74-A-304
Consumers' Association of Canada and Pollution
Probe at the University of Toronto (Applicants)
v.
The Hydro-Electric Power Commission of
Ontario, and the National Energy Board, and Her
Majesty the Queen in right of the Province of
Ontario (the Minister of Energy for Ontario)
(Respondents)
[No. 1]
Court of Appeal, Thurlow and Cattanach JJ. and
Hyde D.J.—Ottawa, April 10, 11 and 16, 1974.
Leave to appeal—Decision of National Energy Board
granting licence for export of electrical energy—Leave to
appeal refused after written and oral submissions—National
Energy Board Act, R.S.C. 1970, c. N-6, ss. 18, 83(b)—
Federal Court Act, s. 28.
On March 19, 1974, the Court considered written applica
tion for leave to appeal under section 18 of the National
Energy Board Act, from a decision of the respondent Board,
granting the respondent Commission a licence to export
electrical energy, and a parallel application under section 28
of the Federal Court Act. Leave was then given to bring on
the applications for oral argument.
Held, the application for leave to appeal is dismissed. As
to the applicants' allegation that the respondent Board, in
granting the licence to the respondent Commission, had no
evidence to satisfy itself that the price to be charged by the
respondent Commission for the exported power was "just
and reasonable in relation to the public interest" within the
meaning of section 83(b) of the National Energy Board Act,
it was not fairly arguable either that there was no evidence
upon which the Board could satisfy itself or that the deci
sion was based on any error of law. As to the allegation of a
defect in a formal condition of the licence, the only likely
consequence of a successful appeal would be the striking
out of the condition in question and the appeal would be
futile.
Aly v. Minister of Manpower and Immigration [1971]
F.C. S40, considered.
APPLICATION.
COUNSEL:
G. F. Henderson, Q.C., and A. J. Roman for
applicants.
J. T. Weir, Q.C., for Power Commission,
respondent.
I. Blue for National Energy Board,
respondent.
M. Manning for the Queen in right of
Ontario.
SOLICITORS:
Andrew J. Roman, Ottawa, for applicants.
Weir & Foulds, Toronto, for Power Com
mission, respondent.
F. H. Lamar, Q.C., Ottawa, for National
Energy Board, respondent.
Morris Manning, Toronto, for the Queen in
right of Ontario.
Deputy Attorney General of Canada for the
Queen in right of Canada.
The following are the reasons for judgment
delivered in English by
THURLOW J.: This is an application for leave
to appeal under section 18 of the National
Energy Board Act from a decision of the Na
tional Energy Board granting to the respondent
Hydro-Electric Power Commission of Ontario a
licence to export electrical energy. There is also
an application before the Court for an extension
of time to bring an application under section 28
of the Federal Court Act to review and set aside
the same decision. Assuming that the delay in
bringing the application has been satisfactorily
explained it might follow on the principle of the
decision in Aly v. Minister of Manpower and
Immigration' that the extension of time should
be granted on terms if the applicants succeed in
obtaining leave to appeal. On the other hand if
there are insufficient grounds for leave to
appeal the application for extension of time to
apply under section 28 would fail as well, for
the same reason.
The principal ground on which leave to appeal
was sought was that there was not before the
Board evidence on which it could properly satis
fy itself that the price to be charged by Hydro
' [1971] F.C. 540.
for the power to be exported was just and
reasonable "in relation to the public interest"
within the meaning of section 83(b) of the Na
tional Energy Board Acte. A variety of aspects
of the issue so raised were discussed and a
number of points said to raise serious questions
of law were submitted but the record of the
proceedings before the Board was not brought
up and I am not persuaded by anything in such
excerpts from that record as were put before us
that it is fairly arguable either that there was no
evidence upon which the Board could satisfy
itself or that the decision of the Board was
based on any error of law.
A further basis of attack put forward was that
the licence contained a provision that its term
should not commence until the licence was
approved by the Governor in Council. It was
said that the law does not require such approval
and that the submission of the licence for such
approval and the approval subsequently given
vitiated the licence because a body other than
the Board had participated in the grant of the
licence. It was not suggested that there was any
bias in fact or that the Board had not reached its
conclusion entirely on its own.
In my opinion it is arguable that the approval
of the Governor in Council was not required but
no alteration or change was made in the licence
by or at the instance of the Governor in Council
and, as I see it, the only effect likely to flow
from a successful appeal on such a point is that
this Court would exercise its authority under
section 52(c) of the Federal Court Act either to
strike out condition 1.(1) of the licence or return
the matter to the Board with a direction to do
so. In such a situation the appeal would be futile
and leave to take it should not be given.
I would dismiss the application.
2 83. Upon an application for a licence the Board shall
have regard to all considerations that appear to it to be
relevant and, without limiting the generality of the forego
ing, the Board shall satisfy itself that
(b) the price to be charged by an applicant for gas or
power exported by him is just and reasonable in relation
to the public interest.
The following are the reasons for judgment
delivered in English by
CATTANACH J.: I agree that leave to appeal
should not be granted for the reasons expressed
by Thurlow J. and Hyde DJ.
* * *
The following are the reasons for judgment
delivered in English by
HYDE D.J.: This application under section 18
of the National Energy Board Act for leave to
appeal a decision of the National Energy Board
dated November 1973 recommending to the
Governor in Council the issue of licence EL-76
for the export of electric power to the United
States was first presented to the Court in writ
ing. On March 19, 1974 the Chief Justice, with
the concurrence of Pratte and Heald JJ., author
ized the applicants to bring their application on
for oral argument within 30 days failing which it
would stand dismissed.
In his reasons for judgment the Chief Justice
made certain observations but refrained "from
expressing any concluded opinion on the
matter".
As 'he said "before this application can be
granted, the Court must be able to see a specific
question of law or jurisdiction the answer to
which may lead to the setting aside of the deci
sion or order attacked".
The Chief Justice sets out the text of the
relevant sections of the Act and the Regulations
thereunder and the grounds urged by the appli
cants so I do not repeat them.
At the hearing before us counsel for the appli
cants relied on two principal grounds:
First, the form of the decision as a report to
the Governor in Council recommending the
issue of a new licence, albeit conditional on the
cancellation of a previous licence EL-33 due to
expire on December 31, 1975, or the interven
tion of the Governor in Council, is illegal in
view of the authority given to the Board alone,
and without approval by the Governor in Coun
cil, by section 82 of the Act, to issue a new
licence for export.
Second, that the Board exceeded its jurisdic
tion in failing to measure the "social costs" to
the public which would result from the increase
in coal generated power under section 83(b) of
the Act and Regulation 6(2).
It is true that in the extensive presentation
before us a number of subsidiary questions
were raised but I think these were the two basic
problems with which we have to deal.
As far as the first one is concerned while
there might be an argument as to the validity of
Regulation No. 8 requiring "all licences for the
exportation of gas or power" to be approved by
the Governor in Council—and in view of my
conclusions I do not pronounce thereon—it is
not that clear that this is a simple application
under section 82(1)(a) for a licence for the
exportation of power the granting of which does
not require approval of the Governor in
Council.
Hydro applied for:
... "either an amendment to Export Licence EL-33 or a
new licence to replace EL-33, as the Board may deem
appropriate, to delete the conditional clause within Condi
tion 3(1) of the licence which refers to equichange transfer
circulating over the power lines in the United States. No
other change was requested; the expiry date and gross
energy limit would remain unaltered. The Board, on review
ing the application, decided to consider it as being for a new
licence to replace EL-33, with the same termination date. 3
(Underlining supplied.)
In dealing with Hydro's request for the Board
to dispense with the furnishing of certain
detailed information specified in section 6(2) of
the Part VI Regulations the report notes that
two reasons were given "1. That Ontario Hydro
3 See NEB Report page 5.
was in effect requesting an amendment to an
existing licence ..." and "2. that there was
some urgency ..." 4 .
This request was granted on certain condi
tions. Now section 17(1) of the Act provides:
17. (1) Subject to subsection (2), the Board may review,
rescind, change, alter or vary any order or decision made by
it, or may rehear any application before deciding it.
Subsection (2) goes on to state, however, that:
... no such change, alteration or variation is effective until
approved by the Governor in Council.
Frankly I can see no logic in the statute giving
the Board power to issue a new licence without
such approval, as does section 82(1)(a), and the
requirement of approval by the Governor in
Council to any "change, alteration or variation"
in section 17(2), and counsel was unable to
suggest any.
However, the nature of Hydro's application,
as already outlined, is such that even though the,
Board decided to accept the alternative of issu
ing a new licence in effect it was, as it says, an
amendment or, to use the wording of section
17(2), "a change, alteration or variation" of
licence EL-33, in 1965.
If Regulation No. 8 did not exist it would still,
in my opinion, have been necessary having
regard to section 17(2) of the Act to have the
approval of the Governor in Council to the
granting of Hydro's application on the basis that
one cannot be indirectly what it is forbidden to
do directly.
Accordingly I would refuse leave on this
ground as not being fairly arguable in law.
There was lengthy argument on the second
ground that the Board had exceeded its jurisdic
tion in not requiring Hydro to lead evidence as
4 'bid, page 6.
to "social costs" to enable it to "satisfy" itself,
as required by section 83(b) that:
(b) the price to be charged by an applicant for gas or
power exported by him is just and reasonable in relation
to the public interest.
Section 6(2) of the Part VI Regulations
required any such applicant, "unless otherwise
authorized by the Board" to furnish information
under a number of headings which included
evidence as to the requirement just quoted in
section 83(b) of the Act. Subsequent to the
hearing, by the Board, but some three months
prior to issuing of its Report, Regulation 6(2)
was substantially amended and in particular a
new paragraph (aa) was introduced requiring
the applicant to include in the information to be
furnished by him:
(aa) evidence on any environmental impact that would
result from the generation of the power for export.
As already indicated in dealing with the first
ground the Board had exercised its authority in
section 6(2) of the Regulations to exempt Hydro
from furnishing information detailed in that sec
tion which must be considered to include that
added by the subsequent amendment,' namely
paragraph (aa). Although in its Report the
Board stated that such dispensation was granted
under subsection 3(2) of its Rules of Practice
and Procedure and its authority in that respect
is questioned it is clear from the provisions of
section 6(2) of the Part VI Regulations, already
noted, that it had the power so to act.
This dispensation to Hydro, however, does
not relieve the Board of its responsibility under
section 83(b) of the Act to consider "the public
interest". A review of its Report shows that this
was recognized and further that it did consider
the question of "social costs". While Hydro, in
view of the dispensation therefrom, did not pro
duce evidence thereon its witness Gillies, its
Senior Meteorologist and Co-ordinator of Air
Pollution Control, testified upon the environ
s See Interpretation Act, R.S.C. 1970, c. I-23 s. 32(2).
mental impact of the generation of this extra
energy for export and said that "no significant
effects" were expected therefrom. 6 He further
stated that:
Ontario Hydro's plants will operate according to their origi
nal design or according to program approval for updating
which will meet the regulations of the Ontario Government
Environmental Protection Act, 1971. (Idem.)
He said this notwithstanding his testimony, as
noted in the NEB Report (p. 14) that this would
result in the emission of 27,300 tons of sulphur
dioxide and 505 tons of particulates per year.
He added that approximately 50 per cent of
these emissions would fall offshore on the
waters of Lake Ontario. Although, in cross-
examination, he admitted that on occasions the
emissions would exceed the limits he said that it
was Ontario Hydro's practice in such cases to
cut back its generation.
Having only brief extracts from the extensive
testimony presented to the Board, selected by
the applicants, we must rely on the summaries
thereof contained in its Report. After stating
that it was satisfied that Hydro operated its
thermal generating stations in accordance with
the Ontario environmental regulations it then
said that:
... it should examine the anticipated benefits from the
export of the power in relation to any likely adverse envi
ronmental impact on the community, to satisfy itself that the
export would result in a net advantage, not merely to the
applicant, but also to Canada. (P. 21.)
It discussed the contention of the present
applicants that the social costs of the increased
air pollution would amount to some $8.5 million
a year, compared with the estimated increased
net monetary returns to Hydro of $6.8 to $8.5
million per year.
6 See his report dated Oct. 22, 1973, reproduced as
Schedule "C" to Hydro's written representations at p. 2.
The Report then goes on to say that:
In spite of the extensive explanations of the intervenors'
witnesses and the persuasive arguments of their counsel, my
[the Presiding Member] analysis of the evidence leads me to
the conclusion that the estimate is not acceptable as a basis
for rejecting the application. (P. 22.)
and it then continues several pages further on
(p. 25) as follows:
In my judgment, from the evidence adduced, the social costs
are likely to be less than estimated, and less than the profit
expected by Ontario Hydro on the export. Having given full
consideration to the environmental impact, as well as to
other aspects of the proposed export, I am satisfied that this
export would provide a net advantage, not merely to the
Applicant, but also to Canada.
One of the other aspects, which is unquantifi-
able, is perhaps worthy of note and that is a
recognition of the practice of mutual assistance
between Canadian and U.S. utilities and the
current energy shortage in the latter country. I
extract the following in these respects:
This application deals with assistance to be rendered by a
Canadian to U.S. utilities, but there are also occasions when
Canadian systems need and receive help from U.S. systems.
It is common knowledge that the United States is passing
through a period of serious energy shortages. Canada's
ability to assist her neighbour by supplying additional oil and
natural gas is severely restricted by pur own requirements
and limited capacity. Here, however, is a case where Canada
can help, with almost no drain on her own resources, while
at the same time making a reasonable profit. (P. 28.)
I have gone into this ground at some length to
show that the Board did face up to its respon
sibilities under the Act and did not ignore the
environmental impact of the requested amend
ment which it had to take into account in rela
tion to the public interest. Having done so I see
no excess of jurisdiction as claimed by the
applicants.
For these reasons I would refuse the applica
tion for leave to appeal.
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