The Alberta Court of Appeal Examines First Nations Interests in the Utilities and Ratemaking Context

 by Doug Evanchuk and Anna Fitz

In the recent AltaLink Management Ltd. v Alberta Utilities Commission decision, the Alberta Court of Appeal provided important guidance with respect to utility ratemaking and First Nations interests.

AltaLink had purchased a transmission system and sought to expand it across routes which crossed First Nations reserves. The First Nations groups affected agreed to the construction of transmission lines on their lands in exchange for an opportunity to obtain ownership interests in the transmission lines, and to participate in the energy transmission industry.

A couple years after the transmission lines became operational, the First Nations groups exercised their options to purchase an interest in the lines. The parties agreed that they would effect the transfers by creating limited partnerships which comprised AltaLink and corporate entities representing the First Nations groups. AltaLink filed applications with the Alberta Utilities Commission, requesting approval of the transfer and sale of the transmission lines to the First Nations groups, as well as approval of the partnerships’ general tariff applications for 2017 and 2018. The Commission approved the transfers in Decision 22612-D01-2018 on the condition that the partnerships could not recover from ratepayers $60,000 in incremental external auditor and hearing costs for new regulatory proceedings if the transaction was approved. AltaLink appealed the imposition of this condition by the Commission.

The Commission applied the “no-harm test” to weigh the positive and negative impacts of the transaction on ratepayers. It rejected the argument that routing the transmission lines through First Nations lands saved $32 million and would create intangible benefits such as supporting First Nations communities. Rather, the Commission stated that the “no-harm” test is a forward-looking exercise, that the Commission could not consider the alleged savings, and found that AltaLink failed to provide sufficient evidence of the intangible benefits. In the Commission’s opinion, removing the incremental costs from the tariffs did not give ratepayers a benefit they did not already enjoy, or relieve ratepayers of a cost they had to pay previously. The Commission concluded that preventing the partnerships from recovering audit and hearing costs would offset the financial harm to ratepayers from incremental costs. AltaLink sought and received leave to appeal.

The majority of the Court of Appeal found that the Commission erred in considering only forward-looking benefits, that there is no legislative basis for this approach, and that the manner in which the project was built—across First Nations lands—necessarily involved a real prospect of forward-looking savings. The majority also emphasized that projects which increase the likelihood of economic activities on reserves are in the public interest and should be encouraged. Such strategies address the employment gap between Indigenous and non-Indigenous Canadians. The majority therefore varied the Commission’s decision, permitting the partnerships to include their regulatory costs from ratepayers.

Justice Feehan agreed with the majority’s decision, but also chose to provide further clarity on when the Commission has a duty to consider reconciliation and the honour of the Crown. He concluded that the Commission must consider these principles whenever it engages with Indigenous collectives or their governance entities, and must include in its decisions an analysis of the impact of these principles on its orders when raised by the parties and relevant to the public interest.

The Court ultimately determined that the Commission committed a legal error by failing to take into account all relevant factors that determine whether a sale is in the public interest. Its decision to ignore the cost savings arising from the routing of the transmission lines across the reserves of the First Nations was found to be an error of law. The Court varied Decision 22612-D01-2018 by ordering that the partnerships be allowed to include the incremental audit and hearing costs in their respective tariff applications and recover the costs from ratepayers in the usual course.

While AltaLink’s application involved typical considerations by the Commission in the context of a transfer of utility assets, this case clarifies the broad nature of the “no-harm test” and the Commission’s on-going responsibilities toward First Nations groups. For further information regarding energy, environmental, or regulatory matters, please contact any member of our Energy, Environmental, and Regulatory PracticeGroup.

Environmental Appeals Board Members Reappointed

by Logan Lazurko

By Order in Council dated October 6, 2021, (O.C. 282/2021), the Lieutenant Governor in Council has made reappointments to the Environmental Appeals Board (the “Board”) under section 90 of the Environmental Protection and Enhancement Act for terms as follows:

Effective October 21, 2021, expiring September 29, 2022:

a)     Nick Tywoniuk

Effective October 21, 2021, expiring October 20, 2023:

a)     Brenda Ballachey;

b)    Meg Barker;

c)     Anjum Mullick

Effective November 27, 2021, expiring November 26, 2023:

a)     Line Lacasse;

b)    Chris Powter

Effective February 25, 2022, expiring February 24, 2024:

a)     Kurtis Averill;

b)    Barbara Johnston;

c)     Chidinma Thompson

The Board is an independent administrative agency with the authority to hear appeals from decisions made under the Environmental Protection and Enhancement Act, the Water Act, and the Climate Change and Emissions Management Act, which are administered by Alberta Environment and Parks. It also hears appeals from decisions regarding enforcement orders related to Restricted Development Areas under the Government Organization Act, Schedule 5, section 6. Decisions before the Board may include approvals, water licenses, preliminary certificates, remediation certificates, administrative penalties, enforcement orders and environmental protection orders.

The Board serves as a quasi-judicial body and has all the powers of a commissioner under the Public Inquires Act while carrying out its functions. However, the Board places a high value on its mediation program and encourages participants to use mediation as the primary way of resolving appeals. Board mediations are meant to promote open and collaborative discussions between participants and encourages individuals to come up with their own solutions.

Approval Granted for Springbank Offstream Reservoir Project

 by Gavin Fitch, Q.C. and Marika Cherkawsky

On October 6, 2021, the Lieutenant Governor in Council (provincial Cabinet) authorized the Natural Resources Conservation Board (“NRCB” or “Board”) to grant approval to Alberta Transportation and Alberta Environment and Parks to construct and operate the Springbank Offstream Reservoir Project (“SR1” or “Project”), located approximately 15 kilometres west of Calgary. The Board had issued a Decision Report on June 22 in which it found that the Project was in the public interest, having regard for social, economic, and environmental effects. However, the NRCB can only approve a project it has reviewed with prior authorization of Cabinet. With Cabinet authorization and NRCB approval, construction of the Project—which is intended to provide flood mitigation on the Elbow River to Calgary and other downstream communities—is expected to commence in February 2022.

In 2016 Alberta Transportation applied to Alberta Environment and Parks (“AEP”) for an approval under the Water Act for SR1. In addition to requiring approvals under the Water Act and also the Public Lands Act, the NRCB is mandated under the Natural Resources Conservation Board Act, RSA 2000, c N-4 (“NRCBA”) to review “water management” projects. Alberta Transportation prepared an Environmental Impact Assessment (“EIA”) which formed the basis for the NRCB’s review of the Project. Finally, because of the potential for the Project to impact fish and fish habitat, as well as Indigenous persons and First Nations, SR1 was designated as a project for review by the Impact Assessment Agency of Canada (“IAAC”) under the federal Canadian Environmental Assessment Act, 2012.

After several rounds of information requests from the provincial and federal regulators, the NRCB held an 11-day hearing in late March and early April 2021. The Board’s decision comes after an eleven-day hearing held between March 22 and April 7, 2021. Shortly after the NRCB decision was issued in June, federal Environment Minister approved the Project based on a report issued by IAAC.

The Project

The purpose of the Project is to divert water from the Elbow River during flood events to an off-stream reservoir, where retained flood water would then be released in a controlled manner after peak flows have subsided. The Project is designed to work in tandem with the existing Glenmore Reservoir, with a total combined storage capacity of 87,771,000 m3, which exceeds the amount of water that overtopped the Glenmore Dam during the 2013 flood.

The Project was one of the provincial government’s primary responses to the devastating flooding in 2013 in southern Alberta and the City of Calgary which resulted in approximately $5 billion in damages. Following an extensive review of various flood mitigation options, the Government selected SR1 as the preferred option.

The Law

Pursuant to s. 2 of the NRCBA, the Board was required to review the Project to determine whether, in the Board’s opinion, the proposed Project is in the public interest, having regard to the social and economic effects of the Project and its effects on the environment. As stated by the Board in its decision, there is no fixed objective test to determine whether a review-able project is in the public interest. Instead, the Board makes its determination by balancing the economic, environmental and social interests in the context and time period in which they arise.

Under the NRCBA, the Board may grant an approval on any terms and conditions that it considers appropriate. However, unlike other regulatory bodies in Alberta, the Board does not have an ongoing role in the regulation of the Project. This means the ongoing review and enforcement of conditions included in an NRCB approval are normally delegated to a provincial department that has an ongoing regulatory function.

The Project is in the Public Interest

An overview of the NRCB’s public interest determination is set out at page 174 to 180 of the Board’s decision. These pages summarily describe the concerns with the Project raised by many of the hearing participants and Alberta Transportation’s response to these concerns. Alberta Transportation’s overall position was that the Project would be in the public interest because of the positive social and economic impacts and that the adverse environmental impacts would not be significant after taking into account their mitigation measures. Generally speaking, the Board agreed with Alberta Transportation and concluded the Project’s considerable positive social and economic benefits of mitigating flood events downstream of the Project and, in particular, on the City of Calgary, outweighed the adverse economic, social and environmental effects. It was the Board’s opinion that the conditions in the approval, together with Alberta Transportation’s commitments, would mitigate any material environmental effects associated with the Project.

Justifiable Need for and Design of the Project

The Board’s decision makes it clear that the need to mitigate future flood events on the Elbow River was key in its determination that the Project is in the public interest. This point is made by the Board throughout the decision in its reference to the significant benefits resulting from the Project’s design reducing the risk to human life and financial losses from damages to residential, commercial and public buildings and infrastructure, as well as direct and indirect economic losses from the disruption of businesses.

Damage avoidance outweighs costs of construction

At the hearing, the Board heard extensive argument surrounding the escalating costs of the Project and the benefit-cost analyses and resulting ratios. While the Board acknowledged the costs for the Project had increased since the initial estimates in 2015, it concluded that the Project was still expected to deliver a positive economic return. The Board’s conclusion was based on the benefit-cost ratios presented by Alberta Transportation. The benefit-cost ratios demonstrated the Project benefits, measured in damage avoidance to private and public infrastructure and business interruption costs, were greater than the cost of constructing the Project, including land acquisition costs.

Social Effects

The Board concluded there were no unacceptable social impacts associated with the Project. However, it is worth briefly discussing three of the more prominent concerns expressed by interveners opposing the Project: dam safety, future land use and impacts on Indigenous groups and First Nations.

Dam safety

Project opponents argued that the Project as a whole was the first of its kind in the world and therefore put public safety at risk. In response, Alberta Transportation presented extensive evidence around the Project design, operating plan and emergency preparedness plan. As pointed out by Alberta Transportation, the Project is designated as an extreme consequence facility pursuant to the Canadian Dam Association Safety Guidelines and Alberta’s Dam and Canal Safety Directive and therefore must be designed to the highest level of safety due to its location in proximity to local population centers. Further, the design of SR1 must ultimately be approved by AEP’s Director of Dam Safety.

The Board agreed with Alberta Transportation’s argument and rejected the notion that the Project design was radical or somehow put public safety at risk. In doing so, the Board not only accepted Alberta Transportation’s evidence, but also relied on the fact that further protection against a dam breach or failure would be provided under the Canadian Dam Association safety guidelines.

Land Use

The off-stream reservoir will be located on land that is privately-owned, mainly by local ranching families. Therefore, Alberta Transportation is required to acquire the land, which will then become provincial Crown land. The Board heard from landowners who will be displaced by the Project and community members concerned about future land use. While the Board was sympathetic to these landowners, its decision made it clear that these adverse social effects were outweighed by the benefits of the Project to the public at large.

Specific concerns were raised about hunting and firearms use, access, parking and the continued use of the Project area for grazing. To address some of these concerns, the Board imposed as a condition of approval that Alberta Transportation (or AEP) must consult with Indigenous groups and community members to finalize a Land Use Plan for the Project Development area and form a Joint Land Use Advisory Committee consisting of representatives of Indigenous groups and members of the local community.

Indigenous Concerns

Alberta Transportation stated that it extensively consulted with 13 Indigenous groups and First Nations. Only one of them—the Stoney Nakoda Nations—participated in the hearing. The Board concluded Alberta Transportation had largely addressed the concerns of affected Indigenous communities about impacts to their rights through various mitigation or accommodation strategies. One of the main mitigation strategies proposed by Alberta Transportation was its draft Land Use Plan, which gives priority access to and use of the project area, during non-flood periods, to Indigenous groups. The final Land Use Plan for the Project area will be developed with participation and input from Indigenous peoples through the First Nations Land Use Advisory Committee.

Environmental Effects

The Board found most environmental effects were low to negligible and any adverse environmental effects would likely be reduced to acceptable levels with proposed mitigation strategies. The Board’s decision assessed a number of impact categories, however, it found the potential adverse effects and conclusions on hydrology and air quality were of particular importance.


The purpose of the Project is to mitigate high flow events in the Elbow River associated with floods. As a result, the Project’s adverse effects on hydrology are unavoidable. However, as noted by the Board, except during relatively infrequent flood events, the Project design allows the Elbow River to remain close to its natural riverine state. Only during flood events will flows exceeding 160 cubic meters per second be diverted from the Elbow River into the reservoir. The Board found these point-in-time effects as necessary to achieve the objective of the Project: flood mitigation and damage avoidance.

Air Quality

Alberta Transportation’s assessment of air quality impacts resulting from the mobilization of sediments deposited in the reservoir during flood events and its proposed mitigation measures were discussed by nearly all other hearing participants who expressed concern with the Project. However, the Board was satisfied with Alberta Transportation’s proposed mitigation measures, which included the timely use of tackifiers, cover crops and revegetation to stabilize sediment, in conjunction with extensive air quality monitoring.

Conclusion on Environmental Effects

At the hearing, many interveners expressed an interest in monitoring of environmental effects and the need for public access to those results. The Board agreed that a transparent approach to monitoring and reporting on environmental effects was important and included as a condition of approval that AEP as operator of the Project must make monitoring results accessible to the public.


This decision demonstrates how the NRCB weighs evidence of the various effects, some positive and some negative, resulting from a proposed Project, and balances those effects in forming its overall opinion as to the public interest. Specifically, this decision highlights a situation where the Board was convinced a project was in the public interest on the basis of the considerable social and economic effects outweighing any adverse economic, social and environmental effects.

Grassy Mountain and the Limits of Adaptive Management

 By Gavin Fitch, Q.C. and Cesar Agudelo


On June 17, 2021, the Joint Review Panel (“JRP”) of the Alberta Energy Regulator and the Impact Assessment Agency of Canada (“IAAC”) rejected a proposal by Benga Mining Ltd. (“Benga”) to develop a metallurgical coal mining project in the Crowsnest Pass region of southwestern Alberta. The JRP concluded the Grassy Mountain Coal Project (“Project”) would result in significant adverse environmental effects that would not be outweighed by the Project’s modest positive economic impacts.

A close review of the Decision shows that the JRP found that Benga put forward a highly optimistic Project that lacked a systemic approach to dealing with the significant uncertainties it posed. As a result, the JRP did not have confidence in Benga’s ability to mitigate the environmental impacts.

The Decision is significant for a number of reasons, in particular the extent to which a proponent can rely on promises to undertake adaptive management to ameliorate uncertainties about the effectiveness of mitigation.

The Project

The Project involved the construction, operation, and reclamation of a new, open-pit metallurgical coal mine in the Crowsnest Pass. By its own estimates, the Project would produce a maximum of 4.3 million tonnes of coking coal a year. Production would occur over 23 years, followed by four years of active reclamation and decades of passive site management to deal with selenium in surface water.

The assessment of the Project considered a wide variety of environmental issues, but the most prominent one was water quality. The high risk of discharge of selenium into local watercourses (Blairmore Creek and Gold Creek, both tributaries of Crowsnest River) and the potential impacts on the threatened Westslope Cutthroat Trout (“WSCT”), which is protected under the federal Species at Risk Act (“SARA”), were major issues at the hearing.

Significant Adverse Effects

The JRP concluded that the Project would result in significant adverse effects on surface water quality and the WSCT. The JRP also found that there would be significant adverse effects on the Whitebark Pine (another protected species under SARA), native vegetative species and biodiversity.

Benga claimed it would use proven mitigation methods to address these potential adverse effects on water. Further, in the event these methods did not prove successful, Benga would rely on adaptive management to deal with it.

With regard to surface water specifically, Benga placed significant reliance on a single technology: the saturated backfill zone (“SBZ”). A SBZ is water saturated waste rock, which is kept in a submerged state and fed with a carbon-based feed to create a chemical reaction that is supposed to attenuate selenium in the water. This method is currently being used in B.C. by Teck Resources (“Teck”) at its Elk Valley mines. However, the JRP found that it had not been demonstrated to be effective at scale (i.e., on an actual operating mine as opposed to demonstration sites). Further, the JRP found that although Benga stated it would have several years to adaptively manage if the SBZ did not perform as expected and that Benga failed to provide sufficient detail about what it would or might do, leaving the panel with little confidence.

The Past

The hearing of the Project occurred against the backdrop of the long history of coal mining in British Columbia’s Elk Valley. The JRP wrote at paragraph 848, “The Elk Valley serves as a cautionary example regarding what could occur when sources of selenium and calcite formation are not controlled. It affirms the importance of preventing problems before they arise, rather than relying on adaptive management after contamination problems have taken hold.”

The precautionary principle featured prominently in the Decision. The JRP interpreted the precautionary principle to mean that where there are threats of serious irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. The precautionary principle at the Grassy Mountain hearing took on increased stature because the “threat of serious irreversible damage” was so readily apparent in the Elk Valley, a short distance from the site of the Project.

Dealing with Uncertainty and Adaptive Management

The JRP acknowledged that every project will have uncertainties. However, the public interest consideration required the JRP to assess the environmental effects and the mitigation methods proposed to address those uncertainties.

In the case of the Project, the JRP found that Benga presented optimistic goals, assumptions and measurements were not conservative; and relied on a single, unproven mitigation technology, the SBZ. This last point was particularly important. At paragraph 1148, the JRP wrote “The strategy of ‘putting all one’s eggs in one basket,’ when the basket …is unproven, does not give us confidence that significant adverse environmental impacts can be avoided even if additional mitigation measures were later put in place.”

Benga’s response to concerns over the reliance on the SBZ and other uncertainties was to state that it would apply adaptive management techniques. However, the JRP stated that “a commitment to adaptive management does not eliminate the need to provide sufficient information on the environmental effects of a project.”

The JRP held that proponents must provide sufficient detail to demonstrate that project plans and proposed mitigation measures are technically and economically feasible, and that these techniques will effectively manage risk. Adaptive management, while not fail-safe, must have systematic and deliberate planning and rigorous implementation. As noted at paragraph 169, adaptive management required more than promising to implement a trial-and-error methodology.

Economic Benefits Insufficient

Proponents can often depend on the economic benefits of their projects to balance out any adverse effects. Not this time.

Benga prepared a Socio-economic Impact Assessment (“SEIA”), which is standard practice particularly in oil sands projects. Several interveners criticized this approach, arguing that a true cost-benefit analysis (“CBA”) should have been provided. The JRP held that a SEIA, while acceptable and important in assessing the economic impacts of a proposal, lacked an assessment of the benefits of the Project. The JRP recommended that the federal and provincial governments should require the use of both economic impact assessments and cost-benefit analysis for future EIAs or federal impact assessments to allow decision makers to make more informed decisions.

Among other things, Benga claimed that the Project would create approximately 400 full-time jobs and generate $77 million annually in royalties and income taxes, and hundreds of thousands annually in municipal taxes. However, the JRP found the Benga’s estimate of its royalty and tax payments was overstated. It concluded that the alleged economic benefits were modest and paled in comparison to the potential costs, both economic and environmental, of the Project.

In the result, the JRP found that even if the economic impacts were as great as predicted, the severity and the character of the environmental impact were such that they would have to deny the application anyway.

Take Away

The Project was rejected by the JRP because it determined that Benga presented an overly optimistic goal for selenium capture based on metrics that were not conservative. The JRP found that Benga’s confidence did not hold up to scrutiny and was not supported by the real-world experience of the Elk Valley, which showed that without a conservative, intentional, and well-planned approach, Alberta’s southern river basins could suffer the same fate.

Further, the JRP found that Benga failed to present a coherent adaptive management plan. Rather than a deliberate plan to deal with uncertainty, the JRP concluded that Benga’s promises to adaptively manage amounted to deferring important mitigation plans to an undefined point in the future.

The JRP essentially denied the Project as it found that Benga placed “all its eggs in one basket” with regard to selenium management, had an ill-defined adaptive management plan, and would provide only modest economic benefits. Therefore, the JRP believed denial was consistent with the precautionary principle and in the public interest.

For further information regarding the post above or any other environmental, energy, or regulatory matter, please contact any member of our Energy, Environmental, and Regulatory Practice Group.