AB Court of Appeal Encourages Economic Activity on Reserves

A recent Alberta Court of Appeal decision has important implications for both Indigenous communities and utility providers, particularly those looking to form partnerships.

In AltaLink Management Ltd v Alberta (Utilities Commission), the Court decided that the Alberta Utilities Commission (“AUC”) may consider any factors relevant to the public interest, including future economic activity on reserve, when making its decisions.

Background

In 2005 AltaLink Limited Partnership (“ALP”) decided to expand the transmission lines in southwest Alberta. ALP identified the shortest and lowest cost route for the new line to be across the reserves of Piikani Nation and Blood Tribe. Both Piikani Nation and Blood Tribe agreed to the construction of the transmission lines on their reserve lands in exchange for an opportunity to obtain ownership interests in the transmission lines and the opportunity to participate in the energy transmission industry.

In October 2010, the transmission lines became operational. Later in October of 2012 and February of 2014, the Blood Tribe and Piikani Nation each exercised their options to purchase a 51 per cent interest in the transmission line located on their respective lands. The Nations subsequently entered into limited partnership agreements with ALP; the PiikaniLink Limited Partnership (“PLP”) and KainaiLink Limited Partnership (“KLP”). Each limited partnership was to become the new transmission facility operator subject to the applicable regulatory regime, including approval by the AUC of their annual tariffs. In April 2017, ALP, PLP and KLP applied to the AUC for approval of the transfer of the transmission line segments (the “Application”).

As regulator of the construction and operation of utility projects, the AUC must weigh the positive and negative impacts of an application on ratepayers to determine whether granting an application is in the public interest. Where the AUC concludes that ratepayers may be harmed, it can mitigate that harm by making its approval subject to conditions.

Upon reviewing the Application, the AUC decided that it could not consider the benefits arising from ALP’s partnership with the First Nations, as those benefits occurred prior to the Application. Therefore the AUC could not consider benefits such as:

  1. access to the First Nations workforce;
  2. strengthening ALP’s relationship with other First Nations in Canada and the United States; and
  3. support for the alignment of interests between ALP and the First Nations to enhance the long-term safe and reliable operation of utility assets on their reserve land.

The AUC approved the transfer of the assets with the condition that PLP and KLP, as transmission facility operators, could not recover the costs of the transaction between the parties from ratepayers as part of their tariffs. This meant that the newly formed partnerships would have to pay additional costs for annual audit fees and hearing costs, in the amount of $35,000 and $25,000 respectively, each year. PLP and KLP appealed the decision.

Decision of the Majority of the Alberta Court of Appeal

On appeal, the majority of the Court found that there was no legislative basis for AUC’s decision-making approach. The Court found that the AUC should consider any public interest factors that are relevant to the transfer and sale application, whether those factors arise before or after the application. Further, the context for a proposed transfer, to the extent it includes potential harms or benefits, may be relevant and should be considered. The relevant context and benefits may include:

  • cost savings from the initial construction phase;
  • predictable lower maintenance costs;
  • the integration of First Nation corporations, as operators linked to the grid, offers the prospect of further benefit over time as technology improves and the needs of rate-paying population increase;
  • employment and education opportunities for Indigenous communities; and
  • increased economic activity on reserve.

In the result, the Court allowed the PiikaniLink Limited Partnership and KainaiLink Limited Partnership to include the transaction costs in their tariff applications.

Comments from Justice Feehan on Reconciliation and Honour of the Crown

Justice Feehan, agreeing with the overall result given by the majority of the Court, chose to further comment on the AUC’s obligations to consider the honour of the Crown and reconciliation when Indigenous communities are involved in commercial matters. He said where the AUC is exercising its statutory powers and responsibilities, it must consider the honour of the Crown and reconciliation whenever it engages with Indigenous communities. Further, in its decisions, the AUC must include an analysis of the impact of such principles upon its orders when the parties raise it as relevant to the public interest.

Justice Feehan’s opinion is based on the presumption that the AUC has the authority to consider the honour of the Crown and reconciliation in determining the public interest. Therefore, when the AUC is contemplating a decision that could affect Aboriginal rights, the special trust relationship and responsibility of the Crown to Indigenous Peoples must be a primary consideration in determining whether a decision can be justified.

Reconciliation is in the interest of the general public. The AUC, as an administrative tribunal with a broad public interest mandate, must address reconciliation by considering the concerns and interests of Indigenous communities including the interests of Indigenous Peoples to participate freely in the economy. Justice Feehan also commented that the Commission may consider the United Nations Declaration on the Rights of Indigenous Peoples Act as a tool to inform reconciliation.

Implications for Indigenous Communities and Utility Operators

The Court of Appeal’s decision indicates positive change for First Nations and utility operators by removing barriers to commercial partnerships in Alberta. Generally, the Court’s decision also signals to the AUC and other public interest regulators that reconciliation and economic development benefitting Indigenous Peoples should be considered in the “public interest.”

If you have questions about how this case may affect you or your organization, we encourage you to reach out to one of the lawyers in our Indigenous practice group.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.