August 27, 2004, E.C.B. No. 09/04/249

REASONS FOR DECISION

1.  INTRODUCTION

[1] The claimant, Talisman Energy Inc. (“Talisman”), is seeking to complete the expropriation of a statutory right of way for a natural gas pipeline already constructed beneath lands owned by the respondents, Diane and Larry Fay (the “Fays”). Talisman has applied to the Expropriation Compensation Board (the “ECB” or the “board”) pursuant to the authority vested in the board by the operation of sections 16(1) and (3) of the Pipeline Act, R.S.B.C. 1996, c. 364, and Part 7 of the Railway Act, R.S.B.C. 1996, c. 395, for a compensation hearing and an order determining the amount of compensation to which the Fays are entitled under the Expropriation Act, R.S.B.C. 1996, c. 125, as a result of the taking.

[2] The Fays have responded with a notice of motion requesting from the board an order dismissing Talisman’s application for determination of compensation. They allege that the matters raised in Talisman’s application to the board were already dealt with in the mid-1970s by another tribunal, the Mediation and Arbitration Board (the “MAB”), acting within its jurisdiction under the Petroleum and Natural Gas Act, 1965 (B.C.), c. 33 as amended by 1974, c. 61 (now the Petroleum and Natural Gas Act, R.S.B.C. 1996, c. 361). The Fays take the position that the expropriation provisions of the Pipeline Act and the Railway Act are inapplicable in the circumstances. Furthermore, they accuse Talisman of bringing these new proceedings in order to avoid obligations it owes to them under compensation orders issued by the MAB. At paragraph 6 of the notice of motion the Fays allege that Talisman’s claim of an urgent need to complete these expropriation proceedings “is bogus and is basically just a scare tactic.” At paragraph 7 the Fays allege that Talisman’s attempt to invoke the jurisdiction of the ECB “amounts to an abuse of the Board’s process.”

[3] Talisman in turn has filed two notices of motion. The first seeks an order that paragraph 6 of the Fays’ notice of motion be struck out on the grounds that its contents are unnecessary, scandalous, frivolous and vexatious within the meaning of Rule 19(24) of the Supreme Court Rules, B.C. Reg. 221/90. The second motion requests an order pursuant to Rule 19(16) of the Supreme Court Rules that the Fays be required to provide particulars of the abuse of process allegation in paragraph 7 of their notice of motion, failing which final argument on their dismissal application be adjourned. At the conclusion of this interlocutory hearing, I indicated to the parties that nothing I had heard satisfied me that any weight should be given to the allegations made in paragraphs 6 and 7 in reaching my determination on the dismissal application. Accordingly, it was unnecessary at that point to adjourn the proceedings or otherwise deal with Talisman’s two motions. I do not find a need to deal with them further in these reasons.

[4] In support of their dismissal application the Fays have filed the sworn affidavit of Diane Fay to which are annexed copies of compensation orders and other documents relating to the role of the MAB in this matter. Their counsel, Mr. Carter, in the course of argument also referred me to a legal opinion in his possession concerning the jurisdiction of the MAB. In response Talisman has filed the sworn affidavit of its in-house counsel, Marni Alexander (the “Alexander affidavit”), to which are annexed copies of, among other things, a location map, title searches and approval orders in relation to the pipeline crossing the Fays’ lands. Talisman has also referred to the affidavit of W.A. Sandy Ross, a British Columbia land surveyor, sworn March 25, 2004 and filed with the ECB (the “Ross affidavit”). Talisman’s counsel on this matter, Mr. Cosburn, in the course of argument cited a judgment of the Supreme Court of British Columbia which he submitted was relevant to the question of the MAB’s jurisdiction.

[5] I heard this application alone by teleconference on the morning of June 24, 2004, exercising the powers and jurisdiction of the board under section 26(5) of the Expropriation Act. Shortly after the hearing concluded, I was provided by Mr. Carter with a copy of the legal opinion to which he had referred and, on June 30, 2004, I received written submissions from Mr. Cosburn in regard to it.

[6] This application has required consideration of a number of statutes. The board has previously set out the statutory framework for expropriation of interests in land for natural gas pipelines and the compensation for such takings in two decisions: B.C. Gas Inc. v. Lansdall (1992), 48 L.C.R. 209 at pp. 213 to 218, and Home Oil Co. v. Schulte (2003), 80 L.C.R. 123 at pp. 128 and 134-139. There are useful discussions in those decisions of the intertwining provisions of certain enactments under consideration here although neither decision had to take into account the effect of the Petroleum and Natural Gas Act or the role of the MAB. For ease of reference I have reproduced what I consider to be the relevant portions of the various statutes in Appendix “A” to these reasons for decision.

 
2.  BACKGROUND

[7] The lands which form the subject of these expropriation proceedings are located north of the City of Fort St. John in the Peace River District of British Columbia and are legally described in the expropriation documents as:

PID 008-907-561
The Northeast ¼ of Section 5, Township 110, Peace River District, Except Plan PGP38245

and

PID 014-501-155
The Southwest ¼ of Section 9, Township 110, Peace River District

(collectively the “subject lands”).

[8] On March 19, 1974, a corporate entity known as Houston Oils Limited (“Houston”), which is a predecessor in title to Talisman, received approval under Order in Council number 181/74 of certificate number 1300 issued by the Minister of Transport and Communications pursuant to the Pipe-Lines Act, R.S.B.C. 1960, c. 284. The certificate authorized the construction by Houston of a natural gas pipeline through the Buick Creek area of the Peace River District which includes the subject lands.

[9] On April 12, 1974, Houston received permission from the MAB under right of entry orders 920-R-1 and 920-S-1 issued pursuant to the Petroleum and Natural Gas Act to enter, occupy or use part of the subject lands for the generally stated purpose of exploring for, developing or producing petroleum and natural gas or for any connected or incidental purpose. I infer that the MAB was aware at the time of Houston’s intention to construct a pipeline.

[10] Houston proceeded to construct the subject pipeline as approved and, on December 24, 1974, deposited in the Prince George Land Title Office under no. 21881 a surveyed “plan of pipeline right of way through parts of Township 110 and Lot 2874, Peace River District” (“plan 21881”). A copy of plan 21881 is attached to the Ross affidavit. It shows the pipeline commencing at a wellsite location northeast of the subject lands and running in a southwesterly direction in the course of which it crosses the subject lands. The registration of plan 21881 is disclosed in the miscellaneous notes to title but the plan is not shown as a registered charge on title to the subject lands. Although plan 21881 does not appear to show the full southerly extent of the pipeline as presently constructed, a recent location map prepared for Talisman and attached to the Alexander affidavit shows it intersecting what has been described as the Duke Energy main pipeline some distance southwest of the subject lands.

[11] In response to Houston’s further application for an order determining the compensation payable for the occupation or use of the subject lands, the MAB carried out inspections, conducted a hearing and, on February 21, 1977, issued orders 90A and 91A which dealt respectively with the two subject parcels. The orders specified the amount of compensation payable from April 12, 1974, the date upon which right of entry had been granted. During the first year only, compensation was awarded for the compulsory aspect of entry, occupation or use. During each of the first two years, compensation was also awarded for loss of right or profit, temporary and permanent damage, and nuisance and disturbance as well as for what is described as “rent” calculated at a per acre rate. The total compensation awarded with respect to the N.E. ¼ of Section 5 was $320 for the first year and $70 for the second year while, with respect to the S.W. ¼ of Section 9, it was $330 for the first year and $80 for the second year. Beyond the first two years, only the nominal amount of $10 per year (referred to as “annual rent”) was awarded for each parcel. However, both MAB compensation orders also referred to “the right to a re-negotiation of the rental provisions” pursuant to section 12 of the Petroleum and Natural Gas Act.

[12] Several corporate and name changes have occurred between the time that Houston obtained approval to construct the subject pipeline and the present. These are detailed in an outline of corporate transactions annexed to the Alexander affidavit. It will suffice to note that on October 15, 1999, the rights of Houston with respect to the subject pipeline passed to Talisman as a result of the amalgamation of Talisman with a successor company which had acquired those rights.

[13] On August 22, 2000, the Fays took registered title to the subject lands. Soon afterwards, it would appear, they entered into negotiations with Talisman over annual compensation for the subject pipeline. Informal negotiations continued for the next two and a half years and culminated in the Fays providing to Talisman a notice to lessee in prescribed form dated August 29, 2003, pursuant to section 11 of the Petroleum and Natural Gas Act. The notice required renegotiation of the “rental provisions” in compensation orders 90A and 91A of the MAB.

[14] At this juncture Talisman raised a jurisdictional objection. Mr. Cosburn wrote to the Fays on September 17, 2003, advising that his client was not prepared to pay the revised amounts being proposed as annual rentals. He went on to say:

“The pipeline in question appears not to be a flow line over which the Mediation and Arbitration Board has jurisdiction. Rather, it is a pipeline transporting petroleum products to the Duke Energy main line for sale, in which case compensation for the acquisition of the necessary statutory right of way is determined by the Expropriation Compensation Board. As such Talisman requires a statutory right of way over the portions of your property affected by the pipeline.”

Mr. Cosburn concluded by indicating that he had recommended to Talisman that expropriation proceedings be instituted pursuant to the Railway Act.

[15] Over the following months prior to involving the ECB, Talisman took various steps aimed at complying with the applicable provisions for expropriation under Part 7 of the Railway Act. Section 48(1) requires that a plan, profile and book of reference be deposited in the land title office. In this instance the plan and book of reference had already been deposited in the Prince George Land Title Office on December 24, 1974. The further deposit of a profile plan occurred in the New Westminster Land Title Office on February 12, 2004 under no. BW060331. The newspaper notice also required under section 48(1) was published in the March 5, 2004 issue of the Alaska Highway News. Section 50 of the Railway Act requires that a notice be served on the owners of the land containing a description of the land to be taken, the powers intended to be exercised with regard to the land, and a declaration of readiness to pay a certain sum or rent as compensation for the land or for damages. Section 51 provides that the notice be accompanied by the affidavit of a B.C. land surveyor which is to contain certain specified information. In this instance the section 50 notice, dated March 16, 2004, and the land surveyor’s affidavit, sworn March 25, 2004, together with an appraisal of the subject lands and a copy of the terms of the proposed statutory right of way instrument, were served on the Fays on April 16, 2004. In the section 50 notice Talisman declared its readiness to pay compensation to the Fays for the statutory right of way and for miscellaneous damages in the amount of $398.

[16] On May 11, 2004, Talisman filed with the ECB its application for determination of compensation which includes a detailed statement of claim. Talisman’s application has resulted in the present interlocutory proceeding. I note that on the same date that Talisman filed its application with the ECB, Mr. Carter on behalf of the Fays e-mailed the MAB advising that his clients were now applying to that tribunal under section 12 of the Petroleum and Natural Gas Act for arbitration of the rentals payable under orders 90A and 91A.

[17] Before concluding my discussion of the background to this matter, I should perhaps point out several unexplained anomalies in the evidence. First, it seems apparent from a review of plan 21881 that Talisman’s pipeline crosses a significantly larger portion of the subject lands owned by the Fays than those small corners of the N.E. ¼ of Section 5 and the S.W. ¼ of Section 9 dealt with by the MAB in compensation orders 90A and 91A and now also said to be the location and extent of the areas being expropriated for Talisman’s statutory right of way. To my mind this raises some questions, should the expropriation proceed, as to the appropriate extent of any land to be taken and, in turn, of the amount of compensation to be paid with respect to the subject pipeline.

[18] Second, there appears to be a discrepancy between the legal description of parcel identifier 008-907-561 shown in the expropriation documents as the “Northeast ¼ of Section 5” but in the title search attached to the Alexander affidavit as “The East ½ of Section 5”. Certainty as to the identification of any land to be taken is of obvious importance in expropriation proceedings.

[19] Third, the Alexander affidavit also reveals that, in addition to taking title to the two parcels comprising the subject lands on August 22, 2000, the Fays on the same date also took title to a third parcel legally described as PID 014-210-592, The South ½ of Section 8, Township 110, Peace River District, Except Plan 19983. This third parcel adjoins each of the other two parcels but, unlike them, already has a statutory right of way registered on title in favour of Talisman. The charge references plan 21881 and is shown as having been registered on July 12, 1996. The fact that part of the Fays’ land is already encumbered with a statutory right of way for the subject pipeline raises perhaps a circumstantial argument in favour of Talisman on this application.

 
3.  ISSUE

[20] The central issue on this interlocutory application is whether the board should make an order dismissing Talisman’s application for determination of compensation. Both parties have construed this as being a largely jurisdictional question involving the respective areas of statutory authority of the MAB and the ECB with respect to pipelines.

 
4.  POSITIONS OF THE PARTIES

4.1  The Fays’ Position

[21] The Fays submit that the MAB had the jurisdiction to make the right of entry and compensation orders it made in this matter pursuant to Part 3 of the Petroleum and Natural Gas Act, that in doing so it has already dealt with the matters now raised in Talisman’s application to the ECB, and that its jurisdiction over these matters continues. Talisman and its predecessors, they argue, obtained the benefit of the expropriation procedures under the Petroleum and Natural Gas Act and Talisman is now obliged pursuant to sections 11 and 12 of that statute either to renegotiate annual compensation or agree to have the matter submitted to the MAB for arbitration.

[22] According to the Fays, the expropriation provisions of the Pipeline Act and the Railway Act, from which the ECB derives its jurisdiction to determine compensation, are not intended to be used for pipelines installed pursuant to authorizations issued under the former Pipe-lines Act and the Petroleum and Natural Gas Act many years in the past. They point out that section 10 of the current Pipeline Act requires a company to have a certificate from the Oil and Gas Commission before beginning construction of a pipeline while section 16(1) provides that the company may take and appropriate land for its pipeline only on obtaining such a certificate. The Fays say these statutory provisions clearly cannot now be applied to the subject pipeline so that, in the result, the entire statutory scheme of expropriation and compensation is inapplicable.

[23] The Fays do not go so far as to suggest that the broad powers they say the MAB enjoys over rights of entry and compensation in respect of pipelines render the ECB’s powers redundant. Mr. Carter argued that ab initio the two tribunals may have concurrent jurisdiction over such matters although he observed that the MAB is the tribunal to which the oil and gas industry most often resorts. Neither did Mr. Carter, in response to my inquiry during the hearing, take the position that Talisman’s application before the ECB was barred by the doctrine of res judicata even though the Fays were arguing that the MAB had already dealt with the matters raised in that application. Rather, as I understood his argument, the ECB should simply decline to exercise any jurisdiction it may have given the circumstances of this case.

4.2  Talisman’s Position

[24] Talisman submits that, whether or not the MAB ever had the jurisdiction to grant the original right of entry and compensation orders with respect to the subject pipeline, it no longer possesses such jurisdiction. Because of the nature of the pipeline, jurisdiction has instead passed to the ECB to determine compensation and complete the expropriation process. Talisman says it has satisfied the procedural requirements enabling the ECB to do so.

[25] According to Talisman’s counsel, the law in this area does not recognize concurrent jurisdiction. Instead, to resolve the jurisdictional question in the present case it is necessary to distinguish between two separate statutory regimes: the first under Part 3 of the Petroleum and Natural Gas Act entitled “Entry, Mediation and Arbitration” and the second under Part 4 of the Pipeline Act entitled “Taking and Using of Land” together with Part 7 of the Railway Act entitled “Acquisition of Land by Expropriation and Purchase”. Talisman posits the following distinctions.

[26] The first statutory regime, under which the MAB is established and from which it derives its jurisdiction, governs right of entry to land for the initial purpose of petroleum and natural gas exploration, development and production. The regime is intended to be temporary in character, conveys no registrable interest in land, and cannot properly be said to involve expropriation. It provides for periodic but usually short term compensation to the land owner in respect of entry, occupation and use. The regime’s authority with respect to pipelines is strictly limited. Pursuant to section 16(4) of the Pipeline Act the MAB’s jurisdiction extends to “flow lines” – defined as “pipelines serving to interconnect wellheads” with field storage or treatment facilities – but does not extend to other pipelines including those constructed for the purpose of transporting petroleum or natural gas product from various well sites either directly to market or to other pipelines carrying the product ultimately to market. Even over those pipelines in respect of which the MAB does have jurisdiction, on case authority Talisman says the tribunal is not authorized to fix an annual rental sum for payment by a pipeline company into the future.

[27] The second statutory regime, under which the ECB derives its jurisdiction to determine compensation, is of a permanent character consistent with the need for ongoing use of the land to operate, maintain and repair pipelines built to carry petroleum or natural gas from the field to market. This regime truly involves expropriation, conveys a registrable interest in the land – usually in perpetuity and often in the form of a statutory right of way – and is primarily although not exclusively concerned with a lump sum award of compensation for the permanent taking.

[28] Talisman suggests that the subject pipeline must have been treated as a flow line for the purpose of the original rights of entry for its construction and for the determination of compensation to be paid since the orders in that respect were sought from the MAB under the Petroleum and Natural Gas Act. However, Talisman says, the subject pipeline is no longer a flow line and therefore is no longer under the jurisdiction of that statute or the MAB. Instead, pursuant to section 16(3) of the Pipeline Act, Talisman must now look to the expropriation procedures set out in Part 7 of the Railway Act in order to regularize the title to its existing pipeline and must pay compensation to the Fays as determined by the board under the Expropriation Act.

[29] Talisman denies that it is seeking in any way to avoid payment of compensation. Mr. Cosburn in his written submissions put the argument this way:

“Although the [Fays and their] predecessors were compensated pursuant to the provisions of the Petroleum and Natural Gas Act at earlier stages of these proceedings they are now entitled to compensation pursuant to the Expropriation Act for the subject acquisition of a statutory right of way. From the point of view of [Talisman] it is the substitution of one compensation regime for another, required by the defined status of the pipeline. The end result for [Talisman] is that it will be required to pay compensation under two separate statutory regimes.”

 
5.  DISCUSSION

[30] I do not accept every argument advanced on Talisman’s behalf but I do find the overall thrust of its submissions compelling. Although the MAB issued the original right of entry and compensation orders in respect of the subject pipeline, it seems to me highly unlikely that the MAB now has jurisdiction in the matter. Despite the pipeline having been installed and the original orders made some three decades ago, I am persuaded that Talisman is entitled at this point to expropriate an interest in land for its pipeline and to involve the ECB in the determination of compensation for the taking. I will elaborate on these jurisdictional considerations below.

5.1  Jurisdiction of the MAB

[31] It may seem presumptuous on my part as a member of this board to attempt to fix the scope of authority of another administrative tribunal. However, I find it necessary to do so for the limited purpose of resolving the particular matter before me since jurisdiction is at the core of this dismissal application.

[32] Through the enactment of two separate statutory regimes, it appears that the Legislature has seen fit to make a distinction in law and administration between entry onto land, on the one hand, for the purpose of finding petroleum or natural gas and getting it out of the ground and, on the other, for the purpose of constructing or operating pipelines, particularly those which deliver petroleum or natural gas from well sites directly or indirectly to market. While one regime may in a sense flow into the other where successful exploratory drilling and development leads eventually to the construction and operation of commercial pipelines, I agree with Talisman that the two regimes are not intended to be concurrent.

[33] The MAB has been given a general jurisdiction under Part 3 of the Petroleum and Natural Gas Act to grant rights of entry and to fix and adjust compensation in respect of land required for exploration, development or production of petroleum or natural gas. However, its jurisdiction over rights of entry and compensation in relation to petroleum and natural gas pipelines is distinctly limited. Part 3 of the Petroleum and Natural Gas Act does not expressly deal with pipelines. Pipelines instead come within the purview of the Pipeline Act. The definition of “pipeline” in the Pipeline Act enumerates several categories including company pipelines, gathering and flow lines, water injection pipelines, and transmission lines. Section 16(3) of the Pipeline Act provides that Part 7 of the Railway Act “applies to pipelines and necessary works and undertakings connected with them.” Section 16(4) of the Pipeline Act carves out an exception inasmuch as it provides that Part 3 of the Petroleum and Natural Gas Act “applies to flow lines and necessary works and undertakings connected with them.”

[34] The jurisdiction of the MAB with regard to pipelines was the subject of a legal opinion letter provided to government by independent outside counsel in early April of 1980. This was the opinion a copy of which Mr. Carter provided to me and in respect of which Mr. Cosburn made further written submissions. I should perhaps make clear that for the purposes of my determination I do not construe this opinion letter as expert evidence but simply as an amplification of Mr. Carter’s argument that the MAB enjoys a wider jurisdiction over pipelines than Mr. Cosburn would have me believe.

[35] In my view the opinion letter, while it does indeed suggest a somewhat wider jurisdiction, is of little or no assistance to the Fays in this matter. It makes at the outset the uncontentious point that the MAB has clear authority to hear applications concerning pipelines defined as “flow lines”. The opinion letter then goes on to consider at some length whether the MAB might also have jurisdiction over other categories of pipelines enumerated in the definition section of the Pipeline Act. It sets forth the proposition that the MAB has jurisdiction “over those pipe-lines which, as a matter of fact, serve a purpose connected with or incidental to the development or production of petroleum and natural gas, as distinct from the transportation of gas to some point beyond the field.” These may include gathering lines, water injection pipelines and transmission lines. Notably, however, the opinion letter does not purport to extend the MAB’s authority over “company pipelines” about which it says the following:

“It would appear that company pipe-lines would have as their object and purpose the transportation of gas from the field to the transmission line, or some other point. In other words, company pipe-lines may be distinguished from gathering and flow-lines, water injection pipe-lines or other pipe-lines used within oil and gas fields which may be said to be connected with or incidental to the production of petroleum or natural gas.”

The author of the opinion letter acknowledges that the arbitration procedures of the Railway Act rather than those of the Petroleum and Natural Gas Act clearly apply to company pipelines.

[36] The precise authority under which the MAB made its original orders in the present matter is unclear from the evidence. The orders themselves make reference only to the Petroleum and Natural Gas Act. Talisman’s suggestion that the subject pipeline must have been treated initially as a flow line because the original orders were sought from the MAB is certainly plausible but there is nothing in the documentation provided which expressly supports it.

[37] Be that as it may, I accept from Talisman’s evidence that the subject pipeline, if it ever was a flow line, is not one now. It fits instead within the definition of a company pipeline or what Talisman’s counsel preferred to call a “sales line”. It is a pipeline transporting natural gas from various producing wells to the main sales line operated by Duke Energy rather than a pipeline interconnecting wellheads with field storage or treatment facilities. As such, it falls outside the limited jurisdiction given to the MAB over rights of entry and compensation in relation to petroleum and natural gas pipelines.

[38] The only reported case brought to my attention in which the courts have considered the jurisdiction of the MAB in relation to pipelines is Anadarko Petroleum of Canada Ltd. v. Syd Johns Farms Ltd., [1975] 6 W.W.R. 350 (B.C.S.C.). While perhaps conceptually helpful in considering the scope of the MAB’s authority, Anadarko must be used with caution in light of certain statutory amendments which have been enacted since the time the judgment was rendered.

[39] In that case the MAB had made right of entry and compensation orders in respect of “a pipeline between two of Anadarko’s well sites”. It seems entirely possible from this cursory description that the pipeline in question was a flow line. In any event no argument was made that the pipeline was subject to the arbitration procedures in place at the time under the Railway Act. The learned judge in Anadarko inferred that the MAB found it had jurisdiction in the matter because the pipeline had been installed for a purpose connected or incidental to the development or production of petroleum and natural gas pursuant to section 16(1)(a) of the Petroleum and Natural Gas Act.

[40] One of the questions before the Court by way of a stated case in Anadarko was whether the MAB had erred in ordering the pipeline owner to pay annual rent to the land owner for the right of entry, occupation and use. The Court held at p. 359 that the MAB “was not authorized to fix an annual rental sum for payment by a pipeline company into the future.” The MAB could not give the pipeline company the legal rights associated with a lease, easement or right of way on the land. Therefore, although it could fix the remuneration payable to the land owner for the disruption, it could not compel the company to pay what it described as “rent”.

[41] Talisman has cited the Anadarko decision as authority for the proposition that the MAB would not have the jurisdiction in the present instance to arbitrate future rentals payable as requested by the Fays pursuant to section 12 of the Petroleum and Natural Gas Act. By implication, I suppose, Talisman’s argument can be extended to submit that the MAB did not have jurisdiction in the first place to order payment of annual rent under orders 90A and 91A.

[42] With respect, I have to disagree. Following the 1975 Anadarko decision and probably in direct response to it, the Legislature in 1976 enacted several amendments to the subject statute in the Petroleum and Natural Gas Act (1965) Amendment Act, 1976, S.B.C. 1976, c. 38. These amendments have the effect of authorizing the MAB to order the payment of rent for occupation or use. See sections 9(1)(c), 9(2)(b) and 20(3)(b) of the current statute. I conclude from my review of those provisions that the MAB undoubtedly was authorized by statute to order payment of annual rent when it issued orders 90A and 91A in February of 1977. If in other respects the MAB continued to have jurisdiction over the subject pipeline at present, the tribunal in my opinion would also have statutory authority to make the particular compensation orders which the Fays are seeking. However, for the reasons already given, I do not believe the MAB currently retains jurisdiction.

5.2  Jurisdiction of the ECB

[43] It is clear that the ECB has the statutory jurisdiction to determine compensation where a company pursuant to provincial legislation has exercised its right to expropriate an interest in land for a natural gas pipeline.

[44] I note that if the company is a gas utility as defined in the Gas Utility Act, R.S.B.C. 1996, c. 170, and is registered as such with the British Columbia Utilities Commission, the company is entitled pursuant to section 6 of that statute to “expropriate any land in British Columbia reasonably required for its undertaking”. In that event the Expropriation Act applies. In turn the ECB, which is established under section 53 of the Expropriation Act, has jurisdiction to become involved. However, in the present case the Alexander affidavit makes the undisputed assertion that Talisman is not a registered gas utility.

[45] Since Talisman does not fall under the domain of the Gas Utility Act, its entitlement to expropriate an interest in land and to involve the ECB in the determination of compensation must flow instead from the rather more convoluted provisions of the Pipeline Act and the Railway Act. Section 16(1) of the Pipeline Act provides that “on obtaining a certificate, the company may take and appropriate for the purposes of its undertaking as much of the land or interests in it as may be necessary for the building, construction, laying or operation of the pipeline.” Section 16(3) makes Part 7 (sections 34 to 63) of the Railway Act applicable to pipelines with the one exception in section 16(4) as to “flow lines and necessary works and undertakings connected with them” previously discussed. I have already concluded that the subject pipeline is not a flow line but rather a company pipeline as defined by the Pipeline Act. Section 53(1) of the Railway Act expressly provides for the determination of compensation by the ECB if, within the specified time frame, the owner of the affected land does not accept the amount offered. That is the case in the present instance where Talisman has declared its readiness to pay total compensation of some $398. Pursuant to section 53(2), the Expropriation Act applies to the determination of the amount of compensation.

[46] By way of limitation on the authority of the ECB, it should be noted that section 2(3) of the Expropriation Act provides in part:

2

(3)

This Act does not apply to expropriations under (…) the Petroleum and Natural Gas Act, the Pipeline Act, the Railway Act (…) except to the extent provided for in those Acts.

[47] However, I do not find persuasive the Fays’ argument that the statutory regime of expropriation and compensation under the Pipeline Act and the Railway Act cannot now be applied to the subject pipeline because it was built many years ago and no certificate of prior approval was, or could have been, obtained from the Oil and Gas Commission.

[48] Section 16(1) of the Pipeline Act plainly allows for the expropriation of an interest in land “for the building, construction, laying or operation of the pipeline.” [Emphasis added.] I read the words in this clause in a disjunctive sense. In my view an expropriation can occur after the fact of pipeline construction for the purpose of operation of the pipeline or, as Talisman says in its application for determination of compensation, “to regularize its title and to allow access for inspection, testing and maintenance of the pipeline.”

[49] The construction of the pipeline predated the creation of the Oil and Gas Commission. However, in my opinion the consequent lack of prior certification from the Commission under section 10 of the Pipeline Act does not disentitle Talisman from pursuing expropriation under sections 16(1) and (3) of the Pipeline Act or from having compensation determined by the ECB pursuant to Part 7 of the Railway Act in a situation where there has been compliance with the statutory requirements in place at the relevant time.

[50] The board dealt with a somewhat similar situation in Schulte, a recent decision to which neither of the parties to this application referred. Like the present matter that case involved the recent expropriation of a statutory right of way for a natural gas pipeline constructed some 25 years earlier pursuant to approvals obtained at that time. The land owner argued that the taking was invalid and the ECB did not have jurisdiction to hear the compensation application because, among other things, there was a procedural defect in the approval process, namely, lack of Ministerial approval under section 14 of the Railway Act. In finding to the contrary the former vice chair, Sharon Walls, also observed as follows at pp. 146-147:

If the pipeline was being approved and constructed now, the procedures for certification and approval are found in the current Pipeline Act, and it would be the Oil and Gas Commission who approved any new pipeline. But in this case, as indicated above, the location of the pipeline has already been approved by the Lieutenant Governor in Council in 1978. Furthermore, following construction, the operation of this pipeline has already been certified, inspected and approved by the Minister of Transport and Communications, also in 1978. These approvals were pursuant to the procedures that were in effect at that time in the Pipe-lines Act.

[51] I agree with Talisman that the approvals which Houston obtained at the time of construction of the subject pipeline in the form of certificate no. 1300 from the Minister of Transport and Communications and O.I.C. 181/74 from the Lieutenant Governor in Council constitute the equivalent of the certification requirements presently in place. The original approvals are sufficient to allow Talisman the right to acquire a statutory right of way for the operation of its pipeline and sufficient to give the Fays the compensation rights provided for under the expropriation regime set out in Part 7 of the Railway Act.

[52] The undisputed evidence at this hearing, which I have already reviewed above, also shows that Talisman has complied with the procedural steps required to date under Part 7 of the Railway Act. It appears that copies of all pertinent documents in that regard have since been filed with the ECB.

 
6.  CONCLUSION

[53] In light of the foregoing discussion, I conclude that the Fays’ request for an order dismissing Talisman’s application for determination of compensation must be denied.

 
APPENDIX “A”

STATUTORY FRAMEWORK

Expropriation Act
R.S.B.C. 1996, c. 125

2

(3)

This Act does not apply to expropriations under the British Columbia Railway Act, the Emergency Program Act, the Health Act, the Petroleum and Natural Gas Act, the Pipeline Act, the Railway Act and the Water Act, except to the extent provided for in those Acts.

Gas Utility Act
R.S.B.C. 1996, c. 170

Part 1

Authority and power of gas utilities

2

(2)

A gas utility to which a certificate of public convenience and necessity is granted after April 14, 1954 under the Utilities Commission Act or the legislation that preceded it is authorized and empowered, subject to the Utilities Commission Act, to carry on its business as a gas utility in the municipality or rural area mentioned in the certificate.

Part 2

Definition

5	In this Part, “utility” means a gas utility authorized under section 2 to carry on its business as a gas utility.

Right to expropriate land

6	A utility may expropriate any land in British Columbia reasonably required for its undertaking and, in that event, the Expropriation Act applies.

Petroleum and Natural Gas Act
R.S.B.C. 1996, c. 361

Part 1 – Definitions

1

(1)

In this Act: “board” means the Mediation and Arbitration Board;

Part 3 – Entry, Mediation and Arbitration

Agreement to enter land

9	(1)	A person may not enter, occupy or use land, other than Crown land, to explore for, develop or produce petroleum or natural gas or explore for, develop or use a storage reservoir unless
		(a)	the person makes, with each owner of the land, a surface lease in the form and content prescribed authorizing the entry, occupation or use,
		(b)	the board authorizes the entry, occupation or use, or
		(c)	as a result of a hearing under section 20, the board makes an order specifying terms of entry, occupation and use, including payment of rent and compensation.
	(2)	A person who enters, occupies or uses land to explore for, develop or produce petroleum or natural gas or explore for, develop or use a storage reservoir is liable,
		(a)	to pay compensation to the land owner for loss or damage caused by the entry, occupation or use, and
		(b)	if the board so orders, to pay rent for the duration of the occupation or use.

Renegotiation

11	(1)	This section applies despite a surface lease containing rental provisions made, order made or an authority given, before or after July 1, 1974, or anything done under the surface lease, order or authority.
	(2)	If a person has, for a continuous period of 4 years, been entering, occupying or using land to explore for, develop or produce petroleum or natural gas or explore for, develop or use a storage reservoir, that person may, or an owner of the land may, on or after the next anniversary of the making of the lease, order or authority, on giving 60 days’ notice in the prescribed form (…) require renegotiation of rental provisions in the surface lease, order or authority.

. . . . .

(4)

If notice is given under subsection (2) or (3), the persons giving and receiving the notice may renegotiate the rental provisions by mutual agreement.

Arbitration: other provisions

12

(1)

If rental provisions are not renegotiated under section 11(4) within 6 months after the expiration of the notice, an owner of the land or person entering, occupying or using the land for a purpose referred to in section 11(2) may apply in writing to the board for arbitration under section 17(3).

. . . . .

Application for mediation and arbitration

16	(1)	A person may apply to the board for mediation and arbitration under this section if the person
		(a)	requires land to explore for, develop or produce petroleum or natural gas or explore for, develop or use a storage reservoir or for a connected or incidental purpose, and an owner of the land refuses to grant a surface lease satisfactory to that person authorizing entry, occupation or use for that purpose,
		(b)	is the owner of land that is entered, occupied or used for a purpose referred to in paragraph (a), and damage to the land or suffering to the owner is caused by the entry or occupation, or (…)

Pipeline Act
R.S.B.C. 1996, c. 364

Definitions

1	(1)	In this Act:
		“commission” means the commission established under section 2 of the Oil and Gas Commission Act;
		“company” means a person or corporation having authority under this Act or a special Act, having power to construct or operate pipelines to transport oil, gas or solids;
		“company pipeline” or “line” means a pipeline to transport oil, gas, solids or water that a company under this Act is authorized to construct or operate, and includes all branches, extensions, tanks, reservoirs, pumps, racks and loading facilities; interstation systems of communication by telephone, telegraph or radio; property and works connected with it;
		“flow line” means a pipeline serving to interconnect wellheads with separators, treaters, dehydrators, field storage tanks or field storage batteries;
		“pipeline” means a continuous conduit between 2 geographical locations through which oil, gas or solids is transported under pressure, and includes
		(a)	a company pipeline,
		(b)	all gathering and flow lines used in oil and gas fields to transmit oil and gas,
		(c)	all water injection pipelines or other pipelines used to transmit water at working pressures in excess of 3 500 kPa in oil and gas fields,
		(d)	all transmission lines used to transmit gas at working pressures in excess of 700 kPa, gauge, from a company pipeline to the distribution system of a public utility or a gas utility,
		but does not include piping used in a gas distribution main as defined in the Gas Safety Act;
	(2)	Unless otherwise provided or the context otherwise requires, words and phrases in this Act have the same meaning as in the Railway Act.

Part 3 – Location of Line

Commission’s approval required

10	Except as this Act otherwise provides, a company must not begin to construct a section or part of a company pipeline until
	(a)	the commission has issued a certificate granting the company leave to construct the line, and
	(b)	the plan, profile and book of reference of the section or part of the proposed line have been approved by the commission.

Part 4 – Taking and Using of Land

Appropriation of land

16	(1)	On obtaining a certificate, the company make take and appropriate for the purposes of its undertaking as much of the land or interests in it of any person as may be necessary for the building, construction, laying or operation of the pipeline.
	(2)	The manner in which and terms on which the company may exercise the right to take and appropriate land or interest in it must be
		(a)	in accordance with the terms of any agreement between the company and the owner of the land, other than Crown land, or an interest in it, or
		(b)	in the absence of agreement, as set out in this Part.
	(3)	Part 7 of the Railway Act applies to pipelines and necessary works and undertakings connected with them.
	(4)	Part 3 of the Petroleum and Natural Gas Act, in so far as it is not inconsistent with this Act, applies to flow lines and necessary works and undertaking connected with them.

Railway Act
R.S.B.C. 1996, c. 395

Part 7 – Acquisition of Land by Expropriation and Purchase

Compensation or damages may be agreed on

48	(1)	After the expiration of 10 days from the deposit of the plan, profile and book of reference in the proper land title office, and after notice of it has been given in at least one newspaper, if any is published, in each of the districts and counties through which the railway is intended to pass, a company may apply to the owners of land, or to persons empowered to convey land or interested in land which may be taken, or which suffers damage from the taking of materials or the exercise of any of the powers granted for the railway, to make an agreement that seems expedient to both parties about the land or the compensation to be paid for it, or for the damages, or as to the mode in which the compensation is to be ascertained.
	(2)	If the parties fail to agree, all questions that arise between them must be settled as provided in this Act.

General notice

49	(1)	The deposit of a plan, profile and book of reference, and the notice of the deposit, is deemed to be a general notice to all parties of the land which will be required for the railway and works.
	(2)	The date of the deposit is the date with reference to which compensation or damages must be ascertained, but if the company does not actually acquire title to the land within one year from the date of the deposit, then the date of the acquisition is the date with reference to which the compensation or damages must be ascertained.

Notice to be served

50	The notice served on the owners of land, or persons empowered to convey land or interested in land, must contain
	(a)	a description of the land to be taken, or of the powers intended to be exercised with regard to any land described in it, and
	(b)	a declaration of readiness to pay a certain sum or rent as compensation for the land or for damages.

Certificate of surveyor

51	The notice must be accompanied by the affidavit of a British Columbia land surveyor, who is a disinterested person, stating the following:
		(a)	that the land, if the notice relates to the taking of land, is required for the railway or is within the limit of deviation allowed by this Act;
		(b)	that he or she knows the land or the amount of damage likely to arise from the exercise of the powers;
		(c)	that the sum offered is, in his or her opinion, a fair compensation for the land and the damages likely to arise.

Arbitration where sum offered not accepted

53	(1)	If, within 10 days after the service of the notice or within one month after the first publication of it, the owner or party referred to in section 50 does not give notice to a company that the owner or party accepts the sum offered by it, the amount of compensation must be determined by the Expropriation Compensation Board under the Expropriation Act.
	(2)	The Expropriation Act applies to the determination of the amount of compensation.