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

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

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.

Enbridge wants land to build replacement pipeline; Landowner refuses because no construction agreement in place; NEB gives Enbridge right to use land; Enbridge makes a huge mess; NEB issues stop work order - Why was Right of Entry granted in the first place?

The National Energy Board (NEB) has recently issued a stop work and compliance order to Enbridge Pipelines Inc. in connection with Enbridge's Line 3 Replacement project on a Manitoba farm property.  The Line 3 project is similar to the Line 6 replacements that took place in Michigan following the Marshall, MI rupture a few years ago - Enbridge leaves a rotting pipeline in place and takes more land to build a new line nearby. 

In this case, Enbridge was not able to obtain the land it needed from the landowner by agreement.  Enbridge then turned to the NEB for the right to take the land it needed for its new pipeline.  In fact, Enbridge appears to have made 25 applications for right of entry to the NEB, all of which were granted in spite of objections by many affected landowners.  The bases for the landowner objections included the fact that Enbridge had failed to negotiate a construction agreement with the landowners that would protect the integrity of the lands affected by the project.

The result?  A complete mess has been made of at least one of the properties involved in the project and it remains to be seen whether the NEB's order will make any difference for future projects.  Will the NEB rethink its relationship with companies like Enbridge?  Will the NEB be as quick to grant land rights to pipeline companies where they have failed to agree on environmental protection measures with landowners? 

Enbridge plans to twin 345 km Athabasca oil pipeline

Enbridge Athabasca has announced its proposal to develop a new crude oil pipeline project called the Athabasca Pipeline Twinning Project in response to increased oil production in the Kirby Lake area in Alberta.  Enbridge says that the pipeline will "generally follow" the existing Athabasca Pipeline right-of-way.  Two new pump stations will also be added.  Enbridge anticipates construction to begin in the winter of 2013/2014 and in-service by early 2015.

NEB takes away Alberta landowner's contractual right to removal of pipeline

The National Energy Board ("NEB") has granted Nova Gas Transmission Ltd. ("NOVA") a Right of Entry order allowing it to continue the operation of its pipeline on lands owned by Albertan Randolph Hill.  Hill purchased the property from a railway company which had negotiated with NOVA and its predecessors a favourable agreement that allowed the company to require removal of the pipeline on notice.  NOVA went to court to argue that Hill was not assigned rights such as the right to require removal when he purchased the land, but the Court disagreed.  Hill issued the notice to NOVA, and NOVA went to the NEB to ask it to intervene and prevent Hill from exercising the contractual right to require removal.  Previously, the pipeline was regulated by the province of Alberta, but was recently transferred to NEB regulation by a decision of the NEB.

The terms of the Right of Entry order significantly expand NOVA's rights over the land beyond what had been agreed upon previously in contract.  This decision of the NEB confirms its willingness to override the terms of validly executed contracts between pipeline companies and landowners.  The interesting question arising out of the decision will be: what was the contract worth?  Mr. Hill is entitled to be compensated for the rights taken in the Right of Entry order.  What was his right to require removal of the pipeline worth?  What was his right to compensation under the contract worth?

Read the Board's decision and the RoE order at: NOVA Ferrier South Lateral.

What happens when a landowner actually has the upper hand?

This question may be answered by the National Energy Board in response to an application made by NOVA Gas Transmission Ltd. (NOVA) for a Right of Entry Order. A NOVA landowner, Randolph Allan Hill, purchased land with the NOVA pipeline in place from CP Rail. CP Rail, like many other railways and large industrial landowners, had in place a "landowner-friendly" crossing agreement with NOVA which provided the landowner with a right to terminate the agreement on notice and require the removal of the pipeline.

In a December 2008 hearing before the Alberta Court of Queen's Bench, NOVA tried unsuccessfully to argue that Hill, although he had purchased the land from CP Rail, was not entitled to benefit from the crossing agreement. The Court disagreed in its decision dated March 6, 2009. Subsequent to that decision, Hill served notice on NOVA that he wanted the pipeline out of the ground. NOVA has now asked the NEB to grant an order allowing it to leave the line in place, in spite of the crossing agreement.

Not surprisingly, Hill has objected to the Right of Entry application and relies on the terms of the agreement that he purchaed from CP Rail.

NEB filings related to this case can be found at: https://www.neb-one.gc.ca/ll-eng/livelink.exe?func=ll&objId=586898&objAction=browse