A-472-87
In the matter of the National Energy Board Act
And in the matter of a reference by the National
Energy Board pursuant to subsection 28(4) of the
Federal Court Act
INDEXED AS: NATIONAL ENERGY BOARD (RE)
Court of Appeal, Mahoney, Stone and MacGuigan
JJ.—Toronto, November 4 and 5; Ottawa,
November 27, 1987.
Constitutional law — Distribution of powers — National
Energy Board authorizing construction of proposed bypass
pipeline from TransCanada PipeLines' metering station direct
ly to end-user's plant — Board lacking jurisdiction — Erred
in drawing analogy between broadcasting systems and pipe
lines — Not interprovincial "work" as pipeline entirely within
Province — CCPI not operating interprovincial undertaking as
bypass pipeline not necessary to operation of whole — Consti
tution Act, s. 92(10)(a) requiring interprovincial undertaking
of transportation or communications nature — Necessary
nexus test applied — Proposed pipeline not necessary to
interprovincial undertaking of TCPL.
Energy — National Energy Board ordering reference to
Federal Court to determine whether proposed bypass pipeline
within federal legislative competence, hence within Board's
jurisdiction — Board authorizing construction of pipeline —
Ontario Energy Board holding it had jurisdiction over bypass
lines within Province — Ontario Divisional Court upholding
provincial jurisdiction over such pipelines — Court decision
constituting change of circumstances raising doubt as to cor
rectness of Board's decision — Irrelevant who brings changed
circumstances to Board's attention as able of own motion to
initiate review of any of its decisions — Board lacking juris
diction as proposed pipeline not interprovincial "work" or
undertaking.
This was a reference by the National Energy Board (NEB)
to determine whether a proposed bypass pipeline came under
the Board's jurisdiction as being within Parliament's legislative
authority. Prior to March 1986, "Cyanamid" purchased gas
from "Consumers' ", which in turn purchased gas from Trans-
Canada PipeLines Limited ("TCPL"). Subsequently, "CCPI"
was incorporated to build and operate a 6.2 km pipeline from
TCPL's meter station directly to Cyanamid's plant, bypassing
Consumers' pipeline. The NEB authorized the proposed facili
ty, but shortly thereafter the Ontario Energy Board (OEB)
held that the Province had jurisdiction over bypass pipelines in
Ontario (whereby an end-user of natural gas avoids using the
local distribution company by tapping directly into the TCPL
system). The Divisional Court upheld that decision. All appeals
to this Court against the NEB decision were then withdrawn
leaving CCPI with unchallenged NEB orders in its favour, but
subject to possible penalties in Ontario if it proceeded to
implement these orders. CCPI therefore sought from the NEB
a review of the Board's decision through which a reference
might be directed to this Court. The Board held that the
operational integration of the enterprises was not sufficient to
consider the two pipelines as one, indivisible pipeline system.
Neither party's operation was under the care, control or direc
tion of the other. However, relying on the Supreme Court of
Canada decisions in Luscar, Capital Cities and Dionne, the
Board held that the proposed pipeline, although located entirely
in the Province, would form a link in a chain for the interpro-
vincial transmission of gas.
Held, the proposed pipeline was not within the NEB's
jurisdiction.
A preliminary issue of whether the Board had jurisdiction to
order the reference was raised. It is well established that the
determination of any question so referred must be required to
deal with the matter that is before the tribunal making the
reference, and not with a merely academic matter. In ordering
the reference the Board correctly held that the Divisional
Court's decision, which had the effect of nullifying the Board's
orders with respect to the CCPI application, was a sufficient
change in circumstances to "raise a doubt" regarding the
correctness of the previous orders. The Board was also correct
in holding that it did not matter that it was the successful party
(CCPI) which brought the altered circumstances to the Board's
attention, as the Board had the power to initiate of its own
motion, a review of any of its decisions.
On the constitutional question, the Board erred in relying so
heavily on the cable-television cases. When the Board saw a
close analogy between the purpose served by transmission
cables and the proposed pipeline, it should have been compar
ing broadcasting transmission and pipelines. The Supreme
Court of Canada has made it clear that cable transmission was
under federal jurisdiction because it was part of a single
undertaking (broadcasting), which had already been deter
mined to be within federal competence. If one compares natural
gas systems and broadcasting systems, there are few similari
ties. Radio waves are not confined in space, as gas is confined
in a pipeline, and so bear no relationship to territorial bound
aries. Their reception is virtually instantaneous. Also, the
necessity for allocating space, in the frequency spectrum sug
gests the need to regulate both the interprovincial and intrapro-
vincial broadcaster. The broadcasting analogy was inappropri
ate for natural gas pipelines.
The Board also erred in relying on the Luscar decision,
because there a railway line constructed and owned by an intra-
provincial company was operated by C.N., an interprovincial
company. No similar agreement whereby TCPL would operate
the proposed pipeline existed here.
In order for a work or undertaking to fall under federal
jurisdiction under paragraph 92(10)(a) of the Constitution Act,
1867, it must either be an interprovincial work or undertaking
or be joined to an interprovincial work or undertaking through
a necessary nexus. In the Luscar case, the necessary nexus
making the branch line a link in the interprovincial chain was
the operating agreement. In the cable-television cases, the
necessary nexus was the inseparability of the medium and the
message. The only authority which resisted the necessary nexus
approach was the Winner case, and there the Privy Council
limited its holding to the exact facts. The suggestion that there
was a "purpose/nature of the undertaking test" whereby juris
diction was attributed on the basis of the overall purpose of an
enterprise was limited to cases where there was a single busi
ness undertaking. Failing an application by TCPL to build and
operate the bypass pipeline as its own, the necessary nexus test
must be met to establish federal jurisdiction under paragraph
92(10)(a).
As the proposed pipeline would be solely within Ontario, it
cannot be an interprovincial "work" (defined as "physical
things, not services"). Mere physical connection to an interpro-
vincial work is not sufficient to found federal jurisdiction.
The bypass pipeline was not part of an interprovincial under
taking by CCPI because it was not necessary to the operation
of the whole. Even if CCPI could be considered to be engaged
in an interprovincial undertaking, it would not be of a transpor
tation or communications character such as is required for
federal jurisdiction under paragraph 92(10)(a). Although
TCPL operated an interprovincial undertaking, the proposed
pipeline was not integral or necessary to TCPL's interprovincial
transmission of natural gas. The proposed pipeline offered no
advantage to TCPL, but served as one end-user's link with the
main line.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.)
[R.S.C. 1970, Appendix II, No. 5] (as am. by Canada
Act 1982, 1982, c. 11 (U.K.), Schedule to the Consti
tution Act, 1982, Item 1), ss. 91(2),(29), 92(10)(a).
/Draft] NEB Rules of Practice and Procedure, R. 41.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s.
28(4).
National Energy Board Act, R.S.C. 1970, c. N-6, ss.
17(1), 49 (as am. by S.C. 1980-81-82-83, c. 116, s. 15),
59(3) (as am. idem, s. 17).
CASES JUDICIALLY CONSIDERED
APPLIED:
British Columbia Electric Ry. Co. Ltd. et al. v. Canadian
National Ry. Co. et al., [1932] S.C.R. 161; Cannet
Freight Cartage Ltd. (In re), [1976] 1 F.C. 174; (1976),
11 N.R. 606; (1975), 60 D.L.R. (3d) 473 (C.A.); Mon-
treal City v. Montreal Street Railway Company, [1912]
A.C. 333 (P.C.); In re Regulation and Control of Radio
Communication in Canada, [1932] A.C. 304 (P.C.); Re
The Queen and Cottrell Forwarding Co. Ltd. (1981), 33
O.R. (2d) 486; 124 D.L.R. (3d) 674 (Div. Ct.).
DISTINGUISHED:
Luscar Collieries v. McDonald, [1927] A.C. 925 (P.C.);
Attorney-General for Ontario v. Israel Winner, [1954]
A.C. 541 (P.C.); Capital Cities Communications Inc. et
al. v. Canadian Radio-Television Commn., [1978] 2
S.C.R. 141; (1978), 18 N.R. 181; (1977), 81 D.L.R. (3d)
609; Public Service Board et al. v. Dionne et al., [1978] 2
S.C.R. 191; (1978), 18 N.R. 271.
CONSIDERED:
Dome Petroleum Ltd. v. National Energy Board
(1987), 73 N.R. 135 (F.C.A.).
REFERRED TO:
Public Service Staff Relations Act (Reference re), [ 1973]
F.C. 604 (C.A.); Martin Service Station Ltd. v. Minister
of National Revenue, [1974] F.C. 398 (C.A.); Alberta
Government Telephones v. Canadian Radio-television
and Telecommunications Commission, [1985] 2 F.C.
472; (1984), 17 Admin.L.R. 149 (T.D.); revd [1986] 2
F.C. 179; (1985), 17 Admin.L.R. 190 (C.A.); Reference
re Industrial Relations and Disputes Act, [1955] S.C.R.
529; Letter Carrier's [sic] Union of Canada v. Canadian
Union of Postal Workers et al., [1975] 1 S.C.R. 178;
Canadian National Railway Co. v. Nor-Min Supplies
Ltd., [1977] I S.C.R. 322; Construction Montcalm Inc.
v. Minimum Wage Commission, [1979] 1 S.C.R. 754;
Northern Telecom Ltd. v. Communications Workers of
Canada, (#1), [1980] 1 S.C.R. 115; (#2), [1983] 1
S.C.R. 733; Toronto Corporation v. Bell Telephone
Company of Canada, [1905] A.C. 52 (P.C.).
AUTHORS CITED:
Hogg, Peter W. Constitutional Law of Canada, 2nd ed.
Toronto: The Carswell Company Limited, 1985.
COUNSEL:
H. Soudek and Sandra K. Fraser for Nation
al Energy Board.
C. Kemm Yates and D. E. Crowther for
Cyanamid Canada Pipeline Inc.
Barbara A. Mcisaac for Attorney General of
Canada.
Michael M. Peterson and M. P. Tunley for
C.I.L. Inc.
Martin Sclisizzi and E. M. Roher for Suncor
Inc.
D. O. Sabey, Q.C. for Simplot Chemical
Company Ltd.
Richard Claus van Banning for Nitrochem
Inc.
J. H. Farrell and M. S. F. Watson for Con
sumers' Gas.
B. H. Kellock, Q.C. for Union Gas.
D. S. Morritt for I.C.G. Utilities.
B. Wright and M. Helie for Attorney General
of Ontario.
Barbara C. Howell for Attorney General of
Alberta.
No one appearing for Attorney General of
British Columbia.
N. D. Shende, Q.C. for Attorney General of
Manitoba.
No one appearing for Attorney General for
Saskatchewan.
Louis Crete and Ann M. Bigue for Gaz
Métropolitain.
T. John Hopwood, Q.C. for Novacorp.
D. M. Masuhara for Inland Natural Gas.
Stephen T. Goudge, Q.C. for Ontario Energy
Board.
SOLICITORS:
Legal Services, National Energy Board,
Ottawa, for National Energy Board.
Fenerty, Robertson, Fraser & Hatch, Cal-
gary, for Cyanamid Canada Pipeline Inc.
Deputy Attorney General of Canada for
Attorney General of Canada.
Tilley, Carson & Findlay, Toronto, for C.I.L.
Inc.
Tilley, Carson & Findlay, Toronto, for
Suncor Inc.
Bennett Jones, Calgary, for Simplot Chemical
Company Ltd.
Tory, Tory, DesLauriers & Binnington,
Toronto, for Nitrochem Inc.
Smith, Lyons, Torrance, Stevenson & Mayer,
Toronto, for Consumers' Gas.
Blake, Cassels & Graydon, Toronto, for
Union Gas.
Osler, Hoskin & Harcourt, Toronto, for
I.C.G. Utilities.
Ministry of Attorney General, Toronto, for
Attorney General of Ontario.
Field & Field, Edmonton, for Attorney Gen
eral of Alberta.
Ministry of Attorney General, Legal Services
Branch, Victoria, for Attorney General of
British Columbia.
Legal Services, Winnipeg, for Attorney Gen
eral of Manitoba.
Legal Services, Regina, for Attorney General
of Saskatchewan.
Clarkson, Tétrault, Montréal, for Gaz Mét-
ropolitain.
Howard, Mackie, Calgary, for Novacorp.
Legal Services, Inland Natural Gas, Vancou-
ver, for Inland Natural Gas.
Gowling & Henderson, Toronto, for Ontario
Energy Board.
The following are the reasons for judgment
rendered in English by
MACGUIGAN J.: This is a reference by the
National Energy Board ("the NEB" or "the
Board") under subsection 28(4) of the Federal
Court Act [R.S.C. (2nd Supp.), c. 10]. The ques
tion referred is as follows:
Are the pipeline facilities proposed to be constructed and
operated by Cyanamid Canada Pipeline Inc. within the juris
diction of the National Energy Board as being within the
legislative authority of the Parliament of Canada pursuant to
the Constitution Act, 1867?
I
Cyanamid Canada Inc. ("Cyanamid") operates a
manufacturing plant for nitrogen fertilizer prod
ucts near Welland, Ontario, which utilizes natural
gas as feedstock and as fuel. Prior to March 1986,
Cyanamid purchased its total gas requirement
from Consumers' Gas Company Ltd. ("Consum-
ers' "), which in turn purchased system gas from
TransCanada PipeLines Limited ("TCPL").
However by the "Western Accord" of March
28, 1985, the Governments of Canada, Alberta,
British Columbia and Saskatchewan agreed on a
more market-oriented domestic pricing regime for
natural gas, an initiative which was further devel
oped by the so-called "Hallowe'en Agreement" of
October 31, 1985.
To take advantage of the new arrangements,
Cyanamid incorporated Cyanamid Canada Pipe
line Inc. ("CCPI") as a federally-incorporated
corporation in 1985. By application dated October
3, 1985, CCPI applied to the NEB for, inter alia,
an order of the Board under section 49 of the
National Energy Board Act [R.S.C. 1970, c. N-6
(as am. by S.C. 1980-81-82-83, c. 116, s. 15)]
("the Act") authorizing the construction and oper
ation of a 6.2 km pipeline for the transmission of
gas from the Welland plant site of Cyanamid to
the Black Horse Meter Station site of TCPL and
an order under subsection 59(3) [as am. idem., s.
17] of the Act directing TCPL to construct inter
connecting facilities between the TCPL pipeline
system and the applicant's proposed new pipeline
at the Black Horse Station. CCPI's proposed pipe
line would have the effect of bypassing Consumers'
existing pipeline from the Black Horse Station to
the Welland plant which presently supplies Cyana-
mid and a score of other customers, with cost
savings for Cyanamid. After holding public hear
ings the Board granted both requested orders in
December 1986 (Order No. XG-13-86 and Order
No. MO-63-86 respectively).
In the interim period Cyanamid had entered
into a gas purchase agreement with a gas producer
in Alberta, had applied for and received an Alber-
ta Energy Removal Permit, had received interim
regulatory approval for transmission of that gas on
the TCPL and Consumers' systems, and gas flow
had commenced in March 1986. Cyanamid had
originally intended that all of these arrangements
should be made on its behalf by CCPI, but Con
sumers' insisted that it would deal only with
Cyanamid itself. Cyanamid still proposes, how
ever, to assign the gas purchase agreement to
CCPI, with the Alberta Energy Removal Permit to
be re-issued in the name of CCPI.
A nomination procedure would be used by CCPI
for the purchase of gas. CCPI would nominate, as
frequently as daily (by mid-afternoon for the next
morning) the volume of gas required by its Wel-
land plant. Nominations would be telecopied both
to the Alberta gas producer and to TCPL, and if
accepted by both, would be delivered by the pro
ducers to the TCPL system at Empress, Alberta,
and to CCPI at the Black Horse Station. Delivery
would be made on a next-day basis despite the fact
that the actual flow-through time for gas from
Empress to Welland is several days. Gas delivered
by TCPL to CCPI would be metered at the Black
Horse Station, and again at the point of sale by
CCPI to Cyanamid. Although TCPL would retain
the right to isolate the CCPI pipeline from the
TCPL system in special circumstances by closing
the manually operated valves which connect the
two pipelines, CCPI would normally control the
flow of gas into its line.
Soon after CCPI's initial application to the
NEB, the Ontario Energy Board (the "OEB")
called hearings on its own motion to enquire into
the issue of bypass, which it defined as the means
by which an end-user of natural gas in Ontario,
such as Cyanamid, avoids using the local distribu
tion company ("LDC"), such as Consumers', by
tapping directly into the TCPL system. On
December 10, 1986, the OEB held that the prov
ince of Ontario, with the OEB as its delegate, has
jurisdiction over bypass lines in Ontario, and
stated a case to the Divisional Court of the
Supreme Court of Ontario to confirm the OEB's
jurisdiction with respect to bypass. The Divisional
Court in a decision dated March 26, 1987, (Action
No. 1243-86) upheld provincial jurisdiction with
respect to the typical bypass which inter alia is
located entirely within the province and is owned,
controlled, maintained, and operated separately
from the interprovincial work to which it is linked.
Following this decision of the Divisional Court,
all the applications for leave to appeal which had
been lodged with this Court by LDC's against the
NEB decision were withdrawn, leaving CCPI with
unchallenged NEB orders in its favour, but never
theless subject to possible penalties in the province
of Ontario if it proceeded to implement these NEB
orders. CCPI therefore sought from the NEB
under subsection 17 (1) of the Act a review of the
Board's decision through which a reference might
be directed to this Court under subsection 28(4) of
the Federal Court Act. This order of reference was
granted by the Board on June 11, 1987.
In the meantime the Lieutenant Governor of
Ontario, by Order in Council O.C. 1079/87, dated
April 30, 1987, referred the question of provincial
legislative jurisdiction over typical bypass pipelines
for hearing and consideration by the Ontario
Court of Appeal. We were informed during argu
ment that the matter had already been argued
before that Court and reserved for its decision.
II
A preliminary issue was raised by several parties
as to the jurisdiction of the NEB to make this
order of reference.
The relevant part of subsection 28(4) of the
Federal Court Act reads as follows:
28....
(4) A federal board ... may at any stage of its proceedings
refer any question or issue of law, of jurisdiction or of practice
and procedure to the Court of Appeal for hearing and
determination.
This Court has held that the determination of any
question so referred must be required "for the
purpose of dealing with the matter that is before
the tribunal making the reference and does not
contemplate determination of a question of law
expressed in academic terms": Public Service
Staff Relations Act (Reference re), [1973] F.C.
604 (C.A.), at page 615; Martin Service Station
Ltd. v. Minister of National Revenue, [1974] F.C.
398 (C.A.), at page 400. It was argued that, since
there was no proceeding pending before the NEB
when the review application was made by CCPI, it
could not as the successful party seek a review
without running afoul of this rule against general
ized and speculative references.
Subsection 17 (1) of the Act, under which CCPI
sought and the Board granted the review reads as
follows:
17. (1) Subject to subsection (2), the Board may review,
rescind, change, alter or vary any order or decision made by it,
or may re-hear any application before deciding it.
Subsection (2) has no application in the instant
case.
Section 41 of the [Draft] NEB Rules of Prac
tice and Procedure, is as follows:
PART V
APPLICATIONS FOR REVIEW OR REHEARING
Applications
41. (1) An application for review or rehearing pursuant to
subsection 17(1) of the Act shall be filed in writing with the
Secretary.
(2) An application pursuant to subsection (I) shall contain a
clear and concise statement of the facts, the nature of the order
or decision applied for, and the grounds that the applicant
considers sufficient
(a) in the case of an application for review, to raise a doubt
as to the correctness of the order or decision including
(i) any error of law or jurisdiction;
(ii) changed circumstances that have arisen since the issu
ance of the order or decision;
(iii) new facts that have arisen since the issuance of the
order or decision; and
(iv) facts that were not placed in evidence in the original
proceeding and that were not discoverable by reasonable
diligence; and
(b) in the case of an application for rehearing, to justify a
rehearing including
(i) any error of law or jurisdiction;
(ii) changed circumstances that have arisen since the
original proceeding;
(iii) new facts that have arisen since the original proceed
ing; and
(iv) facts that were not placed in evidence in the original
proceeding and that were not discoverable by reasonable
diligence.
(3) The applicant shall serve a copy of his application on
every person who was a party to the original proceeding.
In the Board's reasons for decision of May 29,
1987, for its Order No. MO-15-87 of June 11,
1987, it resolved this issue as follows (at pages
4-5):
Section 17 of the Act does not limit the right of review to
parties who are aggrieved by a decision of the Board; neither
does that section restrict a party applying for a review to
requesting that the decision be changed. In point of fact, the
Act is silent with respect to these matters. In the Board's view
subsection 17(1) of the Act gives it the unfettered discretion to
review, rescind, change, alter or vary any order or decision
made by it. No caveats are attached to this wide power of
review. The Board does not agree with the submission that a
review where no change is sought is in effect a re-hearing ....
It is the Board's view that CCPI has met the test set out in
Rule 41. A Court of competent jurisdiction has ruled that
"typical" bypasses within Ontario are within the exclusive
jurisdiction of the OEB. In the Board's view this decision of the
Ontario Divisional Court amounts to changed circumstances
that have arisen since the Board issued its jurisdictional deci
sion and this change in circumstances raises a doubt as to the
correctness of the Board's decision that it had jurisdiction over
the applied-for facilities. In this regard the Board notes the
positions taken by certain parties who filed and subsequently
withdrew applications to the Federal Court for Leave to Appeal
the Cyanamid decision. Statements made by these parties in
their letters addressed to the Administrator of the Federal
Court of Canada accompanying their Notices of Withdrawal
indicate that in the view of these parties, the stated case
decision is applicable to the jurisdictional issue which was
before this Board in GH-3-86. If these parties are correct then
the Board's jurisdictional decision is incorrect.
The fact that the developments, which post-date the Board's
jurisdictional decision, and which now cast doubt on that
decision have been formally brought to the notice of this Board
by a party who does not question the correctness of the Board's
original decision on jurisdiction does not, in the Board's view,
rob the Board of its jurisdiction to review. It should be noted
that the Board has the power, pursuant to section 17, to
initiate, of its own motion, a review of any decision made by it.
For all the reasons above-enumerated, the Board has decided
to grant the request by CCPI to review the decision on jurisdic
tion contained in the Cyanamid decision.
In my view, the Board was entirely within its
jurisdiction in holding as it did. It has jurisdiction
to review on its own motion, which is not subject to
the requirements of section 41 of its Rules. But
even on the basis of these requirements, the deci
sion by the Divisional Court nullifying by implica
tion the Board's orders with respect to the CCPI
application was certainly a sufficient change in
circumstances as to "raise a doubt" regarding the
correctness of its previous orders.
III
The NEB found it unnecessary to decide the ques
tion of constitutional jurisdiction on the basis of
the trade and commerce power (subsection 91(2)
of the Constitution Act, 1867 [30 & 31 Vict., c. 3
(U.K.) [R.S.C. 1970, Appendix II, No. 5] (as am.
by Canada Act 1982, 1982, c. 11 (U.K.), Schedule
to the Constitutional Act, 1982, Item 1)]), and, as
no party relied on that power in argument before
this Court, it will therefore be necessary to consid
er the issue only in the light of subsection 91(29)
and paragraph 92(10)(a) of the Constitution Act,
1867.
Paragraph 92(10)(a) is as follows:
92. In each Province the Legislature may exclusively make
Laws in relation to Matters coming within the Classes of
Subjects next herein-after enumerated; that is to say,—
10. Local Works and Undertakings other than such as are of
the following Classes: —
(a) Lines of Steam or other Ships, Railways, Canals,
Telegraphs, and other Works and Undertakings connect
ing the Province with any other or others of the Provinces,
or extending beyond the Limits of the Province;
This paragraph must be read in relation with
subsection 91(29), which claims for the Federal
Parliament such express exceptions from provin
cial powers under section 92:
91. It shall be lawful for the Queen, by and with the Advice
and Consent of the Senate and House of Commons, to make
Laws for the Peace, Order, and good Government of Canada,
in relation to all Matters not coming within the Classes of
Subjects by this Act assigned exclusively to the Legislatures of
the Provinces; and for greater Certainty, but not so as to
restrict the Generality of the foregoing Terms of this Section, it
is hereby declared that (notwithstanding anything in this Act)
the exclusive Legislative Authority of the Parliament of
Canada extends to all Matters coming within the Classes of
Subjects next herein-after enumerated; that is to say,-
29. Such Classes of Subjects as are expressly excepted in the
Enumeration of the Classes of Subjects by this Act assigned
exclusively to the Legislatures of the Provinces.
The Board regarded the two principal jurisdic
tional questions before it as follows (reasons for
decision of December 1986 on Board Orders
XG-13-86 and MO-63-86, at page 5):
Do the proposed facilities come within the legislative authority
of the parliament of Canada pursuant to the Constitution Act,
1867 (or the British North America Act as it then was)?
If jurisdiction lies with the Government of Canada, do such
facilities constitute a "pipeline" as that word is defined in
Section 2 of the NEB Act?
Only the first of these jurisdictional questions is
constitutional in nature.
With respect to the constitutional question the
Board was of the view that it should be stated as
follows (decisions, ibid., at page 16):
It is the Board's view that, if jurisdiction in respect of the
proposed facilities does lie with Parliament and with this
Board, it is because the CCPI pipeline is an integral part of an
interprovincial undertaking.
The Board approached this question under the
so-called "purpose" and "link-in-the-chain"
categories, but distinguished the "vital, essential or
integral to the undertaking" test. It relied on the
following cases: Luscar Collieries v. McDonald,
[1927] A.C. 925 (P.C.); Attorney-General for
Ontario v. Israel Winner, [1954] A.C. 541 (P.C.);
Capital Cities Communications Inc. et al. v.
Canadian Radio-Television Commn., [1978] 2
S.C.R. 141; (1978), 18 N.R. 181; (1977), 81
D.L.R. (3d) 609; Public Service Board et al. v.
Dionne et al., [1978] 2 S.C.R. 191; (1978), 18
N.R. 271; Alberta Government Telephones v.
Canadian Radio-television and Telecommunica
tions Commission, [1985] 2 F.C. 472; (1984), 17
Admin.L.R. 149 (T.D.); revd [1986] 2 F.C. 179;
(1985), 17 Admin.L.R. 190 (C.A.).
The Board decided that the operational integra
tion of the enterprises is not sufficient to found
federal jurisdiction, but that their functional inte
gration is (reasons for decision, ibid., at pages
18-21, footnotes omitted):
The Board is not convinced that the degree of operational
integration which will exist between CCPI and TCPL is suffi-
cient to consider the two pipelines as one, indivisible pipeline
system. CCPI's operation would not be under the care, control
or direction of TCPL; the converse is also true. The CCPI
facilities would not significantly affect the operation of the
TCPL line. Operational integration must, in the Board's view,
involve more than mere cooperation and agreement with
respect to daily deliveries of gas. In this regard, the Board notes
the excerpt from an article entitled "The Federal Case", which
was referred to by CCPI's counsel during his final argument.
That article noted that there are vital differences between the
features of railways and pipelines because, in the case of
pipelines, once there is a physical connection, coordinated
management and control follow as a matter of course. No
doubt, counsel for CCPI intended this article to support his
submission that the centralized and coordinated operations,
common to any system of interconnecting pipelines, is indica
tive, in this case, of the high degree of operational integration
which will be required as between TCPL and the proposed
CCPI facilities. In the Board's view, the very nature of gas
transmission facilities dictates that there be cooperation and
coordination between interconnecting lines. This, in and of
itself, is not determinative.
5.3.5. Functional Integration
It appears to the Board that the characterization of an
undertaking involves answering a fundamental question: what
is the undertaking which is in fact being carried on; is there one
undertaking or are there two? This question has been posed, in
one form or another, in many of the cases which involved the
characterization of an undertaking as "local" or "interprovin-
cial" and was first asked by the Privy Council in respect of a
bus service in the Winner case. In the AGT case, Madam
Justice Reed, at page 175, noted that "the crucial feature then
is the nature of the enterprise itself, not the physical equipment
it uses". In the Dionne case, the Supreme Court referred to a
"functionally inter-related system". When courts refer to the
"essential nature" or to the degree of "functional integration"
of an undertaking, what they have really considered is the
overall purpose or function of the undertaking.
Parties who argued in favour of provincial jurisdiction in this
case submitted that the purpose of the CCPI facilities was
simply to transport natural gas between two points within
Ontario. Analogy was made between the proposed CCPI facili
ties and other gas distribution systems in Ontario which buy
system gas from TransCanada and then distribute the gas to
industrial, commercial and residential users within Ontario.
The purpose of these gas distribution systems was contrasted
with the TCPL system, whose purpose, it was submitted, is to
transport natural gas from the western producing provinces to
eastern Canada. It was submitted that the fact that CCPI
purchased its gas in Alberta and that, unlike provincial gas
distributors, it did not rely on system gas, was irrelevant in
respect of the characterization of the CCPI facilities.
Parties who advanced the federal argument suggested that
the true purpose of the CCPI facility was to complete the direct
and continuous interprovincial transmission of natural gas,
purchased by CCPI in Alberta, to the proposed terminus of the
CCPI pipeline in Welland, Ontario.
It was argued that the CCPI line was essential in order to
effect that purpose and that the TCPL and CCPI pipeline
systems would form an integral, indivisible and necessarily
cooperative whole for the direct and continuous flow of natural
gas from Alberta to the Cyanamid plant.
In examining what overall purpose the proposed facilities
would serve, reference must be made to three important cases:
the Luscar Collieries case, the Capital Cities case, and the
Dionne case. The facts in these cases have been set out in
Chapter 4 and there is no need to restate them here. In the
Board's view, these cases are important because they closely
parallel the facts before the Board in this case.
Parties who argued that the CCPI facilities would be a
"local" work or undertaking made much of the fact that these
facilities would be operated by CCPI and not by TCPL, the
operator of an existing interprovincial undertaking. It was
submitted that the Luscar case, unlike in the case now before
the Board, the line in question was operated, pursuant to
certain agreements, by CNR, which also operated a railway
system extending from British Columbia to the rest of Canada.
In the Board's view, the mere fact that the Luscar line was
operated by CNR is not significant in and of itself. What is
important is the fact that, by virtue of such operation, the
Luscar line became an upstream "link in a chain", which chain
enabled traffic to pass to such parts of Canada as were served
by the CNR system. The Luscar line itself was, in essence, a
work whose purpose was to, inter alia, facilitate interprovincial
traffic. In the present case, common operational agreements, as
between TCPL and CCPI, are not required to enable traffic to
pass over the TCPL system, through the CCPI system, to the
ultimate consumer. TCPL is required, by virtue of orders issued
by the Board, pursuant to subsection 59(2) of the NEB Act to
transport and deliver gas offered by CCPI over the TCPL
system to the point of connection with the proposed CCPI line.
It is clear, therefore, that even without common operation as
between CCPI and TCPL, the CCPI line is, as the Luscar line
was, a "link in a chain", albeit a downstream link, which chain
facilitates the direct and continuous interprovincial transmis
sion of gas from its point of origin in Alberta to the Welland
plant gate.
The Capital Cities and Dionne decisions relied on the "link
in the chain" analogy as well. These cases involved the distribu
tion by cable of "off-air" signals, which signals originated
outside the province but which were received within the prov
ince and then distributed to an end-user. In both of these cases,
the Supreme Court emphasized that the Court was not deciding
which level of government had jurisdiction over "local pro
grams". The distinction between "local programs" and "off-
air" programs is that the local programs are not received by the
head-end as broadcast signals. So far as "local programs" are
concerned, the cable system cannot be characterized as a
"conduit for signals from a telecast" and does not constitute a
"link in the chain" of transmission from the transmitter to the
end-user as is the case with "off-air" signals ....
Despite the recognition of "local" characteristics, the
Supreme Court, in both the Capital Cities and the Dionne
cases, refused to sever the cable component from the transmis
sion and receiver portions of the broadcasting system ....
In coming to its decision in Capital Cities, the Supreme
Court relied on, inter alia, the decision in the Winner case.
Reference to the Winner case suggests to the Board that the
Supreme Court drew parallels between the test that should be
used for transportation cases and that which should be used in
communication cases, where such cases involve a characteriza
tion pursuant to paragraph 92(1)(a) of the Constitution Act,
1867.
The Board recognizes that it is not bound by the decisions in
the Luscar, Capital Cities and the Dionne cases; however, given
the similarities between the facts before the Board in this case
and the facts before the Court in Luscar. Capital Cities and
Dionne, the Board is of the view that it must be guided by the
reasoning set out in those three decisions ....
Although the CCPI facility will be located entirely within the
Province of Ontario, the Board cannot but conclude that these
facilities will indeed form a downstream "link in a chain"
which chain will facilitate the interprovincial transmission of
gas from Alberta to the Welland plant. The fact that the
Consumers' facilities currently serve the same purpose as the
facilities proposed by the Applicant is, in the Board's view,
immaterial to the characterization of the proposed facilities
themselves.
5.3.6 Conclusion
The Board finds that the proposed facilities of CCPI are
within the legislative authority of Parliament pursuant to sub
section 91(29) and paragraph 92(10)(a) of the Constitution
Act, 1867. In reaching this conclusion, the Board notes that
while none of the characterization factors discussed above were,
in and of themselves, sufficient to attract federal jurisdiction to
the CCPI facilities, their combined effect persuades the Board
that jurisdiction properly lies with Parliament.
Finally, the Board decided that its non-constitu
tional jurisdiction is consequent upon the decision
it had already arrived at regarding the constitu
tional question (Reasons for Decision, ibid., at
page 21):
5.5 Jurisdiction of the Board
The Board finds that the proposed CCPI facilities constitute
a pipeline within the meaning of Section 2 of the NEB Act, and
are, for this reason, under the jurisdiction of the Board, Section
2 of the NEB Act defines "pipeline" as:
"a line for the transmission of gas or oil connecting a
province with any other or others of the provinces, or extend
ing beyond the limits of a province or the offshore area as
defined in section 87, and includes all branches, extensions,
tanks, reservoirs, storage facilities, pumps, racks, compres
sors, loading facilities, interstation systems of communication
by telephone, telegraph or radio, and real and personal
property and works connected therewith;"
The definition of pipeline "tracks" the wording in paragraph
92(10)(a) of the Constitution Act, 1867. The board has found
that the proposed CCPI facilities are part of an interprovincial
undertaking connecting a province with any other or others of
the provinces and fall within the exception enunciated in para
graph 92(10(a). It follows, therefore, that the facilities also
constitute a pipeline within the meaning of Section 2 of the
NEB Act.
IV
Counsel for Union Gas Limited urged that the
whole issue in this case ought to be resolved on the
basis that the bypass pipeline in question is not a
pipeline within the meaning of section 2 of the
Act, since the Act contemplates only interprovin-
cial works, and this pipeline, if within federal
jurisdiction at all, could be only an interprovincial
undertaking and not a work. There would there
fore be no constitutional question to be answered.
This would in my opinion be at best a cumber-
somely backhanded way of coming at the problem,
since one of the very questions to be decided is
whether the bypass line can be, constitutionally
speaking, classed as an interprovincial work.
Moreover, it is certainly not immediately evident
that the correct interpretation of the section 2
definition is that it includes only works, and not
undertakings. Further, it is, after all, only the
constitutional issue which this Court has been
requested to answer. If the Board were to misinter
pret its Act, it would commit an error of law,
which might be subject to review by this Court in
another proceeding. But I do not find it necessary
to answer this hypothetical question in order to
dispose of the matter before the Court at the
present time.
Turning, then, to the main issue, I believe it is
best to begin with the cable-television analogy on
which the Board placed so much emphasis. The
Capital Cities and Dionne decisions of the
Supreme Court of Canada, supra, involved the
distribution by cable of "off-air" signals originat
ing outside the province which were received
within the province and distributed to an end-user.
The Board saw a close analogy between the pur
pose served by the transmission cables in these
cases and the proposed CCPI facilities. In its own
words (supra, at page 19):
Both the cable system and the CCPI pipeline are dependent on
the extraprovincial supply of a product. Neither delivery
system, however, is necessary to the receipt, by end-users, of
that product. Broadcast signals can be received directly by an
antenna. Similarly, gas transported by TCPL to the Black
Horse Station can be delivered to the Welland plant by means
of an existing pipeline system. As well, in both instances, the
consumers of the product are all located within one province;
both the cable system and the proposed CCPI pipeline have a
local character.
Superficially, the Board's comparison is correct.
But in fact it should be made betwen pipeline and
broadcasting transmission, not between pipeline
and cable transmission, since the Supreme Court
made it clear in the Capital Cities case, supra,
that federal jurisdiction over the latter is a mere
consequence of its jurisdiction over broadcasting.
Chief Justice Laskin rejected the contention for
provincial jurisdiction over cable transmission in
these words, at pages 159 (S.C.R.); 198 (N.R.);
621 (D.L.R.):
The fallacy in the contention ... is in their reliance on the
technology of transmission as a ground for shifting constitu
tional competence when the entire undertaking relates to and is
dependent on extra-provincial signals which the cable system
receives and sends on to subscribers .... The system depends
upon a telecast for its operation, and is no more than a conduit
for signals from the telecast, interposing itself through a differ
ent technology to bring the telecast to paying subscribers.
Cable transmission was thus held to be under
federal jurisdiction as a part of a single undertak
ing, which had already been determined to be
within federal competence. In the instant refer
ence, no party even argued that the pipelines
bypassed (those of the LDC's) were under federal
jurisdiction.
Taking the broader comparison, then, between
natural gas systems and broadcasting systems, I
am more struck by the differences than by the
similarities. As was rightly contended by counsel
for Consumers', radio waves, when transmitted
other than by cable, are not confined in space as
gas is confined in a pipeline and so bear no rela
tionship to territorial boundaries. Their reception,
too, is virtually instantaneous. Professor Peter W.
Hogg, Constitutional Law of Canada, 2nd ed., at
page 501, puts the reason for not dividing broad
casting on a territorial basis this way:
[R]adio is different from all of these other modes of transporta
tion or communication in that all radio broadcasters must
use the same kind of radio waves in the same frequency
spectrum .... The need to allocate space in the frequency
spectrum in order to avoid interference suggests that the power
to regulate the interprovincial broadcaster must carry with it
the power to regulate the intraprovincial broadcaster as well.
In the result, I find the broadcasting analogy
singularly inapposite for natural gas pipelines.
Besides the Capital Cities and Dionne cases, the
Board relied on a railway analogy based on the
Luscar decision by the Judicial Committee of the
Privy Council, supra. In the Luscar case the rail
way line in question, although constructed and
owned by an intraprovincial company, was oper
ated on its behalf by the Canadian National Rail
way. The Judicial Committee said, at pages
932-933:
Their Lordships agree with the opinion of Duff J. that the
Mountain Park Railway and the Luscar Branch are, under the
circumstances hereinbefore set forth, a part of a continuous
system of railways operated together by the Canadian National
Railway Company, and connecting the Province of Alberta
with other Provinces of the Dominion. It is, in their view,
impossible to hold as to any section of that system which does
not reach the boundary of a Province that it does not connect
that Province with another. If it connects with a line which
itself connects with one in another Province, then it would be a
link in the chain of connection, and would properly be said to
connect the Province in which it is situated with other
Provinces.
In the present case, having regard to the way in which the
railway is operated, their Lordships are of opinion that it is in
fact a railway connecting the Province of Alberta with others of
the Provinces, and therefore falls within s. 92, head 10 (a), of
the Act of 1867. There is a continuous connection by railway
between the point of the Luscar Branch farthest from its
junction with the Mountain Park Branch and parts of Canada
outside the Province of Alberta. If under the agreements here-
inbefore mentioned the Canadian National Railway Company
should cease to operate the Luscar Branch, the question wheth
er under such altered circumstances the railway ceases to be
within s. 92, head 10 (a), may have to be determined, but that
question does not now arise.
Luscar has been authoritatively interpreted by the
Supreme Court in the British Columbia Electric
Ry. Co. Ltd. et al. v. Canadian National Ry. Co.
et al., [1932] S.C.R. 161, at pages 169-170, where
the Court said of the Luscar decision, in the course
of arriving at a decision in favour of provincial
jurisdiction over an electric railway line:
It was held that the Board had jurisdiction over the appel
lant's lines constructed under provincial authority, because the
line was part of a continuous system of railways operated
together by the Canadian National Railway Company and
connecting one province with another.
The decision is expressly put upon the way in which the
railway is operated by the Canadian National Railway Com
pany under the agreements, and it is intimated that if that
company should cease to operate the appellant's branch, the
question whether, under such altered circumstances, that
branch ceases to be within s. 92, head 10 (a), might have to be
determined. The question thus left undetermined is the very
question that arises in the present case, because the Park line is
not operated by the Canadian National Railway Company, nor
by the appellant, the British Columbia Electric Railway Com
pany, as the operator of the Vancouver & Lulu Island Railway,
on behalf of the Canadian Pacific railway.
The mere fact that the Central Park line makes physical
connection with two lines of railway under Dominion jurisdic
tion would not seem to be of itself sufficient to bring the
Central Park line, or the portion of it connecting the two
federal lines, within Dominion jurisdiction.
With respect to a natural gas pipeline, a parallel
situation would exist if TCPL had a similar agree
ment to operate the CCPI pipeline. This would
approximate the situation of the pipeline ter-
minalling facilities in Dome Petroleum Ltd. v.
National Energy Board (1987), 73 N.R. 135
(F.C.A.), which this Court held to fall under
federal jurisdiction. The Luscar case must there
fore be distinguished.
Rather than trying to pick and choose among
analogies, I believe a far sounder approach is to
seek governing principles. In this context it is
immediately apparent that in the vast majority of
cases under paragraph 92(10(a) the courts have
explicitly required the parties alleging federal
jurisdiction to meet what the NEB initially termed
the "vital, essential or integral to the undertaking"
test, and then shortened to the "essential test",
(supra, at pages 9-10). The Board itself cited the
principal authorities for this test: Reference re
Industrial Relations and Disputes Act, [1955]
S.C.R. 529 (the Stevedoring Reference); Letter
Carrier's [sic] Union of Canada v. Canadian
Union of Postal Workers et al., [1975] 1 S.C.R.
178; Cannet Freight Cartage Ltd. (In re), [1976] 1
F.C. 174; (1976), 11 N.R. 606; (1975), 60 D.L.R.
(3d) 473 (C.A.); Canadian National Railway Co.
v. Nor-Min Supplies Ltd., [1977] 1 S.C.R. 322;
Construction Montcalm Inc. v. Minimum Wage
Commission, [1979] 1 S.C.R. 754; Northern Tele-
com Ltd. v. Communications Workers of Canada,
(#1), [1980] 1 S.C.R. 115; (#2), [1983] 1 S.C.R.
733. Whatever the terminology adopted, the courts
say again and again in these cases that for a work
or undertaking to fall under federal jurisdiction
under paragraph 92(10)(a), it must either be an
interprovincial work or undertaking (the primary
instance) or be joined to an interprovincial work or
undertaking through a necessary nexus (the
secondary instance).
Indeed, I believe that even the cases which do
not explicitly acknowledge this test affirm it
implicitly. In the Luscar case the necessary nexus
is the operating agreement; that is what makes the
branch line a link in the interprovincial chain. In
the cable television cases the necessary nexus is the
inseparability of the medium and the message. As
Chief Justice Laskin put it, in the Capital Cities
case, supra, at pages 162 (S.C.R.); 200 (N.R.);
623 (D.L.R.):
Programme content regulation is inseparable from regulating
the undertaking through which programmes are received and
sent on as part of the total enterprise.
The only authority which seems to resist the
necessary nexus approach is the Winner case,
supra. There an interprovincial (indeed, interna
tional) bus system operating between Boston and
Glace Bay, in addition to embussing and debussing
extraprovincial passengers, also transported pas
sengers between points entirely within New Bruns-
wick. In upholding federal jurisdiction over the
whole undertaking, the Judicial Committee of the
Privy Council said, at page 581:
The question is not what portions of the undertaking can be
stripped from it without interfering with the activity altogether;
it is rather what is the undertaking which is in fact being
carried on. Is there one undertaking, and as part of that one
undertaking does the respondent carry passengers between two
points both within the province, or are there two?
Since the Privy Council found the enterprise as
actually carried on in Winner to be a primary
instance of an interprovincial undertaking, that is,
one having but a single participant with a single
business, no question of a nexus arose, and the
Supreme Court of Canada was declared wrong in
having tried to strip away the incidental from the
essential.
The Privy Council was, however, very careful to
limit its holding to the exact facts, going so far as
to say, at page 583:
Their Lordships express no opinion whether Mr. Winner could
initiate a purely provincial bus service even though it was under
the aegis of and managed by his present organization.
In such a further case it would seem that the issue
of a nexus would loom large, even though only one
organization was in question. The case of a
primarily intraprovincial carrier, which is even
farther removed from the facts in Winner, drew a
more negative response from the Privy Council, at
page 582, with presumably even less possibility
that a nexus could be established:
[T]heir Lordships must not be supposed to lend any counte
nance to the suggestion that a carrier who is substantially an
internal carrier can put himself outside provincial jurisdiction
by starting his activities a few miles over the border. Such a
subterfuge would not avail him. The question is whether in
truth and in fact there is an internal activity prolonged over the
border in order to enable the owner to evade provincial jurisdic
tion or whether in pith and substance it is inter-provincial.
In the instant reference the NEB suggested that
Winner and other cases gave rise to a so-called
"purpose/nature of the undertaking" test, which
attributed jurisdiction on the basis of the overall
purpose of an enterprise. The typical case of this
kind where federal jurisdiction was found is, how
ever, one where there is a single business undertak
ing: Toronto Corporation v. Bell Telephone Com
pany of Canada, [1905] A.C. 52 (P.C.).
In fact, the closest parallel to the Winner situa
tion in the instant reference would be an applica
tion by TCPL to build and operate the bypass
pipeline as its own. Failing that situation, it seems
to me that the bypass line must meet the necessary
nexus test in order to establish federal jurisdiction
under 92(10)(a).
V
Counsel for CCPI cast his net in the broadest way
by proposing in the alternative that the bypass
pipeline was an interprovincial work and/or under
taking of TCPL, or an interprovincial work and/or
undertaking of CCPI.
In the Montreal City v. Montreal Street Rail
way Company, [1912] A.C. 333 (P.C.), at page
342, works were said to be "physical things, not
services." An undertaking, on the other hand, was
defined In re Regulation and Control of Radio
Communication in Canada, [1932] A.C. 304
(P.C.), at page 315, as "not a physical thing, but
... an arrangement under which of course physical
things are used." As a work, the proposed pipeline
exists solely within the province of Ontario and, as
established by the B.C. Electric Railway case,
supra, mere physical connection to the admittedly
interprovincial TCPL work is not sufficient to
found federal jurisdiction. If it is to come under
92(10)(a), I believe it must therefore be as an
undertaking rather than as a work alone.
The NEB held, on the one hand, that the bypass
pipeline was not part of an interprovincial under
taking by CCPI, but that it was, on the other
hand, an integral part of the undertaking of
TCPL. It will be necesary to examine each of these
possibilities in turn.
The interprovincial undertaking of CCPI was
said to consist of the purchase of natural gas in
Alberta, the transportation of that gas across
Canada utilising the facilities of Nova (in Alber-
ta), TCPL and CCPI itself, and the sale of the gas
to Cyanamid at the Welland plant. In point of
fact, at the present moment CCPI makes no gas
purchases in Alberta or sales in Ontario, but as
Cyanamid would presumably have transferred the
Alberta contracts to its subsidiary by the time the
pipeline was completed, I am prepared to decide
the reference on the latter basis. However, to
adapt a phrase of Judge Jerome Frank, I see this
hypothesis as equivalent to a 2 percent tail wag
ging a 98 percent dog. It would be a different
situation if there were a two-way flow, as, for
example, in passenger transportation or in broad
casting, so that even the most infinitesimal part of
the undertaking could be seen as necessary to the
whole.
Moreover, in the Cannet case, supra, where the
company in question was in the business of freight
forwarding, this Court held, at pages 178 (F.C.);
611 (N.R.); 475 (D.L.R.), per Jackett C.J.:
In my view, the only interprovincial undertaking involved here
is the Canadian National interprovincial railway. Clearly, a
shipper on that railway from one province to another does not,
by virtue of being such a shipper, become the operator of an
interprovincial undertaking.
The interprovincial undertaking here is just as
surely that of TCPL. An Ontario Divisional Court
recently reached the same kind of conclusion in Re
The Queen and Cottrell Forwarding Co. Ltd.
(1981), 33 O.R. (2d) 486; 124 D.L.R. (3d) 674,
where the parent company of the company in the
Cannet case, also involved in the assembly, consoli
dation and shipping of freight, was held to be
under provincial jurisdiction. Steele J. said for the
Court, at pages 492 (O.R.); 679-680 (D.L.R.):
The shipment is merely part of an over-all contract and a
person who has no tangible or physical property under its [sic]
control to operate an undertaking cannot, by contract, make
himself a person carrying on an undertaking within the mean
ing of s. 92(10)(a) of the British North America Act, 1867.
Cottrell is not carrying on an undertaking or operation but is
merely providing a service by contract.
Even if CCPI could be considered to be engaged
in an interprovincial undertaking as understood in
general commercial terms, it would not be an
interprovincial undertaking of a transportation or
communications character such as is required for
federal jurisdiction under paragraph 92(10)(a).
Professor Hogg, supra, at page 486, notes that this
provision has never been held applicable to any
work or undertaking which is not of a transporta
tion or communications character, and argues that
the phrase "other works and undertakings" should
be read ejusdem generis with the specific examples
which precede it, which are in every case modes of
transportation or communication. I agree with this
interpretation and with the conclusion of the NEB
on this point. This was also the view of the Ontario
Divisional Court on the OEB's stated case, supra,
at pages 8-9.
On the other hand, the question whether the
proposed pipeline is an integral part of the under
taking of TCPL, for the reasons I have already
given it is impossible to evade the necessary nexus
test as the Board did. Applying that test, I can find
no such necessary connection. Far from being
vital, essential, integral or necessary to TCPL, the
proposed bypass is unnecessary and redundant.
TCPL already has an effectively functioning
system which transports gas not only to the prov
ince of Ontario but (with the aid of an LDC) to
Cyanamid's Welland plant. TCPL has no need for
anything more. The fact that it might be economi
cally advantageous for an end-user to have its own
pipeline has no corresponding advantage for
TCPL, let alone any necessity.
The short (i.e. 6.2 kilometre) proposed pipeline
has in fact more of the character of an individual
connection than of an interprovincial undertaking.
It would be one end-user's link with the main line,
built for its own purposes. It is no more necessary
to TCPL's function as an interprovincial transport
er than any other end-user's connection to its
supply line.
It was argued that CCPI's proposed commercial
links with Alberta producers could be thought of
as enlarging CCPI's nexus with TCPL's interpro-
vincial undertaking. But even if CCPI's two
aspects (as purchaser and as transporter) could be
conceptualized as a single undertaking, then
TCPL would have to be considered from the same
twofold point of view—selling its own system gas
(which it presently sells to LDC's) as well as
transporting others' gas. In this enlarged perspec
tive CCPI's proposed activities can appear only as
even less necessary to TCPL's well-being.
Any argument beyond one based on the inter-
provincial undertaking of TCPL, i.e. one resting,
for example, on any perceived exigencies of nation
al policy, would have to be cast in terms of the
trade and commerce power, or the general power
over peace, order and good government, arguments
which the proponents of federal jurisdiction
expressly refrained from making on the present
reference.
The Federal Parliament also, of course, retains
the option of acquiring jurisdiction over any pipe
line by declaring it to be a work for the general
advantage of Canada under paragraph 92(10)(c)
of the Constitution Act, 1867, but it has not
chosen to exercise that power.
VI
I would therefore answer the question referred as
follows:
The pipeline facilities proposed to be constructed and oper
ated by Cyanamid Pipeline Inc. are not within the jurisdiction
of the National Energy Board as not being within the legisla
tive authority of the Parliament of Canada pursuant to subsec
tion 91(27) and paragraph 92(10)(a) of the Constitution Act,
1867.
MAHONEY J.: I agree.
STONE J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.