Decision Date: January 8, 2019

Panel: Alan Andison

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

Jedidiah and Amber Franklin (the “Applicants”) appealed a permit issued by the Oil and Gas Commission (“Commission”) to Leucrotta Exploration Inc. (“Leucrotta”). The permit authorized Leucrotta to carry out activities for the purposes of oil and gas exploration, development and production. The permitted activities included drilling and operating a gas well, and using a road to access the well site. The road that Leucrotta was permitted to use is on land owned by the Applicants. The Applicants operate an organic farm on their land. The appeal focused on Leucrotta’s use of the road.

The Applicants applied for a stay of the permit, pending the Tribunal’s decision on the merits of the appeal. The Applicants submitted that without a stay, there would be permanent loss of sensitive wildlife habitat, and noxious weeds may be brought onto the Applicants’ farm, which would have irreversible consequences. The Applicants also argued that granting a stay would cause no harm to Leucrotta, because alternative routes were available to access the well site.

After the appeal was filed, the Surface Rights Board granted a right of entry order to Leucrotta in relation to the road. Under the Petroleum and Natural Gas Act, the Surface Rights Board may order a right of entry onto private land if it is satisfied that such an order is required for authorized oil and gas activities. Under the right of entry order, Leucrotta agreed to: make all reasonable efforts to ensure proper weed management on the road; steam clean any vehicles before being brought on the road; and, indemnify the Applicants from any damages, losses, costs, or claims made by the registered easement holder, caused by Leucrotta’s access to the road.

In determining whether the stay ought to be granted, the Tribunal applied the three-part test set out in the Tribunal’s Rules of Practice and Procedure, which 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 regarding the potential for Leucrotta’s road use to adversely affect wildlife and to spread noxious weeds that could adversely affect the Applicants’ farm. The appeal also raised questions regarding the adequacy of Leucrotta’s consultation and notification of the Applicants, and whether the Commission has the jurisdiction to grant a permit authorizing the use of a private road. The Tribunal found that these issues were not frivolous, vexatious, or pure questions of law. Therefore, the Tribunal proceeded to consider the next part of the test.

In the second part of the test, the Applicants had to establish that their interests would likely suffer irreparable harm unless a stay was granted. The Tribunal found that the Applicants had failed to do so. The evidence established that invasive plants already existed on the road before the permit was granted. Therefore, the question was whether Leucrotta’s road use would cause invasive plants to spread beyond the road. The right of entry order required Leucrotta to take measures to reduce that risk. The Tribunal found that the risk would be further reduced if Leucrotta’s activities occurred when the ground was frozen, as planned by Leucrotta. In contrast, granting a stay and delaying the permitted activities may actually increase this risk, if Leucrotta proceeded when the ground was not frozen. The Tribunal also found that, even if noxious weeds did spread onto the Applicants’ farm, the Applicants would be entitled to compensation under the Petroleum and Natural Gas Act.

Regarding the risk of irreparable harm to wildlife, the Tribunal found that there was no evidence that the road goes through a wildlife corridor or ungulate winter habitat. In addition, the Tribunal found that if Leucrotta’s activities occurred in the winter, as planned, the timing would minimize impacts on wildlife. There was no evidence that denying a stay would likely cause irreparable harm to wildlife.

Turning to the third part of the test, the Tribunal concluded that the balance of convenience weighed in favour of denying a stay. The Tribunal found that granting a stay would delay the permitted activities which would cause increased construction costs to Leucrotta, if the appeal is ultimately unsuccessful and the permitted activities proceeded. In addition, granting a stay and delaying construction would increase the risk of spreading invasive weeds, and increase the inconvenience and disruption to farming operations, due to the permitted activities occurring after the ground thawed. For all of those reasons, the Tribunal concluded that the balance of convenience favoured denying a stay.

Accordingly, the stay application was denied.