Canada’s fractured view of fracking

As Canada’s largest natural gas producer defends itself in court against allegations linked to its fracking operations, several provinces are expressing increasing unease with the practice and, in some cases, banning it.

Concerns over fracking — the practice of injecting rocks with pressurized liquid to release natural gas — appear to be unevenly spread across the country. In general, disquiet in Western Canada has been more muted, possibly partly due to the greater public tolerance of large energy projects in general.

Bucking this trend is the multi-million dollar lawsuit launched by Alberta resident Jessica Ernst against energy firm Encana Corp. The case raises interesting questions about the extent to which regulators can be held liable for damage caused by fracking.

Encana had carried out shallow drilling to extract methane gas from coal beds using a technique known as hydraulic fracturing, which Ernst believes has led to the contamination of her water supply.

The water is so contaminated, according to Ernst’s amended 2011 statement of claim, that if it were placed in a capped plastic bottle, in under a minute it would “explode in a flame a foot high if a lit match or lighter was placed near the bottle.”

Her claims echo a striking scene in the Oscar-nominated U.S. documentary Gasland, in which a man set the water from his faucet on fire in a bid to show the dangers of fracking. The scene was heavily criticized by energy firms, which said this was a local geological phenomenon unrelated to fracking.

However, Ernst claimed there were no records her well had historically contained “notable quantities” of gas.

Ernst v. Encana Corporation also names the Alberta government and the Energy Resources Conservation Board, which regulated Alberta’s energy industry until being replaced by the Alberta Energy Regulator in June 2013.

Ernst claims the regulator ignored her complaints related to the contamination, and that Alberta Environment showed “bad faith” in its investigations.

On Sept. 19, 2013, the Court of Queen’s Bench of Alberta struck out parts of Ernst’s claims against the ERCB. Chief Justice Neil Wittmann concluded the regulator did not owe her a private duty of care and could not be held in negligence.

He wrote: “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.”

Ernst also alleges the ERCB breached her s. 2(b) rights under the Canadian Charter of Rights and Freedoms.

But Wittman said the ERCB was protected from the claims under s.43 of the Energy Resources Conservation Act, which provides no action may be brought “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.”

Does Ernst’s lawsuit have any chance of success? Shawn Denstedt, a partner and environmental litigation lawyer at Osler Hoskin & Harcourt LLP’s Calgary office, thinks the chances of proving a regulator is liable for water contamination are slim. “In my view it’s unlikely that a regulator could be held liable for contamination if they have executed their job in a faithful and fair-minded fashion,” he says.

Denstedt, whose firm represents Encana, adds: “In B.C. and Alberta, regulators are conscientious and work hard at their jobs. To me it would be very difficult for a regulator to be held liable. They would have to have been negligent to prove liability.”

But Dianne Saxe, principal at Toronto-based Saxe Law Office, believes it is not out of the question. “Suing a regulator is definitely a tough thing to win, but it can change behaviours,” she says.

Ernst has a “significant chance of persuading the regulator to approach the issue differently,” even if damages are unlikely, Saxe adds. “She has a reasonable shot at getting a procedural change, or a ruling that they [the ERCB] at least have to listen.”

Saxe also thinks case law setting out the limitations of regulators’ duties to private individuals may not apply fully to fracking.

“When you frack, you frack on someone’s property,” she explains. “You don’t have an infinite number of potential victims. There’s someone in particular whose home is there.”

Water contamination is the most contentious issue when it comes to fracking, though it is not the only risk highlighted by opponents; other concerns include methane gas leaks, water usage, the disposal of fluids, and earthquake hazards.

Given the scale of the potential risks, regulators should take their consultation duties seriously, argues Saxe, who points out she is neutral on fracking and understands the frustrations of dealing with a persistent opponent such as Ernst.

“There are legitimate and important concerns about fracking, and for a regulator to refuse to listen to those concerns, it seems to me a serious breach of the regulator’s duties,” she says.

The constitutional challenges raised by aboriginal communities resisting fracking do not stand out, in a legal sense, from other lawsuits related to controversial energy projects, says Denstedt.

But the potential long-term consequences of fracking may give extra weight to claims, suggests Saxe.

After all, she says: “A dam can do an enormous amount of environmental damage, but if all else fails, you can take the dam out. With fracking, if you contaminate an aquifer, they don’t have any way to bring these things back.”

This risk isn’t unique to fracking, but the “unexpected” nature of any environmental damage caused by the practice makes it particularly cogent, she says. For example, chemicals added to fracking fluids fluctuate by location, and the ease with which individuals are able to find out what these components are also varies.

Some energy companies have tried to argue they shouldn’t have to provide this “proprietary” information, though there is increasing pressure to disclose it.
According to a May 2013 Vancouver Sun report based on a leaked document, Environment Canada wants gas producers to provide fuller information on fracking fluids, which can contain dozens of chemicals including hydrochloric acid, benzene, and lead.

These concerns have led to some provinces taking a firm anti-fracking stance. In  November 2013, the Newfoundland and Labrador government said it would not consider any fracking applications until it had assessed the geological impact on the west of the province and carried out a full review of the regulations, rules, and guidelines.

Nova Scotia issued a two-year fracking ban in 2012 pending a report due to be released next year. The government also plans to ban any fracking waste water from being imported to the province.

Natural gas explorations by SWN Resources Canada Inc. have been met with angry protests in New Brunswick by First Nation communities. At a protest last
October, 40 people were arrested for firearms offences, threats, intimidation, mischief, and violating the court-ordered injunction after police cars were set alight and Molotov cocktails thrown at RCMP officers. Law enforcers had responded with tear gas and rubber bullets.

Quebec’s minority government is currently consulting on a bill that would impose a fracking moratorium for up to five years in the St. Lawrence valley.
Landowners in the region are worried about water quality and the agricultural impact, and the Parti Quebecois had pledged a moratorium during the 2012 election campaign.

After the election, the PQ shelved a  strategic environmental assessment on fracking, ordered by the former Liberal government, and asked Le Bureau d’audiences publiques sur l’environnement to carry out a new review.

 “This has been brand new in Quebec and unfortunately, when exploration started, industry didn’t anticipate the reaction of the public,” explains Paul Granda, environmental lawyer at Sheahan and Partners GP, based in Westmount, Que. “They’re probably used to people being accustomed to seeing drill rigs in the middle of a field,” he says. “Here in Quebec, that really raised the concerns of the public.”

Questions have also been raised as to whether the shale gas sector needs to be developed, given the province’s recent electricity surplus and the availability of U.S. gas.

Unsurprisingly, Saxe says she receives more requests for help on anti-fracking issues in Eastern Canada than elsewhere.

The greater maturity of fracking regulations in the West may be helping to reassure local populations there. “B.C. and Alberta already have robust regulatory systems,” says Denstedt. “The trouble with Quebec and New Brunswick is they don’t have mature regulations, and don’t understand the industry in the same way. That’s what is driving a lot of it [the protests].”

Regulations in Quebec are “fairly undeveloped,” agrees Granda. However, he also warns an overly restrictive approach could backfire.

“The former Liberal government adopted amendments to provide for specific information that has to be submitted when you want to do any shale gas exploration,” he says.  “The information required is fairly comprehensive, to the point where it probably discouraged many companies from pursuing any work.”

That isn’t to say there’s no opposition in the West. Last November, fracking protestors set up a fake rig on the lawn of B.C. Premier Christy Clark’s Vancouver home.

The risks are largely dependent on the type and depth of drilling, and on local geological factors, making it wise to weigh the risks on a case-by-case basis.

“One thing I encourage municipalities to do when they contact us is think about the specific concerns of where they are,” advises Saxe.

“What’s particularly vulnerable in their location? Some areas are relatively robust.  There are other cases where the population is entirely dependent on a limited aquifer which couldn’t be replaced and is highly vulnerable.” In these situations there’s a “strong case” that extra protective steps should be taken, she recommends.

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