Last week the National Energy Board (NEB or Board) issued its first order against a municipality in the context of a dispute regarding a pipeline company’s access to municipal lands in order to complete NEB-mandated studies.

On September 26, 2014, the NEB received a Notice of Motion and Notice of Constitutional Question from Trans Mountain Pipeline ULC (Trans Mountain) seeking an order pursuant to sections 12, 13 and paragraph 73(a) of the National Energy Board Act (NEB Act). The Notice of Motion and Notice of Constitutional Question were the result of the City of Burnaby’s (Burnaby) denial of access to city-owned lands based on what it argued were contraventions of Burnaby’s bylaws by Trans Mountain.

On July 15, 2014, the NEB stated that geotechnical, engineering, socio-economic and environmental studies and related information regarding Trans Mountain’s Preferred Corridor through Burnaby Mountain were required before it could make its recommendation to the Governor in Council. Trans Mountain’s Motion focused on paragraph 73(a) of the NEB Act,which grants a company the power to access public and private lands for the purposes of performing surveys and investigations. The Board previously directed Trans Mountain to address the following four questions in its Notice of Constitutional Question in Ruling No. 32:

  1. Does the Board have the legal authority to determine that Burnaby’s specific by-laws that Trans Mountain is alleged to have breached are inapplicable, invalid, or inoperative in the context of Trans Mountain’s exercise of its powers under paragraph 73(a) of the NEB Act?
  2. If so, on the facts before the Board, should the Board find that those by-laws are inapplicable, invalid, or inoperative?
  3. If the Board can and does make a finding that those by-laws are inapplicable, invalid, or inoperable in the particular case, does the NEB Act provide the Board, as a statutory tribunal, with the authority to forbid Burnaby from enforcing those or any other by-laws in the future (for example, what is the scope of the authority under section 13 of the NEB Act, and does it encompass the remedy sought against Burnaby?)
  4. If so, do the facts before the Board support granting such an order?

On October 23, 2014, the NEB issued Ruling No. 40 wherein the Board granted Trans Mountain’s request for an order pursuant to paragraph 73(a) of the NEB Act. The Board concluded that preventing access to lands as needed for the completion of surveys and studies relating to pipeline routing is contrary to the NEB Act.

Trans Mountain filed evidence that geotechnical, engineering, socio-economic and environmental investigations (including geotechnical drilling) were required on Burnaby lands in order to prepare studies mandated by the NEB. Burnaby argued that Trans Mountain’s rights were limited to non-invasive investigations such as environmental studies. The Board determined the NEB Act does not limit a company’s rights to “superficial access” to the lands and that Trans Mountain had established that it is standard practice to determine geotechnical feasibility by drilling.

For the first question, the Board determined it has the legal authority to consider constitutional questions relating to its own jurisdiction, and that this matter was such a question. The Board agreed with Trans Mountain that it also has the jurisdiction to determine that specific Burnaby bylaws are inoperative or inapplicable to the extent they conflict with or impair the exercise of Trans Mountain’s powers under paragraph 73(a) of the NEB Act, citing Cuddy Chicks Ltd. v. Ontario (Labour Relations Board). In Ruling No. 40, the Board ruled it essential to have relevant technical information about the proposed pipeline to fulfil its statutory requirements, including the completion of an environmental assessment under the Canadian Environmental Assessment Act, 2012.

Regarding the second question, the Board accepted Trans Mountain’s submissions that the doctrine of federal paramountcy, or alternatively interjurisdictional immunity, renders Burnaby’s bylaws inapplicable or inoperative for the purposes of Trans Mountain’s exercise of its powers under paragraph 73(a) of the NEB Act. In the Board’s view, there is an operational conflict between provisions of Burnaby bylaws, including parks and traffic bylaws, and federal law. Based on the facts before the Board, dual compliance was impossible. The Board cautioned that a federally regulated pipeline must still comply with a broad range of provincial laws and municipal bylaws, through the operation of law and the imposition of conditions by the Board.

For the third and fourth questions, the Board found that, respectively: subsection 13(b) of the NEB Act provides the Board with the authority to issue an order against Burnaby; and the facts before the Board, including Trans Mountain’s compelling and specific reasons justifying such an order, supported the granting of an order against Burnaby. The Board determined that it had the authority to issue an order against Burnaby to allow the NEB Act’s statutory scheme to be carried out, including an order under s. 13(b) of the NEB Act that forbids any act that is contrary to the NEB Act or the Board’s direction.

The order granted by the Board detailed some of the work to be done and “in no way limits the authorized work to just the specific authorities listed.” In carrying out the work, Trans Mountain was required to do as little damage as possible and provide compensation if damage cannot be remediated, as stated in section 75 of the NEB Act.

Impacts for Resource Development

The Board’s ruling provides greater certainty regarding the powers of federally regulated pipeline companies in circumstances where federal laws conflict with municipal bylaws and dual compliance is impossible. It confirms that federally regulated pipeline companies have the power to access public and private lands for the purposes of performing surveys and investigations under the NEB Act. The Board’s ruling is consistent with previous decisions and orders of the NEB in regard to paragraph 73(a) of the NEB Act.