Pipeline Coming? What to Do?

AgriLaw: June 2009

A letter arrives announcing that your farm is in the path of a proposed new pipeline.  A notice appears in your local newspaper inviting affected landowners to an open house to learn about how the new pipeline will affect you.  Should you be concerned about potential impacts of the pipeline on your farming operations?  Are you entitled to compensation for such impacts?  What can you do about it?

The first national pipeline systems in Canada were constructed beginning in the 1950’s to transport western Canadian gas and oil to eastern markets.  Since that time, these original pipeline easements have expanded into utility corridors containing multiple pipelines crossing a substantial portion of the country and affecting thousands of acres of farmland.  With the current focus on North American energy self-sufficiency, pipelines continue to proliferate.  All of these pipelines are subject to either national or provincial regulation the purpose of which is to protect the public interest, including the interest of affected landowners.  The challenge is for landowners to effectively engage the regulatory process to ensure that their interests are addressed and that they are fairly compensated for the impacts of pipeline construction and operation which cannot be mitigated or avoided.

To obtain regulatory approval for the construction of either nationally or provincially regulated pipelines, pipeline companies generally must undertake consultation with affected landowners for the purposes of identifying and assessing potential impacts of the proposed pipeline construction and operation, and providing for the mitigation or compensation of such impacts.  For farmers, these impacts may include mixing and compaction of agricultural soils with resulting production losses; restrictions on the type and weight of agricultural equipment operating in the proximity of pipelines and on cultivation depths; consent requirements for agricultural operations and for the construction and maintenance of buildings, drainage and fencing; limitation on access to agricultural land; interference with water supply; destruction of wood lots and hedge rows; and environmental, safety and liability exposure concerns resulting from pipeline failure and eventual abandonment.  It is these impacts which affected landowners must ensure are or will be addressed through mitigation measures or compensation before regulatory approval is granted for the construction and operation of a new pipeline.

It has been the experience of farmers across Canada that these issues will be successfully addressed and resolved only when affected landowners unite their efforts and collectively confront pipeline companies and regulators with their demand for solutions.  The Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA), formerly the Canadian Alliance of Pipeline Landowners’ Associations (CAPLA), has been able to assist in the organization of regional landowner associations across Canada for this purpose.  CAEPLA and its members have successfully intervened in both federal and provincial regulatory approval proceedings to focus the attention of pipeline regulators on landowner impacts and to require that these impacts be mitigated or compensated.

Under the regulatory framework governing the construction and operation of pipelines, and in easement agreements between pipeline companies and landowners pursuant to which pipeline companies acquire their rights to the land, landowners have both a statutory and contractual right to compensation for the financial losses suffered as a result of the pipeline construction and operation.  This right to compensation includes not only the value of the land rights acquired by the pipeline company through expropriation or agreement, and the disturbance and production losses related to pipeline construction.  It also includes the right to compensation for continuing production losses, interference with agricultural operations, opportunity costs resulting from inability to grow higher value crops or develop intensive agricultural facilities, and diminishment of land and rental values.  Failing a negotiated resolution of these claims with the pipeline company, landowners have the further right to have these losses determined by arbitration.

Pipeline coming?  What to do?  Exercise your rights!  Organize, intervene in the regulatory approval process, identify concerns and require resolutions either by negotiated settlement or regulatory order, and negotiate or arbitrate appropriate compensation.

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