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Court ruling a possible game changer for forest industry

By Jim Stirling

The Supreme Court of Canada has established a new framework for land use decision making. The court’s unanimous and historic ruling in the Ts’ilhqot’in Nation vs. British Columbia case in June granted the plaintiffs aboriginal title to more than 1750 square kilometres of contiguous traditional territory in B.C.’s Chilcotin region.

The court’s decision has shifted the balance of power in a potentially significant manner. Aboriginal title holders now have a court reinforced legitimacy to be treated as equals of the provincial and federal governments on determining how or if those lands under title can be infringed upon.

Significantly, it is now firmly the Crown’s responsibility to justify any infringement. It has to be more specific than simply declaring an infringement i.e. a development project or new logging, to be in the public interest. Instead, suggests Douglas Harris, an associate professor at the faculty of law at the University of British Columbia in a commentary, the Crown has to first pass a three part test. First, the Supreme Court’s ruling requires the Crown to consult and accommodate the aboriginal title holder. The requirement is also extended to include territories claimed but not yet proven. Second, says Harris, the Crown must have “compelling and substantial” objectives to infringe upon aboriginal title. Thirdly, the importance of the “compelling and substantial” objectives must be proportional to the breach of aboriginal title.

In short, he concludes, “aboriginal title will be balanced against other rights and interests.”

So … what does all that mean for the forest industry? The short answer is: we’ll have to wait and see.

Many commentators and observers have recognized the significance of the Supreme Court of Canada’s judgment.

But B.C.’s Liberal government has been limited to date in its official reaction to the court’s decision. It’s been restricted to: “unavailable for comments” or “we now have removed the uncertainty” or general statements about continuing good relationships with the province’s native peoples.

Most native bands, too, have been moderate in their reactions in the aftermath of their original jubilation at the Supreme Court’s decision. There has been some sabre rattling among some native groups, especially in northwestern B.C.

The Supreme Court’s landmark decision is being used as valuable reinforcement for vocal opposition in the northern half of the province to Enbridge’s Northern Gateway Project. But the forest industry remains officially mute on the implications of the court’s decision. That is probably a prudent strategy. Contrasting that, activity, research and interpretation of all the court rulings’ implications behind the scenes is probably frenetic. The stock in good corporate lawyers is undoubtedly soaring. For it is back in the courts that the Supreme Court of Canada’s ruling will most likely be massaged and interpreted.

But some general observations can be attempted, despite the dangers of such quicksand. Indirect wood costs in the British Columbia interior are likely to increase as a result of the Supreme Court’s decision. Someone has to pay for all those high priced lawyers. Attempt will be made to pass some of those additional costs down the supply line.

Costs will also be increased through the longer periods of time involved in consulting and accommodating with native groups. It’s unlikely to be a quick process, especially during the initial period of familiarization with the issues and implications.

Cash settlements may also be required, as might training costs involving new aboriginal entrants to the forest industry. The industry’s competitive position may well be compromised by the additional costs involved in the process.

All of these types of additional expenses carry the potential of making the decision of where—or even if —it makes sense to pursue agreements on aboriginal title lands.

The large remaining volumes of beetle killed lodgepole pine with their declining value for lumber production are likely to colour the wood cost equation. The competition for quality green wood has already escalated. First Nations with large volumes of those types of stands will find their resources in high demand with prices at a premium. Softwood fibre availability crunches might accelerate research and market development for the utilization of more hardwood species. They, too, could become sought after commodities commanding higher prices for aboriginal title holders.

British Columbia’s Liberal government will have a tough time encouraging forest licencees to convert more existing volume based forest licences into area based ones. The whole concept of area based licences may have to be revisited (or renegotiated) in light of the Supreme Court of Canada’s decision.

It’s most likely the way aboriginal title is interpreted when it comes to land use will come down to the value an individual First Nation places upon and balances the rights and interests of others. It may be a First Nation has developed a good working rapport with the forest industry and wishes the benefits of that cooperation to continue or be enhanced. In those cases, the Crown and the forest industry might find it relatively straightforward to justify a prescribed infringement of aboriginal title and move forward in a mutually satisfactory manner.

That may equally not be the case with other First Nations, and the forest industry might find itself facing a brick wall of opposition.

The Supreme Court of Canada’s decision was widely described as a game changer. It may turn out to be much more than that.