Alberta’s highest court has endorsed the Alberta oil and gas regulatory process as protective of a landowner’s rights to safety and security under the Canadian Charter of Rights and Freedoms (the Charter). Although limited in its scope, the Court’s decision expresses confidence in the application-based, incremental approach to oil and gas development overseen by the Alberta regulator.

Background

Michael Judd is a landowner in the vicinity of Shell Canada Limited’s (Shell) Carbondale sour gas well and pipeline network north of Edmonton. He intervened in the Energy Resources Conservation Board (ERCB or the Board) proceeding that considered Shell’s application to construct additional sour gas facilities on the Carbondale network near his property (the Application).

The Carbondale network has been the subject of several previous ERCB proceedings. In considering the Application, the Board determined that it would not consider evidence or argument that addressed issues previously considered and decided upon, except insofar as that evidence or argument was relevant and material to the Application. Mr. Judd alleged that this “scoping decision” would increase the risk of his exposure to sour gas, and that it therefore constituted government action depriving him of liberty and security, contrary to s. 7 of the Charter. The Board rejected this argument and Mr. Judd sought leave to appeal the Board’s decision.

The Leave Decision

On January 28, 2014, the Alberta Court of Appeal issued its decision in Judd v. Alberta Energy Resources Conservation Board, 2014 ABCA 41, dismissing Mr. Judd’s application for leave to appeal. In his reasons, Mr. Justice O’Ferrall considered whether “the structure and/or scope of the hearing” infringed Mr. Judd’s s. 7 Charter rights. Without deciding whether the right to security of the person includes the right to be protected from all risks associated with the lawful activities of one’s neighbours on their lands, the Court held that, rather than infringing Mr. Judd’s security concerns, the hearing appeared to have been intended to address them. It assisted, rather than inhibited, Mr. Judd in reducing the risks of neighbouring oil and gas facilities, by giving him opportunities to make himself heard and to oppose the Application that he would not have had absent the Board process.

Concerning the structure of the ERCB hearing, the Court addressed and dismissed three arguments raised by Mr. Judd.

  1. The application-focused and adversarial nature of the Board’s hearing process biases the process in favour of oil and gas operators.  The Court dismissed this argument with reference to the Board’s statutory responsibility for determining whether specific applications are in the public interest. This responsibility, it held, did not threaten interveners’ liberty interests. Concerning the imbalance between proponents and landowners in terms of financial resources and expertise, the Court noted the Board’s jurisdiction to award costs to local interveners and the Board’s own experience and expert staff.
  2. Asking the Board to reconsider its own decisions on facility applications makes the Board a “judge in its own cause”.  The Court adopted this turn of phrase, stating that this was precisely what the Board’s enabling legislation intended. The fact that the Board is not bound by its past decisions, and does in fact review and vary them on occasion, was held to enhance, rather than infringe, security rights.
  3. The narrowed focus of Mr. Judd’s hearing created a situation where the safety of the Carbondale sour gas network was dealt with piecemeal, preventing an inquiry into the issue as a whole.  The Court defended the “piecemeal” approach by observing that, in the case of Carbondale, it had contributed to a better understanding of the central safety issue – pipeline corrosion – and how to detect and prevent it. Far from being a rubber-stamp regulator, the Board (which had denied or conditionally approved Carbondale facility applications in the past) had taken an active and ultimately beneficial role in supervising Shell’s development of the Carbondale resources. The Court acknowledged that there had been setbacks, but concluded that the Board process was nevertheless “a supervised process of trial and error leading to improvement”, and that it was “intended to safeguard [Mr. Judd’s] security, not infringe it.”

Implications

This decision is notable for the Court’s examination of Alberta’s oil and gas regulatory process with respect to landowners’ rights under s. 7 of the Charter. While s. 7 arguments occasionally arise in ERCB proceedings and subsequent leave applications[1] this decision represents the most thorough consideration by the Court of Appeal of s. 7’s application to the ERCB process.

Justice O’Ferrall’s consideration of these issues and resulting conclusions represents an endorsement of the Board’s process and a defence of the regulator’s systematic impartiality and positive influence – a characterization that will be welcomed by the Board and industry in light of recent jurisprudence suggesting the opposite. The Court concluded that the Board and its process provides landowners with rights and influence that they would not otherwise have, and that “the laws governing oil and gas development, generally speaking, do not increase the risk of harm. Absent those laws, the risk of harm would be greater.”

Although the subject of Mr. Judd’s Charter challenge was the ERCB, which has since been replaced by the Alberta Energy Regulator, the Court’s comments pertain to the oil and gas regulatory process more generally, and likely apply equally to Alberta’s new energy regulator.

Mr. Judd’s appeal only concerned the structure and scope of the hearing, and not the conditional approval of the Application that followed. Justice O’Ferrall expressly steered around the question of whether the Board’s approval of the Application infringed Mr. Judd’s s. 7 rights, indicating that this would be a major question along the lines of recent s. 7 decisions by the Supreme Court.