The Tsilhqot'in decision: a view from Quebec

Erik Richer La Flèche -

On June 26, 2014 the Supreme Court of Canada recognized for the first time a First Nation’s aboriginal title over an area outside a reserve in Tsilhqot’in Nation vs. British Columbia.

Since then much has been written on whether the decision would have an adverse impact on natural and infrastructure development across Canada, with some columnists and think tanks being alarmed at the consequences the decision may have on projects.

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Grassy Narrows: Supreme Court confirms provincial jurisdiction over logging and mining on Treaty Lands

Patrick G. Duffy and Rachel V. Hutton -

Two weeks after the highly publicized Tsilhqot’in v. British Columbia decision, the Supreme Court of Canada has released another prominent decision in the area of Aboriginal law.  The issue in Grassy Narrows First Nations v. Ontario (also referred to as Keewatin v. Ontario) was a narrow but important one – does a province (rather than the federal government) have the authority to approve logging, mining and other activities on Crown lands that are subject to treaty rights? The Court’s answer can be summarized as “yes, but only if the province has met its duty to consult.” 

What is the significance of the case to industry?

The stakes in the case were high - a ruling against the province would have cast doubt on the validity of provincial approvals for forestry, mining and other activities on Crown lands that were surrendered by treaty. By rejecting that outcome, the Court has provided a pragmatic framework for dealing with surrendered lands, while ensuring that provinces respect treaty rights.  This ruling should allow industry participants to breathe a little easier knowing that existing provincial approvals on surrendered lands are valid, provided the province’s duty to consult has been fulfilled.

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Investment Canada Act approval for oil sands investment by State-Owned Enterprise

Lawson Hunter and Michael Kilby -

In May 2014, the Minister of Industry issued a net benefit approval for PTTEP’s acquisition of control of the Thornbury, Hangingstone and South Leismer oil sands projects from Statoil Canada. PTTEP is a Thai state-owned enterprise for purposes of the Investment Canada Act.

By way of background, in December 2012 the Prime Minister and the Minister of Industry issued new and revised guidance in relation to State-Owned Enterprises. In relation to the oil sands, the relevant policy provides that acquisitions of oil sands businesses by SOEs will only be approved in exceptional circumstances.  The PTTEP acquisition is significant because it represents the first test of this policy.

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Alberta Energy Regulator completes implementation of new mandate

Allison Sears -

In the oil and gas regulatory sphere, Q2 marked the implementation of the third and final phase of the Alberta Energy Regulator’s new mandate under the Responsible Energy Development Act (REDA). In addition to the “energy resources enactments” over which it previously had jurisdiction in its former incarnation as the Energy Resources Conservation Board, the Alberta Energy Regulator (AER) has now assumed jurisdiction over various provisions in certain “specified enactments”, including the Public Lands Act, the Environmental Protection and Enhancement Act and the Water Act insofar as those provisions relate to “energy resources activities” (i.e. oil and gas operations and coal mining, but not power generation or electricity transmission and distribution).

Whereas the proponents of energy resources projects previously obtained Crown surface dispositions and environmental approvals from Alberta Environment and Sustainable Resource Development (AESRD), all requisite approvals can now be obtained under the single umbrella of the AER. Whether this will actually result in the intended efficiency gains of one-stop-shopping remains to be seen as the AER is only just beginning to dig itself out from under the thousands of applications transferred over to it from AESRD.

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Oil and Gas Trends in Q1 and Q2 2014

Glenn Cameron -

The short take on energy trends in the last two quarters is “what a difference a Polar Vortex can make”. That weather phenomenon is partly responsible for a change in the current and the predicted future prices of natural gas. The winter heating season ended with significantly lower quantities of gas in storage than usual. As well, the demand for gas continues to escalate with gas continuing to replace coal as a power generation fuel. 

That and other factors contributed to a strong revival of M&A and financings in the sector. Much of that activity was focused on natural gas properties. The dollar value of deals done to date has already passed last year’s record low levels of activity.

Q1 saw the CNRL purchase of Devon’s Canadian conventional properties (C$3.13B), Baytex’s purchase of Aurora (C$2.6B), Whitecap’s purchase of properties from Imperial Oil (C$855M), Tourmaline’s purchase of Santonia (formerly Fairbourne) (C$189M), IOC’s purchase of 10% of Petronas’ BC gas reserves, and other transactions.

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Top 10 Questions about Tsilhqot'in

Rachel V. Hutton and Patrick Duffy -

While lawyers, analysts and journalists are depicting the Tsilhqot'in Nation v. British Columbia decision as “monumental”, “landmark”, “groundbreaking” and “historical”, the active participants (developers, Aboriginal groups and government) are asking:  What does it mean?  What does this change?

Despite the earth having apparently moved, one important principle has not changed following this decision.  For parties desiring certainty in acquiring rights over lands claimed by First Nations, best practice remains to obtain consent from the affected groups, typically by way of a negotiated and binding agreement.  However, the bargaining power now vested in groups that have viable claims to Aboriginal Title is undeniable.  Where such a claim exists, the ability of governments to override Aboriginal concerns is significantly constrained.

There are no shortcuts to achieving a full understanding of the impact of this case, and to properly do so, one should (at a minimum) begin with the Calder case, decided by the Supreme Court of Canada in 1973. Indeed, any well-rounded study of the relevant issues involves tackling the cultural, legal, constitutional and above all, historical aspects of the problematic and contentious relationship between Aboriginal peoples and Canada, beginning well over a century ago…

As a starting point, or an alternative to delving into the complexities of Aboriginal law, we have prepared below a set of brief Q&As addressing the questions we are being asked about the case.

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Northern Gateway pipeline project approved

Alisha Bhanji -

On June 17,2014 the federal government approved the Enbridge Northern Gateway pipeline project. The decision follows the recommendation of the Joint Review Panel (JRP) on December 19, 2013 to approve the project, subject to satisfaction of 209 required conditions set out in the JRP report.

The federal government’s approval is subject to compliance with the 209 conditions identified in the JRP report. Some of the conditions include: employing rigorous pipeline inspection processes, developing a marine mammal protection plan, conducting pre-operation emergency response exercises, carrying liability coverage of $950 million and development of a research program on the behavior and cleanup of heavy oil.

LNG regulatory process imposes lesser burden

Jonathan Drance and Cameron Anderson -

As we’ve previously discussed on this blog, the increased interest in exporting liquefied natural gas offers Canadian producers the opportunity to access international markets and higher international prices. Notably for producers, the requirements for approval by the National Energy Board for LNG projects over the last few years have eased significantly.

The earliest decisions were made under the NEB’s surplus determination procedure, called the Market-Based Procedure, that had been established in 1987, during the early days of oil and gas deregulation in Canada. The first LNG export licence was granted to KM LNG and involved the filing of detailed gas supply information, an oral hearing, multiple submissions and the production of long and complex reasons. BC LNG Export Co-operative obtained the second licence following a written hearing process.

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Canadian tax considerations for non-residents investors in Canadian renewable energy projects

Marie-Andrée Beaudry, Jean-Guillaume Shooner and Nathaniel Lacasse  -

Introduction

Non-resident investors continue to invest in Canadian renewable energies such as solar energy and, in particular, wind power. The following discussion highlights the principal tax incentives granted by the Canadian and Quebec governments. It also describes a tax efficient holding structure, which may, depending on the circumstances and place of residence of the non-resident investor, be put in place in order to minimize Canadian taxes on gains and income.

It should be noted that there are other ways for a non-resident investor to structure an investment. All options should be carefully reviewed in order to best achieve non-resident investors' tax objectives.

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Sizing up BC's LNG opportunities

Jonathan Drance and Cameron Anderson -

The recent provincial budget in British Columbia included a basic framework for taxes and royalties on the liquefaction of natural gas at LNG facilities in the province. Although the specifics of the LNG tax have not yet been announced, in connection with the budget the province recently released an “Analysis of the competitiveness of BC’s proposed fiscal framework for LNG projects” prepared by Ernst & Young for the Ministry of Natural Gas Development.

It is interesting to compare the hypothetical set of assumptions set out in the E&Y Analysis regarding the intensity of development which the province is assuming compared to the historical growth in other countries such as Qatar and Australia.

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