NEB introduces Administrative Monetary Penalties to landowners

The National Energy Board ("NEB") has issued a new publication called "Administrative Monetary Penalties: Information for Landowners".  Among the information provided by the NEB is the following:

• How did Administrative Monetary Penalties ("AMPs") come to be?  They were created in July, 2012 as part of the Government's omnibus budget bill;
• If an AMP is issued to a landowner, the NEB may post the landowner's name on its website;
• If an AMP is issued to a landowner by the NEB, the landowner may ask the NEB to review its own decision (but, although it is possible for a landowner to ask the Court for a judicial review of the NEB's decision, there is no appeal available where an AMP has been issued).

Landowners are now at risk of being charged AMPs for violations of the NEB Act, including carrying out certain farming activities without pipeline company approval.  Daily penalties range from $250 to a maximum of $25,000 per violation for individuals.  Daily penalties range from $1000 to a maximum of $100,000 per violation for corporations.

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.

NEB decides that Trans Mountain - Burnaby dispute raises constitutional question

About a month ago, I posted about a fight going on before the National Energy Board between Trans Mountain Pipeline (Kinder Morgan) and the City of Burnaby with respect to property access for the proposed Trans Mountain Pipeline Expansion Project.  At that time, the NEB sided with Trans Mountain in rejecting a request by Burnaby for answers to constitutional questions including whether a company's right to survey under Section 73 of the National Energy Board Act (NEB Act) could displace a municipality's by-laws.  The NEB said that Trans Mountain had not made any application for an order requiring Burnaby to allow access to City lands. 

My guess a month ago was that Trans Mountain would have to bring an application for access, and it has.  Now the NEB says that the constitutional question must be answered and has ordered that Trans Mountain provide the Notice of a Constitutional Question to be served on the attorneys-general of Canada and the provinces and territories.  The decision can be accessed at: Ruling No. 32.

Although the NEB continues to maintain its interpretation of Section 73 (i.e. that companies have a right to enter upon lands and complete surveys and examinations), it explains why the Burnaby situation raises a constitutional question:

The Board accepts that it has the authority to consider constitutional questions as they relate to its enabling legislation, pursuant to section 12. The Board can refuse to apply provisions within its enabling legislation if the Board determines that those provisions are contrary to constitutional law. However, this is not the relief requested by Trans Mountain from the Board, nor has Burnaby argued in this instance that the provisions of the NEB Act are unconstitutional.

While the draft order proposed by Trans Mountain does not specifically request that the Board order Burnaby to stop enforcing its by-laws, it is clear from the above quote that this is the desired effect of such an order. This may require the Board to find, either directly or indirectly, that, on the facts before it, legislation or by-laws enacted by another level of government are inapplicable to Trans Mountain and that, consequently, that government should be forbidden by the Board to take any actions to enforce those laws. In the Board’s view, this clearly raises a constitutional question.

This is a case to keep your eyes on.  Should NEB-regulated pipeline companies have a right to run roughshod over pre-existing municipal by-laws?

City of Burnaby challenges NEB on access rights of companies for pre-approval project work - NEB sides with company

The National Energy Board (NEB) is considering an application by Trans Mountain Pipeline ULC (Kinder Morgan) to access lands owned by or within the authority of the City of Burnaby for preliminary work related to the proposed Trans Mountain Expansion Project.  The work includes land surveying and related studies that Trans Mountain wishes to conduct in anticipation of the eventual approval of its project.  In particuar, the work relates to a new proposed pipeline route that was not inclued in Trans Mountain's original application for approval to the NEB. 

Burnaby has so far delayed in deciding on Trans Mountain's request for access over outstanding concerns about environmental protection, environmental remediation, safety and inadequate notice to owners.  A number of properties affected are located in conservation areas under the authority of the City, and the activities that may be carried out on lands dedicated for park and recreation use are extremely limited.  In other words, the proposed access and use of the lands being sought by Trans Mountain are in conflict with municipal by-laws.

Trans Mountain applied for access under Section 73(a) of the NEB Act, which sets out that the powers of a "company" include the power to enter onto land "lying in the intended route of its pipeline, and make surveys, examinations or other necessary arrangements on the land for fixing the site of the pipeline."  In past instances involving private landowners, the NEB has readily granted access to pipeline companies in spite of landowner objections and without the company having served a notice under Section 87 of the NEB Act.  Section 87 requires that a company serve a notice to landowners where the company requires their land for a pipeline.  The notice then provides protection to the landowner for any costs incurred in dealing with the proposed pipeline if the project is later withdrawn. 

Not surprisingly, the NEB has also ruled that the company can serve the Section 87 notice whenever it wants - there is no obligation on it to serve the notice prior to entering on lands pursuant to Section 83(a) even though the company obviously knows by that point that it "may require" the lands in question.

Burnaby challenged the NEB on Section 83(a) on a different basis.  First, Burnaby questioned whether a company may even apply for access under Section 83(a), arguing that the section does not provide for making such an application.  Second, Burnaby argued that Section 73 does not override provincial law or muncipal by-laws.  Burnaby submitted, "There is room for both the operation of Section 73(a) of the NEB Act and Burnaby's by-laws, if access to Burnaby lands is granted subject to Burnaby reviewing the Request and making a determination. Trans Mountain, for instance, would still be able to access the land to survey and examine, even if such access was subject to conditions imposed by Burnaby to protect the purpose for which the property was reserved [i.e. as park or conservation land], pursuant to its by-laws."

Burnaby also argued that Section 73(a) does not authorize the intentional disturbance of land as proposed by Trans Mountain, including the installation of infrastructure or facilities. 

A notice of constitutional question was filed with the NEB and the Attorneys General of Canada and the provinces and territories.  The specific issues raised were:

• Section 73(a) of the NEB Act does not empower the NEB to make orders that override provincial and municipal jurisdiction pursuant to Section 92(8) of the Constitution Act, 1867; and,
• In so far as Section 73(a) of the NEB Act purports to empower a company to enter land, Section 73(a) does not override municipal jurisdiction or by-laws enacted pursuant to the Community Charter, S.B.C. 2003, c. 26 and the Municipal Act, S.B.C. 1958, c. 32, as amended.  Further, or in the alternative, to the extent that they are able, Section 73(a) of the NEB Act and by-laws enacted pursuant to the Community Charter and the Municipal Act, as amended, must operate concurrently.

In a ruling made on August 19, the NEB rejected the submissions made by Burnaby.  The NEB ruled that, pursuant to Section 73(a), Trans Mountain has the power to enter into and on Burnaby land without Burnaby's agreement and Trans Mountain does not require a temporary access order for this purpose.  The NEB says that the Trans Mountain application was not one requesting temporary access; the NEB says the application was one only requesting confirmation of Trans Mountain's rights under the Act, which the NEB has now given.

On that basis, the NEB also found that the Notice of Constitutional Question was misdirected, saying that Trans Mountain did not apply for access.  The NEB added that it did not find that "co-operative federalism" should apply to or influence the powers of Trans Mountain under Section 73(a) of the NEB Act.

Since this decision was made, Burnaby's mayor has said that the City will continue to enforce its by-laws prohibiting access to Burnaby mountain.  We can speculate on what will happen if the City continues to hold out against Trans Mountain.  Trans Mountain would likely have to apply to the NEB for an access order (the application the NEB says Trans Mountain didn't already make).  Assuming the order would be granted, Burnaby could appeal the decision in court.  It would be helpful to have some judicial consideration of the NEB's interpretation of Section 83.  Individual landowners are generally in no position to fight this issue - the City of Burnaby may be in that position.

Shippers complain: Does Enbridge have enough insurance?

On May 9, 2011, Enbridge Pipelines (NW) Inc. discovered an oil release near Willowlake Creek, NWT from its Norman Wells Pipeline.  Between 750 and 1,500 barrels (between 119,243 L and 238,485 L) of oil were released.  Enbridge charged repair and clean up costs arising from the spill to its shippers on the pipeline.  One of the shippers, ISH, contacted Enbridge to enquire why insurance coverage on the pipeline was not used to cover the spill costs.  Enbridge did not provide a response.

ISH has now brought a complaint before the National Energy Board (NEB) asking the NEB to compel Enbridge to explain why the spill costs were not paid by insurance and to determine whether Enbridge failed to comply with certain sections of the NEB Act.  In its books, Enbridge designated most of the spill costs as standard costs of operating the pipeline. 

ISH has noted that, at the time of the Norman Wells clean-up, Enbridge may have already exhausted its insurance coverage in dealing with the Line 6B rupture in Marshall, MI.  ISH says that it is "concerned that ENW's insurance coverage, under the comprehensive insurance coverage, had been exhausted at the time of the Pipeline leak, and that ISH, and the other shippers on the Pipeline, were accordingly denied the benefits of insurance coverage."  ISH raises questions about the cross-subsidization of pipelines and its effect on shippers: "exhaustion of insurance by ENW's affiliated entities should not entitle collection of Spill Costs from its shippers, while such Spill Costs would have otherwise been covered by insurance."

Read the complaint at: Letter from ISH to NEB re Enbridge Pipelines (NW) Inc. 2011 Willowlake Pipeline Spill Operating Costs Complaint.

Changes coming to the NEB Act in the Omnibus Budget Bill C-38

Here are a few of the changes coming to the NEB Act under Bill C-38, the omnibus "budget" bill:

• The Chair of the NEB can issue directives to the members of the NEB hearing any application "regarding the manner in which they are to do so";
• If the Chair is of the opinion that a time limit imposed on the hearing of an application is not going to be met, the Chair can change the composition of the panel or decide how to apply new Section 55.2 of the NEB Act (i.e. deciding to limit the ability to make representations to the Board):

"On an application for a certificate, the Board shall consider the representations of any person who, in the Board's opinion, is directly affected by the granting or refusing of the application, and it may consider the representations of any person who, in its opinion, has relevant information or expertise.  A decision of the Board as to whether it will consider the representations of any person is conclusive.";

•  All applications and proceedings before the Board are to be dealt with as expeditiously as the circumstances and considerations of fairness permit, but, in any case, within the time limit provided for in the Act;
• For Certificates of Public Convenience and Necessity under Section 52 of the NEB Act, the Board must submit a report and recommendation on an application within 15 months of the date on which a complete application has been submitted;
• Once the report has been submitted, Cabinet may direct the Board to issue or refuse a certificate, and must provide reasons for the decision in its order;
• The Board must make an order on a Section 58 exemption application within 15 months of receipt of a complete application
• Added to Section 112 (the control zone and crossing section) is a new suite of direct penalties for anyone contravening Section 112(1) (the requirement for leave from the Board to work within 30 metres of a pipeline easement - the 30 metre control zone) or Section 112(2) (the requirement for leave from the pipeline company for permission to cross the pipeline with a vehicle or mobile equipment): on summary conviction, a fine of up to $100,000 and/or imprisonment up to 1 year; on conviction on indictment, a fine of up to $1,000,000 and/or imprisonment up to 5 years.

One can definitely question how the last change relates to "Jobs, Growth and Long-term Prosperity", which is the "short title" for the Bill.  Pipeline landowners need to be aware that a failure to obtain the consent required under Sections 112(1) and 112(2) of the NEB Act (not just failure to comply with an order made by the NEB or an inspector resulting from non-compliance with those sections) will constitute a federal offence subject to prosecution under the Criminal Code.

Quebec Commission orders pipeline depth at 1.6 m or more than 5 feet

In its decision granting authorization to Gaz Metro for the expansion of its gas distribution pipeline facilities, the Commission de Protection du Territoire Agricole du Quebec (Agricultural Land Protection Commission) is requiring that the pipeline be installed at a depth of 1.6 metres (or more than 5 feet) through cultivated land.  The Commission noted that it requires a minimum depth of cover of 1.2 metres on private property, but in this case 1.6 metres was warranted.  The Commission ruled that Gaz Metro would have to be notified of any agricultural activity conducted to a depth of more than 60 centimetres. 

Note that Section 112 of the NEB Act requires a landowner to obtain permission from the pipeline company for any activities at a depth of more than 30 centimetres (or 1 foot).  The difference is depth of cover.  Under NEB regulation, pipelines need only be installed at a minimum depth of 2 feet as set out in the applicable CSA standard. 

If pipelines had to be installed at 1.6 metres' depth, would a 30 centimetre restriction be necessary?

Read the Commission decision (in French) at: Société en commandite Gaz Métro (Re).