First, Conifex’s position assumes an unlimited supply of electricity, when the evidence reflects that cryptocurrency mining operations have such significant demand implications that they could materially impact the availability of electricity for all ratepayers. It would not have been unreasonable to infer from the available information that if the pending cryptocurrency mining projects proceeded as proposed, B.C. Hydro might have had to make unplanned-for capital expenditures to meet the unanticipated increase in demand. This afforded a reasoned economic justification for differential treatment of cryptocurrency mining operations.

[W]hile the regulation of the manner in which public utilities provide service to their customers is an important feature of the UCA, the statute can reasonably be interpreted to have broader objectives. The LGIC’s use of its regulation-making power under s. 3 of the UCA to address matters of energy policy beyond the technocratic competence of the Utilities Commission is not inconsistent with these broader objectives. Returning briefly to the facts, there is a body of evidence reflecting that the LGIC made the decision to order a pause on the delivery of service to new cryptocurrency mining projects to give the government time to consider not only the cost-of-service and economic impacts of these projects, but also to assess the impact of these projects on B.C. Hydro’s ability to meet demand, and the broader implications for the government’s energy policy. Against this backdrop, and considering the relevant legal constraints discussed above, it was not unreasonable for the LGIC to conclude that the OIC was consistent with the overarching objectives and purposes of the UCA (at paras. 122-123).

There is, perhaps, an important lesson here in applying the reasonableness standard post-Auer. Where the challenge to a regulation is entirely upon statutory interpretation grounds (i.e. contesting what we would have in an earlier era called the vires of a regulation), a challenger may need to demonstrate that its interpretation of the statutory scheme is the only possible and acceptable interpretation. For, it would seem to follow, if more than one interpretation is available, the decision-maker’s interpretation will by definition be reasonable and, under Auer, should be upheld. That certainly seems to be the import of Riley JA’s implication that Conifex needed to demonstrate that preventing undue discrimination was the “exclusive or overarching objective of the statute”. Whether this is a faithful reading of Auer is debatable, however. Regulation makers “must”, under Auer, respect “legislative choice” about the extent of their authority (Auer, at para. 62), adopt an interpretation of their authority that is consistent with other legislation and applicable common law principles” (at para. 63) and “interpret the scope of their authority in accordance with the modern principle of statutory interpretation” (at para. 64). Yes, the burden is on the challenger to demonstrate unreasonableness (Auer, at para. 38) but the Supreme Court insisted that regulations do not benefit from any special deference from a reviewing court. In short, the unanswered question about the scope of the presumption of validity post-Auer remains unanswered. Here, the challenge ultimately failed because Conifex could not discharge its burden given that neither undue discrimination nor the regulatory compact had, in Riley JA’s view, the scope the company sought to give them.

On the third ground, Riley JA disagreed with Conifex that the government’s interpretation of s. 3 effectively eliminated the statutory guarantee in s. 28(3) of a hearing prior to the Commission relieving the Authority of its obligation to provide service. This was because s. 3(2) expressly contemplates an order in council taking precedence over any other provision of the statute: “Read together, the effect of these provisions is that the LGIC can direct the Utilities Commission to exercise any of its powers under the Act, provided that the direction does not negate a prior order or ruling of the Utilities Commission, and the Utilities Commission must then comply with the direction notwithstanding any other provision of the Act or regulations” (at para. 129). Missing from this analysis is any consideration of whether the power in s. 3(2) — which is a Henry VIII clause — should be read narrowly and, if so, how. I have not read Conifex’s submissions, but it seems to me that one way to formulate the point would be to say that the right to a hearing is a fundamental common law guarantee, recognized here by statute, and that s. 3(2) should not be read so broadly as to negate a basic tenet of procedural fairness. Of course, this may just be a way of repackaging the ‘undue discrimination’ argument in the garb of procedural fairness. In any event, Riley JA was not impressed, concluding that Conifex’s interpretation would lead to absurdity: “Conifex’s interpretation would allow the LGIC to issue a regulation under s. 3 directing the Utilities Commission to make a final order relieving B.C. Hydro of its service obligation, but only after a hearing that would serve no purpose, given the Utilities Commission’s statutory obligation under s. 3(2) to comply with the LGIC’s direction” (at para. 131).

Mr. Thibault is now in his late 50s. Commencing in 1999, he worked as a tow truck driver. He has his own truck. In 2001, Mr. Thibault pled guilty to drug-related charges under the Controlled Drugs and Substances Act, S.C. 1996, c. 19 (the CDSA). He had prior offences in 1984 and 1990 but has had none since 2001. He has never owned or used a handgun. Mr. Thibault served a sentence of 16 months in jail and 18 months’ probation for his 2001 conviction under the CDSA. As required by s. 109 of the Criminal Code, the court also imposed a prohibition from possessing any firearm for life. Mr. Ramsay is also in his late 50s. He has worked as an employee for tow truck businesses since 2008. In 2002, he was convicted under the CDSAfor cultivating marijuana. He had prior convictions for theft in 1985 (for which he served nine months in jail) and for possession of a weapon (regarding his use of a block of wood when he got angry with his landlord) in 1989. He has not been involved in criminal activity since 2002. He has never owned or used a handgun. As a result of Mr. Ramsay’s 2002 conviction under the CDSA, the court also imposed a lifetime weapons ban on him under s. 109 of the Criminal Code (at paras. 6-9).

Understandably, T and R assailed the reasonableness of the regulation, arguing that it was inconsistent with the statutory purpose of the new legislation because the effect is to exclude people with no relevant criminal history from the towing industry. The Divisional Court rejected their argument, concluding that T and R were attempting to put the wisdom and policy efficacy of the regulation into question:

These submissions relate to the effectiveness and wisdom of the Regulation, which is not the question. The “reasonableness standard does not assess the reasonableness of the rules promulgated by the regulation‑making authority; rather, it addresses the reasonableness of the regulation‑making authority’s interpretation of its statutory regulation‑making power”: Auer, at para. 56.

…

The decision to impose a weapons prohibition on the applicants was made under the Criminal Code. There may be consequences for them. As put in Auer, at para. 58, the “potential or actual consequences of the subordinate legislation are relevant only insofar as a reviewing court must determine whether the statutory delegate was reasonably authorized to enact subordinate legislation that would have such consequences. Whether those consequences are in themselves necessary, desirable or wise is not the appropriate inquiry.” (at paras. 47-48, 53).

In my view, the conclusion that by referring to “consequences” here, T and R were putting the wisdom or policy efficacy of the regulations into question would have benefited from more extensive analysis. It does not seem at first glance (though I appreciate that opinions may differ) that T and R were arguing that it was unwise as a policy matter to include s. 2(d)(i) in the regulation. Rather, their argument was that, having regard to the consequences the regulation imposes, s. 2(d)(i) sweeps up people like T and R who (a) have no criminal history in the recent past and (b) have no history of the sort of serious criminality envisaged in the other sections of the regulation. The catch-all clause at the end of s. 2, they argued, could not have been reasonably authorized by the legislation because it has consequences well outside the scope of the regulation itself and what the legislature intended.

Under Auer, that seems to me like a tenable argument.

TVA Publications

If both Conifex and Thibault and Ramsay do not augur well for successful challenges to regulations after Auer, the same cannot be said of TVA Publications. At issue here was a fairly complex scheme for the recovery of costs by municipalities from producers of recyclable materials. A three-year tariff is imposed by the Government of Quebec based on a recommendation from a crown corporation which, in turn, bases its recommendation on consultations with industry.Tariffs are to be differentiated based on statutory criteria:

The criteria taken into account to determine the schedule must evolve over the years in such manner as to foster the accountability of the various classes of persons concerned as regards the environmental consequences of the products they manufacture, market, distribute or commercialize or the materials they otherwise generate, having regard in particular to the content of recycled materials, the nature of the materials used, the volume of residual materials produced and their potential for recovery, recycling or other forms of reclamation (Loi sur la qualité de l’environnement, RLRQ c Q-2, s. 53.31.14)

The difficulty that gave rise to the litigation was that the categories of producer were reorganized and magazines found themselves lumped in with others (like producers of telephone directories) whose activities imposed a much higher net cost on the recycling system. This would not, in and of itself, have been legally questionable. However, magazines were then ‘amalgamated’ with other producers. The upshot was a vast increase in the tariff payable by the magazines:

C’est la décision d’amalgamer les tarifs des magazines, des catalogues et publications, des annuaires téléphoniques, et du papier à usage général qui est, aux yeux des demanderesses, inéquitable et déraisonnable envers les magazines. Notons que le tarif proposé pour les encarts et circulaires demeure non amalgamé à 176,42 $. Pour les autres, la décision d’amalgamer change de beaucoup le tarif. Pour les magazines, c’est plus du double (2.12 x). Quant aux catalogues, c’est un peu moins que le double (1.7 x). Il faut également souligner que les annuaires et le papier à usage général voient leurs contributions diminuer de façon dramatique. Les annuaires sont appelés à contribuer plus de deux fois moins que le montant suggéré par l’analyse (-2.16 x) (at para. 86).

As Pless J explained, the resultant problem was that the amalgamated tariff did not (and could not) respect the statutory prescription because it did not permit any consideration of the costs generated by magazines specifically. Indeed, Pless J observed, an amalgamated approach had been specifically rejected by the crown corporation in a previous tariff period (at paras. 92-93). The treatment of magazines was based on a perception that they were responsible for rising costs. However, Pless J found, this perception had no grounding in reality:

Même si la concomitance peut expliquer la perception des autres membres de la catégorie, elle ne la justifie pas. Les magazines n’ont jamais représenté plus de 10 % de la catégorie (3 % du total), peu importe comment on mesure leur part : que ça soit la quantité générée (9 %), la quantité récupérée (10 %), ou leurs coûts nets pour le système (6 %)[71]. La perception que les magazines étaient responsables de l’augmentation de 50 % de la catégorie était totalement fausse et aucunement fondée[72]. Pourtant, il est clair que cette perception a joué un rôle déterminant dans l’exercice. Même si ce n’est pas la seule explication possible pour choisir l’amalgamation, comme question de fait, selon le témoignage des représentants des défendeurs, le Tribunal n’a aucune hésitation à conclure qu’il s’agit de la seule et unique raison pour laquelle le choix de l’amalgamation a été fait. Autrement, ÉÉQ et Recyc-Québec auraient évidemment suivi la logique de la recommandation antérieure (at para. 99).

Consistent with Vavilov, any attempt to magic up an alternative justification after the fact would be impermissible (at para. 106) and, thus, the tariff imposed on magazines was unlawful.

You will note immediately the divergent approaches in Thibault and Ramsay and TVA Publication to the consideration of consequences. In TVA Publications, Pless J traced the consequences back to the statutory scheme, with its prescribed list of factors, and demonstrated that the tariff could not be reasonably authorized by the legislation because it was divorced from the statutory criteria. Yet one could, applying the Divisional Court’s approach from Thibault and Ramsay, complain that this was to cast doubt on the wisdom or policy efficacy of the action in question. To my mind, any such complaint simply underscores the need for careful analysis of whether “consequences” are invoked improperly or as a means of demonstrating that the action strays beyond the confines of the statutory text. In my view, the approach in TVA Publications is more in keeping with the spirit of Auer.

Another important aspect of Pless J’s reasons relate to the content of the record. The record was voluminous in TVA Publications (at para. 49) and, indeed, furnished Pless J with the information necessary to conclude that the tariffs were unlawful. This was a situation where, as the Supreme Court envisaged in Vavilov, “it is possible for the record and the context to reveal that a decision was made on the basis of an improper motive or for another impermissible reason” (Vavilov, at para. 137).

Pless J acknowledged that, ordinarily, the record on judicial review contains only the material that was before the decision-maker at the point of decision (at para. 50). However, in cases involving the adoption of regulations and similar instruments (actes normatifs in French), a more flexible approach is required (at para. 60).

Here, for example, it would have been unduly formalistic to look solely at the text of the decree containing the tariffs that was adopted by the Government of Quebec given that the numbers were based on a recommendation generated by in turn consultations. This was the “the reasoning process that underlies the decision” (Vavilov, at para. 137). As Pless J pointed out, when the Supreme Court explained in Vavilov that is permissible to look to the record to uncover the rationale for a decision, the Court referred to its earlier decision in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, at para. 44 where it took a very large and liberal approach to what constituted ‘reasons’ for an administrative decision (in that case, the notes of an officer). Accordingly, the scope of what can be considered on judicial review of regulations includes material that sheds light on the reasoning process leading up to the decision (subject, of course, to any claim of privilege):

Dans un cas où il n’y a pas de motifs formels, l’obligation de la Cour de révision de considérer l’ensemble du dossier et du processus qui a mené à la décision demeure rigoureuse[39]. Certains types de processus administratifs sont par leur nature plus difficiles à analyser quant à leur « raisonnabilité » qu’une décision adjudicative. Prenons l’exemple d’un contrôle judiciaire d’un règlement municipal. C’est une décision de nature normative qui, en raison de la nature du décideur, n’a pas toujours de « motifs ». De plus, les contours du « dossier du décideur » sont souvent flous ou incertains puisque chaque membre du conseil municipal qui vote peut prendre en considération divers éléments de preuve ou représentations et les parties affectées par la décision n’ont pas nécessairement participé au processus de prise de décision.

La Cour suprême a toutefois rappelé à maintes reprises que « même en pareil cas, le raisonnement qui sous-tend la décision n’est normalement pas opaque ». Une Cour de révision doit donc faire preuve de flexibilité pour assurer une application rigoureuse de la norme de la raisonnabilité tout en respectant le choix du législateur quant au processus administratif approprié pour arriver à la décision. Cette flexibilité est souvent nécessaire pour comprendre la justification de la décision et accepter qu’elle se trouve parmi les options raisonnables, mais ça peut aussi démontrer le contraire – que la décision repose sur un motif inapproprié, tel que le souligne la Cour suprême dans Auer (at paras. 57-58).

Fundamentally, if a piece of evidence would support a finding of unreasonableness, it is admissible on judicial review (at para. 68).

As Pless J notes, the Supreme Court considered abundant material, including expert evidence, in the Auer case. Although the Supreme Court did not comment on the propriety of doing so, its approach strongly suggests that the record is to be considered expansively post-Auer. Pless J’s reasons provide a roadmap in that regard, with relevance determined by reference to the available grounds of review. For more thoughts on this subject, see my paper on the ‘duty of candour‘.