Quebec (Attorney General) v. Canada (National Energy Board)

Quebec (Attorney General) v. Canada (National Energy Board)
Collection
Supreme Court Judgments
Date
1994-02-24
Report
[1994] 1 SCR 159
Case number
22705
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.
On appeal from
Federal Court of Appeal
Subjects
Public utilities
Notes
SCC Case Information: 22705
Decision Content
Quebec (Attorney General) v. Canada (National Energy Board), [1994] 1 S.C.R. 159
The Grand Council of the Crees (of Quebec)
and the Cree Regional Authority Appellants
v.
The Attorney General of Canada, the Attorney
General of Quebec, Hydro‑Québec and the
National Energy Board Respondents
and
Sierra Legal Defence Fund, Canadian
Environmental Law Association, Cultural
Survival (Canada), Friends of the Earth
and Sierra Club of Canada Interveners
Indexed as: Quebec (Attorney General) v. Canada (National Energy Board)
File No.: 22705.
1993: October 13; 1994: February 24.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
on appeal from the federal court of appeal
Public utilities ‑‑ Electricity ‑‑ Licences ‑‑ National Energy Board granting licences for export of electrical power to U.S. ‑‑ Licences granted subject to environmental assessments of future generating facilities ‑‑ Whether Board erred in granting licences ‑‑ National Energy Board Act, R.S.C., 1985, c. N‑7 ‑‑ Environmental Assessment and Review Process Guidelines Order, SOR/84‑467.
Following lengthy public hearings at which the appellants made numerous submissions, the National Energy Board granted Hydro‑Québec licences for the export of electrical power to the states of New York and Vermont. At the time the licence applications were filed, the Board was required to satisfy itself both that the power sought to be exported was not needed to meet reasonably foreseeable Canadian requirements and that the price to be charged by the power authority was just and reasonable in relation to the public interest. After the hearings but prior to the Board's ruling, these two explicit criteria were removed from the National Energy Board Act , leaving only the requirement that the Board is to have regard to all conditions that appear to it to be relevant. In evaluating the environmental impact of the applications, the Board considered itself bound by both its own Act as amended and the Environmental Assessment and Review Process Guidelines Order. The licences were granted subject to two conditions relating to the successful completion of environmental assessments of future generating facilities. The Federal Court of Appeal rejected the appellants' argument that the Board erred in several respects in granting the licences, but allowed the appeal by Hydro‑Québec and the Attorney General of Quebec, concluding that the Board had exceeded its jurisdiction in imposing the environmental assessment conditions. It severed these two conditions and allowed the licences to stand. This appeal is to determine (1) whether the Board properly conducted the required social cost‑benefit review; (2) whether the Board's failure to require that Hydro‑Québec disclose in full the assumptions and methodologies on which its cost‑benefit review was based breached the requirements of procedural fairness; (3) whether the Board owed the appellants a fiduciary duty in the exercise of its decision‑making power, and, if so, whether the requirements of this duty were fulfilled; (4) whether the Board's decision affects the appellants' aboriginal rights; and (5) whether the Board failed to follow the requirements of its own Act and of the Guidelines Order in conducting its environmental impact assessment.
Held: The appeal should be allowed and the order of the Board restored.
Hydro‑Québec provided evidence on which the Board could reasonably conclude that the consideration of cost recoverability was satisfied. The Board did not err in considering relevant to this issue the fact that the export contracts had received the approval of the province. Also, as this was only one of the factors considered, the Board did not improperly delegate its decision-making responsibility. It has not been shown that the Board's discretion to determine what evidence is relevant to its decision was improperly exercised in this case so as to result in inadequate disclosure to the appellants. The Board had sufficient evidence before it to make a valid finding that all costs would be recovered, and the appellants were given access to all the material before the Board. While there is a fiduciary relationship between the federal Crown and the aboriginal peoples of Canada, the function of the Board in deciding whether to grant an export licence is quasi‑judicial and inherently inconsistent with the imposition of a relationship of utmost good faith between the Board and a party appearing before it. The fiduciary relationship between the Crown and the appellants thus does not impose a duty on the Board to make its decisions in the appellants' best interests, or to change its hearing process so as to impose superadded requirements of disclosure. Moreover, even assuming that the Board should have taken into account the existence of the fiduciary relationship between the Crown and the appellants, the Board's actions in this case would have met the requirements of such a duty. The appellants had access to all the evidence that was before the Board, were able to make submissions and argument in reply, and were entitled to cross‑examine the witnesses called by Hydro‑Québec. On the issue of whether the Board's decision will have a negative impact on the appellants' aboriginal rights, it is not possible to evaluate realistically the impact of the Board's decision on the appellants' rights without reference to the James Bay Agreement, on which the appellants disavowed reliance. Moreover, even assuming that the Board's decision is one that has, prima facie, an impact on the appellants' aboriginal rights, and that for the Board to justify its interference it must at the very least conduct a rigorous, thorough, and proper cost‑benefit review, the review carried out in this case was not wanting in this respect.
The Board did not exceed its jurisdiction under the National Energy Board Act in considering the environmental effects of the construction of future generating facilities as they related to the proposed export, an area of federal responsibility. The Court of Appeal erred in limiting the scope of the Board's environmental inquiry to the effects on the environment of the transmission of power by a line of wire across the border. Even though the Board found that the new facilities contemplated would have to be built in any event to supply increasing domestic needs, if the construction of new facilities is required to serve the demands of the export contract, among other needs, then the environmental effects of the construction of such facilities are related to the export. In these circumstances, it becomes appropriate for the Board to consider the source of the electrical power to be exported, and the environmental costs that are associated with the generation of that power. In defining the jurisdictional limits of the Board, this Court must be careful to ensure that the Board's authority is truly limited to matters of federal concern, but the scope of its inquiry must not be narrowed to such a degree that the function of the Board is rendered meaningless or ineffective. The Board met its obligations under the Guidelines Order in attaching to the licence the two impugned conditions. Having concluded that the environmental effects of the construction and operation of the planned facilities were unknown, the Board was required by s. 12(d) of the Order to see either that the proposal was subjected to further study and subsequent rescreening, or that it was submitted to a public review. The conditions imposed by the Board meet in substance this obligation. They do not amount to an improper delegation of the Board's responsibility under the Guidelines Order, but rather are an attempt to avoid the duplication warned against in the Order, while continuing the Board's jurisdiction over this matter.
Cases Cited
Referred to: R. v. Sparrow, [1990] 1 S.C.R. 1075; Bell Canada v. Canada (Canadian Radio‑television and Telecommunications Commission), [1989] 1 S.C.R. 1722; In re Canadian Radio‑Television Commission and in re London Cable TV Ltd., [1976] 2 F.C. 621; Parke, Davis & Co. v. Fine Chemicals of Canada Ltd., [1959] S.C.R. 219; Martineau v. Matsqui Institution Disciplinary Board, [1980] 1 S.C.R. 602; Cardinal v. Director of Kent Institution, [1985] 2 S.C.R. 643; Lakeside Colony of Hutterian Brethren v. Hofer, [1992] 3 S.C.R. 165; Guerin v. The Queen, [1984] 2 S.C.R. 335; Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574; Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369; Gitludahl v. Minister of Forests, B.C.S.C., Vancouver A922935, August 13, 1992; Dick v. The Queen, F.C.T.D., T‑951‑89, June 3, 1992; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3; Canadian Wildlife Federation Inc. v. Canada (Minister of the Environment) (1989), 4 C.E.L.R. (N.S.) 201 (F.C.T.D.), aff'd [1991] 1 F.C. 641 (C.A.); Friends of the Island Inc. v. Canada (Minister of Public Works), [1993] 2 F.C. 229.
Statutes and Regulations Cited
Act to amend the National Energy Board Act and to repeal certain enactments in consequence thereof, S.C. 1990, c. 7, s. 32.
Constitution Act, 1867, s. 91(2) .
Constitution Act, 1982, s. 35(1) .
Environmental Assessment and Review Process Guidelines Order, SOR/84‑467, ss. 2, 3, 4(1), 5(1), 6, 8, 10(2), 12.
Hydro‑Québec Act, R.S.Q., c. H‑5, s. 24.
James Bay and Northern Quebec Native Claims Settlement Act, S.C. 1976‑77, c. 32 .
National Energy Board Act, R.S.C., 1985, c. N‑7 [am. 1990, c. 7], ss. 2 , 22(1) , 24, 118 , 119.02 , 119.03 , 119.06(2) , 119.07 , 119.08 , 119.09 , 119.093 .
National Energy Board Part VI Regulations, C.R.C. 1978, c. 1056, ss. 6, 15(m).
Authors Cited
Canada. Energy, Mines and Resources Canada. Canadian Electricity Policy. Ottawa: Energy, Mines and Resources Canada, 1988.
Canada. National Energy Board. The Regulation of Electricity Exports: Report of an Inquiry By a Panel of the National Energy Board Following a Hearing in November and December 1986. Ottawa: The Board, 1987.
APPEAL from a judgment of the Federal Court of Appeal, [1991] 3 F.C. 443, 83 D.L.R. (4th) 146, 7 C.E.L.R. (N.S.) 315, 132 N.R. 214, severing conditions from licences granted by the National Energy Board, [1991] 2 C.N.L.R. 70, and allowing the licences to stand. Appeal allowed.
Robert Mainville, Peter W. Hutchins and Johanne Mainville, for the appellants.
Jean‑Marc Aubry, Q.C., and René LeBlanc, for the respondent the Attorney General of Canada.
Pierre Lachance and Jean Robitaille, for the respondent the Attorney General of Quebec.
Pierre Bienvenu, Jean G. Bertrand and Bernard Roy, for the respondent Hydro‑Québec.
Judith B. Hanebury, for the respondent the National Energy Board.
Gregory J. McDade and Stewart A. G. Elgie, for the interveners.
The judgment of the Court was delivered by
IACOBUCCI J. -- This appeal arises from the decision of the respondent National Energy Board ("the Board") to grant to the respondent Hydro-Québec licences for the export of electrical power to the states of New York and Vermont. This decision followed lengthy public hearings at which the Grand Council of the Crees (of Quebec) and the Cree Regional Authority ("the appellants"), along with other concerned groups, made numerous submissions.
The Attorneys General of Quebec and of Canada appeared as respondents to this appeal, as did the Board. The Court also heard the joint submissions of the Sierra Legal Defence Fund, the Canadian Environmental Law Association, Cultural Survival (Canada), Friends of the Earth and the Sierra Club of Canada ("the interveners").
The appellants argued before the Federal Court of Appeal that the Board erred in several respects in granting the licences. The respondents Hydro-Québec and the Attorney General of Quebec claimed that the Board erred in making the granting of the licences conditional on the successful completion of environmental assessments of the power generation facilities contemplated by Hydro-Québec for future construction. The Federal Court of Appeal rejected the argument of the appellants, and concluded that the Board had erred in imposing the conditions impugned by the respondents. The Court of Appeal severed these conditions, and allowed the licences to stand. The appellants now appeal to this Court.
I.Facts
On July 28, 1989, Hydro-Québec applied to the Board for licences to export blocks of power to New York and Vermont. These applications involved nine blocks of power which were to be provided over periods ranging from five to twenty-two years, pursuant to two agreements signed with the U.S. power companies that covered a total of 1 450 MW of power and were projected to generate nearly $25 billion in income for Hydro-Québec. The purpose of the export was to raise sufficient revenue such that Hydro-Québec would be able to implement its development plan for expansion to meet the constantly rising demand for the provision of electrical services within the province.
The Board held public hearings during the months of February and March of 1990 on the application for licences for export. A number of interested parties, including the appellants, took part. At the time the applications were filed, the Board was required by s. 118 of the National Energy Board Act, R.S.C., 1985, c. N-7 , to satisfy itself both that the power sought to be exported was not needed to meet reasonably foreseeable Canadian requirements at the relevant times, and that the price to be charged by the power authority was just and reasonable. After the hearings but prior to the Board's ruling, s. 118 was modified by the Act to amend the National Energy Board Act and to repeal certain enactments in consequence thereof, S.C. 1990, c. 7 ("Bill C-23"). These two explicit criteria were removed from the statute, leaving only the requirement that the Board is to have regard to all conditions that appear to it to be relevant. The parties made submissions before the Board on the effect of these amendments.
On September 27, 1990, the Board granted the export licences, subject to a list of conditions. The appellants appealed the Board's decision to grant the licences to the Federal Court of Appeal. The respondents Hydro-Québec and the Attorney General of Quebec also appealed the decision of the Board, challenging the validity of the imposition of two of the conditions to the licences, which related to environmental assessment of future generating facilities. The Federal Court of Appeal unanimously dismissed the appellants' appeal and allowed the appeal of Hydro-Québec and the Attorney General of Quebec. The Court of Appeal severed the two conditions but otherwise allowed the licences to stand.
II.Relevant Statutory Provisions
National Energy Board Act, R.S.C., 1985, c. N-7 (as amended by S.C. 1990, c. 7):
2. In this Act,
. . .
"export" means, with reference to
(a) electricity, to send from Canada by a line of wire or other conductor electricity produced in Canada,
. . .
22. (1) An appeal lies from a decision or order of the Board to the Federal Court of Appeal on a question of law or of jurisdiction, after leave to appeal is obtained from that Court.
24. (1). . . hearings before the Board with respect to the issuance, revocation or suspension of certificates or of licences for the exportation of gas or electricity or the importation of gas or for leave to abandon the operation of a pipeline shall be public.
119.02 No person shall export any electricity except under and in accordance with a permit issued under section 119.03 or a licence issued under section 119.08.
119.03 (1) Except in the case of an application designated by order of the Governor in Council under section 119.07, the Board shall, on application to it and without holding a public hearing, issue a permit authorizing the exportation of electricity.
(2) The application must be accompanied by the information that under the regulations is to be furnished in connection with the applica­tion.
119.06 (1) The Board may make a recommendation to the Minister, which it shall make public, that an application for exportation of electricity be designated by order of the Governor in Council under section 119.07, and may delay issuing a permit during such period as is necessary for the purpose of making such an order.
(2) In determining whether to make a recommendation, the Board shall seek to avoid the duplication of measures taken in respect of the exportation by the applicant and the government of the province from which the electricity is exported, and shall have regard to all consider­ations that appear to it to be relevant, including
. . .
(b) the impact of the exportation on the environment;
. . .
(d) such considerations as may be specified in the regulations.
119.07 (1) The Governor in Council may make orders
(a) designating an application for exportation of electricity as an application in respect of which section 119.08 applies; and
(b) revoking any permit issued in respect of the exportation.
. . .
(3) Where an order is made under subsection (1),
(a) no permit shall be issued in respect of the application; and
(b) any application in respect of the exportation shall be dealt with as an application for a licence.
119.08 (1) The Board may, subject to section 24 and to the approval of the Governor in Council, issue a licence for the exportation of electricity in relation to which an order made under section 119.07 is in force.
(2) In deciding whether to issue a licence, the Board shall have regard to all considerations that appear to it to be relevant.
119.09 (1) The Board may, on the issuance of a permit, make the permit subject to such terms and conditions respecting the matters prescribed by the regulations as the Board considers necessary or desirable in the public interest.
(2) The Board may, on the issuance of a licence, make the licence subject to such terms and conditions as the Board may impose.
119.093 (1) The Board may revoke or suspend a permit or licence issued in respect of the exportation of electricity
. . .
(b) where a holder of the permit or licence has contravened or failed to comply with a term or condition of the permit or licence.
National Energy Board Part VI Regulations, C.R.C. 1978, c. 1056:
6. (1) Every applicant for a licence for the exportation of power shall furnish to the Board such information as the Board may require.
(2) Without restricting the generality of subsection (1), the information required to be furnished by any applicant described in subsection (1) shall, unless otherwise authorized by the Board, include
. . .
(y) evidence that the applicant has obtained any licence, permit or other form of approval required under any law of Canada or a province respecting the electric power proposed to be exported;
(z) evidence to demonstrate that the price to be charged by the applicant for electric power and energy exported by him is just and reasonable in relation to the public interest, and in particular that the export price
(i) would recover its appropriate share of the costs incurred in Canada,
(ii) would not be less than the price to Canadians for equivalent service in related areas, and
(iii) would not result in prices in the country to which the power is exported being materially less than the least cost alternative for power and energy at the same location within that country; and
(aa) evidence on any environmental impact that would result
from the generation of the power for export.
15. Every licence for the export of electric power and energy is subject to such terms and conditions as the Board may prescribe and, without restricting the generality of the foregoing, is subject to every statement set out by the Board in the licence respecting
. . .
(m) the requirements for environmental protection.
Environmental Assessment and Review Process Guidelines Order, SOR/84-467:
2. In these Guidelines,
. . .
"proposal" includes any initiative, undertaking or activity for which the Government of Canada has a decision making responsibility.
3. The Process shall be a self assessment process under which the initiating department shall, as early in the planning process as possible and before irrevocable decisions are taken, ensure that the environmental implications of all proposals for which it is the decision making authority are fully considered and where the implications are significant, refer the proposal to the Minister for public review by a Panel.
4. (1) An initiating department shall include in its consideration of a proposal pursuant to section 3
(a) the potential environmental effects of the proposal and the social effects directly related to those environmental effects, including any effects that are external to Canadian territory; and
(b) the concerns of the public regarding the proposal and its potential environmental effects.
5. (1) Where a proposal is subject to environmental regulation, independently of the Process, duplication in terms of public reviews is to be avoided.
(2) For the purpose of avoiding the duplication referred to in subsection (1), the initiating department shall use a public review under the Process as a planning tool at the earliest stages of development of the proposal rather than as a regulatory mechanism and make the results of the public review available for use in any regulatory deliberations respecting the proposal.
6. These Guidelines shall apply to any proposal
. . .
(b) that may have an environmental effect on an area of federal responsibility;
8. Where a board or an agency of the Government of Canada or a regulatory body has a regulatory function in respect of a proposal, these Guidelines shall apply to that board, agency or body only if there is no legal impediment to or duplication resulting from the application of these Guidelines.
10. (1) Every initiating department shall ensure that each proposal for which it is the decision making authority shall be subject to an environ­mental screening or initial assessment to determine whether, and the extent to which, there may be any potentially adverse environmental effects from the proposal.
(2) Any decisions to be made as a result of the environmental screening or initial assessment referred to in subsection (1) shall be made by the initiating department and not delegated to any other body.
12. Every initiating department shall screen or assess each proposal for which it is the decision making authority to determine if
(a) the proposal is of a type identified by the list described under paragraph 11(a) [one that would not produce any adverse environmental effects], in which case the proposal may automatically proceed;
(b) the proposal is of a type identified by the list under paragraph 11(b) [one that would produce significant adverse environmental
effects], in which case the proposal shall be referred to the Minister for public review by a Panel;
(c) the potentially adverse environmental effects that may be caused by the proposal are insignificant or mitigable with known technology, in which case the proposal may proceed or proceed with the mitigation, as the case may be;
(d) the potentially adverse environmental effects that may be caused by the proposal are unknown, in which case the proposal shall either require further study and subsequent rescreening or reassessment or be referred to the Minister for public review by a Panel;
(e) the potentially adverse environmental effects that may be caused by the proposal are significant, as determined in accordance with criteria developed by the Office in cooperation with the initiating department, in which case the proposal shall be referred to the Minister for public review by a Panel; or
(f) the potentially adverse environmental effects that may be caused by the proposal are unacceptable, in which case the proposal shall either be modified and subsequently rescreened or reassessed or be abandoned.
III.Judgments Below
A.National Energy Board, Decision No. EH-3-89, August 1990 (Fredette, Gilmour and Bélanger, members)
The Board wrote lengthy reasons for its decision, which set out in some detail the status of the applicant, Hydro-Québec, the nature of the licences for which Hydro-Québec was applying, and the evidence of the applicant as it related to surplus, price, and fair market access, the three criteria expressly set out in the former provisions of the National Energy Board Act . The Board also considered the nature of the export markets, the reliability of the system proposed for implementing the export contracts, and the environmental impact of the exports for which the applications were made.
The Board noted that, were the licences to be granted, sufficient power could be generated to service the contracts by the combined use of the existing facilities of Hydro-Québec as well as those contemplated by its development plan. In other words, the exports did not require the use of facilities other than those existing, or already planned. However, the Board found that some of the facilities contemplated by the development plan for future construction would need to be built earlier than if no power were to be exported. The Board then examined the submissions of the various interveners, along with those of the appellants, as to the advisability of granting the licences.
In its disposition of the application, the Board noted that the amendments to the National Energy Board Act had removed the express requirement that the Board satisfy itself that the power to be exported was surplus to reasonably foreseeable Canadian requirements, and that the price to be charged was just and reasonable in the public interest. Nonetheless, there was nothing in the amended Act which would preclude the Board from taking these factors into account. The Board therefore explicitly considered the issues of cost recovery and whether pricing was competitive to rates charged within Canada. On the issue of cost recovery, the Board concluded (at p. 30):
The Board notes that Hydro-Québec did provide information on the magnitude of the revenues expected to be generated by the proposed export sales and that these would be significant, totalling more than $24 billion. . . . In addition, Hydro-Québec provided some details on the methodology used in carrying out its feasibility study as well as on the economic, financial and other relevant assumptions underlying that analysis. The Board has examined this information and finds that the methodology and assumptions described are reasonable.
The Board was accordingly persuaded that the export price charged would provide for recovery of the applicable costs incurred in Canada.
In evaluating the environmental impact of the application, the Board considered itself bound by both its own Act and by the Environmental Assessment and Review Process Guidelines Order, SOR/84-467 ("the EARP Guidelines Order"). The Board held (at pp. 37-38):
The Board recognizes that when electric utilities negotiate long-term system-to-system firm sales agreements, there can be circumstances in such arrangements that require capacity to come from generating facilities to be built at some future date and for which the necessary detailed environmental assessments have not been completed at the time of the export application. The proposed export contracts now before the Board have been negotiated on this basis. Nonetheless, for the Board to reach its decision on Hydro-Québec's applications, and at the same time meet its obligations under the Act and EARP Guidelines Order, it must take into account the environmental impacts arising from the construction of such future facilities.
The Board granted the applications subject to several conditions. In particular, in order to satisfy itself that the electricity to be exported would originate from facilities that had been subjected to the appropriate environmental reviews, the Board attached to the licence the following two conditions:
10. This licence remains valid to the extent that
(a)any production facility required by Hydro-Québec to supply the exports authorized herein, for which construction had not yet been authorized pursuant to the evidence presented to the Board at the EH-3-89 hearing that ended on 5 March 1990, will have been subjected, prior to its construction, to the appropriate environmental assessment and review procedures as well as to the applicable environmental standards and guidelines in accordance with federal government laws and regulations.
(b)Hydro-Québec, following any of the environmental assessment and review procedures mentioned in subcondition (a), will have filed with the Board
i) a summary of all environmental impact assessments and reports on the conclusions and recommendations arising from the said assessment and review procedures;
ii) governmental authorizations received; and
iii) a statement of the measures that Hydro-Québec intends to take to minimize the negative environmental impacts.
11. The generation of thermal energy to be exported hereunder shall not contravene relevant federal environmental standards or guidelines.
B.Federal Court of Appeal, [1991] 3 F.C. 443 (Pratte, Marceau and Desjardins JJ.A.)
Writing for the Federal Court of Appeal, Marceau J.A. dealt first with the validity of conditions 10 and 11 to the licence. He noted that the Board had imposed those conditions so as to meet its perceived mandate under the EARP Guidelines Order. In his view, this raised the questions of the application of this Order to the Board, and to Hydro-Québec as an agent of the Crown in right of the Province, as well as the question of the constitutional validity of the Order itself.
However, Marceau J.A. held that he did not have to deal with these concerns, since it was clear that, in this case, the imposition by the Board of the conditions to the licence emanated from its concerns as to the potential effects of the eventual construction of the production facilities planned to meet the increased demand for electrical power. Marceau J.A. held that the Board had no jurisdiction to make the granting of a licence to export certain goods subject to conditions which pertained to their production. He stated (at pp. 450-51):
The factors which may be relevant in considering an application for leave to export electricity and the conditions which the Board may place on its leave clearly cannot relate to anything but the export of electricity. Section 2 of the Act defines what is meant by export (in French "exportation") in the case of electricity:
2. ...
"export" means, with reference to
(a) power, to send from Canada by a line of wire or other
conductor power produced in Canada...
It seems clear that, as it is understood in the Act with respect to electricity, export does not cover production itself, and it is only reasonable that this should be so. Of course, anyone wishing to export a good must produce it or arrange for it to be produced elsewhere, but when he produces it or arranges for its production elsewhere he is not exporting it, and when he is exporting it he is not producing it.
I do not think anyone would dispute for a moment that in considering an application for leave to export electricity, the Board must be concerned about the environmental consequences, since the public interest is involved. . . . However, the only question can be as to the environmental consequences of the export, namely the consequences for the environment of "[sending] from Canada . . . power produced in Canada".
Marceau J.A. held that the Board had therefore exceeded its jurisdiction in affixing to the licence conditions 10 and 11. That did not mean, however, that the entire decision was vitiated. Marceau J.A. found the two sections to be severable from the remainder of the licence.
Marceau J.A. then considered the contention of the appellants that the Board erred in its decision to grant the licences. The appellants argued that the Board erred in taking into account the amendments to the National Energy Board Act which came into force while its decision was reserved. In the version of the Act in force at the time of the application, and at the time of the subsequent hearing, applicants for licences were required to satisfy the Board that the export price charged would recover the appropriate share of the costs incurred in Canada. This condition was deleted from the version of the Act in force at the time that the decision was rendered. The appellants argued that, in following the new provisions, the Board applied the requirement of cost recovery incorrectly.
Marceau J.A. noted that the new Act was designed to deregulate and simplify the licence application process. The express requirement of cost recovery had been deleted. The new provisions simply required the Board to take into consideration all factors which appeared to it to be relevant. Marceau J.A. held that the Board was correct in considering itself bound by the new provisions of the Act. Nonetheless, he found that, even if he was incorrect in so concluding, the argument of the appellants did not lead anywhere. The Board chose, despite the amendments, to analyze the application in light of the former price criteria.
The appellants argued in the alternative that, if the Board did consider the issue of cost recovery, it could not have concluded that this requirement was met, since there was no direct evidence before the Board on this point. Marceau J.A. agreed that the evidence on this point was not direct in all respects. In particular, the financial data relating to proposed production facilities was reviewed by an accountant, who then testified as to its veracity. He held, however, that nothing required the Board to decide this point on direct evidence. There was persuasive indirect evidence before it. To reevaluate the weight of this evidence was not a task for the courts, since appeals from decisions of the Board were limited by s. 22 of the National Energy Board Act to questions of law or jurisdiction.
IV.Issues on Appeal
Although the parties to this appeal have made numerous specific allegations of error on the part of the Board and of the Court of Appeal, discussed individually below, the issues in this appeal can be reduced to the following three questions:
1.Did the Federal Court of Appeal err in holding that the National Energy Board acted within its jurisdiction in granting the export licences to the respondent Hydro-Québec?
2.Did the Federal Court of Appeal err in holding that the National Energy Board erred in the exercise of its jurisdiction in its imposition of conditions 10 and 11 of the licences?
3.If the Federal Court of Appeal was not in error with respect to these two findings, did it nonetheless err in holding that conditions 10 and 11 were severable from the rest of the licences?
V.Analysis
The appellants challenge on a number of grounds the validity of the decision of the Board to grant the export licences. First, the appellants argue that the Board did not properly conduct the required social cost-benefit review. Second, they argue that the failure of the Board to require that Hydro-Québec disclose in full the assumptions and methodologies on which its cost-benefit review was based breached the requirements of procedural fairness by depriving the appellants of the opportunity for full participation in the review process. Third, the appellants argue that the Board owed them a fiduciary duty in the exercise of its decision-making power, and that the requirements of this duty were not fulfilled. Fourth, the appellants assert that the decision of the Board affects their aboriginal rights, and that the Board is therefore required to meet the justification test set out by this Court in R. v. Sparrow, [1990] 1 S.C.R. 1075. Finally, the appellants submit that the Board failed to follow the requirements of its own Act and of the EARP Guidelines Order in conducting its environmental impact assessment. I will consider each of these arguments in turn.
A. Social Cost-Benefit Review
The appellants argue that the Board was required to carry out a social cost-benefit review which would consider all direct and indirect costs, including economic and social costs, arising from the exports for which the licences were sought. The appellants claim that, in relying on solely the indirect evidence of Hydro-Québec and the fact that the proposal had been approved by the government of Quebec, the Board failed to carry out this review properly. The duty to carry out such a review is ostensibly found in the National Energy Board Part VI Regulations, s. 6(2)(z)(i), which states:
6. (1) Every applicant for a licence for the exportation of power shall furnish to the Board such information as the Board may require.
(2) Without restricting the generality of subsection (1), the information required to be furnished by any applicant described in subsection (1) shall, unless otherwise authorized by the Board, include
. . .
(z) evidence to demonstrate that the price to be charged by the applicant for electric power and energy exported by him is just and reasonable in relation to the public interest, and in particular that the export price
(i) would recover its appropriate share of the costs incurred in Canada,
It appears that both the Canadian Electricity Policy, September 1988, and the Board's own internal report, entitled The Regulation of Electricity Exports, June 1987, interpret this requirement to mean that all direct and indirect costs, including environmental, land use, and economic costs ("social costs"), should be considered. However, I need express no opinion on the correctness of these interpretations or on whether the requirement in the regulations that the applicant for a licence furnish such evidence also means that the Board is required to consider it, especially in light of s. 119.08(2) of the Act, which gives the Board the discretion to determine which considerations are relevant to its decision, and of the terms of s. 6(2) itself, which gives the Board the authority to dispense with proof of any of the items specifically enumerated thereafter. In this case, it is clear that the Board considered that evidence of the nature and recoverability of such costs was relevant to its decision (reasons of the Board, at p. 29).
While the respondents are correct in asserting that the principle of curial deference applies to the weighing of the evidence by the Board in the exercise of its discretion, this principle cannot be invoked to save a decision for which there is no foundation in the evidence or that is based on irrelevant considerations. Once the Board decides that a particular factor is relevant to its decision, there must be some evidence to support the conclusion reached relating to it. The Board must not act unreasonably in evaluating the evidence it requests to make its decision: Bell Canada v. Canada (Canadian Radio-television and Telecommunications Commission), [1989] 1 S.C.R. 1722.
However, in this appeal, it cannot be said that the Board was without evidence on which it could reasonably have concluded that the consideration of cost recoverability was satisfied. The Board, in its decision, summarized the evidence given by Hydro-Québec on this point as follows (at p. 13):
Hydro-Québec did not supply the Board with copies of the cost-benefit analyses for the advancement of facilities required to meet its obligations under the two contracts. Nevertheless it did provide info