Decision Date:  March 20, 2012

Panel:  Alan Andison

Keywords: Oil and Gas Activities Act – s. 72(3); preliminary decision; stay; RJR-MacDonald Inc. v. Canada (Attorney General) (1994), 111 D.L.R. (4th) 385 (S.C.C.)

Ken and Arlene Boon (the “Applicants”) appealed a decision of the Oil and Gas Commission (“Commission”) to issue a permit. The permit authorizes Terra Energy Corp. (“Terra”) to drill and operate a water supply well, and construct and operate road access, on land that is owned by the Applicants. The water supply well and access road were constructed on the Applicants’ property in 2001 by a previous operator. At that time, the operator was not required to obtain a permit for the well or the access road. Subsequently, the water supply well was shut-in. In 2011, Terra decided to reactivate the well and access road, and it applied for the permit as required by the Oil and Gas Activities Act. The Commission issued the permit in January 2012, subject to several conditions that relate to water quality and quantity on the Applicants’ property, and the use and maintenance of the access road.

The Applicants appealed on the basis that the Commission made several errors in issuing the permit.

As a preliminary matter, the Applicants requested a stay of the permit under section 72(3) of the Oil and Gas Activities Act, pending the Tribunal’s decision on the merits of the appeal. The Applicants submitted that a stay was required to avoid irreparable harm due to safety issues and potential environmental degradation associated with the access road.

Terra opposed the application for a stay.

The Commission took no position on the stay application.

In determining whether a stay ought to be granted, the Tribunal applied the three-part test set out in the Tribunal’s Rules of Practice and Procedure. The three-part test is based on the Supreme Court of Canada’s decision in RJR-MacDonald Inc. v. Canada (Attorney General).

With respect to the first part of the test, the Tribunal found that the appeal raised serious issues to be decided, which were not frivolous, vexatious or pure questions of law. The Tribunal noted that section 72(2) of the Oil and Gas Activities Act limits the grounds on which a landowner may appeal a decision of the Commission; specifically, a landowner may appeal “only the basis that the determination was made without due regard to” a submission previously submitted by the landowner to the Commission, or a report on consultation and notification submitted to the Commission by the permit applicant. The Tribunal found that it was unclear at this preliminary stage whether the Applicants were appealing on the basis that the Commission issued the permit without due regard to a submission previously made by the Applicants. However, for the purposes of deciding the preliminary application, the Tribunal concluded that the appeal raised serious issues about whether the permitted use of the access road poses a risk to safety and the environment.

Regarding the second part of the test, the Tribunal found that the Applicants failed to establish that that their interests in the environment or as land owners would likely suffer irreparable harm unless a stay was granted. The Tribunal found that the Applicants’ submissions regarding the alleged safety and environmental issues associated with the access road were too vague. In addition, the Tribunal found that the alleged harm to the Applicants’ interests as land owners was not “irreparable” in nature according to the test set out in RJR-MacDonald, because the asserted harm in relation to those interests appeared to be compensable.

Turning to the third part of the test, the Tribunal found that a stay would prevent Terra from commencing the permitted activities until after the Tribunal decided the merits of the appeal, and Terra had provided affidavit evidence that the delay would harm Terra’s financial interests. Conversely, the Applicants’ claims of harm speculative and vague, and the Applicants’ had failed to establish that their interests would suffer irreparable harm if a stay was denied. Weighing the balance of convenience, the Tribunal concluded that Terra would suffer greater harm if a stay was granted, than the Applicants would suffer if a stay was denied.

Accordingly, the application for a stay was denied.