Westcoast Energy Inc. v. National Energy Board et al., (1996) 193 N.R. 321 (FCA)

• Judge: Hugesson, Pratte and Stone, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 09, 1996
• Jurisdiction: Canada (Federal)
• Citations: (1996), 193 N.R. 321 (FCA)

Westcoast Energy v. Nat. Energy Bd. (1996), 193 N.R. 321 (FCA)

MLB headnote and full text

In The Matter of Parts III and IV of the National Energy Board Act, R.S.C. 1985, c. N-7.

Westcoast Energy Inc. (appellant) v. National Energy Board and Attorney General of Canada (respondents)

(A-545-95)

In The Matter of the National Energy Board Act;

And In The Matter of a reference by the National Energy Board pursuant to section 18.3 and subsection 28(2) of the Federal Court Act.

(A-606-95)

Indexed As: Westcoast Energy Inc. v. National Energy Board et al.

Federal Court of Appeal

Hugesson, Pratte and Stone, JJ.A.

February 9, 1996.

Summary:

Westcoast Energy Inc. operated a gas pipeline utility in British Columbia with connections to the Yukon, Alberta and the United States. Westcoast took delivery of gas provided by producers and delivered the gas to its particular destination. At no time did Westcoast own the gas. Westcoast's mainline pipeline was regulated by the National Energy Board. Westcoast proposed to expand its facilities in the Fort St. John area and in the Grizzly Valley area. The expansions would consist of an expansion of the gathering facilities for the transportation of "raw" gas from the point of delivery by the producers, and the construction of new or expanded processing plants in which the "fuel" gas, basically methane, was separated from the other components of the raw gas. In both cases, the proposed new processing facilities represented by far the most import­ant and expensive part of proposed expan­sions. In each case there would be minor changes and additions to the mainline fuel gas transmission facilities downstream of the proposed processing plants. Westcoast applied to the National Energy Board for approval of both projects. The Grizzly Val­ley application was adjourned and only the Fort St. John application proceeded. B.C. Gas Utility Ltd. (B.C. Gas) questioned the Board's jurisdiction on the grounds the proposed expansion were purely local works and undertakings and not within the ambit of federal jurisdiction under ss. 91(29) and 92(10)(a) of the Constitution Act, 1867. B.C. Gas also submitted that proposed processing facilities, the most important part of the proposed project, did not come within the Board's jurisdiction under s. 2 of the Nation­al Energy Board Act because they were not part of the pipeline.

The National Energy Board allowed B.C. Gas's objection and declined jurisdiction. Westcoast appealed. Westcoast also revived the Grizzly Valley application and applied to the Board to refer the question of jurisdic­tion for determination by the court. The Board referred the following questions to the court: (1) are the proposed facilities to be constructed and operated by Westcoast within the federal jurisdiction under the Constitution Acts 1867 to 1982 and (2), if so, do such facilities fall within the defini­tion of pipeline in s. 2 of the National Energy Board Act.

The Federal Court of Appeal allowed the appeal in relation to the Fort St. John appli­cation and returned the matter to the Board for a decision on the merits. In regard the Grizzly Valley reference, the court held that (1) the proposed expansion was within federal jurisdiction and that (2) the facilities fell within the definition of pipeline.

Constitutional Law - Topic 6643

Federal jurisdiction (s. 91) - Inter-provin­cial works and undertakings - Pipelines - Westcoast operated a gas pipeline with inter-provincial connections - Westcoast proposed to expand its facil­ities in the Fort St. John area - The ex­pansion would consist of an expansion of the gathering facilities for the transporta­tion of "raw" gas from the point of deliv­ery by the producers, and the construction of a new or expanded processing plant in which the "fuel" gas, basically methane, was separ­ated from the other components of the raw gas - Westcoast applied to the National Energy Board for approval - B.C. Gas submitted that the Board lacked juris­dic­tion because the proposed expansion was a purely local work and undertaking - The Board declined jurisdiction - Westcoast appealed - The Federal Court of Appeal allowed the appeal and remitted the matter to the Board - See paragraphs 1 to 36.

Constitutional Law - Topic 6643

Federal jurisdiction (s. 91) - Inter-provin­cial works and undertakings - Pipelines - Westcoast operated a gas pipeline with inter-provincial connections - Westcoast proposed to expand its facil­ities in the Fort St. John area - The ex­pansion would con­sist of an expansion of the gathering facil­ities for the transporta­tion of "raw" gas from the point of deliv­ery by the pro­ducers, and the construction of a new or expanded processing plant in which the "fuel" gas, basically methane, was sepa­rated from the other components of the raw gas - Westcoast applied to the Na­tional Energy Board for approval - B.C. Gas submitted that the Board lacked juris­dic­tion because the most important part of the expansion, the processing facility, did not form part of the pipeline as defined in s. 2 of the National Energy Board Act - The Board declined jurisdiction - West­coast appealed - The Federal Court of Appeal allowed the appeal and remitted the matter to the Board - See paragraphs 1 to 36.

Constitutional Law - Topic 6643

Federal jurisdiction (s. 91) - Inter-provin­cial works and undertakings - Pipelines - Section 92A of the Constitu­tion Act 1867 allowed the provinces to control the pri­mary production and export of non-re­newable natural resources - An interpro­vincial gas pipeline proposed two expan­sions to its gas gathering and pro­cessing facilities - The issue arose as to whether the National Energy Board had jurisdiction - The Federal Court of Appeal stated that "I cannot read this [s. 92A] as preventing the exercise of federal jurisdic­tion over a transportation undertaking which receives raw gas from the producers thereof after it has been extracted from the ground, dehy­drated, and transported to delivery points. Such federal jurisdiction is entirely com­patible with the exercise of provincial powers mentioned in s. 92A" - See para­graphs 38 to 40.

Constitutional Law - Topic 6643

Federal jurisdiction (s. 91) - Inter-provin­cial works and undertakings - Pipelines - A gas pipeline (Westcoast) proposed to expand its gas gathering facil­ities and gas processing plants in the Fort St. John and Grizzly Valley areas - The issue arose as to whether the National Energy Board had regulatory jurisdiction because, inter alia, the gathering operations were a separate undertaking from the processing and the mainline transmission operations and its interprovincial aspect was not significant - The Federal Court of Appeal stated that the gathering facilities "must be considered as interprovincial because such transporta­tion takes place on a regular and continu­ous basis across provincial boundaries. Nor is the fact that only a relatively small part of Westcoast's gathering facilities extend into Yukon, Northwest Territories and Alberta of con­stitutional significance. ... At a minimum, all Westcoast's gathering facilities are subject to federal jurisdiction" - See para­graphs 43 and 45.

Constitutional Law - Topic 6643

Federal jurisdiction (s. 91) - Inter-provin­cial works and undertakings - Pipelines - A gas pipeline (Westcoast) proposed to expand its gas gathering facil­ities and gas processing plants in the Fort St. John and Grizzly Valley areas - The issue arose as to whether the National Energy Board had regulatory jurisdiction in regard to the gas processing plants - A reference was made to determine whether processing plants were included in the meaning of the word "pipeline" as defined by s. 3 of the Na­tional Energy Board Act - The Federal Court of Appeal ruled that the Board had jurisdic­tion because the pipeline was a single undertaking and the plants formed an integral part of the pipelines to which they were connected on each side - See para­graphs 50 to 55.

Constitutional Law - Topic 6646

Federal jurisdiction (s. 91) - Inter-provin­cial works and undertakings - Integral element test - Under the second branch of the test in United Transportation Union v. Central Western Railway Corp., an under­taking which is not itself federal could become subject to federal jurisdic­tion because it is essential and integral to a core federal undertaking - However, the Federal Court of Appeal stated that "where, as here, there is a finding of a single undertaking, it is not in my view necessary that every integral part of that undertaking should also be 'vital' or 'essen­tial' thereto. Or, to come at the matter the other way, it is not necessary that the federal undertaking itself should be depen­dant upon the existence and operation of all of its parts. Those questions need only be asked in connection with the second branch of the Central Western Railway test" - See paragraph 47.

Cases Noticed:

United Transportation Union et al. v. Central Western Railway Corp., [1990] 3 S.C.R. 1112; 119 N.R. 1; 76 D.L.R.(4th) 1, consd. [para. 13].

Ontario (Attorney General) v. Winner, [1954] A.C. 541 (P.C.), consd. [para. 22].

Reference Re Application of Hours of Work Act (British Columbia) to Employees of the Canadian Pacific Railway in Empress Hotel, Victoria (City) - see Canadian Pacific Railway Co. v. British Columbia (Attorney General).

Canadian Pacific Railway Co. v. British Columbia (Attorney General), [1950] A.C. 122 (P.C.), consd. [para. 23].

Toronto (City) v. Bell Telephone Co. of Canada, [1905] A.C. 52 (P.C.), consd. [para. 24].

Ontario v. Canada (Board of Transport Commissioners), [1968] S.C.R. 118; 65 D.L.R.(2d) 425, consd. [para. 26].

Luscar Collieries Ltd. v. McDonald, [1927] A.C. 925 (P.C.), consd. [para. 30].

Dome Petroleum Ltd. v. National Energy Board (1987), 73 N.R. 135 (F.C.A.), consd. [para. 33].

Reference Re National Energy Board Act, [1988] 2 F.C. 196; 81 N.R. 241 (F.C.A.), consd. [para. 34].

Flamborough v. National Energy Board, Interprovincial Pipe Line Ltd. and Canada (1984), 55 N.R. 95 (F.C.A.), consd. [para. 35].

Ontario Hydro v. Labour Relations Board (Ont.), [1993] 3 S.C.R. 327; 158 N.R. 161; 66 O.A.C. 241, consd. [para. 39].

Ottawa-Carleton Regional Transit Com­mis­sion v. Amalgamated Transit Union, Local 279 et al. (1983), 1 O.A.C. 177; 44 O.R.(2d) 560 (C.A.), consd. [para. 43].

Northern Telecom Canada Ltd. v. Communications Workers of Canada and Canada Labour Relations Board, [1980] 1 S.C.R. 115; 28 N.R. 107, consd. [para. 46].

Statutes Noticed:

Constitution Act, 1982, sect. 91(29) [para. 8]; sect. 92A [para. 38]; sect. 92(10)(a) [para. 8].

National Energy Board Act, R.S.C. 1985, c. N-7, sect. 2 [paras. 8, 51].

Authors and Works Noticed:

Hogg, Peter W., Constitutional Law of Canada (3rd Ed. 1992), p. 22-11 [para. 27, footnote 4].

Counsel:

W. Ian C. Binnie, Q.C., and Robin Sirrett, for the appellant, Westcoast Energy Inc.;

Judith Hanebury, for the respondent, National Energy Board;

Anne Michaud, for the respondent, Attorney General of Canada;

Stanley Martin, Cal Johnson and D.G. Cowper, for B.C. Gas Utility Ltd;

George H. Copley, for Her Majesty The Queen in Right of the Province of British Columbia;

James Quail, for Consumers Association of Canada (B.C.) Branch.

Solicitors of Record:

McCarthy, Tétrault, Toronto, Ontario and Vancouver, British Columbia, for Westcoast Energy Inc.;

Legal Services, National Energy Board, Calgary, Alberta, for the respondent, National Energy Board;

George Thomson, Deputy Attorney General of Canada, Ottawa, Ontario, for the respon­dent, Attorney General of Canada;

Russell & Dumoulin, Vancouver, British Columbia, for B.C. Gas Utility Ltd.;

Ministry of the Attorney General, Vancouver, British Columbia, for Her Majesty The Queen in Right of the Province of British Columbia;

B.C. Public Interest Advocacy Centre, Vancouver, British Columbia, for Consumers Association of Canada (B.C. Branch);

Code Hunter Wittmann, Calgary, Alberta, for the Aitken Creek Group;

Legal Services, Alberta Department of Energy, Calgary, Alberta, for the Alberta Department of Energy;

McLeod Dixon, Calgary, Alberta, for the Alberta Natural Gas Co.;

Robert C. Beattie, Vancouver, British Columbia, for Canwest Gas Supply Inc.;

Bull, Housser & Tupper, Vancouver, British Columbia, for the Council of Forest Industries, Methanex Corp. and Cominco Ltd.;

Guild, Yule and Co., Vancouver, British Columbia, for the Export Users Group;

Lidstone, Young, Anderson, Vancouver, British Columbia, for the Peace River Regional District;

Legal Services, Petro-Canada, Calgary, Alberta, for Petro-Canada;

Legal Services, Progas Ltd., Calgary, Alberta, for Progas Ltd.;

Carter, Lock, Repka, Grande Prairie, Alberta, for Mr. Calloway Roller and Mrs. Yvonne Roller;

Legal Services, Shell Canada Ltd., Calgary, Alberta, for Shell Canada Ltd.;

Milner Fenerty, Calgary, Alberta, for Tumbler Ridge Shippers Group;

Legal Services, Unocal Canada Ltd., Calgary, Alberta, for Unocal Canada Ltd.

This appeal was heard at Vancouver, British Columbia, on January 8, 9, and 10, 1996, before Pratte, Hugessen and Stone, JJ.A., of the Federal Court of Appeal.

The decision of the Court of Appeal was delivered by Hugessen, J.A., at Ottawa, Ontario, on February 9, 1996.