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Monday, December 16, 2019

CER: A new acronym, but much the same old NEB for landowners


The Federal Government’s Bill C-69, legislation “to modernize” the National Energy Board and the Canadian Environmental Assessment Agency, was passed by Parliament and received Royal Assent in June, 2019.  The new Canadian Energy Regulator Act, which replaces the National Energy Board Act, came into force on August 28, 2019.  With that, the 60-year old National Energy Board (“NEB”) is no more; Canada’s energy regulator will now be known as the “Canadian Energy Regulator” or “CER”.  While much of the controversy about Bill C-69 has involved conflict between proponents and opponents of the oil and gas industry in the Western Provinces, the new CER and CER Act do have relevance for any Ontario landowner affected by federally-regulated pipelines or electricity transmission corridors.

In general, an energy project falls under federal regulation when it crosses provincial or international boundaries.  Enbridge’s Line 9 Pipeline might be the best known example of a federally-regulated pipeline in Ontario – it was originally constructed in the 1970s to carry oil received from Western Canada at Sarnia onto Montreal in the east.  Later the flow was reversed to carry oil from east to west.  In 2011, Enbridge applied to the NEB for permission to re-reverse a portion of Line 9 – Line 9A.  In 2012, Enbridge applied to re-reverse the balance of Line 9 – Line 9B – and to increase the capacity of the overall line.  The NEB approved both projects.

For any future federally-regulated pipeline or electricity transmission project planned for Ontario (think, TransCanada’s recent Energy East proposal), the CER will now be the body to receive and consider the project application.  From the perspective of landowners affected by proposed new projects, there is not likely to be much if any difference between dealing with the NEB and dealing with the CER.  Landowners whose lands are required for a project will still be able to apply to intervene in project application hearings in hopes of having some influence on the location and construction of projects.  It does not appear that the hearing processes for project approvals will change for landowners under the new legislation.

What has changed is the process for seeking compensation arising from federally-regulated pipeline projects.  The CER Act, like the NEB Act, provides that:

A company must, in the exercise of the powers granted by this Act or a Special Act, do as little damage as possible, and must make full compensation in the manner provided in this Act and in a Special Act to all persons interested, for all damage sustained by them by reason of the exercise of those powers.

Historically, compensation for damages suffered as a result of federally-regulated pipeline projects was addressed under the Railway Act.  A landowner could apply to have a County Court judge sit as arbitrator to determine the compensation to be paid for land rights acquired for a pipeline, or damages and losses sustained during and after construction of the pipeline.  More recently under the NEB Act, a claimant would need to apply to the Minister of Natural Resources for Canada to appoint an ad hoc (case-specific) Arbitration Committee to decide on compensation.  Under the new CER Act, the CER’s own Commission will hear compensation arbitration cases.  The Commission, currently composed of six commissioners, is the same quasi-judicial body that will hold hearings and make decisions on project applications for the CER. 

It remains to be seen what effect this transfer of responsibility for compensation to the CER Commission itself will have on landowner compensation cases.  Previously, the members of the NEB would make decisions on the approval of projects, and would grant Right of Entry Orders (expropriation) to lands where necessary, but would not deal with the issue of compensation.  Now, the Commissioners will be hearing claims for compensation as well.  Although compensation cases will still be handled separately from project approvals and Right of Entry applications, it may be that the experience of the Commissioners in compensation arbitrations will carry over into their dealings with pipeline landowners in project applications and Right of Entry applications, and vice versa.  The Commissioners may gain a better understanding than the members of the NEB had as to whether project impacts on landowners being considered at the project approval stage should be addressed through additional project mitigation measures or can adequately addressed through compensation. 

The Commission’s responsibility for pipeline landowner compensation may also make the process more accessible for landowners.  Under the NEB Act, landowners had to write to the Minister of Natural Resources for Canada and request that an arbitration committee be formed to determine compensation.  An arbitration committee would then be created to hear the specific case, assuming the Minister agreed that the landowner’s claim for compensation was covered by the NEB Act.  The CER Commission will be a more permanent and consistent body, perhaps with a new standardized application process and publicly-accessible decisions.  Access to decisions made by the Pipeline Arbitration Committees under the NEB Act has been severely restricted, meaning that landowners have had limited ability to rely upon past compensation decisions in their dealings with pipeline companies.  With a new process and enhanced access to past decisions, landowners would be in a better position to contest pipeline compensation through arbitration where necessary.

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