COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Carrier Sekani Tribal Council v.
British Columbia (Utilities Commission),

 

2009 BCCA 67

Date: 20090218

Docket: CA035715; CA035791

Between:

The Carrier Sekani Tribal Council

Appellant

(Applicant/Intervenor)

And

The British Columbia Utilities Commission and
British Columbia Hydro and Power Authority and Alcan Inc.
and The Attorney General of British Columbia

Respondents

(Respondents)

Before:

The Honourable Mr. Justice Donald

The Honourable Madam Justice Huddart

The Honourable Mr. Justice Bauman

 

G. J. McDade, Q.C.

Counsel for the Appellant

C. W. Sanderson, Q.C. and K. B. Bergner

Counsel for the Respondent, British Columbia Hydro and Power Authority

D. W. Bursey and R. D. W. Dalziel

Counsel for the Respondent,
Rio Tinto Alcan Inc.

P. E. Yearwood and J. J. Oliphant

Counsel for the Respondent,
Attorney General of British Columbia

Place and Date of Hearing:

Vancouver, British Columbia

November 24 and 25, 2008

Place and Date of Judgment:

Vancouver, British Columbia

February 18, 2009

 

Written Reasons by:

The Honourable Mr. Justice Donald

Concurred in by:

The Honourable Madam Justice Huddart

The Honourable Mr. Justice Bauman

Reasons for Judgment of the Honourable Mr. Justice Donald:

Introduction

[1]                This is one of those cases foreseen by the Supreme Court of Canada in Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, [2004] 3 S.C.R. 511, where the broad general principles of the Crown’s duty to consult and, if necessary, accommodate Aboriginal interests are to be applied to a concrete set of circumstances.

[2]                Consultation arises here in relation to the decision of British Columbia Hydro and Power Authority (B.C. Hydro) to buy electricity from Rio Tinto Alcan Inc. (Alcan) which is surplus to its smelter requirements, in accordance with an Energy Purchase Agreement (EPA) made in 2007. 

[3]                For the EPA to be enforceable, B.C. Hydro needs the approval of the British Columbia Utilities Commission (Commission) under s. 71 of the Utilities Commission Act, R.S.B.C. 1996, c. 473.

[4]                The Carrier Sekani Tribal Council (the appellant) sought to be heard in the s. 71 proceeding before the Commission on the issue of whether the Crown fulfilled its duty to consult before B.C. Hydro entered into the EPA.

[5]                The appellant’s interest (asserted both in a pending action for Aboriginal title and within the treaty process) is in the water and related resources east of the discharge of the Nechako Reservoir created by Alcan in the early 1950s to drive its generators in Kemano for use at the Kitimat aluminum smelter.

[6]                The appellant claims that the diversion of water for Alcan’s use is an infringement of its rights and title and that no consultation has ever taken place.

[7]                The Commission considered the appellant’s request as a reconsideration of its decision, made prior to the appellant’s involvement, that consultation was not relevant and, thus, not within the scope of its proceeding and oral hearing (the Scoping Order).  It was held not to be relevant then because the only First Nations groups involved at that point were the Haisla First Nation and the Haisla Hereditary Chiefs, who did not press the issue of consultation.

[8]                The Commission addressed the reconsideration in two phases.  At Phase I, the Commission “concluded that the CSTC [Carrier Sekani Tribal Council] established a prima facie case sufficient to warrant a reconsideration of the Scoping Order”, and that the ground for reconsideration was “the impacts on the water flows arising from the 2007 EPA”:  Reasons for Decision, “Impacts on Water Flows”, 29 November 2007 (Letter No. L-95-07).  Within Phase I, the Commission conducted a fact-finding hearing into water flow impacts and concluded as follows:

The Commission Panel accepts the submissions of counsel for BC Hydro regarding the determinations that should be made at this time in the proceeding.  The Commission Panel concludes as a matter of fact that:

a)         the 2007 EPA will have no impact on the volume, timing or source of water flows into the Nechako River;

b)         the 2007 EPA will not change the volume of water to be released into the Kemano River; and

c)         the 2007 EPA may cause reservoir elevations to vary approximately one or two inches which will be an imperceptible change in the water levels of the Nechako Reservoir.  This change to reservoir levels will not affect water flows other than the timing of releases to the Kemano River.

[9]                Then, in Phase II, the Commission received argument based on, inter alia, the facts found as described above and on certain assumptions built into the question framed by the Commission as follows:

Assuming there has been a historical, continuing infringement of aboriginal title and rights and assuming there has been no consultation or accommodation with CSTC on either the historical, continuing infringement or the 2007 EPA, would it be a jurisdictional error for the Commission to accept the 2007 EPA?

[10]            On December 17, 2007, the Commission dismissed the appellant’s reconsideration motion for reasons given in the overall s. 71 decision, January 29, 2008. 

[11]            In brief, the Commission rejected the appellant’s motion because it found as a fact that since there were no “new physical impacts” created by the EPA, the duty to consult was not triggered:

... assuming a failure of the duty of consultation for the historical, continuing infringement and no consultation on the 2007 EPA, the Commission Panel concludes that acceptance of the 2007 EPA is not a jurisdictional error because a duty to consult does not arise by acceptance of the 2007 EPA and because a failure of the duty of consultation on the historical, continuing infringement cannot be relevant to acceptance of the 2007 EPA where there are no new physical impacts.

[12]            Among other points taken in the appeal, the appellant says that the Commission was wrong in narrowing the inquiry to “new physical impacts” and ignoring other “non-physical impacts” affecting the appellant’s interests.

[13]            But of greater importance from my viewpoint as a reviewing judge is the Commission’s decision not to decide whether B.C. Hydro had a duty to consult.  It decided that it did not need to address that question because of its conclusion on the triggering issue.  As I will explain later, I consider that to be an unreasonable disposition for, amongst other reasons, the fact that B.C. Hydro, as a Crown corporation, was taking commercial advantage of an assumed infringement on a massive scale, without consultation.  In my view, that is sufficient to put the Commission on inquiry whether the honour of the Crown was upheld in the making of the EPA.

[14]            There is an institutional dimension to this error.  The Commission has demonstrated in several cases an aversion to assessing the adequacy of consultation.  In three other decisions, the Commission deferred the consultation question to the environmental assessment process:  In the Matter of British Columbia Transmission Corporation, An Application for a Certificate of Public Convenience and Necessity for the Vancouver Island Transmission Reinforcement Project, B.C.U.C. Decision, 7 July 2006, Commission Order No. C-4-06; In the Matter of British Columbia Hydro and Power Authority, Application for a Certificate of Public Convenience and Necessity for Revelstoke Unit 5, B.C.U.C. Decision, 12 July 2007, Commission Order No. C-8-07; Re British Columbia Transmission Corporation Application for a Certificate of Public Convenience and Necessity for the Interior to Lower Mainland Transmission Project, First Nations Scoping Issue, B.C.U.C. Letter Decision No. L-6-08, 5 March 2008.  (The appeal from the last decision (Kwikwetlem First Nation v. British Columbia (Utilities Commission), CA035864) was heard together with the appeal in the present case.) 

[15]            The Commission is a quasi-judicial tribunal with authority to decide questions of law.  As such, it has the jurisdiction, and in my opinion the obligation, to decide the constitutional question of whether the duty to consult exists and, if so, whether it has been discharged:  Paul v. British Columbia (Forest Appeals Commission), 2003 SCC 55, [2003] 2 S.C.R. 585.  That obligation is not met by deciding, as a preliminary question, an adverse impact issue that properly belongs within an inquiry whether a duty is owed and has been fulfilled.

[16]            B.C. Hydro may be able to defend the Crown’s honour on a number of powerful grounds, including the impact question, but this should happen in a setting where the tribunal accepts the jurisdiction to make a decision on the duty to consult.

Factual Background

[17]            I have said that the infringement, if such it is, associated with the Alcan/Kemano Power Project is on a massive scale.  The project involved reversing the flow of a river and the creation of a watershed that discharges west into a long tunnel through a mountain down to sea level at Kemano where it drives the generators at the power station and then flows into the Kemano River.  To the east the watershed discharges into the Nechako River which eventually joins the Fraser River at Prince George.  The westerly diversion is manmade.  The natural water flows into the Nechako River system were altered by the project with implications for fish and wildlife, especially salmon.  Alcan holds a water licence in perpetuity for the reservoir.  It is obliged by the licence and an agreement made in 1987 settling litigation involving the Provincial and Federal Governments to maintain water flows that meet specifications for migratory fish.

[18]            At the outset of the project in the late 1940s, Alcan envisioned a smelter at Kitimat and power station at Kemano roughly twice their present size.  The water licence and related permits for the Nechako Reservoir were issued provisionally with the idea that when the plants were enlarged as planned, the licence would be made permanent.

[19]            In the course of an expansion project, sometimes referred to as Kemano II, the Government of British Columbia changed its mind about allowing the full utilization of the reservoir.  This shut down the project and prompted a law suit by Alcan.  The parties settled the dispute in 1997 on terms which included a power deal whereby the Province would supply Alcan should it enlarge the smelter and need more electricity.  The settlement also granted Alcan the water licence on a permanent basis. 

[20]            Alcan has been selling its excess power since the beginning of its operations, at first directly to neighbouring industries and communities, and later to those customers through the B.C. Hydro grid and to B.C. Hydro for general distribution, and to Powerex Corporation (B.C. Hydro’s exporting affiliate).

[21]            The Commission found as a fact in the decision under appeal that (1) Alcan can sell its electricity to anyone – B.C. Hydro is not the only potential customer; and (2) water flows will not be influenced by the EPA.

[22]            In written submissions on the motion for reconsideration, the appellant articulated a number of ways in addition to “new physical impacts” where the EPA might affect their interests:

18.       There are many aspects of the EPA which demonstrate that it is an important decision in relation to the infringements of the Intervenor’s rights and title, within the context set out by recent caselaw.  This decision:

(a)        Approves an EPA that will confirm and mandate extended electricity sales for a very long time – to 2034;

(b)        Approves the sale to BC Hydro of all electricity which is surplus to Alcan’s power needs – and therefore authorizes the sale of power resulting from diversions of water that are causing existing impacts and infringements;

(c)        Removes or affects the flexibility to release additional water, because that power is now the subject of an agreement with BC Hydro;

(d)        Changes the ‘operator’ – by creating a “Joint Operating Committee” (s.4.13), by authorizing B.C. Hydro to ‘jointly develop’ the reservoir operating model (s.4.17), and by requiring B.C. Hydro approval for any amendments to operating agreements “which constrain the availability of Kemano to generate electricity” (App.1, 70 “Operating Constraints”);

(e)        Changes in objective – this agreement confirms that power will now be devoted to long-term ‘capacity’ for B.C. Hydro (Even if there had been a ‘compelling social objective’ to grant the water to Alcan (in 1950) for the production of aluminum, that objective is no longer operative under this agreement.  A new ‘objective’ requires further consultation.);

(f)         Creates added incentives to maximize power sales (rather than release water for conservation);

(g)        Provides incentives to Alcan to ‘optimize’ efficiency of their operations (meaning additional power sales);

(h)        Encourages sales (i.e. diversion of water) through financial incentives in the most significant low water months (January to March);

(i)         Affects the complexity required for proper environmental management – e.g. temperature, variable flows, timing, over-spills etc. – in order to accommodate BC Hydro sales;

(j)         Approves an agreement that contains no positive conditions protecting fish and First Nations rights and which will preclude (by financial disincentives) those conditions from being added later;

(k)        Fails to include First Nations in any way in management decisions.

19.       If, despite the jurisprudence pointing to the contrary, the BC Utilities Commission is not prepared to examine the impacts of existing operations, and instead views the EPA solely as a financial model, there are nevertheless clear impacts on the Intervenor’s interests arising from this agreement:

(a)        Increases the cost of compensation to Alcan;

(b)        Any change to the 1987 Settlement Agreement flows will be more difficult to achieve;

(c)        Additional sales (and therefore diversions) may well occur (evidence of other purchasers – under all conditions and at all times of the year – is speculative).

[Emphasis in original.]

[23]            To the extent that the Commission addressed those points, it did so broadly by distinguishing between issues relating to the use of power and the production of power and by noting that its authority under s. 71 is limited:

There may be steps contemplated by the Crown that have no new impacts that would nevertheless trigger the duty to consult because of a historical, continuing infringement.  However, a section 71 review does not approve, transfer or change control of licenses or authorization and therefore where there are no new physical impacts acceptance of a section 71 filing would not be a jurisdictional error.  That is, it is the combination of no new physical impacts together with the limited scope of a section 71 review that answers the principal question – there is no jurisdictional error in this Decision.  Alcan states: “The Crown’s fiduciary duty arises in specific situations, in particular, when the Crown assumes discretionary control over specific Aboriginal interests” (Alcan Submission, para. 5.3).  The decision to accept or declare unenforceable the 2007 EPA under section 71 of the Act does not affect underlying water resources or any CSTC aboriginal interests there may be in that resource (Alcan Submissions, para. 5.5).

The CSTC submits:

“The 2007 EPA will also constitute a significant change in use (from power produced for aluminum smelting purposes to power for general provincial consumption) which, if approved by the BCUC, will amount to approval by the Crown of that change in use – without consultation” (CSTC Submission, para. A6).

The 2007 EPA may change the use of power in the sense suggested by the CSTC.  However, such change in the use of the power could be effected by Alcan without the 2007 EPA and by means that are beyond the authority of the Commission.  Nevertheless, the important question is whether or not there is a change in water flows, not whether or not there is a change in use of power.  And, as found by the Commission in Letter No. L-95-07, water flows will not change. 

Relevant Enactments

[24]            The Commission’s authority regarding energy supply contracts comes from s. 71 of the Utilities Commission Act, which, including amendments effective May 1, 2008, now reads: 

71.  (1)     Subject to subsection (1.1), a person who, after this section comes into force, enters into an energy supply contract must

(a)    file a copy of the contract with the commission under rules and within the time it specifies, and

(b)    provide to the commission any information it considers necessary to determine whether the contract is in the public interest.

      (1.1)   Subsection (1) does not apply to an energy supply contract for the sale of natural gas unless the sale is to a public utility.

      (2)      The commission may make an order under subsection (3) if the commission, after a hearing, determines that an energy supply contract to which subsection (1) applies is not in the public interest.

      (2.1)   In determining under subsection (2) whether an energy supply contract is in the public interest, the commission must consider

(a)    the government's energy objectives,

(b)    the most recent long-term resource plan filed by the public utility under section 44.1, if any,

(c)    whether the energy supply contract is consistent with requirements imposed under section 64.01 or 64.02, if applicable,

(d)    the interests of persons in British Columbia who receive or may receive service from the public utility,

(e)    the quantity of the energy to be supplied under the contract,

(f)     the availability of supplies of the energy referred to in paragraph (e),

(g)    the price and availability of any other form of energy that could be used instead of the energy referred to in paragraph (e), and

(h)    in the case only of an energy supply contract that is entered into by a public utility, the price of the energy referred to in paragraph (e).

      (2.2)   Subsection (2.1) (a) to (c) does not apply if the commission considers that the matters addressed in the energy supply contract filed under subsection (1) were determined to be in the public interest in the course of considering a long-term resource plan under section 44.1.

      (2.3)   A public utility may submit to the commission a proposed energy supply contract setting out the terms and conditions of the contract and a process the public utility intends to use to acquire power from other persons in accordance with those terms and conditions.

      (2.4)   If satisfied that it is in the public interest to do so, the commission, by order, may approve a proposed contract submitted under subsection (2.3) and a process referred to in that subsection.

      (2.5)   In considering the public interest under subsection (2.4), the commission must consider

(a)    the government's energy objectives,

(b)    the most recent long-term resource plan filed by the public utility under section 44.1,

(c)    whether the application for the proposed contract is consistent with the requirements imposed on the public utility under sections 64.01 and 64.02, if applicable, and

(d)    the interests of persons in British Columbia who receive or may receive service from the public utility.

      (2.6)   If the commission issues an order under subsection (2.4), the commission may not issue an order under subsection (3) with respect to a contract

(a)    entered into exclusively on the terms and conditions, and

(b)    as a result of the process

referred to in subsection (2.3).

      (3)      If subsection (2) applies, the commission may

(a)    by order, declare the contract unenforceable, either wholly or to the extent the commission considers proper, and the contract is then unenforceable to the extent specified, or

(b)    make any other order it considers advisable in the circumstances.

      (4)      If an energy supply contract is, under subsection (3) (a), declared unenforceable either wholly or in part, the commission may order that rights accrued before the date of the order under that subsection be preserved, and those rights may then be enforced as fully as if no proceedings had been taken under this section.

      (5)      An energy supply contract or other information filed with the commission under this section must be made available to the public unless the commission considers that disclosure is not in the public interest.

[25]            Provisions of that Act bearing on the relationship between the British Columbia Government and the Commission include: 

3    (1)      Subject to subsection (3), the Lieutenant Governor in Council, by regulation, may issue a direction to the commission with respect to the exercise of the powers and the performance of the duties of the commission, including, without limitation, a direction requiring the commission to exercise a power or perform a duty, or to refrain from doing either, as specified in the regulation.

(2)      The commission must comply with a direction issued under subsection (1), despite

(a)    any other provision of

(i)     this Act, except subsection (3) of this section, or

(ii)    the regulations, or

(b)    any previous decision of the commission.

(3)      The Lieutenant Governor in Council may not under subsection (1) specifically and expressly

(a)    declare an order or decision of the commission to be of no force or effect, or

(b)    require the commission to rescind an order or a decision.

* * *

5 (0.1)      In this section, "minister" means the minister responsible for the administration of the Hydro and Power Authority Act.

(1)      On the request of the Lieutenant Governor in Council, it is the duty of the commission to advise the Lieutenant Governor in Council on any matter, whether or not it is a matter in respect of which the commission otherwise has jurisdiction.

(2)      If, under subsection (1), the Lieutenant Governor in Council refers a matter to the commission, the Lieutenant Governor in Council may specify terms of reference requiring and empowering the commission to inquire into the matter.

(3)      The commission may carry out a function or perform a duty delegated to it under an enactment of British Columbia or Canada.

(4)      The commission, in accordance with subsection (5), must conduct an inquiry to make determinations with respect to British Columbia's infrastructure and capacity needs for electricity transmission for the period ending 20 years after the day the inquiry begins or, if the terms of reference given under subsection (6) specify a different period, for that period.

(5)      An inquiry under subsection (4) must begin

(a)    by March 31, 2009, and

(b)    at least once every 6 years after the conclusion of the previous inquiry,

unless otherwise ordered by the Lieutenant Governor in Council.

(6)      For an inquiry under subsection (4), the minister may specify, by order, terms of reference requiring and empowering the commission to inquire into the matter referred to in that subsection, including terms of reference regarding the manner in which and the time by which the commission must issue its determinations under subsection (4).

(7)      The minister may declare, by regulation, that the commission may not, during the period specified in the regulation, reconsider, vary or rescind a determination made under subsection (4).

(8)      Despite section 75, if a regulation is made for the purposes of subsection (7) of this section with respect to a determination, the commission is bound by that determination in any hearing or proceeding held during the period specified in the regulation.

(9)      The commission may order a public utility to submit an application under section 46, by the time specified in the order, in relation to a determination made under subsection (4).

* * *

71            ...

(2.1)   In determining under subsection (2) whether an energy supply contract is in the public interest, the commission must consider

(a)    the government's energy objectives, ...

[26]            The provisions of the Utilities Commission Act dealing with the Commission’s jurisdiction and appeals are:

79            The determination of the commission on a question of fact in its jurisdiction, or whether a person is or is not a party interested within the meaning of this Act, is binding and conclusive on all persons and all courts. 

* * *

99            The commission may reconsider, vary or rescind a decision, order, rule or regulation made by it, and may rehear an application before deciding it. 

* * *

101 (1)     An appeal lies from a decision or order of the commission to the Court of Appeal with leave of a justice of that court.

(2)      The party appealing must give notice of the application for leave to appeal, stating the grounds of appeal, to the commission, to the Attorney General and to any party adverse in interest, at least 2 clear days before the hearing of the application.

(3)      If leave is granted, within 15 days from the granting, the appellant must give notice of appeal to the commission, to the Attorney General, and to any party adverse in interest.

(4)      The commission and the Attorney General may be heard by counsel on the appeal.

(5)      On the determination of the questions involved in the appeal, the Court of Appeal must certify its opinion to the commission, and an order of the commission must conform to that opinion.

* * *

105 (1)  The commission has exclusive jurisdiction in all cases and for all matters in which jurisdiction is conferred on it by this or any other Act.

(2)      Unless otherwise provided in this Act, an order, decision or proceeding of the commission must not be questioned, reviewed or restrained by or on an application for judicial review or other process or proceeding in any court.

[27]            B.C. Hydro’s relationship with government is defined in the Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, as follows:

3    (1)      The authority is for all its purposes an agent of the government and its powers may be exercised only as an agent of the government.

(2)      The Minister of Finance is the fiscal agent of the authority.

(3)      The authority, on behalf of the government, may contract in its corporate name without specific reference to the government. 

4    (1)      The Lieutenant Governor in Council appoints the directors of the authority who hold office during pleasure.

(2)      The Lieutenant Governor in Council must appoint one or more of the directors to chair the authority.

(3)      A chair or other director must be paid by the authority the salary, directors' fee and other remuneration the Lieutenant Governor in Council determines. 

5    The directors must manage the affairs of the authority or supervise the management of those affairs, and may

(a)    exercise the powers conferred on them under this Act,

(b)    exercise the powers of the authority on behalf of the authority, and

(c)    delegate the exercise or performance of a power or duty conferred or imposed on them to anyone employed by the authority.

[28]            The authority to purchase power is found in s. 12(1)(m) of the Hydro and Power Authority Act

12  (1)      Subject to the approval of the Lieutenant Governor in Council, which may be given by order of the Lieutenant Governor in Council, the authority has the power to do the following:

* * *

(m)  purchase power from or sell power to a firm or person;

[29]            Section 35 of the Constitution Act, 1982 reads:

35.       (1)  The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.

(2)  In this Act, “aboriginal peoples of Canada” includes the Indian, Inuit and Métis peoples of Canada.

(3)  For greater certainty, in subsection (1) “treaty rights” includes rights that now exist by way of land claims agreements or may be so acquired.

(4)  Notwithstanding any other provision of this Act, the aboriginal and treaty rights referred to in subsection (1) are guaranteed equally to male and female persons.

Issues

[30]            The appellant frames the grounds for appeal in its factum as follows:

22.       The appellant submits that the Commission committed errors of law and jurisdiction in determining:

a)         That the failure of the Crown to consult and, if necessary, accommodate the member tribes of the CSTC was not relevant to the proceeding;

b)         to refuse to allow evidence or cross-examination on the on-going existing impacts of the operations of the Nechako reservoir and the Kemano Project on the aboriginal rights and title of the member tribes of the CSTC; and

c)         that the acceptance of the EPA between BC Hydro and Alcan does not trigger a duty to consult and, if necessary accommodate the member tribes of the CSTC.

[31]            The Attorney General’s factum identifies the question of law in the appeal as follows: 

23.       The Attorney General says that the question of law in this appeal is whether the Commission correctly refused to amend the Scoping Order to consider the adequacy of Crown consultation with First Nations regarding the impact of the Kemano System upon their asserted Aboriginal rights.  In particular:

Is the duty to consult triggered by the Crown contemplating conduct which does not adversely impact claimed Aboriginal rights, but is nonetheless related to historical Crown conduct which does impact claimed Aboriginal rights?

[32]            Alcan poses a threshold question about the Commission’s jurisdiction and a further question on the merits:

35.       This proposition [the appellant’s contention that the Commission had a duty to ensure consultation took place] raises a threshold question about the jurisdiction of the Commission:

In a s. 71 review of an energy supply contract, does the Commission have the jurisdiction to decide whether the Crown’s duty to consult under s. 35 of the Constitution Act, 1982 arises and has been met in relation to that contract?

36.       If the answer is “no”, the appeal must be dismissed, because the CSTC’s complaint about consultation will have been taken to the wrong forum.  If the answer is “yes”, then this Court must address a second question:

Did the 2007 EPA or the Commission’s review of the 2007 EPA give rise to a duty to consult under s. 35 of the Constitution Act, 1982?

[33]            B.C. Hydro’s breakdown of the issues is this:

BC Hydro submits that the primary issue on appeal is as follows:

1.         Did the review conducted by the BCUC in respect of the 2007 EPA pursuant to s. 71 of the UCA amount to the Crown contemplating conduct that might adversely affect the CSTC’s aboriginal interests so as to give rise to the duty to consult with the CSTC?

2.         If and only if the primary question is answered in the affirmative, then BC Hydro submits that there is a secondary issue on appeal as follows:

If the answer to question 1 is yes, does the UCA empower and require the Commission to adjudicate a dispute between the Crown and the CSTC regarding the sufficiency of consultation to discharge the Crown’s obligation in respect of the original authorization, construction and operation of the Nechako Reservoir before the BCUC can exercise its jurisdiction under s. 71?

3.         If and only if the secondary question is answered in the affirmative, then BC Hydro submits that there is a third issue on appeal as follows:

If the answer to both questions 1 and 2 is yes, what remedy is appropriate?

[34]            I will analyze the issues according to this framework:

A.         Was the Commission, in reviewing the enforceability of the EPA under s. 71 of the Utilities Commission Act, obliged to decide whether the Crown had a duty to consult and whether it fulfilled the duty?

B.         Did the Commission commit a reviewable error in disposing of the consultation issue on a preliminary or threshold question defined too strictly and in terms which did not include all of the interests asserted by the appellant?

C.        What is the appropriate remedy if the appellant establishes a reviewable error?

Discussion 

A.  The Power and Duty to Decide

      1.  The Power

[35]            Under the heading of power to decide, I will discuss three propositions:

(a)        As a quasi-judicial tribunal with authority to decide questions of law, the Commission is competent to decide relevant constitutional questions, including whether the Crown has discharged a duty to consult.

(b)        Section 71 of the Utilities Commission Act mandates review of the enforceability of an energy purchase agreement according to factors which include the public interest.  This agreement engages the honour of the Crown in its dealings with Aboriginal peoples.

(c)        The Commission has the capacity to address the adequacy of consultation.

(a)  Competency

[36]            The Commission has not explicitly declared that it has no jurisdiction to decide a consultation issue.  But since the Commission has shown a disinclination to grapple with the issue, and the proponents of the EPA have questioned whether it lies within the Commission’s statutory mandate, I think the court should settle the point.

[37]            In Paul v. British Columbia (Forest Appeals Commission), the Supreme Court of Canada decided, at para. 38, “there is no principled basis for distinguishing s. 35 rights from other constitutional questions.” 

[38]            Moving on to whether administrative tribunals have the power to decide constitutional law questions, the Court in Paul stated, at para. 39:

The essential question is whether the empowering legislation implicitly or explicitly grants to the tribunal the jurisdiction to interpret or decide any question of law.  If it does, the tribunal will be presumed to have the concomitant jurisdiction to interpret or decide that question in light of s. 35 or any other relevant constitutional provision.

[39]            I take those statements to be of broad application and not limited to the facts particular to Paul.  In my opinion, they apply to the instant case, notwithstanding that the determination for the Forest Appeals Commission would have had a more direct effect on Mr. Paul’s use of the forest resource than would the effects of B.C. Hydro’s involvement in the EPA on the appellant’s interests in the water resource.

[40]            It can be inferred from the Utilities Commission Act that the Commission has the authority to decide relevant questions of law.  Section 79, “findings of fact conclusive”, implies that the right to appeal under s. 101 is restricted to questions of law or jurisdiction.  Further, consideration of the exclusive jurisdiction clause in s. 105 indicates that the Legislature must have empowered the Commission to decide questions of law, otherwise the appellate review would be meaningless.

[41]            The Commission is therefore presumed to have the jurisdiction to decide relevant constitutional questions, including whether the Crown has a duty to consult and whether it has fulfilled the duty.  These are issues of law arising from Part II of the Constitution Act, 1982, ss. 35 and 35.1 that the Commission is competent to decide.

(b)  Construction of Section 71

[42]            Section 71 of the Utilities Commission Act focuses on whether the EPA is in the public interest.  I think the respondents advance too narrow a construction of public interest when they define it solely in economic terms.  How can a contract formed by a Crown agent in breach of a constitutional duty be in the public interest?  The existence of such a duty and the allegation of the breach must form part and parcel of the public interest inquiry.  In saying that, I do not lose sight of the fact that the regulatory scheme revolves around the economics of energy: ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140, and that Aboriginal law is not in the steady diet of the Commission.  But there is no other forum more appropriate to decide consultation issues in a timely and effective manner.  As I will develop later, the rationale for the duty to consult, explained in Haida Nation v. British Columbia (Minister of Forests), discourages resort to the ordinary courts for injunctive relief and encourages less contentious measures while reconciliation is pursued.  It would seem to follow that the appropriate forum for enforcement of the duty to consult is in the first instance the tribunal with jurisdiction over the subject-matter – here the Commission in relation to the EPA.

[43]            B.C. Hydro cites this Court’s decision in British Columbia Hydro & Power Authority v. British Columbia (Utilities Commission) (1996), 20 B.C.L.R. (3d) 106, as support for the argument that s. 71 should not be interpreted to include the power to assess adequacy of consultation.  It was held in that case that the governing statute, then the Utilities Commission Act, S.B.C. 1980, c. 60, did not confer jurisdiction on the Commission to enforce as mandatory the guidelines it developed on resource planning.  One of the guidelines required public consultation, the inadequacy of which, as perceived by the Commission, led it to issue directions to B.C. Hydro in connection with an application for a certificate of public convenience and necessity.  The Court examined the contested power to enforce guidelines against the language of the Act, its purpose and object, and found that no explicit provision enabled the Commission to promulgate mandatory guidelines which intruded on the management of the utility and none should be implied.

[44]            On the strength of that case, B.C. Hydro turns to Dunsmuir v. New Brunswick, 2008 SCC 9, 291 D.L.R. (4th) 577, for the following general proposition that it says applies to the present matter:

[28]  By virtue of the rule of law principle, all exercises of public authority must find their source in law.  All decision-making powers have legal limits, derived from the enabling statute itself, the common or civil law or the Constitution.  Judicial review is the means by which the courts supervise those who exercise statutory powers, to ensure that they do not overstep their legal authority.  The function of judicial review is therefore to ensure the legality, the reasonableness and the fairness of the administrative process and its outcomes. 

[29]  Administrative powers are exercised by decision makers according to statutory regimes that are themselves confined.  A decision maker may not exercise authority not specifically assigned to him or her.  By acting in the absence of legal authority, the decision maker transgresses the principle of the rule of law.  Thus, when a reviewing court considers the scope of a decision-making power or the jurisdiction conferred by a statute, the standard of review analysis strives to determine what authority was intended to be given to the body in relation to the subject matter.  This is done within the context of the courts’ constitutional duty to ensure that public authorities do not overreach their lawful powers: Crevier v. Attorney General of Quebec, [1981] 2 S.C.R. 220, at p. 234, 127 D.L.R. (3d) 1; also Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19, 223 D.L.R. (4th) 599, at para. 21.

[Emphasis added.]

[45]            I do not accept B.C. Hydro’s argument.  The rule in question sought to be enforced through proceedings before the Commission arises not as an internal prescription, as in the B.C. Hydro v. British Columbia (Utilities Commission) decision just discussed, but from the Constitution itself.  Haida, at paras. 60-63, contemplates review of consultation by administrative tribunals.  It is not necessary to find an explicit grant of power in the statute to consider constitutional questions; so long as the Legislature intended that the tribunal decide questions of law, that is sufficient.

[46]            It is necessary to address a case cited by all the respondents as standing for the proposition that a tribunal’s power to decide the adequacy of consultation requires an explicit provision in the constituent statute.  In Dene Tha’ First Nation v. Energy and Utilities Board (Alta.), 2005 ABCA 68, 363 A.R. 234, the Alberta Court of Appeal held that the Board’s refusal to accept an intervention in the matter of licences for well drilling and access roads was not reviewable as it was based on a factual finding that the First Nation seeking to intervene had not demonstrated an adverse impact.  The court said it had no jurisdiction to review findings of fact.  Therein lies the ratio decidendi of the judgment.  The court noted at para. 24 that it was common ground that neither the Utility nor the Board had a duty to consult.  As to the duty on the Crown, the court said, obiter dicta:

[28]  A suggestion made to us in argument, but not made to the Board, was that the Board had some supervisory role over the Crown and its duty to consult on aboriginal or treaty rights.  No specific section of any legislation was pointed out, and we cannot see where the Board would get such a duty.  We will now elaborate on that.

[47]            The court went on to record that consultation was not addressed at the Board level.  I regard the above quoted remarks as having been made en passant in an oral judgment rather than a definitive judicial opinion made with the benefit of full argument.  With respect, I do not find it persuasive authority for the proposition advanced by the respondents in the present case. 

(c)  Capacity to decide

[48]            I turn to consider the Commission’s capacity to decide.  As I understand Alcan’s submission, the issues surrounding the consultation duty are so remote from the Commission’s usual terms of reference that the Commission should not be expected to decide them.  Alcan argues that the appellant should go to court for redress.  I quote from paras. 88 and 89 of Alcan’s factum: 

88.       ... to accept the CSTC’s invitation [to entertain the consultation issue] would mire the Commission in complex questions of fact and law to which its mandate, statutory powers and remedies are ill-suited. 

89.       In the end, the argument comes full circle: the CSTC are seeking redress for their grievances in the wrong forum.

[49]            Paul rejected the argument that Aboriginal law issues may be too complex and burdensome for an administrative tribunal, at para. 36: 

To the extent that aboriginal rights are unwritten, communal or subject to extinguishment, and thus a factual inquiry is required, it is worth noting that administrative tribunals, like courts, have fact-finding functions. Boards are not necessarily in an inferior position to undertake such tasks. Indeed, the more relaxed evidentiary rules of administrative tribunals may in fact be more conducive than a superior court to the airing of an aboriginal rights claim.

[50]            I heard nothing in the appeal which causes me to doubt the capacity of the Commission to hear and decide the consultation issue.  Expressed in more positive terms, I am confident that the Commission has the skill, expertise and resources to carry out the task.

      2.  The Duty to Decide

[51]            Not only has the Commission the ability to decide the consultation issue, it is the only appropriate forum to decide the issue in a timely way.  Furthermore, the honour of the Crown obliges it to do so.  As a body to which powers have been delegated by the Crown, it must not deny the appellant timely access to a decision-maker with authority over the subject matter. 

[52]            The process of consultation envisaged in Haida requires discussion at an early stage of a government plan that may impact Aboriginal interests, before matters crystallize, so that First Nations do not have to deal with a plan that has become an accomplished fact.  Haida said this on the question of timing, at para. 35:

            But, when precisely does a duty to consult arise?  The foundation of the duty in the Crown's honour and the goal of reconciliation suggest that the duty arises when the Crown has knowledge, real or constructive, of the potential existence of the Aboriginal right or title and contemplates conduct that might adversely affect it: see Halfway River First Nation v. British Columbia (Ministry of Forests), [1997] 4 C.N.L.R. 45 (B.C.S.C.), at p. 71, per Dorgan J.

As to timing, see also Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, [2005] 3 S.C.R. 388 at para. 3:

... the principle of consultation in advance of interference with existing treaty rights is a matter of broad general importance to the relations between aboriginal and non-aboriginal peoples.

[53]            If First Nations are entitled to early consultation, it logically follows that the tribunal with the power to approve the plan must accept the responsibility to assess the adequacy of consultation.  Otherwise, the First Nations are driven to seek an interlocutory injunction, which, according to Haida at para. 14, is often an unsatisfactory route:

            Interlocutory injunctions may offer only partial imperfect relief. First, as mentioned, they may not capture the full obligation on the government alleged by the Haida.  Second, they typically represent an all-or-nothing solution.  Either the project goes ahead or it halts.  By contrast, the alleged duty to consult and accommodate by its very nature entails balancing of Aboriginal and other interests and thus lies closer to the aim of reconciliation at the heart of Crown-Aboriginal relations, as set out in R. v. Van der Peet, [1996] 2 S.C.R. 507, at para. 31, and Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, at para. 186.  Third, the balance of convenience test tips the scales in favour of protecting jobs and government revenues, with the result that Aboriginal interests tend to "lose" outright pending a final determination of the issue, instead of being balanced appropriately against conflicting concerns: J. J. L. Hunter, "Advancing Aboriginal Title Claims after Delgamuukw: The Role of the Injunction" (June 2000).  Fourth, interlocutory injunctions are designed as a stop-gap remedy pending litigation of the underlying issue.  Aboriginal claims litigation can be very complex and require years and even decades to resolve in the courts.  An interlocutory injunction over such a long period of time might work unnecessary prejudice and may diminish incentives on the part of the successful party to compromise.  While Aboriginal claims can be and are pursued through litigation, negotiation is a preferable way of reconciling state and Aboriginal interests.  For all these reasons, interlocutory injunctions may fail to adequately take account of Aboriginal interests prior to their final determination. 

[54]            While the Commission is a quasi-judicial tribunal bound to observe the duty of fairness and to act impartially, it is a creature of government, subject to government direction on energy policy.  The honour of the Crown requires not only that the Crown actor consult, but also that the regulatory tribunal decide any consultation dispute which arises within the scheme of its regulation.  It is useful to remember the relationship between government and administrative tribunals generally. 

[55]            In Ocean Port Hotel Ltd. v. British Columbia (General Manager, Liquor Control and Licensing Branch), 2001 SCC 52, [2001] 2 S.C.R. 781, the issue was the independence of members of the Liquor Appeal Board given their terms of appointment.  The Court contrasted the ordinary courts with administrative tribunals in the following analysis at para. 24:

            Administrative tribunals, by contrast, lack this constitutional distinction from the executive.  They are, in fact, created precisely for the purpose of implementing government policy.  Implementation of that policy may require them to make quasi-judicial decisions.  They thus may be seen as spanning the constitutional divide between the executive and judicial branches of government.  However, given their primary policy-making function, it is properly the role and responsibility of Parliament and the legislatures to determine the composition and structure required by a tribunal to discharge the responsibilities bestowed upon it.  While tribunals may sometimes attract Charter requirements of independence, as a general rule they do not.  Thus, the degree of independence required of a particular tribunal is a matter of discerning the intention of Parliament or the legislature and, absent constitutional constraints, this choice must be respected.

[56]            No one suggests the Commission has a duty itself to consult:  Quebec (Attorney General) v. Canada (National Energy Board), [1994] 1 S.C.R. 159 at 183.  The obligation arising from its status as a Crown entity is to grasp the nettle and decide the consultation dispute.

[57]            The honour of the Crown as a basis for the duty to decide is compelling on the facts here:  one Crown entity, the responsible Ministry, granted the water licence, allegedly infringing Aboriginal interests without prior consultation; another Crown entity, B.C. Hydro, purchases electricity generated by the alleged infringement on a long-term contract; and a third, the tribunal, dismisses the appellant’s claim for consultation on a preliminary point.

B.  Did the Commission commit a reviewable error in disposing of the consultation issue on a preliminary or threshold question?

[58]            In this part, I identify the appropriate standard of review and apply the standard to the decision under appeal.  I conclude that (1) the standard is reasonableness; (2) the Commission set an unreasonably high threshold for the appellant to meet; and (3) it took too narrow a view of the Aboriginal interests asserted.

      1.  Standard of Review 

[59]            The appellant argues that the Commission has to be correct in disposing of constitutional issues such as those that arise here.  The respondents submit the standard is reasonableness.

[60]            I accept the respondents’ position.  The Commission’s decision involves matters of fact, some assumed and others actually found, some questions of mixed fact and law and procedure.  While I think the Commission took the wrong approach to the dispute, I cannot isolate a pure question of law for review on a correctness standard.  Guidance on the standard is provided by Haida, at para. 61: 

            On questions of law, a decision-maker must generally be correct:  for example, Paul v. British Columbia (Forest Appeals Commission), [2003] 2 S.C.R. 585, 2003 SCC 55.  On questions of fact or mixed fact and law, on the other hand, a reviewing body may owe a degree of deference to the decision-maker.  The existence or extent of the duty to consult or accommodate is a legal question in the sense that it defines a legal duty.  However, it is typically premised on an assessment of the facts.  It follows that a degree of deference to the findings of fact of the initial adjudicator may be appropriate.  The need for deference and its degree will depend on the nature of the question the tribunal was addressing and the extent to which the facts were within the expertise of the tribunal:  Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20; Paul, supra.  Absent error on legal issues, the tribunal may be in a better position to evaluate the issue than the reviewing court, and some degree of deference may be required.  In such a case, the standard of review is likely to be reasonableness.  To the extent that the issue is one of pure law, and can be isolated from the issues of fact, the standard is correctness.  However, where the two are inextricably entwined, the standard will likely be reasonableness:  Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748.

      2.  Reasoning Error 

[61]            In my respectful judgment, the Commission wrongly decided something as a preliminary matter which properly belonged in a hearing of the merits.  The logic flaw was in predicting that consultation could have produced no useful outcome.  Put another way, the Commission required a demonstration that the appellant would win the point as a precondition for a hearing into the very same point.

[62]            I do not say that the Commission would be bound to find a duty to consult here.  The fault in the Commission’s decision is in not entertaining the issue of consultation within the scope of a full hearing when the circumstances demanded an inquiry.  I refer to the assumed facts, namely, that there is an infringement without consultation and on the unquestioned fact that B.C. Hydro, a Crown agent, takes advantage of the power produced by the infringement by signing the EPA.  In my opinion, this is enough to clear any reasonable hurdle.  As stated in Mikisew, at para. 55:

The duty to consult is, as stated in Haida Nation, triggered at a low threshold, but adverse impact is a matter of degree, as is the extent of the Crown's duty.

[Emphasis added.]

Whether the EPA triggered a duty is for a hearing on the merits.

[63]            Deciding whether a trigger occurred at the threshold becomes all the more problematic when the range of issues presented by the appellant went beyond the “new physical impacts” test formulated by the Commission.  The process deprived the appellant the opportunity to develop a case for the non-physical impacts listed in their written application for reconsideration and reproduced earlier at para. 22 of these reasons.  For instance, the decision in question does not deal in any substantive way with the appellant’s allegations that the EPA tends to perpetuate an historical infringement and to make less likely a satisfactory resolution of the appellant’s claimed right to manage the water resource in the future.  They say the power sale has cemented the current regime for many years in the future.  Arguably, the surface facts would seem to indicate that B.C. Hydro will at least participate in the infringement.

[64]            Again, these points may not carry the day for the appellant, but the appellant should have had the opportunity to develop them. 

[65]            Finally, the consultation duty is not a concept that lends itself to hard-edged tests.  The trigger formula in Haida is to be applied within the proceeding, not on a threshold inquiry.  The duty is to discuss, not necessarily to agree or to make compromises.  It is to be open to accommodation, if necessary.  The discussion itself has intrinsic value as a tool of reconciliation.  It is not always possible to say in advance that consultation would be either productive or futile – the Crown may be influenced by the Aboriginal perspective in the way it carries out a project.  At the very least, the First Nation will have had a chance to put its views forward.

[66]            In reviewing the history of the duty to consult, the Court in Haida said, at para. 24:

            The Court’s seminal decision in Delgamuukw, supra, at para. 168, in the context of a claim for title to land and resources, confirmed and expanded on the duty to consult, suggesting the content of the duty varied with the circumstances: from a minimum “duty to discuss important decisions” where the “breach is less serious or relatively minor”; through the “significantly deeper than mere consultation” that is required in “most cases”; to “full consent of [the] aboriginal nation” on very serious issues.  These words apply as much to unresolved claims as to intrusions on settled claims.

[67]            According to Haida, at para. 38, the consultation may advance the goal of reconciliation by improving the relationship between the Crown and First Nations:

            I conclude that consultation and accommodation before final claims resolution, while challenging, is not impossible, and indeed is an essential corollary to the honourable process of reconciliation that s. 35 demands.  It preserves the Aboriginal interest pending claims resolution and fosters a relationship between the parties that makes possible negotiations, the preferred process for achieving ultimate reconciliation:  see S. Lawrence and P. Macklem, “From Consultation to Reconciliation: Aboriginal Rights and the Crown’s Duty to Consult” (2000), 79 Can. Bar Rev. 252, at p. 262.  Precisely what is required of the government may vary with the strength of the claim and the circumstances.  But at a minimum, it must be consistent with the honour of the Crown.

[Emphasis added.]

[68]            In summary, I would allow the appeal on the ground that the Commission unreasonably refused to include the consultation issue in the scope of the proceeding and oral hearing.

Remedy 

[69]            As I have indicated, the merits of the consultation issue are for the Commission to decide in the first instance.  The issue should be remitted to it for consideration.  The order I would make is in terms similar to those suggested by B.C. Hydro in the event the appeal is allowed:

THAT the proceeding identified as “Re: British Columbia Hydro and Power Authority Project No. 3698475/Order No. G-100-07 Filing of 2007 Electricity Purchase Agreement with RTA as an Energy Supply Contract Pursuant to section 71” be re-opened for the sole purpose of hearing evidence and argument on whether a duty to consult and, if necessary, accommodate the appellant exists and, if so, whether the duty has been met in respect of the filing of the 2007 EPA.

“The Honourable Mr. Justice Donald”

I agree:

“The Honourable Madam Justice Huddart”

I agree:

“The Honourable Mr. Justice Bauman”