By Nigel Bankes
Case commented on: Laird v Sword Energy Inc., 2014 ABQB 13.
This decision of Justice Don Manderscheid confirms that it will a rare case in which a lessor will be able to obtain summary judgement for a claim of compensatory royalties under an offset well clause under an oil and gas lease. As such it casts further doubt on the correctness of Justice Lee’s judgement in 1301905 Alberta Ltd v Sword Energy Ltd., 2013 ABQB 113, which was the subject of an earlier post here.
Three co-owners leased the section 5 lands to Thunder, Sword’s predecessor in interest, in 2003. Sword drilled the 1-5 well on the lands in May and June 2004 and tested the Belly River formation for both coalbed methane and conventional gas. Sword concluded that the well was not capable of production. Commercial production was obtained from the Belly River formation from the offsetting section 32 lands as of 2006.
The lessors served a default notice on Sword on April 23, 2007 stipulating that Sword had an obligation to produce rateably from the section 5 lands and, since it had failed to do so, was obliged to make compensatory royalty payments. Sword advised in return that the leases would expire on their own terms on May 11, 2007. The lessor subsequently re-leased the lands to Quicksilver but no further well had been drilled on the lands as of June 2009. The fact pattern was complicated by a rather bizarre incident in which a representative of the lessors persuaded an employee of Sword to calculate the compensatory royalty that might have been payable were that obligation triggered.
Justice Don Manderscheid denied the lessors’ application for summary judgement. He concluded that there were a number of disputed factual issues between the parties as well as a number of legal issues that were intertwined with those factual issues. Justice Manderscheid identified as many as four sets of triable issues. One set of issues related to the default notice including the question of whether or not Sword had an obligation to respond to a technically defective default notice. A second set of issues related to the precise nature of Sword’s alleged breach. A third set of issues related to the question of whether the termination of the leases in accordance with their own terms qualified as a timely surrender within the meaning of the offset clause. A fourth set of issues concerned the well that Sword had already drilled and tested. Given those activities on the leased lands it was not clear whether Sword could have any outstanding obligations under the offset well clause. All of these issues raised questions which were highly intertwined with the facts of the matter and as such should not be resolved by way of summary judgement.
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By Jonnette Watson Hamilton
Case commented on: Suncor Energy Inc v Alberta, 2013 ABQB 728
Suncor Energy Inc v Alberta is a decision by Chief Justice Neil Wittmann on an appeal by the provincial Crown from an arbitration tribunal’s order on a procedural point. Suncor Energy Inc. began arbitration proceedings in January 2011 to resolve a dispute over royalties to be paid on the production of mined bitumen to the province. The issue before the Chief Justice was a narrow one, namely, whether the refusal of the arbitrators to refer a question of law to the court, concerning the application of section 50 of the Mines and Minerals Act, RSA 2000, c M-17, to the production of records that the Crown received from oil sands producers other than Suncor, was a decision that could be appealed. The Chief Justice decided that the court did not have jurisdiction to hear the Crown’s appeal under either section 17(9) or section 44 of Alberta’s domestic arbitration statute, the Arbitration Act, RSA 2000, c A-3. In doing so he confirmed that the competence-competence principle, which allows an arbitral tribunal to determine its own jurisdiction, underlies sections 17 and 44. While not as explicit on this point as was the recent decision of the Ontario Court of Appeal in Ontario Medical Association v Willis Canada Inc, 2013 ONCA 745 at paras 19-37, the Chief Justice’s decision gives effect to the statutory grant of authority to the arbitration tribunal to have the last word on procedural or interlocutory matters that arise during the course of arbitration.
The Crown objected to producing records that it argued could not be communicated according to section 50 of the Mines and Minerals Act, RSA 2000, c M-17 — financial, production, technical and other records that the Crown received from oil sands producers other than Suncor. The Crown objected even though the arbitration tribunal had adopted portions of the Alberta Rules of Court, Alta Reg 124/2010, including Rule 5.33, which provides for the confidentiality and use of information produced under affidavits of record, to govern its procedure. Suncor applied to the arbitrators for an order compelling production of the disputed records. The Crown counter-applied under section 8(2) of the Arbitration Act, which provides:
8(2) On the application of the arbitral tribunal, or on a party’s application with the consent of the other parties or the arbitral tribunal, the court may determine any question of law that arises during the arbitration.
The Crown wanted the court to determine, among other things, whether the arbitrators had jurisdiction to decide the application of section 50 of the Mines and Minerals Act to the production of the records in issue.
In June 2013, the arbitrators refused to direct the Crown’s questions of law to the Court of Queen’s Bench. In their written reasons, the arbitrators stated (among other things):
 Section 17 of the Arbitration Act provides that an arbitral tribunal may rule on its own jurisdiction and may determine any questions of law that arise during the arbitration. It is our view that Section 17 and the case of Jardine Lloyd Thompson Canada Inc. v Western Oil Sands Inc., 2006 ABCA 18 [a decision about a stay of proceedings]… are ample authority for this Panel to determine if production by the Crown of the relevant and material records in its possession is prohibited by Sections 50 and 51 of the Act.
We find that this panel has the jurisdiction and the duty to decide these issues and to determine if the Crown is prohibited by Section 50 and 51 of the Act from producing the relevant and material documents at issue in these applications …
The Rules of Court which govern this Arbitration have by Rule 5.33 codified the implied undertaking prohibiting misuse of produced documents. This panel in carrying out its duties can, like a court, order the parties before it to limited access to and use of the information that is produced.
It was this decision that the Crown promptly appealed. At the hearing of the matter, the parties agreed to limit the issue at the initial stage to the question of whether the decision of the arbitrators was subject to appeal under the provisions of the Arbitration Act. This limited issue was the matter heard by the Chief Justice.
The Crown argued the decision of the arbitrators was subject to appeal under both section 17(9) and section 44 of the Arbitration Act. Section 17, setting out the all-important authority of arbitrators to rule on their own jurisdiction and to determine questions of law, provides in part:
17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.
(2) The arbitral tribunal may determine any question of law that arises during the arbitration.…
(9) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within 30 days after receiving notice of the ruling, make an application to the court to decide the matter.
Section 44 provides:
44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact.
(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that
(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and
(b) determination of the question of law at issue will significantly affect the rights of the parties.
(3) Notwithstanding subsections (1) and (2), a party may not appeal an award to the court on a question of law that the parties expressly referred to the arbitral tribunal for decision.
The Crown argued that there was nothing in their agreement with Suncor or the Arbitration Act or the Rules of Court that had been adopted that would give the arbitrators jurisdiction to affect the rights of third party oil sands producers. They contended that because any decision on Suncor’s application would necessarily deny these third party oil sands producers their rights to the statutory protections provided by s.50 of the Mines and Minerals Act, the arbitration panel has no jurisdiction to make such a ruling. The Crown cited three authorities in support of their arguments, but Chief Justice Wittmann questioned the relevance of all three:
(1) MJS Recycling Inc. v Shane Homes Ltd., 2011 ABCA 221, where the Alberta Court of Appeal held an arbitrator had exceeded his jurisdiction by affecting the rights of parties who were not before him when he concluded a waste management agreement with a number of builders was at an end in a dispute between the waste management company and one builder. The Chief Justice distinguished this case (at para 19) on the basis that the issue was whether the arbitrator, in his final order, could grant a remedy against non-parties.
(2) Jardine Lloyd Thompson Canada Inc. v. Western Oil Sands Inc., 2006 ABQB 933, an arbitration under the International Commercial Arbitration Act, RSA 2000, c.I-5, where the court decided whether the arbitrators had jurisdiction to order that certain employees and former employees of a third party be examined for discovery. The Chief Justice distinguished this case because the arbitrators’ jurisdiction was governed by a different statute.
(3) Farah v Sauvageau Holdings Inc., 2011 ONSC 1819, where the court held an arbitrator did not have jurisdiction to make an “arbitral-Mareva injunction” which required third party financial institutions to freeze the assets of a party to the arbitration. The Chief Justice distinguished this case because it was about the jurisdiction to grant a Mareva injunction, which is an extraordinary remedy based in the inherent jurisdiction of superior courts.
The Chief Justice also distinguished (at para 20) all three cases cited by the Crown on the basis that the award in issue in each of them was one that applied directly to non-parties to the arbitration. The order Suncor sought in this case, on the other hand, would bind only the Crown because it sought the production of documents within the possession of the Crown.
The Chief Justice recognized (at para 20) that the records had been provided to the Crown by third party oil sands producers with the assurance of confidentiality in section 50 of the Mines and Minerals Act. However, he found these circumstances were not decisive for three reasons:
(1) the promise of confidentiality in section 50 of the Mines and Minerals Act does not create a privilege over otherwise relevant and material documents;
(2) the arbitration was subject to the implied undertaking of confidentiality and restrictions on the use of information produced in Rule 5.33;
(3) the arbitrators had the same ability that the Court of Queen’s Bench has to make an order that was mindful of the confidentiality interests of the third parties oil sands producers.
However, it was not these specific reasons which appear to have been the primary motivation behind the Chief Justice’s decision, but rather the fundamental principles behind modern arbitration legislation. This is clear because he makes the following comments:
 This Court has had a number of opportunities in recent years to consider the general scheme of the Arbitration Act and its appeal provisions, and has concluded that the Legislature clearly intended to limit judicial intervention: Ellsworth v Ness Homes Ltd., 1999 ABQB 287 at para. 13; Frank v Vogel, 2012 ABQB 432 at para. 17; Capital Power Corp v Lehigh Hanson Materials Ltd., 2013 ABQB 413, at para. 42. In Inforica Inc. v CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, Sharpe JA considered the largely identical provisions of Ontario’s Arbitration Act, SO 1991 [c 17], and held:
 It is clear from the structure and purpose of the Act in general, and from the wording of s. 6 in particular, that judicial intervention in the arbitral process is to be strictly limited to those situations contemplated by the Act. This is in keeping with the modern approach that sees arbitration as an autonomous, self-contained, self-sufficient process pursuant to which the parties agree to have their disputes resolved by an arbitrator, not the courts…
The Chief Justice found the Inforica decision relevant because it also dealt with an interlocutory or procedural order. In Inforica, the arbitrator had made an award for security for costs which a Chambers Judge set aside on the basis that the arbitrator had no jurisdiction to make the order because it was not merely a matter of procedure. The Ontario Court of Appeal decided that the Chambers Judge did not have jurisdiction to hear the application to set aside the order for security for costs and, in doing so, considered the Ontario equivalent of both section 17 and section 44 on which the Crown relied.
In deciding whether the Chamber Judge had jurisdiction under the equivalent of Alberta Arbitration Act’s section 17, the Ontario Court of Appeal determined:
 To establish the application judge’s jurisdiction to entertain Inforica’s application under ss. 17(5), (7) or (8) as an application to set aside the arbitrator’s ruling “as a preliminary question”, Inforica must bring the arbitrator’s ruling that he had jurisdiction to entertain the CGI’s application for security for costs within s. 17(1). Section 17(1) defines the parameters of s. 17, allowing an arbitrator to rule on his “own jurisdiction to conduct the arbitration”. In my opinion, on a fair reading of that language in light of the modern approach that respects the autonomy of the arbitral process and discourages judicial intervention, s. 17(1) is concerned with only the arbitrator’s jurisdiction to entertain the subject matter of the dispute. Asking an arbitrator to decide whether he has jurisdiction to order security for costs does not amount to asking him whether he has jurisdiction to conduct the arbitration. The words “jurisdiction to conduct the arbitration” in s. 17(1) connote jurisdiction over the entire substance or subject matter of the case, not jurisdiction to make interlocutory or procedural orders that do not determine the merits of the dispute and that are made along the way to final resolution of the issues.
Chief Justice Wittmann agreed (at para 23) with this interpretation of the scope of the arbitrators’ jurisdiction with respect to interlocutory or procedural orders under section 17(1). He agreed that section 17(9), upon which the Crown relied, had to be read in the context of section 17(1):
It is the preliminary question of the arbitral tribunal’s jurisdiction to conduct the arbitration that is subject to review under s.17(9), not the tribunal’s determination of procedural issues that arise in the course of the proceedings.
Inforica was also relevant to the Crown’s reliance on section 44. Ontario’s equivalent provisions differ in material ways from Alberta’s, but they share the crucial characteristic of allowing for appeals from an “award”, a term that has a very specific meaning in the context of arbitration. The Ontario Court of Appeal held, with respect to the meaning of “award”:
 [T]he arbitrator’s order for security for costs was not an “award” within the meaning of s. 46(1). … The Act does not define the term “award”, but the term has been held to connote the judgment or order of an arbitral tribunal that “disposes of part or all of the dispute between the parties”: Environmental Export International of Canada Inc. v. Success International Inc., supra, at para. 13. J. Kenneth McEwan & Ludmila B. Herbst, Commercial Arbitration in Canada (Aurora, Ont.: Canada Law Book, 2008) state at 9:30.10: “Only decisions determining the substantive issues should be termed ‘awards’. Matters relating to the conduct of the arbitration are not awards but, rather, are procedural orders and directions”.
The Chief Justice also pointed to Mathieu v JR Stephenson Mfg Ltd., 2013 MBQB 64, concerning an arbitrator’s order for the production of documents. Manitoba’s sections 44(1) and 44(2) are identical to Alberta’s similarly numbered sections and the court in Mathieu held:
… applying the principles of statutory construction to s. 44 of the Act, absent express provision in the arbitration agreement to the contrary, no appeal lies under ss. 44(1) or 44(2) of the Act from a decision of an arbitrator unless that decision finally determines all or part of the substantive dispute between the parties. Unless that occurs, an arbitrator’s decision is not an “award,” regardless of what label the arbitrator places on their decision. A procedural or interlocutory order of an arbitrator will typically not amount to an award.
As a result, Chief Justice Wittmann determined (at para 26) that the Court did not have jurisdiction, under either section 17(9) or section 44 of the Alberta Arbitration Act, to hear the Crown’s appeal. He held that the determination of whether the Crown can be required to produce relevant documents within its possession falls within the scope of the arbitrators’ jurisdiction under the agreement between Suncor and the Crown, the Arbitration Act and the Rules of Court that were adopted. As a result, the Court does not have jurisdiction to hear the Crown’s appeal under section 17(9). As for section 44, the arbitrators’ order was not an “award” and therefore not subject to appeal under that provision. In summary, the arbitrators’ refusal to direct the Crown’s questions of law to the Court of Queen’s Bench was not appealable.
The principle of restricted court intervention in arbitration proceedings governed by the domestic arbitration legislation was also recently affirmed by the Alberta Law Reform Institute in its Final Report 103 (2013) on the Arbitration Act: Stay and Appeal Issues (at paras 19-25). That Report recommends doing away with the parties’ current right to appeal a question of law with leave of the court set out in section 44, leaving the existence of any avenue of appeal to the courts up to the parties and their arbitration agreement (at vi). The Institute summarized the policy arguments for and against appellate access to the courts (at paras 124-132). In favour of the position adopted by ALRI and by the Chief Justice in Suncor Energy Inc v Alberta are the arguments that appeals reduce the speed, finality and confidentiality of arbitration proceedings. While the finality of the arbitrators’ decision to refuse to refer the Crown’s question of law to the court was ultimately upheld in this case, the appeal to the Court of Queen’s Bench did add six months to the hearing of the dispute and did give the public a very small glimpse into an oil sands royalty dispute between a producer and the Alberta government. Thus it did reduce the speed and confidentiality in this one instance, while upholding the finality of arbitration proceedings and providing a precedent for future arbitrations that favours speed, finality and confidentiality in arbitration proceedings.
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By Giorilyn Bruno
Regulations commented on: Enforcement of Private Surface Agreement Rules, Alta 204/2013.
On November 30, 2013 additional sections of the Responsible Energy Development Act, SA 2012, c R-17.3 (REDA) came into force as part of phase 2 of the implementation of the Alberta Energy Regulator (AER). Under this current phase, the AER assumes jurisdiction over Part 8 of the Mines and Minerals Act, RSA 2000, c M-17, the Public Lands Act, RSA 2000, c P-40, and the Private Surface Agreement Registry. Phase 1 occurred in June 2013 when the REDA largely came into force and established the AER with a new mandate and governance structure. Phase 3, the last one, will occur in Spring 2014 when the AER will take on responsibility for the Water Act, RSA 2000, c W-3 and the Environmental Protection and Enhancement Act, RSA 2000, c E-12 in relation to energy projects. With the implementation of phase 3, the AER will become a full life-cycle regulator for oil, gas, oil sands, and coal developments.
The AER posted two bulletins on its website (AER Bulletin 2013-04 and AER Bulletin 2013-05) describing the main changes and held several sessions to inform stakeholders of those changes. This post focuses on the information and discussion provided at the AER session dealing with the Private Surface Agreement Registry.
What is the Private Surface Agreement Registry?
Part 3 of the REDA and the recent regulations enacted under it (Enforcement of Private Surface Agreement Rules, Alta 204/2013) (Rules), allow a landowner or an occupant of land to register a private surface agreement (PSA) with the AER. Once a PSA is registered, a landowner or occupant may request the intervention of the AER if a company does not comply with a term or condition of the agreement.
The onus to register a PSA is on the landowner or occupant. A company has no responsibility to inform either of this option. The landowner or occupant is also responsible for notifying the AER that the agreement is no longer valid or has been amended. To register a PSA, the landowner or occupier must fill out a registration form (available on the website of the AER, here) and send it with a copy of the PSA to the AER. Once the AER receives the documents, it will review them and assess whether the PSA is eligible to be registered. If the AER makes a positive determination, a copy of the registered PSA will be sent to the company.
Currently, there is no deadline within which an agreement must be registered after it has entered into force. An agreement can be registered at any time. The landowner or occupier need not wait until there is a concern that the company will default. A PSA is eligible to be registered if the AER determines that three requirements are satisfied.
(1) First of all, the party who seeks to register an agreement must be an “owner or occupant of land” as prescribed under s. 63 of the REDA. The other party to the PSA has no right to register the PSA. For the definitions of “owner” and “occupant”, s. 62(1) of the REDA refers respectively to the Land Titles Act, RSA 2000, c L-4 and the Surface Rights Act, RSA 2000, c S-24. An owner “means a person entitled to any freehold or other estate or interest in land, at law or in equity, in possession, in futurity or expectancy”. An occupant means “(i) a person, other than the owner, who is in actual possession of land, (ii) a person who is shown on a certificate of title under the Land Titles Act as having an interest in land, (iii) an operator granted right of entry in respect of land pursuant to a right of entry order, or (iv) in the case of Crown land, a person shown on the records of the department or other body administering the land as having an interest in the land.” For the definition of “land”, s. 62(1)(b) of the REDA provides that “land has the same meaning as in the Land Titles Act, but does not include mines and minerals”. Thus, mines and minerals are excluded from the following definition: “land means land, messuages, tenements and hereditaments, corporeal and incorporeal, of every nature and description, and every estate or interest therein, whether the estate or interest is legal or equitable, together with paths, passages, ways, watercourses, liberties, privileges and easements appertaining thereto and trees and timber thereon, and mines, minerals and quarries thereon or thereunder lying or being, unless any of them are specially excepted”.
(2) To be eligible for registration, the agreement must meet the definition of a PSA provided under the Rules. The Rules define a PSA as “a signed and dated written agreement between a company or an owner or occupant of land that concerns any aspect of the holder’s access to or use of that owned or occupied land for the purposes of an energy resource activity, but does not include an order granted by the Surface Rights Board” (s. 1(d)).
(3) Part 3 of the REDA “applies only to private surface agreements made after the coming into force of this Part” (REDA s. 62(2)). This date corresponds to November 30, 2013. Landowners or occupants who entered into agreements before November 30, 2013 are not eligible to register their PSA. At the information session, the AER clarified that it will be looking at the date in which the agreement was signed to determine whether a PSA is eligible to be registered. Therefore, an agreement that amends an existing PSA signed before November 30, 2013 presumably may be registered if a new PSA is signed after November 30, 2013. The AER has also indicated that a landowner or occupant may be eligible to register just an appendix or a schedule that contains additional conditions to an original agreement that was signed before November 30, 2013, if the parties signed the appendix or the schedule after November 30, 2013. However, it is not clear whether this alternative is practicable because a schedule or appendix without the main agreement may not make sense or be enforceable on its own.
Any agreement that meets the above three requirements may be registered, including a PSA between a city and a company or between a company and a First Nation. Furthermore, as recognized under s. 65 of the REDA, the AER will register an eligible PSA even if it contains a confidentiality clause in which the landowner or occupant agreed not to register the agreement. However, the AER has indicated that agreements concerning geophysical exploration under Part 8 of the Mines and Minerals Act are confidential and not eligible for registration with the AER.
Under s. 5 of the Rules, the AER must cancel the registration of a PSA if it is satisfied that the registration was the result of a mistake, an error, or a false or a fraudulent act. Registration of a PSA with the AER does not make the agreement valid or enforceable and the AER does not have the jurisdiction to carry out a substantive review of the agreement or assess either its validity or its merits.
The Enforcement of Private Surface Agreements
The purpose of registering a PSA with the AER is to allow a landowner or occupant to request an order to comply under s. 64 of REDA if that person has a reason to believe that a company is not complying with a term or condition of the PSA. If a PSA is not registered, the AER will require the landowner or occupant to register the agreement before accepting a request for an order to comply.
A request for an order to comply (see here for a section 64 request form) must be submitted to the AER within one year from the date on which the owner or occupant first knew or ought to have known that the company defaulted (Rules s. 7(2)). The request must “(a) be in writing, (b) indicate the term or condition of the registered private surface agreement that the owner or occupant believes the holder is not complying with, (c) set out the basis for, and provide information that demonstrates the alleged noncompliance, and (d) indicate the AER registration number” (Rules s. 7(1)). Once the AER receives the request for an order to comply and the supporting documents, it will inform the company and seek a response on the alleged noncompliance. The AER may conduct inquiries, direct the parties to provide additional documents or materials, and conduct an examination of the land to which the registered PSA applies in order to understand the alleged noncompliance (Rules ss. 8 and 10). Based on this information, the AER will make a decision.
There are five possible outcomes of a request for an order to comply: (1) the AER determines that a company has failed to comply with a term or condition of the registered PSA and issues an order to comply to the company under s. 64 of the REDA; (2) the AER does not issue an order to comply because compliance of the company is achieved after the request is filed but before the AER makes a decision on the request; (3) the AER dismisses the request because it has no merit; (4) the AER dismisses the request under s. 9 of the Rules because the landowner or occupant failed to file with the AER further information, documents, or materials within the specified period; and (5) the AER decides under s. 12 of the Rules that there is a more appropriate forum to deal with the matter. In this case, instead of deciding the request, s. 12 contemplates that the AER will encourage the parties to settle their dispute through alternative dispute resolution or direct the owner of occupant “to have the matter considered” by a court or the Surface Rights Board. (See post by Nigel Bankes, available here, questioning the decision to give the jurisdiction over the enforcement of private surface agreements to the AER instead of the Surface Rights Board).
If the AER decides to issue an order to comply, it must provide the parties with a copy and publish the decision or otherwise make it available (Rules s. 11). The AER does not have the jurisdiction to order specific performance or an injunction. Thus, an order to comply acknowledges in general that the company has defaulted and orders the company to comply with the PSA. If the company does not comply with the order, the AER does not have the authority to oblige the company to comply with a specific term or condition of the PSA. However, the AER may require the company to pay an administrative penalty for failing to comply with the order (REDA s. 70(b)). The AER may also file the administrative penalty with the Court of Queen’s Bench and have it enforced as a judgment of the Court (REDA s. 75). A decision of the AER, including an order, is appealable with leave to the Court of Appeal on a question of jurisdiction or law (REDA s. 45). Therefore, a company presumably may seek relief on these conditions if it believes that no terms or conditions of the PSA have been contravened provided that it is able to show that the AER has made an error of law. This may not always be straightforward. The interpretation of the PSA may give rise to a question of law but the application of the facts to the clause as interpreted is more likely to be classified as either a question of fact or a mixed question of fact and law.
Under s. 13(1) of the Rules, the AER may decide to make public some information concerning a registered PSA. This information may include the name of the holder of the PSA, the date of the agreement, the date of registration, a description of the energy resource activity to which the PSA relates, and the location of the energy resource activity site.
When the AER receives a request for an order to comply, it must place on the public record the registered PSA and all the documents or materials filed with respect to the request (Rules s. 13(2)). In this case, the AER has no discretion because publication is mandatory. The AER has specified that these materials will be published when a request for an order to comply is received and before the AER has reviewed the request. Therefore, the information becomes public even though the request is subsequently deemed without merit.
At the information session, the AER indicated that the Freedom of Information and Protection of Privacy Act, RSA 2000, c F-25 (FIPPA), concerning the right of access of any person to the records in the custody or under the control of a public body, applies to a registered PSA. Therefore, the AER may decide to disclose to any person, upon request, information concerning a registered PSA under s. 6 of the FIPPA. It seems that at least two of the specific exceptions contemplated under the FIPPA may apply to the right of freedom of information concerning a registered PSA: (1) the AER must refuse to disclose to an applicant information that would be harmful to the business interests of a third party (FIPPA s. 16(1)), and (2) the AER must refuse to disclose personal information to an applicant if the disclosure would be an unreasonable invasion of a third party’s personal privacy (FIPPA s. 17(1)). Could the above exceptions under ss. 16(1) and 17(1) of the FIPPA apply also to s. 13(2) of the Rules? In other words, after receiving a request for an order to comply can (or should) the AER refuse to place on the public record the registered PSA or the supporting documents on the basis that this disclosure would be harmful to the business interests of a third party or an unreasonable invasion of a third party’s personal privacy? The exception to disclosure under s. 16(1) of the FIPPA does not apply if “an enactment of Alberta or Canada authorizes or requires the information to be disclosed” (FIPPA s. 16(3)). The language of s. 13(2) of the Rules is unequivocal and requires the AER to place on the public record the registered PSA and all the supporting documents or materials when a request for an order to comply is received. Therefore, the AER presumably must publish the registered PSA and documents even though the disclosure would be harmful to the business interests of a third party. Possibly, the AER may not publish information that would be an unreasonable invasion of a third party’s personal privacy according to the criteria set out in s. 17 of the FIPPA. However, this protection would apply only to “personal information” as defined under the FIPPA, and the AER would still have to publish the remainder of the registered PSA and documents.
There is no definite answer as to whether the AER may accept for registration a PSA that has been redacted to address privacy concerns. Section 4 of the Rules states that the AER may register a PSA if the AER is of the opinion that the PSA “is the current and entire agreement between the parties in respect of the energy resource activity on the land for which the agreement was made” (emphasis added). Perhaps, the AER could decide to accept the registration of a PSA containing minor omissions for security or legal purposes. However, following a request for an order to comply the AER may direct the parties to produce the entire PSA if needed to fully understand the alleged noncompliance. In this case, the entire PSA would become public under s. 13(2) of the Rules. Consequently, if a PSA contains information that the landowner or occupant do not want to disclose they should probably not submit the PSA for registration.
Ms. Bruno’s research on the REDA is supported by a grant from the Alberta Law Foundation to the Canadian Institute of Resources Law.
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By Shaun Fluker
Legislation commented on: Emergency Order for the Protection of the Greater Sage Grouse, PC 2013-2045
The Greater Sage Grouse is on the brink of disappearing from the Canadian landscape and, in doing so, is leaving its mark on the Species at Risk Act, SC 2002, c 29 (SARA). Readers may recall that the sage grouse recovery strategy prepared under SARA was the subject of dispute several years back over the extent to which critical habitat for a species listed as endangered or threatened must be identified in the strategy (See Nigel Bankes’ ABlawg post “Is SARA growing teeth?”). The sage grouse recovery strategy has recently been amended (2013) to include all known critical habitat – both mating sites and year-round habitat – in Canada and to identify threats to the sage grouse (see here). But since the overwhelming majority of sage grouse habitat falls on provincial lands in Alberta, SARA offers little real protection to the sage grouse here in the absence of an Order in Council from federal Cabinet directing that SARA apply to provincial lands. Cabinet issued an Emergency Protection Order under section 80 of SARA in December 2013 that, to my surprise, applies to Alberta lands and the Order comes into force on February 18, 2014. This comment discusses the significance of the Order, adding to existing commentary (see Martin Olszynski’s earlier ABlawg post here, Janice Walton of Blakes LLP here and Jason Unger of the Environmental Law Centre here).
This discussion is framed by some important observations (generally taken from the 2013 sage grouse recovery strategy). The first is that government officials estimate that only about 100 individual sage grouse remain in Canada. This estimate is based on a count of male birds at mating sites (leks) during 2012. The sage grouse population has fallen rapidly in recent years – 98% since numbers were first reporting in the late 1960s – and is undisputedly on the brink of extirpation in Canada. Sage grouse located in Canada occupy the far northern range for the species in North America. The species is not currently listed as endangered in the United States, although a listing decision is pending in 2015.
Habitat loss is the primary culprit in the demise of the sage grouse, and the species currently remains in only 7% of its historical range in Canada. The biophysical attributes of known sage grouse habitat include sagebrush cover, above average moisture, minimal human presence, minimal noise, and no higher structures that provide good perch sites for predators. Specific threats to the sage grouse and its habitat include grazing and agricultural activity that results in the clearing of sagebrush and other native vegetation used for food and cover, an alteration of the hydrology in sage grouse habitat such as a new water diversion or climate change induced events such as drought or other inclement weather, and energy development which leads to the construction of structures, roads and other facilities that produce chronic noise in mating sites. The species will certainly disappear unless drastic measures are taken in the short term to prevent further deaths and protect what remains of existing habitat.
It is also important to observe that the purpose of SARA is to protect the sage grouse from being extirpated and to enable necessary action that aids in the recovery of the species. SARA is the realization of Canada’s international commitment to protect species at risk under the United Nations Convention on Biological Diversity. In short, it is the end of the line for the sage grouse in Canada and if SARA is to realize its purpose the legislation must be interpreted and applied to backstop the species. The federal government deserves credit for applying the emergency protection measures in an attempt to save the sage grouse in Canada.
The sage grouse is listed as an endangered species under both SARA and the Alberta Wildlife Act, RSA 2000, c W-10. Given that sage grouse habitat largely falls on provincial lands in Alberta, we might expect the Wildlife Act to offer some protection, however the legislation provides only minimal legal protection to sage grouse (for some discussion on this point see here and Shaun Fluker and Jocelyn Stacey, “The Basics of Species at Risk Legislation in Alberta” (2012) 50 Alta L Rev 95). The legal protection afforded to sage grouse under the Wildlife Act is essentially limited to section 36(1) which prohibits the willful disturbance or destruction of its residence and the inability to get a hunting license. This is hardly law with proactive intentions. The Alberta government has chosen to govern endangered species almost entirely with non-binding policy under the rubric of its 2009-2014 Species at Risk Strategy (see here). So, for example, the Alberta government has policy that limits the density of oil and gas activity near sage grouse mating sites, but there are no substantive legal mechanisms under provincial law to protect and recover the sage grouse populations in Alberta. Despite being listed as endangered under Alberta’s Wildlife Act for more than a decade, the sage grouse population has continued to decline rapidly here, faster than scientific predictions, and existing policy is clearly not working. The Alberta government’s refusal to enact meaningful legal protection for the sage grouse is almost certainly the primary reason for the application of federal legislation on provincial lands represented by the Emergency Order for the Protection of the Greater Sage Grouse.
An emergency protection order issued by the federal Cabinet under SARA is reserved for those cases where a listed species faces an imminent threat to its survival. Specifically, section 80(1) provides federal Cabinet with the power to issue the emergency order. This order is issued on the recommendation of the federal Minister of the Environment who must make such recommendation where he or she forms the opinion that the species in question faces an imminent threat to its survival (section 80(2)). In November 2011 a coalition of petitioners (including, amongst others, the Alberta Wilderness Association, the David Suzuki Foundation, the Society of Grasslands Naturalists, and the Sierra Club – Prairie Chapter) requested the federal Minister to make this recommendation concerning the sage grouse (see here).
The Emergency Order for the Protection of the Greater Sage Grouse is the first emergency order to be issued by federal Cabinet under SARA. The Minister has previously declined to recommend an emergency protection order for the woodland caribou in Alberta. This decision was subject to judicial review and in Athabasca Chipewyan First Nation v Canada (Minister of the Environment), 2011 FC 962, the Federal Court ruled that the Minister failed to give an adequate explanation in light of scientific evidence on the declining status of caribou populations in Alberta. It would seem that the dire evidence on the sage grouse population left no legal option for the federal Minister other than to recommend emergency protection. What is perhaps most intriguing here is the political decision by federal Cabinet to issue the Order under section 80(4)(c) and thereby apply SARA to provincial lands.
Section 80(4) of SARA sets out what an emergency protection order may include as measures to protect a species in peril. The legislated parameters of an emergency order vary depending on the same considerations employed throughout SARA: an emergency order has widest application to fish, migratory birds, and other species located on federal lands. In this case, the emergency order applies to non-federal species on provincial lands and section 80(4)(c) provides that such an order may identify habitat necessary for the recovery or survival of a species and include provisions that prohibit activities that may adversely affect the species.
The Emergency Order for the Protection of the Greater Sage Grouse specifies necessary habitat in southeastern Alberta and southwestern Saskatchewan and sets out a number of prohibitions which apply on the specified lands. Schedule 1 of the Order lists the habitat areas covered by the Order. These areas are a subset of the known habitat identified in the 2013 recovery strategy – in particular the Order covers mating areas and surrounding areas habituated by sage grouse between 2007 and 2012. Generally speaking the Order prohibits the killing or moving of sagebrush and other native vegetation used by the sage grouse for cover and food, prohibits the construction of new structures or roads, and prohibits activity that produces chronic noise above 45 decibels during mating season (April-May) between sunset and sunrise. There are, however, a number of exceptions to these prohibitions that accommodate existing residential, agricultural and grazing activities in the specified habitat. The exceptions do not cover existing or future energy development, so oil and gas operators in the region covered by the Order will be impacted by prohibited new development and alterations to existing practices on current production.
There are undoubtedly a variety of opinions on whether the Order is sufficient to halt the demise of the sage grouse and surely it would be unreasonable for the Order to prohibit all human activity without compensation in some cases. But the exceptions to the prohibited activity do raise an interesting point about whether they belong in the Order at all. They suggest a balance between halting the demise of the sage grouse and maintaining existing activities known to threaten the species. Given that we are talking about the last 100 individual birds and the purpose of SARA and the Order is to prevent these birds from known threats – some of which are allowed to continue because of the exceptions – it is quite possible the breadth of the exemptions in the Emergency Order for the Protection of the Greater Sage Grouse will compromise the emergency protection effort.
The exceptions come about, in part, as a result of the regulatory impact assessment conducted by the federal government on the implementation of the Order. The Regulatory Impact Assessment Statement (RIAS) – attached to the Order – includes an interesting mix of methodologies to ascertain the costs and benefits of saving the sage grouse in Canada. Jason Unger of the Environmental Law Centre provides a nice overview on the cost/benefit analysis in his post (referenced above). No doubt the costs of protecting the sage grouse using these methodologies is kept low by the fact that existing grazing and agriculture activities are exempted from the prohibitions contained in the Order. I also note that the RIAS only values the sage grouse instrumentally in terms of the benefits the species provides to Canadians (existence value) and the ecosystems it inhabits. It is important, I think, to remember that the enactment of SARA was in part to recognize that all species have intrinsic value (see preamble to the legislation). This means that sage grouse and any other species have value apart from whatever benefits they provide to others. However intrinsic value poses a problem for those implementing SARA because assessing it does not allow for cost/benefit calculations and generally is not amenable to quantification. Nonetheless we do not assess our own worth by calculating the costs and benefits of our existence, so why do we insist on doing so for other species – particularly those for which we have accepted an obligation to protect?
Mark Sagoff has published an excellent book that persuasively argues it is a category mistake to apply economic reasoning to endangered species problems (Mark Sagoff, The Economy of the Earth: Philosophy, Law and the Environment 2d ed (Cambridge University Press, 2007)). Economic reasoning gives us a means to choose between our preferences (what we want). So, for example, we can use cost/benefit analysis to choose between having a sage grouse population or industrial activity such as grazing, agriculture, and energy development in southeastern Alberta. But SARA obligates us in principle to protect the sage grouse from extirpation in Canada. It is not a matter of preferences, costs and benefits, or choosing between sage grouse and resource development. Protecting remaining sage grouse habitat and preventing any further individual deaths is the reason why SARA was enacted and should be the only concern or purpose under the emergency protection provisions.
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By Ana Maria Radu
Document commented on: 2012 Greenhouse Gas Emission Reduction Program Results
In November 2013, Alberta released the review of 2012 compliance results with the Specified Gas Emitters Regulation, Alta Reg 139/2007 (SGER). Alberta was the first Canadian province to develop legislation regulating greenhouse gas (GHG) emissions. The SGER requires established facilities (i.e. facilities existing in 2000) that emit more than 100,000 tonnes of GHGs a year to reduce their emissions intensity by 12% below a baseline established between 2003 and 2005. Relative to business as usual, the 2012 compliance review shows that the results have been less than stellar.
Alberta has adopted an intensity based scheme, with the threshold level of 100,000 tonnes of carbon dioxide equivalent (CO2e). An intensity based program targets to improve production efficiency in terms of GHG emissions. In other words, there is no cap on the total annual emissions; rather it is the total annual emissions divided by total production for the year that matters. An intensity based system allows GHG emissions to increase from year to year as production expands, as long as a facility can reduce the amount of GHGs emitted per unit of production. New facilities are required to reduce their GHG emissions intensity by 12% over a 6 year period, with a 2% reduction obligation per year. Reductions are measured against facility specific baseline intensities that are determined based on three years of historical operations. Facilities that cannot meet their reduction obligations by improving their own efficiencies have three alternative compliance options:
The benchmark value of $15/tonne of CO2e set by the Climate Change and Emissions Management Fund compliance option provides some insight into the financial implications of this program for large emitters. Essentially this sets a ceiling price for offsets under the SGER and guarantees that an emitter will not be required to pay more than 15$ per tonne in order to achieve compliance.
However, the provincial government has reason to worry about GHGs, since Alberta’s GHG emissions have risen by 46% compared to 1990 levels and are likely to grow(Canada’s Emission Trends 2012, p. 32-33).
In 2011 Canada emitted 702 Mt CO2e, of which Ontario was responsible for 24% and Alberta for 35% (245.7Mt CO2e). In Canada, large emitters (>50,000 t CO2e) are responsible for about one third of the GHG emissions – 254 Mt out of 702. Alberta hosts about half of these large emitters, whereas Ontario hosts 19% of them.
The facts are as follows: Alberta emitted 245.7 Mt of CO2e in 2011. Half of these emissions come from large facilities (>50,000 t CO2e). In total, 164 facilities from 16 industrial sectors reported a total of 123.3 Mt CO2e of greenhouse gas emissions in Alberta for the 2011 calendar year through the Specified Gas Reporting Program. Alberta requires industrial facilities that emit more than 50,000 tonnes of CO2e (including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride) to submit annual reports on their greenhouse gas emissions. The Specified Gas Reporting Regulation, Alta Reg 251/2004 describes who is required to report greenhouse gas emissions and how the information is collected.
In November 2013, Alberta released the 2012 Greenhouse Gas Emission Reduction Program Results. For 2012, 56.6% of the required reductions were achieved by emissions savings through facility operations (1.66 Mt), offsets submitted (2.63 Mt) and recognition of cogeneration (3.25 Mt). The Alberta Climate Change and Emissions Management Fund collected payments that accounted for 43.4% of the required emission reduction.
Compared to 2011, the results for 2012 revealed a dramatic fall in “actual” reductions. In 2011 improvements to operations (1.5Mt), offset purchases (5.3Mt), emission savings at the facility (1.09Mt) and recognition of cogeneration (2.53Mt) represented 73% of the necessary GHG emission reductions for compliance with the SGER; whereas the Alberta Climate Change and Emissions Management Fund payments accounted for only 27% of compliance.
Without overlooking the merits of being the first Canadian jurisdiction to implement GHG emissions reporting and reduction legislation, one has to take into consideration the full picture with respect to Alberta’s GHG profile:
The SGER will expire in September 2014 and this raises the question of what lessons Alberta can learn from its previous experience and what carbon pricing mechanism should be considered in any successor regulation to the current SGER. Alberta needs to address the modest results of the SGER and other problematic issues such as the absence of a limit on the use of fund credits and offset credits for compliance reasons.
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By Martin Olszynski
PDF Version: The Not Quite Twelve Days of Northern Gateway
Decision Commented On: Report of the Joint Review Panel for the Enbridge Northern Gateway Project
When the Joint Review Panel’s report for the Northern Gateway Project (the NGP Report) was first released, I knew that exam marking and other commitments would prevent me from posting a timely comment (in contrast, see here and here). I had hoped to make up for my tardiness by eventually writing a post using a holiday theme, as the Environmental Law Centre’s Jason Unger did so well with respect to other environmental law developments here. My own idea was to write something along the lines of ‘The Twelve Days of Christmas.’ Alas, it is mid-January and it seems that the time for such ornamentation has passed; a plain and simple discussion of some of the more interesting aspects of the NGP Report will have to do.
1. This is What a Justification Looks Like
Having recently called out the federal government for failing to provide a justification for its decision to approve Shell’s Jackpine mine oil sands expansion project (an approach that serves no interest other than the government’s, as even industry would stand to benefit from knowing why one project is justified while another, e.g. Taseko’s original Prosperity mine, is not), it was reassuring to see that at least this Joint Review Panel (JRP) shares my understanding of this obligation under the Canadian Environmental Assessment Act, 2012, SC 2012, c 19.
Thus, while concluding that the NGP is likely to result in significant adverse environmental effects with respect to caribou and grizzly bears, the JRP recommended that these “can be justified in the circumstances, as set out in Chapter 2” (see NGP Report, Volume II, Chapter 8, Environmental Assessment). Chapter 2, many readers will know by now, is the JRP’s discussion, in its role under the National Energy Board Act, RSC, 1985, c N-7, as to whether the NGP is in “the public interest.” Notwithstanding its potential environmental burdens, the JRP ultimately concluded that the NGP is in the public interest, citing various societal benefits including primarily jobs and job-training for Aboriginal communities but also “research, monitoring, and planning initiatives and techniques with relevance beyond the project” and economic benefits, first and foremost the importance of “opening Pacific Basin markets” (NGP Report, Volume II, Chapter 2, s. 2.4.3 and 2.4.4.).
Of course, not everyone will agree with this conclusion. The good news, for Enbridge and the federal government anyway, is that they don’t really have to; accountability at this stage of the environmental process is primarily intended for the ballot box, not the court room. The one caveat to this is that, as with every exercise of statutory authority, the justification must be able to withstand judicial scrutiny. While the subjective and policy-laden nature of this particular exercise points to a highly deferential approach by the judiciary, it seems clear that the JRP must have some basis for its various conclusions. My sense is that herein lies the reason for the federal government’s reluctance to engage in any real justification for Shell Jackpine, as even this relatively low bar can create problems. For example, factored into the JRP’s public interest determination for Northern Gateway was its opinion that a large spill is highly unlikely, a conclusion that appears questionable at least. And even if Canadian courts ultimately deem such probing too onerous within the rubric of “reasonableness” review, such details can provide fodder for public commentary that can undermine the government’s position in the court of public opinion (regarding the economic case for increased oil sands production, for example, see University of Alberta Professor Andrew Leach’s commentary here).
2. The JRP’s Failure to Consider Greenhouse Gas Emissions Associated with Increased Oil Production
Probably the most discussed aspect of the NGP Report (see this excellent discussion on CBC’s The 180 beginning at around the seven minute mark) is the JRP’s treatment (or lack thereof) of “upstream” greenhouse gas emissions (GHGs), and specifically the apparent asymmetry between the JRP’s decision to consider the need to open markets for projected increases in oil production – the vast majority of which would uncontrovertibly be from the oil sands – but not the GHGs associated with this projected growth. The JRP explained its approach as follows:
Many people said the project would lead to increased greenhouse gas emissions and other environmental and social effects from oil sands development. We did not consider that there was a sufficiently direct connection between the project and any particular existing or proposed oil sands development or other oil production activities to warrant consideration of the effects of these activities. We based our decision on four factors:
NGP Report, Volume I (“Connections), s. 2.2.2 (Emphasis added)
I find both the JRP’s framing of the issue and its approach very odd. From a strictly legal perspective, the relevant question is not whether there is a sufficient connection to any particular existing or proposed oil sands development or other production activity, and certainly not whether such projects or activities were included in the Terms of Reference (ToR), but rather simply whether the GHGs associated with the production of bitumen that will be transported by the NGP are an “environmental effect” of that project (see NGP Report, Volume II, Appendix 4, Terms of Reference, which defines “environmental effect” very broadly to mean “any change that the project may cause in the environment.” The result is essentially the same when you consider s. 5 of CEAA, 2012).
This, then, brings us to the very same “chicken and egg” issue that has plagued the Keystone XL pipeline (KXL) and that has caused energy (and myriad other) analysts to spill tons of virtual ink over: Are pipelines such as KXL and NGP simply one form of bringing oil to market (alongside rail, for example), or do they enable increased production? If the answer is that production will increase irrespective of new market access or increased pipeline capacity then assessing GHGs does not seem necessary (though not harmful and probably useful, as further discussed below). If they enable new production, then the case for considering the GHGs associated with a projected growth from 447,900 cubic metres (2.8 million barrels) per day in 2010 to 990,800 cubic metres (6.2 million barrels) per day by 2035 (NGP Report, Volume II, s. 3.1) seems quite strong. And while I would not purport to answer that question here, Figure 3.2 of the NGP Report (Northern Gateway Forecast of United States versus China and India Oil Demand) does suggest that market access, or lack thereof, could be a limiting factor for oil sands production. So too for pipeline capacity, as the following graph prepared in the context of KXL illustrates:
Whatever the case, there certainly seems to be little merit in the JRP’s first factor. If the reference to provincial authorities is intended to suggest a jurisdictional issue here, the law is settled that there isn’t one (see Quebec (Attorney General) v. Canada (National Energy Board)  1 SCR 159 at para 66). Furthermore, if the reference to other authorities generally is intended to suggest that a consideration of GHGs here would somehow be duplicative or unnecessary, this too misses the mark. One need only look at the JRP reports for three of the most recent oil sands mines – Kearl (at pp. 54 – 60), Joslyn North (at pp. 102 – 105) and Shell Jackpine (at pp. 49 – 51) – to find that the treatment of GHGs in this context is cursory and inadequate. In each case, the JRP’s conclusions defer to government policy (arguably in contravention of Madame Justice Tremblay-Lamer’s ruling in the Kearl Litigation) and hinge on the adequacy of a future federal regime that consistently fails to materialize. Most importantly, they are entirely project-specific; nowhere is there any discussion of the GHGs associated with multiple oil sands project, to say nothing of a total projected growth to 6.2 million barrels/day by 2035.
This brings me to my final point which I alluded to above. As the JRP noted in its discussion of the public interest, “[h]aving an independent expert tribunal take the time to collect, digest, and understand all aspects of a complex application results in thorough, reasoned recommendations and conditions. This provides the decision maker with expert views, based on tested evidence, on which to base a decision” (NGP Report, Volume II, s. 2.3.1). Bearing in mind the relatively loose language of the ToR (see definition of “environmental effect” above) and that environmental assessment (EA) is a simply a process for decision-making that does not dictate any particular result, why not consider the GHGs associated with increased oil production and avoid what could be a crucial political and legal objection to the NGP?
3. Ecosystem Services Mark their Canadian Debut in the EA Context
In the context of considering the NGP’s economic burdens and benefits (NGP Report, Volume II, s.2.4.4), the JRP noted that the concept of “ecological goods and services” was described during the hearing but that, based on the hearing record, the estimated costs for damages to ecosystem goods and services were not well quantified and based on a methodology that is not currently broadly accepted.
Ecosystem goods and services have most recently been defined as “the direct and indirect contributions of ecosystems to human well-being,” which can further be divided into one of four broad categories: regulating services (e.g. flood mitigation, water purification), provisioning services (e.g. food), habitat or supporting services (e.g. spawning grounds) and cultural services (e.g. recreational opportunities) (see here for an excellent explanation of these categories). The idea of analogizing the environment to a form of capital stock that gives rise to the flow of various services first broke into the policy mainstream in 1997 following the publication in the United States of “Nature’s Services,” followed shortly thereafter by the first attempt to quantify the global value of ecosystem services (US $33 trillion/year). The concept has since been adopted by the United Nations’ Millennium Ecosystem Assessment (2005), which grimly reported that two thirds of the earth’s ecosystems are in decline and urged governments to adopt policies that “recognize the true value of nature.” In Canada, ecosystem services research dates back to at least 2004, with the publication of Simon Fraser University Professor Nancy Olewiler’s study, The Value of Natural Capital in Settled Areas of Canada. The concept has now made its way into various government documents and policies, with a significant new effort, Measuring ecosystem goods and services in Canada, being launched by Statistics Canada last year.
While an assessment of the NGP record with respect to ecosystem services will have to await a future post, the least that can be said is that their debut here is a positive development that is bound to alter the way EA is done in Canada going forward (for another potential application of the ecosystem services concept in Canadian environmental law, see here).
There are other aspects of the NGP Report that merit further discussion, including its approach to adaptive management (we now have three different JRP reports in as many years that take different views on the extent to which AM can be relied upon in making a determination as to the likelihood of significant adverse environmental effects under CEAA), the precautionary principle, species at risk and Aboriginal consultation. Readers should stay tuned to ABlawg for analysis of those issues.
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By Elizabeth Whitsitt and Nigel Bankes
Decisions commented on: World Trade Organization (WTO) Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, 25 November 2013, and Inuit Tapiriit Kanatami et al v European Commission, Case T-526/10, Judgement of the General Court (EU), (Seventh Chamber), 25 April 2013, available here (currently on appeal)
Regulations commented on: Regulation (EC) No 1007/2009 on trade in seal products, (Framework Regulation) and Commission Regulation (EU) No 737/2010 of 10 August 2010 laying down detailed rules for the implementation of Regulation (EC) No 1007/2009 of the European Parliament and of the Council on trade in seal products (Implementing Regulation) (collectively the Sealing Regulations) (both available here along with other background information and reports)
The WTO Panel handed down its decision in the complaints made by Canada and Norway in relation to the European Union’s ban on placing seal products on the market on November 25, 2013. The reaction in the media was immediate with most outlets indicating that the Panel had upheld the ban. The CBC, for example, reported that “[t]he WTO, while finding that the EU’s so-called Seal Regime had violated international trade agreements, also determined that the ban was valid because of a controversial public morals clause”. Gloria Galloway in the Globe and Mail reported that “[a] WTO ruling released on Monday says the ban the EU imposed in 2010 undermines the principles of fair trade, but is justified because it ‘fulfills the objective of addressing EU public moral concerns on seal welfare’”.
Yet if one flips to the end of the 186 page decision the Panel concludes that the EU is in breach of certain provisions of both the Agreement on Technical Barriers to Trade (TBT) and the General Agreement on Tariffs and Trade (GATT) (1994) and therefore recommends that the WTO’s Dispute Settlement Body request the EU to bring the inconsistent elements of the seal ban into conformity with the EU’s obligations under the two agreements.
So who won and who lost? The short answer is that the WTO’s decision is a serious loss for Canada and Norway. While the Panel finds that certain aspects of the Sealing Regulations are inconsistent with the EU’s international trade obligations, the Panel upholds the core elements of the Regulations concluding that while the Regulations breach key obligations under the TBT and GATT, those violations can be justified on the grounds that the Sealing Regulations are motivated by a concern for public morals. According to the Panel, those parts of the Regulation that are inconsistent with international trade law are best thought of as ameliorative provisions designed to make the Ban more acceptable to economic and traditional interests within the EU that would otherwise be more affected by a blanket ban. As discussed below, however, the reasons why the EU included these ameliorative provisions demonstrate the incoherence and self-serving nature of the EU’s Regulation.
There is a second conundrum embedded in the EU’s regulatory scheme and in the reporting of the Panel decision, and that relates to the effect of the scheme on indigenous communities and especially Inuit communities. The EU’s Regulation contains an important exception (the “IC exception”) to its main prohibition on placing seal products on the market to the effect that:
The placing on the market of seal products shall be allowed only where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence.
It is clear that this exception does nothing for the Newfoundland hunt but it does seem to offer cover for a continued Inuit harvest; and if that is the case why do Inuit leaders in Canada continue to be so exercised by the Regulation? The answer we think is at least two fold. First, the overall tenor of the Regulation is to demonize and condemn a cultural practice. It represents an effort by an economically powerful and dominant culture to marginalize the “other”. Second, and as a practical matter, Inuit access to the global (and principally European) seal product markets depends upon being able to make use of (piggy back on) the marketing channels created and maintained by the much larger Atlantic seal hunt. If the Atlantic seal hunt is denied market access and collapses, then market access for Canadian Inuit harvested seals will de facto also be denied. The same is far less likely to be the case for the much larger Greenlandic Inuit harvest. This is attributable both to the size and central organization of that harvest which is subsidized and supported by the Greenlandic government. Indeed it is the large scale and commercial organization of the Greenlandic harvest which was one of the concerns that led the Panel to question the coherence of the EU’s Regulation.
The balance of this post proceeds as follows. The next section summarizes the EU regulation while the following sections summarize the Panel’s main conclusions under the TBT and the GATT. We then briefly examine an earlier decision of the EU’s General Court in which seal harvesters had sought to question the validity of the Seal Ban Regulation under EU law. The decision is revealing because it illustrates that the justifications that the EU offers for the legislation may differ depending upon the legal issue at stake and the forum. This tends to undermine the legitimacy of the EU’s position.
The EU Regulation
The EU Regulation comprises 21 preambular paragraphs and 8 operative articles. The preamble is important in ascertaining the premises and intent of the regulation as well as establishing the legal basis for the Regulation in EU law. The preamble (paras 1 and 2) begins by reciting the history of the community’s concerns with respect to sealing (cruel hunting of sentient beings) and the adoption of the prohibition on imports of skins from harp seal and hooded seal pups in 1983. Animal welfare concerns are also mentioned in other paragraphs of the preamble (e.g. paras 4 and 5) but another concern that emerges is that member states are responding to these concerns by passing domestic measures that regulate trade in seal products. The preamble expresses the concern that such a patchwork of initiatives may “adversely affect the operation of the internal market in products which contain or may contain seal products, and constitute barriers to trade in such products.” Furthermore it may affect trade in goods where consumers cannot readily tell if such goods include ingredients from seals, such as leather goods or Omerga-3 capsules and oils. Thus, to deal with both animal welfare concerns and concerns as to fragmentation of the internal market, the placing of seal products on the market should generally be prohibited (at para 10). The preamble effectively acknowledges that this is an extreme solution but justifies it on the basis that assessments have shown that it is not feasible in practice, given the conditions of the seal hunt, to provide assurances that seals will only (i.e. exclusively) be harvested in an effective way that satisfies concerns as to animal welfare (at para 11). For the same reason labelling solutions are also unable to offer the requisite assurances (at para 12).
The preamble also addresses the need to create some exceptions. The rationale for the indigenous harvest exception is laid out at some length:
 The fundamental economic and social interests of Inuit communities engaged in the hunting of seals as a means to ensure their subsistence should not be adversely affected. The hunt is an integral part of the culture and identity of the members of the Inuit society, and as such is recognised by the United Nations Declaration on the Rights of Indigenous Peoples. Therefore, the placing on the market of seal products which result from hunts traditionally conducted by Inuit and other indigenous communities and which contribute to their subsistence should be allowed.
By contrast, the preamble to the regulation does little more than allude to the two other exceptions, namely personal imports by travellers (hardly a case of putting seal products on the market in any event) and harvesting (and subsequent marketing) that occurs “for the sustainable management of marine resources” (at para 17).
The heart of the Regulation is Article 3, the relevant provisions of which state as follows:
Conditions for placing on the market
1. The placing on the market of seal products shall be allowed only where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence. These conditions shall apply at the time or point of import for imported products.
2. By way of derogation from paragraph 1:
(a) the import of seal products shall also be allowed where it is of an occasional nature and consists exclusively of goods for the personal use of travellers or their families. The nature and quantity of such goods shall not be such as to indicate that they are being imported for commercial reasons;
(b) the placing on the market of seal products shall also be allowed where the seal products result from by-products of hunting that is regulated by national law and conducted for the sole purpose of the sustainable management of marine resources. Such placing on the market shall be allowed only on a non-profit basis. The nature and quantity of the seal products shall not be such as to indicate that they are being placed on the market for commercial reasons.
The application of this paragraph shall not undermine the achievement of the objective of this Regulation.
Much of the balance of the Regulation is procedural in nature but Article 4 headed “Free Movement” is worth mentioning if only because it hearkens back to the proper functioning of the internal market providing as it does that “Member States shall not impede the placing on the market of seal products which comply with this Regulation”.
The more detailed Implementing Regulation specifies the conditions which must be met before seal products can qualify under either of the main exceptions. In order to qualify under the indigenous community exception, the products must originate from a seal harvest that satisfies the following conditions:
(a) seal hunts conducted by Inuit or other indigenous communities which have a tradition of seal hunting in the community and in the geographical region;
(b) seal hunts the products of which are at least partly used, consumed or processed within the communities according to their traditions;
(c) seal hunts which contribute to the subsistence of the community.
Similarly the conditions applicable to the marine resources exception are:
a) seal hunts conducted under a national or regional natural resources management plan which uses scientific population models of marine resources and applies the ecosystem-based approach;
b) seal hunts which does not exceed the total allowable catch quota established in accordance with the plan referred to in point (a);
(c) seal hunts the by-products of which are placed on the market in a non-systematic way on a non-profit basis.
In addition, any product put on the market pursuant to either form of hunt must also be accompanied by “an attesting document” submitted by a “recognized body” approved by the Commission. At the time of the panel decision the Commission had approved two applications, one approving a number of County Administrative Boards in Sweden (see here) and the other approving the Greenland Department of Fisheries, Hunting and Agriculture (here). One of the things that the panel discusses in its report is the time consuming nature of the process for becoming a “recognized body”, although such delays were not considered sufficient to establish a violation of the TBT Agreement (Panel Report at paras 7.555-7.580).
The WTO Panel Report
The bulk of the Panel’s decision focuses on arguments raised by Canada and Norway under the TBT Agreement (available here). Both countries disputed the EU’s regulation under Articles 2.2, 5.1.2 and 5.2.1 with Canada raising an additional claim under Article 2.1, namely that the EU’s Seal Regime provides less favourable treatment to Canadian imports of seal products when compared to seal products from Greenland and the EU. The following discussion largely focuses on the Panel’s analysis under Articles 2.1 and 2.2 of the TBT Agreement. But before moving to that discussion it is important to note that the Panel did take issue with some of the procedural components of the EU’s measure in this case. Particularly troubling for the Panel was the fact that the EU failed to ensure that a competent body was in place to assess compliance with the Sealing Regulations, a failure which meant that the EU’s conformity assessment procedures (CAP) were not capable of permitting trade in conforming seal products on the date its Regulations came into force. In the Panel’s view that procedural gap created an unnecessary obstacle to trade and violated Article 5.1.2 of the TBT Agreement (Panel Report paras 7.521-7.529). The Panel however rejected other claims by Norway and Canada that the EU’s proposed CAP created an unnecessary obstacle to trade in violation of Article 5.1.2 (Panel Report paras 7.539-7.547).
Non-Discrimination under the TBT Agreement: Article 2.1
On the substantive portions of the EU’s Sealing Regulation, Canada’s arguments about the discriminatory nature of the EU’s regulation (in particular the regulation’s exemption for indigenous community (IC) and marine resource management hunts (MRM)) were compelling to the Panel; it found that the IC and MRM exceptions under the EU’s Sealing Regulations violated Article 2.1 of the TBT Agreement. The relevant provision (Article 2.1) of the TBT Agreement provides:
With respect to their central government bodies…Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.
The Panel began its analysis by first establishing that all seal products are “like” products whether they can be placed on the EU market or not (Panel Report at paras 7.134-7.140). In addition, it found that the EU Regulations had a detrimental impact on the competitive opportunities of Canadian seal products versus Greenlandic imported and EU-originating goods (Panel Report at paras 7.149-7.170). Such differential treatment does not necessarily mean, however, an automatic violation of the TBT Agreement. In an attempt to balance the rigors of trade law obligations with a state’s right to regulate, WTO Panels and the Appellate Body have held that where the competitive relationship between like goods is negatively affected because of legitimate regulatory distinctions, a State’s measure will not run afoul of the non-discrimination disciplines articulated in Article 2.1 (Panel Report at paras 7.171-7.172). As a result, the key question addressed by the Panel under this provision was whether the distinctions made under the EU Regulations between commercial seal hunts on the one hand, and IC and MRM hunts (and the products derived therefrom) on the other hand, are legitimate.
Referring to jurisprudence considering GATT Article XX the Panel explains that the legitimacy of distinctions made under the EU Regulations can be established in one of two ways: (1) if the distinctions are rationally connected to the objective of the EU Regulations, or (2) if the distinctions can be explained and are applied in an even-handed manner (Panel Report at paras 7.256-7.259). Under both of these tests, the EU failed to persuade the Panel that the distinctions made under its Regulations between commercial seal hunts on the one hand and the IC and MRM hunts on the other hand were legitimate.
Throughout the case the EU contended that the objective of its regulations was to address moral concerns about the incidence of inhumane killing of seals and economic activities carried out to sustain such practices (see e.g. Panel Report at para 7.274). However, after comparing the features of seal hunts carried out for commercial purposes with features of seal hunts carried out by indigenous communities (Panel Report at paras 7.185-7.245), the Panel concluded that hunting methods used by indigenous hunters (e.g. trapping and netting) “…can cause the very pain and suffering for seals that the EU public is concerned about” with the result that the IC exception under the EU Seal Regime bore no rational connection to the EU’s alleged concern for animal welfare (Panel Report at para 7.275). The EU did manage to convince that Panel that the protection of Inuit interests (i.e. tradition, culture and subsistence) was a sufficient basis for distinguishing IC seal hunts from commercial seal hunts through the IC exception. However, serious doubts about the even-handedness of the design and application of the IC exception led the Panel to conclude that the IC exception was inconsistent with Article 2.1 of the TBT Agreement (Panel Report at para 7.319). Of particular relevance were findings that the exception had so far only been available to products derived from the Inuit seal hunt in Greenland, where such hunts (unlike the Inuit hunts in Canada, Russia or Alaska) were highly organized to capture a high volume of seal in order produce quality furs and leather for commercial purposes, all factors which made those hunts look more like commercial seal hunts than IC hunts carried out for subsistence purposes (Panel Report at paras 7.309-7.317).
The MRM exception, like the IC exception, was also found to violate Article 2.1 of the TBT Agreement. While noting that MRM seal hunts take place only occasionally and on a small-scale for the purpose of controlling nuisance seals and seal culling, the Panel concluded that these types of hunts still give rise to animal welfare concerns (Panel Report at paras 7.336-7.337). Bolstered by evidence that there is little monitoring of seal hunts conducted for management of marine resources, the Panel determined (as it did with the IC exception) that there is a disconnect between the MRM exception and the stated purpose of the EU’s Regulations (Panel Report at para 7.338). Additionally, the EU was unable to convince the Panel that there was a justifiable rationale for distinguishing MRM hunts from commercial seal hunts. Particularly persuasive to the Panel were arguments raised by Canada that MRM hunts are motivated, at least in part, to support commercial fishing industries. Thus, in contrast to its determination that the protection of Inuit interests could justify differential treatment between IC hunts and commercial hunts, the Panel held that “…there is a commercial dimension to seal hunts conducted for the purpose of managing marine resources” (Panel Report at para 7.343). As a result, the Panel found that the EU’s Regulation made an illegitimate distinction between MRM and commercial seal hunts (Panel Report at paras 7.344-347).
Unnecessary Trade Obstacles: Article 2.2
Despite the discriminatory nature of the exceptions within the EU’s Sealing Regulations, Canada and Norway were unable to successfully challenge the regime as an “unnecessary obstacle to international trade” under Article 2.2 of the TBT Agreement. Article 2.2 provides:
Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfill a legitimate objective, taking account of the risks non-fulfillment would create. Such legitimate objectives are, inter alia: national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment. In assessing such risks relevant elements of consideration are, inter alia: available scientific and technical information, related processing technology or intended end-uses of products.
The dispute under this provision began with a disagreement between the parties over the objective of the EU’s Regulations. While all parties agreed that one of the objectives of the EU’s Sealing regulation was animal welfare, they disagreed about characterizing that objective as a moral concern of the EU public (see Panel Report at para 7.377). Incorporating previous interpretations of the “public morals” exception under GATT and GATS, the Panel indicated that in order for a TBT measure to address public morals within the society of a regulating member, it must consider whether the concern in question actually exists in that society and whether that concern falls within the scope of “public morals” as “defined and applied” by a regulating Member “in its territory, according to its own systems and scales of values” (Panel Report at paras 7.379-7.383). After considering the text and legislative history of the Sealing Regulation, the Panel easily found that seal welfare was a concern that existed within the EU. In addition, the Panel found that legislative action taken by the EU and its member states demonstrated that animal welfare is a moral issue within the EU. As a result, the Panel concluded that the objective of the Sealing Regime is “to address the moral concerns of the EU public with regard to the welfare of seals” (Panel Report at paras 7.406-7.410).
Having clarified that seal welfare qualified as a moral concern within the EU, the Panel went on to consider whether this objective is legitimate within the meaning of Article 2.2 of the TBT Agreement. Unlike “national security requirements” or “the prevention of deceptive practices”, “public morals” is not expressly mentioned as a legitimate objective in Article 2.2. With relative ease the Panel found that “public morals” is a legitimate objective within the meaning of Article 2.2. In so finding, the Panel was cognizant of the need for interpretive consistency between the TBT Agreement and other international trade treaties like GATT and GATS. In particular, the Panel observed that the TBT Agreement is intended to further the objectives of GATT and it noted the existence of a “public morals” exception in GATT and GATS, making the inclusion of such an objective in Article 2.2 a natural extension of the listed legitimate objectives (Panel Report at paras 7.415-7.421).
In its examination of the Sealing Regulation as an unnecessary obstacle to trade, the Panel considered a number of different factors, including the extent to which the Sealing Regulations actually contribute to the objective of protecting seal welfare. Canada and Norway attacked the EU’s measure by arguing that the Sealing Regulations do not condition market access on compliance with animal welfare requirements and do not protect EU consumers from seal products derived from an inhumane hunt. In considering all of the arguments raised, the Panel acknowledged that the actual contribution of the Sealing Regulation to seal welfare was undermined by the IC and MRM exceptions (i.e. because both types of hunt permit the inhumane hunting of seals) (Panel Report at paras 7.444-7.448) and by the fact that the measure allows commercial activities in the EU related to the processing of seal products that are otherwise prohibited under the Seal Regulations (Panel Report at paras 7.449-7.455). In a somewhat confusing twist, however, Panel sided with the EU and determined that the Sealing Regulations are “…capable of making and do make some contribution to its stated objective of addressing the public moral concerns” (Panel Report at para 7.460). Without an alternative measure reasonably available to make an equivalent or greater contribution to the welfare of seals, the Panel determined that the Sealing Regulations are not unnecessary obstacles to the international trade in seal products (Panel Report at paras 7.468-7.505).
The GATT Analysis
Given the Panel’s findings under the TBT Agreement, it had little difficulty concluding that the EU Regulations breached two basic GATT disciplines:
(1) the most favoured nation standard of Article 1(1) (seals harvested in Canada and Norway are not “immediately and unconditionally” entitled to the same treatment as seals harvested in Greenland, at paras 7.592 – 7.600);
(2) the national treatment standard of Article III.4 (seals harvested in Sweden under an MRM program may be placed on the market but not seals harvested in Norway or Canada – the seal products in each case are “like products”);
The Panel did not, however, find a breach of Article XI:1 which is the prohibition on quantitative restrictions. The Panel reached this conclusion (at paras 7.6.57 – 7.663) on the basis that Article 3 of the Framework Regulation functions as a prohibition on placing goods on the market and not as a quantitative restriction on imports. The scope of the prohibition is informed by the exceptions but the exceptions do not themselves constitute a prohibition or quantitative restriction on imports.
Since the Sealing Regulations were inconsistent with Article 1:1 and III:4 it fell to the EU to seek to justify the measures under Article XX and in particular the so-called chapeau of Article XX and paragraphs (a) and (b):
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:
(a) necessary to protect public morals;
(b) necessary to protect human, animal or plant life or health …
The Panel concluded that the Sealing Regulations could prima facie be justified as a measure necessary to protect public morals and in particular “moral concern with regard to the protection of animals”. In assessing necessity the Panel noted that it needed to assess the importance of the interests and values at stake (at para 7.630) as well as the contribution that the measure made to the achievement of the objective (at para 7.635): “The more vital or important the values or interests furthered by the measure are, the easier it will be to accept that measure as necessary” (7.630). In its assessment the Panel concluded that the value at stake was “an important value or interest” and that the ban made a material contribution to reaching the EU’s objective:
The ban does contribute to the European Union’s objective by reducing, to a certain extent, the global demand for seal products and by helping the EU public avoid being exposed to seal products on the EU market that may have been derived from seals killed inhumanely. To the extent that such seal products are prohibited from the EU, we find that the ban makes a material contribution to the objective of the measure.
However, the effectiveness of the measure was reduced by the scope of both the IC and MRM exceptions. Further, the measure could not be justified on the basis of paragraph (b) since the EU had never really argued that the Regulations were developed for the protection of seal welfare.
While the Panel found that the Regulations could prima facie be justified under paragraph (a), the exceptions could not meet the test established by the chapeau. In particular (at para 7.650) the IC exception could not be justified “due to the lack of even-handedness in the design and application”; similarly the MRM exception could not be justified because the distinction inherent in that exception between commercial and MRM hunts “is neither rationally connected to the objective nor based on any justifiable grounds” and neither was “the MRM exception … designed and applied in an even-handed manner.”
In addition to the concerns raised in the introduction to this post, the WTO Panel’s decision is problematic for Canada and Norway for a number of reasons. One of the fundamental concerns raised by the decision relates to the Panel’s characterization of the EU’s sealing Regulation. According to the Panel, the primary objective of the EU’s measure is animal welfare. Yet, there was compelling evidence before the Panel that the EU’s measure did little to ameliorate concerns about the well-being of seals. The Panel’s conclusion under Article 2.2 of the TBT Agreement is particularly troublesome. Despite evidence that the contribution of the EU’s ban on seal products to the objective of seal welfare was significantly undermined by the IC and MRM exceptions and by the fact that the measure allows commercial activities in the EU related to the processing of seal products imported from outside the EU, the Panel concludes that the EU’s measure does not unnecessarily restrict trade because it “make[s] some contribution” to its stated objective. In the context of a measure (i.e. a ban), which by its very nature restricts trade in goods, one would have expected the Panel to require a closer connection between the operation of the Sealing Regulations and its alleged primary objective – animal welfare – than merely “some contribution”. If anything, the features of the measure that undermine its contribution to animal welfare evince a protectionist motive behind the Sealing Regulations and the structure of those Regulations that is largely ignored in the Panel’s analysis. The protectionist objectives include the preservation of the commercially organized seal hunt in Greenland and the management harvest in the principal Baltic states of the EU.
The Panel’s characterization of the primary objective of the EU’s Sealing Regulation as animal welfare is also interesting in light of the ruling of the EU’s General
Court in April 2013. In that case, seal harvesters challenged the validity of the Sealing Regulations under EU law. In dismissing that action, the General Court upheld the Regulations on the basis of Article 95 of the EC Treaty and observed that the principal objective of the EU’s Sealing Regulations “…is not to safeguard the welfare of animals but to improve the functioning of the internal market” (Judgement at para 35). Particularly compelling for the Court were recitals 6 to 8 of the EU’s Framework Regulation, which, according to the General Court, evinced a decision by EU legislators to harmonize rules about the commercial activities associated with seal products within the Union (Judgment at para 39). This supported the Court’s conclusion that the EU’s measure was not ultra vires the powers of the Union legislature (Judgment at paras 79-102). Finding that the applicants’ arguments were grounded on “…the erroneous assertion that the objective of the regulation is the protection of animal welfare…” (Judgment at para 83), the Court found that the EU’s Sealing Regulations was consistent with the principle of subsidiarity.
This decision of the EU’s General Court stands in contrast to the WTO panel decision regarding the “primary objective” of the Sealing Regulations. It is clear that the justifications offered for the regulations have differed depending upon the legal issue at stake – jurisdiction of the EU legislators versus the EU’s international trade obligations. In result, the Sealing Regulations seem destined to be upheld regardless of the basis of the complaint. This is a serious defeat for Canada and Norway or for those who harvest seals within those jurisdictions for both cultural and economic reasons.
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Case commented on: Wood v Schaeffer, 2013 SCC 71
By Alice Woolley
When police officers in Ontario kill or injure someone in the course of their duties, the Special Investigations Unit (SIU) investigates their conduct. The government created the civilian SIU to avoid the problems – both real and perceived – in the investigation of police officers by police officers. The creation of the SIU does not, however, eliminate the complexity of investigating alleged crimes by police. The Supreme Court of Canada addressed one of these complexities in its recent decision in Wood v Schaeffer, 2013 SCC 71: how does a police officer’s regular duty to make notes during an investigation operate when the officer may him or herself become a subject of, or direct witness to, the matters investigated? In particular, what opportunity ought a police officer have to consult counsel when preparing notes in those circumstances?
The answer of Supreme Court majority is none: “the question presented is whether, under the scheme that Ontario has crafted, a police officer who witnessed or participated in an incident under investigation by the SIU is entitled to speak with a lawyer before preparing his or her notes concerning the incident. In my view, the answer is “no”” (para 4, Moldaver J). In dissenting reasons, LeBel, Cromwell and Fish JJ would have granted officers a limited opportunity to consult with counsel, to discuss their legal rights and obligations but not the specific content of the notes being prepared.
This post reviews the Supreme Court’s decision with particular attention to the model of the lawyer as advisor assumed or reflected by the Court. It suggests that the Court struggles with the conceptual problem that underlies the lawyer as advisor, namely, the extent to which the role of the lawyer when advising clients is to dispassionately advise the client of how the law applies to their circumstances, is to assist clients to achieve the optimal position under the law, or is some uncertain combination of the two. The Court does not expressly address how the tension between advising and assisting clients ought to be resolved, but the tension seems to inform both the majority and dissenting views of the appropriate role for the lawyer. For the majority, the perception that lawyers assist clients to achieve the optimal position under the law – that they advise “clients of their public duties and their private interests” (para 75, emphasis in original) means that giving police access to counsel prior to preparing their notes will create a “threat to public confidence” in the investigatory process (para 83). For the dissent, the perception that lawyers will “encourage their clients to comply with the law” and “act as ethical agents as part of our justice system” (para 109) makes some consultation with counsel unproblematic.
This post further suggests that the role of the lawyer when advising clients is irreducibly complex. Lawyers must balance the obligation to provide legal advice to clients that reflects an objectively reasonable assessment of the law and its application to the client’s circumstances, while simultaneously ensuring that clients enjoy the optimal position that the law provides them, given their objectives. How lawyers strike that balance depends on the context in which they are advising – the legal matters at issue and the nature of the client in particular – but the dual orientation of their attention persists, even as its exact parameters remain necessarily imprecise.
Regulations enacted pursuant to the Police Services Act, R.S.O. 1990, c. P.15 address the duties of police officers involved in incidents subject to investigation by the SIU. Under the applicable regulation, Conduct and Duties of Police Officers Respecting Investigations by the Special Investigations Unit, O. Reg. 267/10, police offers are “entitled to consult with legal counsel… and to have legal counsel… present during his or her interview with the SIU” (s. 7). An officer subject to an investigation, or an officer who has witnessed an incident, is also required to “complete in full the notes on the incident in accordance with his or her duty” (s. 9). If, however, the officer is the officer subject to investigation by the SIU, “no member of the police force shall provide copies of the notes at the request of the SIU”.
The Supreme Court interpreted those regulations, and in particular whether s. 7 entitled police officers to counsel prior to their preparation of notes pursuant to s. 9, in the context of two specific investigations. In the Seguin investigation the police officer had shot a civilian who approached him with a knife. The Director of the SIU concluded that Seguin had acted with an “apprehension of imminent death or grievous bodily harm” and that the “lethal force used was not excessive” (para 13). The Director also, however, expressed concern with the fact that “all witness officers had been instructed not to write up their notes until they had spoken to counsel” (para 14). In the Schaeffer investigation Cst. Wood shot and killed Schaeffer during the course of investigating a reported theft. Sgt. Pullbrook was present at the shooting; afterwards they were both instructed not to speak with each other or to write any notes until they had spoken to counsel (para 16). They consulted counsel and their notes were reviewed by the lawyer prior to being submitted. Upon reviewing the notes and other information submitted (which presumably were only the notes of Sgt. Pullbrook since s. 9 of the Regulations would not require that Cst. Woods’ notes be produced), the Director of the SIU determined that the information provided was not reliable to permit conclusions to be drawn as to what happened. The Director again expressed concern about the process through which the notes were prepared, noting that the “only version of the material events are association lawyer approved notes” which could not be relied upon (para 17).
Family members of the individuals killed by the officers brought applications to court to clarify whether officers could be advised by counsel prior to the preparation of notes. As noted, the majority of the Supreme Court held that they could not. The Court started by noting that neither s. 10(b) of the Charter nor the common law right to silence or to counsel were at issue in this case. The only matter was “the regulation which governs these situations and which comprehensively sets out their rights and duties, including their entitlement to counsel” (para 31). In interpreting that regulation the Court noted the history of the development of the SIU and the regulations, concluding that the purpose of the creation of the SIU was to “create an independent and transparent investigative body for the purpose of maintaining public confidence in the police and the justice system as a whole” (para 44). In terms of s. 7 of the regulation, the majority rejected the position that the provision creates “a freestanding entitlement to consult with counsel at the note-making stage” (para 47). Allowing consultation at that point would erode public confidence in the SIU process; the legislative history is inconsistent with that perspective and, finally, “consulting with counsel at the note-making stage impinges on the ability of police officers to prepare accurate, detailed and comprehensive notes in accordance with their duty under s. 9 of the regulation” (para 47).
With respect to maintaining public confidence, the majority suggested that a reasonable member of the public would question whether the assistance of counsel “at the note-making stage is sought by the officers to help them fulfill their duties as public officers, or if it instead sought, in their self-interest, to protect themselves and their colleagues” (para 50). The Court noted that lawyers have a duty to “prepare accurate, detailed and comprehensive notes as soon as practicable after an investigation” (para 57).
The majority rejected the idea that consulting with counsel would undermine the independence of the notes, since one can rely upon lawyers to act consistently with “the position of trust counsel rightly enjoy in our justice system” (para 71). At the same time, however, consultation with counsel
 creates a real risk that the focus of an officer’s notes will shift away from his or her public duty under s. 9, i.e. making accurate, detailed, and comprehensive notes, and move toward his or her private interest. i.e. justifying what has taken place – the net effect being a failure to comply with the requirements of the s. 9 duty.
(Emphasis in original)
The majority noted that the sort of “wide-ranging conversation” that the officer would have with the lawyer would shift the focus to justifying the officer’s conduct, and allow “some margin of error in your account so that later the SIU does not begin to doubt your credibility/reliability”, as suggested by one public statement by a lawyer who has advised police in such cases (para 74).
This is not inherently improper; “Advising clients of their public duties and their private interests is the responsibility of competent counsel” (para 75). The problem is that that ordinary sort of counseling undermines the officer’s ability to fulfill his or her duty to take notes, turning evidence into “a prepared statement designed, at least in part, to justify his and his partner’s conduct, unlike a set of police notes that simply record the events in a straightforward fashion” (para 80). Notes ought not to be “lawyer-enhanced” (para 80).
The majority rejected the availability of even more limited consultation. Such limited consultation would be of little use (para 85) but, as well, “even the perfunctory consultation contemplated by the Court of Appeal is liable to cause an ‘appearances problem’… Because the initial consultation is privileged, the public will have no way of knowing what was discussed” (para 83).
The dissent would have permitted a more limited consultation, in which the officer does not discuss the content of his or her notes, but does receive basic information about his or her rights and obligations during an SIU investigation. They interpreted the regulations differently from the majority but also viewed the role of the lawyer differently. They noted that “everyone is entitled to seek the advice of a lawyer” and that such advice “contributes to the maintenance of the rule of law” (para 103). That general freedom ought not to be “eliminated merely through a narrow reading of the regulation in the absence of clear legislative intent” (para 103).
Counsel can be expected to respect the boundaries on their advice. They “cannot place their clients’ interests ahead of their duty to the public and the advice they provide must be confided within this boundary”. Further, it “cannot be assumed that they will not be faithful to their ethical duties”; they “will know that they cannot give advice on the style or content of the notes” (para 104).
There is no reasonable basis for the public to be concerned about this sort of consultation with counsel. Indeed, the duties of lawyers to “the public and the court” include the duty “to encourage their clients to comply with the law” (para 109). While advice on the content of the notes might compromise the independence of the officer’s recollection of the facts, the ability to speak with a lawyer need not be eliminated entirely (para 110).
Neither the majority nor the dissent view lawyers as untrustworthy. They do not rest their judgments on the position that lawyers cannot be relied upon to respect the ethical boundaries of legal practice. Rather, the majority and the dissent disagree about the nature of the advice that a lawyer ought to provide. The suggestion of the dissent is that lawyers advising officers preparing notes in advance of an SIU investigation will not only decline from advising the officers as to the content of those notes (which is what the judgments require) but will additionally seek to encourage the officer to comply with the law. The lawyer’s advice will not assist the client in a way that changes how the client responds to the investigation, as a result of which the investigation will not be injured by the consultation.
The majority, by contrast, suggests that because it is in the nature of the lawyer’s role to advise a client as to his or her private interests as well as her public duties, that even a more limited consultation will create a public appearance that the SIU process cannot be relied upon to fairly and impartially investigate police conduct. This suggestion is implicit in the judgment, but follows from the majority’s description of the nature of the lawyer’s role, and its further suggestion that the poor appearance created by a more limited consultation does not result from a failure of the “integrity of counsel or police officers” (para 83). In other words, even if we assume that lawyers and police are all honourable, any consultation will legitimately create the impression that the process has unfolded with the emphasis on matters beyond the public duties of the officers in question.
Without taking any position on the specific regulatory issue decided by the court, or the approach to the availability of counsel, in my view the majority’s characterization of the role of the lawyer is more accurate and appropriate than that of the dissent. The task of advising clients is remarkably complicated. Lawyers do have a duty to provide their clients with advice that provides an objectively reasonable and honest assessment of the law. That duty arises from the law of negligence, which imposes liability on lawyers who provide advice that is objectively inadequate in the circumstances (see, e.g., Alberta (WCB) v Riggins (1992) 95 DLR (4th) 279 (ABCA); Confederation Life Insurance Co. v Shepherd, McKenzie, Plaxton, Little & Jenkins (1992) OJ No 2595 (OCJ – Gen Div); Lenz v Broadhurst Main  OJ No 288 (OSCJ)). It also arises from the various codes of conduct, that impose a duty on lawyers to provide honest and candid advice, even when that advice does not accord with what the client would like to hear (in Alberta see, e.g., Rule 2.02(2) of the Code of Professional Conduct, here).
At the same time, lawyers’ advice exists to advance their clients’ interests. Lawyers are neither judges nor police officers. As Kate Kruse has noted, a lawyer’s advice may properly be directed to allowing a client to structure her “affairs in ways that resist or avoid unfair laws” (Katherine R. Kruse, “Beyond Cardboard Clients in Legal Ethics” (2011) 53 Ariz L Rev 493 at 520). It may be structured to allow a client to take advantage of lacunae or ambiguities in the laws, or the legitimate range of interpretations that the law permits. It may direct the client to structuring her affairs so that the law applies in the most advantageous way possible, even if that structure might stretch the ordinary understanding of the law. The approach of the Supreme Court to the General Anti-Avoidance Rule in the tax context, where taxpayers may engage in a transaction that technically works, unless an abuse of the legislation is “clear” (Canada Trustco Mortgage Co v Canada 2005 SCC 54 para 50), suggests this perspective on the intersection between the citizen and the law.
Knowing how to draw the line between the duty to provide objectively sufficient legal advice while seeking to advance client interests can be remarkably complicated, particularly when one takes into account the broad range of contexts in which lawyers advise clients. In the special and somewhat unusual context raised in Wood v Schaeffer, the public content of the duties being discharged by the clients, properly constrained the willingness of the courts to permit the police to take advantage of the advice of counsel. This was particularly so given the protection given to subject officers by the regulations, which ensure that their notes are not producible to the SIU in an investigation. But even in more garden-variety situations that arise in legal practice we might understand the balance between honest and reasonable assessments of the law, and assisting the client to achieve her goals in light of the law (through, despite or because of the law), to vary. Advice given to a detainee in a criminal case about what he might say to the police is less likely to focus on the boundaries of the law and is more likely to focus on minimizing the legal consequences to the client given his conduct. In an example given by Kate Kruse, a lawyer helping a family to secure the financial security of a disabled relative, might reasonably push the law to achieve the best possible outcome for that family. By contrast, advice given to a government minister about the requirements for compliance with a legal duty to which the minister is subject would more properly focus on providing an objectively reasonable interpretation of the legal duties to which the minister is subject. In each of these cases, the nature of the client, the nature of the legal problem and the circumstances of the advice, affect how the lawyer approaches her obligations to the law and to the client.
At the same time, however, a lawyer must always attempt to fulfill these duties. A lawyer advising a criminal accused cannot advise that accused to lie or to destroy evidence; the lawyer for the family of the disabled relative can only seek advantages that the law in some way provides (even if only through a technicality); and a lawyer advising a government minister ought to assist the minister to achieve the public policy goals of the administration. Lawyers who advise clients discharge a sui generis function, in which they do not act as advocates, but nor do they act as judges; they occupy a continually shifting middle ground, in which both functions have to be operative in determining what they should say and do on behalf of a client.
One point is certain, however: this function of the lawyer as advisor has not been sufficiently explored or understood. In part because lawyers are not generally liable to third parties for advice that injures those third parties (see, e.g., Thompson v Merchant 2010 SKQB 64), and in part because in general law societies have not paid significant attention to lawyer advising in disciplinary proceedings (this is not necessarily for bad reasons, but is observable nonetheless), the regulatory regime governing lawyer advising leaves many significant questions unanswered, including matters not addressed here. The fact that Wood v Schaeffer raises this issue, and the discussion of it in relation to the Edgar Schmidt lawsuit (see The Whistleblower; Legality of Legal Advising), will hopefully bring greater attention to it going forward. It is notable in this respect that the CBA Futures initiative has begun to engage with it, including in a recent twitter conversation (here). Hopefully that conversation will continue.
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By Alice Woolley
PDF Version: The Top Ten Canadian Legal Ethics Stories – 2013
Once again John Steele at Legal Ethics Forum has compiled his list of the top ten ethics stories of 2013 (here). As was the case last year, his list has inspired me to think about the top ten ethics stories in Canada (2012 is here). On reviewing last year’s list it is clear that a number of the stories of significance in 2012 remained important this year. As well, legal ethics in Canada continues to develop as a matter of practical and intellectual significance, with practitioners, judges, regulators and academics paying attention to the conduct and regulation of lawyers and judges.
Thanks to Professor Annalise Acorn of the University of Alberta, and Malcolm Mercer of McCarthy Tetrault, for their assistance in compiling this list.
1. Conflicts of interest: the Supreme Court speaks. On July 5, 2013 the Supreme Court issued its judgment in Canadian National Railway v McKercher LLP 2013 SCC 39, in which it affirmed the “bright line rule” that “a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client – even if the two mandates are unrelated” (para 27). It also limited the rule so that it only applies where the new representation is directly adverse to the immediate legal interests of the client and where it would not be “unreasonable for a client to expect that its law firm will not act against it in unrelated matters” (para 37). While the Court’s judgment has been subject to some criticism (e.g., by me on ABlawg) it has also been acknowledged to be a significant step forward in clarifying the obligations of lawyers in relation to their current clients (also by me, and by Malcolm Mercer on SLAW).
Other notable 2013 Supreme Court judgments that address lawyers’ ethics include Ontario v Ontario Criminal Lawyers’ Association of Ontario 2013 SCC 43 which limited the role and compensation of amicus curiae appointed by the court (see ABlawg round table) and Wood v Schaeffer 2013 SCC 71 which indirectly considered the role of the lawyer in advising clients (ABlawg post forthcoming shortly).
2. Regulatory innovation and change by the law societies. Canada’s law societies are on the move. The Benchers of the Law Society of British Columbia have approved a merger with the Society of Notaries Public of British Columbia, to create a program for the creation of “certified paralegals” and, as well, to develop a regulatory framework to credential and regulate other legal service providers (see in general, News Release December 9 2013). The Nova Scotia Barristers’ Society is actively considering regulatory reforms, including a move to outcomes/risk-based regulation (here). It completed an extensive research paper Transforming Regulation in the Public Interest and has undertaken a consultation process with its members to consider regulatory change. The Law Society of Upper Canada appointed David Wright as its first Tribunal Chair who, with two vice-chairs, will be actively involved in adjudicating disciplinary proceedings. This change was first approved in June 2012 (here) but the appointment of Wright, a former chair of the Human Rights Tribunal of Ontario, demonstrates the Law Society’s commitment to this new approach (here).
These developments reflect a remarkable shift in Canada’s regulatory landscape. While Canada’s legal profession remains self-regulating, and not all law societies have embarked on these sorts of developments, the changes show a sophistication and engagement on the part of regulators that is to be commended.
3.s Integrated Practice Curriculum as a Pathway to Licensing. On November 21 2013 the Law Society of Upper Canada approved Law Practice Programs offered by Ryerson University (English) and the University of Ottawa (French) as alternatives to articling (here). It also approved Lakehead’s Integrated Practice Curriculum, in which students take approximately 10-20 extra credit hours across the course of their law degree, and complete practical and experiential education, as a replacement to articling after graduation (Lakehead’s program is described here).
While the Lakehead program in and of itself does not reflect an enormous change in the credentialing of Canadian lawyers, if it is expanded to other law schools and jurisdictions, it could transform Canada into a more experience based version of American legal education. Except for the bar examinations, the totality of the preparation of legal education will be governed by the law schools. The significance of that sort of change is considerable.
4. Resignation of the Inquiry Committee of the Canadian Judicial Council concerning the Honourable Lori Douglas. The Lori Douglas proceedings are not new, nor are extensive criticisms of their legitimacy and fairness (see, e.g., this one of numerous columns by National Post columnist Christie Blatchford). But the decision of the Inquiry Committee to resign en masse (here) has reinforced the perception that the proceedings have gone badly awry, and are undermining public confidence in the fair and effective regulation of the ethics of the judiciary (see my SLAW post here)
5.s Proposed Common Law Degree. In December the Federation of Law Societies approved Trinity Western University’s Proposed School of Law Program (See general information on the FLS website here and the Approval Committee Report). The Federation did so despite some “concerns” with respect to: “i. the teaching of Ethics and Professionalism; ii. the teaching of the elements of the Public Law competency relating to the Canadian Charter of Rights and Freedoms and human rights law principles; and iii. the budget for the proposed school.” (para 48). It nonetheless concluded that in relation to Ethics and Professionalism and the teaching of public law, the issues amounted only to a “concern” not a “deficiency” and could be addressed through the provision of “additional materials in future annual reports, including more detailed course outlines demonstrating exactly how the competencies will be met.” (para 52). It also viewed the budgetary issues as capable of being addressed in its future annual reports (para 53).
The Federation’s approval of Trinity Western’s program is not the final word on this issue. Law societies that have not delegated their power to approve law degrees to the Federation must determine for themselves whether the school’s program satisfies the credentialing requirements which they are empowered to impose by virtue of their constituting legislation, taking into account the distinct human rights laws that govern in each province. Clayton Ruby has indicated that he will be seeking judicial review of the Federation’s decision (here). Opposition to the Trinity Western program remains significant (See Elaine Craig’s op-ed in the Globe and Mail, here). Regardless of how these events unfold, however, the Federation’s decision is a significant first step towards the approval of a Canadian law school teaching through a religious perspective.
6. The Law Society of Upper Canada dismissal of disciplinary proceedings against Beth DeMerchant and Darren Sukonick. The reasons issued by the Law Society for finding that DeMerchant and Sukonick had not been in a conflict of interest when representing Hollinger International Inc. and Conrad Black during the sale of Hollinger’s newspaper businesses to CanWest, are not especially interesting as a matter of doctrinal law (the DeMerchant decision is here). Of greater interest is the arguably questionable decision by the Law Society to pursue the charges as long as they did (discussed by Allan Rouben at SLAW) and the question of whether the case indicates the problems that law societies have in relation to the direct regulation of lawyers at large law firms. The decision may not legitimately have significance in the latter respect – if the charges were baseless then they ought not to have succeeded, regardless of the nature of the practice of the lawyer against whom they were made. But it may nonetheless reinforce the perception that lawyers at large law firms can resist professional discipline with an effectiveness that lawyers at smaller firms cannot.
7. The Law Society of Upper Canada Appeals Decision on Joe Groia and incivility. In lengthy reasons the Law Society of Upper Canada Appeal Panel halved the sanction imposed on Joe Groia, eliminated the costs award against him (with a new costs award to be determined through a subsequent proceeding), and reversed many of the legal determinations made in the original panel. In particular, it rejected the position that a lawyer would be committing an abuse of process to the extent he sought to litigate the legitimacy of his conduct in the face of judicial criticism of that conduct in prior proceedings to which he was not a party and which involved different legal issues. The panel also narrowed the definition of incivility and emphasized that “the word ‘civility’ should not be used to discourage fearless advocacy manifested by passionate, brave and bold language.” (para 211)
8.s Litigation re the Conduct of the Minister of Justice and the Deputy Minister of Justice. Schmidt’s litigation was commenced at the end of 2012 but remains of significant importance with respect to the question of the ethical duties of lawyers when advising clients. Schmidt alleged that the Minister of Justice and the Deputy Minister failed to satisfy their statutory obligations to examine proposed legislation to determine if it is “inconsistent with the purposes and provisions” of the Canadian Bill of Rights or the Canadian Charter of Rights and Freedoms, and to advise the House of Commons if it is so (Canadian Bill of Rights, SC 1960, c 44, s. 3; Department of Justice Act, RSC 1985 c J-2, s. 4.1; Statutory Instruments Act, RSC 1985 c S-22, ss. 3(2) and (3)). Schmidt alleged that the Department’s policy was only to direct the Minister to advise the House on the sufficiency of legislation where it had a less than 5% chance of surviving a court challenge (see my post on Schmidt on ABlawg). A recent article in the Canadian Bar Association’s National Magazine discussed developments in the Schmidt case, including the federal government’s decision in February 2013 to proceed on the merits of the litigation and noted that Schmidt is now represented by notable litigator Joseph Arvay. The website charterdefence.ca provides information with respect to Schmidt’s case, including document disclosure respecting the Department of Justice’s approach to these matters.
9.s Office and the Mike Duffy Affair. The precise nature and legality of the conduct of Nigel Wright and Ben Perrin, lawyers working at the Prime Minister’s Office and dealing with the problem of Mike Duffy and his expenses, remains unclear. However, the case does suggest the ethical challenges and risks for lawyers working in political settings, in which the legal and ethical implications of decisions can be obscured (as I discussed on SLAW). This issue has been considered in the United States since Watergate, but this case may be the first time it has been publicly observable here.
10. The CBA Futures Initiative Begun in 2013 and continuing into 2014, the CBA Futures Initiative is addressing issues related to the ethics and regulation of the legal profession, education and training of lawyers, and innovation in business structures (see here). While the insights and innovations of the process are uncertain at this time, the CBA seems committed to considering matters of regulatory innovation and change, particularly in relation to the adoption of alternative business structures (ABS). If the CBA can identify a path to ABS, this will significantly progress the regulatory innovation and change identified in #3, and will help Canada move towards keeping pace with regulatory developments in other jurisdictions such as Australia and England.
I would like to add Rob Ford, since it seems that no Canadian top ten list could be complete without him. But try as I might I could not see the legal ethics angle to his story.
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Legislation commented on: Protecting Alberta’s Environment Act, SA 2013, c P-26.8
The Protecting Alberta’s Environment Act received royal assent on December 11, 2013, and the statute will come into force on proclamation at a later date. The title of this new legislation suggests it is a reworking of environmental protection laws, along the lines of the Alberta Land Stewardship Act, SA 2009, c A-26.8, which enacted a new framework for land use planning in 2009, or the Responsible Energy Development Act, SA 2012, c R-17.3,which reconfigured energy project regulation this year in Alberta. Anyone with these kinds of expectations will be disappointed though. The sweepingly broad title is misleading as the Act really just targets environmental monitoring and reporting, and is the Alberta legislature’s response to the 2012 Report issued by the Alberta Working Group on Environmental Monitoring, Evaluation and Reporting (see here). What follows are my comments on the Protecting Alberta’s Environment Act. My overall synopsis is that the Act accomplishes very little, reads as if it was put together in a hurry, and unfortunately allows politics to override science and transparency when it comes to environmental monitoring and reporting.
Generally speaking the law on environmental protection is largely contained in statutes, regulations, and bylaws. In other words, the courtroom takes a backseat to the legislature when it comes to the legal implementation of environmental norms, principles or concepts such as the precautionary principle or ecological integrity. There are some good reasons for the dominance of legislation in the environmental arena, including the fact that the common law is reluctant to recognize the sort of collective rights or interests embedded within environmentalism. Indeed the fact that environmental norms gain legal traction largely by statutory rules has lots of implications (good or bad depending on your viewpoint), and I mention it here only to emphasize the importance of content in environmental legislation. If the legislature is to be our primary lawmaker on environmental matters, then good environmental stewardship demands good legislative drafting.
The Protecting Alberta’s Environment Act is deficient on so many counts it is difficult to pick a starting point for the analysis. But since the Act purports to implement the 2012 Working Group Report, a good starting point might be to assess how the Act implements the Working Group’s recommendations. The Working Group was tasked with providing recommendations on establishing a new environmental monitoring and reporting structure in Alberta. The Working Group observed the current approach to environmental monitoring is not well coordinated, lacks a scientific foundation, has little credibility, and is not cost-effective. The Working Group formulated 12 recommendations intended to help fix this, and most notably these included recommendations to: (1) establish a single monitoring agency which is independent of line departments such as energy and sustainable resource development and representative of various stakeholders with an interest in environmental quality; (2) ensure stable and sustainable funding for monitoring, evaluation and reporting activity; and (3) ensure information and data produced by the monitoring system is timely and scientifically sound. So what does the Protecting Alberta’s Environment Act deliver in this regard? Not too much I’m afraid.
Section 2 of the Act establishes the Alberta Environmental Monitoring, Evaluation and Reporting Agency and section 3 sets out the various purposes of the Agency which more or less follow from the Working Group Report. The purpose of the Agency is to obtain environmental data, analyze it, and report it to the public. So far so good, but the Act contains no structure on how or when the Agency will monitor and report. There are no legislated timelines. In short, there is precious little accountability or transparency here.
There is also nothing in the Act to ensure the Agency is at arm’s length or otherwise independent of the executive. The directors of the new Agency are appointed by Cabinet, hold their office at the pleasure of Cabinet, and have their remuneration fixed by Cabinet (section 5). Section 11 gives Cabinet the power to enact regulations that expand or limit the powers or functions of the Agency. Section 3 states the Agency will carry out any activities prescribed by the Minister. The directors require the Minister’s approval before appointing a person as the Agency’s CEO (section 10). The Act makes it very clear that this Agency has close ties to the inner circle of the Alberta government and is accountable to the Minister.
The Working Group observed the Agency would need a base budget sufficient to support a wide range of activities including baseline environmental monitoring across the province, ongoing cumulative effects monitoring, evaluation of data, scientific assessments, and reporting. The Working Group noted that the oil sands region alone would likely need at least $50 million annually to fund these activities. The Working Group considered a number of possible funding sources including specific levies on resource recovery, consumption taxes, surcharge on royalties, and allocations from the general revenue fund. The only statutory provision dealing with funding is section 3(3) of the Act which simply states the Agency may charge fees on a cost-recovery basis for services requested of it. It isn’t clear at all from the Act how the Agency will be funded. It is noteworthy to compare section 3(3) of this Act with sections 28 and 29 of the Responsible Energy Development Act which provide the Alberta Energy Regulator with power to set and collect specific levies from oil and gas activity and in general more clearly delineate how the Regulator is funded on an annual basis.
Section 18 of the Act requires the Agency to appoint a scientific subcommittee whose members will periodically review the scientific integrity of the Agency’s monitoring activities and advise the Agency accordingly. This provision is apparently designed to facilitate the scientifically sound monitoring and evaluation activities. Surprisingly though, the Act does not include any requirements concerning the credentials of these subcommittee members and provides no timelines on when the scientific assessments take place. The Act is also tantalizingly vague on when the Agency is to report monitoring data and evaluation to the public. Section 4 of the Act provides that the Agency will report to the public at a frequency determined by the Agency in consultation with the Minister. This provision arguably undermines the whole structure and suggests that politics can and will override science and transparency on environmental monitoring and reporting.
This Act reads as an umbrella document on environmental monitoring which is very light on substance for an area of this magnitude and provides Cabinet and/or the Minister with a disturbingly large amount of discretionary power over an Agency which is supposed to be at arm’s length in order to ensure its work is seen as credible and free of political influence. And it is not as if the Alberta government was unaware of these shortcomings in the Act. The Opposition parties tabled a total of 18 amendments during second and third readings of the Bill directed at the same concerns I’ve mentioned here, and each and every one of these amendments were rejected by the Conservatives (see here).
This takes me back to my opening in this post. Since the legislature is our primary lawmaker on environmental matters, good environmental stewardship demands good legislative drafting. We are entitled to expect the legislative process will address substantive shortcomings in proposed legislation and ensure the intention of the legislature is reflected in the text. Here is what the Honourable Minister Diana McQueen told Albertans during the first reading of this Bill:
Bill 31 will establish the Alberta environmental monitoring, evaluation, and reporting agency. It will be the first of its kind in Canada and will fundamentally change the way Alberta’s environment is monitored. This arm’s-length, open, and transparent public agency will lead environmental monitoring in Alberta. Its focus will be on sound science, a comprehensive, co- ordinated monitoring and reporting of land, air, water, and biodiversity, beginning in the oil sands area. The work of this agency will provide the best possible data that will be used to make the best possible decisions when it comes to responsible development of the province’s natural resources. This bill also creates a science advisory panel, that will oversee the scientific work of the agency to ensure integrity is maintained. This is yet another step, Mr. Speaker, that this government has taken to demonstrate to Albertans and to the world that we are committed to environmental stewardship and responsible resource development.
(Alberta Hansard, 28th leg, 1st sess, Oct 28, 2013, page 2496)
I can’t see how the text of the Protecting Alberta’s Environment Act accomplishes what the Minister says the Act will do. Much of the legislation contains what I would call boilerplate statutory provisions, and the substantive provisions seem like a meagre effort to facilitate a robust and credible environmental monitoring system in Alberta. The name of the statute is so overly broad it fails to even capture the essence of the legislation – why not the Environmental Monitoring Act or something similar? And if the intention was to establish an arm’s-length, open, and transparent public agency responsible for environmental monitoring, the drafting here is terrible. It is a testament to the sorry state of legislative process today that the Conservatives were either unwilling or too embarrassed to vote in favour of amendments tabled by the Opposition parties that would have helped to ensure the text of the Act reflected the intention pronounced by the Minister during first reading.
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ABlawg is thrilled and honoured to have won the Canadian Law Blogs Award (Clawbie) for Best Law School/Law Professor Blog for the second year in a row. Here is what the Clawbie judges had to say:
13) Best Law School/Law Professor Blog
ABlawg, the University of Calgary Faculty of Law Blog. No other Canadian law blog received as many nominations as this one, many of them from practicing lawyers who find ABlawg’s updates and insights highly valuable. This is not just the best academic law blog in Canada, a category that is very difficult to win; it’s one of the best law blogs around, period.
ABlawg is very much a collective effort, and so we collectively express our thanks to the Clawbie judges, all of those who nominated us, and most importantly, our dedicated readers.
Happy New Year to all.
ABlawg will be taking a break from Christmas Day to New Year’s. We’d like to take this opportunity to thank all of our followers for your readership and support this year. We are honoured to have received so many Clawbie nominations from so many diverse sources. When we return in the new year, you can look forward to a series of posts on the NEB’s Northern Gateway Pipeline decision, amongst other commentary. We wish all of our readers a wonderful holiday season.
Case commented on: Canada (Attorney General) v Bedford, 2013 SCC 72
Much commentary has already been written on the Supreme Court’s decision in Bedford and the implications the case has for the regulation of prostitution in Canada. My interest in this post is to reflect on how to approach Bedford when teaching constitutional law next term. I think Bedford brings some clarity to the case law on section 7 of the Charter, and as Sonia Lawrence has noted here, the decision helps dispel some of the problematic thinking around “choice” and causation in constitutional cases, though I would have liked to see the Court go further here. The Court also could have done more by way of taking a contextual approach in its consideration of the prostitution laws. The evidence presented in the case clearly provided a compelling enough picture of the harms of these laws for the Court to find a violation of section 7, but it is disappointing to see no explicit references to the gendered and racialized nature of prostitution nor to the rich and diverse literature in this area, some of which was cited in the submissions of interveners (see e.g. here, here and here). Finally, the case can also be seen as an example of the relative success that section 7 claims have had of late at the Supreme Court, especially in comparison to the lack of success of section 15 claims.
Doctrinal Clarity and Dismissal of Choice
Bedford is consistent with other recent decisions such as Canada (Attorney General) v PHS Community Services Society, 2011 SCC 44,  3 SCR 134 (PHS) at para 93 (McLachlin CJ), where the Court found that the security of the person interest under section 7 of the Charter is engaged where laws or government actions threaten health and bodily integrity (in that case, by refusing to extend approval for a safe injection site for intravenous drug users). In Bedford, another unanimous decision written by the Chief Justice, the Court agreed with the applicants that the criminal prohibitions on bawdy-houses, living on the avails of prostitution, and communicating for the purposes of prostitution “do not merely impose conditions on how prostitutes operate. They go a critical step further, by imposing dangerous conditions on prostitution; they prevent people engaged in a risky — but legal — activity from taking steps to protect themselves from the risks.” (at para 60). The case applies rather than elaborates on previous definitions of security of the person. Like PHS, however, it is interesting to see that the Court in Bedford was not content to limit its analysis to the obvious violation of the liberty interest inherent in the criminal prohibitions against prostitution. In Bedford, the Court explained its rationale as follows:
The focus is on security of the person, not liberty, for three reasons. First, the Prostitution Reference [Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.),  1 SCR 1123] decided that the communicating and bawdy-house provisions engage liberty, and it is binding on this point. The security of the person argument is a novel issue and an important reason why the application judge was able to revisit the Prostitution Reference. Second, it is not clear that any of the applicants’ personal liberty interests are engaged by the living on the avails provision; rather, they have pleaded that they fear that it could apply to their employees or their loved ones. Lastly, it seems to me that the real gravamen of the complaint is not that breaking the law engages the applicants’ liberty, but rather that compliance with the laws infringes the applicants’ security of the person.
(At footnote 1, emphasis in original)
Bedford also adds to the jurisprudence in its dismissal of the arguments of the Attorneys General of Canada and Ontario that “it is the choice of the applicants to engage in prostitution, rather than the law, that is the causal source of the harms they face” (at para 73). This argument is similar to that advanced by the AG Canada in PHS with respect to injection drug use. In Bedford, the Court clarified the case law by indicating that the appropriate standard of causation is the “sufficient causal connection” test, which requires “a sufficient causal connection between the state-caused [effect] and the prejudice suffered by the [claimant]” (at para 75, quoting from Blencoe v British Columbia (Human Rights Commission), 2000 SCC 44,  2 SCR 307,at para 60 (emphasis added in Bedford)). The Court also cited Canada (Prime Minister) v Khadr, 2010 SCC 3,  1 SCR 44 at para 21 for the point that “A sufficient causal connection standard does not require that the impugned government action or law be the only or the dominant cause of the prejudice suffered by the claimant, and is satisfied by a reasonable inference, drawn on a balance of probabilities” (at para 76). Furthermore, causation should be assessed with attention to the context of the case at hand.
Applying this test to the facts in Bedford, the Court rejected the AGs’ arguments about choice and lack of causation for several reasons. First, many prostitutes – especially those involved in street prostitution – have “no meaningful choice” but to engage in risky activities associated with prostitution. Here, the Court pointed to the marginalization of this group of prostitutes, and the ways in which “financial desperation, drug addictions, mental illness, or compulsion from pimps” may result in “little choice but to sell their bodies for money” (at para 86). Second, the Court noted that prostitution is not itself illegal, nor was this a case where the claim was “a veiled assertion of a positive right to vocational safety” (at para 88). Third, the fact that it is the actions of pimps and johns that are “the immediate source of the harms suffered by prostitutes” did not pose a causation problem, since the state still played a role “in making a prostitute more vulnerable to that violence” (at para 89). Fourth, the Court rejected the AGs’ calls for deference to government policy decisions and for attention to the floodgates that a positive decision in Bedford would open up for similar claims. According to the Court, the principles of fundamental justice stage of section 7 analysis is the appropriate place to consider such arguments (at paras 90-91).
The Court’s analysis of choice in Bedford builds on its ruling in PHS, where drug addiction was found to be an illness rather than a matter of personal choice, and where the federal AG’s arguments about government policy choices were put off to a later stage of analysis (2011 SCC 44 at paras 101 and 104). The Supreme Court did not go as far as the Ontario Court of Appeal did in Bedford, however, on the role of choice. At the Court of Appeal, the Court rejected the implication “that those who choose to engage in the sex trade are for that reason not worthy of the same constitutional protection” (Bedford v Canada (AG), 2012 ONCA 186 at para 123). This is a more principled rejection of “choice” than that of the Supreme Court, which relied on the factual finding that the claimants’ actions were not actually a matter of choice. I also take issue with the Supreme Court’s suggestion that it might have rejected any claim of a “positive right to vocational safety.” This comment is rather troublesome in the Alberta context, where certain groups of workers are excluded from the Occupational Health and Safety Act, RSA 2000, c O-2, and should surely have a decent claim to inclusion in the protections that that legislation provides to other workers. More broadly, this statement is another example of the Court’s reticence to protect so-called positive rights under section 7, which it has expressed in cases such as Gosselin v Québec (Attorney General), 2002 SCC 84,  4 SCR 429 at paras 81-83.
Bedford also adds to the section 7 jurisprudence at the principles of fundamental justice stage. The Court provided the following introduction to those principles:
 The s. 7 analysis is concerned with capturing inherently bad laws: that is, laws that take away life, liberty, or security of the person in a way that runs afoul of our basic values. The principles of fundamental justice are an attempt to capture those values. Over the years, the jurisprudence has given shape to the content of these basic values. In this case, we are concerned with the basic values against arbitrariness, overbreadth, and gross disproportionality.
The Court acknowledged that there is overlap between these values, but maintained that they are distinct principles that can be defined on their own as well as in relation to each other (at para 107). Collectively, these principles are aimed at “two different evils”; first, “the absence of a connection between the infringement of rights and what the law seeks to achieve”, which embraces arbitrariness and overbreadth, and second, “depriving a person of life, liberty or security of the person in a manner that is … connected to the purpose, but the impact is so severe that it violates our fundamental norms” (i.e. gross disproportionality) (at paras 108-9).
In terms of the definitions of these principles, arbitrariness is “the situation where there is no connection between the effect and the object of the law” (at para 98). In other words, “There must be a rational connection between the object of the measure that causes the s. 7 deprivation, and the limits it imposes on life, liberty, or security of the person” (at para 111). Overbreadth occurs where “the law goes too far and interferes with some conduct that bears no connection to its objective” (at para 101). Laws that are overbroad are therefore arbitrary in part (at para 112). The Court also clarified the degree of lack of connection that is required for laws to be arbitrary or overbroad, which it left open in Chaoulli v Quebec (Attorney General), 2005 SCC 35,  1 SCR 791 (paras 131-2 and 232) and PHS (para 132). According to the Court in Bedford, “the root question is whether the law is inherently bad because there is no connection, in whole or in part,between its effects and its purpose” (at para 119, emphasis in original). This lack of connection can occur when the effect of the law is to undermine its purpose, such that it is “inconsistent” with its objective, or when “there is simply no connection on the facts between the effect and the objective, and the effect is therefore “unnecessary”” (para 119). This approach thus encompasses both definitions of arbitrariness from Chaoulli.
Gross disproportionality, the third relevant principle of fundamental justice, occurs where “the effect of the law is grossly disproportionate to the state’s objective” (at para 103). The Court indicated that this principle “only applies in extreme cases where the seriousness of the deprivation is totally out of sync with the objective of the measure” (at para 120). Put another way, “The connection between the draconian impact of the law and its object must be entirely outside the norms accepted in our free and democratic society” (at para 120). The Court gave as an example a sentence of life imprisonment for the offence of spitting on a sidewalk.
The Court also clarified the interplay between section 7 and section 1 of the Charter. It specified that any beneficial impact that a law may have is not to be considered at the section 7 stage, rather section 1 is where to assess “whether the negative impact of a law on the rights of individuals is proportionate to the pressing and substantial goal of the law in furthering the public interest” (at para 125). This calls into question the majority’s analysis in Rodriguez v British Columbia (Attorney General),  3 SCR 519, where Sopinka J found that societal interests are an appropriate consideration under the principles of fundamental justice. Nor are the principles of fundamental justice concerned with numbers – arbitrariness, overbreadth and gross disproportionality are qualitative rather than quantitative assessments and a problematic effect even on one person may be sufficient to violate the relevant principle (at para 122). Lastly, the Court indicated that while violations of section 7 will normally be difficult to justify under section 1 of the Charter, there may still be cases where justification is possible, “[d]epending on the importance of the legislative goal and the nature of the s. 7 infringement in a particular case” (at para 129).
Applying these principles to the facts, the Court found that the harmful effects of the bawdy house provisions on the safety of prostitutes were grossly disproportionate to the purpose of the provisions, preventing nuisance (at paras 131, 134-6); the living on the avails provision was overbroad in that it did not distinguish between those who actually exploited prostitutes and those who might increase their safety and security (at para 142); and the communicating provision was contrary to the principles of fundamental justice because its “negative impact on the safety and lives of street prostitutes is a grossly disproportionate response to the possibility of nuisance caused by street prostitution” (at para 159). None of these violations of section 7 could be justified under section 1 of the Charter.
The Court’s failure to take a fully contextual approach is something I have commented on in response to some of its recent decisions in the area of violence against women (for example, R v Ryan, 2013 SCC 3, commented on here, and R v JA, 2011 SCC 28, commented on here). In Bedford, there is certainly some reference to the context of prostitution and its harms (see e.g. paras 64, 86-92), but there is no analysis of the gendered and racialized nature of these harms. For example, the only references to “women” in the judgment are in the Court’s description of the applicants’ evidence (at paras 9 to 14) and in the context of other decisions referred to by the Court. Again, this approach can be contrasted with the Ontario Court of Appeal judgment, where Justices MacPherson and Cronk acknowledged that it was overwhelmingly marginalized women who are prostituted (2012 ONCA 186 at para 358). As noted earlier, the Supreme Court also fails to cite to the literature on prostitution written by feminists, critical race scholars and NGOs. These omissions may be related to the Court’s holding that the application judge’s findings on social and legislative facts were entitled to deference (at paras 48-56), but this is still a disappointing aspect of the ruling.
Section 7 versus Section 15
I wrote about the relative success of section 7 claims redressing the harms of government (in)action as compared to equality rights claims under section 15 of the Charter here. Bedford continues the trend of successful section 7 cases such as PHS and Victoria (City) v Adams, 2009 BCCA 563, which can be contrasted with the lack of success in section 15 cases such as Withler v Canada (AG), 2011 SCC 12,  1 SCR 396, Alberta (Aboriginal Affairs and Northern Development) v Cunningham, 2011 SCC 37,  2 SCR 670, and Quebec (Attorney General) v A, 2013 SCC 5. There are, however, other cases before the courts that will continue to push decision makers on equality rights and on the intersections between section 7 and section 15. For example, in Carter v. Canada (Attorney General), 2013 BCCA 435, the Supreme Court is being called upon to reconsider the constitutionality of Canada’s assisted suicide laws under both sections 7 and 15. The recent decision in Inglis v British Columbia (Minister of Public Safety),2013 BCSC 2309 is another example of how the harms of government action (in this case the failure to accommodate imprisoned women with children) can amount to violations of sections 7 and 15 of the Charter. And in the prostitution context more specifically, both section 7 and section 15 arguments are being raised in another challenge to the criminal prohibitions against prostitution (see Canada (Attorney General) v Downtown Eastside Sex Workers United Against Violence Society, 2012 SCC 45,  2 SCR 524, for the decision on standing in this case). It is to be hoped that in these cases, the courts will find the harms of inequality to be no less significant than the harms protected under section 7.
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Decision considered: Rocky View County – Water and Wastewater Franchise Agreement with Harmony Advanced Water Systems Corporation (29 November 2013), Decision 2013-424
This decision is significant because, in this rare instance of a public objection to a municipal utility franchise agreement, the Alberta Utilities Commission took a progressive approach and granted public interest standing to an objector who did not have a statutory right to standing.
Summary of the Decision
In May 2013, Rocky View County (Rocky View) applied to the Alberta Utilities Commission (AUC) for approval pursuant to s. 45 of the Municipal Government Act, RSA 2000, c M-26, to grant approval to enter into a water and wastewater franchise agreement (franchise agreement) to Harmony Advanced Water Systems Corporation (Harmony) for 20 years for an area within Rocky View known as Harmony Lands. Under the agreement, Rocky View would determine annually a franchise fee to be paid by Harmony for the exclusive right to provide services to customers within Harmony Lands. The rates and charges established by Harmony for water and wastewater services to consumers would have to be approved by the AUC. Harmony sub-contracted with Corix Utilities (Corix) for Corix to construct and operate the water and wastewater facilities on the Harmony Lands. (The use of sub-contractors and operators was anticipated by the franchise agreement).
Mrs. Wilkinson, a resident and taxpayer of Rocky View (but who did not reside in the franchise area) objected to the application. Mrs Wilkinson argued that if the Harmony application was approved that there would be a chance taxpayers in Rocky View would ultimately be responsible for Harmony’s debts as had occurred with a different utility service in the Balzac area. She also argued that a utility without a guaranteed water supply did not meet the requirements of public “convenience” and “public interest” in s. 106(2) of the Public Utilities Act, RSA 2000, c P-45.
The first issue raised was whether Mrs. Wilkinson had standing to participate in the proceedings. The AUC determined that Mrs. Wilkinson was not “directly and adversely affected” as required by s. 9(2) of the Alberta Utilities Commission Act, SA 2007, c A-37.2, as she did not own any lands in the franchise area. However, the AUC determined that its authority to control its own process gave it the ability to allow Mrs. Wilkinson to participate in the proceedings and therefore granted her standing.
Under s. 45 of the Municipal Government Act and s. 106 of the Public Utilities Act, the AUC has extensive powers to review franchise agreements, including to determine whether they: a) have been duly advertised, b) do not exceed 20 years, c) are necessary and proper for public convenience and d) properly conserve the public interest.
In this case, the AUC considered each of these elements, but the most contentious issue was whether the franchise agreement was necessary and proper for the public convenience. The AUC ultimately concluded that it was, but in doing so considered a number of sub-issues. The first of these was that the franchise agreement was atypical in that it applied to only one defined area in the municipality as opposed to all of Rocky View. To avoid the possibility of different franchise fees applying to different areas within Rocky View, the AUC directed that any change in the level of franchise fee required both notice and approval in advance by the AUC. Second, it considered whether the quantity of water allocated to Harmony under the preliminary certificate and, ultimately a water licence, would provide an adequate supply of water to customers within the franchise area. It cautioned Harmony to ensure that commitments made to irrigators were interruptible in the event these commitments needed to be curtailed to ensure an adequate supply of potable water. Third, it considered what steps had been taken by Rocky View to mitigate the risk that Rocky View taxpayers might potentially become responsible for the debt of Harmony. Rocky View confirmed that Harmony would be required to provide monetary security to ensure that the services and roads required for each subdivision would be completed at no cost to Rocky View. In addition, water and wastewater facilities were to be transferred to Harmony upon the issuance of construction completion certificates. The AUC was further satisfied by the fact that Corix, known to have expertise in water utility operations, had been contracted by Harmony to construct and operate the water utility. Accordingly, the AUC concluded that the provision of water and wastewater services by Harmony under the proposed franchise agreement was necessary and proper for the public convenience. (at paras 45-65).
Franchise agreements are common in the public utility sector, particularly with respect to the delivery of electricity, gas and water services. It is not, however, that common for an objection to a franchise agreement to be made. More often than not, once an agreement is advertised pursuant to s. 45 of the Municipal Government Act, the agreement then proceeds to the AUC for review and approval.
In the case under consideration, Mrs. Wilkinson filed an objection to Harmony’s application for a franchise agreement. The AUC granted standing to Mrs. Wilkinson to participate in the proceeding, even though she did not meet the “directly and adversely affected” test. As the AUC stated (at para. 26): “Mrs. Wilkinson voices particular public interest perspectives, hearing of which may be of some relevance and will not delay efficient consideration of this application.”
According to some administrative experts, the AUC’s approach to standing is typical of administrative agencies, which have traditionally taken a more democratic approach to public interest standing than the courts. As Macaulay and Sprague describe, generally, as part of their duty to represent and consider the public interest, administrative agencies have allowed members of the public to participate in proceedings provided their contribution was relevant (Practice and Procedures Before Administrative Tribunals, Volume 2, (Toronto: Thomson, 2004) at 9-30 to 9-31). However, the AUC’s approach to public interest standing can be contrasted with the approach taken by other Alberta tribunals and commented on in past ABlawg posts. See for example, the post by Prof. Shaun Fluker here.
The author wishes to thank Nigel Bankes for his comments on an earlier draft of this post.
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Case commented on: Tanudjaja v Canada (Attorney General), 2013 ONSC 5410
This post discusses a decision from the Ontario Superior Court which rejected “homelessness” as an analogous ground under section 15 of the Canadian Charter of Rights and Freedoms. I divide the analysis into two sections: (1) a discussion of the analytical flaws in the court’s approach to analogous grounds, and (2) an application of a multi-variable approach to the potential ground of homelessness to demonstrate its apparent viability as an analogous ground. This case should be of concern to ABlawg readers interested in section 15 jurisprudence as well as those advocating for the interests of the homeless.
(1) A flawed approach to homelessness as an analogous ground
In Tanudjaja v Canada (Attorney General), 2013 ONSC 5410, Lederer J of the Ontario Superior Court of Justice allowed motions by the Federal Crown and the Ontario Provincial Crown for an order dismissing the application by Tanudjaja and others for Charter relief. In particular, Lederer J allowed motions dismissing applications that alleged breaches of sections 7 and 15 of the Charter flowing from legislative changes that resulted in increased homelessness and inadequate housing.
As a preliminary note, Lederer J’s analysis of homelessness as an analogous ground is obiter dicta. He concludes that whether or not homelessness is an analogous ground is irrelevant because “the actions and decisions complained of do not deny the homeless a benefit Canada and Ontario provide to others or impose a burden not levied on others” (at para 128). Despite its obiter nature, my discussion focuses exclusively on his analysis regarding analogous grounds.
Lederer J alludes to the various factors that have been considered in the jurisprudence for assessing analogous grounds (at para 127). However, he ultimately rejects homelessness as an analogous ground because of a novel requirement for analogous grounds that he identifies and which I will label as “definability” (at para 134). In his own words, a lack of definability may be described as follows:
 [T]here is no means to understand the parameters that would define those who make up the analogous group. Who would be the members? On what basis is the group said to be analogous? In these circumstances, it is impossible to come to a substantive understanding of what the analogous ground is.”
To be clear, according to Lederer J, an indefinable ground is one which fails to outline an objectively ascertainable group of people that belong to it. As he explains with respect to homelessness:
 In the circumstances of this Application, it is not possible to identify who is “homeless” […] homelessness is not, for the purposes of this Application, restricted to those without homes. […] It may be that what is being referred to as “the homeless” includes those without “affordable, adequate and accessible” housing. What is adequate housing? Presumably, this depends on the circumstances of the individuals involved.
I have three observations about Lederer J’s approach to analogous grounds: (a) he lacks a jurisprudential basis for a “definability” requirement, (b) he appears to conflate definability with a different idea (heterogeneity) in his reasoning which results in a lack of analytical clarity, and (c) neither definability nor heterogeneity are conclusive when assessing analogous grounds.
(a) Why definability is not a requirement of the analogous grounds in the jurisprudence
In support of a purported definability requirement for analogous grounds, Lederer J cites Polewsky v Home Hardware Stores Ltd (1999), 68 CRR (2d) 330 (ONSC) [Polewsky], where “poverty” was rejected as an analogous ground. He also claims that the Ontario Court of Appeal “recognized this limitation” (that is, the definability requirement) in Falkiner v Ontario (Ministry of Community and Social Services) (2002), 59 OR (3d) 481 (CA) [Falkiner], where “social assistance recipients” was recognized as an analogous ground.
With regard to Falkiner, the Court of Appeal did not adopt a definability requirement in its reasoning. Rather, in that case, social assistance recipients was recognized as an analogous ground after a consideration of many other factors including historical disadvantage and continuing prejudice, immutability, protection in human rights statutes, and heterogeneity (at paras 82-93).
The other key decision cited by Lederer J – Polewsky – in one passage appears to consider a definability requirement:
 A third reason lies in a consideration of those who make up the group of people who are in financial need. The poor in Canadian society are not a group in which the members are linked by shared personal or group characteristics. The absence of common or shared characteristics means, in my view, that poverty is not an analogous grounds to those enumerated. Those enumerated grounds are defined by one or more shared characteristics whether it be race, nationality, colour, religion, sex, age or disability.
Arguably, lacking a “shared characteristic” could be interpreted as lacking definition (in so far as groups may be defined by their shared characteristics). However, upon further inspection, that is not the interpretation advanced by Gillese J in Polewsky.
Later in her reasoning, Gillese J clarifies that lacking a shared personal characteristic is equivalent with being a “disparate and heterogeneous group” (at para 60). In particular, Gillese J provides the example of agricultural workers as such a disparate and heterogeneous group. However, agricultural workers are also definable (by a common occupation), which in turn precludes the possibility that the court was applying a definability requirement. As a consequence, Polewsky, like the other authorities that Lederer J relies on, cannot be read as creating a definability requirement.
(b) Conflating indefinability with heterogeneity
For the sake of clarity, I will begin with a basic definition of indefinable and heterogeneous groups. An indefinable group is one which lacks clear parameters for identifying its members. A heterogeneous group is one which has a diverse membership.
Lederer J’s reliance on Polewsky as a key authority results in unclear reasoning. In particular, Lederer J seems to conflate his basis for rejecting homelessness as an analogous ground (indefinability) with a factor considered in Polewsky when rejecting poverty as an analogous ground(heterogeneity).
This conflation of concepts is demonstrated in Lederer J’s closing remarks, where his basis for rejecting homelessness as an analogous ground subtly transitions from indefinability to heterogeneity. First, he rejects homelessness as an analogous ground because it is indefinable:
 Homelessness is not a term that, in the context of this case, can be understood. Without an understanding of the common characteristics which defines the group, it cannot be established as an analogous ground under s. 15(1) of the Charter.
Then, he discusses the heterogeneity of homelessness:
 There is a list of groups which are said, in the Application, to be protected from discrimination under s. 15(1) of the Charter and disproportionately affected by the lack of adequate housing. It includes: “women, single mothers, persons with mental and physical disabilities, Aboriginal persons, seniors, youth, racialized persons, newcomers and persons in receipt of social assistance” […] What discrimination can there be when all of the groups identified as being subject to this discrimination, taken together, include virtually all of us?
Finally, he again rejects homelessness as an analogous ground, this time because it is heterogeneous:
 Homelessness is not an analogous ground under s. 15(1) of the Charter. The Application does not propose to protect “discreet and insular minorities”. It is an attempt to take “disparate and heterogeneous groups” and treat them as an analogous ground under s. 15 (1) of the Charter. Such groups do not obtain this protection.
However, “heterogeneous” groups are not necessarily “indefinable.” In fact, broad and diverse groups are often definable. For example, agricultural workers (the heterogeneous group discussed in the reasoning of Polewsky) may include all sorts of individuals (young, old, different religions, different races) who are still defined by a common occupation. Similarly, Lederer J appears to concede that a narrower conception of homelessness would also be definable. He qualifies that homelessness is indefinable “in the circumstances of this Application” (at para 129) because it is defined as having “inadequate housing” as opposed to having no housing at all. By implication, he suggests that if the homeless were simply defined as having no housing at all then such a group would be definable. Yet, such a group also encompasses a broad and diverse set of people. While the larger and more diverse a group becomes, the more difficult it may be to find a common thread tying them together, such a thread may nonetheless exist. As a consequence, I would argue that Lederer J improperly conflates indefinability with heterogeneity and ends up misapplying what is, in the jurisprudence, a relevant factor when assessing analogous grounds: status as a “discrete and insular minority” (see e.g. Andrews v Law Society of British Columbia,  1 SCR 143, 56 DLR (4th) 1 at 152 [Andrews] and Miron v Trudel,  2 SCR 418, 124 DLR (4th) 693 at para 148 (QL) [Miron])).
(c) Why neither definability nor heterogeneity are conclusive of the analogous grounds
It is unclear whether Lederer J rejects homelessness as an analogous ground because it is indefinable, heterogeneous, or both. Regardless, an analysis of only these two factors is incomplete because definability is irrelevant to the question of analogous grounds and heterogeneity is only one of many factors to be considered.
Definability cannot be a factor when assessing analogous grounds because it is not an attribute of the enumerated grounds. The basic analytical approach to analogous grounds is the drawing of analogies from the enumerated grounds for the purpose of identifying new sufficiently similar grounds worthy of protection under section 15 (see Corbiere v Canada (Minister of Indian and Northern Affairs),  2 SCR 203, 173 DLR (4th) 1 at para 13 [Corbiere]). Analogousness is an attribute which is intrinsically relative. To describe something as analogous begs the question: analogous to what? In the case of analogous grounds under the Charter, the legal question is whether or not the potential ground is analogous to the enumerated grounds. Thus, any consideration when identifying analogous grounds must be an attribute which attaches to the enumerated grounds.
Many enumerated grounds lack definability. For example, suppose a law discriminated against black people (that is, based on the enumerated ground of race). How would one qualify for membership within that group? A certain threshold of dark skin? A certain ethnic background? Other attributes classically (read stereotypically) associated with black people? Just like homelessness, the “parameters” that define what it means to be black (or any race for that matter) are not defined (unsurprisingly, given the constructed nature of race: see Ian F Haney López, “The Social Construction of Race” in Richard Delgado, ed, Critical Race Theory: The Cutting Edge (Philadelphia: Temple University Press, 1995) 191 available here). As another example, consider a government action that discriminated against Muslims (the enumerated ground of religion). Are all different denominations of Islam included? What if someone is non-practicing? What if different denominations have conflicting definitions of who fits under the umbrella of Muslim? Again, being Muslim may also lack clear parameters.
Admittedly, my characterization of definability is not identical to Lederer J’s. He considered homelessness indefinable because, in part, lacking “adequate housing” must be assessed on an “individual basis” (at para 129). In other words, depending on the size and make up of a particular family, more or less housing may be required for it to qualify as “adequate” housing. Regardless, his ultimate concern (unclear parameters, unclear membership) equally applies to multiple enumerated grounds. As a consequence, definability cannot be a requirement of the analogous grounds.
Heterogeneity is also not decisive of the analogous grounds, though it may be a relevant factor. Lederer J appears to rely on the notion of “discrete and insular minorities” for his consideration of heterogeneity (at para 136).
Whether or not a ground encompasses a “discrete and insular minority” (which is arguably the opposite of a disparate and heterogeneous group) has been considered by the courts (see e.g. Andrews, at 152and Miron, at para 148 (QL)). However, this factor alone cannot be a gatekeeper to the analogous grounds. For example, in Andrews and Miron, whether or not the grounds in question encompassed a discrete and insular minority was considered along with other factors when determining analogousness. Furthermore, the limited weight of heterogeneity becomes apparent with a consideration of the currently protected grounds. For example, the first recognized analogous ground was citizenship (in Andrews). In that case, the Supreme Court held that it was contrary to the Charter to discriminate against “non-citizens” with respect to qualifying as legal professionals. Yet, non-citizens, just like the homeless, are a heterogeneous group. The same can be said for all of the enumerated grounds. Race (any type), age (at any stage of life), and sex (male, female, intersex, etc) all intersect with various other identities throughout Canadian society. All of these groups (with minor restrictions, like 5 year olds not being parents) would contain all of the “women, single mothers, persons with mental and physical disabilities, Aboriginal persons, seniors, youth, racialized persons,” etc that Lederer J referred to when rejecting homelessness as an analogous ground because of its diverse membership (at para 135).
While representing a “discrete and insular minority” is an aspect of analogous grounds, it is merely a factor to be considered. Additionally, while it is beyond the scope of this comment, the concept of “discrete and insular minorities” does not appear to have the same meaning that Lederer J assigns to it, namely, a small and homogenous group. In particular, when commenting on early jurisprudence that considered “discrete and insular minorities,” Dale Gibson interpreted this factor as relating to historical disadvantage which, if anything, furthers the argument for homelessness as an analogous ground (see Dale Gibson, “Analogous Grounds of Discrimination Under the Canadian Charter: Too Much Ado About Next to Nothing” (1991) 29 Alta L Rev 772 (QL)).
(2) A multi-variable approach to homelessness as an analogous ground
Generally, analogous grounds are described as personal characteristics that are either (1) immutable, like national origin, or (2) constructively immutable, like religion (Corbiere, at para 13). However, this tidy dichotomy overlooks the complex multi-variable analysis the Supreme Court often applies.
In “Assessing Analogous Grounds: The Doctrinal and Normative Superiority of a Multi-Variable Approach,” (2013) 10 JL & Equality 37 (HeinOnline) [“Assessing Analogous Grounds”], I argue that the existing jurisprudence surrounding section 15 goes beyond the concept of immutability and is open to many different variables such as those outlined in L’Heureux-Dubé J’s multi-variable approach from her concurring reasons in Corbiere. As a consequence, I will consider the ground of “homelessness” in light of immutability, constructive immutability, and several other indicia that have been applied by the Supreme Court in Charter jurisprudence when characterizing analogous grounds: difficulty and cost of change, vulnerability, historical disadvantage, and presence of the ground in human rights codes.
A multi-variable approach to analogous grounds favours the recognition of homelessness as an analogous ground.
Homelessness is not, strictly speaking, immutable. However, whether or not homelessness satisfies the test for “immutability” applied by the Supreme Court does not have a clear answer. As I argued in “Assessing Analogous Grounds”:
L’Heureux-Dubé J states in Egan that “the common characteristic of all of the enumerated grounds other than religion is that they involve so-called ‘immutable’ characteristics.” However, how would the Court characterize the actual immutability of generally stable, yet changeable, enumerated grounds such as sex and colour? How would the Court characterize the immutability of enumerated grounds that change over time but often due to factors beyond our control, such as age and temporary disability? (at 49).
Put differently, for the court to characterize the enumerated grounds (except for religion) as immutable means that the court has a flexible understanding of what it means for something to be “immutable.” Most notably:
[T]he Court has at times allowed for a very flexible and thus unpredictable understanding of immutability. For example, McLachlin J in Miron describes marital status as immutable “albeit in an attenuated form” because “it often lies beyond the individual’s effective control” (“Assessing Analogous Grounds,” at 49).
As a consequence, the analysis of the immutability of homelessness must look beyond the fact that it is subject to change (like sex and colour). That is not to say that a sex-change operation or skin bleaching is necessarily as common as escaping or entering homelessness. That being said, if “often [lying] beyond the individual’s effective control” can qualify as an “attenuated” form of immutability, then homelessness could very well meet that standard.
Whether homelessness is constructively immutable is also unclear. The leading decision on constructive immutability is Corbiere, which held that a personal characteristic is constructively immutable if (1) it is changeable only at unacceptable cost to personal identity, or (2) the government has no legitimate interest in expecting an individual to change the personal characteristic (see “Assessing Analogous Grounds,” at 40-41). Such an approach, which implicitly assumes that personal characteristics are desirable, is confusing when they are not desirable. As I discussed in the context of the potential ground of “drug addiction”:
Many potential grounds of discrimination struggle to satisfy this test. For example, escaping drug addiction is possible (though “very difficult”) and becoming someone who is no longer an addict does not result in unacceptable cost to personal identity. If anything, being a drug addict is the cost and escaping addiction the benefit (“Assessing Analogous Grounds,” at 52-53).
Homelessness similarly struggles to fit within this framework of constructive immutability.
Escaping homelessness, like addiction, would be mischaracterized as a “cost” rather than a benefit. Furthermore, describing the government’s “legitimate interest” in “expecting” the homeless to change their circumstance, when the homeless probably want to change their circumstance, is an equally strained analysis. Regardless, a similarly undesirable trait related to financial disadvantage – receipt of social assistance – was held to fit within “the expansive and flexible concept of immutability” endorsed by the court in Falkiner (at para 89).Consequently, while the characterization of undesirable traits as constructively immutable is strained, it is still possible, and has jurisprudential support.
Despite the ambiguity that results from applying the concepts of actual and constructive immutability to homelessness, the remaining factors in a multi-variable approach favour its inclusion as an analogous ground.
Homelessness is certainly difficult to change, encompasses a vulnerable community, and is subject to historical disadvantage (see generally here). Provincial human rights codes also support the recognition of homelessness as an analogous ground under the Charter. The Manitoba Human Rights Code, CCSM c H175, protects against discrimination based on “social disadvantage” (s 9(2)(m)) which it defines as “diminished social standing or social regard due to (a) homelessness or inadequate housing” (s 1). Furthermore, other provincial human rights legislation has recognized grounds that demonstrate a trend toward greater equality protections for the financially disadvantaged (seee.g. the Newfoundland and Labrador Human Rights Act, 2010, SNL 2010, c H-13.1, s 9(1): “social origin” and “source of income”; the Nova Scotia Human Rights Act, RSNS 1989, c 214, s 5(1)(t): “source of income”; and the Ontario Human Rights Code, RSO 1990, c H.19, s 2(1): “receipt of public assistance”).
In sum, a brief overview of the factors in a multi-variable approach tends to favour the recognition of homelessness as an analogous ground. The next time the question of homelessness as an analogous ground comes before the courts it should not be undermined by Lederer J’s obiter remarks which misapplied the proper multi-variable approach to section 15 of the Charter.
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Case commented on: Deagle v 1678452 Alberta Ltd., 2013 ABQB 708
Does permission to construct a semi-detached dwelling allow the building of a secondary suite? That was the essence of the controversy in Deagle v 1678452 Alberta Ltd., which involved the interpretation of a 1911 restrictive covenant registered against the title to homes in the Glenora community in Edmonton. In deciding the matter, Justice Donald Lee reviewed a large number of cases concerning restrictive covenants that, in one way or another, limited construction to one dwelling house per lot. While each of those many cases ultimately depended on the exact wording in each restrictive covenant, the distinction that Justice Lee made between a “duplex” and a “semi-detached” house goes beyond the particularities of each case in the absence of evidence as to what the parties to any one restrictive covenant intended by their use of those terms at the time the covenant was entered into.
Four property owners from the Glenora community applied to Justice Lee to enforce restrictive covenants that limited the ways in which residential property in their community could be developed. These restrictive covenants were contained in the “Carruthers Caveat” that was filed against all of the relevant titles in December 1911. The restrictive covenants provided that:
2. No building of any kind other than a private dwelling house with appropriate offices and outbuildings to be appurtenant thereto and occupied therewith shall be erected upon the said land, and no trade or business of any kind shall be carried on upon any part of the said land, and no part of the said land or any building thereon shall be used as a place of public entertainment, amusement, or resort,
3. Not more than one dwelling house shall be erected upon the said land or any part thereof.
4. The house to be erected upon the said lands shall be either detached or semi-detached…”
The Respondent, 1678452 Alberta Ltd., was incorporated by Suhaib Al-Kurtass and Tatiana (Alice) Horhota for the purpose of buying the house in the Glenora community. Al-Kurtass and Horhota moved into the house in August 2012. According to the Brief filed on behalf of the Respondent, once Al-Kurtass and Horhota moved in they decided to renovate their house.
(Most of the facts about the house and its contested renovations appeared as “background facts” in a Brief filed by the Respondent. Despite what appears to be a lack of evidence, Justice Lee stated that he accepted the facts set out in the Respondent’s Brief “for purposes of this application” (para. 3). He does not explain why he was at liberty to do so even though the details about the planned renovation were crucial to his choice of applicable law and to his conclusions about the application of that law to the facts.)
In April 2013, the Respondent applied for and the City issued a Development Permit. A neighbor appealed the Development Permit but the Subdivision Development Appeal Board denied that appeal. According to the Brief filed on behalf of the Respondent, it was only after the Development Permit was granted that Al-Kurtass and Horhota became aware of the Carruthers Caveat on the house. The reason for this late discovery was not given but the validity and enforceability of the Carruthers Caveat does not seem to have been an issue. In any event, Justice Lee found (at para 40) that the Carruthers Caveat was a valid and enforceable caveat protecting the restrictive covenant running with the lands, and that the Respondent’s lands and premises were subject to that caveat.
After the appeal was heard, Al-Kurtass and Horhota made some changes to the plans that were submitted to the City. According to the Brief, once completed, the basement would include two bedrooms, a living area, a bathroom, and kitchen. Access to the basement would be from an interior staircase located in the dining room and family room area on the main floor or from an exterior staircase outside the house. The renovated basement would be available for long-term family visits by out-of-country relatives or a live-in nanny, should Al-Kurtass and Horhota have children.
Based upon the restrictive covenants and the facts, the main issue was whether the construction and use of a basement secondary suite contravened the restrictive covenants contained in the Carruthers Caveat restricting construction and use to a private dwelling house. The key concern was how to give meaning to the Carruthers Caveat’s seemingly contradictory requirements that only one private dwelling house be constructed on each lot, but that one private dwelling house could be either detached or semi-detached.
As the Court of Appeal stared in Tanti v Gruden, 1999 ABCA 150 (CanLII) at paras 9-10, a restrictive covenant is essentially a contract. Therefore principles of contract interpretation are relevant. Courts look at both the words of the covenant in question and also at the purpose the covenant was intended to fulfill when it was entered into. Particularly useful in the context of the case before Justice Lee (and quoted by him at para 42) were the following principles set out by the Supreme Court of Canada in BG Checo International Ltd. v British Columbia Hydro and Power Authority,  1 SCR 12 at 23-24:
It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of the intentions of the parties as evident from the contract as a whole Where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms of the question. Only if an interpretation giving reasonable consistency to the terms in question cannot be found will the court rule one clause or the other ineffective…
Justice Lee first considered (at para 8) the meaning of the word “dwelling” and the phrase “dwelling house.” He noted that section 6.1(26) of the City of Edmonton Zoning Bylaw defines “Dwelling” as “a self-contained unit comprised of one or more rooms accommodating sitting, sleeping, sanitary facilities, and a principal kitchen for food preparation, cooking and serving. A Dwelling is used permanently or semi-permanently as a residence for a single Household.” As Justice Lee notes (para 9), if this definition were to be applied to the Respondent’s house post-renovation, the house would have two dwellings, one in the basement and one on the main floor.
Next, both the Applicants and Respondent cited a large number of cases considering restrictive covenants limiting development of a parcel of land to “a private dwelling house”. However, Justice Lee distinguished most of these cases on the basis that their restrictive covenants did not allow semi-detached buildings, as did the Carruthers Caveat.
The Respondent argued that it was important that the Carruthers Caveat did not require the house to be a “one family” private dwelling house or a “one household” dwelling house and that permitting a semi-detached house, or duplex, allowed for more than one family or more than one household to live in the house. Justice Lee rejected (at para 44) the Respondent’s assumption that the restrictive covenant’s permission to construct a “semi-detached” building was permission to construct the duplex that the Respondent was erecting. Justice Lee distinguished (at para 44) the two types of dwelling by labelling two houses, one superimposed on the other divided horizontally, a “duplex”, and two houses where the division was ordinarily vertical as “semi-detached”. He relied upon Re James and Cutts, 1922 CarswellOnt 213,  4 DLR 950 (Ont Sup Ct) at CarswellOnt page 2, which in turn relied upon Ilford Park Estates Limited v. Jacobs,  2 Ch 522 at 526, which in turn relied upon Grant v. Langston,  AC 383 for his distinction between a duplex and a semi-detached dwelling:
In substance each building [what is called in Toronto a duplex house] constitutes two houses which are structurally separate in every respect … It is merely a case of one house superimposed on another from which it is divided horizontally, while in the ordinary case of semi-detached houses the division is vertical.
Justice Lee noted (at para 48) that the Re James and Cutts understanding of what a “duplex” is was consistent with long-standing City of Edmonton Bylaws that defined “duplex” housing as meaning “any development consisting of a building containing only two dwellings, with one dwelling placed over the other in whole or in part. Each dwelling has separate and individual access, not necessarily directly to Grade. This type of development is designed and constructed as two dwellings at the time of the initial construction of the building. This Use Class does not include Secondary Suites or Semi-detached Housing” [emphasis added]. Justice Lee also noted that dictionary definitions for “semi-detached” — e.g., a house joined to another similar house on only one side — were also consistent with the dichotomy set out in Re James and Cutts.
It was also significant that the date of the Re James and Cutts decision and those of the two cases it relied upon were fairly contemporaneous with the 1911 date of the Carruthers Caveat.
The Respondent had not introduced any evidence of what was meant by “duplex” or “semi-detached” in 1911 when the Carruthers Caveat was filed. As a result, Justice Lee concluded (at para 49) that what the Respondent was constructing was a duplex and “not a semi-detached house as described in paragraph 4 of the Carruthers Caveat” because (at para 51) “the Respondent’s present development cannot be semi-detached as it is divided or created vertically, not divided by a sidewall(s) horizontally.”
Even if the duplex the Respondent wanted to construct fell within the permission for a semi-detached building, Justice Lee held (at para 47) that the Respondent’s renovation would create two dwellings, and two dwellings on one lot violated paragraph 3 of the Carruthers Caveat, which stated that “Not more than one dwelling house shall be erected upon the said land or any part thereof.” The existence of two cooking and eating areas in one building was the key fact in determining the number of dwellings. As was stated in Szymanski v Excel Resources Society, 2004 ABQB 89 (CanLII) at para 21: “The building has one kitchen and one dining room. It was not constructed to accommodate more than one household.” In Szymanski, with only one kitchen, residents would be living together as one household. In this case, the Applicants argued, and Justice Lee agreed (at para 63), that the basement renovation could comply with the Carruthers Caveat if the kitchen and dining areas were eliminated, leaving only bedrooms, a bathroom and a sitting area “which would not constitute a separate ‘dwelling’.”
In summary, Justice Lee determined (at para 65) that: (1) a duplex is not a semi-detached house and the Respondent’s planned duplex was not saved by paragraph 4 of the Carruthers Caveat which permitted a semi-detached dwelling; and (2) the planned renovation violated paragraph 3 of the Carruthers Caveat that limited construction to one private dwelling house because the renovation would create two dwelling houses on one lot. As a result he issued a permanent injunction (at para 70) enjoining the Respondent from “constructing, developing, renovating or using the lands and the buildings thereon to create one or more additional suites or dwellings or Secondary Suites on the lands or in the building on the lands, or any part thereof”.
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Case commented on: Coldwater Indian Band v Minister of Indian Affairs and Northern Development, 2013 FC 1138
This case raises the question of the leverage available to a First Nation to claim hold-out rents where a pipeline crosses reserve lands and the current owner/operator of the pipeline has failed to obtain required consents to an assignment of the pipeline easement.
Built in the 1950s, the Trans Mountain Oil Pipeline (TMOP), like many similar linear developments, crosses the reserves of a number of First Nations in British Columbia. One of those First Nations is the Coldwater Indian Band or First Nation. The Coldwater First Nation passed a Band Council Resolution (BCR) approving the grant of a right of way which was accepted by federal Order in Council. Relying on the Order in Council, the Crown, represented by the relevant Minister, entered into an indenture granting TMOP an easement for pipeline purposes. The habendum provided that the grant was to last for so long as the lands were required for pipeline purposes. The consideration was a lump sum payment. One clause of the easement provided that TMOP “shall not assign the right hereby granted without the written consent of the Minister.” The pipeline was built and still operates today. It provides the only pipeline access to tide water on the west coast for Alberta oil. There was a similar BCR, Order in Council and grant of easement for a second right of way some three years later – also for a lump sum. That second easement has never been used.
It is important to emphasize a couple of points about the legal character of these two easements. First, they are, on the face of it consensual documents. The acquisition of the easements did not involve an act of expropriation (even though it may have occurred under the shadow of such state authority) and therefore does not engage s. 35 of the Indian Act, RSC 1985, c. I-5. Second, the grants did not take the form of an easement for a term of years but rather took the form of an easement for a defeasible estate in fee simple (either determinable or subject to a condition subsequent – the distinction may be important in relation to the second easement since if it were determinable it likely automatically came to an end at some point during the last sixty years). Third, the parties to the easement were the Crown and TMOP. Consistent with the terms of the Indian Act and the common law rules dealing with First Nation lands (and more generally lands reserved for Indians, see Delgamuukw v British Columbia,  3 SCR 1010), the Crown was a necessary intermediary in the transaction.
The TMOP assets were apparently sold to Kinder Morgan (KM), the current operator of the pipeline, in 2007 but there was no effort to obtain consent to the assignment at that time. As is well known Kinder Morgan is currently planning a significant expansion of TMOP to increase the throughput from 300,000 barrels per day to 900,000 barrels per day to provide increased tidewater access for the growing volumes of oil sands production. In 2012 KM seems to have realized that there was some legal risk associated with failing to obtain the Minister’s consent to the assignment and accordingly applied for that consent. The Coldwater First Nation learned of the application and objected to the Minister granting any such consent and eventually commenced this application in Federal Court under ss.18 and 18.1 of the Federal Courts Act, RSC 1985, c. F-7 in relation to the Minister’s pending decisions seeking (at para 2) declaratory relief and a prohibition or injunction.
According to the Court the application raised the following issues (at para 27):
Justice Roger Hughes referred to a number of key cases including Guerin v The Queen, 1984 CanLII 25 (SCC),  2 SCR 335; Blueberry River Indian Band v Canada, 1995 CanLII 50 (SCC),  4 SCR 344; Osoyoos Indian Band v Oliver (Town), 2001 SCC 85 (CanLII),  3 SCR 746, Ermineskin Indian Band & Nation v Canada, 2009 SCC 9 (CanLII),  1 SCR 222 (see ABlawg post here) and Manitoba Metis Federation Inc v Canada (Attorney General), 2013 SCC 14 (CanLII), 2013 SCC 14 (see ABlawg post here). And he then suggested that it was possible to draw the following conclusions from those decisions (at para 60):
Applying these conclusions to the facts Justice Hughes concluded (at para 65) that the Minister “does not have an absolute duty to refuse to consent to the assignments” if the First Nation does not support the assignments but must consider both the First Nation’s interest and the public’s interest in deciding whether “Coldwater’s consent is required.” Beyond this Justice Hughes stated “particularly with respect to the second easement, the Minister should consider whether that easement has expired for non-use; and, therefore, whether re-negotiation with Kinder Morgan for terms much more favourable to Coldwater is required should Kinder Morgan wish to use that second easement or a new easement for another pipeline.” (emphasis added)
In working through this case it is useful to begin by considering how the case might be decided if the arrangements involved two private parties. If that were the case I think that the key issues for the grantor (the Crown in this case) would be: (1) what is the effect of the failure to obtain consent to an assignment of an easement, (2) on what grounds might the grantor withhold consent, and (3) in relation to the second easement, what is the effect of non-use for sixty years?
As to the first, I think it is clear that the failure to obtain consent does not cause the easement to terminate; it is simply a breach of the agreement. If the duty to obtain consent can be interpreted as a condition, breach of the condition might give rise to a right of re-entry but likely subject to an application for relief from forfeiture which might be granted on terms. If the duty to obtain consent is merely a term of the contract then the only remedy would lie in damages unless the breach can be characterized as a fundamental breach which might afford the grantor the option to repudiate the arrangement. It is unlikely that the breach could be characterized as fundamental since neither the term nor the result of breach go to the heart of the contract.
As for the second point (the grounds on which consent may be withheld), the contract here does not provide that consent may not be unreasonably withheld and the law will not imply such a term. However, as noted above, unless the requirement of consent takes the form of a condition, the consequences of the failure to obtain consent, retrospectively or prospectively, will only sound in damages.
As to the third point, the grantor is likely entitled to a declaration that the second easement has terminated in accordance with its own terms – at least if the interest is determinable. The easement should have been used for pipeline purposes within a reasonable period of time. Sixty years is not a reasonable period of time! In a properly framed action the grantor should be entitled to a declaration that the easement is of no force or effect.
How does the case change if we assume that the grantor is a trustee for some other person (other than a First Nation)? As between the grantor and the grantee nothing changes whatsoever. As between the grantor and the beneficiary the grantor owes a duty to the beneficiary to manage the property as a reasonable and prudent person would manage their own property (the trustee’s duty of care) and not to put its own interests ahead of those of the beneficiary (the trustee’s undivided duty of loyalty). What would that mean on these facts? I think that the trustee’s duty of care would require the trustee to pursue termination of the second easement and to take reasonable steps to extract some value out of the grantee’s failure to comply with the terms of the first easement. While there might be a duty to ascertain the wishes of the beneficiary there is no duty to follow the instructions of the beneficiary. The trustee, for example, might reasonably conclude that the withholding of consent to an assignment would likely lead to expensive litigation with uncertain outcomes.
How does the case change when we overlay on the second scenario the facts that: (1) the Crown is the trustee/fiduciary, (2) the beneficiary is a First Nation, (3) the subject matter involves reserve lands held under the terms of the Indian Act, and (4) the application that is before the Court is brought by the First Nation against the Crown on administrative law grounds?
Let’s begin with the easy case, the unused easement. I said above that in a private context the trustee would have a duty to seek a declaration that the easement had terminated. I think that the Crown has a similar duty here although the matter is not directly raised in Coldwater’s administrative law proceeding. However, Justice Hughes seems to suggest that the matter would not be clear cut and that in making any decision in relation to private interests in reserve lands the Minister must balance the interests of the First Nation against other public interests (see paras 60 and 63). It is not clear to me that the case law on which Justice Hughes relies supports this approach. There is, for example, no suggestion in any of the judgments in Guerin, that the Crown should balance anything against its duty to ensure that it did not go beyond what the First Nation had actually authorized. Indeed the very suggestion that that there might have been a competing public interest in that case is vaguely absurd – a public interest in what? The membership interests of a private golf club?
It is certainly true, especially where expropriation decisions are involved, that the Crown, of necessity, is wearing multiple hats and cannot live up to the ideal of undivided loyalty: Osoyoos – but even in such a case there is a duty of minimal impairment (at para 52). But where, as here, the case does not involve an expropriation it is hard to see where the competing public interest lies. If Kinder Morgan loses its unused easement and then realizes that it requires the additional right of way to implement its expansion plans it will still be permitted to access the expropriation provisions of the National Energy Board Act, RSC 1985, c. N-7 if it cannot reach a new agreement with the First Nation (through the Crown) (and thus s. 35 of the Indian Act) assuming that the National Energy Board (or ultimately the Governor General in Council) accepts that the expansion is in the “public convenience and necessity” (NEBA, s. 52).
As for the consent issues I suggested above that an ordinary trustee might have a duty to use the consent as an opportunity to obtain some value for its beneficiary. The same may be equally true of the Crown in this case. Justice Hughes seems to accept that this is the case in relation to the second easement (see paras 60 and 64) but equally he seems to dismiss its possible application to the first pipeline without giving much in the way of supporting reasons for the distinction.
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Earlier this week, the Supreme Court of Canada heard argument in an Alberta case involving the interplay between federal and provincial legislation providing for the compensation of workers injured in workplace activities. Workers’ Compensation Commissions from British Columbia, Quebec and Nova Scotia intervened in the case. The Court, which reserved judgment after its hearing, offers the following description of the case on its website:
Statutes – Statutory interpretation – Eligibility for compensation – Is a federal government or Crown corporation employee’s eligibility for workers’ compensation determined by the Government Employees Compensation Act, R.S.C. 1985, c. G 5 or by provincial legislation? – Can the definition of “accident” under the Government Employees Compensation Act be interpreted to require “excessive or unusual” events for psychological stress claims?
The Respondent Martin commenced a labour complaint against the Applicant, his employer. Parks Canada subsequently instructed the Respondent to disclose information relating to data on his work computer so that Parks Canada might comply with a request that it had received under the Access to Information Act. The Respondent claimed that this request triggered a psychological condition leading to his taking leave and, ultimately, to his making a claim for compensation for chronic stress. The Workers’ Compensation Board found that the Respondent’s chronic onset stress was ineligible for compensation because it failed to meet two of the criteria set out in the Workers’ Compensation Board of Directors Policy 03 01 as the labour relations issues with Parks Canada were not excessive or unusual compared to the normal pressures and tensions of an average worker in a similar occupation. The Appeals Commission for Alberta Workers’ Compensation also concluded that the Respondent had not satisfied two criteria of the Policy and was ineligible for the compensation.
The Alberta Court of appeal framed the issue as follows:
whether the [Workers’ Compensation] Board, in determining Martin’s claim underthe Government Employees Compensation Act, R.S.C. 1985, c. G-5 (GECA), is entitled to apply the policies that the Board has developed under the Workers’ Compensation Act, R.S.A. 2000, c. W-15 (WCA)for determining eligibility for compensation arising from psychological/psychiatric injury arising in the case of any worker in a covered workplace activity within Alberta.
(2012 ABCA 248 at para 3)
A majority of the Court of Appeal (Watson JA and Fraser CJA) held that whether a reasonableness or correctness standard of review was applied, the result would be the same: “when properly interpreted, both statutes can apply harmoniously with the same result on the crucial issues here” (at para 31). The majority noted that constitutional and human rights arguments had not been directly raised in the case (at para 34), and perceived the case as involving “co-operative federalism” in that “interaction of federal and provincial legislation should be made workable by courts consistently with the intent of both levels of legislature” (at para 42). The fact that the WCB was given authority to decide on workers’ compensation claims for federal workers covered by the GECA was a recognition that “federal workers reside within provincial economic circumstances, and that accordingly, the support provided to the workers in those jurisdictions who qualify should largely conform to those circumstances, and not to some nationalized standard oblivious to local reality” (at para 57). It followed that the conditions set out in Alberta’s WCB policy for claims involving psychological / psychiatric stress applied to the adjudication of Martin’s claim (at para 51). Martin could not meet the conditions that his injuries were the result of events that were “excessive or unusual”, so the denial of his claim for compensation was upheld. Justice McDonald concurred in the result, but found that Martin had not met the threshold for compensation under the GECA either.
In Martin’s factum to the Supreme Court, available here, he argues that the GECA should be interpreted in a way that ensures federal employees across Canada are subject to the same eligibility standards for workers’ compensation (at para 3). He contends that the Court of Appeal “improperly relied on a policy concern that Alberta workers should not face differing eligibility standards, a consideration that finds no expression in GECA” (at para 4). He also argues that an interpretation of the GECA that incorporates Alberta’s policy for psychological injuries “is inconsistent with the Charter rights of federal government employees with psychological disabilities, given that there are no analogous restrictions imposed on workers with physical injuries” (at para 5). In the alternative, if GECA employees do have to prove the presence of “excessive or unusual” events before psychological injuries will be compensated, such events were present in the circumstances of this case.
The Martin case was recently cited in a decision of Justice Bryan Mahoney of the Alberta Court of Queen’s Bench. In Ashraf v SNC Lavalin ATP Inc., 2013 ABQB 688, the court considered an employer’s application to strike a former employee’s statement of claim for workplace related injuries on the basis that the Workers’ Compensation Board has exclusive jurisdiction in this area. Ashraf was claiming damages for psychological and physical injuries sustained as a result of “an escalating and systematic campaign of abuse, harassment and bullying” against him (at para 4). Justice Mahoney held that this claim was barred by section 21 of the WCA. First of all, Ashraf’s employment with SNC was covered by the WCA. Secondly, his injuries met the requirement that they were caused by an “accident”, as defined in the WCA to include wilful and intentional acts (at para 39). Ashraf argued that WCB policies also required that the underlying events be unexpected, and that the campaign of abuse he suffered did not meet that criterion. Justice Mahoney found that the WCB policies did not assist Ashraf, as they were relevant to the merits of claims rather than the jurisdiction of the WCB (at para 37). Even if the “unexpected” requirement was applied, it could be satisfied in the case of ongoing or continuous events, based on previous cases interpreting this requirement (at para 38). Thirdly, Ashraf’s injuries fell into categories that were compensable under the WCA. Justice Mahoney noted that while some provinces exclude chronic stress from workers’ compensation regimes, psychological injuries (including stress), are included in Alberta’s WCA (though he acknowledged that these injuries are subject to particular eligibility requirements, citing Martin (at para 42)). As a result, “it is up to the Workers’ Compensation Board to determine if compensation will be granted for psychological injuries, including stress, that arise out of workplace accidents” (at para 45).
Martin is the second case by that name involving workers’ compensation issues to be considered by the Supreme Court. In Nova Scotia (Workers’ Compensation Board) v Martin; Nova Scotia (Workers’ Compensation Board) v Laseur, 2003 SCC 54,  2 SCR 504, the Court held that the exclusion of chronic pain injuries from Nova Scotia’s workers’ compensation legislation amounted to discrimination on the basis of disability that could not be justified under section 1 of the Charter. The current Martin appeal allows the Supreme Court to consider similar issues, albeit via a Charter values approach rather than a direct Charter challenge, and with an added federalism spin.
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Last Friday (December 6, 2013), the federal Minister of the Environment, Leona Aglukkaq, released the long-awaited decision statement for Shell’s Jackpine Mine Expansion project. As I wrote here, the joint review panel concluded – for the first time in the oil sands context – that the project was likely to result in numerous significant adverse environmental effects. This conclusion triggered the application of subsection 52(2) of the Canadian Environmental Assessment Act, 2012, SC 2012, c 19 (CEAA, 2012), pursuant to which the Governor in Council (GiC) must determine whether the project is nevertheless “justified in the circumstances.” This the GiC did. Or at least, we are told that it did.
The Oxford Canadian Dictionary (2nd ed, 2006) defines “justify” as follows:
1 Show the justice or rightness of (a person, act, etc.) 2 demonstrate the correctness of (an assertion etc.) 3 provide adequate grounds for (conduct, a claim, etc.) 4 (esp. in passive) (of circumstances) be a good reason or excuse for…
But there is no such justification. Rather, and in marked contrast to the detailed justification found in the government’s response to the Lower Churchill Hydroelectric project report (2011), the Shell Jackpine Decision Statement simply states that “[in] accordance with paragraph 52(4)(a) of CEAA 2012 the Governor in Council decided that the significant adverse environmental effects that the Designated Project is likely to cause, are justified in the circumstances.
I am not suggesting that an oil sands project like Shell’s could never be “justified in the circumstances” under CEAA, 2012. I am not even suggesting, as others have, that a project ought to pass some kind of sustainability test in order for it to be so considered. I am instead making two related and relatively uncontroversial observations.
The first is that the total absence of any explanation or reasons fundamentally undermines the process of political accountability that this element of CEAA, 2012 (a holdover from CEAA, 1992) was intended to facilitate (see Pembina Institute for Appropriate Development v. Canada (Attorney General), 2008 FC 302 (CanLII) at para. 72). Without such reasons or explanation, Canadians can only guess as to “the wider public policy factors” (Pembina at para. 74) taken into account by the GiC in ultimately granting project approval. And while such “filling in the blanks” may not seem terribly difficult in this context – the Alberta Energy Regulator (AER) provided several reasons why, in its view, the project was nevertheless in the “public interest” (see Shell Jackpine JRP Report, at para. 18), such an approach overlooks the unique character of environmental law and EA law in particular and, perhaps most concretely, renders CEAA, 2012 meaningless.
For better or for worse and in contrast to other areas of law (e.g. contracts, property, and torts), modern environmental law does not consist of hard rules or substantive limits but rather is focused primarily on the process of decision-making. As noted by American law professor Dan Tarlock in his authoritative article nearly ten years ago:
There is a reason that no Restatement (First) of Environmental Law exists or is in process. The candidate suite of principles such as advance environmental impact assessment, polluter pays, precaution, and sustainable development are useful starting points but they can only serve as guideposts to structure a dynamic, but inevitably ad hoc, decision-making process.
(A. Dan Tarlock, “Is There a There There in Environmental Law?” (2004) 19 J Land Use & Envtl L 213 at 219)
Although subject to criticism, the procedural focus of environmental law is not contested; nor is the underlying premise that structuring decision-making processes in certain ways (e.g. Tarlock’s “guideposts,” above) tends to lead to better substantive outcomes. Indeed, such has been the understanding of EA law in Canada since at least the Supreme Court of Canada’s decision in Friends of the Oldman River Society v. Canada (Minister of Transport)  1 SCR 3. It is also reflected in section 4 of CEAA, 2012:
4. (1) The purposes of this Act are …
(b) to ensure that designated projects…are considered in a careful and precautionary manner to avoid significant adverse environmental effects;…
(2) The Government of Canada… in the administration of this Act, must exercise [its] powers in a manner that protects the environment and human health and applies the precautionary principle.
Simply put, environmental law is more concerned with how a decision was actually arrived at, and specifically whether it was made in accordance with the applicable (e.g. legislated) “guideposts,” rather than the ultimate result. Returning to Shell Jackpine, while Canadians might be able to guess which policy factors were considered, they have no way of knowing how they were considered in light of the government’s obligations pursuant to section 4 to ensure that projects “are considered in a careful and precautionary manner” and that the government exercises its powers “in a manner that protects the environment and human health and applies the precautionary principles.”
This, then, is my second observation. In addition to undermining political accountability, the absence of any reasons or explanation as to why the Shell Jackpine project is “justified in the circumstances” undermines legal accountability by making it impossible to determine whether the GiC actually complied with its obligations under the Act. Such a result is clearly untenable (see Alberta Wilderness Association v Canada (Attorney General), 2013 FCA 190 at para 48). I should add that Canadian courts’ willingness to accept “after-the-fact rationalizations of administrative decisions” (as recently blogged about by University of Montreal Professor Paul Daly here) has a similar potential to undermine the purpose and effectiveness of environmental laws, but a detailed discussion of that issue will have to await a future post.
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Legislation commented on: Alberta Energy Regulator Rules of Practice as amended by Alta Reg 203/2013
In the Fall of 2012 ABlawg published a series of entries concerning the enactment of the Responsible Energy Development Act, SA 2012, c R-17.3 (REDA) and the transition to a single regulator for energy projects in Alberta. That transition is now underway. The Alberta Energy Regulator is responsible for the approval and ongoing oversight of energy projects – and will soon be responsible for all energy project approvals and oversight other than the disposition of mineral rights by Alberta Energy.
REDA is umbrella legislation, which means much of the detail on how the Regulator will administer its mandate is left for subordinate rules and regulations. The details have begun to emerge with the Specified Enactments (Jurisdiction) Regulation, Alta Reg 201/2013, Responsible Energy Development Act General Amendment Regulation, Alta Reg 202/2013, Rules of Practice Amendment Regulation, Alta Reg 203/2013, and the Enforcement of Private Surface Agreement Rules, Alta Reg 204/2013. And I’m sure more is on the way. All of these new rules and regulations are posted to the Regulator’s website. The Rules of Practice Amendment Regulation provides some insight into landowner and public participation before the Regulator, and this is my focus here. Osler has also posted some commentary on its website (see here). That the rules of practice need to be amended to such an extent only 6 months after their initial enactment suggests the first version was not fully considered – this is not good governance and reflects poorly on the Alberta government in my view.
The most relevant provisions of REDA governing participation before the Regulator concerning an application made for energy project approval are sections 31 thru 34:
31. The Regulator shall on receiving an application ensure that public notice of the application is provided in accordance with the rules.
32. A person who believes that the person may be directly and adversely affected by an application may file a statement of concern with the Regulator in accordance with the rules.
33(1) Where a statement of concern is filed in respect of an application, the Regulator shall decide, in accordance with the rules and subject to section 34, whether to conduct a hearing on the application. …
34(1) Subject to subsection (2), the Regulator may make a decision on an application with or without conducting a hearing.
(2) The Regulator shall conduct a hearing on an application
(a) where the Regulator is required to conduct a hearing pursuant to an energy resource enactment,
(b) when required to do so under the rules, or
(c) under the circumstances prescribed by the regulations.
(3) If the Regulator conducts a hearing on an application, a person who may be directly and adversely affected by the application is entitled to be heard at the hearing.
(4) A hearing on an application must be conducted in accordance with the rules.
I’ve made a number of observations concerning these provisions in an earlier ABlawg entry (See Bill 2 and its implications for landowner participation in energy project decision-making) and for ease of reference I’ll summarize them again.
The first observation is that the provisions of REDA alone do not provide a legal right to participate in front of the Regulator. Section 34(2) obligates the Regulator to conduct a hearing only in circumstances where an ‘energy resource enactment’ requires it (these enactments are defined in REDA to mean the various energy sector-specific statutes such as the Oil and Gas Conservation Act, RSA 2000, c O-6, which provide hearing rights for energy companies, not landowners or the public in general) or in circumstances set out in rules or regulations. The amendments to the Rules described in this comment are presumably to be some of these circumstances. To be clear however, these Rules contain no legal right to a hearing for landowners or the public in general and if anything the Rules speak more to denying hearings or the ability to otherwise participate before the Regulator.
The second observation is that a person who feels they may be directly and adversely affected by an energy project must initially file a statement with the Regulator documenting their concern(s). The amended Rules now clearly indicate that failure to properly file this statement of concern with the Regulator pretty much extinguishes any possibility of participation under REDA by a landowner or anyone else.
The third observation is that participation by landowners or the public generally in energy project decision-making is entirely within the discretion of the Regulator. REDA itself does not obligate the Regulator to conduct a hearing before deciding whether to approve a project application.
The amended Rules now provide some insight into how the Regulator will exercise its discretion concerning who gets a hearing or otherwise participates in an energy project decision. In many respects the Rules amount to a list of factors the Regulator may (not must) consider in exercising this discretion. What follows is a description of the new Rules organized under particular topics.
Public notice of applications
Section 31 of REDA requires the Regulator to give public notice of energy project applications. Section 5 of the Rules now prescribes the mandatory content of the notice. That content includes a description of the proposed project and setting the deadline for receiving a statement of concern. Section 5.1 of the Rules provides the manner in which notice is made public. What is noteworthy about section 5.1 is that ‘public’ notice does necessarily mean a posting on the Regulator’s website. The Regulator may satisfy ‘public’ notice by a newspaper advertisement or even making the application available in its local office. Why ‘public’ notice does not necessarily mean posting to its website is a strange one to me in this age of tweets and the internet generally. It is fine to disseminate notice of an application by various means, but surely posting to the Regulator’s website should be mandatory. And if that is the intent, why not just say so in the Rules?
Statements of Concern
Section 32 of REDA entitles a person to file a statement of concern with the Regulator where they feel an energy project may directly and adversely affect them. Section 5.3 of the Rules now states a person must file their statement of concern no later than 30 days after the issuance of public notice or within a different time period set out in the notice. This is a curious provision. It isn’t clear why this section is even necessary since section 5 requires the notice to prescribe the deadline for filing, and so presumably the deadline in the notice will always govern.
Section 6.2(1) of the Rules provides factors the Regulator may consider in deciding whether to accept a statement of concern as duly filed. It is important to understand that simply filing a statement of concern under section 32 of REDA does not mean it has been duly filed under REDA. The statement must be ‘accepted’ by the Regulator – you won’t find this stated as such in the statute however. It is also noteworthy how section 6.2 is worded. The section describes the factors as circumstances in which the Regulator may disregard a statement of concern. These factors – and others described below – all seem very negative towards public participation. The factors/circumstances which the Regulator may consider in deciding whether to accept or disregard a statement of concern are:
Has the person demonstrated they may be directly and adversely affected by the application
There is nothing too unusual in this list, and the fact it is non-exhaustive leads me to question the need for 6.2(1). However, section 6.2(2) is more interesting and takes things a step further by setting out factors/circumstances in which the Regulator may disregard a particular concern mentioned in a statement. Presumably this means there will be cases where the Regulator accepts part of a statement but not the entire statement. The factors/circumstances which may lead the Regulator to disregard a particular concern are (together with my own commentary on what I think this means in practice):
Section 6.1 of the Rules also sets out additional cases besides an energy project application where the Regulator may accept a statement of concern. I’m not sure what legislative authority there is for this in section 6.1, but nonetheless it does address what is otherwise an oversight in REDA because it provides for the filing of statements of concern in relation to decisions by the Regulator concerning matters such as license amendments or approvals issued under the Water Act, RSA 2000, c W-3 for energy projects (part of the transition from Alberta Environment to the Regulator).
Normally the Regulator will not make a decision on a project application before the time period for filing a statement of concern expires (see section 5.2(1) of the Rules). However there are exceptions that allow for expedited decisions. These exceptions are set out in sections 5.2(2) and 5.2(3), and they include:
Failure to properly file a statement of concern with the Regulator pretty much extinguishes any possibility of participation in an energy project decision-making process. However, the filing of a statement of concern does not necessarily guarantee participation either. REDA does not obligate the Regulator to hear landowners or the public in general, and their participation in energy project decision-making is thus entirely within the discretion of the Regulator. Section 34(3) of REDA comes closest to providing persons who may be directly and adversely affected with hearing rights, however the section only obligates the Regulator to hear such persons IF the Regulator first decides to conduct a hearing.
Section 7 of the Rules now provides a non-exhaustive list of factors the Regulator may consider in exercising this discretion on whether to conduct a hearing. These factors include those which may be considered by the Regulator in relation to statements of concern noted above, plus the following:
In short, the Rules do not require the Regulator to conduct a hearing. So section 34(2)(b) of REDA – which requires the Regulator to conduct a hearing when required to do so by the rules – continues to have no substantive meaning since the rules contain no such requirement.
Traditionally getting an opportunity to participate as an intervener (as opposed to the person with hearing rights) in a regulatory hearing was straightforward and non-contentious – presumably interveners are generally welcome because they have a genuine interest in the matter and provide the decision-maker with more information concerning the decision to be made. Times have changed. Section 9 of the Rules suggests it will now be more difficult to intervene in a hearing before the Regulator. Remember we are talking about participation in a hearing that will be conducted anyways at the request of another participant. So these are not hearing rights.
As with many of the new provisions noted above, section 9 lists a number of factors the Regulator will consider in deciding whether to allow an intervention. Perhaps the most notable item here is that an intervener must also explain how they may be directly and adversely affected by a project application. Section 9 also suggests that if the intervener did not file a statement of concern with the Regulator, this fact will be used against them, or they will at least have to explain why the statement wasn’t filed. Query though what point this has, since if a statement of concern was filed by a person and no hearing was called, in what process will they be hoping to intervene?
If a potential intervener cannot demonstrate how they may be directly and adversely affected by the project, that person must convince the Regulator they nonetheless have a tangible interest in the matter, won’t cause unnecessary delay, and won’t duplicate the evidence of others at the hearing. Groups or associations will likely have to demonstrate that a majority of their members may be directly or adversely affected by the project in question. The overall message here is that interventions are generally not welcome, and public interest groups need not apply at all!
A person who is allowed to intervene will participate in a manner to be determined by the Regulator. Section 9.1 of the Rules gives the Regulator the power to determine the scope of an intervention, in terms of whether the intervener will be allowed to give evidence, cross-examine the applicant, make legal argument, and the like. This is really a codification of existing practice at the Regulator.
Section 61(r) of REDA provides the Regulator with full discretion to make rules governing the awarding of costs to hearing participants. The Regulator and its predecessors have always had said discretion over cost awards – although the now-repealed Energy Resources Conservation Act, RSA 2000, c E-10 did include a legislated framework for how that discretion would be exercised. In Kelly v Alberta (Energy Resources Conservation Board), 2012 ABCA 19, the Court of Appeal added to this by ruling that energy project review hearings are an important component of resource development in this province and that cost awards may be a practical necessity if the Regulator is to fulfill its mandate of giving Albertans an open, transparent and accessible process in which to give input to public decisions that affect their rights (at paras 33, 34).
Section 58.1 of the Rules is now the provision which sets out the factors the Regulator will consider in deciding whether to make an interim, advance, or final cost award to a hearing participant. This new section replaces section 64 which had only been in force since June 2013.
As was the case previously, a participant must demonstrate costs incurred are reasonable and directed towards participation that is relevant and helpful (I’m paraphrasing a lot here). But notable in the new section 58.1 is paragraph (a) which states the Regulator will consider whether there is a compelling reason why the participant (landowner) should not bear their own costs. To me this reads like an onus provision – in other words the rebuttable presumption going in is that a landowner or other participant should bear their own costs. In my view, this is inconsistent with the Court of Appeal’s 2012 Kelly ruling that cost awards may be a practical necessity.
The overall message in these new Rules is that the Alberta government and the Regulator see little value in public participation concerning energy project decision-making and have little regard for participation even by landowners who may be directly affected by a project. Public participation in energy and environmental decision-making in Alberta is almost non-existent. The ability of Albertans to give input into public decisions that affect their rights has suffered a major setback under this new regime. The only real opportunity for public input into how resources owned by the public are to be developed is at the land-use planning stage – when the dialogue remains in generalities and occurs in the future tense. Even at that stage, the decision-making occurs behind closed doors. Once the shovels are poised to hit the ground the time for talk is definitely over.
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