On February 18, 2009, the Court of Appeal in companion decisions held that the British Columbia Utilities Commission (the “Commission”) has both the jurisdiction and obligation to ensure that the Crown has discharged its duties to consult with, and where necessary, accommodate aboriginal people regarding allegations that their aboriginal interests will be impacted by a Commission decision. The Court issued its reasons for decision in the following appeals:  

(a) Carrier Sekani Tribal Council v. British Columbia (Utilities Commission), 2009 BCCA 67 (the “Alcan Appeal”); and  

(b) Kwikwetlem First Nation v. British Columbia (Utilities Commission), 2009 BCCA 68 (the “ILM Appeal”).  

These cases were heard consecutively by the same panel of the Court of Appeal.  

Alcan Reasons for Decision

The Alcan Appeal reasons for decision contain findings that are referred to in the ILM Appeal reasons and provide helpful context. This case arises in relation to the decision of B.C. Hydro to buy electricity from Rio Tinto Alcan Inc. (“Alcan”) that is surplus to its smelter requirements, in accordance with an Energy Purchase Agreement (“EPA”) made in 2007. For the EPA to be enforceable, B.C. Hydro needs the acceptance of the Commission.  

The Carrier Sekani Tribal Council (the “Carrier Sekani”) sought to be heard in the Commission proceeding on the issue of whether the Crown fulfilled its duty to consult before B.C. Hydro entered into the EPA. The Carrier Sekani interest (asserted both in a pending action for Aboriginal title and within the treaty process) is in the water and related resources east of the discharge of the Nechako Reservoir created by Alcan in the early 1950s to drive its generators in Kemano for use at the Kitimat aluminum smelter.

The Carrier Sekani claims that the diversion of water for Alcan’s use is an infringement of its rights and title and that no consultation has ever taken place.

The Commission rejected the appellant’s motion because it found as a fact that since there were no “new physical impacts” created by the EPA, the duty to consult was not triggered. In addition, the Commission found that a failure to fulfill consultation on the historical, continuing infringement cannot be relevant to acceptance of the 2007 EPA where there are no new physical impacts.

This decision was appealed by the Carrier Sekani directly to the B.C. Court of Appeal. The key findings of the Court of Appeal in the Alcan Appeal reasons are as follows:  

(a) The Commission has the jurisdiction, and is competent, to decide relevant constitutional questions, including whether the Crown has a duty to consult and whether it has fulfilled the duty.  

(b) Not only does the Commission have the ability to decide the consultation issue, but in theres particular circumstances, it is the only appropriate forum to decide the issue in a timely way. Furthermore, the honour of the Crown obliges it to do so.  

(c) The Commission, as a “creature of government”, is bound by the honour of the Crown to decide (but not undertake) any consultation dispute that arises within the scheme of its regulation.

(d) The standard of review for Commission decisions on constitutional issues such as those raised in the appeal is reasonableness (as opposed to the higher standard of “correctness”, as argued by the Appellants).

(e) The Court did not say that the Commission was bound to find a duty to consult in the circumstances. The Commission’s decision to decline to entertain the issue of consultation within the scope of a full hearing when the circumstances demanded an inquiry was found by the Court to be unreasonable.

The Court allowed the appeal on the grounds that the Commission unreasonably refused to include the consultation issue in the scope of the proceeding and oral hearing. The Court ordered that the issue be remitted to the Commission for the sole purpose of hearing evidence and argument on whether a duty to consult (and, if need be, accommodate) the appellant exists; and, if so, whether the duty has been met in respect of the filing of the 2007 EPA.  

ILM Reasons for Decision

This appeal questions the Commission’s approach to the application of the principles of the Crown’s duty to consult (and, if need be, accommodate) asserted aboriginal interests on an application for a certificate of public convenience and necessity (“CPCN”). At issue was the CPCN application by the respondent, British Columbia Transmission Corporation (“BCTC”), for a proposed transmission line project designed to meet burgeoning energy requirements of the lower mainland’s growing population. Most of the province’s electrical energy is generated in the interior of the province while most of the electrical load is located at the coast. BCTC’s preferred plan to remedy this problem is to build a new 500 kilovolt alternating current transmission line from Merritt to Coquitlam, a distance of about 246 kilometres (the “ILM Project”). It requires transmission work at both ends, substations, and the construction of a series capacitor station at the midpoint. Most of the line will follow an existing right of way, although some areas will require new right of way and further widening.  

The proposed line originates, terminates, and passes through the claimed traditional territory of each of the four appellant First Nations. All parties agreed that the ILM Project has the potential to affect aboriginal interests, including title. The two crucial decisions necessary to approve the ILM Project are the CPCN, and an Environmental Assessment Certificate upon completion of an environmental assessment under the Environmental Assessment Act.

The Commission reasoned that there was already a process in place requiring consultation and possibly accommodation with First Nations: the environmental assessment process. The Commission determined that it should not look beyond that process but rely on the environmental assessment to address consultation concerns.

The ILM Appeal was brought by four First Nations from a decision of the Commission that, in the course of determining whether to grant a CPCN for the ILM Project, it need not consider the adequacy of consultation and accommodation.

In the ILM Appeal the Court of Appeal focused on the relationship between the environmental assessment process and the CPCN process, and concluded that it was not reasonable for the Commission to defer to the environmental assessment process in order to address the consultation issue. The key findings are as follows:

(a) The central legal proposition from the Alcan reasons, that the Commission, as a “creature of government”, is bound by the honour of the Crown to decide any consultation dispute which arise within the scheme of its regulation, applies with equal force to the ILM proceeding.  

(b) A purpose of the CPCN process is to select the most costeffective project amongst alternatives, and to approve the scope design and cost estimates of the most cost-effective project.  

(c) The environmental assessment process is a “wrap-up” decision where two ministers have unconstrained discretion to prevent a proposed activity, public or private, for-profit or not, that has potential “adverse effects” from going forward.  

(d) The Court acknowledged that the two processes can overlap and involve the same information and considerations. However, the Court held that this interplay does not mean the effect of the two decisions on aboriginal interests is the same.  

(e) Similarly, the interplay between the two processes does not make a ministerial review of the Crown’s duty to consult with regard to the definition of the project a satisfactory alternative. The Commission is charged with opining as to whether a public utility system enhancement is necessary and in the public interest, which requires an assessment of that duty at an earlier stage by the Commission.  

(f) In the case of the CPCN process, the Court found that it is a vital “first step” towards building a transmission line across territory that might be subject to First Nations’ rights. For that reason, the Court held that:  

In these circumstances, in my view, the appellants were not only entitled to be consulted and accommodated with regard to the choice of the ILM Project by BCTC, they were also entitled to have their challenge to the adequacy of that consultation and accommodation assessed by the Commission before it certified BCTC’s proposal for extending the power transmission system as being in the public interest.  

(g) The Court held that BC Hydro, as a Crown agent, had the duty to consult. Therefore, where the proponent is a Crown agent, the Commission is required to assess the consultation efforts of the project proponent to determine whether the Crown’s honour was maintained in its dealings with First Nations regarding the potential effects of the project. The Commission’s failure to determine whether the Crown’s honour had been maintained up to that stage of the Crown’s activity was an error in law.  

The Court held that before the Commission certified the ILM Project as necessary and convenient in the public interest, it was required to determine when the Crown’s duty to consult with regard to that project arose, the scope of that duty, and whether it was fulfilled. The Court held that the Commission’s refusal to consider whether the honour of the Crown was maintained to the point of its decision was based on a misunderstanding of the import of the relevant jurisprudence and was unreasonable.  

As a result, the Court remitted the matter to the Commission for reconsideration and directed that the effect of the CPCN be suspended for the purpose of determining whether the Crown’s duty to consult and accommodate the appellants had been met.