Enbridge files Line 9 engineering assessment

Enbridge has filed an engineering assessment of its Line 9 oil pipeline with the National Energy Board (NEB) as part of an application for approval of a flow reversal.  The assessment addresses risks of internal and external pipeline corrosion, stress corrosion cracking and mechanical damage to the pipeline and provides information obtained from recent investigative digs and associated testing.  Read the assessment at: ENGINEERING ASSESSMENT FOR LINE 9 REVERSAL PHASE 1.

Ontario Wildlife Damage Compensation Program

OMAFRA has released its Ontario Wildlife Damage Compensation Program Guidelines as part of the joint Federal-Provincial Growing Forward program.  The program provides for compensation for damage to livestock and poultry by "wildlife", which is defined as "undomesticated animals as designated by the Minister in Schedule "D" in this Program Guideline".  The list includes coyotes, wolves, bears, foxes, cougars, eagles, crows, turkey vultures, raccoons, etc.

The program has been introduced through changes to the Livestock, Poultry and Honey Bee Protection Act, which has now been renamed the Protection of Livestock and Poultry from Dogs Act.  Although the Act applies to damage caused to livestock and poultry by wildlife generally, its title refers to dogs specifically because the Act addresses damage caused by dogs in some detail, including certain rights to kill dogs who have caused or threaten to cause damage to livestock or poultry.  The Act also imposes an obligation on the owner of a dog who has killed or injured livestock or poultry to destroy the dog or cause it to be destroyed within 48 hours of acquiring knowledge of the killing or injury.

The changes to the Act were publicized by OMAFRA on the Environmental Bill of Rights Registry and received some 244 comments representing a wide range of points of view, many of which can be viewed at: EBR Comments. 

Hearsay evidence not enough to establish prescriptive easement

The Ontario Superior Court of Justice recently ruled against a landowner seeking a prescriptive easement over property owned by the Township of Guelph/Eramosa for lack of evidence.  The applicant, 1718351 Ontario Inc., had owned its property for only 4 years.  The establishment of an easement by prescription (the passage of time) required evidence of use of the land in question for a period of no less than 20 years.  The applicant relied upon statutory declarations that had been registered on title by previous owners which purported to establish the use of the Township property by the previous owners of the applicant's lands.  The Township objected to the admission of this evidence on the basis that it is hearsay (out of court statements tendered for the truth of their contents - i.e. tendered to show that it is true that the previous owners made use of the Township property).

Hearsay evidence may be admissible in certain circumstances if it falls within a traditional exception to the hearsay rule or if it meets the tests of reliability and necessity (the "principled approach").  Mr. Justice Hourigan found that the proposed evidence did not fall within any established exception and did not meet either of the tests of reliability or necessity:

Turning first to the issue of necessity, there was nothing in the record before me indicating the current whereabouts of the individuals who executed the statutory declarations. Counsel asked me to assume that given their likely ages at the time of executing the documents that the declarants are deceased. However, there is no evidence before me to make such an assumption.  Nor was there any evidence of even the most cursory efforts to locate the declarants.  Moreover, there was no explanation proffered regarding why Ms Tomlinson could not have sworn an affidavit. I conclude, therefore, that the applicant has not established necessity.

The applicant has also not met its onus of establishing the reliability of the statements in issue. There is no explanation provided as to why the statutory declarations were completed in the first place, nor is there a description of the context in which they were made.  We do know that they were executed some years after the time when the owner of the Applicant Parcel and the Police Village of Rockwood could not reach an agreement on an easement. This timing makes their reliability more suspect given that they appear to have been made during an on-going negotiation between the parties. Similarly, the context in which the statement was made by Ms Tomlinson to Mr. Clarke is nowhere described.

Given the lack of supporting evidence, the application was dismissed.  Read the decision at: 1718351 Ontario v. Township of Guelph/Eramosa.

OMB declines to discount pipeline easement payment from highway expansion expropriation compensation

On April 11, 1996, the Ontario government (the "Respondent") expropriated 8.391 acres (3.396 ha) out of lands owned by the Estate of Alexander Shypka and Julia Shypka (the "Claimants") to be incorporated into the right-of-way for the 407 highway near Milton. The effect of the expropriation was to divide the Claimants’ lands leaving a 23.392 acre (9.473 ha) parcel on the east side of the highway fronting onto the Ninth Line and a 7.532 acre (3.05 ha) landlocked parcel on the west side of the highway, which is also subject to Consumer Gas and Trans Canada Pipeline easements.  Both before and after the partial taking, the land had been used for agricultural purposes.

In its decision on compensation, the Ontario Municipal Board ("OMB") set out the following general principles of compensation:

The Expropriations Act is a remedial statute enacted for the specific purpose of adequately and fully compensating a land owner whose lands are taken to serve the public interest.
To take all or part of a person’s property constitutes a severe loss, and a significant interference with a citizen’s private property rights, and as such, the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected.

The Expropriations Act, being a remedial statute, must be given a broad and liberal interpretation, and should not be interpreted to deprive one of common law rights unless there is a specific provision in the Act stating so.

This is a presumption that whenever land is expropriated, compensation will be paid, and the Expropriations Act should be read in a broad and purposive way.

Section 13 (2) of the Expropriations Act sets out that the compensation payable shall be based upon one or more of the four heads of damages, three of which for this matter are relevant ; the market value of the land (13(2)(a)), damages for disturbance (13(2)(b)), and damages for injurious affection (13(2)(d)).

The first step in any expropriation is to determine the highest and best use of the expropriated property and the second step is to fix the compensation to be awarded to a Claimant based on such use.

The OMB also discussed the relevance of the TransCanada pipeline easement to the compensation. The Claimants and Transcanada Pipeline Limited had entered into an agreement dated May 29, 1998 in which a total of $53,000.00 was paid to them in 1998. The OMB could find no reason why an adjustment should be made to the amount of the compensation it ordered to be paid to reflect this amount. The pipeline in question is located in the westerly landlocked portion of the Claimants’ lands that the Respondent chose not to take in 1996. The amount paid had no reference to a market value calculation being made then. The Claimants reserved their rights to be paid for the value of that pipeline easement before the National Energy Board. The OMB saw no issue that the Claimants have been doubly compensated by the OMB’s award in this matter. There is a right to arbitration in the agreement, should a party to it wish to pursue the matter.

Read the decision at: Shypka v. Ontario.

Trespass Claim for Pesticide Drift

Click on the following link for an article from the official blog of the Association of American Law Schools - Agricultural Law Section about a significant pesticide drift ruling from the Minnesota Court of Appeals: Johnson et al. v. Paynesville Farmers Union Cooperative Oil Co.  The Johnsons, organic farmers, sued the PFUC over allegations that pesticide and herbicide spray had drifted onto their organic crops and caused crop damage (including the alleged loss of organic certification). 

PFUC applied for summary judgment to have the claim thrown out on the basis that there was no "trespass by particulate matter".  A lower court judge agreed with the PFUC, but the appeal court ruled that pesticide overspray could constitute an unlawful entry (trespass).  The AALS article notes that most jurisdictions now recognize agricultural chemical drift as sufficient grounds for a claim in trespass.

Court prepared to determine what is "normal farm practice"

Madam Justice Stewart of the Ontario Superior Court of Justice says the Court is prepared, in the case of Rausch v. Pickering (City), to decide whether raising wild boars constitutes a "normal farm practice" for the purpose of the Farming and Food Protection Act, 1998.  In a decision released June 28, she declined to strike out James Rausch's claim that enforcement by the City of Pickering under its Exotic Animal By-law was an abuse of process or malicious prosecution (and that entry onto his property for the purpose of enforcement was a trespass).  Rausch had amended his claim to include a pleading that his raising of wild boars is a "normal farm practice" and is exempt from the By-law (essentially asserting a new claim that the City was negligent in breaching the Farming and Food Protection Act, 1998).

Justice Stewart found that it was not plain and obvious that Rausch's claim was doomed to fail.  Also, she ruled that it was not necessary for the parties to go to the Normal Farm Practices Protection Board to have the issue decided.  The Court could make a determination under the Act for the purposes of the litigation - it would serve no goal of fairness or economy to refer the issue to the Board for preliminary determination, given how intertwined the issue was with the other issues to be determined by the Court.

Read the decision at: James Rausch v. Corporation of the City of Pickering.

Pipeline landowner who sold land for highway not in breach of Statutory Right-of-Way

Terasen Gas Inc. (now FortisBC Energy Inc.) has lost its attempt to draw one of its pipeline landowners into a legal battle with the City of Surrey.  The dispute between Terasen and Surrey relates to Surrey's project to widen a portion of the Fraser Highway.  The highway crosses a Terasen high-pressure gas pipeline, which will require upgrades to permit the widening. 

Terasen expects to be on the hook for at least part of the cost of the upgrades, but contends that the City of Surrey should be responsible.  In addition, as part of an ongoing court case, Terasen claimed damages from Angus Properties Ltd.  Terasen says that Angus, which agreed to sell certain lands to Surrey for the road widening project, breached the terms of the 1957 Statutory Right-of-Way ("SRW") that applied to the lands in favour of Terasen:

In its Amended Statement of Claim filed March 30, 2010, Terasen alleges that Angus was aware of, consented to and cooperated in Surrey’s conduct of the highway project on the Additional Lands, and that Angus was aware of Terasen’s position that the project would interfere with the safe and efficient operation of the pipeline. It says that Angus nevertheless entered into the Purchase Agreement and granted Surrey a licence to enter the Additional Lands to prepare the site, in breach of the SRW. It claims that Angus breached the SRW by permitting Surrey to proceed with the highway project. It says that Terasen has suffered damage as a result, including the pipeline upgrade costs.

Angus brought a motion for summary judgment to strike out Terasen's claim against it.  The Court allowed the motion, finding:

Terasen says that Angus breached the SRW simply by entering into the Purchase Agreement with Surrey, since that agreement removed Angus’s ability to prevent Surrey from doing work on the Additional Lands which would endanger the integrity of the pipeline.
Counsel for Terasen placed some reliance on Terasen v. Utzig, a case with very different circumstances from those here. Angus agreed to sell the Additional Lands to Surrey and to facilitate Surrey’s highway widening project by permitting it to enter the lands for preliminary preparatory work prior to transfer. It did not agree to permit, and there is no evidence that it ever permitted, activities that would reasonably be seen to endanger the pipeline. In contrast, that is what the defendant in Terasen v. Utzig was found to have done.

I agree with counsel for Angus that Terasen v. Utzig, and the other cases upon which Terasen relies, are distinguishable.

I further agree that, as a general proposition, it cannot be the case that the owner of land breaches a statutory right of way simply by granting an interest in the land to another party, unless the terms of the particular statutory right of way so prohibit. The SRW here does not prohibit sale or other transfer of interests in the land. [emphasis added]

I find that Angus did not breach the SRW by entering into the Purchase Agreement.

Did Angus breach the SRW by permitting Surrey to perform its work on the Additional Lands? Angus had granted Surrey a licence to “access, use and enter” the Additional Lands to facilitate “preliminary site preparation, pre-engineering and highway construction” and to “perform such tests as the City deems appropriate, including soil tests”. However, no work was done on the Additional Lands in connection with the highway widening project, by Surrey or any other party, until after the Consent Order of June 30, 2008 had been made. The work was done only after Terasen had prepared the pipeline so that it would not be endangered, and had given permission, in the Consent Order, for Surrey to proceed with the preloading.

Thus, when Surrey actually came onto the Additional Lands and performed the work, it was with Terasen’s consent and it was in circumstances in which the integrity of the pipeline was not endangered. Angus’s failure to prevent Surrey from doing the work, in these circumstances, did not in itself constitute a breach of the SRW.

I find that Angus did not breach the terms of the SRW either by entering into the Purchase Agreement or by failing to prevent Surrey from performing the work on the Additional Lands.

The Court found nothing wrong with Angus' agreement to sell its land to Surrey.  Implied in the Court's ruling, however, is that Angus may have been in breach of the SRW by allowing the preliminary work for the road widening to take place on its lands.  But for the consent for that work already granted to Surrey by Terasen, it is possible that the Court would not have granted the summary judgment motion, leaving the issue of whether or not Angus breached the SRW by allowing for the endangerment of the pipeline to be decided at trial.  That said, the Court found in any event that the damages sought by Terasen were not recoverable in any event because they did not "flow naturally from the breach" of contract alleged by Terasen:

The damages sought by Terasen do not flow naturally from the breach it alleges (Angus’s entering into the Purchase Agreement and removing its own ability to prevent Surrey from doing work on the Additional Lands). If Terasen in the end is found responsible for the costs of the pipeline upgrade, or for more of those costs than Terasen thinks it should bear, that will be a result of the legal framework governing pipeline operators and municipalities, and of the legal relationship between Terasen and Surrey, and not a result of Angus’s entering into the Purchase Agreement.

Read the decision at: Terasen Gas Inc. v. Surrey (City).

Joint Review Panel has asked Enbridge to provide preliminary abandonment plan for Northern Gateway project

The Joint Review Panel (NEB and CEAA) considering the application by Enbridge for the Northern Gateway pipeline project has requested the following information from the proponent on the issue of pipeline abandonment:

Request: a) Please provide a preliminary abandonment plan for the Northern
Gateway Project, including:

a.1) a description of what pipeline components would be removed,
reused or left in place and provide the rationale for doing so. Where site specific situations require special methodology, then details should be provided;

a.2) the reclamation objectives or principles to be applied to abandonment; and

a.3) sufficient information to demonstrate that abandonment of the project will return the right of way to a state comparable with the surrounding environment.

b) Regarding consultation on eventual abandonment with stakeholders including potentially affected landowners and aboriginal groups, and other authorities and agencies, provide:

b.1) a summary of the consultation that has occurred, and

b.2) the strategy and processes for future consultation as the abandonment plan is refined.

c) Provide an estimate in 2010 dollars of the total cost to abandon the system, using Base Case components (as described in reference iv), or other better information available to Northern Gateway. If information other than Base Case components is relied on, provide an explanation as to why that information was used.

d) Explain the source of revenue that Northern Gateway will use to fund this liability. If the source is shipper tolls, provide an estimate of the impact on revenue requirement.

More information on the Northern Gateway Project Joint Review Panel is available at: Review Panel.