Decision Date: August 14, 2015

Panel: Brenda Edwards

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.)

Brian Derfler appealed a decision of the Oil and Gas Commission (“Commission”) to issue a permit that authorizes Encana Corporation (“Encana”) to construct and operate a pipeline.

In July 2014, Encana applied to the Commission for a permit to construct a pipeline within a right of way, along with temporary workspace areas. The proposed pipeline would consist of five lines, some containing natural gas and some containing emulsion/water associated with fracturing. The proposed right of way would be 18 metres wide, but temporary work spaces on either side of the right of way would extend the total width to as much as 58 metres. Except for a small area of Crown land, the pipeline would be constructed on private cultivated land, including lands owned by Mr. Defler. The pipeline would be constructed adjacent to three other pipeline right of ways which are, in part, located on Mr. Derfler’s land. Mr. Derfler cultivates grain on his land.

Shortly after Encana applied for the permit, it provided the Commission with a consultation and notification report, which indicated that Encana had received no written submissions associated with the permit application, and there were no outstanding concerns associated with the application. The report also stated that Encana had been unable to reach an agreement with Mr. Derfler, but “no project specific concerns” had been raised.

In September 2014, Mr. Derfler filed a written submission with the Commission setting out his concerns regarding the pipeline. He stated that he had requested information from Encana during the consultation period, but he was not provided with some of that information. He also stated that he had unresolved issues with Encana regarding flooding/erosion and road damage on his lands, as well as compensation for crop loss due to his loss of access to a field.

In May 2015, the Commission issued the pipeline permit to Encana.

Mr. Derfler appealed the pipeline permit to the Tribunal on several grounds including that: his crops are his livelihood; Encana failed to provide the information he requested regarding the contents of the pipeline so he could understand the risk of contamination; Encana did not accommodate his proposal for an alternate pipeline route that would address flooding and reduce the potential for contamination; and, he was denied access to Encana’s consultation and notification report.

As a preliminary matter, Mr. Derfler requested a stay of the amendment under section 72(3) of the Oil and Gas Activities Act, pending the Tribunal’s decision on the merits of his appeal. The Tribunal heard the stay application on an expedited basis, as construction of the pipeline was to begin imminently. The Tribunal issued a temporary stay of the permit, except for certain non-invasive archaeological and soil work, pending the Tribunal’s final decision on the stay application.

Encana 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. That 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 Mr. Derfler’s appeal raised serious issues related to the permit that are not frivolous, vexatious or pure questions of law. For example, the appeal raised issues regarding the Commission’s reasons and evidence for rejecting Mr. Derfler’s proposal of an alternate pipeline route which may have fewer impacts on landowners, and the potential for Encana’s proposed route to harm Mr. Derfler’s grain farming business.

Turning to the second part of the test, Mr. Derfler, as the applicant for a stay, had the onus of establishing that his interests would likely suffer irreparable harm unless a stay was granted. The Tribunal found that, if a stay was denied, there could be serious harm to Mr. Derfler’s interests, which would be “irreparable” in nature according to the test set out in RJR-MacDonald. Specifically, the Tribunal found that construction of the pipeline was to begin imminently, and it was unlikely that Encana would remove the pipeline and rebuild it in another location if the appeal was successful and the Tribunal determined that an alternate location was more appropriate. Further, even if the appeal was successful and Encana relocated the pipeline after it was constructed, it was unclear whether the harm to Mr. Derfler’s interests in the meantime could be remediated or compensated. The Tribunal found that, if a stay was denied, the pipeline could cause or contribute to flooding, soil loss, difficulty accessing his crops with farm equipment, and reduced productivity on his land, which could cause a significant loss of farming income and harm to his business reputation. There was a risk that he could be put out of business as a grain farmer.

Turning to the third part of the test, the Tribunal concluded that the balance of convenience weighed in favour of granting a stay. The Tribunal found that Encana may suffer increased costs if a stay was granted and construction of the pipeline was delayed until the merits of the appeal were decided. However, the Tribunal found that the risk of financial harm to Encana, if a stay was granted, did not outweigh the potential for irreparable harm to Mr. Derfler’s interests if a stay was denied.

Accordingly, the application for a stay was granted.