PROPERTY ISSUES | NOVA - HEARING EXCERPTS
What Alberta Landowners Lost When Ottawa's National Energy Board (NEB) Moved In, and Took Over Regulatory Control of the Alberta NOVA Gas Pipeline System
The following information is taken from the transcript of the National Energy Board hearing in Calgary, which addressed the issue of regulatory control over the Alberta Nova Gas Pipeline system. Even a casual read of the information demonstrates that Ottawa’s energy regulator knew exactly what it was taking away from Alberta landowners, and inordinately imposing upon them in terms of costs, liability, and duty of care, when it ruled that its own bureaucrats, rather than the Alberta government, should regulate the NOVA gas pipeline system.
Landowner Impact — Cultivation Restrictions Imposed on Landowners/Control Zone
— "(And) the moment there is a[n NEB] Board Certificate in place for the operation of the Alberta System, each and every landowner on the system will be subject to the National Energy Board Act 30-metre control zone and whatever restrictions that might bring with it. We looked at one specific example: Cultivation.
Whereas under the Alberta Pipeline Act and Regulation, no farmer must obtain company consent for cultivation down to a depth of 45 centimetres or 18 inches, and the Alberta Act specifically exempts that cultivation from being considered a ground disturbance. Under the National Energy Board Act Regime those same landowners would have to seek permission every time they wanted to cultivate below 30 centimetres or 12 inches, anywhere on the right-of-way -- anywhere on the right-of-way which could be, according to TransCanada's evidence, anywhere from 15 metres wide to over 30 metres wide and on an additional 30 metres on each side of the right-of-way."
— "And I used the example of cultivation with the panel because it's a fundamental component of farming -- cultivation -- but the National Energy Board Act control zone covers other operations as well, like simple excavations and construction, and to some extent so does the Alberta Regulation. But it's also important to remember that the Alberta Regulation measures the Alberta control zone from the centreline of the pipe rather than from the edge of the right-of- way, as does the National Energy Board system. And the reference for that is section 1(3) in the Alberta Pipeline Regulation. And that in itself can result in a significant increase in the amount of land on which activities are being restricted as a result of the presence of the pipeline. In the example that I discussed with the witness panel, a single pipe in a 20-metre wide easement, the increase in the controlled area under the NEB Act system as opposed to the Alberta Regulation would be 20 metres or an increase of 50 percent of the land outside the right-of-way that would be subject to restriction. And if the right-of-way were 30 metres wide, as it is in some cases in the Alberta System, the increase would be even greater."
— "If landowners in the National Energy Board system want to cultivate below 12 inches in the control zone, Part I of the Pipeline Crossing Regulations, section 6(b) says they need consent from the company, unless they get consent from the Board. Consent from the company, Section 6(1) of Part I requires that the landowner give three days working notice, and Part II, Section 6(1) provides that the company has up to 10 working days for the company to respond. There is, in this setup, the possibility of a delay of up to 13 working days, not including weekends – and I think that everyone can agree that farmers don't stop working on weekends because weather certainly doesn't allow them to stop working on weekends – and up to 13 working days of delay before they could undertake cultivation of a certain type or before other activities restricted by the regulations. And there's also Section 9 of the Pipeline Crossing Regulations Part I, that 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 TransCanada has a certificate to operate. The restrictions will apply to anyone falling within the 30-metre National Energy Board Act control zone, 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, it's also their neighbours, to the extent that they fall within the control zone."
"And there can be pretty substantial penalties for non-compliance with the control zone restrictions. The reference is section 51.1 in the National Energy Board Act. 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 noncooperation 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."
— “In order to mitigate these prejudices that will result from the transfer of jurisdiction, we submit that TransCanada should be required before a certificate is granted to carry out a detailed analysis of the changes in land use restrictions to result from the transfer, and to address the concerns of landowners and commit to mitigation measures. And if the Board is not prepared to impose that condition on TransCanada, then we would ask simply that it impose Draft Condition 4(b) from our proposed conditions at Exhibit C-l-lOc that TransCanada shall grant permission to Alberta System landowners to cultivate over the Alberta System pipelines to a depth of 45 centimetres, the same thing they're permitted to do now under the Alberta Regulations.”
Landowner Impact — Crossing Restrictions
— "We also talked about restrictions on crossing the pipeline with farm equipment. That simply doesn't exist in the Alberta Regulations. Albert Pipeline Regulations section 66 specifically exempts landowners from requiring company permission to cross pipelines with vehicles or equipment for farming operations. Contrast that with section 112(2) of the National Energy Board Act. It's clear landowners need company permission and this is different, I would submit, from the cultivation permission. It's different in that the Act and the Pipeline Crossing Regulations don't provide that the landowner in the alternative can go to the Board for permission.”
— "So there is no limitation on how long a company may take to respond to a landowner request for permission to cross its pipeline with farm equipment under the National Energy Board Act scenario. These are significant changes for farmers who to date have operated in a regulatory system that required no permission to drive their farm equipment over the pipelines for farming operations. Having to ask permission to cross a pipeline could result in operational delay of what could be an indeterminate period."
— "In order to mitigate this prejudice that will result from the transfer of jurisdiction, we submit that TransCanada should be required, before a certificate is granted, to carry out a detailed analysis of the changes in land use restrictions to result from the transfer and to address the concerns of landowners and commit to mitigation measures. And again, if the Board is of the view that the Certificate should be granted and it would decline to order a condition requiring consultation before the decision of the type that I've just suggested, then we would simply ask that the Board impose Condition 4(a) from our proposed conditions at Exhibit C-1- lOc:
'That TransCanada shall grant permission to Alberta System landowners to cross Alberta System pipelines on their respective properties with vehicles or equipment used for farming purposes.' (As read)
That's the landowners' situation under provincial regulation today. And Mr. Kendel told me at paragraph 2360 in Transcript Volume 7 that: “TransCanada's J practice is, and the fact, that with farming operations we haven't required that permission has to be granted.”
“So if it's TransCanada's practice anyway, then we submit that the Board should impose the condition we have proposed. It will provide landowners with certainty about what they can and cannot do on their farms. It will also address with certainty the fact that the NEB Act restrictions, the control zone and the permission requirement for crossing with equipment, the possible penalties -- all of those restrictions apply immediately when a certificate becomes operative. They apply to every single landowner in the system, whether or not she or he knows about it; whether or not she or he actually received the notice that TransCanada now says it's going to send; whether or not she or he actually understands what's going on."
Landowner Impact — Depth of Cover
— "And the program by which insufficient depth of cover might be found is one where outside parties bring TransCanada's attention to the situation; in other words, this is a reactive program, not a proactive program. And I was at pains to have Mr. Kendel acknowledge that TransCanada doesn't know whether any of the Alberta System pipelines were installed at a depth of less than .6 metres originally... My point is TransCanada doesn't appear to know what the starting point is. There's going to be operation of this Alberta System under this Application going forward from a date when the certificate is granted and becomes effective, if it's granted. As far as depth of cover goes over the pipelines, except in those locations where someone has brought TransCanada's attention to insufficient depth of cover, landowners don't know what they're dealing with."
— "The Board imposed depth of cover monitoring program as a condition in the Enbridge Alberta's Clipper certificate. That was for a new pipeline construction. The Board in that case was advised by Enbridge and knew what the starting point was for depth of cover... The Board knew that it was being installed at .9 metres, which is more than sufficient, and yet the Board still imposed a condition on Enbridge that it-create a depth of cover monitoring program and it ensure that landowners know what the depth of cover on their properties are, and that if there are problems found that they be mitigated, in consultation with landowners going forward. Frankly, the more information that landowners have about the pipelines on their properties the better. Safety requires information and landowners in the Alberta System deserve the same information and the same safety that landowners along the Alberta Clipper Pipeline have been given by the Board. "
— "Proposed Condition 3 from [CAEPLA] is again from the Enbridge Alberta Clipper Project. It was a commitment by Enbridge that is now a condition of its certificate that ensures that it mitigates the effects of insufficient depth of cover. We submit that that should be included as a condition going forward as the operation -- of the operation of the Alberta System. Proposed conditions 4(c) and 4(d), these are to provide landowners with certainty about what TransCanada will do to mitigate impacts of any restriction it places on the use of equipment near its pipelines, on the right-of-way, or in the control zone, and requires the specification, in writing, of any restriction that there's going to be put on land use. It's about certainty and a written commitment to landowners that's enforceable by the National Energy Board.”
Landowner Impact — Maintenance and Integrity Digs
— “Proposed Condition 5 relates to integrity and maintenance digs. There's ample evidence in the record that integrity digs are something that are a fairly common occurrence on the Alberta System. There have been incidents, as set out in Exhibit B-19, TransCanada's Response to NEB IR 3.2. We reviewed the Transportation Safety Board Report, P-9-4-H-0003, which refers to a 1991 integrity problem on a NOVA pipeline. We saw that there can be problems with a certain type of pipe coating -- polyethylene tape - and disbondment of that tape and the external corrosion of pipes. And that was a pipe coating that was used widely on the Alberta System, as shown at Exhibit B-4 k, Adobe pages 240 to 268, TransCanada's Listing of Pipe Coatings in the System. And TransCanada has an integrity management system in place and we certainly don't take issue with there being a program in place to ensure safety. But that program will inevitably require entry onto the properties of landowners, investigative and maintenance digs, and interference with farming operations.”
— "Proposed Condition 5 is a proposal for a written integrity and maintenance dig procedure to be put in place for the Alberta System to guarantee to landowners certain minimum standards for integrity digs; minimum standards enjoyed by landowners on the Enbridge Alberta Clipper Pipeline; minimum notice requirements; written documentation regarding the dig areas; written commitments regarding topsoil stripping and other aspects of the operation."
— "TransCanada wants the Board to keep its hands off its operations. It does not want landowner-related conditions on the Certificate to operate the Alberta System and that, I submit, leaves landowners at risk. Certainly landowners can still come to the Board for assistance. They can participate in Board processes, they can go to hearings, they can intervene, they can respond to right-of-entry applications that TransCanada may make. But, as we've seen, they do so at their own expense."
— "They lose -- in this Application they lose their right to seek costs of regulatory proceedings; something that is part of the Alberta regulatory system and, I would submit, a major part of landowner concern resolution in Alberta but it's not a part of the NEB system. That fact, I submit, should weigh heavily in the Board's consideration of the conditions we've proposed. TransCanada is asking to remove 23,500 kilometres of pipeline landowners from a system where they can participate in proceedings with a right to seek costs, and place them in a system that has no availability of costs, save in a detailed route hearing.”
— "Jim Ness, in his Written Evidence Statement, Exhibit C-I-5b, explains why we submit it's important for the Board to deal with these landowner concerns now. After the certificate is granted, landowners will have no right to costs or funding if it is necessary to go back to the NEB to complain if or when TransCanada fails to address landowner concerns appropriately. That's why [CAEPLA is] involved in this proceeding. TransCanada and the Board should be dealing with landowner concerns now and to do so, we submit, would be in the public interest.”
Landowner Impact — Abandonment Liabilities and Costs
— "There will be additional pipelines in the future. These landowners will be subjected to additional pipeline construction and operation in the future, and similarly, at that reference TCPL also acknowledges that eventually all of the existing and new pipelines will be abandoned."
— "So the result of a transfer of jurisdiction for the NOVA landowners with respect to their increased risk of exposure to abandonment costs and liabilities is that they are left in a regulatory vacuum without a regulatory remedy to address future abandonment liabilities and costs. On the basis of the Board's decision in Manitoba, and as reflected in the current Filing Manual requirements on abandonment applications, the Board is without jurisdiction. There is no applicable provincial legislation to address this jurisdiction void. It's clear that the provisions of the Alberta Pipeline Act and Regulations, which currently apply to the NOVA pipelines within its jurisdiction and provide the landowners with a regulatory remedy in respect of future abandonment costs and liabilities only impose liabilities, as we saw, on provincial licensees. That is the reference in both the Act and the Regulation. That would not include, then, TCPL if the pipeline has been transferred to the federal jurisdiction and it was operated by the TCPL in the federal jurisdiction under a CPCN issued by this Board."
— " ...those are the technical issues which create this realistic (concern) of future costs and liabilities: the corrosion, collapse of the pipe, the creation of water conduits and the soil contamination. So that evidence clearly establishes, then, that this concern of the landowners with respect to their future exposure to increased risk resulting from the jurisdiction transfer and loss of a regulatory remedy is a real and substantial concern, which has significant environmental and socioeconomic effects for them."
— "If those same provisions, as included in the Enbridge agreement and in the Enbridge Certificates of Public Convenience and Necessity, were included by the Board in any Certificate of Public Convenience and Necessity issued to TCPL with respect to its Alberta System as proposed in [CAEPLA's] proposed conditions, while the landowners would still have to be concerned about the loss of their regulatory remedy to address future abandonment liabilities and costs, at least they would have some assurance under Condition 6... that in the event of an assignment there would be a party, either the assignee or Enbridge itself, continuing to be available in the event of post-abandonment costs and liabilities—either Enbridge or a party of equivalent financial strength. And under Condition 7 then you'll find the same provision we just looked at in the Enbridge agreement. So a condition similar to the condition in the Enbridge certificates, that TCPL would not surrender the easement, could not surrender the easement and its contractual obligations without first removing the pipe, and until then it would have to continue maintaining the pipe unless the landowners consented otherwise. And TCPL at Questions 1621 and 1639 have acknowledged that those provisions would provide some measure of security for landowners being subjected to this proposed jurisdiction transfer. And then also Condition 8 you will see there is simply a continuation of the liability TCPL currently has under the provincial regulatory system which it would no longer have under the federal system with respect to future costs and liabilities. So the purpose of Condition 8 is simply to continue TCPL' s current post abandonment liability under the provincial regulatory system so that landowners aren't prejudiced to that extent upon the transfer of the system to the federal jurisdiction."
Landowner Impact — Loss of Annual Payments to Landowners
— "So in essence, the difference that is being noted by the Federal Court in this decision with respect to compensation available to landowners under provincial and federal regime, is that provincially, under the NOVA-type arrangement, landowners are entitled to an initial lump sum payment upon the granting of an easement and then an annual payment thereafter, equivalent to 20 percent of the land value which is reviewable every five years. That's to be contrasted to this more restricted option available under the federal jurisdiction where essentially the option is really only the market value of the land, in a lump sum, or the market value of the land divided up into a fixed number of annual payments over an agreed number of years. And what landowners lose then and what the company gains is the appreciating -- any appreciation in the value of the land. And the landowner loses continuing compensation for the ongoing type of impacts of TCPL' s operations on their agricultural operations.”
— "The necessity of an annual payment to address these types of ongoing recurring losses of pipeline landowners was recognized by the Alberta Surface Rights Board, recently, in a decision that you'll find in the Reference Documents at Tab 20(d), which is a decision of the Surface Rights Board with respect to the Enbridge Wapisu Pipeline. This was a compensation arbitration on this provincially regulated pipeline under the provisions of the Alberta Surface Rights Act. At page 19, in the first paragraph, under Reasons for Decision, the Board says:
'The role of the Board is to consider the evidence in the Act and to arrive at a fair and reasonable award of compensation that comes as close as possible to making the landowners whole. The Board is persuaded that there will be ongoing and/or recurring compensable losses in this case. Once the Board made this determination, it is only reasonable to award annual compensation since only an annual award provides for compensation that is contemporaneous with the events factors that are attracting the award of compensation. ' (As read).
— “And with respect to these ongoing recurring types of compensable loss, you'll see at page 20, in Table 1, the Board has categorized, in Table I, under Category A: ‘The long-term effects of pipeline operations which should be compensated through an annual payment.’ (As read). So for example, you'll see in 2, deals with the loss of trees; in 6 it deals with land use limitations, the restrictions on construction of livestock and other agricultural facilities; and 9 makes reference to the restriction of cultivation depth to 18 inches and the restriction that that places on cultivation practices in planting of new crops.”
“And here, of course, on the transfer, from the provincial to the federal jurisdiction you have an even greater restriction down to 12 inches under the federal jurisdiction. In number 14, the restriction on agricultural activities which results from even the Call First requirements, under the provincial legislation, and again here, you have even a more onerous, the (notice) and consent requirements under the NEB Act and Regs, not only with respect to excavation but even to cross the pipeline. And in 16, there is the reference to the creation of hot strips which interfere with the free thaw cycle. In 19; safety issues and related ongoing concerns and fears; interference with GPS data which provides the basis for fertilizer application and crop protection; and 21, loss of the opportunity to grow higher value, identity preserved or specialty crops."
— "So the Board then summarizes these ongoing losses which necessitate an annual form of compensation at page 23, in the paragraph immediately below that chart, where the Board says: 'Based on the evidence and arguments presented in this case, the Board cannot accept that there will be zero ongoing and/or recurring loss. The Board is persuaded that there will be ongoing and/or recurring loss if you use adverse effect, nuisance and inconvenience that will accompany this pipeline. Items characterized as (a) above were accorded weight when arriving at an award of compensation. The Board will highlight three specific nuisances, inconveniences that were identified in Table 1 and/or in other evidence or arguments heard
The Board is persuaded that the landowners will have to alter and adapt their agronomic practices on an ongoing basis because of the presence of the pipeline. The landowners will have to consider the effect of the pipeline every year at seeding time.
The Board is persuaded that the landowners dare not ever forget about the presence of this pipeline; they would do so at their peril. To forget could lead to catastrophic results. Out-of-sight is not out-of-mind; the Board is persuaded that, if the landowners cannot forget about the pipeline, it must be considered an ongoing nuisance or inconvenience.
The Board notes from the Land Title Certificates that Enbridge has registered caveats on all their respective land title Certificates to register interest. This, by itself will be an ongoing nuisance and inconvenience to landowners when they try to enter into future agreements/contracts.
"The Board is persuaded that there will be ongoing nuisance and inconvenience to the landowners as a result of the Wapisu Pipeline Project and, therefore, necessitating an annual form of compensation." (As read)
— "Those losses, Madam Chairman, are not unique to Wapisu but are common to all pipeline landowners, including the pipeline landowners on the TransCanada System and many of those same impacts are addressed in [CAEPLA’s} pre-filed evidence... So what we have is something over threequarters of the agreements with landowners entered into on the Alberta System since 1983. The landowners have chosen to receive annual payments reviewable every five years to address the increasing value of their lands and these types of ongoing recurring losses. But if we look at TCPL' s response to [CAEPLA] IR ll(e) and (f), no such payment option has been made available by TCPL on its federally regulated Mainline system."
— "So, if the Alberta System is to be transferred to and operate under the federal jurisdiction, for these NOVA landowners to have the same rights as other federally regulated landowners, my submission is that the NEB should impose, by certificate condition, the same minimum requirement as 86 (2) (e) of the NEB Act and require that TCPL obtain written landowner consent for the construction of future pipelines. That again is in the proposed conditions of [CAEPLA’s], Exhibit C-l-l O(c) at Proposed Condition 9. Secondly, for NOVA landowners to continue to have the same option as they currently have under the provincial jurisdiction to receive both a lump sum and a reviewable annual payment on future pipeline, which isn't available to them under the NEB Act, my submission is the Board should impose by certificate condition the requirement that TCPL make available to landowners in respect of all future pipelines the same option to receive compensation as they currently have under Schedule "A" of the standard-form right-of-way agreement, which is attachment -- Attachment 2 to TCPL's Response to [CAEPLA’s] IR Number 4(a). And in the Proposed Conditions, it's Proposed Condition 10, and the Schedule "A" attached to the Proposed Conditions is simply a copy of the current Schedule "A" in TransCanada's Annual Payment Agreement in the provincial jurisdiction."
Landowner Impact — Consultation/Assessment/Mitigation
— "In its Application, TCPL has recognized that to obtain issue of a Certificate of Public Convenience and Necessity requires what it's referred to as two primary determinations by the Board. The first is that the Alberta System is properly within the federal jurisdiction; and secondly, as to whether TCPL has satisfied the requirements of section 52 that the Alberta System is required by present and future convenience and necessity. At question 861 in the transcript, TCPL has acknowledged fairly that these are two quite separate and distinct determinations. In making the second determination, section 52 is quite clear that the Board must have regard to all relevant considerations, which may include, under section 52, any public interest that in the Board's opinion may be affected by the granting or refusing of the certificate."
— "In addition to the Board's specific Filing Guidance Direction on this Application requiring that TCPL address how their current management systems and programs would meet the federal requirements to deal with these environmental and socioeconomic issues and to provide landowners with appropriate notice of how their interests might be affected, and their right to participate in this proceeding - in addition to that Filing Guidance Direction, in my submission, the Board's own Filing Manual Requirements also impose on TCPL, through both the filing requirements and the Guidance in that document—impose an obligation to consult with landowners to identify such potential effects before bringing the Application, and to work in cooperation with landowners to mitigate these effects as part of the planning process."
— "So TCPL has not identified and assessed the potential effects on landowners related to the transfer of the Alberta System from the provincial to the federal jurisdiction. It has not undertaken the consultation described by the Board as crucial to the identification of those effects. It has certainly not provided the more detailed information required under Table A-3 with respect to those outstanding concerns identified, or in fact any information with respect to those outstanding concerns. That was not part of TCPL's planning of this Application and it has not developed or proposed any mitigation with respect to those concerns."
— "Based on that, my submission to you is that there's no evidence in the record before you, upon which you, as a Board, can conclude that this proposed jurisdictional transfer will not have significant environmental and socioeconomic impacts on landowners' interests."
— "So, Madam Chair, [CAEPLA is] requesting that TCPL's Application for a Certificate of Public Convenience and Necessity under section 52 be dismissed in consequence of TCPL's failure to comply with the Board's Filing Guidance direction in this case and the Filing Manual requirements and guidance with respect to identification and assessment of the environmental and socioeconomic effects of the proposed jurisdictional transfer on landowners. However, in the alternative, should this Board nevertheless determine that a Certificate of Public Convenience and Necessity should issue with respect to TCPL's Alberta System, [CAEPLA is] requesting that the Board impose conditions on any such certificate to mitigate, at least in part, the environmental and socioeconomic effects addressed in [CAEPLA’s] pre-filed evidence."
— "In the LMCI, [CAEPLA] has consistently maintained the position that this industry must change its perception of landowners as simply being impediments to their projects and come to recognize landowners as stakeholders with interests that are as important and worthy of recognition as customers and shareholders. My submission: That is a change which will only happen if a clear message is sent by this Board to TCPL and any other so inclined industry Applicants that Applicants will not be permitted to simply ignore the requirements of CEAA, the Board's Filing Manual Requirements and the Board's Filing Guidance, and that to do so is at their peril.”
— "My submission to you is that the time for change is now. Should the Board determine to issue this certificate nonetheless, despite the failures in consultation, et cetera, this Board, on this Application, can direct the changes that are required to reduce, at least, the impact of this jurisdictional change on thousands of landowners in Alberta and we are requesting that the Board proceed accordingly with that direction."
LANDOWNER IMPACT
TABLE OF CONTENTS
Cultivation Restrictions Imposed on Landowners/Control Zone
Maintenance and Integrity Digs
Abandonment Liabilities and Costs
Whereas under the Alberta Pipeline Act and Regulation, no farmer must obtain company consent for cultivation down to a depth of 45 centimetres or 18 inches, and the Alberta Act specifically exempts that cultivation from being considered a ground disturbance. Under the National Energy Board Act Regime those same landowners would have to seek permission every time they wanted to cultivate below 30 centimetres or 12 inches, anywhere on the right-of-way -- anywhere on the right-of-way which could be, according to TransCanada's evidence, anywhere from 15 metres wide to over 30 metres wide and on an additional 30 metres on each side of the right-of-way."
"So there is no limitation on how long a company may take to respond to a landowner request for permission to cross its pipeline with farm equipment under the National Energy Board Act scenario. These are significant changes for farmers who to date have operated in a regulatory system that required no permission to drive their farm equipment over the pipelines for farming operations. Having to ask permission to cross a pipeline could result in operational delay of what could be an indeterminate period."
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