Omers Energy Inc. v. Alberta (Energy Resources Conservation Board)

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Page: 5VI. The Intervener[23] Although the FHOA participated in the Board hearing, it is neither a party, nor an intervener,in this appeal. Eva Cymbaluk, however, was granted leave to intervene.VII. Standard of Review[24] Omers submits the issue before the court is a legal one as it involves the interpretation of aspecific term in the lease. Omers says, further, that the decision does not call upon the Board’sspecialized expertise, nor its policy-making function, with the result that the standard of review iscorrectness. Omers relies, in part, on this court’s decision in Alberta Energy Co v GoodwellPetroleum Corp, 2003 ABCA 277, 339 AR 201, where the court held that the interpretation of welllicences did not engage the Board’s technical expertise because it involved, by necessity, theinterpretation and application of statute and case law. The intervener agrees with Omers’submission. Montane, on the other hand, submits the interpretation of “capable of producing theleased substances” is ultimately a matter of mixed fact and law falling within the Board’s expertise,thus inviting a standard of reasonableness.[25] The Board takes a third view. It submits there are two discrete issues of law involved in theappeal, each of which has a different standard of review. The first issue of law is whether the Boardadopted the correct legal principles of interpretation in determining the meaning of “capable ofproducing the leased substances”. The Board submits this is not a matter within its specialized areaof expertise with the result that the standard of review for this question is correctness. The Boardgoes on to argue, however, that the application of those interpretive principles to attribute meaningto the phrase “capable of producing the leased substances” is a second principle of law that fallswithin the Board’s expertise. Therefore, the Board says the standard of review with respect to thelease’s interpretation, as well as to its ultimate finding on the facts, is reasonableness.[26] The starting point for any analysis of the standard of review is the Supreme Court ofCanada’s decision in Dunsmuir v New Brunswick, 2008 SCC 9, [2008] 1 SCR 190. In Dunsmuir,the court described a two-step process for determining the standard of review. The court held at para62:In summary, the process of judicial review involves two steps. First, courtsascertain whether the jurisprudence has already determined in a satisfactorymanner the degree of deference to be accorded with regard to a particularcategory of question. Second, where the first inquiry proves unfruitful, courtsmust proceed to an analysis of the factors making it possible to identify theproper standard of review.[27] The Supreme Court affirmed that if the standard of review could not be determined by areview of the existing jurisprudence, it was necessary to examine such matters as the existence ofa privative clause, the nature of the administrative decision-maker, the nature of the statutoryscheme and whether the issue raised is one of law or fact.
Page: 6[28] I am satisfied that the standard of review, applicable to the Board in this case, was effectivelydetermined by this court in Goodwell. In Goodwell, the Energy and Utilities Board (the Board’spredecessor) was asked to interpret and apply certain oil sands leases, granted by the government,to determine if the lessee of an oil sands lease was entitled to produce gas-cap gas incidental tobitumen recovery. As in the present case, the appellants had a statutory right of appeal on questionsof law or jurisdiction, and the issue on appeal was a matter of law. Fruman JA discussed the issueof the Board’s expertise at paras 24-26:In considering this factor, the reviewing court is not to focus on theadministrative board’s general expertise, but must examine the board’sexpertise on the particular issue in question, and compare it to the court’sexpertise: Barrie, supra, at 219.The Board is a specialized tribunal that administers a comprehensive set oflegislation regulating the energy industry in Alberta: Coalition of CitizensImpacted by the Caroline Shell Plant v. Alberta Energy and Utilities Board(1996), 187 A.R. 205 at 209 (C.A.). It has considerable technical expertisein addressing issues concerning hydrocarbon exploration, development,production and conservation, and balancing competing policy interestsamong industry participants, government and the public. The Board’sinterpretation of a well license that engages these areas of expertise might beaccorded considerable deference by the courts.However, the Board’s well license interpretation in this case did not employthat technical expertise, but involved a legal determination of the right toextract resources. In order to delineate the scope of the AEC’s rights underthe well licenses, the Board had to interpret the oil sands leases, which wouldhave required an examination of the relevant energy statutes and applicablecase law. The well licenses would been contravened if, based on thisanalysis, AEC’s leased right to recover bitumen did not include the right toproduce initial gas-cap gas incidental to bitumen recovery. The court’sexpertise in determining legal issues, which involves analyzing and applyingcase law and interpreting contracts and statutes, is superior to the Board’s.See Barrie, at 218-219.[29] The situation is similar here. The Board was asked to determine whether a valid lease existedto support the licence. To do so, the Board was required to properly interpret an oil and gas leaseto determine the circumstances under which a lease could be maintained once the well was shut-in.This, in turn, required an interpretation of the phrase “capable of producing the leased substances”– the interpretation challenged in this appeal. Although the Board’s expertise may be relevant tofactual underpinnings of any interpretation adopted, it holds no special expertise in the interpretationof this phrase within this lease. Rather, the courts have superior expertise in determining legal issueswhich involve analyzing and applying case law, and interpreting contracts and statutes, and I am
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Omers Energy Inc. v. Alberta (Energy Resources Conservation Board)

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