Area s, [1984] 1 SCR 388; Reference re: Mineral and Othe r

Natural Resources of the Contine ntal Shelf (1983), 145 DLR (3d) 9 (Nf‌ld CA);

Reference re: Contine ntal Shelf, [1984] 1 SCR 86 [Hibernia Refer ence].

4 See Alast air Lucas & Constance Hunt, O il and Gas Law in Canada (Toront o:

Carswell, 1990) at 74– 84.

5 See Natural Res ources Canada, Repor t of the Public Review Panel on the Gov-

ernment of Can ada Moratorium on Oil and Gas Act ivities in the Queen Charlotte

Region Bri tish Columbia (Ottawa: Natura l Resources Canada, 20 04).

6 Canadian Hydropower Association, Hydropower in Canada: Past, Presen t and

Future (Ottawa: Canadian Hydropower Association, 2008).

7 Constitution Act, 1867, above note 2, s 109.

A Case Study in R esource Management: Energ y on Public Lands 223

retained some legislative powers relevant to energy resource extrac-

tion and use. These include interprovincial transportation and trade,

as well as the latterly signif‌icant powers in relation to health and the

environment.8 Following the federal–provincial hydrocarbon revenues

dispute of the late 1970s, section 92A of the Constitution Act, 1982

conf‌irmed exclusive provincial powers in relation to exploration, de-

velopment, and management of non-renewable natural resources and

forestry resources as well as sites for hydroelectric power generation.

2) Aboriginal Powers and Roles

In constitutional division of powers terms, the federal government has

exclusive legislative power in relation to “Indian s and Lands Reser ved

for the Indians.”9 “Indians” includes Inuit as well as Métis.10 Thi s

means that energy resources on Aboriginal reserve lands are within

exclusive federal jurisdiction — subject to the Crown’s f‌iduciary obli-

gations towards Aboriginal people. Section 35 of the Constitution Act,

1982 provides: “existing Aboriginal and treaty rights are recognized

and aff‌irmed.” Judicial interpretation has revealed an encompassing

reconciliation value that informed deci sions on how these rights can be

infringed by conf‌licting public lands use, including energy resources

uses, and in what circum stances this infringement can be justif‌ied.11

The Crown role and duty is f‌iduciary, so that infringing action by gov-

ernment can be justif‌ied only if it is consistent with the “honour of

the Crown” in relation to Aboriginal people.12 The Supreme Court has

aff‌irmed that “Crown lands” under provincial public lands and resour-

ces statutes, unless clearly specif‌ied, do not include lands for which

Aboriginal title has been judicially declared.13

Energy projects on public lands authorized by government and its

agencies, both federal and provincial, h ave become an increasing threat

to Aboriginal and treaty rights. A major issue has been intensive oil

and gas development, best exemplif‌ied by northern exploration pro-

grams and most visibly by development of the Athabasca Oil Sands.

Large pipelines — linear projects that cut through the traditional

lands of First Nations — have been a particular source of conf‌lict. The

8 Ibid, ss 91(2), 91(24), and 92(10)(a). See R v Hydro Québec, [1997] 3 SCR 213. See

Chapter 3, Section E for a di scussion of Aborigin al jurisdiction.

9 Constitution Act, 1867, ab ove note 2, s 91(24).

10 Daniels v Canad a (Indian Affairs and Northern De velopment), 2016 SCC 12.

11 Delgamuukw v British Colum bia, [1997] 3 SCR 1010.

12 Ibid; Haida Natio n v British Columbia (Minister of Forests), 2004 SCC 73.

13 Tsilhqot’in Nation v Brit ish Columbia, 2014 SCC 44 [Tsilhqot’in].