COURT FILE NO.: 484/05
DATE: 20060724
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MEEHAN, E. MACDONALD & CAMERON JJ.
B E T W E E N:
POWER WORKERS UNION, CANADIAN UNION OF PUBLIC EMPLOYEES, LOCAL 1000 and SOCIETY OF ENERGY PROFESSIONALS
Appellants
- and -
ONTARIO ENERGY BOARD, UNION GAS LIMITED and GREENFIELD ENERGY CENTRE LIMITED PARTNERSHIP
Respondents
Andrew K. Lokan, for the Appellant, Power Workers Union, CUPE Local 1000
Paul H. Manning, for the Appellant, Society of Energy Professionals
M. Philip Tunley, for the Respondent, Ontario Energy Board
Gordon Cameron, for the Respondent, Union Gas Limited
Patrick Moran & Jennifer Teskey, for the Respondent, Greenfield Energy Centre Limited Partnership
Michael D. Schafler, for the Intervenor, Enbridge Gas Distribution Inc.
HEARD: June 6 & 7, 2006
BY THE COURT:
NATURE OF PROCEEDING
[1] The appellants appeal from two decisions of the Ontario Energy Board, dated November 7, 2005 and January 6, 2006. The Board allowed applications for leave to construct a gas pipeline to the proposed Greenfield Energy Centre near Sarnia, Ontario.
[2] The applications were made to the Board, pursuant to the Ontario Energy Board Act, 1998, S.O. 1998, c. 15 ("OEBA").
[3] The appellants are the Power Workers' Union ("PWU") and the Society of Energy Professionals ("SEP"). The appellants are labour unions whose members are employed at a number of coal-fired generating stations, including the Lambton Generating Station ("Lambton").
[4] The two decisions appealed from may be summarized as follows:
• Decision on the Merits – January 6, 2006: The Board granted leave to construct the gas pipeline to the Greenfield Energy Centre ("GEC") to two applicants who had filed competing applications to the Board. These successful applicants are the respondents in the case at bar: Green Field Energy Centre Limited Partnership ("GEC LP") and Union Gas Ltd. ("Union Gas").
• Motion Decision – November 7, 2005: The Board excluded certain "pre-filed" evidence sought to be adduced by the appellant SEP.
[5] Section 96 of the OEBA directs the Board to make an order granting leave to construct a work where the Board is of the opinion that the construction "of the proposed work is in the public interest". The central issue to be determined on this appeal is whether the Board properly limited the scope of its jurisdiction under this section. The Board chose to limit its public interest consideration to the effects of the actual pipeline construction; it declined to consider the effects of the GEC itself, including the closing of the Lambton coal-fired plant.
BACKGROUND
The Greenfield Energy Centre ("GEC")
[6] In June, 2005, GEC LP entered into a twenty-year, standard Clean Energy Supply contract with the Ontario Power Authority to construct, operate, and supply electricity to Ontario's power grid from the GEC.
[7] The GEC is a proposed 1,005 MW gas-fired generating station to be located in Courtright, south of Sarnia. The GEC is intended to replace the 1975 MW coal-fired Lambton under the provincial government's coal replacement plan. The GEC is to be located about three km. south of Lambton.
The Applications to Construct the Pipeline
[8] GEC LP filed an application with the Board, pursuant to s. 90 of the OEBA, on July 20, 2005, for leave to construct a natural gas pipeline for the GEC:
Leave to construct hydrocarbon line
- (1) No person shall construct a hydrocarbon line without first obtaining from the Board an order granting leave to construct the hydrocarbon line if . . .
(c) any part of the proposed hydrocarbon line,
(i) uses pipe that has a nominal pipe size of 12 inches or more, and
(ii) has an operating pressure of 2,000 kilopascals or more; or
[9] The pipeline proposed by GEC LP would by-pass the distribution system of Union Gas, which holds the municipal franchise and certificate rights to distribute natural gas in the area. On August 30, 2005, Union Gas also filed an application to build a pipeline to serve the GEC. Its proposed pipeline would connect the GEC directly to Union Gas' Courtright Station.
[10] With respect to the competition between GEC LP and Union Gas, the issue was whether Union Gas was entitled to a monopoly on the supply of gas pursuant to its franchise and Board jurisprudence, or if the GEC LP should be permitted to construct its own by-pass gas pipeline.
[11] The Board's "Environmental Guidelines for the Location, Construction and Operation of Hydrocarbon Pipelines and Facilities in Ontario" ("Guidelines") required GEC LP and Union Gas to file an environment review report. The respondents complied with this requirement.
[12] The Board heard the applications in a combined proceeding. The PWU and the SEP were granted intervenor status in the proceeding before the Board. The SEP and the PWU sought to make submissions on the effects of the GEC itself, including air emissions, the taking and discharge of water into the St. Clair River, and the loss of jobs and other socio-economic and environmental impacts consequent on the closure of Lambton.
The Application by the PWU and the SEP to the Ministry of the Environment
[13] The PWU and the SEP also requested on July 8, 2005 that the GEC construction be elevated to a full environmental assessment under the Environmental Protection Act. The Minister of Environment denied that request on November 18, 2005. The Minister's position was that the GEC qualifies for an exemption from the Environmental Assessment Act under the Electricity Projects Regulation, O. Reg. 116/01. This decision is the subject of a separate pending judicial review application before the Divisional Court.
The Motion to Exclude Evidence
[14] Prior to the hearing before the Board, the SEP filed documents relating to the need for the pipeline, the impact upon consumers, and environmental matters. By Notice of Motion dated October 5, 2005, GEC LP moved for an order excluding the documents. The Board heard submissions from the SEP, the PWU, Union Gas and GEC LP. In the Motion Decision dated November 7, 2005, the Board excluded three of the documents. It stated:
In deciding whether to grant leave to construct, the Board must determine whether the pipeline itself is in the public interest, not whether facilities connected to it will be in the public interest… In considering the leave to construct application, it is not within the Board's jurisdiction to determine whether the generating station is in the public interest. (p. 6)
[15] In accepting certain of the SEP's materials as relevant to the issue of cumulative effects of the pipeline, the Board stated that "it remains an open question as to the appropriate use and weight to be accorded to this material during the hearing"
The Decision on the Merits
[16] The hearing took place over nine days. The Board was required to consider the following provision of the OEBA:
Order allowing work to be carried out
- (1) If, after considering an application under section 90, 91 or 92 the Board is of the opinion that the construction, expansion or reinforcement of the proposed work is in the public interest, it shall make an order granting leave to carry out the work.
[17] The Board found that the public interest would not be well served if GEC LP's application for a pipeline were denied, since it is in the public interest for gas customers to have access to the services they require. As GEC LP could not currently access adequate services from Union Gas, it was in the public interest to allow GEC LP to pursue those services directly through the option of bypassing Union Gas. None of the parties had established that Union Gas or its customers would suffer direct harm due to the approval of GEC LP's application.
[18] The Board approved the competing applications of both GEC LP and Union Gas. However, Union Gas was approved on the condition that it obtain the GEC as a customer.
[19] On the issue of the "need" for the proposed pipelines, the Board concluded that should the GEC proceed, the pipeline would clearly be needed in order to supply natural gas.
[20] The Board found that the GEC's (as opposed to the pipeline's) environmental effects that were raised by the SEP and the PWU could not be tied back to some effect of pipeline construction. The Board determined that such effects were not within the realm of "cumulative effects" as contemplated in the Guidelines. The Board stated:
To be clear, only those effects that are additive or interact with the effects that have already been identified as resulting from the pipeline construction are to be considered under cumulative effects. (p. 10)
[21] It stated further that it had no jurisdiction to consider the arguments of the intervenors:
… the law is clear that jurisdiction on environmental matters associated with the power station falls under the Environmental Assessment Act administered by the Ministry of the Environment, and not the Ontario Energy Board. (p. 17)
COURT'S JURISDICTION
[22] The Divisional Court has jurisdiction to hear this appeal, pursuant to s. 33 of the Ontario Energy Board Act, 1998, s.O. 1998, c. 15, Sched. B:
33.(1) An appeal lies to the Divisional Court from,
(a) an order of the Board;
(2) An appeal may be made only upon a question of law or jurisdiction and must be commenced not later than 30 days after the making of the order or rule or the issuance of the code.
STANDARD OF REVIEW
[23] The parties disagree on the applicable standard of review. Under the pragmatic and functional approach espoused in Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, the court is required to examine the following factors in determining the appropriate standard of review:
Privative Clause: The OEBA does not contain a privative clause. There is a statutory right of appeal only upon a question of law or jurisdiction.
Expertise: As per this Court in Consumers' Gas Co. v. Ontario Energy Board, [2001] O.J. No. 5024, the Board has a "high level of expertise" on issues such as economic forecasting and the viability of a monopolistic utility. The OEBA provides the Board with exclusive jurisdiction to hear and determine all questions of law and fact, and its decisions on fact are not open to review.
Purpose of the OEBA: The objectives of the OEBA with respect to gas are listed in s. 2. These objectives are policy-laden and require specialized knowledge of the industry, which suggests deference is owed where the Board is required to engage these objectives:
Board objectives, gas
The Board, in carrying out its responsibilities under this or any other Act in relation to gas, shall be guided by the following objectives:
To facilitate competition in the sale of gas to users.
To protect the interests of consumers with respect to prices and the reliability and quality of gas service.
To facilitate rational expansion of transmission and distribution systems.
To facilitate rational development and safe operation of gas storage.
To promote energy conservation and energy efficiency in a manner consistent with the policies of the Government of Ontario.
5.1 To facilitate the maintenance of a financially viable gas industry for the transmission, distribution and storage of gas.
- To promote communication within the gas industry and the education of consumers.
Nature of the Problem: The appellants and the intervenor agree that the issue is a question of law: what is the scope of the Board's jurisdiction under the public interest test in s. 96 of the OEBA? Some of the respondents characterize the issue as one of the Board's discretionary decision-making powers to determine what considerations are relevant to its assessment.
Conclusions: In our view, the standard of patent unreasonableness is not appropriate in light of the Supreme Court of Canada's comments in Voice Construction Ltd. v. Construction General Workers' Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609, where Major J. described the "rare" circumstances in which the patent unreasonableness standard is to apply, at para. 18:
A decision of a specialized tribunal empowered by a policy-laden statute, where the nature of the question falls squarely within its relative expertise and where that decision is protected by a full privative clause, demonstrates circumstances calling for the patent unreasonableness standard.
The issue is essentially a question of law, requiring a determination of the scope of the Board's jurisdiction. This requires a consideration of the proper interpretation of the jurisdiction-conferring provisions in the statute and the appropriate level of deference to be accorded to other decision-makers that may have concurrent jurisdiction over certain issues. In my view, these are issues of law on which the court has more expertise than the Board. Absent a privative clause and in light of the express appeal right on questions of law and jurisdiction, the appropriate standard is correctness.
KEY ISSUES
Did the Board err in concluding it had no jurisdiction to assess the environmental and socio-economic effects of the end use of natural gas?
Did the Board err in excluding some of the SEP's evidence?
TWO COMPETING PIPELINE APPLICATIONS
[24] The appellants were granted intervenor status under s. 96 of the OEBA. The Board is directed to make an order granting leave to construct a work where the Board is of the opinion that the construction of "the proposed work is in the public interest".
[25] The Board has published guidelines outlining many of the matters it may take into consideration, such as cumulative effect and social consequences of implementing each route site or alternative. The guidelines for pipelines deal mainly with physical environmental effect.
[26] The Board in its decision also considered the physical effect of another pipeline, the placement and building of the GEC in a relatively small area.
THE JURISPRUDENCE
[27] The appellants rely on Sumas Energy 2 Inc. v. Canada (National Energy Board), [2005] F.C.J. No. 1895 (C.A.) for authority that the Board should consider the end use of the gas. The factual issue in that case is substantially different in that the power plant was to be built in the U.S. No Canadian authority would have reviewed the plant. Here, of course, the Ministry of the Environment gave its approval and by correspondence with the appellants, dealt with the concerns raised by them.
[28] The National Energy Board ("NEB") is expressly permitted to "have regard to all considerations which appear to it to be relevant".
[29] The OEB does not have such broad authority. Quebec (Attorney General) v. Canada (National Energy Board), [1994] 1 S.C.R. 159 may be distinguished again on the broader powers of the NEB.
[30] Nakina Twp. v. Canadian National Railway 1986 F.C.J. 426 (F.C.A.), cited by the appellants, found the Commission had improperly limited its jurisdiction by failing to consider the public interest when considering the effect of a run through.
[31] In this case, the OEB has refused to consider the effects of a project outside the applications before the Board. Cases such as Bow Valley Naturalists Society v. Canada (Minister of Canadian Heritage), [2001] 2 F.C.S. No. 18 (C.A.) and Friends of the West Country Assn. v. Canada (Minister of Fisheries & Oceans) 1999 F.C.S. No. 1515 (C.A.) are not helpful as they rely upon a comprehensive scheme for assessing the environmental impacts of projects under federal jurisdiction.
[32] The federal scheme as well includes an initial (scoping) under s. 15 and detailed instructions under s. 16. These sections allow a broader jurisdiction under the federal legislation.
ANALYSIS
[33] When dealing with the competing pipeline applications did the Board apply the wrong test? It confirmed a need by finding a long-term demand for the facility and the natural gas. It refused to consider whether or not the end use, power generation, is required by the province. In doing so, it found such a decision was a question for the government of the day.
[34] It concluded as well that the construction of the pipeline would not have an adverse impact on Union Gas' consumers.
[35] To accept the task as suggested by the appellants, including the effects of the closure of the Lambton coal-fired plant, would have set the Board upon a complex and virtually limitless task.
[36] The term "public interest" is confined to a consideration of the specific project, in this case, the pipeline.
[37] The Supreme Court in ATCO Gas & Pipeline Ltd. v. Alberta (Energy & Utilities Board), [2006] S.C.C. 4 was dealing with a case of broader jurisdiction from a "public interest" mandate and stated, at para. 49:
As in any statutory interpretation exercise, when determining the powers of an administrative body, courts need to examine the context that colours the words and the legislative scheme. The ultimate goal is to discover the clear intent of the legislature and the true purpose of the statute while preserving the harmony, coherence and consistency of the legislative scheme.
[38] It is conceded that there is no statutory requirement to be met for the closure of the Lambton plant.
[39] While one can have sympathy with the question of possible job losses, it was, in our view, not improper for the Board, to limit its jurisdiction to the questions before it. As well, it accepted or deferred to the policy role of the government and ruling of the Ministry of the Environment on the assessment of the plant. The appeals are dismissed.
[40] The appeal as to the refusal of the Board to accept the evidence relating to matters it found beyond its jurisdiction is dismissed as the evidence was not relevant to the issue dealt with by the Board.
[41] Costs are payable at $17,500 each to Union Gas and Greenfield Energy Centre Limited Partnership payable by the appellants. The amount was agreed to by counsel. No costs are sought by the Intervenor or the Board.
MEEHAN J.
MACDONALD J.
CAMERON J.
Released: 20060724
COURT FILE NO.: 484/05
DATE: 20060724
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MEEHAN, MACDONALD & CAMERON JJ.
B E T W E E N:
POWER WORKERS UNION, CANADIAN UNION OF PUBLIC EMPLOYEES, LOCAL 1000 and SOCIETY OF ENERGY PROFESSIONALS
Appellants
- and -
ONTARIO ENERGY BOARD, UNION GAS LIMITED and GREENFIELD ENERGY CENTRE LIMITED PARTNERSHIP
Respondents
JUDGMENT
BY THE COURT
Released: 20060724