Frequently Asked Questions - Compensation of Lands Acquired or Damaged for Pipelines

This is an information document and should not be considered legal advice. These "Frequently Asked Questions" (FAQs) will give you legal information. To get legal advice regarding your situation, you would have to speak with a lawyer.

Q1. I have a pipeline crossing my land. Am I entitled to any compensation?

  • Compensation is a private matter between a pipeline company and a landowner.
  • However, for pipelines that are federally-regulated, i.e. by the National Energy Board, when a landowner and a pipeline company cannot agree on compensation for lands that the company plans to acquire, has acquired or has damaged, either party may apply to the Minister of Natural Resources Canada (Minister) to receive the services of a negotiator, or to have the dispute settled by arbitration.
  • To have a negotiator or an arbitration committee appointed, the Minister must, pursuant to subsection 84 (a) of the National Energy Board Act (NEB Act) be satisfied that the activities of a pipeline company for which compensation is sought directly relate to:
    • (i) the acquisition of lands for a pipeline;
    • (ii) the construction of the pipeline; or
    • (iii) the inspection, maintenance or repair of the pipeline.

Q2. How do I apply for the services of a negotiator or an arbitrator?

In either case, your application, on which more details are provided below, should be submitted to:

The Minister of Natural Resources Canada
580 Booth Street
Ottawa, Ontario
K1A 0E4

Q3. What information should I include with my application?

Negotiator

  • Negotiation proceedings are covered in sections 88 and 89 of the National Energy Board Act (NEB Act). To receive the services of a negotiator, a landowner or the pipeline company must serve a notice of negotiation (subsection 88(1) of the NEB Act) on the other party and on the Minister of Natural Resources Canada.
  • For a negotiator to be appointed, your application must include a clear and concise statement of the relevant facts and details regarding the proposed compensation.

Arbitration Committee

Q4. What is the difference between the negotiation option and having an arbitration committee appointed?

Negotiation

  • The Minister appoints a negotiator to help the parties reach an agreement.
  • The negotiator has 60 days after the start of negotiations to report to the Minister as to the success or failure of the process.
  • It is an informal process during which the negotiator does not favour either party and does not decide on the amount of compensation.
  • If there is agreement, details are not necessarily included in the negotiator's report to the Minister. However, if they are, they are protected under the Privacy Act and would not be released by Natural Resources Canada without the consent of both parties.
  • If the negotiations are unsuccessful, either party may apply to the Minister to have the matter settled by binding arbitration.
  • The negotiation process is carried out "without prejudice" to any subsequent arbitration proceeding. Whatever happens during negotiations cannot be used against a party during arbitration. In other words, the willingness to make or accept offers during negotiations cannot bind any party for the purpose of the arbitration proceedings.

Arbitration

  • An arbitration committee consists of at least three members appointed by the Minister and, once appointed:
    • is completely independent of the Minister; and
    • has its own powers to conduct the arbitration proceedings as it sees fit.
  • Unlike negotiations, arbitration hearings are relatively formal. A transcript of what is said is kept. The committee may review evidence and hear from witnesses.
  • A committee's decision is binding and enforceable in a court of law.
  • Parties may ask a committee to review a decision. Subsection 46 (1) of the Pipeline Arbitration Committee Procedure Rules, 1986 provides more information about what shall be included in your review application.
  • It is your right to appeal an arbitration committee's decision to the Federal Court on questions of law or jurisdiction. An appeal must be filed within 30 days of the decision.
  • Evidence gathered at hearings and the committee's decision are protected under the Privacy Act. You are free to release information, but Natural Resources Canada will only do so with the written permission of both parties.

Q5. It must be expensive to participate in these negotiation and/or arbitration proceedings. What about my costs? Is there any up-front money available to landowners or will I be reimbursed for my out-of-pocket expenses?

Negotiation

  • Unfortunately, Natural Resources Canada cannot provide money in advance for the negotiation process.
  • More specifically, during negotiations, neither the negotiator nor the Minister can award costs.
  • Landowners who want to be reimbursed for any expenses they expect to incur during the negotiation process can discuss this matter with the pipeline company prior to the start of negotiations.

Arbitration

  • Like negotiation, Natural Resources Canada cannot provide funding in advance to landowners to participate in the arbitration process.
  • However, if a pipeline company has been given a right of entry order by the National Energy Board to enter your lands, under section 105 of the National Energy Board Act you are entitled to advanced compensation. However, if you have not received any advanced compensation or you are unable to reach an agreement with the pipeline company, you may request that the matter be determined by an arbitration committee.
  • If you go to arbitration, the National Energy Board Act provides for the recovery of reasonable costs incurred during this process.
  • Subsection 99 (1) states:

    "Where the amount of compensation awarded to a person by an Arbitration Committee exceeds 85% of the amount of compensation offered by the company, the company shall pay all legal, appraisal and other costs determined by the Committee to have been reasonably incurred by that person in asserting that person's claim for compensation." (emphasis added)

  • Further, subsection 99 (2) states:

    "Where the amount of compensation awarded to a person by an Arbitration Committee does not exceed eighty-five per cent of the amount of compensation offered by the company, the legal appraisal and other costs incurred by that person in asserting his claim for compensation are in the discretion of the Committee, and the Committee may direct that the whole or any part of those costs be paid by the company or by any other party to the proceedings."

  • Legislative provisions can be open to interpretation. As such, Natural Resources Canada cannot provide any definitive statements as to the meaning of subsections 99 (1) and (2) that address the matter of reimbursement of costs incurred. However, the interpretation of these subsections was the subject of a Federal Court decision on June 7, 2006 (Bue v. Alliance Pipeline Ltd). You could benefit from reading this decision to form your own view of the meaning of these sections and/or seek legal counsel.

Q6. How do I decide whether to choose negotiation or arbitration? Can someone at Natural Resources Canada help me decide and, if it is arbitration, help me prepare the notice of arbitration?

  • Officials at Natural Resources Canada and the Department of Justice cannot provide advice regarding your decision to apply for negotiation or arbitration.
  • The Pipeline Arbitration Secretariat can provide you with basic information on how to proceed.
  • At the end of the day, applicants must make their own determination as to their perceived rights and decisions as to whether to apply for negotiation or arbitration.

Q7. What is the Pipeline Arbitration Secretariat (PAS or Secretariat)?

  • The PAS advises the Minister of her/his statutory obligations relating to negotiation and arbitration under the National Energy Board Act. The Secretariat's responsibilities include:
    • processing of notices of arbitration;
    • the Ministerial appointment process;
    • correspondence;
    • payment of invoices;
    • court reporting for hearings; and
    • release of decisions where permission has been granted by the parties to do so.
  • The Secretariat provides information to landowners and pipeline companies on the negotiation and arbitration services via the Minister of Natural Resources Canada.
  • Information is provided upon request or available on the Pipeline Arbitration Secretariat website.
  • You can contact the Pipeline Arbitration Secretariat at

    Natural Resources Canada
    Pipeline Arbitration Secretariat
    Attn: Maia Konrad
    580 Booth Street, 17th Floor
    Ottawa, Ontario K1A 0E4
    Phone: 343-292-6216
    Fax: 613-992-0614
    E-mail: PAS-SAP@NRCan-RNCan.gc.ca

Q8. Where do the arbitration committees hold their hearings? Will it be close to my residence so that I can attend?

  • Section 94 of National Energy Board Act leaves the choice of hearing location up to the arbitration committee.
  • However, the Secretariat believes that the spirit of the National Energy Board Act is best served by holding proceedings in a location requested by the property owners.

Q9. Generally, companies are represented by lawyers. Should I have a lawyer to represent me?

You may decide whether or not you are represented by a lawyer. You can represent yourself in the negotiation proceedings or before an arbitration committee. However, you should be aware that the processes are based on the applicable provisions of the National Energy Board Act and, in the case of arbitration, the Pipeline Arbitration Committee Procedure Rules, 1986. If you want advice on the interpretation of these provisions, you may seek legal advice.

Q10. What information can the Secretariat provide to landowners?

The following documents are available on request:

  1. Information for Landowners, compensation for lands acquired and for damages for federally regulated pipelines. Negotiation and arbitration services provided by the Minister of Natural Resources Canada.
  2. Pipeline Regulation in Canada: A Guide for Landowners and the Public
  3. The National Energy Board Act and an Amendment Order to the Act.
  4. Pipeline Arbitration Committee Procedure Rules
  5. A table that allows you to read the National Energy Board Act and the Procedure Rules together.

The Secretariat cannot provide advice to landowners and pipeline companies. This includes interpretation of the provisions of the NEB Act that apply to the negotiation and arbitration services offered by the Minister.

Q11. How does the Minister appoint negotiators and arbitration committees?

  • If there is an existing arbitration committee to which additional work can be referred, under paragraph 91(1)(a) of the NEB Act, the Minister may do so.
  • Alternatively, the Minister's office can provide the Secretariat with a list of suitable candidates located near the landowner to screen for interest, availability and qualifications.
  • Provided that potential arbitration committee members successfully complete a conflict of interest questionnaire, the Deputy Minister of Natural Resources recommends appointments to the Minister for consideration.
  • The Minister may appoint whomever she/he sees fit.

Q12. How long does it take to set up a committee and get a decision?

  • If there is an existing committee to which the Minister can give the additional work, this eliminates the need and time to find new members, determine their interest and availability, ensure that there are no conflicts of interest and make the appointments.
  • Once the committee is appointed, it is master of its own proceedings and operates independently of the Minister of Natural Resources. The time required can vary considerably depending on the complexity of the case, the number of landowners involved, the availability of three arbitration committee members, lawyers and/or landowners to meet and, following the completion of the hearings, to write the decision. Appeals will also affect the time required for a final decision.
  • Historically, arbitration committees have taken 19-37 months to reach a final decision.

Q13. How can I receive copies of arbitration committee decisions?

  • Arbitration committees' decisions are subject to the provisions of the Privacy Act. As such, Natural Resources Canada will only release them if it has received permission from all parties to the agreement to do so.
  • The following arbitration committee decisions are available for public release, upon request to the Secretariat:
    • Houle vs TransCanada Pipelines Limited (March 24, 1995);
    • Brian Burke vs TransCanada Pipelines Limited (February 1, 1996) (August 30, 1999);
    • Eric Winter and Winter Farms Ltd vs Federated Pipe Lines (Northern) Ltd. (July 5, 1999)*.;
    • Nicholas Milkovich vs Federated Pipe Lines (Northern) Ltd.(August 30, 1999)*
    • Byron Bue, Raymond Bue, Brian and Teresa Fast, Raymond and Florence Gilkyson, Stirling and Laura Hanson, Lloyd and Kathryn Olley, Kane Piper and Dale and Gwen Smith vs.Alliance Pipeline Ltd. (August 25, 2011)*;
    • Byron Bue, Raymond Bue, Brian and Teresa Fast, Raymond and Florence Gilkyson, Stirling and Laura Hanson, Lloyd and Kathryn Olley, Kane Piper and Dale and Gwen Smith vs. Alliance Pipeline Ltd. - Applicants' Payment Elections (October 25, 2011);
    • Terrence and Marcia Balisky, Peter and Levke Eggers, Byan Ellingson, Fern Jones, Gregory leroux and 340104 Alberta Ltd., Donald Liland, Randy and Kristin Moe, Franklin Moller, Robert and Ada Richards, Albert Slater and Gordon Strate vs. Alliance Pipeline Ltd. (November 25, 2011)*; and
    • Terrence and Marcia Balisky, Peter and Levke Eggers, Byan Ellingson, Fern Jones, Gregory leroux and 340104 Alberta Ltd., Donald Liland, Randy and Kristin Moe, Franklin Moller, Robert and Ada Richards, Albert Slater, Gordon Strate, Byron Bue, Raymond Bue, Brian and Teresa Fast, Raymond and Florence Gilkyson, Stirling and Laura Hanson, Lloyd and Kathryn Olley, Kane Piper and Dale and Gwen Smith vs. Alliance Pipeline Ltd. (June 15, 2012).

    *Redacted version, i.e. does not include any dollar amounts for compensation.

  • As well, arbitration committee decisions that have been appealed (see Question 15) can also be released. These decisions are available upon request to the Secretariat.

Q14. What are my options after the arbitration committee provided a decision?

You have three options:

  1. First, you can accept the decision.
  2. Second, pursuant to subsection 100(2) of the National Energy Board Act, you can ask that the arbitration committee to review its decision. You should refer to subsection 46 (1) of the Pipeline Arbitration Committee Procedure Rules, 1986 regarding the information you must provide to the committee.
  3. Third, pursuant to section 101 of the National Energy Board Act, the arbitration committee's decision can be appealed to the Federal Court.

Q15. How many arbitration committee decisions have been appealed and what was the outcome?

  • Several arbitration committee decisions have been appealed (including cross-appeals) to the Federal Court, the Federal Court of Appeal and/or the Supreme Court of Canada. They have involved pipeline companies, landowner(s), mineral rights owners and/or the Minister of Natural Resources. Some decisions have been appealed more than once.
  • About half were won by landowners and half were won by the pipeline company or the Minister of Natural Resources. Some decisions were split, and determined some aspects in the landowners' favour and other aspects in the pipeline company's favour.
  • The following table provides information regarding:
    • the applicants and respondents in the court proceeding;
    • a brief summary of the case and decision; and
    • a link to the complete decision.
  • The information reproduced here is not the official version of any of the decisions below and while we strive to be accurate, readers are directed to the Federal Court websites for the full text of these decisions. This information is not provided in affiliation with or endorsement of the Federal Court of Appeal or the Court Administration Service. We have provided hyperlinks to all the court decisions. Visitors to the Federal Court website should read the "Important Notices" in the bottom right hand corner on the last page of the decision for further information.

Q16. Once an arbitration committee has made its decision regarding compensation, what are my options for receiving the funds?

  • You should refer to subsection 86 (2) of the National Energy Board Act, that sets out the provisions that should be included in a land acquisition agreement between a pipeline company and a landowner.
  • While these provisions should be read in their entirety, subsection 86 (2) states, in part, that: "A company may not acquire lands for a pipeline under a land acquisition agreement unless the agreement includes provision for (a) compensation for the acquisition of lands to be made, at the option of the owner of the lands, by one lump sum payment or by annual or periodic of equal or different amounts over a period of time...".
  • Subsection 86 (2)(b) goes on to state that, where the amount of compensation payable for annual or other periodic payments has been selected, the agreement should include a provision for it to be reviewed every five years. There is no mention of a five-year review where the lump sum option has been selected.

Q17. The process of getting compensation can be onerous and slow. Will Natural Resources Canada establish service standards so these proceedings will be faster?

  • It is not possible to establish service standards for arbitration committees. Once a committee is appointed, it is master of its own procedures and operates independently of Natural Resources Canada.

Q18. If a pipeline company decided to abandon its pipeline, could the Minister of Natural Resources appoint a negotiator or an arbitration committee to determine how much compensation I might receive?

  • Before a company can abandon the operation of its pipeline, it must first obtain permission from the National Energy Board (NEB). At that time, the NEB will review the proposed abandonment, taking into account the concerns of landowners and other affected parties, and will determine the required conditions for the company to abandon the pipeline. Although the NEB will not decide on liability, it will be able to address, through conditions, the issues that may give rise to liability.
  • In the early part of 2009, the NEB was in the last stages of a hearing process to consider the financial aspects of pipeline abandonment. The NEB is also addressing physical issues related to pipeline abandonment with the Land Matters Consultation Initiative (LMCI).
  • Abandonment could be subject to the negotiation and/or arbitration services available via the Minister of Natural Resources, depending on the facts presented to the Minister at the time of a landowner's application.
  • Sections 88 and 90 of the National Energy Board Act address the matters of negotiation and arbitration proceedings in relation to the operations of the pipeline company. To seek such services, an application for compensation must fit within the parameters of Section 84 of the National Energy Board Act. Activities of a pipeline company must be directly related to:
    • (i) the acquisition of lands for a pipeline;
    • (ii) the construction of the pipeline; or
    • (iii) the inspection, maintenance or repair of the pipeline.
  • Natural Resources Canada cannot provide a definitive statement as to the exact meaning of operations and activities of the company as they are open to interpretation. However, the relevance of these expressions, i.e. operations and activities, in relation to the appointment of a negotiator or an arbitration committee has been the subject of a Federal Court of Appeal decision Balisky v. Canada. Readers could benefit from reading this decision to form their own view of the meaning of these sections or when seeking legal counsel.

Q19. Where can I get additional information about negotiation or arbitration services available from Natural Resources Canada or to receive a copy of the National Energy Board Act and the Pipeline Arbitration Committee Procedure Rules?

Additional information is available from:

Natural Resources Canada
Pipeline Arbitration Secretariat
Attn: Maia Konrad
580 Booth Street, 17th Floor
Ottawa, Ontario K1A 0E4
Phone: 343-292-6216
Fax: 613-992-0614
E-mail: PAS-SAP@NRCan-RNCan.gc.ca