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Oil and Gas Appeal Tribunal

Fourth Floor, 747 Fort Street Victoria, British Columbia V8W 3E9 Telephone: (250) 387-3464 Facsimile: (250) 356-9923 Mailing Address: PO Box 9425 Stn Prov Govt Victoria BC V8W 9V1 Website: www.ogat.gov.bc.ca E-mail: [email protected]

DECISION NOS. 2015-OGA-001(a) and 2015-OGA-002(b)

In the matter of two appeals under section 72 of the Oil and Gas Activities Act, S.B.C. 2008, c. 36.

BETWEEN: Robert and Maxine Dilworth Olaf and Frances Jorgensen

APPELLANTS

AND: Oil and Gas Commission RESPONDENT

AND: EnCana Corporation THIRD PARTY

BEFORE: A Panel of the Oil and Gas Appeal Tribunal Gregory J. Tucker, Panel Chair James Hackett, Member Douglas VanDine, Member

DATE: Conducted by way of oral hearing concluding on October 22-23, 2015

PLACE: Fort St. John, BC

APPEARING: For the Appellants: For the Respondent: For the Third Party:

Dr. Judi Krzyzanowski Andrea Jarman, Counsel Lars Olthafer, Counsel

APPEALS

[1] Robert and Maxine Dilworth (the “Dilworths”) and Olaf and Frances Jorgensen (the “Jorgensens”) filed separate appeals of a February 23, 2015 permit (the “Permit”) issued by Mohammad Farah, a delegated decision-maker with the Oil and Gas Commission (the “OGC”). The Permit was issued under section 25(1) of the Oil and Gas Activities Act, S.B.C. 2008, c. 36 (the “OGAA”), and authorizes EnCana Corporation (“Encana”)1 to construct and operate certain buried pipelines (the “Project”) on lands owned by the Dilworths and the Jorgensens.

[2] The Dilworths’ appeal is 2015-OGA-001; the Jorgensens’ appeal is 2015-OGA-002.

[3] The Oil and Gas Appeal Tribunal has authority to hear these appeals under section 72 of the OGAA. Section 72(6) of the OGAA gives the Tribunal the power to

1 Both spellings “Encana” and “EnCana” appear in the evidence. This decision refers to “Encana” throughout.

DECISION NOS. 2015-OGA-001(a) and 002(b)

“confirm, vary or rescind” the determination, or to “send the matter back, with directions” to the person who made the determination.

[4] An appeal by a landowner, however, is limited in scope by section 72(2) of the OGAA, which provides, in part, that a landowner:

… may appeal a determination under this section only on the basis that the determination was made without due regard to

(a) a submission previously made by the land owner under section 22(5) or 31(2) of this Act, or

(b) a written [consultation and notification] report submitted under section 24(1)(c) or 31(6).

[Emphasis added]

[5] The Dilworths maintain that the OGC made the decision to issue the Permit without due regard to their written submission.

[6] The Jorgensens did not make a written submission. They maintain that the Permit was issued without due regard to their verbal objections and Encana’s consultation and notification report. The Jorgensens assert that the consultation and notification report was defective because it did not include reference to their verbal concerns, and that the decision to issue the Permit must therefore have been made “without due regard” to the consultation and notification report.

[7] Both Appellants submit that, had the OGC given “due regard” to their respective submissions, Encana would have had to use one of the alternative routes they proposed. The Appellants ask the Tribunal to rescind the Permit.

[8] The appeals were joined for the purposes of a hearing. The testimony received from each of the parties was applied to both appeals, as appropriate.

BACKGROUND

Overview of the Project

[9] The Project is located approximately 40 kilometres northwest of Dawson Creek, British Columbia. It consists of five buried pipelines within a single right-of-way: a fuel line, water line, emulsion line, product line and sales gas line.

[10] The Project, apart from the sales gas line, is part of Encana’s “Saturn” development, located in Townships 78 and 79. The current “Saturn” development commenced in 2012 and includes ten well sites, with an average of four wells per pad. The Project’s pipelines “tie in” a riser site to a wellsite, and are required for the following purposes:

• Fuel line. The fuel line provides natural gas to the wells associated with the Project.

• Water line. The water line runs from Encana’s water resources hub to the well sites. It reduces water consumption and the need to “truck in” water.


• Emulsion line. The emulsion line is a return line. It transports emulsion back to the water resources hub after use in hydraulic fracturing for recovery and re-use.

• Product line. The product line carries production fluids from the well sites, primarily natural gas and some condensate, as well as some entrained water.

• Sales gas line. The sales gas line runs for a portion of the Project route only. It is essentially a separate line, integrated into the Project only for convenience. The sales gas line delivers gas to the Spectra South Peace Pipeline. Encana made an agreement to deliver that gas on a “take or pay” basis. The “in operation” date was July 1, 2015, and Encana was required to pay a daily toll from that date.

The properties at issue in the appeals

[11] The pipeline route (the “Project route”) crosses three quarter sections2, but the Appellants argue that it should be rerouted onto an adjacent quarter section; therefore, there are four quarter sections relevant to the issues on these appeals. For ease of reference, the configuration of the relevant quarter sections, as well as the Project route, the alternate routes (to be discussed later), and other existing oil and gas activities, are shown on an Encana plan attached to this decision as Appendix A. The pale blue shaded route is the Project route.

[12] The quarter sections at issue are the North East ¼ section and the South East ¼ section of Range 18, Township 79, section 25 (the “NE25” and the “SE25”), and the North West ¼ section and the South West ¼ section of Range 17, Township 79, section 30 (the “NW30” and the “SW30”), all West of the 6th Meridian, Peace River District. (On Appendix A, the NW30 is the parcel north of the SW30 and east of the NE25.) 251 Road lies between sections 25 and 30, forming the boundary between the parcels.

[13] Ownership of these parcels is as follows:

• NE25 - This parcel has been owned by the Dilworths at all material times.

• SE25 - This parcel has been owned by Darrell Van Alstine at all material times.

• NW30 - This parcel was owned by Barbara Batyski when Project consultation commenced. The Dilworths purchased the NW30 from Ms. Batyski in June 2014.

• SW30 - This parcel has been owned by the Jorgensens at all material times.

[14] All of these lands are within the Agricultural Land Reserve (the “ALR”).

2 A “quarter section” covers an area of approximately 805 metres by 805 metres (½ mile by ½ mile).


The Project route

[15] The Project route runs eastward from a riser site on the North West ¼ section of Range 18, Township 79, section 25, along the southern boundary of that parcel and the NE25 (both parcels owned by the Dilworths). As shown on Appendix A, approximately 125 metres west of 251 Road, the Project route angles slightly to the north, and crosses under 251 Road at a 90 degree angle to the road, onto the NW30 (owned by Ms. Batyski and later the Dilworths). Approximately 125 metres east of 251 Road, the Project route turns southward 90 degrees and crosses onto the SW30 (owned by the Jorgensens), then turns eastward 90 degrees and follows the northern boundary of the SW30.

[16] The fundamental issue on these appeals relates to the 125 metre length of the Project route on the NW30 (underlined above). The Dilworths and the Jorgensens assert that the Project should have been routed to avoid the NW30. They submit that, from the NE25, the pipeline should have proceeded south, through the SE25 (Van Alstine), or angled to the southeast, directly to the SW30 (Jorgensens). These alternate routes are described as follows:

The SE25 Route

The Project would turn 90 degrees south on the NE25 (Dilworths), instead of being angled slightly north, and would then turn 90 degrees eastward along the northern boundary of the SE25 (Van Alstine), under 251 Road, and onto the SW30 (Jorgensens), thus avoiding NW30 altogether.

The Angled Route

The Project would be routed at an angle from the NE25 (Dilworths) to the SW30 (Jorgensens) in order to completely avoid the NW30, or cross only a very small part of the NW30.

[17] For the purpose of the appeals, the OGC added three coloured items to the Appendix A plan. The OGC’s “Alternate Route 1” (in green) on this plan is the approximate SE25 Route. The OGC’s “Alternate Route 2” (in red) on this plan is the approximate Angled Route. The OGC’s “BC Hydro right of way” (in yellow), is the BC Hydro line that runs from 251 Road to the residence on NW30.

[18] The portion of the Project route on the SW30 (Jorgensens) parallels, to the south, an existing Encana pipeline right-of-way, which originates at a riser site on the SE25 (Van Alstine).

Consultation with landowners regarding the Project route

[19] The evidence regarding consultation with the landowners will be outlined and discussed in detail later in this decision. However, for the purpose of this background, a general description of the consultation process is necessary.

[20] In 2012, Encana started an informal consultation process to determine the best route for the pipelines. The informal consultations consisted of meetings, telephone calls and correspondence with each of the potentially affected landowners. Encana also sought permission from the potentially affected


landowners to perform surveys on their land (“survey consent”).3 In this case, Encana received survey consent from Ms. Batyski (then owner of the NW30), the Jorgensens (SW30) and the Dilworths (NE25), and entered into separate Assessment Access Agreements with each of them. No consent was obtained from Mr. Van Alstine, as he had advised Encana that he would not consent to any further development on the SE25.

[21] Before a project proponent applies for a permit, the OGAA requires it to do a number of things. Of relevance to these appeals, section 22 requires the proponent to formally notify, and consult, affected landowners. Section 22 of the OGAA states in part:

(2) Before submitting an application under section 24 [application for a permit], a person must notify the land owner of the land on which the person intends to carry out an oil and gas activity of the person’s intention to submit the application, and the notice must advise the land owner that he or she may make a submission to the commission under section (5) of this section with respect to the application or proposed application.

(3) Subject to subsection (4), before submitting an application under section 24, a prescribed applicant must carry out the prescribed consultations …, with respect to the oil and gas activities and related activities, if any, that will be the subject of the prescribed applicant’s application.

…

(5) A person, other than the applicant, may make a written submission to the commission with respect to an application or a proposed application under section 24.

(6) If a person makes a submission under subsection (5), the commission must send a copy of the submission to the applicant or to the person intending to apply for a permit, as the case may be.

[Emphasis added]

[22] Specific requirements for notification and consultation are established in the Consultation and Notification Regulation, B.C. Reg. 279/2010 (the “Consultation Regulation”). Section 13 of the Consultation Regulation sets out, in detail, the required content of what is referred to as an “invitation to consult”. Specifically, the invitation to consult must, among other things, include a statement advising the landowner that, within 21 days of receiving the invitation to consult, he or she may provide a written response to the applicant and/or ask the applicant for a meeting, or the landowner may make a submission to the OGC under section 22(5) of the OGAA.

[23] Encana sent invitation to consult letters dated October 8, 2013 to Ms. Batyski, Mr. Van Alstine, the Dilworths and the Jorgensens. The letters provided

3 Landowner consent is not required in order for a permit to be issued under the OGAA.


them with information regarding its proposal to construct and operate five buried pipelines in a right-of-way between its riser site and its wellsite. The proposed route (i.e. the Project route crossing the NE25, the NW30 and the SW30) was shown on an attached map. In accordance with the requirements in the Consultation Regulation, Encana’s letters also stated as follows:

If you feel at any time that we have not adequately addressed your concerns, you may submit a written response to Encana outlining the reasons why this proposed project should not be carried out or should be modified. Any written response must be received by Encana within 21 days of receipt of this letter, as outlined in section 79(2) of the Oil and Gas Activities Act [service and deemed delivery of documents].

You may also make a written submission to the B.C. Oil and Gas Commission (OGC) under section 22(5) of the Oil and Gas Activities Act for this project up until such time as a determination is made by the OGC.

To discuss this project or request a meeting, please contact a representative below:

[names and contact information provided].

[24] Mr. Van Alstine did not respond to the invitation to consult.

[25] The Dilworths met with Encana representatives on October 25, 2013 to discuss a statutory right-of-way agreement for the NE25, which the Dilworth’s agreed to and signed the same day for that parcel.

[26] The Jorgensens did not provide a written response to either Encana or the OGC. They did, however, have discussions and meetings with Encana representatives and, on at least two occasions, advised Encana that they would not enter a right-of-way agreement for the SW30 unless Ms. Batyski accepted the Project route on the NW30.

[27] In a letter dated October 19, 2013, Ms. Batyski wrote to the OGC advising of her concerns with the Project route on the NW30, including the proximity of the pipeline to her dugout (a source for residential water). Ms. Batyski also raised concerns with nuisance and disturbance arising from the construction, and other matters. In response, Encana agreed to reroute the Project further from the dugout. However, her additional issues were still to be resolved.

[28] In April of 2014, Ms. Batyski met with Encana representatives. At this meeting, Ms. Batyski produced a sketch showing the two alternate routes: the SE25 Route and the Angled Route. She had previously suggested the Angled Route during informal discussions in February of 2013.

[29] Ms. Batyski sold the NW30 to the Dilworths in June of 2014. At that time, her concerns with the Project route had not been resolved, and she had not signed a right-of-way agreement for the NW30.

[30] The Dilworths, as the new owners of the NW30, wrote to the OGC on October 2, 2014, objecting to the Project route on the NW30 on the grounds that they wanted the NW30 as a retirement property, and for it to remain in its “pristine, natural condition” (without oil and gas activity). They stated that the pipeline route on the NW30 would interfere with their plans for a barn and handling system in the


southwest corner.4 They also stated that Encana should use the SE25 Route because that section was already developed with a riser and pipeline, and attached a sketch proposing a route through the SE25.

[31] Shortly after this submission, and over the following months, the Dilworths met with representatives from the OGC regarding their concerns. During these meetings the Dilworths suggested that the Project be rerouted, using either the SE25 Route or the Angled Route.

[32] In December of 2014, Encana provided a written response to the Dilworths’ letter objecting to the Project route on the NW30. Encana explained that it had reviewed routing options during the preliminary scouting process with all landowners along either side of the right-of-way before selecting the Project route. Of note, it said “As we had consent to proceed with the project from the previous owner [Ms. Batyski] and all other landowners along the right of way we proceeded with the survey.” In their appeal, the Dilworths’ maintain that this statement was misleading.

[33] Encana also addressed the alternate routes. It advised the Dilworths that the landowners of the SE25 (Van Alstines) did not want the pipeline on their land. Regarding the Angled Route, it advised that this route did not comply with Standard Z662 established by the Canadian Standards Association (“CSA”) for pipelines that cross a road. Encana also responded to the Dilworths other concerns, including their plans for the barn and handling system.

[34] In response to the Dilworths’ concerns and suggestions regarding the NW30, the OGC made further inquiries regarding the viability of the alternate routes. It asked Encana for additional information and various confirmations, and consulted with its own engineers and personnel on matters pertinent to the alternate routes and the concerns raised by the Dilworths.

[35] In addition, the OGC asked Encana to consider other routes that would avoid the NW30 (not shown on Appendix A). However, these routes were rejected as not practical.

[36] Ultimately, Encana was left with the option of either applying for a route across the NW30 or across the SE25, knowing that the landowners of both parcels objected to the Project. Encana chose to pursue its application for the Project route across the NW30.

[37] On December 9, 2014, Encana submitted its Consultation and Notification Report (Line List) (the “Consultation Report”) to the OGC. This report was required by section 24(1)(c) of the OGAA, which states that an applicant for a permit must submit “a written report, satisfactory to the commission, regarding the results of the consultations carried out or notification provided under section 22”.

[38] The Consultation Report summarized Encana’s notification to, and consultation with, all landowners along the Project route. With respect to the NW30 and the Dilworths, the Consultation Report states:

Negotiations are ongoing with landowners. The subject property was purchased after pipeline route was selected prior to negotiations being

4 At the hearing, it was determined that they intended to build a horse barn and corrals.


completed with previous owner. Encana is working with current owner to reach an agreement on compensation and conditions.

[39] With respect to the SW30 and the Jorgensens, the Consultation Report states:

Encana has been unable to reach an agreement with the landowner and will be seeking right of entry, no project specific concerns have been raised.

The OGC’s decision and rationale

[40] On February 23, 2015, Mr. Farah issued the Permit to Encana. The Permit allows the pipeline to proceed on the Project route.

[41] In his rationale for decision, Mr. Farah identified the submissions provided by the affected landowners and considered their concerns. Because the Tribunal is required under section 72(2) of the OGAA to determine whether the Permit was issued “without due regard” to the Appellants’ submissions, large portions of Mr. Farah’s rationale are set out below.

[42] Regarding the Dilworths’ written submission, Mr. Farah states:

They would like to keep these properties free from oil and gas developments as they currently have these activities on six of their ten quarter sections. They want to keep the rest of their properties as their retirement property. Dilworths stated on their submission that the proposed pipeline would be inside the pasture area which is already fenced and they plan to build a barn and handling system in the area. ….

[43] With regard to the alternate routing, Mr. Farah states as follows:

Dilworths suggested two alternate route options to Encana to move the pipeline onto adjacent properties or to bore under the 251 Road. Encana stated that the [Project] route had been selected prior to Dilworth purchasing the property, with considerations of all factors; including the requirements of CSA Z662-11 Section 4.12.1.3 with regard to bore crossing of railroads, roads or utility right-of-ways with an angle not less than 45 degrees and as close to 90 degrees. The Commission has confirmed the crossing angle CSA criteria with the Commission’s Engineering department and it is correct. Dilworth admitted that the pipeline construction should meet with the CSA requirements.

Community Relations has confirmed that Encana provided proper information to Dilworths regarding bore crossing of 251 Road. Dilworths concerns remain outstanding as they feel this pipeline route will limit their future family plan. Encana continues to work with Dilworths on their concerns with this proposed [sic].

During my review I looked for other alternate route options that Encana could select for this pipeline and I deemed two other possible routes (one along 251 Road and the other alongside 249 Road) and I


asked Community Relations to reflect these options to Encana. Sheri Wannamaker of Encana replied that they had considered these alternate options, however the current route was chosen as they wanted to minimize the pipeline length by paralleling existing disturbances as much as possible and to minimize surface impact to landowners for five future pipelines as well as access to these pipelines. Encana also wanted to utilize one corridor accommodating all five pipelines.

[44] Under the heading “Considerations”, Mr. Farah states, among other things, as follows:

According to Community Relations File Note, EnCana has addressed concerns raised by Mrs. Barbara Batyski (the former landowner with written submission) and Mr. Robert Dilworth and Mrs. Maxine Dilworth and provided their commitments to minimize the impact to the Dilworth property stating that other than this planned route, other alternatives would create more impacts to the land and to other landowners in the area. Encana selected this route as it parallels their existing pipeline right of way for this proposed [sic] as well as other future plans.

The construction of the pipeline right of way is a temporary activity and after the completion of pipeline construction there will be less traffic on 251 Road and minimum other nuisance due to the operation of this pipeline activity to the Dilworths and their future family plans. The land also will be back available for crop cultivation 24 months after the pipeline installation. The construction and operation of a pipeline are governed under all British Columbia legislated requirements and Commission’s guidelines for safe operation of the activity with minimal footprint to environment and minimal nuisance to the surrounding community.

Dilworths would have been aware of this proposed pipeline within the southwest corner of the … [NW30] during the purchase of this property from Ms. Batyski. The pipeline is proposed on a small land within the same area already captured by BC Hydro Overhead powerline on the SW corner of this quarter section. In addition to engineering implications of bore crossing of the 251 Road, the relocation of this short pipeline portion to the … Jorgensens [SW30] would not make a significant difference to any forecast risks to Dilworths’ future plans due to small distance. Dilworths may plan their barn and handling system away enough from this sweet pipeline right of way and the powerline in their desired location. There will be plenty [of] area available on Dilworths properties to build their future family building site farther from oil and gas activity. It is also worth to note that Dilworths agree to have rest of this pipeline on their other quarter sections except this small area ….

[45] Mr. Farah did not specifically address the alternate SE25 Route in his rationale.


[46] Regarding the Jorgensens, Mr. Farah states:

Community Relations confirmed that there is no objection or outstanding concerns to this pipeline application from other landowners, Olaf and Frances Jorgensen.

[47] Mr. Farah added conditions to the Permit. Among them, Encana had to complete, to the OGC’s satisfaction, a site assessment required pursuant to an agreement between the ALR and the OGC, dated June 13, 2013 (the “ALR-OGC Agreement”). The ALR-OGC Agreement establishes certain requirements in connection with “non-farm” use of lands within the ALR, subject to certain conditions.

The Appeals

[48] Both the Dilworths and the Jorgensens filed separate Notices of Appeal against the Permit on March 9, 2015, and filed amended Notices of Appeal on March 10, 2015.

EVENTS FOLLOWING THE APPEALS

Application to dismiss the Jorgensens’ appeal

[49] After the appeals were filed, Encana brought a preliminary application to the Tribunal to dismiss the Jorgensens’ appeal on the basis that the Jorgensens had not made a written submission to the OGC pursuant to section 22(5) of the OGAA. Encana asserted that, under section 72 of the OGAA, the OGC could not have made a decision to issue the Permit “without due regard” to the written submission made by the Jorgensens, because the Jorgensens made no such submission. Accordingly, Encana asserted that the Jorgensens had no right of appeal.

[50] The Jorgensens’ primary argument in response to this application was that their concerns or objections were clearly communicated verbally to Encana; therefore, Encana’s Consultation Report was inaccurate. The Jorgensens argued that the inaccuracy triggered their right to appeal either on the basis of section 72(2)(b) (i.e., without due regard to the Consultation Report), or based on breach of a legal duty owed to the Jorgensens outside of the OGAA.

[51] In a decision dated June 15, 2015, the Tribunal declined to dismiss the Jorgensen’s appeal on a preliminary basis: Jorgensen v. Oil and Gas Commission, Decision No. 2015-OGA-002(a)). However, the Tribunal stated at paragraph 49 that “this does not preclude the parties from pursuing the jurisdictional question during the hearing of this appeal, at which time the Tribunal will have the benefit of oral evidence from the parties and legal argument.” Encana has raised this as an issue for the Tribunal to determine in this decision.

Surface Rights Board proceedings and orders

[52] The filing of an appeal does not result in an automatic stay of activities authorized under a permit. In or around April 2015, Encana applied to the Surface Rights Board for an order permitting Encana to enter onto the NW30 and the SW30


for the purpose of constructing and operating the Project on those parcels of land, pursuant to the Petroleum and Natural Gas Act, R.S.B.C. 1996, c. 361.

[53] The Surface Rights Board granted a right of entry order for the Dilworths’ NW30 on April 14, 2015. However, the application for the Jorgensen’s SW30 was delayed while the Board considered a jurisdictional question.

[54] Under section 154(2) of the Petroleum and Natural Gas Act, the Surface Rights Board has no jurisdiction to grant a right of entry unless a pipeline is a “flow line”. The Jorgensens objected to Encana’s application for a right of entry order on the grounds that the sales gas line did not qualify as a “flow line”. The Jorgensens noted that the natural gas to be transported in the sales gas line would connect well heads with the Saturn compressor station. They argued that the activities to be carried out at the compressor station would constitute “processing” of the natural gas. Accordingly, prior to arrival at the compressor station, the natural gas was “unprocessed” and the sales gas line was not, therefore, a “flow line”.

[55] In a decision dated June 15, 2015, the Surface Rights Board found that raw natural gas and produced liquids, principally water and condensates, enter the compressor station from various well pads tied into the Saturn gathering pipeline system. At the compressor station the raw natural gas and produced liquids undergo primary treatment, comprised of inlet separation, compression and dehydration. None of those processes alter the composition of the raw natural gas. The raw natural gas, after leaving the Saturn compressor station, joins the Spectra McMahon Pipeline system, and travels to the Spectra McMahon plant for processing before being transported to market.

[56] The Surface Rights Board found that, while certain processes are carried out on the raw natural gas at the compressor station, “processing” of natural gas has a specific meaning in the industry, involving alteration of the gas by removal of constituent components to make the gas marketable.

[57] The Surface Rights Board found, after considering various authorities, that the industry definition of “processing” should be adopted. Based upon that definition, it found that the Saturn compressor station was not a “processing” facility and that the sales gas pipeline was a “flow line”.

[58] Following this decision, the Surface Rights Board granted a right of entry order for the Jorgensens’ SW30 on June 16, 2015.

Status of the Project at the time of the Hearing

[59] Construction of the Project across the parcels in issue proceeded in or around August 2015. Accordingly, as of the date of the hearing of the appeals, that portion of the Project on the NW30 and the SW30 had been fully constructed. However, the Project was not yet in operation.


THE PARTIES POSITIONS ON THE APPEALS

The Dilworths

[60] The Dilworths maintain that the OGC failed to give due regard to their proposed and preferred uses of the NW30. They further submit that Encana led them to believe that Ms. Batyski had already signed an agreement in relation to the pipeline on the NW30, which they later learned was not true. They submit that they were misled into believing that an agreement was in place for the pipeline and that the agreement was “automatically transferred” to them from the previous owner. They submit that this is contrary to due process and fundamental justice.

[61] The Dilworths also submit that their plans to build a barn and related works on the southwest corner of the NW30 were ignored.

[62] Most significantly, the Dilworths proposed two alternate routes to Encana and the OGC which, they submit, were unreasonably rejected. In their view, one route was rejected because of Mr. Van Alstine’s objection, which was given greater weight than their objection.

The Jorgensens

[63] The Jorgensens submit that the OGC failed to consider their verbal consultation with Encana and its land agent. They submit that they raised pipeline alignment concerns throughout the consultation period. While they are not opposed to the pipeline running through their land, they are opposed to the route the pipeline is taking. In particular, there would be less impact to the SW30 in terms of land uses (e.g., agriculture and access) if the pipeline entered the property from the west (from the SE25), instead of the north (the NW30). They submit that the Project route, as approved, creates a pocket of marginalized land on their property.

[64] The Jorgensens also refer to the Surface Rights Board decision on the “flow line” issue. They submit that the pipelines, specifically the sales gas line, are not “flow lines” under section 34(1) of the OGAA, and that Encana should not have been allowed to enter their property and construct them.

The OGC

[65] The OGC submits that Mr. Farah carefully and fairly considered the Dilworths’ objections to routing the pipeline on the NW30, and the owners’ suggestions for alternate routes. He considered a range of information about those routes to consider whether the route chosen sufficiently limited or mitigated the effect of the Project on the area. The Project route was approved only after the consideration and weighing of many factors, including, but not limited to, Encana’s operational needs, engineering considerations, comments from the Appellants, information regarding comments made by neighbouring landowners and stakeholders, consideration of current and future agricultural uses of the lands, and consideration of current use of neighbouring lands for roads and hydro infrastructure. Mr. Farah


found that none of the alternate routes indicated that the Project route was not appropriate, or that the other routes were more appropriate.

[66] Ultimately, the OGC submits that Mr. Farah gave “due regard” to the Dilworths’ submissions and their appeal should be dismissed.

[67] Regarding the Jorgensens, none of their concerns were considered because they did not provide a written submission. However, in coming to his decision, the OGC states that Mr. Farah considered the impact of the pipeline on land in the area. Further, despite that fact that no submissions were made by the Jorgensens, Mr. Farah considered the alternate route now proposed by the Jorgensens (the SE25 Route) because it was proposed by the Dilworths. Therefore, despite their failure to provide a written submission, the OGC submits that the issues they now raise were considered by Mr. Farah.

[68] Regarding the Jorgensens’ submissions on the “flow line”, the OGC submits that this is not a permitting matter and is not relevant to whether or not the Permit should be upheld. In any event, the OGC submits that this issue has been heard and dealt with by the Surface Rights Board, which granted Encana right of entry orders for the quarter sections along the right-of-way, including the Jorgensens’.

[69] The OGC submits that the Jorgensens’ appeal should be dismissed.

Encana

[70] In response to the Dilworths’ submissions, Encana denies that it misled the Dilworths into believing that Ms. Batyski signed an agreement with Encana.

[71] Encana submits that it selected the Project route for a variety of reasons, including Mr. Van Alstine’s strong opposition to having any pipeline project routed on the SE25. Regarding the Project route on the NW30, Encana notes that Ms. Batyski had given survey consent, the Dilworths purchased that property knowing of the proposed route, and the Dilworths had agreed to oil and gas activities on their other properties.

[72] Encana submits that it made various attempts to utilize the Angled Route, and all revisions to it, but ultimately determined that the Angled Route was not feasible. At the request of the Dilworths, Encana also considered an alternative routing option that closely aligned the Angled Route but didn’t run between power poles. It applied to the Ministry of Transportation and Infrastructure (the “MOTI”) for approval. However, in June of 2015, the MOTI rejected this alternative routing option because of the angle of the crossing.

[73] At the request of the OGC, Encana also considered alternative routes avoiding the NW30 (not shown on Appendix A), but rejected them as not practical.

[74] Encana also submits that the Project has not precluded the Dilworths from constructing a barn and other facilities on the southwest portion of the NW30.

[75] In response to the Jorgensens’ appeal generally, Encana submits that the evidence at the hearing establishes that their appeal ought to be dismissed: they lack standing to appeal under section 72(2) of the OGAA.

[76] If their appeal is not dismissed, Encana submits that the Jorgensens’ concern about a “marginalized area” was never expressed or articulated to Encana prior to


the appeal. Now that construction has occurred, it is evident that the Project is compatible with continued agricultural use of the land and does not create any barrier to access.

[77] Regarding the “flow line”, Encana submits that this issue has been addressed, and orders allowing entry have been issued.

[78] Finally, Encana states that any concerns that the Jorgensens had about the Project route on their land have been addressed by the micro-routing adjustments that Encana made during its consultation with them. This is evident from Encana’s July 11, 2013 consultation summary, which states that the Jorgensens had “no additional concerns with the routing on either of the two projects affecting their lands.”

ISSUES

[79] The Panel has summarized the issues to be decided in each appeal as follows:

A) THE DILWORTHS’ APPEAL NO. 2015-OGA-001

1. Did Encana make a misrepresentation to the Dilworths and, if so, what is the effect of that misrepresentation?

2. Whether prior survey consent and/or a landowner’s consent to oil and gas activities on an adjacent property are relevant considerations in a pipeline permit application.

3. Was the Permit issued “without due regard” to the Dilworths’ written submission?

B) THE JORGENSENS’ APPEAL NO. 2015-OGA-002

1. Do the Jorgensens have standing to bring their appeal?

2. If so, was the Permit issued “without due regard” to the Jorgensens’ concerns?

3. Is the sales gas line a “flow line”?

THE EVIDENCE

[80] At the outset of the hearing, the Appellants proposed that they testify in panels, with the Dilworths testifying together, and the Jorgensens testifying together. The OGC and Encana consented to this proposal, and similarly proposed that their witnesses testify in panels. The Panel granted these requests.

[81] The Dilworths and Jorgensens submitted a notice of expert testimony of Dr. Judi Krzyzanowski. Dr. Krzyzanowski appeared at the hearing as agent and representative of the Dilworths and Jorgensens. Dr. Krzyzanowski made submissions at the hearing, but, quite properly, did not testify. The Panel treats the proposed statement of expert testimony of Dr. Krzyzanowski as a submission, rather than as a statement of expert testimony. Whether the document is treated


as a statement of expert testimony or a submission makes no difference to the outcome of these appeals.

[82] The OGC called three witnesses: James Nazareth, Carling Goertzen, and Mohammad Farah. Mr. Nazareth is employed by the OGC as Supervisor of the Facilities and Pipeline Engineering Groups and is a Professional Engineer registered in British Columbia. Mr. Nazareth provided a statement of expert evidence and testified as an expert in pipeline design and configuration. Ms. Goertzen is employed by the OGC as a landowners liaison. Ms. Goertzen had various discussions and meetings with the Dilworths in connection with the Project. Mr. Farah is an employee of the OGC, and is the delegated decision-maker who issued the Permit.

[83] Encana called four witnesses: Heidi Berscht, Sheri Wannamaker, Leo Chan, and Jason Blanch. All are employees of Encana. Ms. Berscht and Ms. Wannamaker are land coordinators, and were involved in the notification and consultation process in connection with the Project. Mr. Blanch is Encana’s Lead British Columbia Infrastructure Coordinator. Mr. Chan is a Professional Engineer registered in British Columbia, and, like Mr. Nazareth, provided a statement of expert evidence, and testified as an expert in pipeline design and configuration.

[84] Given that the legal test in this case is whether the OGC’s decision was made without “due regard” to the Appellants’ written submissions or Encana’s Consultation Report, the main evidence in the appeals relates to the pre-Permit consultation process and Mr. Farah’s consideration of the submissions and the report. However, as there was also significant evidence regarding discussions between the parties after the Permit was issued, that evidence will also be discussed.

Pre Permit consultation on the Project and the Project route

[85] In letters dated October 8, 2013, Encana notified Ms. Batyski, Mr. Van Alstine, the Dilworths and the Jorgensens of the application. These letters triggered the 21-day period referred to in the Consultation Regulation. As stated in the Background, while the October 8, 2013 letters triggered the formal consultation process, informal consultation had begun with these landowners in 2012 and consisted of meetings, telephone calls and correspondence. The meetings, telephone calls and correspondence are summarized in “Stakeholder Engagement Summary” documents prepared by Encana. All parties testified as to the meetings, telephone calls and correspondence, and that testimony was generally consistent with the written description in the Stakeholder Engagement Summaries.

Ms. Batyski

[86] Encana first contacted Ms. Batyski with regard to the Project in November 2012. Initial telephone discussions were followed by two meetings in February 2013. At that time, Ms. Batyski raised concerns with routing across the NW30, and first suggested the Angled Route. Encana’s representatives explained the difficulties with the Angled Route; specifically, the pipeline could not cross the 251 Road at a 45 degree angle. Various other matters were discussed, including rerouting to avoid the dugout on the NW30.


[87] There were a series of additional telephone calls, followed by a joint meeting between Encana, Ms. Batyski and the Jorgensens in July 2013. Ms. Batyski asked Encana to have the Jorgensens present for all meetings, due to her inexperience as a landowner dealing with an oil and gas project. Various details of the proposed construction were discussed at the July 2013 meeting. Ms. Batyski expressed concerns regarding the dugout and some other matters. There were a series of further discussions over the summer and fall of 2013.

[88] On October 8, 2013, Encana sent its invitation to consult to Ms. Batyski.

[89] In an October 19, 2013 submission to the OGC, Ms. Batyski indicated that she had “several major concerns” with the Project. Ms. Batyski stated that she believed the proposed pipeline on the NW30 was too close to the dugout on the NW30, and raised concerns with nuisance and disturbance arising from the construction, and other matters.

[90] In a letter dated January 9, 2014, Encana agreed to reroute the Project further from the dugout. It had previously agreed to route the Project to avoid Ms. Batyski’s driveway running along the southern border of the NW30. (This explains the slight angle to the north in the Project route on the NW25 before it crosses under 251 Road onto the NW30, as shown on Appendix A.)

[91] Following Ms. Batyski’s written submission to the OGC, there was one final meeting between Encana and Ms. Batyski. This meeting took place on April 8, 2014, and was attended by the Jorgensens. At this meeting, Ms. Batyski produced a sketch showing the SE25 Route and the Angled Route as alternative routes. Encana’s representatives again referred to the difficulties with the Angled Route. With regard to the SE25 Route, Encana’s representatives advised that Mr. Van Alstine had refused to grant survey and right-of-way consent. Following that refusal Encana said, as recorded in the Stakeholder Engagement Summary, that it “went forward with the routing as per survey permissions granted”. The Jorgensens advised that they would not grant right-of-way consent until Ms. Batyski was satisfied.

[92] There were no further meetings or consultations with Ms. Batyski as she sold the NW30 to the Dilworths shortly thereafter.

Mr. Van Alstine

[93] Encana had contacted Mr. Van Alstine regarding a prior project in November 2011. At that time, Mr. Van Alstine indicated that he would not consent to any additional oil and gas activity on the SE25. Mr. Van Alstine reiterated the same position to Encana in September 2012, at the time informal consultation regarding the Project was ongoing.

[94] Initially, given Mr. Van Alstine’s opposition to any new pipelines on the SE25, Encana proposed to construct the Project on the NE25 and the NW30. In late 2013, after right-of-way negotiations concerning the NW30 with Ms. Batyski were unsuccessful, Encana again approached Mr. Van Alstine. Mr. Van Alstine denied Encana survey consent on November 7 and November 22, 2013.

[95] In addition to the lack of survey consent, there was a separate issue with crossing Mr. Van Alstine’s SE25: The SE25 was charged with a tax judgment in


favour of the Canada Revenue Agency. Encana was concerned about the potential for any subsequently acquired interest to be “foreclosed off title”.

[96] Given Mr. Van Alstine’s refusal to engage with Encana, and the possibility that Encana’s interest could be foreclosed off title to the SE25, Encana did not pursue the SE25 Route further.

The Jorgensens

[97] Discussions with the Jorgensens concerning the Project began in late 2012. There were some fairly detailed discussions during late 2012 and early 2013 regarding, among other things, the specific location of the Project on the SW30. The Jorgensens wanted to ensure that the Project right-of-way was as close as possible to the northern SW30 property line, in order to minimize interference with their ability to farm the SW30. The Jorgensens also wanted the Project to parallel an existing pipeline across the SW30, which was tied to an existing riser site on the SE25. These matters were discussed on multiple occasions during 2013.

[98] Following receipt of the October 8, 2013 invitation to consult, the Jorgensens did not submit a written response to Encana, or make a submission to the OGC. The Jorgensens had a series of discussions with representatives of Encana. In those discussions, the Jorgensens raised certain questions and concerns regarding the existing pipeline on the SW30.

[99] At a meeting with Encana in January 2014, the Jorgensens first advised that they would not agree to the Project unless Ms. Batyski accepted the Project. By this time, it was apparent that Ms. Batyski’s position was the primary, or sole, barrier to obtaining the Jorgensens’ agreement.

[100] The next discussion between Encana and the Jorgensens was the April 8, 2014 meeting, also attended by Ms. Batyski, and referred to above. That meeting appears to have been the last substantive discussion between the Jorgensens and Encana prior to Encana’s application and the issuance of the Permit.

The Dilworths

[101] The Dilworths were involved in consultation for both of their properties: the NE25 and the NW30. These consultations will be described separately.

Consultation on the NE25

[102] Encana’s informal consultation with the Dilworths began in late 2012 when the Dilworths only owned the NE25. The Dilworths had no objection to the Project as landowners of the NE25. There was some discussion between the Dilworths and Encana regarding the possibly of routing the Project around a patch of bush on the NE25, a matter that the Dilworths ultimately did not require. There was also discussion with regard to ensuring that the Project route did not interfere with a home site on the NE25, and the Dilworths were satisfied on this point.

[103] The Dilworths state that, in late 2012, they formed the impression, from discussions with Encana’s representative Donald MacLeod, that Ms. Batyski had agreed to the Project in relation to the NW30. Mr. MacLeod did not testify at the hearing. The Dilworths did not testify that they were told expressly by Mr. MacLeod


that Ms. Batyski has agreed to the Project in relation to the NW30, but that Mr. MacLeod left them with this impression.

[104] In October 2013, the Dilworths granted right-of-way consent, and other related agreements, accepting the Project in relation to the NE25. There were some meetings and discussions over the ensuing months regarding construction details and other matters.

Consultation on the NW30

[105] The Dilworths acquired the NW30 in June 2014. The first meeting between the Dilworths and Encana regarding this property took place in July 2014. There were discussions over the following months concerning the possibility of the Dilworths granting right-of-way consent for the NW30; however, no agreement was reached.

[106] On October 2, 2014, the Dilworths made a written submission to the OGC objecting to the Project on the NW30, the contents of which are summarized as follows:

• They intended to make the NW30 a “retirement property” and had “concerns about family and livestock health and safety”.

• The Project would be in an area in which they planned “to build a barn and handling system”.

• Encana already had a riser site and pipeline on adjacent properties (i.e., the SE25) and should use those properties instead of the NW30.

• They want to “keep this ¼ section [NW30] pristine and free of oil industry activity.”

• To date, they had accommodated the oil and gas industry on six other parcels of their land.

[107] The Dilworths attached a sketch to their submissions proposing the SE25 Route.

[108] On October 6, 2014, the Dilworths attended the OGC office to discuss their concerns with regard to the Project. The Dilworths met with Carling Goertzen, the OGC landowner liaison. According to Ms. Goertzen’s meeting notes, the Dilworths told Ms. Goertzen that Donald McLeod had said that “the previous owner allowed for surveying; therefore the pipeline is inevitable and they are required to sign.” According to her notes, Ms. Goertzen explained to the Dilworths that this was not the case, and that the Dilworths could object to the Project.

[109] During that meeting, the Dilworths suggested alternative routes that could be used to avoid the NW30; specifically, the SE25 Route or the Angled Route.

[110] Following the October 6, 2014 meeting, there was discussion and correspondence between the OGC and Encana. The OGC asked for Encana’s opinion on the Dilworths’ suggested alternate routes.


[111] On October 20, 2014, Encana emailed the OGC to advise that it was reviewing the Dilworths’ concerns and alternate routes, and would respond to the Dilworths accordingly.

[112] In November 2014, the OGC wrote to Encana and asked whether any responses had been sent to the Dilworths.

[113] In a letter dated December 9, 2014, Encana provided its formal response to the Dilworths’ October 2, 2014 written submission, as well as the proposed alternate routes. Under the heading “Routing of the Pipeline”, Encana states:

Many factors are considered when selecting the most appropriate route for our proposed development. Encana reviewed routing options during the preliminary scouting process with all landowners along either side of the Right of Way before selecting the proposed route. As we had consent to proceed with the project from the previous owner [Ms. Batyski] and all other landowners along the right of way we proceeded with the survey. Encana worked with the previous owner to minimize the impact to the subject quarter section as much as possible and made an inquiry to re-route the pipeline on the [SE25] … very similar to the sketch you’ve provided. During this second inquiry the landowners on … [the SE25] advised that they do not want this pipeline on their lands.

[114] Encana also advised that it had considered whether the Angled Route would work, but ultimately determined that it was not feasible, in part due to CSA Standard Z662 (“Oil and Gas Pipeline System”), which sets out certain requirements in terms of siting and construction of pipelines. Encana explained that clause 4.12.1.3 of that standard, establishes the following road crossing angle restrictions:

Where practical, crossings other than water crossings shall be made so that the angle between the center line of the railway, road, or utility being crossed and the center line of the pipeline is not less than 45° and is as close to 90° as practical.5

[115] Encana also stated, “These requirements would have our proposed pipeline right of way directly under the two power poles [along 251 Road] (which is not permitted) as per the attached sketch.”

[116] Regarding the Dilworths’ plans for a barn and corrals on the NW30, Encana stated that the existence of the pipeline should not prevent construction or other use of the right-of-way, although it acknowledged that the right-of-way “does create extra work/time to complete ‘ground activities’ within 30 metres of a pipeline”.

5 The commentary for this clause states as follows:

Crossings other than water crossings are to be made, where practicable, using the minimum amount of piping, in order to minimize the associated interaction of the piping with the item being crossed and thereby reduce the risk of damage. Water crossings are exempt from this requirement in recognition of the fact that other design criteria can dictate the preferred crossing angle.


[117] On December 11, 2014, Mr. Dilworth attended the OGC office to further discuss the Project. Mr. Dilworth explained that the pipeline could limit or affect their ability to build in the corner of the property. He also suggested that the Angled Route might be possible if the route was shifted slightly to avoid the power poles on 251 Road. Mr. Dilworth further reiterated his view that the pipeline could be built on another property, specifically the SE25.

[118] Following this meeting, Ms. Goertzen emailed OGC staff asking them to comment on the accuracy of Encana’s statements regarding the CSA Standard and whether the shifted route would work.

[119] The OGC engineering staff confirmed the requirement for the angle crossing, and confirmed that there were general difficulties arising from angled crossings, but those difficulties were not conclusive in terms of whether the shifted route was possible in this case.

[120] Another meeting took place on December 12, 2014 between Ms. Goertzen and Mr. Dilworth. They discussed the safety and logistical difficulties in connection with angled crossings. They discussed the difficulties in connection with the location of the power poles along 251 Road. Mr. Dilworth noted that the power pole along the western side of 251 Road was an anchor pole only and, therefore, should not present an obstacle to a revised routing.

[121] On December 19, 2014, the Dilworths provided a sketch to the OGC showing two potential options for the Angled Route that would address the angled crossing restrictions, and would avoid, or minimize, the Project on the NW30. These two Angled Route options would alter the location and configuration of the Project route, but would still require an angled crossing at substantially less than 90 degrees under 251 Road (the “Revised Angled Routes”).

[122] In January 2015, the OGC wrote to Encana suggesting two other routes to the north (not shown on Appendix A) that would avoid the NW30. By email dated January 22, 2015, Ms. Wannamaker advised of various problems which made these routes impractical. This was accepted by all parties at the hearing. These routes were not pursued further.

Summary

[123] In summary, based upon the informal and formal consultations, the difficulties in connection with the Project route were as follows:

• Mr. Van Alstine, the landowner of the SE25, refused to engage in any discussion or consultation with Encana in connection with the Project. Mr. Van Alstine refused to provide survey consent and did not respond to Encana’s communications in connection with the Project. For that reason, it was apparent that any route on the SE25 would not have landowner consent. In addition, there was a substantial tax judgment registered against the SE25 in favour of the Canada Revenue Agency. Encana was concerned that any order permitting access to the SE25 in connection with the Project was at risk of being foreclosed off title.


• Ms. Batyski granted survey consent in connection with the Project, but did not grant right-of-way consent to cross the NW30. Ms. Batyski objected to the Project in writing.

• The Dilworths granted right-of-way consent to cross the NE25 as landowners of that parcel. However, the Dilworths were not prepared to grant right-of-way consent to cross the NW30 after they acquired that parcel.

• The Jorgensens objected to the Project on the basis that it should not be routed across NW30 without the agreement of Ms. Batyski (and later the Dilworths). While the Jorgensens had some other concerns with regard to the Project, they were prepared to grant right-of-way consent to cross the SW30 if, and only if, the landowner of the NW30 consented to the Project.

• The Angled Route created a fundamental design issue due to the presence of 251 Road. Applicable pipeline design standards limit the circumstances in which a pipeline can be buried under a road at an angle, other than 90 degrees. There were other issues in terms of that routing, including the presence of power poles, but the presence of 251 Road was the most serious issue.

Mr. Farah’s evidence regarding the alternate routes

[124] On February 23, 2015, the Permit was issued. Mr. Farah testified that he considered the Dilworths’ submissions and the alternate routes. He gave extensive evidence on his consideration of the Angled Route.

[125] Although Mr. Farah did not address the SE25 route in his rationale for decision, he did so in his evidence. Mr. Farah testified that he considered the fact that Mr. Van Alstine objected to any further pipelines on his land and weighed the impacts to the Van Alstines and their land, against the impacts to the Dilworths and their land. Mr. Farah noted that the Van Alstines already had oil and gas facilities on the SE25, and that a new set of facilities would increase the impact to that land. He also noted that most of the impact to the NW30 would be temporary, occurring primarily during construction and for a short time afterwards.

[126] Mr. Farah testified that, while the Jorgensens also had facilities on their land and the Project route would impact them, they did not express specific concerns about it.

Post Permit discussions on the Project and the Project route

[127] After the Permit was issued, discussions concerning the Project route continued. Jason Blanch, Encana’s Lead BC Infrastructure Coordinator, testified that he had committed to the Dilworths to continue to do everything reasonably possible to investigate the Angled Route.

[128] On March 12, 2015, there was a discussion between Ms. Goertzen and Mr. Dilworth. Mr. Dilworth told Ms. Goertzen that the proposed alternate routes had


not been adequately considered. Ms. Goertzen and Mr. Dilworth further discussed the angled crossing requirements.

[129] On March 16, 2015, the Dilworths wrote to the OGC asking why all of their alternate route proposals had been rejected. In this letter, the Dilworths also stated:

We would also appreciate finding out why Encana had the opportunity to reject proposals that the OGC puts forward, but as landowners we do not have the same courtesy.

[130] The OGC responded by letter dated March 30, 2015, the substance of which is summarized as follows:

• Encana did not proceed with the SE25 Route because of concerns raised by the landowner of the SE25 (Van Alstine).

• The Revised Angled Routes both required boring under 251 Road at an angle less than 90 degrees. The CSA standard requires that, where practicable, the boring angle used when crossing a road must be as close to 90 degrees as possible. In addition, both Revised Angled Routes would bring the pipeline in close proximity to power poles: one anchor pole (on the west side of 251 Road) and a “live” pole (on the east side of 251 Road). This raised safety and logistical concerns, including possible interference with cathodic protection. In addition, the Revised Angled Routes would increase disturbance on adjacent landowners’ properties.

[131] From May to June 2015, there was further discussion between Encana, BC Hydro, Telus and the MOTI with regard to the various angled routes.

[132] On June 2, 2015, the MOTI wrote to Encana’s agent advising that the proposal for an Angled Route would not be approved. The MOTI referred to the fact that the suggested crossing was outside the “70-90 degree angle supported under our Utility Policy Manual”. The Manual itself was not put into evidence at the hearing; however, the existence of the policy was not disputed. This letter from MOTI appears to have been the end of the ongoing discussion regarding the Angled Route and Revised Angled Routes.

[133] At the outset of the hearing, the Dilworths understood that the OGC and Encana had only considered the original Angled Route, and that there had been no consideration of the Revised Angled Routes. However, based upon the evidence of Encana and the OGC during the hearing, it became apparent that the Revised Angled Routes were considered by both Encana and the OGC, and attempts had been made to proceed with any reasonable variation of the Angled Route. As a result, by the time the hearing concluded, the issues were focused on the SE25 Route. The Panel has, therefore, limited its discussion of the issues to the evidence and arguments pertaining to the SE25 Route.

[134] Nevertheless, if the Panel had been required to render a decision on the various versions of the Angled Route, it would find that Encana made an extensive and genuine effort to adopt the Angled Route, and later the Revised Angled Routes, in order to avoid the NW30. Due to the regulatory and safety issues arising in connection with all versions of this route, these routes were not feasible. The Panel


would also find that the OGC gave due regard to the Dilworths’ written submissions in relation to the Angled Route, and went further to consider the variations thereof after the Permit was issued.

DISCUSSION AND ANALYSIS

A) THE DILWORTHS’ APPEAL NO. 2015-OGA-001

1. Did Encana make a misrepresentation to the Dilworths and, if so, what is the effect of that misrepresentation?

[135] The Dilworths assert that Encana’s representatives misrepresented to them the state of affairs, and their rights, in connection with the Project.

[136] There were several meetings between the Dilworths and Encana in connection with the Project. Those meetings are summarized above. Donald MacLeod was Encana’s representative at most of those meetings. The Dilworths say that, at one or more of the meetings, Mr. MacLeod told them that they did not have a right to object to the Project route, or left them with that impression. Mr. MacLeod’s comments to the Dilworths were based on Ms. Batyski’s survey consent. The Dilworths understood from Mr. MacLeod’s comments that either, (a) Ms. Batyski had actually approved the Project in a way that was binding on them, or (b) Ms. Batyski’s grant of survey consent amounted to approval, or preliminary approval, of the Project route on the NW30 and was binding on them. The Dilworths testified that they could not recall the exact words used by Mr. MacLeod, but were in no doubt as to the impression left by Mr. MacLeod’s comments.

[137] Mr. MacLeod did not testify at the hearing and limited evidence was given by Encana on this point. Ms. Wannamaker testified that she discussed the Dilworths’ assertion concerning Mr. MacLeod’s comments with him, and that he was “surprised” by the assertions. Ms. Wannamaker was not present for the discussions in question, and could give no direct evidence on the content of the discussions.

[138] The Panel finds that any evidence from other Encana representatives as to what Mr. MacLeod said to the Dilworths is hearsay. While the strict rules of evidence do not apply to the Tribunal, the Panel places no weight on Encana’s evidence that counters the direct evidence given by the Dilworths on this particular matter.

[139] The Dilworths assert that Encana’s December 9, 2014 response to their written objection appears to blur the line between survey consent and right-of-way consent. In that letter (quoted at paragraphs 32 and 113 of this decision), Encana states, “As we had consent to proceed with the Project from the previous owner and all other landowners along the right-of-way we proceeded with the survey”.

[140] In the Panel’s view, the words “consent to proceed with the Project” could be taken as consent to proceed with the survey for the Project, which is what Encana then states that it did. However, it is easy to see how a landowner could take “consent to proceed with the Project” as indicating that the prior landowner had consented, not just to a survey, but to the Project.


[141] Regardless of how Encana’s sentence ought to be interpreted, there is no doubt that the Dilworths were under the impression that, as of the fall of 2014, they had no ability to oppose the Project route. This was discussed in some detail in the meeting between the Dilworths and Ms. Goertzen on October 6, 2014. That is clear from Mr. Goertzen’s notes of the meeting.

[142] Based on all of the evidence, the Panel concludes that Mr. MacLeod left the Dilworths with the impression that Ms. Batyski had given some form of approval for the Project, and that the Dilworths were bound by that approval. The Panel does not find that Mr. MacLeod made any intentional misrepresentation to the Dilworths. Much clearer evidence would be required for such a finding. It may well be that Mr. MacLeod was not careful in his discussions with the Dilworths to distinguish between survey consent and right-of-way consent. However, the evidence supports a finding that, following their discussions with Mr. MacLeod, the Dilworths were left with an incorrect understanding of their rights.

[143] The question then becomes what, if anything, turns on this?

[144] The OGC corrected the Dilworths’ mistaken understanding during the October 6, 2014 meeting. As a result of discussions with Ms. Goertzen, the Dilworths understood that they were entitled to object to the Project route on the NW30. More importantly, even prior to that meeting, the Dilworths had provided their written submission to the OGC objecting to the pipeline on the NW30. The submission was dated October 2, 2014. Accordingly, the Panel finds that the Dilworths have not lost any right or benefit as a result of their mistaken understanding, and Encana has gained no right or benefit.

[145] As the Dilworths noted in both their oral and written evidence, it is important for project proponents to be complete, accurate and plain in their discussions with landowners during the formal statutory consultation process, and during any informal consultation process prior to, or following, the formal process. However, the importance of ensuring full and accurate disclosure does not justify granting or denying relief going beyond correcting any consequence of less than full disclosure.

[146] Had the Dilworths, for example, missed the deadline for filing a submission because they were left with the impression that they had no right to object, the facts would clearly support extending the deadline. That did not happen in this case. The Dilworths filed a submission with the OGC, and there is no objection to the timeliness of that submission. It is possible that a finding of material and intentional misrepresentation or non-disclosure on the part of a proponent could have more serious consequences. It is possible that, in such a situation, the setting aside of a permit could be justified. However, those are not the facts here. The Panel finds that this matter does not justify setting aside the Permit.

2. Whether prior survey consent and/or a landowner’s consent to oil and gas activities on an adjacent property are relevant considerations in a pipeline permit application.

The Dilworths’ prior consent as landowners of the NE25

[147] In its arguments in support of the Project route, Encana noted that the Dilworths, as landowners of the NE25, had accepted the Project.


[148] In his rationale for decision, Mr. Farah similarly noted that the Dilworths had agreed to “have the rest of this pipeline on their other quarter sections …”.

[149] At the hearing, the Dilworths candidly expressed their concerns on this point. They felt that, because they had been generally cooperative during the Project planning process and granted survey consent for the NE25, they may have impaired their right to object to the Project on the NW30.

[150] The Panel finds that the Dilworths prior consent as a landowner of the NE25, and other parcels, cannot be a relevant consideration when it comes to the Project route, or to the OGC’s decision on the permit application. The fact that a landowner consents to oil and gas activities on one property does not prevent the landowner from objecting to an activity, even the same activity, on another property. Nor can such consent be used against that person when considering a pipeline application and a landowner’s written submissions.

[151] Although Mr. Farah’s rationale noted the Dilworths’ consent to the pipeline on their other properties, based upon the evidence, this had no bearing on his assessment of their objections to the project on the NW30, and has no bearing on the Panel’s decision on the Dilworths’ appeal.

Prior survey consent regarding NW30

[152] Encana argues that, the fact that Ms. Batyski gave survey consent prior to selling the NW30 to the Dilworths, favoured the Project route on that parcel.

[153] The Panel understands the difficulties faced by Encana, or by any project proponent faced with complex routing decisions and opposition from relevant landowners at a “choke point”. It is understandable that, in this situation, the proponent would adopt a route for which there was, at least, survey consent. The proponent might also believe that, if survey consent had been granted, consent to a right-of-way, even after initial opposition, might be more likely.

[154] However, there is a fundamental problem with treating a landowner’s survey consent as, in any way, relevant to their ultimate position on a project. The entire basis for a survey consent is that it stands alone. A landowner can grant survey consent during the route planning stage of a project, while reserving the right to object to the project during the formal consultation process, once the final routing has been chosen.

[155] If the survey consent could be seen as some form of preliminary approval of the final project, this could create serious problems. For example, this could encourage landowners to issue a blanket objection to all surveys, which would make it more difficult for proponents to obtain survey consents.

[156] The Panel finds that Ms. Batyski’s survey consent for the NW30 has no relevance to whether the Dilworths could object to Encana’s application as it pertains to that parcel. The Panel finds that the OGAA and the Consultation Regulation cannot be interpreted in a way that allows a landowner’s cooperation during the planning process to impair that landowner’s, or a subsequent landowner’s, right to object to a project. The Panel also finds that there is no evidence that Mr. Farah placed any weight on Ms. Batyski’s survey consent when he issued the Permit: there is no evidence that he considered this irrelevant factor


when making his decision, and this has no bearing on the Panel’s decision on the Dilworths’ appeal.

3. Was the Permit issued “without due regard” to the Dilworths’ written submission?

[157] Under section 72 of the OGAA, the OGC’s decision to issue the Permit may be set aside on this appeal “only on the basis that the determination was made without due regard to” a landowner’s submission, or the applicant’s consultation and notification report. Section 72 is repeated for convenience as follows:

72(2) A land owner of land on which an operating area is located may appeal a determination under this section only on the basis that the determination was made without due regard to

(a) a submission previously made by the land owner under section 22(5) or 31(2) of this Act [a submission to the OGC regarding a permit application], or

(b) a written report submitted under section 24(1)(c) or 31(6) [an applicant’s consultation report].

[Emphasis added]

[158] The parties are in general agreement as to the meaning of the words in subsections (a) and (b).

[159] Section 72 makes it clear that the OGC must listen to a landowner’s concerns regarding routing or other characteristics of the proposed pipeline or project, and determine whether the landowner’s concerns have been addressed or accommodated by the applicant. If not, the OGC must determine whether those concerns ought to be addressed by the applicant in order to obtain a permit, whether the concerns ought to be addressed as a precondition to a permit (e.g., a particular study or assessment) or as a term or condition of a permit. However, the legislation does not require a landowner to consent to a project on their land: the fact that a landowner objects to an application does not preclude the OGC from issuing a permit. Under this legislation, a landowner does not have a veto over oil and gas activities on his or her land.

[160] In this case, the Dilworths assert that their routing concerns were not properly or adequately considered and addressed in connection with the Project route. The Dilworths assert that, in light of their legitimate and genuinely held objection to routing the Project across a portion of the NW30, the OGC should not have issued the Permit. The OGC should have required Encana to avoid the NW30.

[161] Essentially, the Dilworths submit that the OGC should have rejected Encana’s application for a route over the NW30 on the basis that there is a better alternate route. Encana would then have been forced to either abandon the Project, or reapply on the basis of the alternate route.

[162] The Panel will consider the Dilworths’ arguments under the following headings:


(a) Failure to give due regard to interference with the Dilworths’ use and enjoyment of the NW30; and

(b) Failure to give due regard to the SE25 Route.

(a) Failure to give due regard to interference with the Dilworths’ use and enjoyment of NW30

[163] Several matters were raised during the hearing in terms of the actual or potential interference with the Dilworths’ use and enjoyment of the NW30. These include the Dilworths desire to keep the NW30 free from oil and gas activities, potential interference with plans to construct a horse barn and corrals in the southwestern corner of the NW30, and concerns raised by the prior owner, Ms. Batyski, regarding the dugout and the possible impact on water quality. The parties provided evidence on these matters.

[164] There is no dispute that carrying out an oil and gas activity, including construction and operation of a pipeline, inevitably results in temporary interference with the land in question, and results in certain permanent limitations on use. For the NW30, due to changes made to the route during the consultation period (including the informal consultation period commencing in 2012), the Project only crosses a small portion of the southwestern corner of that parcel (approximately 125 metres by 65 metres) before crossing onto the SW30. Accordingly, any actual or potential interference with the NW30 is limited to that corner.

[165] In the southwestern corner of the NW30, there is a driveway and an overhead BC Hydro powerline that runs from 251 Road to the residence on the NW30. The Project has been routed to avoid interfering with either.

[166] The NW30, and all of the surrounding lands, are within the ALR. As such, the lands are subject to the ALR-OGC Agreement referenced earlier in this decision.

[167] Under the ALR-OGC agreement, there are several requirements to be met when an oil and gas activity is proposed for lands within the ALR. Except in limited circumstances, the proponent is required to conduct an investigation and provide reports, referred to as a “Schedule A Report” and a “Schedule B Report”. The Schedule A Report includes a site assessment and recommendations for minimizing agricultural impacts, soil management and reclamation. The Schedule B Report deals with remediation.

[168] For the Project, the investigation was conducted by consultants retained by Encana, and Schedule A and B Reports were written and submitted. The reports make recommendations, and those recommendations must be followed under the terms of the Permit. For instance, the land must be fully reclaimed within two years of the date of installation of the pipeline.

[169] Following restoration, there can be no, or very limited, interference with ability to carry on agricultural activities on the NW30. There could, however, be some ongoing and permanent interference with the ability to carry out certain construction or other activities.

[170] Section 76 of the OGAA [Pipeline Crossings] prohibits, or sets restrictions on, the carrying out of certain activities in the vicinity of a pipeline. The activities are


further described in the Pipeline Crossing Regulation, B.C. Reg. 147/2012, and include “ground activities”. Cultivation up to a depth of 45 centimetres is excluded from the definition of “ground activity” and is not, therefore, restricted: cultivation may take place in the vicinity of, and directly over, a buried pipeline. Any other work resulting in disturbance to a depth of 30 centimetres or greater, including construction, fence building or operation of heavy equipment, requires a “BC One” call in order to determine the specific location of the pipeline, and may require marking of the pipeline. Such other work can be carried out only with agreement of the permit holder, or by order of the OGC. The required distance is 30 metres, in terms of the initial prohibition. An agreement or order can be made permitting ground activities provided they are not within 10 metres of the pipeline.

[171] In this case, the Dilworths’ plans regarding future construction on the NW30 are not fully developed. The Dilworths have a general plan to construct a horse barn and corrals on the NW30. Given the location of the driveway, the BC Hydro line, and the dugout on the NW30, the Dilworths believe that the most suitable location for such structures is within the southwestern corner of the NW30.

[172] The extent of interference with potential construction of these structures was investigated by the OGC, and is referred to in the decision rationale. The OGC concluded that the Dilworths could still construct a barn in the southwestern portion of the NW30 if the Project was approved. That conclusion is consistent with the evidence at the hearing.

[173] It is true that the Project would preclude construction in the extreme southwestern corner of the NW30. However, based on all of the photographic, video and oral evidence, it is clear that a horse barn and corrals could still be built somewhere within that corner of the NW30. For that reason, while there may be permanent interference with the Dilworths’ ability to carry out construction on a portion of the NW30, the Panel finds that this interference is limited to a small area.

[174] This conclusion will be of little comfort to the Dilworths because they wish to keep the NW30 free from oil and gas activities. In that sense, it could be said that any development, whether or not it interferes with the Dilworths’ plans to construct a horse barn and corrals, interferes with their use and enjoyment of the NW30.

[175] Given that the Project is fully buried and occupies only a relatively small area of the NW30, and the fact that the surface of the affected portion of land must be fully restored within two years of installation, the Panel finds that the interference is minimal. The Panel also finds that Mr. Farah gave due regard to the Dilworths’ concerns and objections relating to their future use and enjoyment of the NW30, as is evident from his rationale for decision, and his evidence at the hearing. The Panel agrees that this interference would not justify refusing to issue the Permit.

[176] There was some discussion at the hearing regarding safety. This was not a case involving a general objection to existence of pipelines based on safety or other concerns. The Dilworths acknowledge that they have no objection to pipelines generally. Indeed, they have accommodated pipelines on other parcels which they own, and have accepted the Project insofar as it crosses the NE25. Nonetheless, some evidence was presented concerning pipeline safety generally.

[177] Based upon the evidence presented, the Panel does not consider safety to be an issue. At the hearing, the OGC referred to the requirement under the OGAA that


a permit holder establish, and follow, both an Integrity Management Program and a Damage Prevention Program in order to assess and mitigate risks, and to mitigate threats to pipeline integrity. The requirements are set out in some detail in the OGC’s Pipelines Operations Manual, the current version of which is dated January 2015.

(b) Failure to give “due regard” to the SE25 Route

[178] The Dilworths’ written submission to the OGC suggested that the SE25 Route be used rather than the NW30 and provided a sketch of the proposed SE25 Route. In addition to that sketch, they discussed the benefits of this route on various occasions with the OGC.

[179] The Panel notes that Mr. Farah, in the decision rationale, did not refer to the SE25 Route. However, he did refer to the considerations associated with the Angled Route in some detail. The Panel finds that nothing turns on this lack of analysis of the SE25 Route in his rationale.

[180] It is apparent from the evidence that the SE25 Route was considered by Encana during the Project planning process. It was also considered by Mr. Farah during his decision-making process, although he did not address this route specifically in his rationale. Mr. Farah testified that he looked at the SE25 Route from the perspective of balancing the interference with the Dilworths’ use of the NW30 against the interference with the Van Alstines’ use of the SE25. The fact that there were already existing oil and gas facilities on the SE25 supported a conclusion that the effect of routing the Project across the SE25 would be greater. While there is no specific requirement for written reasons from the OGC, it would have been preferable if Mr. Farah had addressed the SE25 Route in his rationale. However, the Panel finds that nothing turns on his lack of rationale, apart from the fact that the Panel must set out its reasoning on this issue in greater detail than might otherwise be necessary.

[181] The Dilworths point out that, while the SE25 is an agricultural parcel, it is not currently in production and it already has a riser site and pipelines on it; therefore, the interference with the SE25 arising from the Project would be less than the interference with the NW30.

[182] The Dilworths are correct that the lack of any current agricultural use of the SE25 is a relevant factor when considering the Project route. However, the existence of oil and gas activities on the SE25 does not mean that all other oil and gas activities ought to be located on that land. The fact that a landowner allows a particular project on the land, does not mean that the landowner must host all future projects on the land. This applies equally to the Dilworths’ lands currently being used for oil and gas activities.

[183] In the present case, the evidence establishes that the Project could not occupy a single right-of-way with the existing pipeline on the SE25, given routing of that pipeline. Therefore, the Project on the SE25 would result in three separate areas of oil and gas activities on that parcel:

1) the existing riser site,


2) the existing pipeline running eastward from the middle of the parcel to its eastern boundary (refer to Appendix A), and

3) a possible routing for the Project, running through the northeastern corner of the parcel.

[184] The fact that there would be three separate areas of oil and gas activities on the SE25 would support a conclusion that there is greater interference with use and enjoyment of that parcel than if there were only the two existing areas of development. This is also a relevant consideration in a permit application.

[185] In addition, the routing of a project must be justifiable from a technical standpoint. In the present case, there was significant evidence comparing the relative merits of the SE25 Route and the Project route crossing the NW30.

[186] In response to questions from the Panel, the OGC’s witness, Mr. Nazareth testified that the SE25 Route would have some technical advantages over the Project route which crosses the NW30. Specifically, the SE25 Route would require boring under only one BC Hydro line, the line running north-south along the east side of 251 Road. In contrast, the Project route crosses two BC Hydro lines: the north-south line along the east side of 251 Road, and the line that runs from 251 Road to the residence on the NW30.

[187] Mr. Chan, on behalf of Encana, did not agree with Mr. Nazareth’s conclusion on this point. Mr. Chan pointed out that, while the Project route requires boring under two BC Hydro lines, it is a single bore under both lines which are in close proximity. For that reason, Mr. Chan testified that crossing under one or two BC Hydro lines is irrelevant.

[188] Another technical issue considered relates to the length of boring required. Mr. Chan testified that the SE25 Route would require a substantially longer and deeper bore during construction, with a correspondingly longer “drag section”. The longer and deeper bore would arise from the fact that the SE25 Route would require the Project pipeline to be bored under 251 Road at 90 degrees to the road, and under the existing south-north pipeline that is buried along the western boundary of the SW30. This existing pipeline runs from the existing riser site on the SE25.

[189] By comparison, the Project route requires a shorter boring, under the existing west-east pipeline that runs along the northern boundary of the SW30. Once under this existing pipeline, and after its 90 degree turn to the east, the Project pipeline would parallel, immediately to the south, and partially utilize, the existing pipeline right-of-way along the northern boundary of the SE30. For that reason, Mr. Chan testified that the Project route across the NW30 was somewhat superior from a technical perspective.

[190] Mr. Chan also testified that the two turns of the pipelines from the NE25 to the NW30, and then the 90 degree turn from the NW30 to the SW30, are not an issue. Turns are a common feature of pipeline construction and present no technical challenges.

[191] Based upon the above, the Panels finds that the technical merits of the Project route crossing the NW30 are slightly better than those of the SE25 Route.


[192] As a final matter, the Dilworths argued that their objection to the use of the NW30 was given less weight than Mr. Van Alstine’s objection to the SE25 Route. Encana argued that, in addition to his objection, there is another impediment to that route. Specifically, Encana was concerned that, if it proceeded with the SE25 Route, it might be foreclosed off title due to the tax judgment in favour of the Canada Revenue Agency. The delay arising from that possibility would be outside Encana’s control and could, potentially, be lengthy and costly. Encana had a substantial “take or pay” commitment with Spectra Gas, which came into effect in 2015, and which added urgency to completion of the Project. Encana had planned to have the Project in operation by the Fall of 2015. At the time of the appeal hearing in October of 2015, the Project had not commenced operation. This was due to unanticipated delays on another section of the Project.

[193] When a landowner objects to the issuance of a permit on the grounds that another route ought to have been chosen, the relative merit of two routes must be considered from the perspectives of interference with use and enjoyment of the parcels, safety, technical merit, and potentially, cost.

[194] The OGC submits at paragraph 24 of its pre-hearing submissions:

The Authorizations Manager [Mr. Farah] carefully and fairly considered Dilworth’s objection to routing the Pipeline on NW 30, and the land owners’ suggestions for alternate routes. In doing so, he considered a range of information about those routes to consider whether the route chosen sufficiently limits or mitigates the effect the project will have in the area. The route was approved only after a consideration and weighing of many factors, including but not limited to Encana’s operational needs; engineering considerations; comments from the Appellants; information regarding comments made by neighbouring land owners and stakeholders; consideration of current and future agricultural uses of the lands; and consideration of current use of neighbouring lands for roads and hydro infrastructure.

[195] There is no evidence that Mr. Farah was aware of the Canada Revenue Agency issue, or took that into consideration when he made his decision. Nor is it clear that this is a relevant consideration to a permitting decision.

[196] The Panel notes that there are financial risks to some degree in every routing decision. Such risks must be assessed by the proponent. In this case, there is no evidence that the Canada Revenue Agency actually took enforcement proceedings against Mr. Van Alstine prior to building the Project.

[197] In the circumstances, the Panel concludes that it would give too much weight to the interests of the proponent, relative to those of the landowner, to take Encana’s commercial considerations into account. The Panel does not suggest that these factors should never be taken into account. However, the Panel concludes that they were not, and should not be, taken into account in this case.

[198] The OGC summarized Mr. Farah’s conclusions on the SE25 Route as follows at paragraph 32 of its pre-hearing submissions:

In summary, the Authorizations Manager [Mr. Farah] did consider the impact and disturbance to NW 30 and found it to be minimal due to the impact already caused by the BC Hydro right of way and the


reclamation requirements imposed on Encana. The Authorizations Manager also considered that while the Dilworths did not want the Pipeline on NW 30, the Van Alstines also did not want the Pipeline on SE 25. Apart from the fact that the Dilworths would prefer to have the Pipeline on the Van Alstine property, there was no compelling evidence presented to the Authorizations Manager to indicate that the Pipeline route applied for was inappropriate.

[199] Based upon all of the evidence presented at the hearing, the Panel agrees.

Conclusion on Issue 3: Was the Permit issued “without due regard” to the Dilworths’ written submission?

[200] The OGC was presented with an application for a Project route over the NW30. The OGC was required to consider the application under section 25(1) of the OGAA and either approve or reject that application. The OGC does not have the legislative mandate to require Encana to proceed with the alternate route.

[201] The OGC gave due regard to the Dilworths’ submissions regarding the effect to their plans for the NW30, and to the alternate routes.

[202] Further, based upon the evidence presented at the hearing, the Panel finds that:

• The Project will result in some interference with the Dilworths use and enjoyment of the NW30, but that interference will be limited. The Project will not prevent the Dilworths from constructing a horse barn and corrals somewhere in the southwestern corner of the NW30.

• Although the OGC did not specifically refer to the SE25 in the rationale for decision, the evidence at the hearing is that Mr. Farah considered the SE25 Route, but this route was not any more appropriate than the Project route. Further, based upon the evidence before the Panel, if the SE25 Route had been selected, it would have resulted in some interference with use and enjoyment of the SE25, and that interference would, potentially, be greater than interference to the NW30, given the fact that there would be three separate areas of oil and gas activities on the SE25.

• From a technical perspective, the SE25 Route and the Project route are fairly evenly balanced, although there may be a slight advantage to the Project route given the shorter boring length.

• Encana’s commercial consideration regarding the Canada Revenue Agency judgment was not considered by the OGC and is irrelevant in this case, and should not be considered.

[203] Overall, it is apparent that the choice between the SE25 Route and the Project route was fairly evenly balanced. In these circumstances, the Panel cannot find that the SE25 Route is clearly superior to the Project route. The Panel finds that there was no basis for the OGC to find that the SE25 Route was superior – or ought to have been preferred – over the Project route. The Panel has had the


benefit of extensive submissions and evidence on the SE25 Route, and agrees with the OGC that the reasons given for this alternate route did not, and do not, justify refusing the Permit.

Conclusion on the Dilworths’ appeal

[204] For the reasons given above, the Dilworths’ appeal is dismissed.

B) THE JORGENSENS’ APPEAL NO. 2015-OGA-002

1. Do the Jorgensens have standing to bring their appeal?

[205] The Jorgensens did not file a written submission with the OGC or to Encana objecting to the Project. On that basis, Encana asserts that the Jorgensens have no standing to bring their appeal.

[206] The Jorgensens assert that their appeal must be addressed on its merits, as the Tribunal considered their standing in its June 15, 2015 preliminary decision, and allowed their appeal to proceed to a hearing. This is not correct.

[207] The Tribunal’s decision of June 15, 2015 did not decide that the Jorgensens, in fact and law, had standing to appeal; rather, it found that the Jorgensens’ appeal could not be dismissed on a preliminary basis. The reason for this is clear from the Tribunal’s decision, which states as follows at paragraphs 43–49:

[43] The legislation requires a landowner’s appeal to be based upon written submissions, of which there are none. Further, the Appellants do not challenge the consultation report in their Notice of Appeal, and, in fact, it is clear from the decision rationale that Mr. Farah considered that report. The problem for the Jorgensens is that the report did not contain any relevant objection from the Jorgensens. The only written record of the Jorgensen’s concerns with the pipeline route on their land is in an email that was written after the permit was issued. As this record was made after the permit was issued, the Tribunal agrees that it neither provides a ground for appeal under section 72(2) of the OGAA, nor can it be accepted as evidence of previous concerns.

[44] However, if the Tribunal accepts the Jorgensen’s claims that they clearly communicated their objections to Encana on numerous occasions, and if Encana ought to have included their objection in its consultation report as alleged by the Jorgensens, then there may have been a breach of procedural fairness and/or a violation of the legislation such that the consultation report is fundamentally flawed and should not have been given “due regard”.

[45] Conversely, if the Tribunal accepts Encana’s claims that the Jorgensens did not communicate these objections to Encana during the consultation period, then the Tribunal agrees that the Jorgensens do not have the required statutory grounds for appeal under section 72(2) of the OGAA, and their appeal would be dismissed.


[46] As this application has been conducted in writing and there are no personal notes, minutes of meetings, or affidavits with sworn evidence regarding what was discussed during the meetings, the Panel is unable to make an assessment of credibility and to determine whether the Jorgensens communicated a clear objection to the proposed route, as claimed.

[47] Further, the parties have not had the opportunity to address the question of whether there is, in law, a duty upon the proponent to include verbal objections in a consultation report and, if so, the implications of the OGC’s reliance on the December 9, 2014 consultation report and on its decision-making process.

[48] In these circumstances, the Panel [of the June 15, 2015 decision] is not prepared to summarily dismiss the Jorgensen’s appeal. To find that the Tribunal does not have jurisdiction over an appeal and to take away a landowner’s ability to appeal, should only be done in clear cases. This is not one of those cases. There are lingering questions which the Panel has no ability to evaluate and decide based on the information before it. For all of these reasons, Encana’s application is denied.

[49] However, this does not preclude the parties from pursuing the jurisdictional question during the hearing of this appeal, at which time the Tribunal will have the benefit of oral evidence from the parties and legal argument.

[Emphasis added]

[208] It is apparent from these paragraphs that the Tribunal was concerned that the evidence tendered during the hearing could show a basis on which the Jorgensens had raised concerns/objections that would give them standing under section 72(2) of the OGAA.

[209] The question now faced by this Panel is whether, based upon the evidence tendered during the hearing, the Tribunal has jurisdiction over the Jorgensens’ appeal, notwithstanding the lack of a written submission and the absence of objections identified in the Consultation Report.

[210] The Jorgensens submit that they expressed concerns orally to Encana on several occasions during the consultation process, and that those concerns, or some of them, amounted to an objection to the Project.

[211] The Jorgensens assert that Encana was required under the OGAA to include their verbal concerns or objections in the Consultation Report. Because the Consultation Report failed to include reference to their verbal objections, the Jorgensens submit that any determination made on the basis of the Consultation Report constitutes a determination made “without due regard” to their objections/concerns. In this way, the Jorgensens assert that they have satisfied the requirement for standing. The Jorgensens assert that the Permit was issued “without due regard to a written report submitted” by Encana (i.e., the Consultation Report) under section 72(2)(b) of the OGAA.


[212] To address this issue, it is first necessary to summarize the legislative requirements in connection with the consultation process. The process has been summarized above, but additional detail is necessary to address this issue.

[213] The Panel notes that the OGAA and the Consultation Regulation contemplate a formal consultation process that may include direct, face-to-face meetings. However, the various stages of the process are, in each case, triggered by a written notice or response. There is good reason to require written notice: written notice ensures clarity and certainty in the process. This is the basis for the appeal section which only allows appeals on the grounds that the OGC made a determination without due regard to a written submission made to the OGC during the consultation process under section 22 of the OGAA, or failed to give due regard to the proponent’s consultation report under section 24 of the OGAA.

[214] The Panel further notes that section 24 of the OGAA only requires the results of the formal consultations carried out under section 22 of the OGAA to be included in the consultation report. If the consultation report contains a description of any informal consultation process, obviously, it must describe that process accurately. However, the OGAA does not require a description of that informal process in the consultation report.

[215] The details of the notification and consultation process required to be performed by the applicant are set out in the Consultation Regulation. The consultation process is initiated by an invitation to consult under section 13 of the Consultation Regulation. The invitation to consult must contain certain specific information, including a statement that the landowner may provide a written response to the applicant within 21 days (section 13(h)). The invitation must also contain certain specific information concerning the written response. Specifically, section 13(h) requires the invitation to consult to include:

(h) a statement advising that the person receiving the invitation to consult

(i) may provide a written response to the applicant, within 21 days of receiving the invitation to consult, the written response either advising the applicant that the person does not object to the applicant's application or doing one or both of the following:

(A) setting out the reasons why the proposed activities that will be the subject of the applicant's application should not be carried out or should be modified;

(B) requesting a meeting with the applicant to discuss the proposed activities, and

(ii) may make a submission to the commission under section 22 (5) of the Act, if the invitation to consult is in relation to an application under section 24 of the Act [as this matter does].

[Emphasis added]

[216] According to section 14(1) of the Consultation Regulation, if the landowner provides a written response to the applicant, the applicant must provide a written reply as soon as practicable. If the landowner requests a meeting, the applicant must arrange such a meeting.


[217] According to section 14(2), a written reply by the applicant must include certain information. It must:

• advise of any revisions made to the project in response to the landowner’s written response,

• advise that the landowner’s written response and the applicant’s reply will be included in a consultation and notification report, and

• must again refer to the landowner’s right to make a written submission to the OGC where applicable.

[218] Under section 14(3), the applicant has no further consultation obligations in connection with a particular landowner when 21 days have passed following the invitation, or following the proponent’s written reply to the landowner, if there is no written response, or further written response, received from the landowner.

[219] After this formal consultation process is completed, section 24(1)(c) of the OGAA requires the proponent’s application package to include a written consultation and notification report, satisfactory to the OGC, “regarding the results of the consultation carried out or notifications provided under section 22, if any”.

[220] In this case, Encana engaged in a lengthy informal consultation with the landowners affected by the Project, including the Jorgensens, commencing in late 2012. The formal consultation process was triggered by the October 8, 2013 invitations to consult. The Panel finds that the invitations to consult met the requirements of the Consultation Regulation, and clearly set out, for the Jorgensens, the option of either providing a written submission to the OGC, or providing a written response to Encana. The Jorgensens did neither.

[221] As a result, in terms of the formal consultation process under the OGAA, Encana was not required to engage further with the Jorgensens during the 21-day period after issuance of the consultation invitation. Nevertheless, following issuance of the formal consultation invitation, Encana continued with informal discussions and consultations, and attempted to obtain an agreed right-of-way across the Jorgensens’ property.

[222] During those discussions, the Jorgensens made certain comments concerning activities on the SW30. Those comments are referred to in more detail below, in connection with the Jorgensens’ substantive concerns. For the purposes of deciding this issue, it is sufficient to note that none of their comments amounted to an objection on the basis of interference with the Jorgensens’ use or enjoyment of the SW30. What the Jorgensens told Encana was that they objected to the Project route on the basis that the consent of their neighbour, Ms. Batyski, had not been obtained. If Ms. Batyski consented, the Jorgensens advised that they would, or would likely, consent to the Project.

[223] There is no evidence that Encana made any statement to the Jorgensens to the effect that Encana would include the Jorgensens’ verbal comments in its Consultation Report, notwithstanding the lack of any written response or submission from the Jorgensens. Nor was there any promise or representation that Encana would act on any concerns expressed verbally by the Jorgensens, or that Encana would not proceed with the Project in the absence of consent from Ms. Batyski.


[224] Encana’s Consultation Report includes a “Summary of Engagement” with the Jorgensens, listing their formal and informal consultation steps. The Consultation Report then states under “Outstanding Concerns” that Encana “has been unable to reach an agreement with the landowner and will be seeking right of entry, no project specific concerns have been raised”.

[225] The question is whether that statement is accurate, and, if not, whether that inaccuracy provides the Jorgensens’ with standing to appeal under section 72(2)(b) of the OGAA.

[226] The Panel finds that the statement in the Consultation Report concerning the Jorgensens is accurate. If not entirely accurate, the statement is certainly not misleading. The statement indicates that no agreement had been reached with the Jorgensens, and that a right of entry would be sought. The Panel finds that the Consultation Report does not imply that the Jorgensens agreed to the Project.

[227] The statement that “no project specific concerns have been raised” is also accurate insofar as the SW30 is concerned. The Jorgensens, to the extent that they verbally objected to the Project route, did not make that objection in connection with the SW30; rather, they made that objection to support their neighbour, Ms. Batyski, in connection with the NW30. The Consultation Report accurately sets out the state of affairs in relation to the NW30, including the fact that a written submission to the OGC had been made by the Dilworths.

[228] In addition, had the Consultation Report included a statement indicating the Jorgensens’ full position, it would have simply indicated that the Jorgensens’ consent was dependent upon consent of the landowners of the NW30. In the circumstances, that would have made no difference to the OGC’s consideration of Encana’s application. The OGC’s consideration of the NW30 would be on the basis of the submission filed by the landowner of that parcel, and would not depend on whether the Jorgensens granted or withheld consent based on the position of the owner of the NW30.

[229] It should also be noted that the Jorgensens’ oral evidence at the hearing did not contradict these findings or provide compelling evidence that they had other issues with the Project on the SW30 that were not reported by Encana in its Consultation Report.

[230] For all of these reasons, the Panel finds that the Jorgensens do not have standing to appeal.

2. Was the Permit issued “without due regard” to the Jorgensens’ concerns?

[231] Notwithstanding the Panel’s conclusion on the standing issue, the Panel will nonetheless consider the substantive issues raised by the Jorgensens.

[232] The Jorgensens raised the following matters in their evidence:

• The Jorgensens had concerns about the manner in which the Project work had been done. For example, the Jorgensens pointed out that the Project had been constructed on the SW30 in August 2015, and the right-of-way and work space was seeded at the time of construction. The Jorgensens


asserted that seeding should not have been done at that time: the proper time to seed would be the Spring of 2016.

• The Jorgensens expressed some concerns about the size and configuration of the pipeline “drag area” (the temporary work space) in the northwestern corner of the SW30.

• The Jorgensens testified that the configuration of the Project unnecessarily cuts off a portion of land in the northwestern corner of SW30. The Jorgensens noted that they lease this portion of the SW30 to a farmer, and they will have to compensate the farmer for the inability to utilize that portion of the SW30.

[233] Based upon Encana’s detailed Stakeholder Engagement Summary, these matters were not referred to during the Jorgensens’ consultation with Encana. According to the summary, there were a number of concerns expressed by the Jorgensens, but none of the above. For example, the summary refers to the Jorgensens’ request for the Project right-of-way to be close to the northern boundary of the SW30, a concern which Encana accommodated. The summary also refers to ongoing discussion over compensation matters.

[234] Even if these matters had been referred to in a written submission provided by the Jorgensens to the OGC, or a written report provided by the Jorgensens to Encana, the Panel finds that these concerns would not have justified a different decision concerning the Project route. The Jorgensens’ concerns amount to a temporary interference within a small portion of the SW30 during the construction and restoration period. While such concerns are legitimate, they are relatively minor, and are, to some extent, unavoidable in connection with any project. They are matters that are subject to the appropriate level of compensation to be provided by Encana. If the parties cannot agree on compensation, that matter may go before the Surface Rights Board.

[235] For these reasons, the Panel finds that, even if the Jorgensens had filed a written response or written submission outlining these concerns, the OGC would not have been acting without “due regard” to those objections when it issued the Permit.

3. Is the sales gas line a “flow line”?

[236] The Jorgensens assert that the sales gas line is not a “flow line”, and that the Project, or a part of it, cannot support a right of entry to Encana.

[237] In the circumstances, it is not open to the Jorgensens to raise this issue. As described above, the flow line issue has been determined by the Surface Rights Board in connection with this Project. There is no new evidence on that issue and, assuming that the Panel even has the jurisdiction to reconsider this matter in the context of this appeal, there is no basis for the Panel to make a different decision than has already been made by the Surface Rights Board.


Conclusion on the Jorgensens’ appeal

[238] For the reasons given above, the Jorgensens’ appeal is dismissed on the basis of jurisdiction (lack of standing to appeal).

DECISIONS

[239] In making these decisions, the Panel of the Oil and Gas Appeal Tribunal has carefully considered all of the evidence and arguments before it, whether or not specifically reiterated herein.

[240] For the reasons given above, the appeals are dismissed.

“Gregory Tucker” Gregory Tucker, Q.C., Panel Chair Oil and Gas Appeal Tribunal “James Hackett” James Hackett, Member Oil and Gas Appeal Tribunal “Douglas VanDine” Douglas VanDine, Member Oil and Gas Appeal Tribunal

June 7, 2016


APPENDIX “A”

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