Alberta (Municipal Affairs) v. Access Pipeline Inc., 2011 ABQB 144

Court of Queen ’ s Bench of Alberta Citation: Alberta (Municipal Affairs) v. Access Pipeline Inc., 2011 ABQB 144 Date: 20110307 Docket: 1003 10025 Registry: Edmonton Between: The Crown In the Right of the Province of Alberta As Represented by the Minister of Municipal Affairs (Designated Linear Assessor) Applicant - and - Access Pipeline Inc. and the Municipal Government Board Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.W. Germain _______________________________________________________ 1.

Introduction.............................................................................................................. Page: 2 2. Background............................................................................................................ Page: 4 A. The Access Pipeline.................................................................................. Page: 4 B. The MGB Order Under Judicial Review.................................................. Page: 6 3. Standard of Review............................................................................................... Page: 8

A. The Parties Positions................................................................................ Page: 8 B. Analysis....................................................................................................... Page: 9 i. Preliminary Issues........................................................................ Page: 11 a. Alliance Pipeline Ltd. v. Alberta (Minister of Municipal Affairs) Page: 11 b. Bill 16 Amendments Created “Unfamiliar” Legislation Page: 12 ii. Privative Clause........................................................................... Page: 13 iii.

The Purpose of the Tribunal........................................................ Page: 14 iv. Nature of the Question................................................................. Page: 15 v. Expertise of the Tribunal............................................................. Page: 15 vi. Fairness and Equitable Treatment............................................ Page: 16 vii. Conclusion - Standard of Review............................................... Page: 17 4. Relevant Legislation............................................................................................ Page: 17 5.

Characterization of the Access Pipeline........................................................... Page: 17 A. The Position of the Parties..................................................................... Page: 19 i. The Minister and DLA................................................................. Page: 19 ii. Access.......................................................................................... Page: 20 iii. The MGB....................................................................................... Page: 21 B.

Legal Analysis.......................................................................................... Page: 21 i. Pressure Testing and Pipeline Completion.............................. Page: 21 ii. Appropriate Weight to Self-Reported Evidence...................... Page: 22 iii. The Status of the Wood Buffalo to Enbridge Facility Blend Line Page: 23 a. The Sturgeon Facility....................................................... Page: 25 b. The Blend Line was Not Complete................................ Page: 26 c. Conclusion........................................................................ Page: 27 6.

Fair and Equitable Treatment of Access by the DLA...................................... Page: 27 A. Equity During the Assessment Process................................................ Page: 28 B. Board Conclusion on DLA Information Gathering Obligations........... Page: 28 7. Conclusion............................................................................................................ Page: 29 1. Introduction

[ 1 ] Pipelines are big business in Alberta. So is the taxation of them. In Alberta pipelines are assessed for property tax (ie. asset) purposes as “linear property”: Municipal Government Act , R.S.A. 2000, c. M-26, s. 248(1)(k)(iii) [the “ MGA ”]. Assessed values are determined by a provincial official, the Designated Linear Assessor [the “DLA”]: MGA , s. 292(1).

Complaints on those assessments are heard by the Municipal Government Board [the “MGB”]: MGA , s. 488(1)(a). [ 2 ] A general principle that applies to taxation of all linear properties is that this kind of infrastructure is subject to taxation once the linear property is complete, but not while under construction. In Alberta this rule is codified by MGA , ss. 291(1)-291(2).

This judicial review centers on the issue of when a linear property is complete. [ 3 ] In 2008, Access Pipeline Inc. [“Access”] owned a pair of parallel set of pipelines that run from the oil producing facilities in the Regional Municipality of Wood Buffalo, to a facility identified as the Sturgeon Facility, and then ultimately to an Enbridge facility in Strathcona County, northeast of Edmonton (see para. 11, below). In 2008 the DLA assessed the October 31, 2007 status of those pipelines, and concluded those pipelines were complete and subject to taxation.

Access appealed that decision to the MGB. [ 4 ] The appeal by Access was complicated by a new development; the MGB was obliged to consider new Alberta legislation, Bill 16 - the Municipal Government Amendment Act 2008 [“Bill 16”], which was passed in 2008. Bill 16 redefined what degree of completion qualifies a linear property segment for assessment. The Legislature intended this change in definition to have retroactive effect.

The Access hearing before the MGB was the first time the amended legislation was applied by that body. [ 5 ] Bill 16’s effect is unusual; it changed the past property tax assessment regime for a taxpayer. In Canada, there is a general presumption that legislation does not have retroactive effect, particularly where that legislation interferes with a vested right, such as in taxation; see for example CNG Producing Co. v. Alberta (Provincial Treasurer) , 2002 ABCA 207 , 218 D.L.R. (4th) 257 .

That does not mean the legislature cannot change the assessment criteria retroactively, but only express and clear statutory language would authorize a retroactive effect. Here, the parties do not dispute that is exactly what the Alberta Government intended when it passed Bill 16. [ 6 ] It is also common ground that the intent of Bill 16 was to clarify the rules for assessing pipeline status, in response to Alliance Pipeline Ltd. v. Alberta (Minister of Municipal Affairs) , 2006 ABCA 9 , 263 D.L.R. (4th) 725 , leave denied [2006] S.C.C.A. No. 81 [“ Alliance ”].

The Alliance decision at para. 68 led to an industry-wide

interpretation that a pipeline can be assessed for taxes once the pipeline is ready for safe operation: 68 In my view, the Legislature intended that a pipeline be assessable when it is "ready-to-go" . At this stage, while full line capacity may not yet have been achieved, the pipeline has completed the basic safety and systems testing to ensure that the public and the environment are not at risk when the pipeline moves to full line capacity.

This is not to say that no further calibration or adjustments are required - these will be on-going throughout the life of the pipeline - but that the commissioning process has reached the point that the public and the environment are not compromised. It is also the point that the pipeline can be used commercially, which is the ultimate purpose behind the pipeline's construction.

It is only at this point, when the pipeline is capable of the safe, commercial transmission of gas , that a pipeline company such as Alliance has the ability to use the property for its intended purpose. [Emphasis added.] [ 7 ] Bill 16 added new and more detailed guidelines for when a linear property is complete and subject to taxation: 291(3) For the purposes of subsection (2)(a), (a) "capable of being used" , in respect of linear property, means having the physical capacity to transmit gas, oil or electricity whether or not (

i) there is any gas, oil or electricity to transmit, or (ii) there are any facilities connected to the linear property for the sending or receiving of gas, oil or electricity;

(b) "construction", in respect of linear property, means the building or installation, or both, of linear property, but does not include the commissioning, operation or use of linear property .

(4) For the purposes of subsection (3)(a), linear property that is a pipeline has the physical capacity to transmit gas or oil when pressure testing of the pipeline is successful .

(5) For the purposes of this section, linear property that is a pipeline must be assessed separately and not as a system of pipelines . [Emphasis added.] [ 8 ] The MGB released its 70 page decision, Municipal Government Board Order MGB 123/09 [the “MGB Order”] on December 18, 2009. Access was assessed for the north-bound diluent component of the double-line, but not for the south-bound blend line. Access accepts the decision of the MGB. Subsequently, this application for judicial review was brought by the DLA and the Minister of Municipal Affairs [the “Minister”].

The Minister seeks confirmation of the DLA’s decision and argues that the Bill 16 amendments to the MGA lead to the conclusion that both the diluent and blend lines were assessable. As a consequence, the Minister argues the DLA decision should be upheld in its entirety. [ 9 ] For the reasons outlined in this decision the Minister’s application is dismissed. 2. Background [ 10 ] The background to this judicial review is not greatly in dispute and helps explain the position of the parties. A. The Access Pipeline [ 11 ] The MGB Order,

section B, page 3, describes an overview of the Access pipeline: The Access Pipeline system consists of two main stretches of pipeline. The northbound stretch (the “diluent line”) transports diluent from the northern point of Strathcona County to a facility at Christina Lake in the Southern boundary of the Regional Municipality of Wood Buffalo. The second stretch of the pipeline (the “blend line”) runs mostly parallel to the diluent line but in a southbound direction carrying bitumen mixed with diluent from the Christina Lake facility to an Enbridge tank farm in Strathcona County.

The bitumen is blended with diluent (“blend” or “dil-bit”) so that it is viscous enough to be conveyed through a pipeline. The pipeline system was designed to bring bitumen to the marketplace from two Northern steam assisted gravity drainage (“SAGD”) oil sands projects at Jackfish and Christina Lakes, owned respectively by M.E.G. Energy Inc. and Devon Canada Ltd. [ 12 ] Stations located along both the north and south components provide pumping assistance to first move the diluent north and then the blend south.

The pipeline also has check valves and safety valves which allow the isolation of some portions of the line for environmental, safety, and security reasons. Where the blend pipeline nears Strathcona County it passes through or beside a structure identified as the “Sturgeon Facility”, which has the capability to inject additional diluent into the south-bound blend line.

Corresponding, at that point the blend line changes to a larger diameter, and then continues to a metering station at the Enbridge tank farm [the “Enbridge Facility”] where the product leaves the pipeline and becomes someone else’s property. [ 13 ] The parties and the MGB all agreed on the status of parts of the overall system as of October 31, 2007:

a) the north-bound diluent line had been successfully pressure tested prior to October 31, 2007,

b) the south-bound blend line between Wood Buffalo and the Sturgeon Facility had been successfully pressure tested prior to October 31, 2007, and

c) the south-bound blend line between the Sturgeon Facility and the Enbridge Facility was neither completed nor pressure tested by October 31, 2007. [ 14 ] Pressure testing is critical as the amended MGA , s. 291(4) indicates a pipeline is capable of transmitting material once it has been pressure tested. [ 15 ] As noted above, Access did not challenge the DLA conclusion that the north-bound diluent line had been completed and was subject to taxation as of October 31, 2007.

The question instead is how to characterize the south-bound blend line: 1. do the Wood Buffalo to Sturgeon Facility and Sturgeon Facility to Enbridge Facility parts represent a single pipeline, or 2. are both the Wood Buffalo to Sturgeon Facility and Sturgeon Facility to Enbridge Facility components of the blend line separate pipelines?

In the former case, the southbound line is not complete and taxable, however interpreting the Wood Buffalo to Sturgeon Facility and Sturgeon Facility to Enbridge Facility lines as separate pipelines means both are independently potentially subject to taxation. [ 16 ] Therefore, the MGB’s handling of issues surrounding the Sturgeon Facility is pivotal to the Minister’s application.

If the MGB had interpreted this Sturgeon Facility as creating a ‘breakpoint’ on the blend line, then based on the legislative amendments in Bill 16 the blend line up to that point would have been subject to assessment and taxation in 2008. [ 17 ] This was the view urged by the Minister. The MGB found, however, that the blend line ended at the Enbridge Facility, and since the portion lying between the Sturgeon Facility and the Enbridge Facility had not been completed as of October 31, 2007, the blend line as a whole had not been completed and was not assessable.

Applying the new legislation, the MGB found that the north-bound smaller diluent line was completed and assessable and ruled against Access on that portion of their assessment complaint. B. The MGB Order Under Judicial Review [ 18 ] Board Order MGB 123/09 is under judicial review.

This detailed (70 page) and comprehensive order addresses a number of issues, but two are particularly relevant for this judicial review: 1. whether the southbound blend line was “complete or capable of being used for its intended purpose” ( MGA , s. 291(1)), and 2. whether the DLA had discharged its duty to treat all taxpayers in a fair and equitable manner. [ 19 ] The MGB’s reasoning is lengthy, and its conclusion on the first issue is summarized in chart form on pages 67 to 70.

That conclusion contains four parts, some of which were subsequently amended by MGB 001/10, but nothing turns on the amendment and I will make no further reference to those variations from the original order. [ 20 ] The MBA decision on the status of the pipelines may be summarized as follows:

1) the diluent pipeline - assessed : the MGB confirmed both that entire pipeline was subject to taxation and that the DLA had correctly assessed that property; this assessment has been accepted by the parties. 2) the blend pipeline - not assessed : the MGB concluded twelve segments, effectively the entire blend pipeline between the commencement point in the regional municipality of Wood Buffalo through to the Sturgeon Facility, were ruled to be “not capable of use or complete” as of October 31, 2007 and therefore not assessable by the DLA.

That conclusion reduced the approximately $112 million assessment value to zero. The Minister challenges that result. 3) the blend pipeline - assessed : the MGB concluded six segments of the blend pipeline, all lying in Sturgeon County, were correctly assessed by the DLA for an amount of approximately $500,000. This portion of MGB 123/09 is not challenged by either party. 4) the blend pipeline not in existence on October 31, 2007 : two small blend line segments located entirely in Fort Saskatchewan were assessed by the DLA for $21,780.00.

The MGB rejected that conclusion and made a factual determination that these pipelines did not exist as of October 31, 2007, and therefore should not have been assessed. This part of MGB 123/09 is also not under appeal. [ 21 ] Thus, only the second conclusion and associated analysis is under review by this court. [ 22 ] The second issue, whether the DLA had failed to act in a fair and equitable manner, relates to the retrospective effect of the Bill 16 amendments.

Pipeline owners self-report the state of their pipelines, whether under construction or in operation, and therefore the owners are the ones who ‘make the call’ on whether a pipeline falls into either category. Access noted that prior to the Bill 16 amendments a pipeline owner would not have known that pressure testing provides the benchmark that determines whether a pipeline is complete ( MGA , s. 291(4)).

As a consequence, some pipeline owners may, in good faith, have in 2007 self-reported the condition of a pressure-tested pipeline as “under construction”, a conclusion that might have subsequently been rendered incorrect by Bill 16. [ 23 ] Access was the only pipeline owner who ended up having a taxation assessment affected by Bill 16 for the 2008 year.

The DLA did not seek further information from owners of other pipelines under construction to confirm whether their reporting was consistent with the s. 291(4) pressure test criterion. [ 24 ] In its decision the MGB concluded that Access was treated inequitably by the DLA, as the DLA did not request pressure testing evidence from the owners of other pipelines self-reported as under construction.

However, that conclusion was irrelevant as the MGB concluded that the south-bound line was not assessable as of October 31, 2007, and de-facto , Access had not been assessed taxes and treated differently from other pipeline owners. [ 25 ] I will address the south-bound pipeline status issue separately from the question of fairness, but as both issues require I determine the appropriate standard of review, I will first move to address that as a preliminary issue. 3. Standard of Review A.

The Parties’ Positions [ 26 ] The Applicant’s position is that the MGB made several errors of law or errors of mixed fact and law. The Minister asserts that errors of law should be decided on the basis of correctness and mixed fact and law errors should attract, some, but not unlimited deference. However, the Applicant never indicates what it identified as questions of mixed fact and law, and rather presents a list of alleged errors which are all characterized as either questions of law or jurisdiction.

[27] Access disputes the Minister’s characterization of the issues before the court as being questions of law, but instead notes theintegral factual component of the decisions made in MGB 123/09. Access further emphasizes that in prior judicial reviews of MGBdecisions, the Board has been reviewed on an unreasonableness or patently unreasonableness standard, the sole exception, AlliancePipeline Ltd. v. Alberta (Minister of Municipal Affairs), 2006 ABCA 9, 263 D.L.R. (4th) 725, leave refused [2006] S.C.C.A. No. 81[“Alliance”], being an instance in which there were no facts in dispute.

Reviewing the criteria set in Dunsmuir v. New Brunswick, 2008SCC 9, [2008] 1 S.C.R. 190 [“Dunsmuir”], Access argues a privative clause, the legislation’s purpose, and the MGB’s expertise allindicate that decisions made by the MGB are due deference, even in strict questions of law that fall within the tribunal’s expertise. [28] The MGB restricted its participation in this judicial review to the parameters established by the Supreme Court of Canada inC.A.I.M.A.W. v. Paccar of Canada Ltd., (SCC), [1989] 2 S.C.R. 983 at 1014, 62 D.L.R. (4th) 437, and only madesubmissions to: (

a) explain the Board’s record in this application including its decision, as may be necessary; (

b) address the standard and scope of review for decisions of this nature; and (

c) assist the Court, as might be necessary, in explaining the Board’s practices or procedures where those practices and proceduresrelate to the matters in issue between the parties. [29] The MGB submits that in the “Dunsmuir” era the MGB decision should be approached with deference and any review ofthat decision should be on a standard of reasonableness. Its argument largely parallels that of Access on this point, though it stresses thevery unusual nature of linear properties, their operation, and assessment and taxation. B.

Analysis [30] The majority judgment in Dunsmuir provides a court engaged in a judicial review with the current approach to the standardof review. That judgment at para. 62 emphasizes that a reviewing court conducts a two-step process to determine the appropriatestandard of review: ... First, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to beaccorded with regard to a particular category of question.

Second, where the first inquiry proves unfruitful, courts must proceed to ananalysis of the factors making it possible to identify the proper standard of review. [31] Given that direction, the first issue is whether previous court decisions have determined the appropriate standard of reviewfor decisions of the MGB.

In its submissions the MGB identified a number of Alberta Court of Appeal decisions which have commentedon the appropriate standard of review, including instances where the MGB reviewed linear property assessments. [32] Many of the relevant judicial review decisions which addressed the standard of review for the MGB were made prior toDunsmuir and saw the Court of Appeal apply the judicial review standard of review analysis indicated in Pushpanathan v.

Canada(Minister of Citizenship and Immigration), (SCC), [1998] 1 S.C.R. 982, 160 D.L.R. (4th) 193 [“Pushpanathan”],commonly known as the “pragmatic and functional approach”. An important distinction between the Pushpanathan and Dunsmuiranalyses is that the former recognized three standards of review: correctness, patent unreasonableness, and reasonableness simpliciter;while Dunsmuir recognizes only correctness and reasonableness (Dunsmuir, at para. 34).

Another difference is the emphasis inDunsmuir on deference due an administrative tribunal that interprets legislation closely connected to the function of that body (at para.54). [33] The parties identified the following appellate cases as instructive: · Alberta (Minister of Municipal Affairs) v. Telus Communications Inc., 2002 ABCA 199, 218 D.L.R. (4th) 61, leave

refused, [2002] S.C.C.A. No. 440 [“ Telus ”] - the MGB considered whether certain software was a part of a linear property; the majority of the court concluded this was a question of mixed fact and law, the issue revolved on

interpretation of legislation and the scope of a linear property, and therefore warranted a review on a patent unreasonableness basis (paras. 38-39). · University of Alberta v. Edmonton (City) , 2005 ABCA 147 , 252 D.L.R. (4th) 501 [“ University of Alberta ”] - the court reviewed whether certain University of Alberta property used in the food services were used in connection with an educational purpose.

The court rejected the patent unreasonableness standard applied in the court below, but still concluded that decisions of the MGB in matters of fact and law were tested on a reasonableness standard. · Alliance Pipeline Ltd. v. Alberta (Minister of Municipal Affairs) , 2006 ABCA 9 , 263 D.L.R. (4th) 725 , leave refused [2006] S.C.C.A. No. 81 - the court applied a correctness standard to

interpretation of legislation involving taxation of linear property, but that analysis was based on a set of accepted facts. · Alberta (Minister of Municipal Affairs) v. Alberta (Municipal Government Board) , 2007 ABCA 217 , 417 A.R. 112 [“ Corridor ”] - in a brief oral decision the court dismissed an appeal that a diluent and bitumen blend pipeline system similar to that currently under evaluation had not yet been completed and was subject to assessment; the question, one of mixed fact and law, was due some deference and here identified as reasonable (para. 4). · Boardwalk Reit LLP v.

Edmonton (City) , 2008 ABCA 220 , 299 D.L.R. (4th) 332 , leave refused [2008] S.C.C.A. No. 328 [“ Boardwalk ”] - a reasonableness standard applied to questions of law during review of various residential property assessments (at para. 32), but a standard of correctness applied to the MGB’s alleged breaches of natural justice and fairness (para. 174). · Calgary (City) v.

Alberta (Municipal Government Board) , 2008 ABCA 187 , 432 A.R. 202 [“ Calgary ”] - one issue was the appropriate standard of review for the MGB’s conclusion that a tenant in a property was an assessed person, which the court concluded was a question of law that was reviewed on a reasonableness standard; the tribunal was interpreting its own legislation (paras. 17-23).

Of these judgments, Boardwalk and Calgary were decided under the present Dunsmuir scheme. [7] Judicial review level decisions which have evaluated the appropriate deference to the MGB have concluded that questions of fact and law ought to be tested on a reasonableness standard ( Alberta (Minister of Municipal Affairs) v. Alberta Oil Sands Pipeline Ltd. , 2007 ABQB 652 , 436 A.R. 89 [“ Alberta Oil Sands ”] ) or patent unreasonableness standard ( GT Group Telecom Services Corp v. Alberta (Municipal Government Board) , 2005 ABQB 79 at paras. 27-29 , 26 Admin. L.R. (4th) 283 ; Chateau Lake Louise Corp. v.

Improvement District No. 9 , 2004 ABQB 579 at para. 23 , 366 A.R. 318 ; FHR Real Estate Corp. v. Banff (Town) , 2004 ABQB 557 at para. 30 , 34 Alta. L.R. (4th) 50 ). Similarly, deference was due on questions of law that fall within the limited scope of the MGB’s legislative scheme: Pan Canadian Energy Services v. Alberta (Minister of Municipal Affairs) , 2008 ABQB 393 , 452 A.R. 324 . [8] The majority of appellate and trial decisions in Alberta which involve the MGB had the courts conclude that the MGB is a body which is owed deference when addressing issues within its expertise.

While Dunsmuir suggests that a repetitive contextual analysis may not be necessary in all cases where the standard of review issue has been determined by the courts and is no longer in dispute, the distinct result in Alliance indicates this question is not settled and thus deserves review. None of the post- Dunsmuir Alberta Court of Appeal judgments directly involve the highly specialized and quite unusual nature of linear property assessment, and the MGB’s jurisdiction and expertise on that topic.

On that basis I conclude that a full review of the appropriate standard of care is prudent, and move to the second step in the Dunsmuir analysis. [9] The four factors cited with approval in Dunsmuir , at para. 64 provide the appropriate starting point: (1) the presence or absence of a privative clause; (2) the purpose of the tribunal as determined by

interpretation of enabling legislation;

(3) the nature of the question at issue; and (4) the expertise of the tribunal. [10] Lebel and Basterache JJ. explained at para. 64 that consideration of these factors is contextual, and ought to be weighted inreference to the particular tribunal and the issues in question: In many cases, it will not be necessary to consider all of the factors, as some of them may be determinative in the application of thereasonableness standard in a specific case. [11] These factors are also relevant in the pre-Dunsmuir approach to judicial review, and so I will reference “pragmatic andfunctional” test evaluations of deference to the MGB.

The most relevant cases are those that address the MGB’s assessment and taxationof linear properties, and the appropriate standard of review in that role. As a consequence I will focus my analysis on that case-law. i. Preliminary Issues [12] The parties dispute whether this judicial review involves a question of law or law and fact (though the Applicant is somewhatvague on whether the issue of pipeline completion is in part one or the other, or some combination of both). Pushing beyond that is aspecific issue: to what degree is the standard of review in Alliance relevant in this matter?

The Applicant focuses on Alliance and theCourt of Appeal’s conclusion that the standard of deference to the MGB should be much lower and toward the level of correctness. Thisargument has two aspects. a. Alliance Pipeline Ltd. v. Alberta (Minister of Municipal Affairs) [13] First, there is an alleged strong parallel between the issues before the court in this case and Alliance. In that matter, our Courtof Appeal determined that they were dealing with a purely legal question (interpretation of the MGA, s. 291(2)(

a) phrase “capable ofbeing used for the transmission of gas”) and therefore the issue would be determined on a standard of correctness: Alliance, paras. 44,46. [14] The difference between Alliance and the present judicial review was, however, identified by the MGB, which noted that inAlliance all relevant facts were agreed upon and the dispute boiled down purely to an

interpretation of MGA, s. 291(2). [15] Here, the finding of the MGB necessarily involves both fact and law. The Board interpreted two key sections of the MGA,including s. 291, however the Board’s analysis required it consider two crucial questions of fact: 1. what, if any, parts of the Access pipeline were complete, and 2. do the complete parts of the pipeline qualify for property assessment on October 31, 2007? [16] In Housen v. Nikolaisen, 2002 SCC 33 at para. 26, [2002] 2 S.C.R. 235, Iacobucci and Major JJ. succinctly restated theCanada (Director of Investigation and Research) v.

Southam Inc., (SCC), [1997] 1 S.C.R. 748, 144 D.L.R. (4th) 1definition of a question of mixed fact and law: “[q]uestions of mixed fact and law involve applying a legal standard to a set of facts.”That is precisely the task faced by the MGB and now this court; was this particular pipeline assessable given the language of the post-Bill 16 MGA? That distinguishes Alliance.

[17] It is today simply too easy to try and narrow a legal dispute down to a pure question of law and therefore invoke a higher standard of review. I note that in both Telus and Corridor the Alberta Court of Appeal considered a MGB decision that involved the status of a linear property and application of the MGA . Both decisions involved a question of mixed fact and law rather than simply the construction of that statute. Those judicial reviews are better analogs to the matter before the court. b.

Bill 16 Amendments Created “Unfamiliar” Legislation [18] The second and novel argument advanced by the Minister stresses that the post-Bill 16 provisions of the MGA have not been previously interpreted by the MGB, any other tribunal, or the courts. The applicant asserts that means the court should review the MGB decision on a correctness standard.

One might characterize this argument as being that the amended MGA was not legislation that was ‘familiar’ to the MGB, as it had never previously encountered the amended provisions. [19] I reject this argument; there is no principle that the ‘newness’ of legislation changes the manner in which a reviewing court should evaluate the first

interpretation of a statute or regulation. Instead, Dunsmuir , at para. 54 makes clear that deference is potentially due on a question of law when the legislation in question involves the specific function and expertise of a tribunal. See also Smith v. Alliance Pipeline Ltd. , 2011 SCC 7 at para. 26 [“ Smith ”] .

Here, that was most certainly the case; the MGB has expertise in assessment of linear properties, and while it had never previously applied the post-Bill 16 MGA provisions, the MGB was very familiar with the context in which those amendments operated. [20] Further, and with respect to those who would hold a contrary opinion, in a historical context the legislation in question changed relatively little from the point of view of an informed MGB; that tribunal was very well positioned to understand and interpret the changes. [21] Bill 16 did not put in place some revolutionary new scheme for the evaluation and assessment of linear properties.

The actual definition of linear property did not change. The basic concept of s. 291(2), that pipelines are only assessed for taxes when complete, remained unchanged. The basic and statutorily ingrained public policy of not taxing work in progress remained in effect. [22] Instead, the Bill 16 changes prevented certain delays in assessment. First, the phrase “capable of being used for it is intended purpose” ( MGA , s. s 291(2)), which was interpreted by the Alberta Court of Appeal as meaning “capable of safe production” (an operational efficacy test) was now defined in s. 291(3)(

a) as “... having the physical capacity to transmit gas, [or] oil”. [23] The other changes created by Bill 16 are similar. Pipeline owners could no longer delay taxation by describing a pipeline as part of an incomplete “system of pipelines” (s. 291(5)). Pipeline owners could not avoid assessment and taxation on a completed pipeline once the system was pressure tested (s. 291(4)), nor simply because there was neither product to pump or receive (s. 291(3)(i)), nor source or destination facilities (s. 291(3)(ii)).

Thus rather than tackling “new legislation”, the Board was interpreting provisions with which it was greatly familiar but that had been modified or ‘tweaked’ as part of the Alberta government’s reaction to the Alliance decision. Therefore, I do not see any ‘new’ legislation that would demand a higher standard of review, even if that principle did, in fact, exist. [24] I will now turn to the four Pushpanathan factors. ii. Privative Clause [25] A privative clause is an indication by the legislature that, during a judicial review, decisions of a tribunal are owed deference by the courts.

At the time of MGB 123/09, the MGB’s decisions were ‘protected’ by MGA , s. 506: “[t]here is no appeal from a decision of the Board.” Effective January 1, 2010 MGA , s. 506 was changed to provide limited rights of appeal, however the pre-January 2010 privative clause indicated the appropriate degree of deference when this judicial review was launched. [26] Appellate commentary is clear that this

section (prior wording) is a “weak” privative clause that calls for only a moderate degree of deference: Telus , at paras. 30-31; Alliance , at para. 36.

iii. The Purpose of the Tribunal [27] Certain kinds of administrative tribunals address issues in a “polycentric” way, as described in Pushpanathan , at 1008: Where the purposes of the statute and of the decision-maker are conceived not primarily in terms of establishing rights as between parties, or as entitlements, but rather as a delicate balancing between different constituencies, then the appropriateness of court supervision diminishes. ... [L]egal principles are vague, open-textured, or involve a “multi-factored balancing test” may also militate in favour of a lower standard of review ...

In contrast, a tribunal is owed less deference when the tribunal operates in a two-party confrontational mode that resembles a court proceeding. [28] The purpose of the MGB was developed by Berger J.A. in Telus , at paras. 35: 35 ...

The purpose of the Board is, in this case, as the chambers judge found,"to supervise the assessment of real property for municipal taxation purposes with the objective of ensuring that all property in the Province subject to municipal taxation is fairly and equitably assessed ." [chambers judge's emphasis] When called upon to determine whether municipal taxation is fair or equitable, the Board's decisions should be accorded greater deference. She concluded that in this case the Board did not engage in this analysis and, accordingly, less deference is owing.

I respectfully disagree . 36 Although the Board did not expressly deal with the issues of fairness or equity, it cannot be said that the Board confined itself to statutory

interpretation as a pure question of law. As already pointed out, the Board may be taken to have concluded on the basis of the "operational realities" of a telecommunications system that a fair and equitable

interpretation of the enactment in the light of the factual matrix justified the result. That the Board turned its mind to such matters is borne out by the record. [Italics in the original, underlining for emphasis.] [29] To satisfy this mandate the MGB must interpret and apply the assessment provisions found in the MGA , specifically the two provisions under close review in this application -

section 291 as amended by Bill 16 and section 284(1)(k). These provisions and their operation are complex matters, and further these two sections fall near the epicentre of the MGB’s jurisdiction. This is precisely what Berger J.A. described as a matter of “operational realities”, and requires experience with the regulatory provisions of the tax assessment regime, an understanding of the practices and expectations of assessors and linear property taxpayers, a contextual review and

interpretation of the self-assessing declaratory documents of the taxpayer, and appreciation of the underlying social policies and objectives of the legislation. This complex, highly specialized function implies deference for the decisions of the MGB. Certainly, as was observed in Telus , at 35: “[w]hen called upon to determine whether municipal taxation is fair or equitable, the Board's decisions should be accorded greater deference.” iv.

Nature of the Question [30] In Dunsmuir , at para. 60 , the majority indicated no deference is due a tribunal when that body evaluates a question: ... of general law “that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” (Toronto (City) v. C.U.P.E., at para. 62, per LeBel J.). Because of their impact on the administration of justice as a whole, such questions require uniform and consistent answers.

Naturally, that means no deference is due where a tribunal comments on a constitutional issue ( Dunsmuir , at para. 60 ). Administrative tribunals also have no expertise on questions of jurisdiction, either a “true question of jurisdiction or vires” or where the jurisdictions of two specialized tribunals potentially compete or overlap ( Dunsmuir , at paras. 58-61 ).

See also Smith at paras. 26, 34 . [31] In contrast, a question that falls within what is sometimes called the “home statute” of a tribunal and which involves that tribunal’s special expertise will usually require review on a standard of reasonableness ( Smith , at para. 28 ). [32] Here, the provisions of the amended MGA which were allegedly interpreted in error are best described as highly specialized, and only relate to a specific class of property with unusual physical and operational characteristics.

Interpretation of the legislation in question does not therefore involve administration of justice as a whole, or the other categories which would require a correctness standard for review. v. Expertise of the Tribunal [33] The last factor is whether the MGB is the kind of tribunal which possesses special expertise that warrants deference.

In Dunsmuir , at para. 54 , the majority indicated the kinds of tribunals which would qualify: Deference may also be warranted where an administrative tribunal has developed particular expertise in the application of a general common law or civil law rule in relation to a specific statutory context: Toronto (City) v. C.U.P.E., at para. 72. Adjudication in labour law remains a good example of the relevance of this approach. [ 34 ] I conclude the MGB is the kind of body which has a particular expertise in

interpretation and application of the MGA . The MGB points out that the projects to which the MGB must apply its expertise are unique ones, often unsuited for the standard methods of property assessment that are more common in business settings. These evaluations often involve the assessment of property owned by heavily regulated businesses where the common tools of market value comparison are unavailable or inapplicable.

Similarly, income approaches to valuation are difficult to undertake, particularly for elements of a linear system. [ 35 ] The unique and specialized nature of the legislation and the expertise required to properly administer this taxation regime requires the MGB be given significant deference for its

interpretation of the parts of the MGA which address linear properties. One cannot help but appreciate that the MGB handles a highly specialized workload in a unique area when one reviews the lengthy and methodical ruling of the MGB, and the size of the Return, which included some 1200 pages of viva voce evidence. This illustrates the complexities of the issues involved, the width and breadth of the discussion before the tribunal, and the complicated factual and legal

interpretations that the MGB was obliged to consider before reaching its decision. Further, the Board has developed specialized expertise by its repeated handling of these issues: Law Society of New Brunswick v. Ryan , 2003 SCC 20 at para. 33 , [2003] 1 S.C.R. 247 . That specialized expertise should be given deference. [ 36 ] My conclusion parallels that of other Alberta courts.

In the pre- Dunsmuir legal framework, with its three levels of review, our courts had either afforded the MGB the highest level of deference in questions of mixed fact and law, namely that the Court would only interfere with the Board’s decisions if those decisions were patently unreasonable ( Telus ), or the intermediate standard, where the MGB’s decision was unreasonable ( University of Alberta , Corridor ). In the post- Dunsmuir era and its two standards, tribunal expertise and the highly specialized character of the tasks addressed by the MGB both strongly favour a judicial review standard of reasonableness.

Again, that has been the conclusion of our Court of Appeal: Boardwalk , Calgary . vi. Fairness and Equitable Treatment [ 37 ] The second issue under review, whether the DLA treated Access in an inequitable manner, follows a separate standard of review. In Boardwalk , Côté J.A. explained at para. 174 that the obligation of the MGB to be fair is tested on a standard of correctness: 174 Second, the Pushpanathan (standard of review) deference approach is not used for breach of the principles of natural justice and procedural fairness : Moreau-Bérubé v.

Judicial Council, 2002 SCC 11 , [2002] 1 S.C.R. 249 , 281 N.R. 201 (paras. 74-75 ); cf. Min. of Community etc. Services v. Crown Employees Grievance Settlement Bd., supra (paras. 19-23). The standard of review there is

correctness : Edm. Police Assn. v. Edm. (City), supra; Anderson v. Alta. Securs. Comm., [2008] A.J. No. 516 , 2008 ABCA 184 , Calg. #0701-0070-AC (para. 30); Johnston v. Dir. of Vital Stats., supra (para. 12). [Emphasis added.] [ 38 ] The situation in Boardwalk is the same as here, in that the MGB is acting in an ‘appellate’ role for a subordinate tribunal: para. 173. This approach is only logical, any tribunal has no special expertise in questions of procedural and natural justice.

I will therefore evaluate the MGB’s analysis and conclusion in relation to the ‘fairness and equity’ issue on a correctness standard. vii. Conclusion - Standard of Review [ 39 ] I have concluded that the appropriate standard of review for the status of the Access pipeline is that of reasonableness. Although mindful of the standard of correctness adopted in Alliance , I conclude that the issue before the MGB in this case was, at best, an issue of mixed fact and law that required the Board interpret sections of the Municipal Government Act with which the Board already had significant experience.

That legislation had been amended slightly to provide greater guidance, specifically that a pipeline could be assessed when certain factual preconditions had occurred.

In my respectful view, the MGB is therefor entitled to deference in the context of this application on its conclusion in fact and law that the south-bound pipeline had not been completed. [ 40 ] If I am incorrect, and instead one or more of the issues before the MGB are properly characterized as a question of law, then I would still conclude that under the Dunsmuir scheme that deference is appropriate in light of the expertise of the MGB and the specialized character of legal issues that arise in

interpretation of its home legislation, the MGA , in relation to assessment of linear properties. [ 41 ] As explained above, the second ‘fairness and equity’ issue will be reviewed on a standard of correctness. 4. Relevant Legislation [ 42 ] The relevant post-Bill 16 amended MGA provisions are found in

Schedule I. The provisions added by the 2008 retroactive amendments are underlined; these are also indicated above at para. 7. Bill 16 did not remove any of the relevant pre-amendment legislation. Bill 16 also changed the text of s. 292, however that particular amendment was not made retroactive. 5. Characterization of the Access Pipeline [ 43 ] On the first issue the Applicant asserts the following errors at para. 13 of its brief, and identified these as either errors of law or jurisdiction: a. The Board erred in its

interpretation of section 292(2) of the Municipal Government Act with respect to the use of Energy Resources Conservation Board (ERCB) records for the purpose of determining what constitutes pipeline linear property, specifically a "continuous string of pipe". b. The Board erred in its

interpretation of section 284(1)(k)(iii) of the Municipal Government Act with respect to the definition of "continuous string of pipe", the circumstances giving rise to a break in the continuity of a string of pipe, and the onus for establishing whether a break in continuity exists. c. The Board erred in determining that the continuity of a "continuous string of pipe" was not interrupted by storage and/or processing facilities, notwithstanding the exclusion of such facilities from the definition of "linear property" pursuant to section 284(1)(k) (iii)(F). d. The Board erred in interpreting

section 291 of the Municipal Government Act with respect to the tests for determining the

assessability of pipeline linear property. e. The Board erred in its

interpretation of section 292(2) of the Municipal Government Act with respect to the statutory authority of the DLA to consider information received from the taxpayer, other than through the Request for Information and the records of the ERCB, in making a determination of the assessability of pipeline linear property. f. The Board erred by misinterpreting

section 293 of the Municipal Government Act with respect to the onus of proof for establishing the fairness and equity of linear property assessments. [ 44 ] It is helpful to group these allegations in reference to the two issues under review. Of the six assertions of error set out in the brief of the Minister: 1. issues (

a) to (

d) inclusive relate to the question of the ‘completion and operational capacity’, that is the composition and status of the Access pipeline; 2. issue (

e) involves the weighing of evidence relevant to determine issues (

a) to (d); and 3. issue (

f) relates to the second issue of fairness and equitable treatment. [ 45 ] I have previously concluded that the issue of the composition and status of the Access pipeline is not simply a question of the alleged erroneous

interpretation of MGA , ss. 284(1)(k)(iii), 291, and 292, but rather whether the MGB erred when it applied the MGA to the evidence of the state of the Access pipeline(

s) on October 31, 2007. In certain instances I will expand on that conclusion further. [ 46 ] It is also helpful to rephrase the allegations of the Minister into that factual context - that the MGB erred when it concluded that: 1. the Sturgeon Facility was not a storage or production facility; and 2. the Sturgeon Facility did not represent the endpoint of the bitumen/diluent blend line from Wood Buffalo, that line ended at the Enbridge Facility. A. The Position of the Parties i.

The Minister and DLA [ 47 ] The Applicant argues the “errors of law or jurisdiction” quoted above, but then proceeds to address the facts of various features of the blend line and the Sturgeon Facility: 1. the Sturgeon Facility mixer is not a pipe but instead “machinery or equipment” ( MGA , s. 284(1)(l)), Matters Relating to Assessment and Taxation Regulation , Alta. Reg. 220/2004, s. 1(j)), 2. the Sturgeon Facility is a storage facility ( MGA , s. 284(1)(k)(iii)(F)) and its physical limits were incorrectly identified by the MGB, and

3. the improper characterization of the Sturgeon Facility means the MGB was incorrect when it concluded there was no break in the Wood Buffalo to Enbridge blend line. [ 48 ] The focus of the Minister’s challenge of the MGB decision is the MGB’s conclusion “... that 0.79 km of line 22 had not been pressure tested by October 31, 2007, and as a result the entire 345 km Blend Line was not assessable” (Minister’s Brief, page 6, para. 12(e)).

The Minister argues that was an error of law, but during oral argument may also have stressed this as an unreasonable factual finding. [ 49 ] The Minister also asserts that the MGB’s alternate finding constitutes a reviewable error: In the alternative ... lines numbers 7 – 11, 12, and 21 - 22 did not form a continuous string of type intended for or used to transport or distribute oil as of October 31, 2007 and, thus, also did not meet the definition of linear property and were not assessable. [ 50 ] The Minister argues that the MGB failed to properly characterize the break in the blend line segments created by the Sturgeon Facility, and as a consequence did not separately evaluate those parts of the blend line north of the Sturgeon Facility, which had been pressure tested and therefore were capable of use on October 31, 2007.

Thus the correct result would have been that the Wood Buffalo to Sturgeon Facility part of the blend line should have been assessed, based on the amendments contemplated by Bill 16. The Applicant emphasizes that a separate treatment for the Wood Buffalo to Sturgeon Facility was exactly what Bill 16 intended.

Using the numbering system of the parties, the up-stream segments lines numbered (7 to 11, and 12) should be considered separate from pipeline segments (21 and 22) which lay between the Sturgeon and the Enbridge Facilities. [ 51 ] While these allegations and arguments have distinct facets, they all ultimately devolve to a single point; the MGB got it wrong when it concluded the south-bound blend line was one pipeline instead of two. [ 52 ] Two additional related but distinct errors are alleged.

The first is that the MGB improperly weighed self-reported evidence of the status of the south-bound blend line against that provided by Access. The second is that the MGB was incorrect when it concluded that the amended MGA provided a definition of when construction of a pipeline was complete or capable of use - when pressure testing had been completed. [ 53 ] The Applicant requests this court quash the ‘completion and operational capacity’ component of the MGB decision which precluded assessment, and that the matter then be remitted back to the MGB for proper determination of the taxes due. ii.

Access [ 54 ] Access takes the position that the decision of the MGB was correct. Alternatively, Access asserts that even if the MGB decision is not completely correct or if there are minor errors, the result is nevertheless reasonable and that the court must give the MGB deference for that reasonable decision. [ 55 ] In relation to the issue of weighing various evidence sources, Access takes the position that the MGB simply took note and weighed of all evidence available, including both written and oral submissions directly made to the Board, and previously filed regulatory self-reporting documentation.

The Board then applied its expertise, evaluated the evidence and any inconsistencies disclosed, and came to its conclusion. [ 56 ] Access argued the MGB’s

interpretation of the role of pressure testing is correct, noting that conclusion follows logically from the MGB’s understanding of the typical operation of pipelines. [ 57 ] Similarly, Access endorses the MGB’s reasoning on how the endpoints of a pipeline ought to be determined, and the

significance of various instillations, including the Sturgeon Facility, along its path. In particular Access notes that the Applicant’s own witnesses had difficulty with the ‘strict’ scheme advanced by the Applicant to determine the endpoints of a pipeline, and its

interpretation of the equipment at the point where the Sturgeon Facility diluent enters the bitumen and diluent flow in the blend line. iii. The MGB [ 58 ] The MGB made no submissions on these issues. B. Legal Analysis [ 59 ] I will first address the Applicant’s arguments on the MGB’s

interpretation of the interrelationship between pressure testing and pipeline completion, and the weight the MGB placed on self-reported evidence. Those provide a foundation for the subsequent analysis on the nature and effect of the Sturgeon Facility. i. Pressure Testing and Pipeline Completion [ 60 ] The Applicant argues that MGA , s. 291(2)(

a) sets two different criteria under which a pipeline becomes assessable, either: 1. the construction of a pipeline has been completed, or 2. the pipeline is capable of being used for the transmission of gas or oil. [ 61 ] The Minister notes that the amended MGA goes further and explains the meaning of “construction” and “physical capacity to transmit gas or oil”: 291(3) For the purposes of subsection (2)(a), ... (b) “construction”, in respect of linear property, means the building or installation, or both, of linear property, but does not include the commissioning, operation or use of linear property.

(4) For the purposes of subsection (3)(a), linear property that is a pipeline has the physical capacity to transmit gas or oil when pressure testing of the pipeline is successful. [ 62 ] In its decision the MGB concluded that this

interpretation of the MGA is a “red herring”, since pressure testing is a step that always occurs before a pipeline can be considered completed. A pipeline would never have ‘completed construction’ but not been ‘pressure tested’. The Board and DLA therefore only need to consider the latter fact to correctly determine whether a pipeline is assessable. [ 63 ] The Applicant argues this is simply a matter of statutory

interpretation, and thus should be tested by this court on a standard of correctness. That however is not entirely true, because the MGB had to evaluate expert testimony on the point at which pressure testing occurs during pipeline construction, and apply its expertise in relation to pipelines to come to a conclusion that pressure testing is a necessary precursor to completion of a pipeline.

Interpretation of the statute is thus a mixed question of fact and law, and due

deference. [ 64 ] The “red herring” language flows from Alberta Oil Sands , a judicial review of Gill J. that was conducted under the pre-Bill 16 MGA scheme. In that review the Minister advanced an argument related to this one: that the Alliance “safe use” criterion and pipeline completion (s. 291(2)(a)) are two separate bases on which a pipeline may become liable for assessment. Justice Gill rejected that proposition at para. 48: Section 291(2)(

a) of the MGA provides an exception to the general principle in s. 291(1) that an assessment is to be prepared for improvements, whether or not they are complete or capable of being used for their intended purpose. The exception applies in the case of linear property only if it is under construction but has not been completed on or before October 31st and is not yet capable of being used for the transmission of gas, oil or electricity. The exception does not apply if construction has been completed .

I agree with AOSPL that if the Legislature intended that linear property only be assessable if it is capable of being used for its intended purpose, logic dictates that construction cannot be said to have been completed if a pipeline is not yet capable of transmitting oil . As a result, it is something of a red herring to focus on whether construction of a pipeline has been completed without considering whether it is capable of transmitting oil on the statutory date of assessment . [Emphasis added.] [ 65 ] While the relevant legislation has changed, the Minister’s argument, in the context of this case, has not.

The Board concluded that pressure treating is always a necessary precursor to operational use of a pipeline. If Alberta defines ‘ready to use and operational’ as completion of pressure testing (and it has - MGA , s. 291(4)), then it is hard to factually envisage a completed pipeline that has been successfully pressure tested and is not complete for the purposes of assessment. I believe that the MGB’s conclusion is reasonable: a pipeline that has been completely constructed (as opposed to sequential partial pressure testing during construction) is complete once it is pressure-tested. ii.

Appropriate Weight to Self-Reported Evidence [ 66 ] The Applicant has argued that the MGB erred when it either relied upon or did not rely upon self-reported evidence by Access on the state of the pipeline. Access was required to report the state of its pipelines to the Energy Resources Conservation Board [the “ERCB”]. However, that evidence was supplemented and clarified by other information provided to the DLA via requests for information, and at the MGB hearing by viva voce and affidavit evidence.

While the Applicant raises ERCB self-reporting in a number of contexts, it seems the error it alleges is the following (Minister’s Brief, at p. 23, para. 51): It is submitted that in the face of its

interpretation of section 292(2) of the MGA and the information derived from the ERCB facility codes for lines 11 and 12, the Board acted unreasonably in preferring information provided by Access that contradicted their own representations to the ERCB (in the form of the facility codes assigned by Access to lines 11 and 12). The Board's decision in that regard stands in contrast to its reliance upon the facility codes for lines 21 and 22 as determinative of the configuration of the two lines at the Enbridge tank farm. [Emphasis added.] [ 67 ] There are several simple responses to this argument.

First, the Board has an unrestricted statutory authority to admit, weigh, and apply evidence in whatever manner it considers appropriate: 496(1) The Board is not bound by the rules of evidence or any other law applicable to court proceedings and has power to determine the admissibility, relevance and weight of any evidence . [Emphasis added.] There is therefore no legislative basis for the Applicant to argue that the MGB should have preferred one source of evidence over another. [ 68 ] Further, I think it would be unreasonable for the MGB to have not used all evidence that was relevant to the proper assessment of the Access pipelines.

Assigning weight to any conflicting evidence and then applying that evidence to the statutory definition of a pipeline and pipeline operational capacity required the MGB: 1. make findings of fact, then

2. apply those findings of fact to the relevant legislation. The former is a question of fact, while the latter involves questions of mixed fact and law; both are owed deference by this court. [ 69 ] I conclude that given its jurisdiction and the complexity of the issues (assessment of linear property under a retroactively revised legislative regime) the MGB was correct to have received, reviewed, and weighed all the evidence before it.

The remaining two allegations by the Minister involve the application of those facts to the MGA and that legislation’s provisions which define what is a pipeline, and when that pipeline is liable for assessment. iii. The Status of the Wood Buffalo to Enbridge Facility Blend Line [ 70 ] It is helpful to start with a policy perspective on Bill 16 and its effects.

The historic root of the Government’s concern following the Alberta Court of Appeal decision in Alliance appears to be that a linear pipeline owner could have many kilometres of pipeline that were, in fact, completed, but that the pipeline owner could avoid assessment and taxation by simply leaving a small

section of a notional ‘pipeline system’ incomplete, or avoiding certain steps in the final pressure testing and commissioning of the pipeline. This ‘loophole’ could be exploited and allow linear property taxpayers to avoid taxation. [ 71 ] Accordingly, MGA , s. 292 was amended in 2008 but retroactive to catch the October 31, 2007 assessment date. These amendments were designed to ensure that certain pipeline configurations, for example looping pipelines such as the Access northward diluent and south-flowing blend line system, did not avoid assessment on the basis that the overall pipeline was not completed.

This concern and the amendment of the MGA are easily understood; it could be all too easy for a pipeline owner to assert that a complex network of pipelines was in reality one pipeline, and then escape assessment by leaving some part of that network inoperative or incomplete. [ 72 ] Review of the Board Order makes very clear that the amendments to MGA , s. 292 were neither ignored by the MGB, nor mischaracterized. Without the Bill 16 amendments the diluent line running north to Wood Buffalo may not have been assessed; instead it could be characterized as part of an entire loop that was not yet completed.

The MGB could not hold that the north-bound diluent line was assessable without properly applying the amendments - namely MGA , ss. 291(4) and 291(5). Indeed Access capitulated on that point after their argument against applying the new amendment retrospectively to this project failed. [ 73 ] The amended scheme is explicitly and clearly applied in MGB 123/03, for example at p. 34: ... the MGB finds that the SAGD facilities at the northern point of the Access pipeline system break the continuity of the Access pipeline . The diluent line segments and bitumen blend line segments make up separate pipelines. This

interpretation is also consistent with the newly included section 291(5), which states that each pipeline must be assessed separately and not as a system of pipelines . This new amendment implies that there should be more than one pipeline in a system. Whether the blend and diluent pipelines can be subdivided into further continuous strings of pipe is discussed below . [Emphasis added.] [ 74 ] No one suggests that the MGB was incorrect in making that conclusion, the remaining point of contention is whether any part of the Wood Buffalo to Enbridge Facility blend line ought to be assessed.

The reason that the south-bound blend line was not assessed is simple - the MGB found factually that it was not completed! a. The Sturgeon Facility

[ 75 ] To arrive at that position, the MGB had to weigh the evidence, much of it technical or from pipeline experts, and determine whether the parallel pipeline was one line in total (Access’ initial, but rejected position); two lines (the Access ‘fall-back’ position), or three lines (the DLA’s conclusion). These are questions of fact and law, and tested on a reasonableness standard. [ 76 ] I have reviewed the MGB’s analysis, which is clearly laid out in its written decision, and conclude the evidence considered and the analysis shows a line of reasoning that is reasonable and may well be correct.

The MGB found that there were two main continuous pipelines that make up the Access pipeline system: the diluent pipeline made up of ERCB lines 1 to 6; and the blend line of made up of ERCB lines 7 to 12, 21 and 22. The Sturgeon Facility does not interrupt the south-bound blend line. [ 77 ] To reach that decision the MGB considered the legislation, applied its knowledge of the environment in which the legal arguments and evidence were presented, and reviewed and weighed the exhibits and the expert evidence.

This question devolves to whether the Sturgeon Facility: 1. was not a storage or production facility; and 2. did not represent the endpoint of the bitumen/diluent blend line from Wood Buffalo, that line ended at the Enbridge Facility. [ 78 ] At pp. 43-44 of the Board Order, the Board preferred the characterization of the Sturgeon Facility provided by Mr. Gray, an expert witness for Access: The MGB accepted Mr. Gray’s account as the best evidence of the configuration of the pipeline and Sturgeon terminal. ...

The MGB finds that there is no break in the continuity of the blend pipeline caused by the blend injection process at Sturgeon terminal.

The location of the inlet or outlet valves and any non-linear property between them at Sturgeon terminal is not configured in such a way that it interrupts lines 11 and 12 so as to make them separate, or discontinuous, strings of pipe. [ 79 ] In short, the Sturgeon Facility did not interrupt the Wood Buffalo to Enbridge Facility Line, and the since the facility did not physically interrupt the line, whether it was a production or storage facility was immaterial. [ 80 ] On the standard of reasonableness, deference is due for the MGB’s decision to prefer one expert’s opinion over another and on that basis make a factual conclusion as to where a pipeline starts and ends.

Further, the MGB had a sound basis on which to prefer Mr. Gray’s evidence; the DLA witness had neither inspected the Sturgeon Facility nor had accessed a formal schematic of that facility (at p. 43). b. The Blend Line was Not Complete [ 81 ] The MGB concluded that the Sturgeon Facility did not represent the end of the blend line, and instead found as fact that the blend line ended at the metering station of the Enbridge tank farm.

The thoroughness of the MGB’s reasons makes clear that the Board recognized that the Bill 16 amendments, which might logically lead to assessment of physically completed but not yet operational pipelines, still maintained the previous legislative policy position, expressed in MGA , s. 291(2), that any linear property which is a work in progress would not be assessed and subject to taxation.

This is a public policy exception carved out of the general rule expressed in MGA , s. 291(1), “... an assessment must be prepared for an improvement whether or not it is complete or capable of being used for its intended purpose .” [emphasis added]. [ 82 ] The MGB was clearly live to the issues and policy considerations that flowed from the Bill 16 amendments. It concluded that a pipeline must extend its full intended length before one applies the presumptions of completeness contained within s. 291(3)-(5).

Merging those rules, a pipeline is subject to assessment once the pipeline extends the entire distance from its start to end, and that length is pressure tested. Completeness no longer depends on whether there are facilities attached at either end to input or remove oil, nor is assessment dependent on a lack of product, or excluded from assessment due to repair, maintenance or commissioning delay.

[ 83 ] With those criteria, the MGB concluded the south-bound blend line had not been completed. Two alternative scenarios were presented. First, there was the question of fact on whether the last segment of the blend line (segment 22) had been tied in and pressure tested as of October 31 st . The MGB concluded that it had not, and that conclusion is not under review. The alternative scenario was whether a ‘shorter’ pipeline could be said to be complete, that involved notional removal of the last segment of the pipeline to create a continuous string of pipe up to but not including that last segment.

The MGB concluded that characterization of the pipeline was also incorrect, and again that is not under review - the pipeline clearly ended at the Enbridge Facility. [ 84 ] On either scenario the Board concluded that the blend pipeline should not have been assessed. Again, this result is a highly fact-specific, and flows from a detailed, and comprehensive analysis that takes into account the amendments to the legislation and concludes that with the pipeline arrangement as factually existed in this case, the Sturgeon Facility to Enbridge Facility component of the blend pipeline was not completed.

It is difficult to fault the Board’s analysis. [ 85 ] The MGB also went through this assessment (decision part six, issue three, pp. 46-57) and after describing two possible scenarios the MGB states: “[i]n either scenario, the result is that the blend pipeline should not have been assessed. [ 86 ] The new amendments made clear that if an owner has a completed line, that is successfully pressure tested prior to October 31 of the year prior, that pipeline will be assessed in the following year.

Thus, had the Board found that the line from Wood Buffalo to the Sturgeon Facility constituted a completed line, that line would have been assessed. However, once the Board concluded as a fact that the pipeline operator could not remove fluid at the Strathcona Facility and only add further diluent, that input event could not represent an ‘end’ of the pipeline. Instead, completion required the last two segments (ERCB #21 and 22).

This additional line would extend the pipeline from the Sturgeon Facility to the point where the oil diluted blend was metered for volume, removed into the Enbridge Facility tank farm, and became someone else’s property. This conclusion is a factual decision that is at the bull’s-eye centre, or the core of the MGB’s expertise. [ 87 ] The MGB did not have to apply the various tests for whether a pipeline is capable of transmitting gas or oil once the Board concluded that the blend line runs to the Enbridge Facility.

The Board found as fact and the parties admitted that the last part of the line was factually not physically built to its completion point. The various provisions that ‘deem’ a pipeline as completed once pressure tested simply do not apply; the new legislation was not designed to assess pipelines that did not extend their full intended length. That is clearly the provincial government’s intention.

If the Legislature intended a different result, it could simply have achieved that goal in a much more straightforward way - by removing the exception to assessment of linear properties provided in s. 291(2), and assess work in progress. c. Conclusion [ 88 ] I conclude that the Minister has not established that the first five errors (items (

a) to (

e) in para. 74) attributed to the Board are reversible errors and therefore, based on a standard review of reasonableness and with appropriate deference, the application fails on these points. There is a clear route or thread running through the MGB Order which provides and explains the tribunal’s reasoning and analytical process. The Board’s decision-making can be followed and understood. The MGB conclusion is a reasonable one and is highly fact specific. As such, and applying appropriate deference, that decision ought not be disturbed.

I conclude that it would have been reasonable for the MGB to conclude that the south-bound blend line was not subject to assessment and taxation in 2008. 6. Fair and Equitable Treatment of Access by the DLA [ 89 ] The Minister has also alleged that the MGB was incorrect when it concluded that the DLA had acted unfairly and treated Access in an inequitable manner when only Access was subject to re-assessment under the amended post-Bill 16 MGA provisions. A. Equity During the Assessment Process [ 90 ] The MGA requires the DLA to prepare assessments in a fair and equitable manner:

293(1) In preparing an assessment, the assessor must, in a fair and equitable manner, (

a) apply the valuation and other standards set out in the regulations, and (

b) follow the procedures set out in the regulations. [ 91 ] This issue became academic once the MGB did not assess the south-bound blend. [ 92 ] Thus the decision of the MGB on the issue of equity and fairness would not and could not affect the outcome of the decision for which the Minister applies for judicial review. Once the southbound blend line was not assessable there is no prejudice to Access or the Minister that flows from any portion of the issue of fairness and equity reviewed by the Board from pages 58 to 66 of the MGB 123/09 Board Order.

Further, the commentary by the Board is arguably obiter , it affects nothing. Nevertheless, the parties did argue in the alternative that the MGB was incorrect when it concluded that Access was assessed unfairly and inequitably, and on that basis I make the following analysis. B. Board Conclusion on DLA Information Gathering Obligations [ 93 ] Each year the DLA issues a Request For Information [an “RFI”] to pipeline operators. Return volume 6 of 12, tab 25, which is a copy of Exhibit 20 1C, Tab 25, provides an example. The pipeline operators complete and return a response to the RFI.

Thus this is a self-reporting system. In 2008 the draftsmen who prepared the RFI responses for the 2007 taxation year based their forms on the existing state of the law - the Alliance decision of the Alberta Court of Appeal. Of course, that response could be inappropriate given the post- Bill 16 scheme to categorize pipeline completion. [ 94 ] The Board was asked by Access as to how the DLA should have responded to this situation. Access argued before the Board that the DLA had a duty to treat all pipeline owners equitably and fairly.

That, Access says, meant the DLA should have obtained further information from pipeline owners to correct misinformation which was rendered in error (from a retrospective perspective). Access demanded that the DLA obtain that information. [ 95 ] The Board agreed; to single out Access for investigation and reassessment is inequitable and unfair.

This concept is developed in Board Order 123/9, where at pp. 61-64 the MGB finally determines that the appropriate remedy for the unusual information deficit faced by the DLA is that the DLA ought to have required additional information and production from all operators of pipelines then under construction. Nevertheless, the MGB concludes at p. 65 that the DLA is prohibited by statute from preferring information from one source over another from its available pool of pre-Bill 16 RFI responses, ERCB records, and post-Bill 16 correspondence from Access (Board Order, p. 65).

In short, the MGB concluded that the DLA ought to review and consider all relevant information, and not simply prefer one source over another (presumably without reason and explanation). [ 96 ] While the MGB expresses this concern as “the DLA was statutorily prohibited from preferring [a January 30, 2008 letter from Access] in the face of the December 2007 RFI response and the ERCB records...”. I conclude this statement relates to the MGA , s. 292(5) obligation that the DLA must use the most accurate information available when assessing inaccurately documented linear property. [ 97 ] My

interpretation is that this comment involves a subtext that the MGB is particularly concerned that the DLA did not scrutinize all the information available through the perspective of the Bill 16 amendment process. In isolation this statement, by the MGB, is in error as the reverse is correct. However taken in its entirety, and not selecting simply seven words out of context, the Board here has emphasized the DLA’s duty to adapt its procedures and information review to unforseen (and unforeseeable) circumstances such as retroactive tax assessment legislation. The MGB gently chastises the DLA for not doing so.

I see no error on that point. The words imply an erroneous limiting of the investigative function of the DLA, this cannot be what the Board intended, given the entire picture of the assessment issues it was determining. In any event, the MGB’s discussion in this area does not affect the outcome of the Board decision nor my handling of the review of it. 7. Conclusion

[ 98 ] Applying the standard of reasonableness to the decision of the MGB, those sections of the 70 page decision that relate to the MGB’s determination that the Access-owned south-bound blend pipeline was not assessable reveal a thought process and pattern that satisfy the test of reasonableness. As a result the application is dismissed. Heard on the 23 rd day of November, 2010. Dated at the City of Edmonton, Alberta this 7 th day of March, 2011. A.W. Germain J.C.Q.B.A. Appearances: Barry A Sjolie, Q.C. and Alvin R. Kosak Brownlee LLP for the Applicant Gilbert J. Ludwig Wilson Laycraft for the Respondent, Access Pipeline Inc. Mike d’Alquen for the Respondent, The Municipal Government Board

Schedule I:

284(1) In this Part and Parts 10, 11 and 12, ... (k) "linear property" means ... (iii) pipelines, including (

A) any continuous string of pipe, including loops, by-passes, cleanouts, distribution meters, distribution regulators, remote telemetry units, valves, fittings and improvements used for the protection of pipelines intended for or used in gathering, distributing or transporting gas, oil, coal, salt, brine, wood or any combination, product or by-product of any of them, whether the string of pipe is used or not, (

B) any pipe for the conveyance or disposal of water, steam, salt water, glycol, gas or any other substance intended for or used in the production of gas or oil, or both, ... but not including (

F) the inlet valve or outlet valve or any installations, materials, devices, fittings, apparatus, appliances, machinery or equipment between those valves in (

I) any processing, refining, manufacturing, marketing, transmission line pumping, heating, treating, separating or storage facilities, or (II) a regulating or metering station, (

G) land or buildings; ... ... 291(1) Unless subsection (2) applies, an assessment must be prepared for an improvement whether or not it is complete or capable of being used for its intended purpose.

(2) No assessment is to be prepared (

a) for linear property that is under construction but not completed on or before October 31, unless it is capable of being used for the transmission of gas, oil or electricity,

(

b) for new improvements that are intended to be used for or in connection with a manufacturing or processing operation and are not completed or in operation on or before December 31, or (

c) for new improvements that are intended to be used for the storage of materials manufactured or processed by the improvements referred to in clause (b), if the improvements referred to in clause (

b) are not completed or in operation on or before December 31.

(3) For the purposes of subsection (2)(a), (a) “ capable of being used ” , in respect of linear property, means having the physical capacit

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