Focus On

OIL AND GAS - Pipelines - Right of way

Friday, October 20, 2017 @ 8:31 AM  


Appeal by Coldwater Indian Band (Coldwater) from the dismissal of its application for judicial review of a decision by the Minister of Indian Affairs and Northern Development (Minister), consenting to the assignment of the easement indenture from one affiliate of Kinder Morgan Canada Inc. (Kinder Morgan) to another affiliate. A pipeline right-of-way easement was granted for the Trans Mountain Pipeline in 1955. The easement indenture allowed Trans Mountain Oil Pipe Line Company (Trans Mountain) to construct, operate and maintain a pipeline through portions of ten Indian reserves, including the Coldwater reserve. Clause 2 of the easement indenture prevented Trans Mountain from assigning the rights granted to it under the easement without the written consent of the responsible Minister. By 2007, the Trans Mountain Pipeline was under the management and control of Kinder Morgan. It was not until June 2012 that Kinder Morgan sought Ministerial consent to the assignment of the easement indenture. In 2013, Kinder Morgan applied to the National Energy Board for a certificate of public convenience and necessity in order to enlarge the pipeline to triple its capacity. On December 19, 2014, the Minister consented to the assignment of the easement indenture from one affiliate of Kinder Morgan to another affiliate, notwithstanding that the Coldwater Band council had previously advised him that this was not in the interests of the Band. The Federal Court found that the consent to the assignment was a continuation of the initial recognition of the public interest of the initial taking of the easement for the pipeline right-of-way and that it minimally impaired the Band’s use and enjoyment of its land. The Court rejected the Band’s argument that the Minister was obliged to renegotiate the terms of the indenture, including the compensation the Band was to receive, or to consider the proposed pipeline expansion when making his decision.

HELD: Appeal allowed. The Minister was interposed between the Band and Kinder Morgan with respect to the Band’s interest in its lands. He was under a continuing duty to preserve and protect the Band’s interests from an exploitive or improvident bargain. He was required to consider whether consenting to the assignment would be in the Band’s interest, or whether it would continue an improvident arrangement and an excessive intrusion on the Band’s right to enjoy and use its reserve lands. The Minister’s December 29, 2014 letter to the Band, indicating that consent was granted based on Kinder Morgan’s legal capacity, track record and financial capacity, negated the suggestion that the Minister considered the adequacy of the compensation offered to the Band, and the other terms of the easement indenture. Kinder Morgan’s capacity to comply with the terms of the easement indenture was not the only relevant consideration. The Minister’s failure to assess the current and ongoing impact of the continuation of the easement on the Band’s right to use and enjoy its lands rendered his decision unreasonable.

Coldwater Indian Band v. Canada (Minister of Indian Affairs and Northern Development), [2017] F.C.J. No. 900, Federal Court of Appeal, E.R. Dawson, W.W. Webb and D.J. Rennie JJ.A., September 26, 2017. TLD-October162017010