CAEPLA Property Issues | NOVA

PROPERTY ISSUES | NOVA - INDUSTRY SPIN

Ottawa's National Energy Board (NEB), and the Pipeline Industry Knowingly Apply Spin So As To Mislead Thousands of Alberta Landowners

When the application to transfer the Nova gas pipeline system from Alberta’s regulatory control into the hands of Ottawa’s NEB, rather than acknowledge the clear implications upon landowners, the federal regulator and the pipeline industry applied spin, and in doing so, misled thousands of landowners about the implications that the shift would have upon them.

At the time, to clarify the issue in his own mind, one Alberta MP wrote to CAEPLA and to CEPA (Canadian Energy Pipeline Association) asking for answers to a number of very specific questions. CEPA is the big pipeline lobby group that represents the big pipeline companies in Canada. The answers the MP received are below.

CEPA's response is first, followed by CAEPLA’s comments.

The Impact of the NOVA Jurisdictional Shift Upon Landowners

Are there changes to crossing restrictions for landowners?
Will landowners be held liable for accidental damage to pipelines?
Will there be any changes to landowner compensation?
Will landowners be liable for abandoned pipelines if the pipeline undergoes a jurisdictional shift?
What about costs associated with any legal burden?
Is the control zone wider or different under federal regulation? What does this mean if my neighbor has a pipeline adjacent to my property?
Are there other federally regulated pipelines in Alberta?

Crossing Restrictions

MP’s Question: Are there changes to crossing restrictions for landowners?

CEPA Answer: Under both the provincial and federal regulation, normal farming practices, to a depth of 30 cm, over the entire pipeline right of way are permitted. (The 30 cm depth restriction is a federal regulation.)

For crossings other than normal farming equipment, (e.g. construction equipment or a drilling rig), it has always been the case that permissions are required. Under federal regulation, a response is required within ten working days (as opposed to twenty one under the provincial regulation.)
It is important to note that the reason permissions are required is to ensure the safety of the landowner, the public, the environment and also the integrity of the pipeline.

CAEPLA Response #1: There is a vast difference between provincial and federal regulations on crossing restrictions. Alberta recognizes, in statute, the importance of agriculture and provides farmers with a significant measure of operational flexibility. The NEB Act makes no specific provision for agriculture or agricultural operations. For example, under provincial legislation, the working depth is 45 centimetres (18 inches). Under federal jurisdiction, it is only 30 centimetres, or slightly less than 12 inches.

Provincial jurisdiction specifically exempts landowners from requiring company permission before crossing buried pipelines with vehicles or farm equipment. In contrast, Section 112 of the National Energy Board Act requires that a landowner request permission of the pipeline company for ALL mobile equipment before crossing. There is no exemption for farm equipment.

Additionally, no limit has ever been established regarding how long a pipeline company can take to respond to a request for permission to cross. And, there is no defined consequence for the pipeline company when it either refuses, or neglects, to respond to such a request in a timely fashion.

CAEPLA Response #2: Absolutely there are changes to crossing restrictions! Alberta Pipeline Regulations section 66 specifically exempts landowners from requiring company permission to cross pipelines with vehicles or equipment for farming operations. Put that up against Section 112 of the National Energy Board Act, which clearly indicates that every "person" needs company permission to cross:

...no person shall operate a vehicle or mobile equipment across a pipeline unless leave is first obtained from the company or the vehicle or mobile equipment is operated within the travelled portion of a highway or public road.

With respect to cultivation practices, under Alberta rules a "ground disturbance” does not include any cultivation that does not exceed 45 centimetres (18 inches) in depth. Under the NEB Act and regulations, permission from the pipeline company must be obtained for any cultivation that exceeds 30 centimetres (roughly 11.8 inches) in depth.

If any person in the National Energy Board system wants to cultivate below 12 inches anywhere within the control zone, regulations require that consent from the pipeline company is obtained, unless that individual gets consent from the NEB.

The individual who seeks consent, is required to give three days working notice, and then the pipeline company has up to 10 working days to respond. There is, in this setup, the possibility of a delay of up to 13 working days, not including weekends. And what farmer doesn't work weekends?

There's also Section 9 of the Pipeline Crossing Regulations Part I, which provides that a company like TransCanada could prohibit cultivation of any sort for up to three working days on the entire farm, not just in the control zone. And all of these restrictions will commence the moment regulatory jurisdiction is transferred. The restrictions will apply to anyone falling within the control zone as defined by the National Energy Board Act, whether it's a landowner with a TransCanada right-of-way or a neighbouring landowner who has no TransCanada right-of-way. It's not just the thousands of agricultural landowners who have the Alberta System pipelines that will be affected; it's also their neighbours, to the extent that they fall within the control zone. And there can be substantial penalties for non-compliance with the control zone restrictions.

If a landowner happens to disagree with what TransCanada is telling them and how they're being restricted in their operations in the control zone and they don't comply with the permission requirements, then they become subject under section 49 of the Act to the National Energy Board's inspection. And non-cooperation with the inspection or non-compliance with inspection orders can result, on indictment, in fines of up to $1 million or imprisonment for up to five years. And, of course, this is a federal Act, so we're dealing with Criminal Code charges when it comes to prosecution.

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Liability

MP’s Question: Will landowners be held liable for accidental damage to a pipeline?

CEPA Answer: No. Most, (but not all), existing easement agreements protect landowners from liability for pipeline damages which may result from normal farming operations. This will not change.

However, it should be noted that it has never been the practice of CEPA member companies to hold landowners liable for accidental damage to a pipeline and we will not be changing this practice.

CAEPLA Response #1: Regulatory liability is not decided by a private citizen or by a pipeline company. Liability is based on applicable law. While some recent easement agreements may provide an indemnity for landowners, easement agreements made before 1983 do not.

It is not true that existing easement agreements protect landowners from liability that may result from normal farming practices. Given the recent decision of the Ontario Court of Appeal in CAPLA v. Enbridge and TransCanada, landowners don't know whether the words in their easement agreements have any effect in the face of new legislation and regulations designed to protect the interests of pipeline companies and their return on capital.

The NEB Act at Section 112 (2) states that we have to ask permission to cross the pipeline with mobile equipment, and the Act provides not a single exemption for normal farming practices. What it all means is that in a court of law, if a landowner does not have written permission to cross a pipeline, and that pipeline collapses or is otherwise damaged, a legitimate basis for landowner liability exists. That one or more pipeline company representatives in the midst of applying for a jurisdictional transfer is saying, "trust us on this one, we know what the law says but we would never go there," is hardly reassuring.

Some time ago, the National Energy Board requested that CEPA consult with landowners to come up with a blanket exemption for farm equipment to cross pipelines. CEPA's written response was to say that they would not fulfill the request, since it is a site specific issue.

In other words, this means if a buried pipeline is too shallow, too corroded, too old, or isn't buried deep enough, the pipeline operator can deny permission. Is this for the safety of the farmer, or is it so pipeline companies don't have to upgrade aging infrastructure?

CAEPLA Response #2: This is a situation where the pipeline operators are saying, "regardless of what the Act might say, there is no landowner liability—take our word for it!" Yet if section 112 of the Act establishes the fact that landowners are obligated to seek permission prior to crossing, how can the operators then construe the situation to declare that there will never be a consequence if and when a landowner might infringe the Act?

In its evidence presented at the Calgary hearing, TransCanada said that it permits "normal farming operations" with "normal farm equipment" over its pipelines. Our question is who decides what constitutes "normal?" And is what's normal for one farmer automatically considered normal for another? If it is TransCanada who decides; then our farming operations are at risk of being prohibited by the pipeline company. If the pipelines are safe, farmers should have a blanket permission to cross as is provided in the existing Alberta regulations. What is occurring here is that there is a duty of care, as well as an ongoing risk, that is being imposed on landowners by the pipeline companies, and that obligation exists in law regardless of the words the pipeline companies might speak.

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Compensation

MP’s Question: Will there be any changes to landowner compensation?

CEPA Answer: No. A pipeline operator is contractually bound to the payment terms of their agreement with the landowner. This obligation remains unchanged, regardless of the jurisdiction of the pipeline.

CAEPLA Response: The above statement by CEPA demonstrates why landowners on the Foothills Pipeline were able to maintain their ongoing annual payments that had been established under the Northern Pipelines Act, after the Foothills line was transferred to NEB jurisdiction.

Contrary to what certain Alberta government MLAs have been claiming, a transfer of jurisdiction will mean that for future pipelines constructed by TransCanada adjacent to existing NOVA Gas pipelines, Alberta landowners will not be eligible to receive annual payments of the sort that have been established in a recent ruling by Alberta's own Surface Rights Board. (These are perpetual and ongoing annual payments due to the ongoing impact of pipeline operations.)

Some Alberta government MLAs are telling landowners that the NEB legislation on this issue is similar to the Alberta legislation. At a casual glance, to an uninformed eye, things may appear that way, but in this case what certain MLAs think a piece of federal legislation is supposed to mean, and what a federal judge has already determined the legislation to mean, are two different things. Time and again, when it comes to ongoing annual compensation for landowners affected by NEB regulated pipelines, the federal arbitration committee that makes decisions about such things, has ruled that Alberta-style annual payments are not available under the federal rules. And the federal courts have backed this assertion, in legal cases such as Bue v. Alliance Pipelines. For information about Bue v. Alliance Pipelines see this site.

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Abandonment

MP’s Question: Will landowners be liable for abandoned pipelines if the pipeline undergoes a jurisdictional shift?

CEPA Answer: No. Regulatory approval is required regardless of the jurisdiction of the pipeline. As well, abandonment plans are negotiated between the landowner and the pipeline company. It is the intention of CEPA member companies that the burden of abandonment never falls to the landowner.

CAEPLA Response #1: The industry is absolutely not telling the truth here. Under the Alberta rules landowners have a regulatory remedy with respect of future abandonment costs and liabilities. With respect to abandonment, the Alberta Act only imposes liabilities on the pipeline companies, not on the landowner.

Under existing Ottawa-based rules, the minute a pipeline is declared as abandoned, the NEB no longer has any jurisdiction. A situation is created in which no one has liability but the landowner, who at the point of abandonment becomes the sole owner of the worn out pipes. Only the landowner is responsible for subsequent costs.

CAEPLA Response #2: Definitely yes, landowners are responsible and legally liable. Here's why: It's clear that the provisions of the Alberta legislation, which currently applies to all NOVA pipelines within its jurisdiction, provides landowners with a regulatory remedy in respect of future abandonment costs. Liabilities are only imposed on provincial licensees. This would not include TCPL if the NOVA system has been transferred to federal jurisdiction.

Whereas under the Alberta rules a company remains responsible for its pipeline after abandonment, and this obligation may be enforced by the provincial regulator, the NEB loses its jurisdiction over a pipeline once it makes an abandonment order in favour of a pipeline company——following a process in which landowners have no access to costs or funding to participate.

In other words, upon abandonment the NEB no longer has any say in the matter, and the landowner thus owns the pipeline that has been abandoned. There are no existing legal or regulatory provisions for landowner non-liability in this matter.

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Legal Burden Costs

MP's Question: What about costs associated with any legal burden?

CEPA Answer: These disputes are managed on a case by case basis between the individual pipeline company and the landowner(s), however, CEPA's [Canadian Energy Pipeline Association] member companies do not believe that landowners should be held liable for any cost associated with pipeline abandonment.

CAEPLA Response #1: If the NEB approves abandonment in place it no longer has jurisdiction. The landowner is responsible for the pipeline. Without cathodic protection or maintenance, abandoned lines will corrode and collapse. Imagine a large diameter pipeline collapsing when a farmer drives across his field with a fully loaded combine or truck.

Additionally, an abandoned pipeline will act as a water and/or contamination conduit. Perhaps CEPA members say they do not think landowners should carry liability, but under the NEB Act that is exactly what happens. If what the law says and what a pipeline company says differ, inside a courtroom the law will trump the pipeline company every single time.

CAEPLA Response #2: Under Alberta regulation, until a pipeline has been removed from the ground, the landowner will always be able to go back to the regulator in the event there is a problem with the pipeline, and recover the cost of having to do so. Under NEB regulation, once the NEB signs off on the abandonment of a pipeline, the NEB loses jurisdiction and the landowner will have no one to turn to. The NEB says landowners can always take part in abandonment hearings to decide how abandonment will take place. However, landowners under the NEB provisions must pay all their own costs of participating in these increasingly expensive, and at times complex, quasi-judicial hearings. Under Alberta rules, landowners may readily receive funding for reasonable costs, including advance funding to prepare for an upcoming hearing.

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Control Zone

MP's Question: Is the [control] zone wider or different under federal regulation? What does this mean if my neighbour has a pipeline adjacent to my property?

CEPA Answer: It is true that the NEB safety zone (federal regulation) is measured differently than the provincially regulated safety zone. The safety zone is exactly the same size in each case; 30 metres. The NEB measures it from the edge of the pipeline versus the ERCB measuring it from the centre of the pipeline. In each case however, normal farming practices are not affected by the pipeline safety zone. This zone is in effect for the safety of the landowner.

Federal regulations do stipulate that "excavating, drilling, blasting or digging deeper than 30 cm is not allowed without permission of the pipeline company to prevent accidental damage to the pipe."

This differs from the provincial regulation that cultivation can occur to a depth of 45 cm within the control or safety zone. It is important to recognize that this restriction is for the safety of the landowners/farmers. The intention is not to impact normal farming practices.

It is very important, however, for all landowners to "Call Before You Dig" to ensure the integrity of all buried facilities as well as landowner and public safety.

CAEPLA Response #1: Contrary to what CEPA has stated above, an NEB regulated control zone is measured from the edge of the easement, not from the edge of the pipe. Under provincial rules it is measured from the centre of the pipe. It means if the pipeline were in a 60-foot corridor, under provincial regulations there would be control zone restrictions on 200 feet of land (30 meters, or roughly 100 feet, on either side of the pipe). Under the NEB rules, landowners will have an additional 60 feet of restrictions. The control zone will be 260 feet wide.

(As a sidebar issue, the very existence of, or need for, a controlled safety zone demonstrates that the pipelines themselves do not have adequate cover and are not buried deep enough.)

CEPA claims that the control zone does not affect normal farming practices, but then it says there must be depth restrictions in the zone. Under Alberta provincial rules, ripping, which is a common soil conditioning method in some areas of the province, can go to 18 inches (45 centimetres). Under the NEB rules it is restricted to 11.8 inches (30 centimetres), which means that soil ripping becomes unusable, despite the fact that it is an important farming practice.

With respect to the control zone, the NEB Act provides for penalties against individuals and corporations. On a summary conviction offence alone, a landowner could face a fine of up to $100,000 and one year's imprisonment. Under the Alberta legislation, a landowner would face only a fine of up to $5,000 with no risk of imprisonment except in default of payment. Additionally, a landowner who is in violation of the NEB Crossing Regulation is subject to inspections. The inspectors are empowered to order landowner compliance, and a violation of such an order constitutes an offence that carries a fine of up to $1,000,000 and imprisonment of up to five years. The prosecution is not under the NEB Act but rather, pursuant to the Criminal Code.

CAEPLA Response #2: The control zone is an area that the operator can control, and upon which it can restrict a farmer's activities. Under the proposed Ottawa-based rules, the control zone is much wider than it is under existing Alberta law.

Contrary to what has been stated by CEPA, the federal control zone is not the same size as the provincial control zone. CEPA is right when it says that the provincial control zone is 30 meters on each side of the pipe, measured from the centre of the pipe. However, CEPA is absolutely misrepresenting the truth when it says that the federal control zone is 30 meters from the edge of the pipe. The federally regulated control zone extends 30 meters on either side of the easement.

The federal control zone is measured from the edge of the easement, not from the edge of the pipe.
The NEB control zone is so much wider that some farmers who don't even have underground gas pipelines or related surface structures are going to discover that because of the proximity of their land to a pipeline that's buried at the edge of a neighbour's field, portions of their land will suddenly come within the jurisdiction of the new control zone.

This means the neighbour will not be able to excavate, drill a posthole, or cultivate deeper than 11.8 inches without getting permission from the pipeline company. It also means the neighbour could theoretically find himself, or herself, in a spat with an NEB inspector, and the consequence for violating the order of an NEB inspector could lead to prosecution under the Criminal Code with fines of up to $1 million plus five years in prison.

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Change in Regulation

MP's Question: Are there other federally regulated pipelines in Alberta?

CEPA Answer: Yes, there are a number of federally regulated pipelines that cross through or intersect parts of Alberta.

MP's Question: Is one jurisdiction better than the other? Say provincial better than federal?

CEPA Answer: No. Both provincial and federal regulations are set up to maintain the safety and integrity of the pipeline system. CEPA member companies do not have a choice as to which jurisdiction applies to their respective pipelines. Those decisions are "facts in law" and are determined by the relevant regulatory authority, (e.g. NEB, ERCB, etc.)

CAEPLA Response: From the perspective of the landowner, provincial jurisdiction is preferred every time. The Alberta legislation has been tried and tested over a period of many decades. Landowner interests are entrenched in law. There is provision for cost recovery if a legal conflict should arise.

Crossing restrictions, loss of annual payment provisions of the kind that now exist in Alberta, and unresolved policies on abandonment costs and liabilities makes the possibility of a shift to NEB regulations thoroughly odious to landowners. Add to this the complete absence of cost recovery for landowners at NEB hearings, and it is easy to see how landowners effectively end up being shut out of the process.

It is also important to note that as this application for jurisdictional transfer has unfolded, landowners have been deliberately ignored by the Alberta government, the applicant (TCPL), and the NEB itself has overlooked its own requirements that the applicant has an obligation to consult with individual landowners.

The NEB even posted information on its website that tells half stories and ignores the implications of a jurisdictional shift. For example, the NEB has stated that the assertion put forward by landowners with regard to the possibility of $1 million fines and up to five years in prison is a false claim. It is not a false claim. It is true that under the auspices of the NEB Act, the maximum penalty is one year in prison and a fine of $100,000, but it is also true that a landowner who violates the order of an NEB inspector is subject to criminal prosecution under the provisions of the Criminal Code, and in that context could be fined up to $1 million and spend five years in prison.
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By way of an endnote, to shed light on the attitude of TransCanada Nova on this issue, it is worth noting that at the NEB hearing in Calgary, TransCanada NOVA publicly stated that as far as it was concerned landowners didn't need to know anything about the way proposed changes would affect them until “after” the jurisdictional shift has already been approved. Obviously, the federal regulator, which suffers from an acute case of regulatory capture, agreed.

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Section 112 of the National Energy Board Act requires that a landowner request permission of the pipeline company for ALL mobile equipment before crossing. There is no exemption for farm equipment.