Big News On Hydro One

Ontario has announced it will sell part of both the transmission and distribution components of Hydro One. An initial public offering of 15 per cent is expected by 2016, with further shares to be sold over time. Ontario intends to retain a 40 per cent ownership stake.

This decision follows the final report from the Advisory Council on Government Assets (Report). The Report and the decision have triggered responses from various stakeholders, including First Nations leaders, some of whom have claimed a lack of required consultation about the sale.

Could First Nations demand consultation on the Hydro One privatization?

The duty to consult is triggered when the Crown has real or constructive knowledge of Aboriginal rights, and contemplates a decision which has the potential to adversely affect to those rights. The leading case is the Rio Tinto decision,1 in which the Supreme Court of Canada considered whether the duty was triggered in relation to a power purchase agreement. In considering the case, the Court cast a wide net in relation what could qualify as 'government action':

Government action is not confined to decisions or conduct which have an immediate impact on lands and resources. A potential for adverse impact suffices. Thus, the duty to consult extends to 'strategic, higher level decisions' that may have an impact on Aboriginal claims and rights.2

Some First Nations leaders are saying that the Hydro One decision is such a "strategic, higher level decision" because it may "set(s) the stage for further decisions that will have a direct adverse impact on land and resources." Given the nature of Hydro One's business in managing new and legacy transmission and distribution projects, and the impact that such projects can have on lands and resources, it may be the decision to privatize could fit within this definition.

The case law has also specifically considered the issues of whether authorizing a change in control over resources may trigger the duty. In one such case, a community successfully challenged British Columbia's approval of the transfer of control of a company which held tree farm and forest licences from a Crown corporation to a private entity. The Court held that this decision triggered the duty because it changed the identity of the controlling mind managing the resource, and its governing philosophy.3

In another case,4 B.C. awarded the right to develop a ski area plan to a new development group without consulting or...