Ont. C.A. confirms Ontario Energy Board exclusive jurisdiction over gas storage

The Ontario Court of Appeal has dismissed an appeal by several Lambton County gas storage landowners of the summary dismissal of their claims against Union Gas Limited (Union) for:

• breach of contract - the appellants claim that Union, in breach of their gas storage leases (GSLs), has failed to properly compensate them for crop loss and other lost income arising from Union’s storage operations (statement of claim, at paras. 26-27);

• unjust enrichment - the appellants claim that Union has been unjustly enriched by storing gas on and in the appellants’ land (statement of claim, at para. 28(b));

• nuisance - the appellants claim that Union’s storage operations, which have decreased the profitability of their land, caused damage to their land and decreased their enjoyment of the land, constitute a nuisance (statement of claim, at para. 36);

• negligence - the appellants claim that due to Union’s storage operations, oil has not been produced from the Edys Mills Storage Pool since 1993 and, as a result, the appellants have not received royalty payments since that time (statement of claim, at para. 37(c)); and

• termination of contract - the appellants seek a declaration that their GSLs were terminated in 2006, along with compensation from Union on the basis that it is storing gas without a contract (statement of claim, at paras. 34-35).

In September 2008, Union moved for summary judgment dismissing the action against it on several grounds, namely: (i) that the Superior Court has no jurisdiction to entertain the claim, as it falls within the exclusive jurisdiction of the Ontario Energy Board (OEB); (ii) that the claims are statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the “LTA”); and (iii) that the claims are barred by the doctrines of res judicata or abuse of process.

The Court of Appeal dealt only with the issue of the OEB's jurisdiction, which was the basis on which the Superior Court had initially dismissed the landowners' action.  Under the Act, the Board has broad jurisdiction to regulate the storage of natural gas, to designate an area as a gas storage area, to authorize the injection of gas into that area, and to order the person so authorized to pay just and equitable compensation to the owners of the property overlaying the storage area.  Section 38(3) of the OEB Act provides that no civil proceeding may be commenced in order to determine that compensation.  On these and other bases, the Court of Appeal found that the OEB has exclusive jurisdiction to determine all issues of law and fact arising from the appellants' claim against Union, including the validity of gas storage contracts. 

Read the Court of Appeal decision at: Snopko v. Union Gas Limited.