Administrative law – Natural resources – Natural gas – Distribution – Powers under legislation – Ultra vires – Judicial review – Jurisdiction of tribunal – Compliance with legislation – Standard of review – Correctness
Enbridge Gas Distribution Inc. v. Ontario (Energy Board),  O.J. No. 33, Ontario Court of Appeal, January 11, 2005, M.A. Catzman, D.H. Doherty and S.T. Goudge JJ.A.
The natural gas business in Ontario is comprised of gas vendors, who sell gas to the consumer, and gas distributors, who transport the gas to the consumer by pipeline. Historically, vendors and distributors each billed the customer directly for their respective service. In 2002, the Respondent Ontario Energy Board issued the Gas Distribution Access Rule (“GDAR”) pursuant to the rule-making power given to it by the Ontario Energy Board Act, 1998, S.O. 1998 c. 15, Schedule B (the “Act”). The Rule was issued after a consultation process which took a number of months.
Among other things, the GDAR permits the gas vendor to determine who will bill its customer for the gas they buy and for its transportation to them by the gas distributor. The gas vendor may choose to provide both charges to the customer, or require the gas distributor to do so, or choose to have each provide its own bill to the customer.
The Appellants were the two major gas distributors in Ontario. The Appellants exercised a right of appeal under the Act to the Divisional Court. They argued that aspects of the GDAR did not come within the Board’s jurisdiction to make rules and that, in any event, the Board did not follow the process required by the Act. The Divisional Court dismissed both arguments and upheld the GDAR. The Appellants brought an appeal to the Court of Appeal.
The Court of Appeal first considered whether the Divisional Court was right in applying the standard of review of correctness. The Appellants argued that the Divisional Court had correctly determined the standard of review, by way of the pragmatic and functional approach, to be correctness. The Board argued that a pragmatic and functional analysis was misplaced and the issue on appeal was whether the making of the Rule was ultra vires the statutory provision giving the Board jurisdiction. The court held that whether one uses the ultra vires analysis or the pragmatic and functional analysis, the result was the same and the proper standard of review is correctness. The court accords no deference to the Board’s view of the scope of jurisdiction granted by the Act and in essence applies a correctness standard but without having first applied a pragmatic and functional analysis to determine that this is the appropriate standard of review. In any event, all of the considerations under the pragmatic approach indicated that the legislature intends the court to apply a correctness standard in determining whether the Act gave the Board jurisdiction to issue the GDAR.
The Court next considered whether section 44(1) of the Ontario Energy Board Act gave the Board jurisdiction to make the GDAR and, in particular, its provisions regarding billing. The Court held that there was nothing in the language of section 44(1)(b) for its statutory context to suggest a narrow interpretation that would exclude the Board’s jurisdiction for the billing provisions of the GDAR. A narrow reading would be inconsistent with the broad purpose of the Act, which is to regulate all aspects of the gas distribution business, not simply those aspects that involve a direct business relationship with gas vendors.
Finally, the Court considered whether the Board had complied with section 45(2) of the Act, which required the Board to give notice of the anticipated costs and benefits of the rule it proposed to make. The Appellants argued that the Board had not complied with this requirement, either for the proposed rule as a whole, or for the provisions setting out the different billing arrangements. The Court held that section 45 required the Board to provide only a description of the anticipated costs and benefits of the proposed rule as a whole, as opposed to an analysis of each provision in the proposed rule. The purpose of section 45 is to give interested parties a reasonable opportunity to make written submissions with respect to the proposed rule or the changes, and this was the standard to be used in evaluating what the Board did in this case. In the process of issuing the GDAR, the Board had engaged in three rounds of notices to interested parties, followed by acceptance of written representations from interested parties. In each case, the notice had set out the anticipated costs and benefits in a general way. The interested parties were held to have had ample opportunity to make representations in respect of the described costs and benefits. This ground of appeal failed.
In the result, the appeal was dismissed.
To stay current with the new case law and emerging legal issues in this area, subscribe here.