Alberta Landowner Takes Fight with Energy Regulator Back to Court

Does Alberta's oil and gas regulator owe a "duty of care" to Alberta landowners affected by the growing industrial footprint of hydraulic fracturing operations?

Or can a regulator refuse to listen to the concerns of landowners and citizens, possibly violating their Charter rights?

These are the questions facing a panel of three Alberta appeal court justices tomorrow in Calgary as Jessica Ernst's lawsuit slowly marches its way through Canada's legal system.

Seven years ago, the oil patch consultant and landowner sued the Alberta government, the Energy Resources Conservation Board (or ERCB, now the Alberta Energy Regulator) and Encana Corporation for $33 million.

The lawsuit alleges that Encana drilled and fractured shallow coal bed methane wells directly in the local groundwater supply between 2001 and 2004 near Rosebud, Alberta, polluting Ernst's water well with enough toxic chemicals and methane to make it flammable.

It also alleges that two provincial regulators (the ERCB and Alberta Environment) failed to act on documented violations of the law and ceased all communication with Ernst on the grounds that she posed "criminal threats."  

In particular, the lawsuit alleges that the ERCB violated Ernst's right to free expression under the Charter by banishing her from contact with the board while she was dealing with the pollution issues on her property.

Last year, Queen's Court Chief Justice Neil Wittmann ruled that the case against Alberta Environment and Encana could proceed to trial. 

But Wittmann excluded the energy regulator, deciding that provincial legislation gave it statutory immunity from Charter claims and that the ERCB did not owe a duty of care to Ernst.

Ernst's appeal of that decision argues that Wittmann erred on three points.

What the court will hear

Ernst's lawyers Murray Klippenstein and Cory Wanless will argue that a statutory immunity clause cannot provide immunity from Charter claims. As Supreme Court Justice Beverly McLachlin has noted, the Charter "provides a personal remedy against unconstitutional government action."

Ernst claims the regulator stopped all communication and contact with her on the grounds that she embarrassed the agency with public revelations of negligence and posed a physical threat to the organization.

"If I hadn't appealed, there would have been a precedent for energy regulators to violate the Charter of Rights and get away with it," Ernst told the Tyee. "It's Canada's supreme law."

Ernst's lawyers will also argue that Wittmann erred in his ruling dismissing the regulator from the claim on the issue of duty of care or legal obligations the regulator may have before citizens.

The courts have ruled that government agencies can and do owe both private and public duties of care. A policeman, for example owes a private duty of care for individual investigations as well as a wider duty of care to the public to protect the community.

Judges apply two legal tests on cases involving public duty of care. A government agency generally owes a duty if they are close to the individual (proximity) and have overriding policy objectives to serve the public.

In their factum for the appeal judges, Ernst's lawyers argue that not only did several members of the ERCB have personal contact with Ernst, but they assured the landowner to rely on the regulator's investigation and enforcement scheme to protect her groundwater.

As a consequence, "the ERCB is responsible for ensuring the oil and gas operations do not contaminate potable groundwater," and therefore owes a duty of care to landowners to ensure oil and gas operations do not have a catastrophic impact on their lives, they argue.

Lastly, the lawyers will argue that ERCB's statutory immunity clause does not cover claims for "negligent omission," or failing to implement its own specific Compliance Assurance and Enforcement scheme.

In other words, Ernst is suing the board for what she claims it failed to do and not what it did do, given its own stated duties to landowners.

Glenn Solomon, a Calgary lawyer representing the ERCB, will argue that "the ERCB owes a public duty of care, not a private duty of care," and that any harm done to Ernst should be the responsibility of the regulated party, Encana, and not the regulator.

"The imposition of a private duty of care between the ERCB and individuals impacted by, or opposed to, oil and gas development would have wide-ranging and detrimental impacts on oil and gas development in Alberta," argues Solomon in his factum.

Other frack-case verdicts

Hydraulic fracturing, the injection of fluids at high pressure to break open previously uneconomic hydrocarbon sources, has sparked scores of lawsuits in Alberta, Texas, Colorado, Louisiana and Pennsylvania due to its large industrial footprint, extreme water use, gas migration problems, and regulatory concerns.

Last month, a Texas jury awarded a family $3 million for illnesses they suffered from contaminated groundwater, air pollution, and toxic waste caused by a fracking operation near their ranch in heavily-drilled Wise County. 

"Many studies have shown the adverse health effects on those who live or work near these sites, but those findings haven't really changed anything," said Houston attorney David Matthews, as quoted by a local news agency.

"This verdict is a game changer. It should make fracking operators stand up and take notice."

The Council of Canadian Academies, one of Canada's premier scientific bodies, has issued a critical report on the state of hydraulic fracturing in the nation, finding the industry has outpaced credible baseline data, scientific knowledge and necessary monitoring.

Last month, an Alberta government lawyer argued in court that Ernst's lawsuit should be struck down because it would open a floodgate of litigation against the province.

The Attorney General of Alberta is expected to intervene in the appeal tomorrow against Ernst. It will be heard in the Calgary Court of Appeal at the TransCanada Pipelines Tower, beginning at 10 a.m.