AgriLaw: December 2010

Energy pipeline companies may have both statutory and contractual rights to access their pipelines to undertake necessary maintenance and repair. What right does a landowner have to reasonable notice of such activities and to recover financial losses which may result from the work performed?

In a recent decision of the Alberta Court of Appeal, the appellate court considered an appeal of a trial judgment which had awarded to a landowner compensation for livestock losses attributed to repair of a leaking sour gas production pipeline and related soil and groundwater contamination. The trial judge had determined that the pipeline company breached a duty to give timely advance notice to the landowner of intended repair work and subsequently to ensure that hydrocarbons and contaminated soil and water were not accessible by the plaintiff landowner’s cattle. Evidence at trial established that the landowner had not received advance notice of the work and that, as a result of exposure to contaminated soil and groundwater, the cattle suffered increased incidence of disease, decreased reproductive performance and reduced production.

The pipeline company appealed the trial decision on the grounds that there was no evidence that the cattle had in fact consumed the contaminated soil or groundwater, or that such exposure caused the plaintiff landowner’s financial loss. In dismissing the appeal, the appellate court agreed with the trial judge with respect to the pipeline company’s breach of its duty to provide the landowner with reasonable notice of the work to be undertaken and that, on a balance of probabilities, the evidence was sufficient to establish that the injury to the cattle was caused by the conduct of the pipeline company. In this regard, the appellate court concluded:

“… the plaintiff’s evidence established, on a balance of probabilities, that the cattle ingested the chemicals, whether from the water or soil, or both. Secondly, the plaintiff demonstrated that there was a marked difference in the health and reproduction of cattle pastured in the south field from the remainder of the herd pastured elsewhere. The plaintiff also proved that at least for a period of time the water in the excavation contained BTEX chemicals significantly in excess of the Guidelines for livestock watering, and that it could be inferred that the pipeline leak had contaminated the groundwater. Further, the veterinarian who looked after the entire herd testified concerning the preventive medicine program that was in effect for all the cattle, and gave the opinion that the increased incidence of disease and the decreased reproductive performance resulted from the hydrocarbon exposure.”

With respect to the pipeline company’s complaint that the evidence was insufficient to establish the cattle’s exposure to contaminants, the court stated:

“… [the pipeline company] entered [the landowner’s] property and undertook the repair work, without prior warning. It then placed contaminated soil and water in the vicinity of her livestock, also without her knowledge. [The pipeline company’s] actions made it difficult, if not impossible, for [the landowner] to gather the evidence necessary to scientifically assess the extent to which the cattle had been exposed to hydrocarbon contamination. All the while, it was within [the pipeline company’s] power to test the water in the excavation and the contaminated water dumped upon the ground – something it failed to do in any timely or comprehensive way … thus … [the pipeline company’s] conduct made it impossible for it to overcome the inferences reasonably drawn from the plaintiff’s evidence.”

Landowners are entitled to reasonable notice of repair and maintenance work to be undertaken on their properties by energy pipeline companies. Where there is sufficient evidence to establish at least a reasonable inference that such activities have resulted in financial loss to the landowner, landowners are entitled to compensation.