In a recent9 decision, the Alberta Court of Appeal addressed the overlapping jurisdiction of the National Energy Board (NEB) and the Alberta Energy and Utilities Board (EUB 10) in respect of international power lines (IPL), and the EUB's "public interest" mandate. The majority upheld the EUB's decision that its jurisdiction does not extend to considering the relative merits of corridors where corridor selection had been assessed and approved by the NEB, and also upheld the EUB's interpretation of its "public interest" mandate; Madam Justice Conrad dissented in favour of the appellant landowners on the jurisdictional matter and did not consider the second point on appeal.

The dispute in Sincennes arose from an original application by Montana-Alberta Tie Line (MATL) to the NEB for a permit to build and operate an IPL between Lethbridge, Alberta and Great Falls, Montana. The NEB permit included a number of terms and conditions, the most relevant of which – paragraph 4 – provided that:

MATL shall cause the IPL to be designed, manufactured, located, constructed, installed and operated in accordance with those specifications, drawing and other information or undertakings set forth in its application and its related submissions.

In essence, the NEB permit defined the parameters of the corridor through which the IPL was to be constructed.

The NEB's permit process does not requires a public hearing, but does require the NEB to provide an Environmental Screening Report, which in this instance involved various federal and provincial government departments and extensive public participation.

In accordance with that process in the MATL case, the provisions of the NEB Act required the application of provincial laws to, among other matters, the determination (by the EUB) of the "location or detailed route" of the IPL (subsection 58.19(a)). On the basis of the NEB permit condition noted above, the EUB concluded11 that the EUB did:

not believe that its jurisdiction extends to considering the relative merit of corridors beyond the preferred route as the matter of corridor selection was assessed and approved by the NEB. The Board does find that it has the jurisdiction to consider the effects associated with the detailed route selection.

Leave to appeal was granted on two questions:

  1. Whether the EUB erred in its interpretation and application of the interplay of jurisdiction between the NEB and the EUB under the NEB Act, particularly in relation to the selection of the location of an international power line; and
  2. Whether the EUB erred in its interpretation and application of the public interest test, particularly in light of the "merchant nature" of the project.

Majority: Overlapping Jurisdiction and Questions of Paramountcy

A good part of the majority decision focused on the interpretation of "location or detailed route" found in subsection 58.19(a) of the NEB Act . The Court noted the ambiguity of the legislative language and the difficulty of interpretation given the complexity of the statutory scheme and some of the language found in the NEB's decision granting the permit to MATL. In analysing the difference between location and detailed route, the Court noted that location was generally understood to refer to the macro or general location of the line, or the corridor. Even though the NEB Act does not require the NEB to select the corridor, the majority questioned the practicalities of the NEB leaving open the matter of location of the corridor to the EUB. Given that the NEB is required to assess the environmental impacts of a project, presumably it must first identify the corridor.

Regardless of the interpretive difficulties, the majority found that section 58.22 of the NEB Act clearly grants paramountcy to "the terms and conditions of permits". The intent of the permit condition was clear, and required the IPL to be constructed and operated within the general corridor applied for by MATL. Accordingly, the majority concluded that:

[t]he function of the EUB is not to second-guess the NEB. Provincial laws relative to the location of international transmission lines are only applicable when so delegated by the federal government. In this case, provincial laws are expressly made subordinate to the terms and conditions of the federal permit. The NEB's authority to issue the permit conditions it imposed have not been challenged. Condition no. 4 requires the IPL to be constructed and operated within the two-kilometre corridor applied for by MATL. It is only the detailed route within the corridor that has been left to be dealt with by the provincial board... (emphasis added)

The Court found that the possibility of alternative locations outside the permit corridor was beyond the authority of the EUB. According to the majority, this was supported by the fact that a "contrary interpretation would promote operational conflict. If the EUB determined that a different corridor were appropriate, the NEB findings would be revisited and the permit process subverted because the provincial designate could undo the permit through refusing its approval on the basis that another location was superior..." If the EUB were to reconsider the matter of location of the corridor, this would offend the principle of estoppels, including abuse of process, as such a reconsideration would constitute re-litigation of the same issue and be a collateral attack upon the NEB's earlier determination.

With respect to the argument of the appellant landowners that as a matter of fundamental justice they were entitled to a full oral hearing on all issues, whether at the federal or provincial level, the Court concluded that "[p]rocedural fairness does not require that interested parties be given the right to an oral hearing in every situation. Meaningful participation can be achieved through various ways."

Majority: Public Interest Test

Justice O'Brien, for the majority, was reluctant to agree with the appellants that "need to Albertans" – a hall mark of the Alberta regulatory scheme – constituted a requisite element of the public interest test. Having regard to the flexibility accorded that criterion, the Court found that the EUB clearly demonstrated it had ample evidence regarding the social, economic and environmental effects of the proposed IPL, and that it undertook a comprehensive balancing of those effects with the benefits of the MATL project. According to the majority, "[t]he assessment was made after a comprehensive review of the specific social, economic and environmental effects of the proposed line, including those that are unique to a merchant line." As such, there was no reason to disturb the conclusion reached by the EUB with respect to public interest.

Minority: Concept of "Permit" and Right to a Public Hearing

Justice Conrad would have allowed the appeal on the basis that the EUB erred in finding it did not have jurisdiction to consider alternate corridors when dealing with MATL's application. She concluded that even though the corridor provision is found under the "terms and conditions" portion of the NEB's permit, it was not really a condition of the permit. Rather, paragraph 4 is the permit itself, which is subject to review by the EUB in accordance with sections 58.19 and 58.21 of the NEB Act. Thus, she found that on the basis of the language in section 58.21, 12 the EUB was entitled to consider alternate corridors in arriving at its decision of whether or not to refuse MATL's application for detailed route approval.

Justice Conrad was evidently concerned by the fact that the appellant landowners were not given an oral hearing under the NEB's permit process. Given that an NEB permit will always issue for a location, and if that fact deprives the public from a hearing on location, she concluded that section 58.19 of the NEB Act, as it relates to location, is meaningless. Accordingly, "[i]f paragraph 4 was intended to limit the EUB's right to consider "location", I fail to see how such a limitation could be "necessary or desirable in the public interest". Similarly, she was satisfied that:

...when it passed the NEB Act, Parliament intended to give Canadians an effective means to protect themselves with dealing with international pipelines and powerlines...In my view, Parliament intended that the public would have the protection of a public hearing when there is an application to build an IPL. It is difficult to assume, therefore, that Parliament intended the public would have less protection when a permit issues, especially having regard to the fact that powerlines are above ground and continue to cause interference long after construction...

Conclusion

According to subsequent press reports, counsel for the appellant landowners has stated that leave to appeal this decision to the Supreme Court of Canada will be sought, principally on the basis of Justice Conrad's dissent. Should leave be granted, the complexities of the overlapping federal-provincial jurisdiction in respect of international power lines, as evidenced in this Alberta decision, will be further clarified.