Decision Date:  January 19, 2012

Panel:  Alan Andison, Monica Danon-Schaffer, Tony Fogarassy

Keywords: Oil and Gas Activities Act – ss. 4(b), 22(5), 25(2)(b), 38, 72(2); well; permit; land owner; jurisdiction; hearing de novo; relevant consideration; noise; water quality; wildlife; vegetation

Mike and Aspen Fraser (the “Appellants”) appealed a permit issued by the Oil and Gas Commission (the “Commission”), that authorizes Encana Corporation (“Encana”) to conduct the following activities on the Appellant’s land: drill, operate and flare a vertical well; and construct and operate an access road. The well site is on the northeastern corner of the Appellants’ land, approximately 850 metres away from the Appellants’ home. The Appellants’ land is within the Agricultural Land Reserve, and much of it is covered in natural vegetation that supports birds, deer and other wildlife. The property also has two dugouts, one of which is used to water the Appellants’ horses.

Before the permit was issued, Encana and the Appellants had several meetings about the proposed permit, and the Appellants provided three separate written submissions to the Commission regarding their concerns about the proposed permit. Their concerns included: noise, disturbances to plants and wildlife, and potential water contamination on their property. In response to the Appellants’ concerns, Encana agreed to conduct studies on the ambient noise level on the Appellants’ property, the water quality in the Appellants’ dugout, and the vegetation and wildlife habitat on the Appellants’ property.

On May 16, 2011, Encana submitted its permit application to the Commission. Encana’s application package included a report summarizing Encana’s notification and consultation with persons who may be affected by the proposed activities, including the Appellants, as required by section 24(1)(c) of the OGAA.

On May 20, 2011, the Commission issued the permit to Encana.

The Appellants appealed the permit on the basis that: the ambient noise study had been completed, but Encana refused to provide the Appellants with a copy of the study; the forest health study had not been completed; and the water testing had not been done. The Appellants requested that Encana provide them with copies of the three studies before drilling commences. Near the end of the appeal hearing, the Appellants also requested that the well be moved to a neighbour’s property.

The Commission and Encana opposed the appeal. They submitted that the Commission’s determination to issue the permit was made with due regard to the Appellants’ submissions, as required by section 72(2) of the OGAA. They also argued that section 72(2) limits the scope of appeals by land owners, and the Tribunal has no jurisdiction to conduct such an appeal as a new hearing of the matter.

With regard to the nature of appeals by land owners, the Tribunal adopted its findings in Daniel Kerr v. Oil and Gas Commission (Decision No. 2011-OGA-005(b), issued December 12, 2011). In that case, the Tribunal held that, regardless of whether the appeal is filed by a land owner or another eligible person, the Tribunal’s statutory powers and procedures are indicative of a hybrid appeal process that is more like a new hearing of the matter than a review on the record before the Commission. Section 72(2) of the OGAA limits the basis on which a land owner may file an appeal, but the legislation does not limit the Tribunal’s powers or procedures in relation to appeals filed by land owners.

Next, the Tribunal considered whether the Commission’s determination to issue the permit was made without due regard to a previous submission by the Appellants or Encana’s consultation report. The Tribunal found that the Commission had no obligation to consider new concerns that were raised by the Appellants after the permit was issued. However, the Tribunal found that the Appellants concerns about the potential impacts of Encana’s activities on noise levels, water quality and vegetation and wildlife habitat on their property were raised several times in their previous submissions to the Commission, as were their requests that Encana provide them with copies of the three studies. Although those reports were not required by the legislation to be filed with the Commission as part of Encana’s application package, the Tribunal noted that the Commission has broad powers under section 25(2)(b) of the OGAA to impose conditions in permits. The Tribunal also noted that section 38 of the OGAA provides the Commission with the discretion to order a permit holder to prepare and produce reports, which the Commission must then disclose to the public, subject to the regulations. Further, the Tribunal held that the Commission’s mandate under section 4(b) of the OGAA specifically addresses the public interest in the environmental effects of permits.

Based on the relevant legislation and the evidence, the Tribunal found that the Commission wrongly concluded that it had no authority to add a condition to the permit requiring Encana to complete the studies and provide the results to the Appellants. In addition, the Tribunal found that the results of the studies were likely to have been relevant to the Commission’s determination and useful to the Appellants, and the Commission ignored potentially relevant information that it knew was either available or would soon be available. For those reasons, the Tribunal concluded that the Commission failed to give due regard to the Appellants’ submissions, contrary to section 72(2) of the OGAA.

As for the appropriate remedy, the Tribunal rejected the Appellants’ request that the well be moved to a neighbour’s property. The Tribunal found that it would be unfair to grant that remedy, because the Appellants did not request it until near the end of the hearing, and the Tribunal had no information on how changing the well’s location might affect Encana, the neighbouring property owner, or other neighbouring property owners. The Tribunal concluded that, in the circumstances, it was appropriate, and not contrary to the regulations, to send the matter back to the Commission, with directions to amend the permit by adding a condition requiring Encana to complete the studies and provide copies of the results to the Appellants and the Commission before road construction and drilling of the well may commence.

Accordingly, the appeal was allowed.