Canada: Alberta Court Of Appeal Reconfirms That The Surface Rights Board's Role Is Ancillary To Regulators Who Authorize Or Permit Energy Development

On June 9, 2015, the Alberta Court of Appeal released its memorandum of judgment (issued orally from the bench on May 7, 2015) in Togstad v Alberta (Surface Rights Board) 2015 ABCA 192 (found here). On appeal were two separate decisions from the Alberta Court of Queen's Bench, namely Togstad v Alberta (Surface Rights Board), 2014 ABQB 485 and Kure v Alberta (Surface Rights Board), 2014 ABQB 572. The Court of Appeal dismissed the appeals, upheld the decisions of the Court of Queen's Bench, and stated that the appellant's judicial review applications, which challenged the decision of the Alberta Surface Rights Board ("SRB"), were a collateral attack on a decision made by the Alberta Utilities Commission ("AUC").

AltaLink Management Ltd. ("AltaLink") obtained a permit and license from the AUC to construct and operate the Western Alberta Transmission Line ("WATL"). The AUC had determined, in an extensive proceeding, that WATL is wholly within Alberta. Togstad and the Kures had challenged the decision of the SRB to grant a right of entry over their property for the purpose of the construction of the Western Alberta Transmission Line ("WATL"). The crux of Togstad and Kures' position was that WATL is an inter-provincial undertaking and is therefore beyond the jurisdiction of the Alberta regulators.

The Court of Appeal held that the AUC was the appropriate regulatory forum to consider the question of whether the transmission line is an interprovincial work and no appeal was taken from that decision. The Court of Appeal went on to note that the SRB's jurisdiction was ancillary to the AUC's jurisdiction and the SRB cannot exercise its jurisdiction so as to effectively repeal a permit granted by the AUC. Further, the SRB is statutorily prohibited from making an order that is inconsistent with the AUC's permit. Finally, the Court of Appeal held that the SRB had no jurisdiction to consider constitutional questions.

The Court of Appeal concluded that the appellants' objections were collateral attacks on the AUC's decision. By seeking to raise the question again before the SRB, the appellants were attempting to circumvent the AUC's order and were forum shopping for a better result.

The AUC Decision

AltaLink obtained a permit and license from the AUC to construct and operate WATL. It was argued before the AUC, that WATL is an interprovincial work as it is designed to connect Alberta with other provincial or international works and undertakings. The AUC had determined, in an extensive proceeding, that WATL is not an interprovincial work and is wholly within Alberta.

The SRB Decisions

AltaLink Management Ltd. v Togstad, 2013 ABSRB 576.

AltaLink Management Ltd. ("AltaLink") had sought a right of entry order ("RoE") over Togstad's lands for the purposes of the construction of WATL. Togstad had opposed the application on the basis that he should be entitled to an oral hearing, that he should be entitled to file further evidence not currently before the SRB and, lastly, that the SRB should reject AltaLink's application because the approval of WATL by the AUC was not within the AUC's constitutional jurisdiction.

The SRB rejected Togstad's submissions and determined that an oral hearing was unnecessary, and that the necessary documents to assess AltaLink's application were properly before the SRB. The SRB determined that Togstad's submissions amounted to a collateral attack on the AUC's previous decision and the SRB did not have jurisdiction to decide a question of constitutional law. AltaLink was accordingly granted the RoE over Togstad's lands.

AltaLink Management Ltd. v Kure, 2014 ABSRB 263

AltaLink sought a similar RoE over the Kures' land for the construction of WATL. The Kures advanced similar arguments to Togstad, namely that the SRB should refuse to grant the RoE as WATL was outside of the constitutional jurisdiction of the AUC.

In this decision, the SRB stated explicitly that the Kures' arguments were a collateral attack on the AUC's decision, and that the SRB was not the proper forum to challenge the previous decision of the AUC. AltaLink was also granted the RoE over the Kures' lands.

The QB Decisions

Togstad:

Togstad's sought judicial review at the Court of Queen's Bench on the basis that:

  1. the SRB erred in declining to make a decision with respect to its jurisdiction to deal with WATL;
  2. the SRB erred in failing to give Togstad a reasonable opportunity to provide relevant evidence that WATL was an interprovincial work or undertaking; and
  3. the legislation allowing the AUC to approve WATL pertains to interprovincial undertakings and is beyond the competence of the Alberta Legislature.

The Court determined that pursuant to the Hydro and Electric Energy Act, the AUC had the jurisdiction to determine if WATL was wholly in Alberta, and accordingly not an interprovincial work. Having concluded that WATL was, in fact, wholly in Alberta, the AUC's decision could have been challenged only by way of appeal to the Court of Appeal. Because Togstad failed to do so, he was now barred from arguing these issues.

The Court, following earlier cases that had decided the role of the SRB with respect to the decisions approving or authorizing energy development (see for example, Mueller 2011 ABQB 738: found here), also determined that the SRB was required to comply with the decision of the AUC in approving WATL. The Court found that the SRB did not have jurisdiction to question the constitutionality of the AUC's decision or the legislation pursuant to which it made that determination because its role is "ancillary and in aid of prior decisions of licensing authorities such as the AUC". Any attempt by the SRB to examine the constitutionality of the AUC's jurisdiction would be an attempt to "frustrate the AUC's jurisdiction via an application to the SRB," and the SRB was correct in declining to do so. As such, Togstad's application for judicial review was dismissed in its entirety.

The Kures:

On judicial review, the Alberta Court of Queen's Bench determined that the Kures' application was, similar to Togstad, a collateral attack on the AUC's decision. The Kures' primary argument was that WATL was not wholly within Alberta, and accordingly outside of the jurisdiction of the AUC to approve the project. The Kures argued that the SRB could have and should have rejected AltaLink's application for the RoE over their lands because the AUC was wrong to approve WATL.

The Court emphasized that the SRB's role is limited to granting RoEs that are consistent with permits previously granted by the AUC, and that the SRB's deference to the decisions of the AUC is unassailable. Accordingly, the Kures' judicial review application was dismissed in its entirety.

Court of Appeal Decision

Togstad and the Kures appealed the Queen's Bench decisions to the Albert Court of Appeal. The appeal was based on two grounds: (i) Togstad argued that his objection was not constitutional in nature and only required the SRB to determine the nature of the transmission line as a question of fact; and (ii) both Togstad and the Kures argued that the SRB and the Queen's Bench judges erred in finding that the objections were collateral attacks on the AUC's decision.

With respect to the first argument, the Court of Appeal held that Togstad had framed his objection in constitutional terms and it was accompanied by a Notice of Constitutional Question. The Court of Appeal stated that an inquiry into whether a transmission line is interprovincial necessarily involves constitutional considerations. The Court of Appeal went on to note that Togstad could not now argue that the SRB erred in treating it as such.

With respect to the second argument, the Court of Appeal reviewed the law on collateral attack and stated that the rule prevents a party from attempting to challenge the validity of a binding order in the wrong forum and it precludes a party from forum shopping for a different and better result. The Court of Appeal stated that the AUC was the appropriate regulatory forum to consider the question of whether the transmission line is an interprovincial work. The Court of Appeal reiterated the statements made in the Queen's Bench and stated that the SRB's jurisdiction is ancillary to the AUC's. The SRB cannot exercise its jurisdiction so as to effectively repeal a permit granted by the AUC. Further, the SRB is statutorily prohibited from making an order which is inconsistent with the AUC's permit. Finally the Court of Appeal stated that the SRB has no jurisdiction to consider constitutional questions.

In summary, the Court of Appeal stated that the appellants' objections were collateral attacks on the AUC's decision. By seeking to raise the question again before the SRB, the appellants were attempting to circumvent the AUC's order and were forum shopping for a different result. As such, the appeals were dismissed.

Implications

The Court of Appeal decision, as well as the other cases, confirm again that if a landowner or other interested party wishes to challenge the constitutionality of an energy development, the SRB is not the correct venue to do so. Constitutional challenges must be made before the administrative tribunal approving the development (such as the AUC) and, if necessary, by seeking leave to appeal or reconsideration by the administrative tribunal. The AUC is one of a very few Alberta tribunals that can consider all constitutional questions, and is afforded that ability by provincial legislation. Further, the decision confirms that the SRB cannot exercise its jurisdiction as to effectively repeal a permit granted by the licensing authority (such as the AUC or the AER). The Togstad decision confirms that the SRB has the jurisdiction to control its own process and to decide whether an oral hearing is required in any particular case. Finally, these decisions further solidify the courts' reluctance to allow parties to make collateral attacks in final decisions which have not been appealed.

Borden Ladner Gervais LLP was co-counsel for AltaLink on both applications before the Alberta Court of Queen's Bench and counsel on the appeals before the Alberta Court of Appeal.

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