Canada: Regulators Of Fracking Negligent? Alberta Case Cut Down

Last Updated: November 21 2013
Article by Meredith James and Dianne Saxe

Can energy and environmental regulators be successfully sued if they allow fracking to contaminate drinking water? Jessica Ernst is trying with her lawsuit against EnCana, the Alberta Energy Resources Conservation Board (ERCB) and the Alberta government for the contamination of her property and drinking water due to EnCana's fracking program. But she has just had a major setback.

We first wrote about her claim in 2011. At the time, we predicted that stronger regulations were coming. Two years later,  Quebec has proposed legislation to impose a 5-year moratorium on fracking and Newfoundland and Labrador has also announced a moratorium. Other provincial governments are under increasing pressure to do the same. Ms. Ernst's case, however, is still working its way through the courts.

The Court of Queen's Bench recently struck out significant portions of Ms. Ernst's claim against Alberta's energy regulator, the ERCB. It concluded that the ERCB did not owe her a private duty of care, and so could not be held liable in negligence. Further, even if it did owe such a duty, it was protected by the statutory immunity provision found in section 43 of the Energy Resources Conservation Act, RSA 2000, c E-10(ERCA) (since repealed and replaced by the Responsible Energy Development Act, SA 2012, c R-17.3).

Ms. Ernst's Claims

As summarized by the Honourable Chief Justice of Court of Queen's Bench, Neil Wittmann:

[1] Jessica Ernst ("Ernst") sued EnCana Corporation ("EnCana"), the Energy Resources Conservation Board (the "ERCB") and Her Majesty the Queen in Right of Alberta ("Alberta"). The claims against EnCana are for damaging the Ernst water well and the Rosebud aquifer, the  source of fresh water supplied to the Ernst home near Rosebud, Alberta. It is alleged that, between 2001 and 2006, EnCana engaged in a program of shallow drilling to extract methane gas from coal beds and, in so doing, used a technique known as hydraulic fracturing, which included the use of hazardous and toxic chemicals in its hydraulic fracturing fluids, resulting in contamination of the Rosebud aquifer and the Ernst water well. The claim against EnCana is grounded in a number of different legal theories, including negligence, nuisance, the rule in Rylands v Fletcher, and trespass.

 [2] The claim against the ERCB is that it was negligent in its administration of its statutory regulatory regime, that it failed to respond to Ernst concerns about water contamination from the EnCana drilling activity, that the ERCB knew that EnCana had perforated and fractured directly into the Rosebud aquifer, and that it failed to respond. Further, it is alleged that the ERCB owed a duty to Ernst to take reasonable steps to protect her well water from foreseeable contamination. It is also alleged that, by its conduct, the ERCB breached section 2(b) of the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982 c 11 (the "Charter"), by barring Ernst from communicating with the ERCB through the usual public communication channels, and thereafter ignored her for a period of time until she agreed to communicate with the ERCB directly only, and not publically through the media or through communications with other citizens.

[3] The claim against Alberta is specifically against Alberta Environment and Sustainable Resource Development ("Alberta Environment"). Ernst alleges she relied on Alberta Environment to protect underground water supplies and to responsibly and reasonably respond to any of her complaints; that by October 2004, Alberta Environment knew that EnCana was diverting water from underground aquifers without the required permits from Alberta Environment; and that a number of land owners had made complaints regarding suspected contamination of the Rosebud aquifer by mid-2005. It is alleged that, in late 2005, Ernst contacted Alberta Environment to report her concerns about EnCana's activities. Further, it is alleged that Alberta Environment failed to take any action until March 2006, when it tested the Ernst well and other water wells in the region. The tests allegedly indicated high concentrations of methane, hazardous chemicals and petroleum pollutants. Ernst claims that Alberta Environment's investigation into the contamination of the Ernst water well was conducted negligently and in bad faith and prevented the Alberta Research Council from conducting an adequate review on the information provided by Alberta Environment. It is alleged that Alberta Environment owed a duty to Ernst to protect her water well from foreseeable contamination caused by drilling for shallow methane gas, that it failed to conduct a reasonable investigation and to take remedial steps to correct damage, and that Alberta Environment breached its duty to Ernst.

ERCB application to strike 

The ERCB brought an application seeking to strike out certain portions of Ms. Ernst's revised statement of claim on the basis that it was "plain and obvious" that the pleadings did not disclose a reasonable cause of action.

Negligence claim against the ERCB – struck out

The ERCB claimed that, as a statutory body, it did not owe a private duty of care to Ms. Ernst. Without such a duty of care, there could be no action in negligence. Chief Justice Wittmann agreed, reasoning as follows:

[27] Applying the contrasting authorities analysed by Cromwell J. in Fullowka and the principles articulated in the other authorities as summarized in Liability of the Crown, I am of the view that the duties owed by the ERCB in the circumstances of this case are not private duties. They are public duties. The necessary relationship of proximity between Ernst and the ERCB is absent. The duties of the ERCB owed to the public are derived from the ERCA.

[28] None of the paragraphs in the Fresh Claim elevate the ERCB's public duties to a private duty owed to Ernst. She stands in her relationship to the ERCB much like the plaintiffs in Edwards and Cooper to the regulators in those cases, notwithstanding that she was in direct contact with the ERCB. In all three instances, a member of the public may communicate with the regulator (the Law Society of Upper Canada in Edwards, the Registrar under the Mortgage Brokers Act, RSBC 1996, c 313 in Cooper, and the ERCB in this matter), but the regulator has no direct regulatory authority over the member of the public. Whether a private duty arises does not turn on whether an individual does or does not communicate directly with the regulator; regardless, there is no sufficient proximity to ground a private duty. Nor was there a relationship established between Ernst and the ERCB outside the statutory regime which created a private duty.

The Court concluded that as there was no private duty, and insufficient proximity to ground a public duty, it was not necessary to consider whether the harm to Ms. Ernst was forseeable, or to consider whether there were policy reasons to impose a private duty.

Ms. Ernst's allegations of negligence against the ERCB were struck out.

Charter claim against the ERCB – ERCB protected by statutory immunity

Chief Justice Wittmann found that although Ms. Ernst's Charter claims were novel, he could not say that they were doomed to fail or that the claims did not disclose a cause of action.

However, he found that the ERCB was protected from the claims, for both the Charter breach and negligence, by section 43 of the ERCA, which provides that no action or proceeding may be brought against the ERCB "in respect of any act or thing done purportedly in pursuance of this Act, or any Act that the Board administers, the regulations under any of those Acts or a decision, order or direction of the Board."  With regard to the Charter claims:

[82] I conclude that statutory immunity clauses apply to claims for personal remedies pursuant to the Charter. I reach this conclusion for two reasons. Firstly, it is my view that the reasons why limitation periods apply to claims for personal remedies under the Charter also apply to statutory immunity clauses because statutory immunity clauses and limitation periods are both legislated bars to what may otherwise be a meritorious claim.

[83] Secondly, there are strong policy reasons for the application of immunity clauses to claims for personal remedies under the Charter. Policy considerations are given effect when the merits of a claim for a Charter breach are examined. In my view, these policy considerations also apply when determining whether a statutory immunity clause applies.

Ms. Ernst's Charter claims against the ERCB were also struck out.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Meredith James
Dianne Saxe
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