Federal or Provincial Regulation? One of the Many Challenges Facing Energy Projects

Background

From the small town of Smithers, British Columbia, Michael Sawyer applied to the National Energy Board (the "NEB") requesting it to determine and issue a declaratory order that the Prince Rupert Gas Transmission Project (the "Project") was properly within federal jurisdiction, and therefore subject to regulation by the NEB. The NEB found that Sawyer failed to demonstrate on a prima facie basis that the Project was a federal work or undertaking and therefore not subject to NEB jurisdiction. Sawyer applied for judicial review of the NEB's decision and the Federal Court of Appeal unanimously granted Sawyer's appeal, remitting Sawyer's original application back to the NEB for redetermination.

The judgment of Sawyer v Transcanada Pipeline Limited, 2017 FCA 159, 2017 CarswellNat 3405 [Sawyer v Transcanada] is interesting for a number of reasons:

the facts demonstrate how significantly an individual may affect regulatory processes; the facts demonstrate the difficulties facing energy projects that are potentially subject to both provincial and federal regulation; and it provides a useful overview of how a court will likely consider, and how a regulatory tribunal should consider, whether or not a project is a federal work or undertaking. The NEB's Decision

Standing

Sawyer's application was preliminary. Subsection 12(1) of the National Energy Board Act, RSC 1985, c N-7 (the "Act") grants the NEB full and exclusive jurisdiction to determine whether an inquiry is required to determine if the NEB has jurisdiction over a given project. Accordingly, the NEB held it was not necessary to apply a standing test for Sawyer at this preliminary stage. The NEB noted it "would not be in the public interest to limit" the NEB's discretion to take action under section 12 of the Act. In short, any individual may be able to apply to the NEB to argue that the NEB should inquire into its jurisdiction over a proposed project.

Decision

The NEB engaged in a constitutional analysis by opening with reference to subsection 91(29) and 92(10)(a) of the Constitution Act (1867). The NEB noted these sections govern jurisdiction over works and undertakings, such as pipelines. Further, they stated the judgment of Westcoast Energy Inc v Canada (National Energy Board), [1998] 1 SCR 322, 156 DLR (4th) 456 [Westcoast Energy] remains the applicable law in regards to whether or not a pipeline falls under federal jurisdiction.

The NEB stated Sawyer was required to establish a...