Decision Date:  October 9, 2012

Panel:  Alan Andison

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

Willis Shore appealed a decision of the Oil and Gas Commission (“Commission”) to issue a permit authorizing Murphy Oil Company Ltd. (“Murphy Oil”) to construct and operate a pipeline on land that is owned by Mr. Shore. The pipeline consists of three flow lines that would be situated in a 15-metre right of way.

Mr. Shore appealed on the basis that the Commission failed to: (1) consider that Mr. Shore had presented a reasonable alternative route for the pipeline; and, (2) require Murphy Oil to fully consider all reasonable alternatives.

As a preliminary matter, Mr. Shore requested an immediate 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. Mr. Shore submitted that an immediate stay was required because Murphy Oil was about to commence construction of the pipeline, and allowing Murphy Oil to do so would render the appeal moot.

Following a teleconference with the parties, the Tribunal issued an interim stay of certain activities authorized by the permit, to allow time for the Tribunal to receive full submissions on the stay application. Specifically, Murphy Oil was permitted to carry out staking, surveying, and material mobilization as authorized by the permit, but all other activities authorized by the permit were stayed pending a final decision on the stay application.

The Tribunal heard the stay application on an expedited basis.

Murphy Oil opposed the application for a stay.

The Commission took no position on the 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 Mr. Shore had made submissions to the Commission regarding Murphy Oil’s permit application, and there was no mention of Mr. Shore’s submissions in the Commission’s decision to issue the permit. Consequently, the Tribunal found that there was a serious issue regarding whether the Commission gave due regard to Mr. Shore’s submissions.

Regarding the second part of the test, the Tribunal found that Mr. Shore failed to establish that that his interests would likely suffer irreparable harm unless a stay was granted. The Tribunal found that Mr. Shore’s submissions revealed that any alleged harm to his interests as a land owner was quantifiable in monetary terms, and that although he and Murphy Oil may disagree on the amount of compensation he should receive for the pipeline on his property, there was no evidence that he would not be compensated by Murphy Oil. The Tribunal found, therefore, that the alleged harm to Mr. Shore’s interests was not “irreparable” in nature, according to the test set out in RJR-MacDonald.

Turning to the third part of the test, the Tribunal found that a stay would prevent Murphy Oil from commencing the permitted activities until after the Tribunal decided the merits of the appeal, and Murphy Oil provided affidavit evidence that the delay would harm its financial interests. Conversely, Mr. Shore had failed to establish that his interests would suffer irreparable harm if a stay was denied. Weighing the balance of convenience, the Tribunal concluded that Murphy Oil would suffer greater harm if a stay was granted, than Mr. Shore would suffer if a stay was denied. Regarding Mr. Shore’s concern that the appeal would be rendered moot if a stay was denied, the Tribunal noted that, if Mr. Shore’s appeal is successful, Murphy Oil will have no authority to be on his property, and Murphy Oil is taking an obvious risk in proceeding to construct the pipeline before the Tribunal issues a final decision on the merits of the appeal.

Accordingly, the interim stay was rescinded and the application for a stay was denied.