NEB - Government of Canada Pipeline Regulations: Criminalization of Farming?

New pipeline regulations proposed by the National Energy Board (NEB) shift the burden of constructing, operating and maintaining safe pipelines to farmers, who will face near automatic Administrative Monetary Penalties (AMPs) or even Criminal Code prosecutions for failing to warn pipeline companies when pipelines cannot safely accommodate farming practices.  Doesn't this sound backwards?  On behalf of CAEPLA and landowners across Canada, the Manitoba Pipeline Landowners Association (MPLA) submitted the letter below to the NEB urging the regulator to shift the burden to make pipelines safe back to pipeline companies where it belongs, and to avoid making criminals out of landowners and farmers. 

October 20, 2014

 

Proposed NEB Pipeline Damage Prevention Regulations

Sheri Young
Secretary of the Board
National Energy Board
517 Tenth Avenue S.W.
Calgary, AB   T2R 0A8

Dear Madam Secretary:

RE:          Manitoba Pipeline Landowners Association (MPLA)

               Comments on Proposed Amendments to Regulations for Pipeline Damage Prevention

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We are the lawyers for the Manitoba Pipeline Landowners Association (MPLA) and are writing in response to the NEB’s letter of September 18, 2014 to provide MPLA’s comments concerning the proposed amendments to pipeline damage prevention regulations.    MPLA is a voluntary association of Enbridge pipeline landowners in Manitoba, most of whom have between 6 and 8 pipelines crossing one or more of their properties (with at least one additional pipeline being proposed at present).  MPLA landowners and all NEB-regulated pipeline landowners across Canada are directly affected by Section 112 of the NEB Act and its related regulations.  MPLA is taking the lead on behalf of the Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA), of which MPLA is a member association, in responding to the NEB’s proposed regulatory amendments.  MPLA’s comments should be taken as those of pipeline landowners across Canada.

This marks the third time that MPLA has written to the NEB concerning the most recent round of proposed changes to Pipeline Crossing Regulations.  CAEPLA also provided comments to the NEB on previously proposed changes to the regulations dating back more than a decade.  Unfortunately, the currently proposed amendments demonstrate that the NEB is still not listening to the concerns of pipeline landowners.  The amendments do nothing to introduce fairness for agricultural landowners into the regulatory scheme.

As set out in MPLA’s comments to the NEB in February, 2013 on the NEB Discussion Paper, Section 112 of the NEB Act leaves landowners carrying an unfair burden in ensuring pipeline safety in Canada.  Restrictions on agricultural operations over and near pipelines are only necessary where companies have failed to ensure that the condition and location of their pipelines are adequate to accommodate agricultural operations.  Fairness dictates that pipeline companies, which have obtained land rights by expropriation or by agreement made through the threat of expropriation, should be required to accommodate farming.  However, as is apparent in the latest proposed amendments to the regulations, the NEB is continuing to move in the opposite direction – creating regulations that absolve pipeline companies from the duty to build, maintain and operate safe pipelines by restricting agricultural operations and exposing pipeline landowners to regulatory and penal liability.

Once again, MPLA urges the NEB to reverse this course by making amendments to the regulations that restore a landowner’s ability to carry out agricultural operations without the constant fear of contravening the NEB Act and regulations and of incurring the penalties that will result.  The starting point is to prescribe an exemption for all agricultural activities from the requirements to obtain NEB and/or company permission in Sections 112(1) and 112(2).  Then, similar to the proposed Section 10.1 of the proposed Damage Prevention Regulations, Part 2, the regulations would also provide that, if a pipeline company determined that agricultural activities could jeopardize the safe and secure operation of a pipeline, the pipeline company would be required to identify affected locations and advise landowners and farmers in writing of those locations and the reasons for the determination.  The pipeline company would then have two options for addressing its safety and security concerns:

 

1.       Remove, repair, modify, relocate or replace its pipeline so as to ensure that agricultural activities will not jeopardize the safe and secure operation of the pipeline; or,

2.       Provide affected landowners and farmers with clear written direction on any restrictions to be applied to agricultural operations in specified locations and pay the landowners and farmers compensation for any resulting business losses or other related damages or loss.

This proposal is consistent with the principles that should apply to the interaction between pipeline companies and landowners under the NEB Act – that pipeline companies are responsible to build, operate and maintain their pipelines safely, and that landowners are to be compensated for the imposition of pipelines on their properties and on their businesses.  MPLA’s proposed amendments do not compromise pipeline safety.  Instead, they shift the primary safety and security decision-making burden off of the backs of landowners and farmers and onto pipeline companies where it should be.  Landowners and farmers should not be placed in the position of having to decide whether a pipeline is safe or not and of having to face regulatory and penal liability if they are wrong.

As MPLA previously stated in its February, 2013 comments, pipeline companies have the resources and expertise to make this work.  They can obtain equipment specifications directly from farm equipment manufacturers; they can determine the surface loading and other impacts generated by farming activities; they already possess information (or should possess information) about the location, depth and condition of their pipes.  Where site specific locations are identified that will not accommodate the impacts of all farming activities, pipeline companies can determine what work is necessary to accommodate farming or what restrictions may be necessary.  And pipeline companies can compensate landowners and farmers for restrictions that are necessitated by the unsafe condition of their pipes.

Without this shift of responsibility to pipeline companies, Section 112 of the NEB Act and the related regulations will continue to work an injustice for landowners and farmers across Canada.  How else can one describe a situation where a Canadian farmer faces at a minimum an “administrative monetary penalty” of no less than $1,000.00 (or $4,000 for a corporation) for failure to notify a pipeline company that its pipeline is unsafe?  And the farmer has been deprived of any defence of due diligence, has no ability to appeal a decision of the NEB on the matter, and faces public denunciation by the NEB?  MPLA and its members are very concerned about the opportunities for abuse by pipelines companies that have been created by the administrative monetary penalty regime.  The answer is for the NEB to make the amendments proposed above by MPLA so that pipeline landowners and farmers do not face punishment on account of the failure of pipeline companies to build, operate and maintain safe pipelines.

The NEB should stop covering up for the inadequacies and deficiencies in pipelines on the backs of Canadian landowners and farmers.  Safety is in everyone’s interest, but it is the pipeline companies that should be responsible for safety.  MPLA and pipeline landowners across Canada hope that the NEB will take advantage of this opportunity to enhance pipeline safety while making the pipeline regulatory scheme fairer for landowners and farmers.

Yours truly,

 

John D. Goudy

c.c.:        MPLA, Board of Directors

NEB rules in favour of Kinder Morgan Trans Mountain - City of Burnaby prohibited from interfering or obstructing destruction of park land

In a decision dated October 23, 2014, the National Energy Board (NEB) has ruled that: 1) it has the jurisdiction to determine that City of Burnaby by-laws are inoperative or inapplicable to the extent that they conflict with or impair the exercise of Trans Mountain's powers under paragraph 73(a) of the NEB Act; 2) the doctrine of federal paramountcy, or alternatively, interjurisdictional immunity renders those by-laws inapplicable or inoperative for the purposes of Trans Mountain's exercise of its powers under paragraph 73(a) of the NEB Act; and, 3) the NEB has authority under subsection 13(b) of the NEB Act to issue an order against the City of Burnaby.

The NEB has issued that order, which prohibits Burnaby from interfering with or obstructing Trans Mountain and its staff, representatives, contractors, or agents from exercising Trans Mountain's powers under paragraph 73(a) of the NEB Act to enter into an on lands owned by or controlled by the City of Burnaby (including park lands and conservation lands) to complete surveys and examinations.  The NEB then specifies that there is a "broad range of necessary activities and arrangements that must be performed in completing the surveys and examinations", including but not limited to "associated brush clearing, tree removal, movement of equipment, traffic management and bore hole drilling necessary to complete the geotechnical site investigations."

The NEB also ordered that Burnaby could not order or authorize its own personnel to be present within any "safety zone" set by Trans Mountain during the survey and examination work.

BC Rancher conviction for shooting neighbour's dog set aside; new trial ordered

In June, 2011, a BC rancher shot and killed her neighbour's dog.  She was later charged under Section 445(1) of the Criminal Code.  At trial, the rancher claimed the dog had attacked her cattle and relied upon Section 11.1(2) of BC's Livestock Act (a person may kill a dog if the dog is running at large and attacking or viciously pursuing livestock) and Section 39 of the Criminal Code (protection of personal property, this section has since been rolled into section 35) as legal justifications for her actions.  The Provincial Court judge rejected those defences and convicted her.  The rancher appealed the conviction to the BC Supreme Court.

At trial, counsel agreed that the burden rested with the Crown to prove that the defence under Section 11.1(2) of the Livestock Act (the other defence was not pursued) did not apply.  The trial judge identified the significant issue to be whether the dog that the rancher killed was "attacking or viciously pursuing livestock", and found that there was "no merit to the argument" that this was the case. 

However, the appeal court found that the trial judge had misapprehended the evidence at trial.  He had failed to consider a written statement of the rancher that had been tendered as evidence that included evidence that the dog had been "attacking or viciously pursuing" the cattle - there was evidence of biting and attacking.  Instead, the trial judge found that there was no evidence on this point, which in the view of the appeal court constituted a misapprehension of evidence.

The appeal court also found that the trial judge had erred in his application of the law.  On appeal, the rancher raised three defences: 1) the Livestock Act defence; 2) common law justification of defence of property; and, 3) defence of colour of right.  Although the second two defences were not raised at trial, the Crown did not object to those defences being raised on appeal.  The appeal court found that the matter must be sent back for a new trial in which the Court would consider evidence related to all three defences. 

With respect to Section 11.1(2) of the Livestock Act in particular, the appeal court gave the following interpretation of the defence: "Rather, a fair and liberal construction, consistent with the common law, the overall object of the [Act], and the intention of the legislature is required.  To my mind, s. 11.1(2) of the [Act] should [be] construed in the same manner as the common law as permitting any person to kill a dog when at the time of the act of killing, the dog: a. is running at large; and, b. is actually attacking or viciously pursuing livestock, or, if left running at large, would subject the livestock to a real and imminent danger that the attack or vicious pursuit would be renewed."  The act of killing a dog would be prohibited once the need for protection of the livestock has ended.

Read the decision at: R. v. Robinson.

"Shared water does not necessarily make good neighbours" Part 2 - The Appeal

In September, 2013, I wrote about a case involving the post-purchase discovery of an underground waterline on a farm.  The purchaser of a 97-acre hobby farm did not know that the vendor, who retained a three-acre parcel next to the farm where he had built his retirement home, continued to receive water from a spring on the 97-acre farm through an underground line that also supplied other neighbours.  Rather than disclosing the existence of the line and his expectation that he would continue to receive the water supply, the vendor provided a statutory declaration on the date of closing stating that he was "not aware of any person or persons ... having any claim or interest in the said lands or any part thereof adverse to or inconsistent with [his] title and that [he was] positive that none such exists."

After the waterline was discovered, the matter ended up in court and the trial judge declared that there was no prescriptive easement for the line and that the vendor was not entitled to an injunction to prevent the new purchaser from taking steps to interfere with the quality or quantity of the water supply.  The judge also found that the waterline constituted a "latent defect" and that the vendor was liable for negligent misrepresentation.  He awarded the purchaser $25,500 in damages along with nearly $115,000 in costs.

The vendor appealed the decision of the trial judge on negligent misrepresentation and damages to the Court of Appeal.  The Court of Appeal agreed with the trial judge's finding that the vendor had a duty of care not to make false statements to the purchaser, which arose "specifically from respondent's foreseeable and reasonable reliance on the appellant's representations contained in the statutory declaration."  And, since the vendor himself was a person with an alleged continuing interest in the land being purchased by the purchaser, he "knew, or, at the very least, ought to have known, that his representation to the contrary, in a statutory declaration executed under oath, was false."

The appeal was dismissed with costs to the purchaser in the amount of $22,000.

Read the appeal decision at: Hanisch v. McKean.

Court declines to find that shared driveway right-of-way was abandoned

The drawing above shows three adjacent residential properties in Toronto (in blue, pink and yellow) along with a right-of-way that is shared by the three properties (in green).  The street adjacent to the three properties runs down the left side of the drawing; the right-of-way is a driveway that runs back behind the properties in an L-shape.

 

The owners of the blue lot wanted to use the driveway pursuant to the deeded right-of-way.  The owner of the yellow lot challenged this use on the basis that the blue lot owners had abandoned the right of way.  She claimed that she was entitled to park her car beside her house so as to block the laneway.  In fact, both the yellow lot owner and the pink lot owner (or their predecessors in title) had fenced off the right-of-way adjacent to their backyards.

 

The owners of the blue lot applied to the Superior Court of Justice for an order enforcing their rights to use the right-of-way.  In reviewing the application, the Court noted that the rights-of-way of the three lot owners were duly registered on title.  However, the registered owner of the right-of-way lands (the laneway) had passed away and none of his heirs were made parties to the application by the owners of the blue lot.  For that reason, Justice Myers stated, "I am reluctant to declare any rights in the laneway that may affect the owners' interests."

 

Justice Myers did comment that he would not find as a fact that the applicants (owners of the blue lot) or their predecessors in title abandoned their right-of-way over the laneway, but he did not think that he had the proper parties before him (including the owners of the laneway) to make a formal determination that the owners of the blue lot had not abandoned the right-of-way.  Justice Myers was prepared, however, to enforce the applicants' deeded right-of-way as against the other two residential lot owners (pink and yellow) in personam so that neither of those two owners would be permitted to block the laneway.  He specified that, "nothing herein is intended to bind the true owner(s) of the laneway and my order is expressly without prejudice to any and all rights of the true owner(s) to assert abandonment or any other causes of action or defence that he, she, it, or they may have against the [residential owners]."

Read the decision at: Currie v. Chatterton.

Landowners succeed on appeal of assessment for municipal drain maintenance work

Little Creek Municipal Drain services a watershed in the Municipality of the Town of Lakeshore. Little Creek itself drains approximately 2,700 hectares (or 6,650 acres) of mostly farmland into Lake St. Clair.  In 2011, the Town instructed a drainage Engineer to prepare a new updated assessment schedule for Little Creek for the purposes of future maintenance.  Several landowners who farm within the watershed disputed the results of the Engineer’s new assessment schedule primarily on the basis that his ratio of “benefit” to “outlet” assessment was disproportionate and unfairly burdened their lands with a higher assessment.

On the appeal of the Engineer's assessments, the Agriculture, Food and Rural Affairs Appeal Tribunal (the "Tribunal") concluded that the Engineer's method of assigning benefit assessments to the landowners relied too heavily on previous reports and not enough on his own objective determinations.  As this was a drain repair or maintenance project, the assessment process was not the same as it would be for a new drain construction.  The Tribunal said the following about the determination of "benefit" to the landowners and its role in setting the assessment of costs to the landowners:

According to the definition of “benefit” in Section 1 of the Act, benefit assessments apply to new work or improvement work where it can be easily justified that the construction, in fact, “… will result in a higher market value or increased crop production or improved appearance or better control of surface or subsurface water, or any other advantages …”. However, once that initial benefit has been paid by those lands, they should not have to pay a higher assessment every time it is maintained or repaired; that is, those lands should not have to pay over and over again for those initial benefits. Using the outlet assessment schedule is the fairest way to charge properties for maintenance and repair because, as stated in Section 23(3) of the Act, it is “…based upon the volume and rate of flow of the water artificially caused to flow … into the drainage works from the lands and roads …” as well as the length of the drainage works used by those lands and roads.

 

For the reasons mentioned above, when both a benefit assessment schedule and an outlet assessment schedule exist within a report prepared under Section 4 or Section 78, it seems most reasonable that only the outlet assessment schedule be used for maintenance purposes, after the new or improved drain has been constructed. In this case, the Engineer has prepared a benefit schedule that totals $11,000 and an outlet schedule that totals $39,000. The Tribunal does not find the 1981 Brewer-Terry Drain Decision to be comparable as the report under consideration in that hearing was an improvement report, prepared under Section 78 of the Act, wherein the appellant’s lane crossing was being extended. It was not a report prepared under Section 76 of the Act.

 

Accordingly, the Tribunal agrees with the Appellants that, given the facts of this case, benefit assessments should not be considered when apportioning assessments for maintenance.

[emphasis added]

The Tribunal ordered the Engineer to revise the Schedule of Assessment so that assessments would be based only on revised outlet assessments (rather than on the standard categories of "special benefit", "benefit" and "outlet").

Read the decision at: Little Creek Drain (Re).

BC Court: Aborted sale should have proceeded - vendor did not conceal property's propensity to flood

The purchaser of a 60-year-old residential property (Lot A) on Salt Spring Island in BC chose not to complete the purchase on the closing date because of alleged latent defects.  The purchaser alleged that a dam or berm constructed on a neighbouring property encroached on Lot A and also caused Lot A to flood.  He took the position that the dam and the flooding were latent defects not discoverable on reasonable inspection and that the vendor of Lot A knew about the dam and earlier flooding and should have disclosed them to the purchaser.

The purchaser did discover the presence of the dam shortly before the closing date.  The vendor's efforts to satisfy him that the property had no flooding problems were unsuccesful.  So the transaction did not close and the vendor sued the purchaser for loss of value (Lot A was ultimately sold to another purchaser at a lower price) and other losses including loss of rent and interest.

The BC Supreme Court found that the vendor did not fail to disclose a latent defect (i.e. a propensity to flood).  As stated by the Court: "The doctrine of caveat emptor applies in real estate transactions with respect to defects that are discoverable on reasonable inspection.  A vendor does not have to disclose patent defects; rather, a vendor must only disclose latent defects."  On the evidence before it, the Court found that there was only one relevant flooding event and that was caused by vandalism combined with poorly maintained highway ditches - not by the dam encroachment.  This was not a latent defect known to the vendor.

Also, the sale contract provided for an inspection to confirm property boundaries, which would have revealed the actual boundaries and whether there were any encroachments (i.e. the dam).  However, the purchaser did not complete an inspection.  If there was an encroachment, the Court found that it could have been identified by reasonable observation (i.e. a patent defect).  Moreover, the encroachment that did exist was a minor one and in no way rendered the residential premises unfit for habitation.

The purchaser was bound to close the transaction and, as a result of his failure to do so, was found liable to pay damages including the decrease in the sale price obtained by the vendor and various carrying costs incurred when the property had to be offered for sale again.

Read the decision at: Ganges Kangro Properties Ltd. v. Shepard.