NEB Trans Mountain Decision


On October 23, 2014 the National Energy Board (“NEB” or the “Board”) issued Ruling No. 40 (the “Ruling”) in response to a Notice of Motion (“Motion”) and a Notice of Constitutional Question (“NCQ”) filed by Trans Mountain Pipeline ULC (“Trans Mountain”) in connection with the Trans Mountain Expansion Project (the “Project”). The NCQ dealt with the operational conflict between certain municipal by-laws and certain provisions of the National Energy Board Act (the “NEB Act”) .1

In its Ruling, the Board concluded it has the legal authority to consider constitutional questions relating to its own jurisdiction. The Board also determined that the doctrine of federal paramountcy, or alternatively the doctrine of interjurisdictional immunity, applied and rendered certain City of Burnaby by-laws (the “By-Laws”) inapplicable to the extent they conflicted with sections 73 and 75 of the NEB Act (which allowed Trans Mountain to carry out certain work in support of its Project). The Ruling forbids the City of Burnaby (the “City” or “Burnaby”) from, inter alia, interfering and obstructing Trans Mountain from exercising its authority under the NEB Act. The Federal Court of Appeal subsequently denied the City’s application for leave to appeal.

Background: The Trans Mountain Project & Preferred Route

On December 16, 2013 Trans Mountain applied to the NEB pursuant to sections 52 and 58 of the NEB Act for a certificate of public convenience and necessity (and related orders) approving the Project. The Project involves construction of 987 kilometres of new buried pipeline in British Columbia and Alberta, and the reactivation of 193 kilometres of existing pipeline.2 On April 2, 2014 the NEB issued hearing order OH-001-2014, setting out procedural steps and timelines, and granting the City intervener status.3

Trans Mountain’s initial application proposed the construction of two delivery lines to the Westridge Marine Terminal through a residential neighbourhood in Burnaby (within Trans Mountain’s existing right-of-way), using conventional pipeline construction techniques. During the course of consultations (as part of the NEB process), it became evident that stakeholders and interested parties preferred a route that avoided Burnaby’s urban areas, and utilized trenchless construction. As a result, Trans Mountain subsequently revised its preferred route to travel directly to the Westridge Marine Terminal, through Burnaby Mountain Conservation Area (the “Preferred Route”), utilising trenchless construction.4 As a result of this change to the preferred route, Trans Mountain was required to carry out additional engineering, environmental, socioeconomic, and geotechnical studies (the “Mandated Field Work”, more particularly described below) in order to assess the Preferred Route. In light of the requirement for new information, the Board issued Procedural Direction No. 4, allowing Trans Mountain until December 1, 2014 to carry out and file the results of the Mandated Field Work.5

Ruling No. 28 – Confirming Interpretation of Section 73(a) of the NEB Act

Following Procedural Direction No. 4, Trans Mountain attempted to obtain approval from the City to access the lands in question. The City took the position that the physical work required to complete the Mandated Field Work (which involved, inter alia, the drilling of boreholes for geotechnical investigations, conducting soil surveys, tree removal and clearing brush, and the drilling of a series of vertical walls to ascertain groundwater conditions) would be contrary to the By-Laws.6 Among the By-Laws that the Mandated Field Work would violate was the Burnaby Parks Regulation Bylaw 19797 (the “Parks Bylaw”), which inter alia, prohibited any person from damaging, destroying or polluting any personal property, tree, shrub, plant, turf or flower in any park.

On July 25, 2014, Trans Mountain wrote to the NEB requesting confirmation of its rights to access lands for the purpose of conducting the Mandated Field Work under paragraph 73(a) of the NEB Act.8 On August 19, 2014, the Board issued Ruling No. 28, which confirmed that Trans Mountain had the power to enter the Burnaby Mountain Conservation Area and carry out the Mandatary Field Work, subject to the requirement in section 75 of the NEB Act that Trans Mountain do as little damage as possible and make full compensation for any damage caused.9

Work Done Following Rule No. 28 and the Resulting Notice of Motion

On August 20, 2014, Trans Mountain wrote to Burnaby and advised that it intended to proceed with the Mandated Field Work on August 22. Burnaby’s response to this letter indicated that Trans Mountain’s section 73 rights were subject to compliance with the By-Laws (including the Parks Bylaw).10

On August 28, 2014, Trans Mountain commenced work in the Burnaby Mountain Conservation Area. Shortly thereafter, City staff issued Trans Mountain with two Orders to Cease Bylaw Contraventions, and served a By-Law Notice on a Trans Mountain employee citing damage or destruction to trees or plants contrary to the Parks Bylaw.11 On September 3, 2014 Trans Mountain filed its Motion with the NEB requesting an order pursuant to sections 12, 13, and 73(a) of the NEB Act, directing the City to comply with paragraph 73(a) of the NEB Act and forbidding the City from denying/obstructing access to the lands in question.12 The Board responded, advising Trans Mountain to file an NCQ posing the following questions:

  1. Does the Board have the legal authority to determine that Burnaby’s specific bylaws that Trans Mountain is alleged to have breached are inapplicable, invalid, inoperative in the context of Trans Mountain’s exercise of its powers under paragraph 73(a) of the NEB Act?
  2. If so, on the facts before the Board, should the Board find that those bylaws are inapplicable, invalid, or inoperative?
  3. If the Board can and does make a finding that those bylaws are invalid, inapplicable, or inoperable in the particular case, does the NEB Act provide the Board, as a statutory tribunal, with the authority to forbid Burnaby from enforcing those or any other by-laws in the future (for example, what is the scope of the authority under section 13 of the NEB Act, and does it encompass the remedy sought against Burnaby)?
  4. If so, do the facts before the Board support granting such at order?

On September 26, 2014, Trans Mountain resubmitted its Motion with the NCQ, as directed by the NEB. The Hearing occurred on October 9, 2014 and the Board issued its Ruling on October 23, 2014 in which it addressed each of the four NCQ issues.

Issue 1: Whether the Board has the legal authority to decide the issues

The City argued that the Board only had the power to determine legal and constitutional questions regarding its own enabling legislation and was therefore not able to determine legal constitutional questions regarding provincial or municipal legislation.13 As such, Burnaby argued that the Board was not able to determine that Burnaby’s By-Laws are inapplicable, invalid or inoperable and that the matter properly belonged before a provincial superior court.14 Trans Mountain, on the other hand, submitted that sections 11, 12, and 13 of the NEB Act provide the Board with legal authority over the issues as these provisions establish the NEB as a court of record “with full and exclusive jurisdiction to inquire into, hear, and determine any matter within its jurisdiction, whether a matter of law or fact.”15

The Board rejected Burnaby’s position and concluded that it did, in fact, have the legal authority to consider constitutional questions relating to its own jurisdiction. The Board found that subsection 12(2) of the NEB Act was determinative of the issue. Subsection 12(2) of the NEB Act states: “For the purposes of this Act, the Board has full jurisdiction to hear and determine all matters, whether of law or fact” (emphasis added). The Board also went on to note that case law from the Supreme Court of Canada (“SCC”) supported this conclusion.16 Relying on the 1991 SCC’s decision in Cuddy Chicks Ltd v Ontario (Labour Relations Board), the Board stated that where a tribunal has jurisdiction over the subject matter, parties, and remedy, it may treat an impugned provision as invalid “for the purpose of the matter before it.”17 As the Board had jurisdiction over the subject matter, the parties, and the remedy, it therefore had jurisdiction on the issue and the ability to declare the By-Laws invalid, inoperative, or inapplicable for the purpose of the Trans Mountain matter before it. The subject matter at issue was “an application to order Corridor Study Access to the Subject Lands in relation to a proposed pipeline route.”18 The parties came within the purview of the NEB because they relate to project routing and access required to complete necessary surveys. The Board had jurisdiction over the remedy as a result of the statutory language of sections 11, 12(2), 13(b), and 73(a) of the NEB Act.19

The Board’s ruling also referred to an earlier decision of the BC Supreme Court (“BCSC”) in respect of a motion brought by Burnaby to enjoin Trans Mountain from continuing to carry on its Mandated Field Work in contravention of the City By-Laws. The BCSC declined to issue the injunction, finding no irreparable harm and stating among other things that the matter was properly before the NEB.20 The BCSC went on to note that pursuant to the SCC’s ruling in Cuddy Chicks, the NEB would have the jurisdiction to treat the City’s By-Laws as invalid for the purpose of the dispute between Burnaby and Trans Mountain.21

Question 2: Whether Burnaby’s By-Laws should be inapplicable, invalid, or inoperative

In relation to this question, the Board considered the applicability of the doctrines of federal paramountcy and interjurisdictional immunity.

Federal Paramountcy

The doctrine of federal paramountcy, as articulated by the SCC in Canadian Western Bank, provides that “when the operational effects of provincial legislation are incompatible with federal legislation, the federal legislation must prevail and the provincial legislation is rendered inoperative to the extent of the incompatibility.”22 This doctrine applies in two circumstances: (i) where it is impossible to comply with both a federal and provincial law, such that compliance with one results in a violation of the other; and (ii) where application of the provincial law would frustrate the purpose of the federal law.23

The City of Burnaby argued that there was no impossibility of dual compliance because the Parks Bylaw did not forbid access to the Burnaby Mountain Conservation Area to carry out studies.24 Further, the City submitted that the Board should not give too broad an application to paramountcy on the basis of frustration of federal purpose. Citing Canadian Western Bank, Burnaby stated that the mere fact that Parliament has legislated in an area does not preclude provincial legislation from operating in the same area. Trans Mountain responded by indicating that it was impossible to carry out the Mandated Field Work (and thereby satisfy the information requirements under the NEB Act) without breaching the By-Laws.

The Board concluded that there is a conflict between both the operation and purpose of the By-Laws and paragraph 73(a) of the NEB Act. The Parks Bylaw prohibits any tree cutting, vegetation clearing, and borehole drilling.25 The Board accepted Trans Mountain’s evidence, finding that these activities were necessary in order to carry out the Mandated Field Work and provide the Board with the requisite information.26 Thus, the Board found that it was simply not possible for Trans Mountain to comply with both the requirements to provide information mandated by the NEB Act and the Burnaby By-Laws, and that therefore there was an operational conflict. The Board also found that this conflict between the federal and municipal laws had the purpose of frustrating the federal purpose of the NEB Act. The purpose of the requirements under the NEB Act is to provide the Board with sufficient information to determine whether a particular project is in the public interest; by prohibiting Trans Mountain from being able to conduct the surveys and examinations, Burnaby had frustrated this federal purpose.

Interjurisdictional Immunity

As explained recently by the SCC in Bank of Montreal v Marcotte, “Interjurisdictional immunity operates to prevent a law enacted by one level of government from impermissibly trenching on the ‘unassailable core’ of jurisdiction reserved for the other level of government”.27 Where the doctrine applies, the otherwise validly enacted law (in this case, the City By-Laws) is “read down” such that it no longer applies to the extra-jurisdictional matter.28

In its submissions, Burnaby noted that the SCC had cautioned that the doctrine of interjurisdictional immunity should only be used in situations covered by precedent and that the doctrine must not be used to undermine cooperative federalism.29 Further, Burnaby argued that Trans Mountain had not demonstrated that the By-Laws would impair the core of a federal power.30

Trans Mountain argued that carrying out the Mandated Field Work for the purpose of informing the route of an interprovincial pipeline falls within the “core” of a federal power and the application of the By-Laws impairs the federal power. Further, Trans Mountain submitted the facts of the case had already been covered by precedent in Campbell-Bennett v Comstock Midwestern Ltd.31

The Board found that the regulation of interprovincial pipelines is a core area of federal jurisdiction, and that the By-Laws impaired the Board’s ability to make a decision regarding the public convenience and necessity of the interprovincial pipeline.32 The Board likened the situation to the SCC case of Construction Montcalm Inc. v Quebec (Minimum Wage Commission),33 and stated that like the location of aerodromes being essential to the federal government’s power over aeronautics in Construction Montcalm, technical information about pipeline routing is essential to the federal government’s power over interprovincial pipelines.34 Finally, the Board concluded that the trenching on federal jurisdiction was sufficiently serious to warrant reading down. This was based on the Board’s findings of fact that Trans Mountain required more than mere access to the land, because in order to satisfy the filing requirements, Trans Mountain had to engage in physical activities contrary to the By-Laws, and section 75 of the NEB Act presumed some waste and physical damage. Therefore, the Board declared the ByLaws inapplicable to the extent they impaired the work to be done by Trans Mountain under the authority of the NEB Act.35

Question 3: Whether the Board has the authority to forbid Burnaby from enforcing its ByLaws

On this issue, Trans Mountain submitted that the NEB had full authority, pursuant to section 13 of the NEB Act, to forbid Burnaby from enforcing its By-Laws in a manner that undermined the rights provided to Trans Mountain by paragraph 73(a) NEB Act. The City took the position that the Board has no such authority to prevent another level of government from enforcing its By-Laws.36

The Board disagreed with Burnaby, concluding that paragraph 13(b) of the NEB Act, which states that the Board “may forbid the doing or continuing of any act, matter or thing that is contrary to this Act or any such regulation, certificate, licence, permit, order or direction” provided sufficient authority. The Board noted that paragraph 73(a) permits a company to enter Crown and non-Crown land to make surveys and examinations. Therefore, the Board concluded, Parliament intended to confer the authority to forbid a municipality from acts that contravened paragraph 73(a).37

Question 4: Whether the Board should forbid Burnaby from enforcing its By-Laws

The City submitted that the facts did not support an order forbidding Burnaby from enforcing its By-Laws and that this was particularly true in light of the fact that the NEB had not mandated how the required information must be collected or the where the required studies must take place.38 Further, the City took the position that the Board should not make such an order without considering the environmental harm the proposed work would cause.39

The Board rejected these submissions, finding that the affidavit evidence from Trans Mountain’s Project Lead provided “compelling and specific reasons justifying such an order.”40 In particular, the Board accepted the affidavit evidence indicating that the Mandated Field Work could not be conducted without minimal disturbances to the subject lands, and that Trans Mountain had made numerous attempts to cooperate with Burnaby, none of which were reciprocated.41 Further, the Board explicitly rejected Burnaby’s submission that it had not mandated the location or required information, and referred to Ruling No. 28, which included attachments detailing the Mandated Field Work to be done and location of the survey work to be performed. Finally, the Board rejected Burnaby’s submission that it must consider the environmental impacts of an order to prevent Burnaby from enforcing its By-Laws. The Board noted that the studies and examinations were not designated projects, and it was not persuaded an environmental assessment would be necessary. The Board did note, however, that the Mandated Field Work to inform the environmental assessment of the project are required under the Canadian Environmental Assessment Act, 201242.

Application for Leave Denied in the Federal Court of Appeal and BC Court of Appeal

On October 29, 2014 Burnaby filed an application for leave to appeal Ruling No. 40 to the Federal Court of Appeal. In its application, Burnaby argued that the Board did not have jurisdiction to forbid Burnaby from enforcing its By-Laws or to determine constitutional questions relating to the interpretation of sections 73 and 75 of the NEB Act. On December 12, 2014 the Federal Court of Appeal denied Burnaby’s application for leave.43

Burnaby also sought leave to appeal the BCSC decision (noted above) to the BC Court of Appeal (“BCCA”). On November 27, 2014, the BCCA dismissed Burnaby’s application for leave and stated that the application was “a collateral attack on the ruling of the NEB” and that the issues raised by Burnaby had “been dealt with by a binding and conclusive order of the NEB”.44

Implications of Ruling No. 40

On their face, the Burnaby By-Laws were not extraordinary – seeking only to prevent disturbance of vegetation and natural features within municipal parks and conservation areas. However, because the By-Laws’ prohibitions operated to prohibit Trans Mountain from carrying out physical work in order to generate information for the NEB’s regulatory process, the By-Laws were found to be in conflict with the federal statutory regime, and the paramountcy doctrine applied.

Obviously, the NEB’s Ruling (and subsequent denial of leave to appeal by the Federal Court of Appeal) provides greater certainty to federally-regulated pipeline companies in circumstances where municipal by-laws (either intentionally or incidentally) seek to prohibit companies from carrying out work required for the federal regulatory process. It also confirms that federally regulated pipeline companies have the power to access public and private lands (without the owner’s consent) for the purposes of performing surveys and investigations under section 73 of the NEB Act.

However, the Ruling also applies more broadly to other sectors where municipal by-laws encroach upon federal undertakings, adding to a fairly lengthy list of recent case law including 2241960 Ontario Inc v Scugog (Township)45 and Burlington Airpark Inc v Burlington (City)46 where in both cases the Courts upheld the operation of municipal by-laws requiring clean fill to be used at federal aerodromes; and Detlor v Brantford,47 where the Court upheld municipal bylaws prohibiting certain “development fees” sought to be imposed by an aboriginal community on land developers. The Board’s reasoning may also provide guidance to municipal authorities considering ways to minimize the shipments of oil by rail through municipalities. Shipments of crude-by-rail have increased significantly in recent years in Canada, and a number of municipal politicians (in light of the Lac-Mégantic disaster) have made public pronouncements about taking steps to eliminate crude-by-rail shipments. Most railways in Canada are interprovincial or international lines, and therefore fall within the jurisdiction of the federal government.48 As such, in light of Ruling No. 40, municipal authorities will have to take a close look at any attempt to eliminate that risk by municipal by-law.

* Richard King is a partner at Osler Hoskin and Harcourt LLP.
** Patrick Welsh is an associate at Osler Hoskin and Harcourt LLP.
*** Rebecca Hall-McGuire is an articling student at Osler Hoskin and Harcourt LLP.

  1. National Energy Board Act, RSC 1985, c N-7 [“NEB Act”].
  2. Trans Mountain Pipeline ULC and City of Burnaby (Trans Mountain Notice of Constitutional Question Reasons for Decision ) (23 October 2014), OH-001-2014 (Ruling No 40) (NEB) at 2.
  3. Trans Mountain Pipeline ULC (Hearing Order) (2 April 2014) OH-001-2014 (NEB).
  4. Ruling No. 40, supra note 2 at 2.
  5. Trans Mountain Pipeline ULC (Procedural Direction No 4) (15 July 2014) OH-001-2014 (NEB).
  6. Trans Mountain Pipeline ULC and City of Burnaby (Interpretation of 73(a) of National Energy Board Act) OH-001-2014 (19 August 2014) (Ruling No 28) at 2 (NEB).
  7. City of Burnaby, bylaw No 7331, Burnaby Parks Regulation Bylaw 1979 (26 March 1979) [“Parks Bylaw”].
  8. Ruling No 40, supra note 2 at 3.
  9. Ruling No 28, supra note 6 at 4.
  10. Burnaby (City) v Trans Mountain Pipeline ULC, 2014 BCSC 1820 at para 24 [“Burnaby”]
  11. Ruling No 40, supra note 2 at 4.
  12. Trans Mountain Pipeline ULC (Notice of Motion) (3 September 2014) OH-001-2014 (NEB).
  13. Ruling No 40, supra note 2 at 6.
  14. Ibid.
  15. Ibid at 5.
  16. The Board referenced Cooper v Canada (Human Rights Commission), [1996] 3 SCR 854, 140 DLR (4th) 193; Dunsmuir v New Brunswick, [2008] 1 SCR 190, 2008 SCC 9; and Westcoast Energy Inc v Canada (National Energy Board), [1988] 1 SCR 322, 156 DLR (4th) 456.
  17. Cuddy Chicks Ltd v Ontario (Labour Relations Board), [1991] 2 SCR 5 at paras 13-17 [“Cuddy Chicks”]. See also Ruling No 40, supra note 2 at 8.
  18. Ruling No 40, supra note 2 at 8.
  19. The Board stated it has jurisdiction over the remedy at 8 and notes that the basis for this conclusion is further described in its answers to questions 2-4 (see Ruling No 40, ibid at 8-18).
  20. Burnaby, supra note 10 at para 16. See also Ruling No 40, ibid at 8. It is notable that at the time Burnaby filed its injunction motion, Trans Mountain had already filed its Motion with the NEB on essentially the same matters.
  21. Burnaby, supra note 10 at para 40. Brown J. stated “Therefore, although [the NEB] could not issue a declaration that s. 73 of the Act or the Burnaby bylaws were invalid, nonetheless, the NEB would be able to treat the impugned provision as invalid for the purposes of the matter before it.” See also Ruling No 40, supra note 2 at 8.
  22. Canadian Western Bank v Alberta, [2007] 2 SCR 3, 2007 SCC 22 at para 69 [Canadian Western Bank].
  23. Ibid.
  24. Ruling No 40, supra note 2 at 10.
  25. Section 5 of the Parks Bylaw, supra note 7 states: “no person shall cut, break, injure, damage, deface, destroy, foul, or pollute any personal property or any tree, shrub, plant, turf or flower in or on any park”.
  26. Ruling No 40, supra note 2 at 12.
  27. Bank of Montreal v Marcotte, 2014 SCC 55 at para 62.
  28. Peter Hogg, Constitutional Law of Canada, 5th ed (Scarborough, ON: Carswell, 2007) at 15-28 as cited in Ruling No 40, supra note 2 at 13.
  29. Ruling No 40, supra note 2 at 10. The Ruling notes that the City of Burnaby relied on Canadian Western Bank, supra note 22.
  30. Ruling No 40, supra note 2 at 10.
  31. Campbell-Bennett v Comstock Midwestern Ltd.,[1954] SCR 207.
  32. Ruling No 40, supra note 2 at 14.
  33. Construction Montcalm Inc. v Quebec (Minimum Wage Commission), [1979] 1 SCR 754.
  34. Ruling No 40, supra note 2 at 14.
  35. Ibid at 15.
  36. Ibid.
  37. The Board states that “in the Board’s view, Parliament intended that the Board have authority over both the subject matter (which is about temporary access to complete survey work for a federal undertaking) and the remedy” see Ruling No 40, ibid at 16.
  38. Ibid at 17.
  39. Ibid.
  40. Ibid.
  41. Ibid.
  42. Canadian Environmental Assessment Act, 2012, SC 2012, c 19 s 52.
  43. City of Burnaby v The National Energy Board and Trans Mountain Pipeline ULC (12 December 2014), Ottawa 14-A-63 (FCA) available online:<>.
  44. Burnaby (City) v Trans Mountain Pipeline ULC, 2014 BCCA 465.
  45. 2241960 Ontario Inc v Scugog(Township), 2011 ONSC 2337 (Ont Div Ct), [2011] OJ No 2445.
  46. Burlington Airpark Inc v Burlington (City), 2014 ONCA 468.
  47. Deltor v Branford, 2013 ONCA 560.
  48. Standing Senate Committee on Energy, the Environment and Natural Resources, Moving Energy Safely: A Study of the Safe Transport of Hydrocarbons by Pipelines, Tankers and Railcars in Canada (August 2013), online: See also Rui Fernandes, Transportation Law (Toronto: Aerospark Press, 1991) (2011-Rel 1), ch 20 at 20-3.

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