Decision Date:  December 12, 2011

Panel:  Alan Andison

Keywords: Oil and Gas Activities Act – ss. 72(2), 72(6); Administrative Tribunals Act – ss. 32, 33, 38, 40; well permit; land owner; water resources; jurisdiction; statutory powers and procedures; hearing de novo

Daniel Kerr appealed a determination of the Oil and Gas Commission (“Commission”) to issue a permit authorizing Canadian Natural Resources Limited (“CNRL”) to drill and operate a well, and construct and operate road access, on land that is owned by Mr. Kerr in the Peace River District of B.C.

Before CNRL applied for the permit, it notified Mr. Kerr of its intention to apply for the permit, and it invited him to provide comments on the proposal to CNRL and/or the Commission. In response, Mr. Kerr provided written and oral (telephone) comments to the Commission. He expressed concern about the location of the wellsite and a borrow pit on his land, the disturbance that would occur on his land, the potential for contamination from the wellsite, the sufficiency of the information provided by CNRL, and the sufficiency of the financial compensation offered by the CNRL. In support of its permit application, CNRL submitted a report to the Commission that outlined the steps it took to provide notice and consultation regarding the proposal, as required by the legislation.

Mr. Kerr appealed the permit on several grounds, including that the fracturing process used to recover oil and gas may contaminate ground and surface water on his property, and that the issue of CNRL paying appropriate financial compensation for its use of, and potential damage to, his property was unresolved.

The Commission and CNRL opposed the appeal. They submitted that appeals filed by land owners are limited by section 72(2) of the Oil and Gas Activities Act (“OGAA”), which states that “A land owner… may appeal… only on the basis that the determination was made without due regard to (a) a submission previously made by a land owner under section 22(6) or 31(2) of this Act, or (b) a written report submitted under section 24(1)(c) or 31(6).” The Commission and CNRL submitted that the Commission gave “due regard” to the submissions Mr. Kerr had provided, and to CNRL’s consultation report, before making the determination to issue the permit. They also argued that the Legislature did not intend for a land owner’s appeal to be conducted as an appeal de novo; rather, it should be conducted as a review on the record before the Commission, and the Tribunal should give deference to the Commission’s determination.

First, the Tribunal considered its jurisdiction in relation to appeals filed by land owners. The Tribunal reviewed the sections of the OGAA and the Administrative Tribunals Act that provide the Tribunal’s powers and procedures in relation to conducting and deciding appeals. The Tribunal found that sections 69(1) and 72(2) of the OGAA limit the types of determinations that may be appealed by land owners, and the basis on which land owners may initiate appeals. However, the Tribunal found no indication in the OGAA or the relevant provisions of the Administrative Tribunals Act that the Tribunal’s powers and procedures in appeals filed by land owners are any different from those in appeals filed by other eligible persons, and there is no difference in the procedural rights of any party in an appeal. Further, the Tribunal found that its statutory powers and procedures are inconsistent with the notion that its jurisdiction is limited to reviewing the Commission’s determinations for errors on the record. Moreover, the remedies available to the Tribunal under section 72(6) of the OGAA do not indicate that the Legislature intended to limit the Tribunal to conducting appeals as hearings on the record. The Tribunal concluded that its powers and procedures are indicative of a hybrid appeal process that is more like an appeal de novo than a true review on the record before the Commission, and the Tribunal need not show deference to the Commission’s determinations.

Next the Tribunal considered the merits of Mr. Kerr’s appeal. The Tribunal found that most of Mr. Kerr’s submissions addressed the question of appropriate compensation from CNRL for its activities in his land, and those matters are not within the jurisdiction of the Tribunal or the Commission. Rather, they are within the jurisdiction of the Surface Rights Board. The Tribunal also found that Mr. Kerr did not specifically advise the Commission of his concerns about the fracturing process until after the permit was issued. Regarding his submissions that were within the scope of the appeal, the Tribunal found that the Commission gave due regard to the submissions that Mr. Kerr had provided, and to CNRL’s consultation report, before the permit was issued. In particular, the Commission had explained that Mr. Kerr’s concerns about compensation and the location of the borrow pit were outside the scope of the permit application process, and had inquired about CNRL’s rationale for its chosen location for the well and whether the well could be moved to address Mr. Kerr’s concerns. The Tribunal also found that there was no evidence that the permitted activities would cause contamination of water resources.

Accordingly, the appeal was dismissed.