Author Archives: Nigel Bankes

About Nigel Bankes

Nigel Bankes is emeritus professor of law at the University of Calgary. Prior to his retirement in June 2021 Nigel held the chair in natural resources law in the Faculty of Law.

The Bilcon Award

By: Nigel Bankes

PDF Version: The Bilcon Award

Award Commented On: The Claytons and Bilcon v Canada, NAFTA, UNCITRAL Rules, 17 March 2015

Once again Canada has lost an important investor/state arbitration under Chapter 11 of NAFTA (for a post on Canada’s last reversal (Mobil and Murphy), also characterized by a strong dissent, see Regulatory Concussion). The Clayton family and Bilcon Inc (US investors, the claimants) were hoping to develop a quarry in Digby Neck, Nova Scotia. The project was sent to a joint federal/provincial environmental review panel (JRP) by both levels of government. The JRP recommended rejection and both governments accepted that recommendation, and thus the project died. The claimants took the view that the JRP process was badly flawed. They were of the opinion that the panel had recommended rejection on the basis that the project would be inconsistent with “community core values” and furthermore that the panel had deliberately failed to identify any mitigation measures that might make the project acceptable. However, instead of seeking judicial review of the JRP in the Federal Court the claimants commenced this NAFTA arbitration. They have been rewarded with a majority decision in their favour. The majority (Judge Bruno Simma and Professor Bryan Schwartz) found that Canada had breached both Article 1105 (minimum standard of treatment (MST) – even as constrained by the Interpretation Note (2001) issued by NAFTA contracting parties here) and Article 1102 (national treatment standard). The matter will now go back to the tribunal for it to assess damages. Professor Donald McRae delivered a strong dissent contending that the majority had turned what was nothing more than a possible breach of domestic law into an international wrong. I have nothing to add to McRae’s excellent critique (and see also Meinhard Doelle’s post on the decision); my purpose here is to review some of the implications of the Award from a number of different perspectives.

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An Update on the Northern Gateway Litigation

By: Nigel Bankes

PDF Version: An Update on the Northern Gateway Litigation

Cases Commented On: Forest Ethics Advocacy Association v Northern Gateway Pipelines Inc, 2015 FCA 26; Gitxaala Nation v Northern Gateway Pipelines Inc, 2015 FCA 27; Gitxaala Nation v Northern Gateway Pipelines Inc, 2015 FCA 73

This post provides an update on the various challenges that have been mounted to Enbridge’s Northern Gateway Project (NGP). ABlawg has been following this project for some time. Earlier posts include a post on the relationship between the National Energy Board (NEB) and the Governor in Council, a post on BC’s conditions for oil pipelines as well as a series of posts by Shaun Fluker here, here and here particularly on Species at Risk Act (SC 2000, c.29) issues with respect to the report of the Joint Review Panel (JRP) and the Governor in Council’s decision, and Martin Olszynski’s post on the JRP Report. In addition, I offered an earlier account of the Federal Court proceedings in August 2014 which was published in Energy Regulation Quarterly.

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Entitlements Protected by a Property Rule vs Entitlements Protected by a Liability Rule; or FPIC vs Regulated Access

By: Nigel Bankes

PDF Version: Entitlements Protected by a Property Rule vs Entitlements Protected by a Liability Rule; or FPIC vs Regulated Access

Case Commented On: Sproule v Altalink Management Ltd, 2015 ABQB 153

AltaLink is building a transmission line to connect new wind generation in southern Alberta to the grid. The routing and construction of the line was approved by the Alberta Utilities Commission. Part of the line crosses private lands including lands owned by Sproule and the other parties to this appeal, and part crosses Piikani First Nation lands. Altalink reached a negotiated agreement with the Piikani First Nation but was unable to reach an agreement with Sproule et al. Accordingly, Altalink proceeded under the terms of the Surface Rights Act, RSA 2000, c. S-24 (SRA) to obtain right of entry orders and subsequently compensation orders for the different parcels.

Sproule et al appealed the compensation order on two main grounds; only the first is the subject of this post. The first ground of appeal was that the Board had wrongly refused to consider other compensation arrangements in setting the appropriate level of compensation for the Sproule et al lands. In particular, the appellants argued that the Board should have taken into account: (1) the levels of compensation that Sproule received under other agreements for wind turbines and a cell phone tower located on his land, and (2) the amounts received by the Piikani First Nation from Altalink for consenting to the transmission line crossing the Piikani Reserve. There was evidence before the Board that Altalink had been considering two routes for the transmission line, a preferred route that would cross the reserve and a second best route that avoided the reserve. The route across the reserve resulted in savings to Altalink (and ultimately to all consumers in Alberta) of about $30 million. Sproule’s evidence on appeal suggested that the Piikani received about $444,000 per mile under their agreement with Altalink (for a total of $7.45 million) whereas Sproule et al received about $60,000 per mile under the terms of the Board compensation order.

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The AER and the Values of Efficiency, Flexibility, Transparency and Participation: Best in Class?

By: Nigel Bankes

PDF Version: The AER and the Values of Efficiency, Flexibility, Transparency and Participation: Best in Class?

Matter Commented On: AER Bulletin, 2015-05 and an amendment to the Oil and Gas Conservation Rules creating the concept of a “Subsurface Order”

On February 10, 2015 the Alberta Energy Regulator (AER) issued Bulletin 2015-05 announcing a change to the Oil and Gas Conservation Rules. This change authorizes the AER to issue something called a Subsurface Order:

11.104 Notwithstanding sections 3.050, 3.051, 3.060, 4.021, 4.030, 4.040, 7.025, 10.060, 11.010, 11.102 and 11.145, if the Regulator is satisfied that it is appropriate to do so, the Regulator may, on its own motion, issue a subsurface order that

(a) designates a zone in a specific geographic area, and

(b) prescribes requirements pertaining to spacing, target areas, multi-zone wells, allowables, production rates and other subsurface matters within that zone,

in which case if there is a conflict or inconsistency between the subsurface order and any of the sections referred to above, the subsurface order prevails to the extent of the conflict or inconsistency.

The Bulletin provides additional guidance as to how the AER will use this significant new power – which evidently allows it to suspend and vary the default rules relating to important issues such as spacing, target areas, allowables and production rates over broad geographic areas. The amendment likely has something to do with the AER’s experimentation with the play-based approach (see post welcoming that development here). The Bulletin does not specifically mention that initiative although it does indicate that the change is particularly directed at tight oil and gas resources.

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Providing an Effective Remedy for the ISO’s Unlawful Line Loss Rule

By: Nigel Bankes

PDF Version: Providing an Effective Remedy for the ISO’s Unlawful Line Loss Rule

Decision Commented On: AUC Decision 790-D02-2015, Milner Power Inc. and ATCO Power Ltd, Complaints re the ISO Transmission Loss Factor Rule and Loss Factor Methodology, Phase 2 Module A, January 20, 2015

In this decision the Alberta Utilities Commission (AUC) has decided that it has the jurisdiction to grant tariff-based relief in a case where a rule of the Independent System Operator (ISO) is found to be unlawful on the basis that it was unjust, unreasonable, unduly preferential, arbitrarily and unjustly discriminatory and inconsistent with various provisions of the Electric Utilities Act (EUA) (now SA 2003, c. E-5.1) and the Transmission Regulation (now Alta Reg 86/2007). Such relief may involve retrospective or retroactive adjustments to the ISO tariff going back to the date when the Rule first entered into force (January 1, 2006, Milner Power having originally filed its objection to the ISO Line Loss Rule in August 2005 before the rule came into force).

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