Case: Reference re Environmental Management Act (British Columbia), 2019 BCCA 181 (CanLII) 

Keywords: Trans Mountain Pipeline; Constitutional Law; ss. 91 and 92 of the Constitution Act, 1867; Environmental Management Act, SBC 2003, c 53

Synopsis:

The Province of British Columbia seeks to regulate the Trans Mountain pipeline (the “TMX project”), to impose conditions, and possibly even prohibit the flow of “heavy oil” within its borders. The Province submits a constitutional reference to the Court of Appeal for British Columbia asking, in essence, whether British Columbia is constitutionally capable of doing so.

The Court says it is not within the authority of the British Columbia to enact its proposed amendments to the Environmental Management Act, SBC 2003, c 53 (the “EMA”). The reason is that these amendments are, in “pith and substance”, related to the regulation of interprovincial activities and subject to exclusive federal jurisdiction under ss. 91(29) and 92(10)(a) of the Constitution Act, 1867. The TMX Project is an undertaking to transport oil between Alberta and British Columbia. The Court of Appeal determines this “matter” is federal and so the proposed EMA amendments are ultra vires or beyond provincial jurisdiction.

Importance:

The Court of Appeal set out the “pith and substance” analysis plainly and clearly. The first step is to determine what the proposed EMA amendments do and why. What is the dominant purpose of British Columbia’s proposed amendments to the EMA? For the Court, “…the pith and substance of the proposed Part 2.1 is to place conditions on, and if necessary, prohibit, the carriage of heavy oil thorough an interprovincial undertaking.” (See para. 105).

The Court recognized, citing Canadian Western Bank v. Alberta, Reference re Securities Act, and Rogers Communications v. Châteauguay (City) that the dominant characteristic of these amendments will, along with nearly every other piece of enacted legislation, “affect” (for the Court of Appeal, rather than ‘effect’ (see at paras. 3-6)) subjects allocated to the other level of government “incidentally”. (See paras. 3-6). That being said, the fact of overlap does not “override or modify the separation of powers”. (See para. 6).

With respect to the “ancillary powers doctrine” or “double aspect”, the Court of Appeal noted that Canadian courts “…have not always clearly distinguished” between these concepts. (See para. 10). The bottom line is that a valid law enacted by either level of government will very likely affect a matter reserved for the other government. But when the affected matter is exclusively federal, provincial law must yield. It’s simple matter of constitutional traffic law.

The Court also addressed the concept of “co-operative federalism” and assessed whether this concept militates in favour of allowing British Columbia to regulate the flow of heavy oil within or across its borders. The Court of Appeal deferred to the Supreme Court of Canada’s recent illustrative pronouncements on the subject: “…notwithstanding the attraction of co-operative federalism, [the Supreme Court of Canada] recently reminded us that “the ‘dominant tide’ of flexible federalism” cannot sweep the allocation of powers in ss. 91 and 92 of the Constitution Act ‘out to sea.’” (See para. 51).

The Court of Appeal accepted the federal government’s argument that the proposed amendments to the EMA, and in particular, Part 2.1, were principally designed to “…frustrate the construction and operation of the TMX Project, an interprovincial undertaking whose purpose is to transport increased quantities of heavy oil produced in Alberta through BC for export overseas.” (See para. 55; 101).

In other words, the “pith and substance” of these amendments would be regulation of an interprovincial undertaking, a matter of exclusive federal competence. Why does the federal government get to control these activities? For the Court of Appeal, the answer is not a question of “semantic categorization”, it is a matter of historical fact: “the framers of Confederation as to what laws should be considered by Parliament in the national interest, and what should be decided by provincial legislatures on the basis of local interests.” (See para. 64).

Provincial laws may regulate matters which are vital to the national interests of Canada, but they are not entitled to “…interfere with the operation of a federal undertaking…or result in its dismemberment”. (See para. 67). The Court of Appeal referred to Alltrans Express Ltd. v. British Columbia (Workers’ Compensation Board), Canadian National Railway Co. v. Courtois, and Bell Canada in support of the proposition that the federal government’s jurisdiction in respect of interprovincial undertakings is exclusive. (See paras. 73-80).

For the Court of Appeal, it is the National Energy Board (the “NEB”) rather than the British Columbia legislature that is entrusted to regulate the TMX Project: “Unless the pipeline is contained entirely within a province, federal jurisdiction is the only way in which it may be regulated”. (See paras. 101-104). This reflects the principle that ss. 91 and 92 of the Constitution Act, 1867 “…provide for ‘exclusive’ heads of power that have substantive content.” (See para. 105).

Counsel for the Attorney General of British Columbia: Joseph Arvay, Q.C., Catherine Boies Parker, Q.C., Derek Ball (Arvay Finlay LLP, Vancouver), G. Morley

Counsel for the Attorney General of Canada: Jan Brongers, B. J. Wray, Christopher Rupar, Jonathan Khan (Justice Canada, Vancouver)

Counsel for the Interested Person, Attorney General of Alberta: Peter Gall, Andrea Zwack (Gall Legge Grant Zwack LLP, Vancouver)

Counsel for the Interested Person, Attorney General of Saskatchewan: Thomas Irvine, Katherine Roy (Min. of Justice (SK) Constitutional Law Branch, Regina)

Counsel for the Interested Person, City of Vancouver: S Horne

Counsel for the Interested Person, City of Burnaby: Gregory McDade, Q.C., Michelle Bradley (Ratcliff & Company LLP, North Vancouver)

Counsel for the Interested Person, EcoJustice Canada: Harry Wruck, Q.C., Kegan Pepper-Smith (Ecojustice Canada Society, Vancouver)

Counsel for the Interested Persons, The Council of the Haida Nation: David Paterson (Paterson Law Office, Surrey); Terri-Lynn Williams-Davidson (White Raven Law Corporation, Surrey)

Counsel for the Interested Persons, The Heiltsuk First Nation: Lisa Fong (Ng Ariss Fong, Lawyers, Vancouver); Katherine Webber (Min. of Attorney General (BC), Victoria)

Counsel for the Interested Person, The Assembly of First Nations: Justin McGregor (Alexander Holburn Beaudin + Lang LLP, Vancouver)

Counsel for the Interested Persons, The Little Shuswap Lake Indian Band: Arthur Grant (Grant Kovacs Norell, Vancouver)

Counsel for the Interested Person, Trans Mountain Pipeline ULC: Maureen Killoran, Olivia Dixon (Osler, Hoskin & Harcourt LLP, Calgary)

Counsel for the Interested Persons, Beecher Bay First Nations, Songhees First Nation and T’Sou-Ke Nation: Robert Janes, Q.C. and Aria Laskin (JFK Law Corporation, Victoria)

Counsel for the Interested Persons, Lax Kw’alaams Band: Christoper Harvey and Robert Wickett, Q.C. (Mackenzie Fujisawa LLP, Vancouver)

Counsel for the Interested Person, Canadian Association of Petroleum Producers: Brad Armstrong, Q.C., Will Shaw, Lewis Manning (Lawson Lundell LLP, Vancouver), Nicholas Hughes (McCarthy Tetrault LLP, Vancouver)

Counsel for the Interested Person, Canadian Fuels Association: Geoffrey Cowper, Q.C., Daniel Byma (Fasken Martineau DuMoulin LLP, Vancouver)

Counsel for the Interested Person, Canadian Energy Pipeline Association: Michael Marion (Borden Ladner Gervais LLP, Calgary)

Counsel for the Interested Person, Enbridge Inc.: Maureen Killoran and Sean Sutherland (Osler, Hoskin & Harcourt LLP, Calgary)

Counsel for the Interested Persons, Coalition of Interested Parties: Alyssa Tomkins (CazaSaikaley LLP, Ottawa)

Counsel for the Interested Person, Railway Association of Canada: Nicholas Hughes, Emily MacKinnon, Sarah Blanco (McCarthy Tetrault LLP, Vancouver)

Counsel for the Interested Persons, Consortium of Energy Producers (Suncor et al.): William Kaplan and Catherine Beagan-Flood (Blake, Cassels & Graydon LLP, Vancouver)

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