Decision Date: January 28, 2022

Court: B.C.S.C., Justice Steeves

Citation: 2022 BCSC 135

A Director (the “Director”) in the Ministry of Environment and Climate Change Strategy (the “Ministry”), and the Attorney General of BC (collectively, the “Province”), sought a judicial review of three decisions issued by the Board. The Board’s decisions related to appeals by Canadian National Railway Company, Canadian Pacific Railway Company, and BNSF Railway Company (the “Railways”) against orders issued by the Director under section 91.11 of the Environmental Management Act (the “EMA”). The orders required the Railways to provide information to the Director about: the number of railcars transporting those of crude oil and diluted bitumen, and the volume transported, weekly and route by route in British Columbia, from 2018 to 2020; and, electronic maps showing the transportation of those substances. The Ministry intended to publish the information.

The Railways’ operations extend across Canada or across international borders and are regulated by federal legislation. Federal legislation requires the Railways to publish the top 10 dangerous goods shipped in each province. Federal legislation also requires the Railways to provide local officials, including emergency response officials, with more detailed information about dangerous good shipments, subject to confidentiality restrictions.

In response to the Director’s orders, the Railways offered to provide the information on the same confidential basis as under the federal legislation. The Ministry declined.

The Railways appealed the Director’s orders to the Board on constitutional grounds. The main issue before the Board was the constitutional validity of section 91.11 of the EMA and the definition of “regulated person” in section 2 of the Spill Preparedness and Recovery Regulations (the “Spill Regulation”).

Before the appeals were heard by the Board, the Railways applied to the Board for orders excluding the public and media from viewing documents considered sensitive to railway security issues, and from hearing testimony about those documents at the Board’s hearing. On September 10, 2019 (Decision Nos. 2018-EMA-043(a), 044(a), 045(a)), the Board ordered that certain documents were sealed from the public and the media, and on September 17, 2019 (Decision Nos. 2018-EMA-043(b), 044(b), 045(b)), the Board ordered that certain testimony would be heard in confidence (the “Confidentiality Decisions”).

On May 29, 2020, the Board issued its decision on the merits of the appeals (Decision Nos. 2018-EMA-043(c), 044(c), 045(c), the “Constitutionality Decision”). The Board agreed with the Railways that section 91.11 of the EMA and the definition of “regulated person” in section 2(1)(b)(i) of the Spill Regulation are beyond the Province’s constitutional jurisdiction because they regulate the Railways’ interprovincial railway operations, which are federal undertakings. In addition, the Board found that the legislation was inapplicable to the Railways under the doctrine of federal paramountcy, because it had a serious impact on vital elements of the Railways as federal undertakings. However, the Board rejected the Railways’ argument that the doctrine of federal paramountcy applied.

The Province sought a judicial review of the Board’s decisions by the BC Supreme Court. The Province asked the Court to set aside the Board’s decisions and remit the matter back to the Board with directions. The Province also asked the Court to declare that section 91.11(5) of the EMA and section 2(1)(b)(i) of the Spill Regulation are valid provincial legislation.

The Railways opposed the Province’s position. Also, in relation to the Constitutionality Decision, the Railways asked the Court to declare that section 91.11(5) of the EMA is inoperative against them by virtue of federal paramountcy.

The Court reviewed the Constitutionality Decision on a standard of correctness. The Court reviewed the Evidentiary Decisions based on a standard of reasonableness, which meant that the Court gave some deference to the Board’s decision.

The Court found that the Confidentiality Decisions were unreasonable. There is a presumption in favour of open hearings, and it was up to the Railways to rebut that presumption. The Board was supposed to weigh the public interest in favour of open hearings against the Railways’ private interests in keeping their security information confidential. The Board’s September 10, 2019 decision unreasonably reversed the onus that was on the Railways to rebut the presumption that hearings are open to the public. The Board unreasonably concluded that the Railways’ private interest in keeping their security information confidential overlapped with a public interest. Although the public has an interest in the security and safety of railways, the Board did not adequately consider the public interest in open hearings. The Board gave little consideration to why the principle of open hearings is important, or how it was outweighed by the Railways’ interests. The Board also failed to consider the Province’s objection to deciding the application based on summaries of the security documents rather than full copies of the documents, and this led to unreasonable conclusions about whether the media and third parties should receive notice of the confidentiality applications. The Board’s September 17, 2019 decision was also unreasonable, because it was based on the reasoning in the September 10, 2019 decision.

In addition, the Court found that the Constitutionality Decision was incorrect. First, the Board incorrectly found that section 91.11 of the EMA is unconstitutional and that it targets the Railways as federal undertakings. The Court found that section 91.11 is valid provincial legislation. Its purpose is the planning, preparedness, and response to toxic spills, which is within the Province’s constitutional jurisdiction over property and civil rights or over municipal institutions. Second, the Board incorrectly concluded that the doctrine of interjurisdictional immunity applied. The Court found that provinces can regulate interprovincial railways for the purposes of protecting the environment, and the impugned legislation does not trench on a core of the federal undertaking of interprovincial railways.

However, the Board correctly concluded that federal paramountcy did not apply. The Court agreed that there was no operational conflict between section 91.11 of the EMA and the federal legislation; the Railways can comply with both. There was also no frustration of purpose between the federal and section 91.11 because they can operate without conflict, both levels of government have jurisdiction over the environment, and both legal regimes protect the confidentiality of security information.

In conclusion, the Court directed the Board to reconsider the Confidentiality Decisions. The Court directed that the Board must decide the scope of the evidence that is to be before it, and whether any of that evidence should be received in confidence, before it decides the constitutional issues.

Regarding the Constitutionality Decision, the issue of whether the Railways’ security concerns support their arguments on the constitutionality of the impugned legislation, and their arguments on interjurisdictional immunity, was also referred back to the Board for determination.

The Province’s petition was allowed in part, and the Railways’ petition was dismissed.