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THE MATTER of
the application by Parkland Fuel Corporation
pursuant to section 20 of the
Petroleum Products Act, R.S.P.E.I.,
c. P-5.1, for a retail petroleum outlet license to operate a retail gasoline
and diesel outlet.
BEFORE THE COMMISSION
ON Wednesday, June 27, 2018
J. Scott MacKenzie, Q.C., Chair
M. Douglas Clow,
John Broderick, Commissioner
Terry McKenna, Commissioner
Appearances & Witnesses
Reasons for Order
Public Interest, Convenience, and Necessity
Other Issues Raised by the Intervenors
Appearances & Witnesses
1. For the Appellant, Parkland Fuel Corporation
Counsel: Ryan P. MacDonald
Witnesses: Steve Beatty, Bill McQuillan, and Vera Gaudet
2. For the Intervenor, Cape d'Or
Counsel: Tom B. Keeler
Witness: Doug MacDonald
3. For the
Intervenor, Mel's Enterprises Inc.:
Representative: Dan MacIsaac
For the Intervenor, Ferne MacPhail
For the Intervenor, PEI Retail Gasoline Dealers
Witness: Norman Glow
6. For the Island
Regulatory and Appeals Commission:
Counsel: Jonathan M. Coady
Reasons for Order
The Island Regulatory Appeals Commission (the "Commission") approves the
application of Parkland Fuel Corporation ("Parkland") for a retail
petroleum license pursuant to section 20 of the
Petroleum Products Act1.
On September 8, 2017, Parkland
made an application to the Commission for a license to operate a new
retail petroleum outlet at the intersection of Capital Drive and Maypoint
Road in Charlottetown, Prince Edward Island.
The property is located beside a new roundabout at this
 The proposed outlet will have
eight fuel pumps, provide both gasoline and diesel, include a convenience
store and car wash facility, and be open 24 hours a day.
The outlet will be operated under the Ultramar brand.
A quick-service restaurant is also planned for the property.
The property will be owned by Cordova Realty Ltd. ("Cordova") and
leased to Parkland.
 On February 26, 2018 the
Commission ordered a public hearing in relation to the application.
 Four parties applied for and were
granted status as an intervenor in the public hearing:
Mel's Enterprises Inc. ("Mel's"),
which operates a newly renovated retail petroleum outlet on Highway 1
under the Shell brand;
Ferne MacPhail ("MacPhail"), who
owns a property on Highway 1 that is leased for the operation of a
longstanding retail petroleum outlet under the Petro Canada brand;
Cape d'Or Holdings Limited ("Cape
d'Or"), which operates a successful retail petroleum outlet at the
intersection of Capital Drive and North River Road under the Esso brand;
the PEI Retail Gasoline Dealers Association ("Association"), which is a voluntary association of a small
number of the retail petroleum dealers in Prince Edward Island.
 The four intervenors oppose
approval of the application by Parkland.
The Commission did not receive any
comments or objections from the other retail petroleum dealers in Prince
Edward Island. In response to
the public notice of the application and hearing the Commission received
an objection from only one member of the public who operates a nearby
stand alone car wash.The Commission does not regulate car washes.
 All parties were invited to
present evidence and provide written and oral submissions to the Commission.
A public hearing was held on May 30 and May 31. All parties participated at the hearing.
The Legislature has vested the
Commission with the authority to supervise the licensing of retail
petroleum outlets in Prince Edward Island2.
Petroleum Products Act requires that every retailer obtain a
license from the Commission for any petroleum outlet3.
However, no license confers any perpetual or exclusive right by
virtue of section 18 of the
Petroleum Products Act.
 In order to decide whether
to approve the application by Parkland, the Commission is required to
consider the public interest, convenience and necessity.5
More specifically, section 20 of the
Petroleum Products Act
requires the Commission to consider the demand for the proposed service,
the location of the outlet, traffic flows and the applicant's record of
When issuing a license with
respect to the operation of an outlet operated by a retailer, the
Commission shall consider the public interest, convenience and necessity
by applying such criteria as the Commission may from time to time consider
advisable including but not restricted to the demand for the proposed
service, the location of the outlet, traffic flows and the applicant's
record of performance.6
Additional relevant factors are
set out in the application form.
The form states that the Commission may consider the following:
the services presently available
to the motoring public in the area;
trends in gasoline sales;
population and traffic trends in
the demand for service; and
whether the application would
 The Commission has
previously found that section 20 of the
Petroleum Products Act permits flexibility
and the particular circumstances surrounding each application must be
considered. There is no single
checklist of factors that must be satisfied in every application.
The determination of an application by the Commission is to be made
in the context of the relevant facts of that application.7
The goal of the
Petroleum Products Act is to ensure that there is a
reasonable network of retail outlets.8
Public convenience and necessity are assessed under the
Petroleum Products Act from the perspective of the motoring public and not the
public in general.9
 Consistent with the earlier
direction of the Commission in Order
PC10-01,10 it was generally agreed amongst the parties that the following
factors were relevant to the application made by Parkland in this case:
the promotion of competition;
traffic volumes and trends in the
general area of the proposed outlet;
population size and trends in the
general area of the proposed outlet;
trends in gasoline sales,
especially, but not exclusively, among outlets in the general vicinity of
the proposed location; and
services presently available to
the motoring public in the general area of the proposed location.
 The exercise is a contextual one.
The presence or absence of any one factor is not necessarily fatal.
The whole of the application must be considered against the
statutory standard fixed by the Legislature in section 20 of the
Petroleum Products Act: public interest, convenience and necessity.
 The only issue is whether public
interest, convenience and necessity would be satisfied by approving or
denying a retail petroleum license for Parkland at the proposed location.
 Two evidentiary questions arose
during the hearing of the application.
First, there were questions raised as to the admissibility of, and
weight to be given to, a report prepared by the MRSB Group and filed by
Parkland as part of its application (the "MRSB Report").
Second, there were questions raised as to the burden of proof in an
application of this type.
(1) Admissibility and/or Weight of the MSRB Report
 As part of its application,
Parkland appended the MRSB Report, which had been prepared for Cordova.
The report provided a number of opinions on each of the factors
outlined above in relation to public interest, convenience and necessity.
In order to form these opinions, the report relied on a number of
sources of information, including a telephone survey conducted by Vision
Research Inc. ("VRI") and statistics published by Statistics Canada
("StatsCan"), the Department of Transportation, Infrastructure and Energy
(the "Department"), and Tourism PEI.
 Several intervenors argued that
the Commission cannot give any weight to the MSRB Report.
They argued that the author of the report was not available as a
result of a conflict of interest with one of the intervenors and therefore
could not be examined at the hearing.
It was also argued that, without the whole VRI survey and its
underlying data, the reliability of the survey could not be tested in any
meaningful way. Both Cape d'Or
and Mel's noted that Parkland was relying on statistics arising from the
VRI survey, but the Commission was not provided the actual supporting data
for those statistics or any data that was potentially to the contrary.
 For its part, Parkland submitted
that the MRSB Report, including the VRI survey, was admissible and
deserving of weight from the Commission.
While Parkland acknowledged that it was unfortunate that the author
of the MSRB Report was not present at the hearing, Parkland submitted that
this was not fatal and beyond its control.
Parkland also argued that the reliability of the MRSB Report was
not really an issue because many of its findings were not disputed by the
parties and based on credible, objective sources.
As for the VRI survey, Parkland submitted that any issues as to its
reliability went only to weight and not admissibility.
 The Commission agrees with the
interveners and finds that there are concerns surrounding the MRSB Report
and, in particular, the VRI survey.
Given that the author of the MRSB Report was not available for
cross-examination at the hearing, the intervenors did not have meaningful
opportunities to test the opinions contained in the report.
While the MRSB Report is relevant to the application by Parkland,
the absence of its author at the hearing raises concerns as to both
fairness and reliability. The
Commission therefore places no weight on the subjective opinions contained
in the MRSB Report.
 The Commission is similarly
concerned with the VRI survey.
The Commission agrees with the intervenors that the VRI survey ought to
have been tabled in its entirety.
Without knowing the questions, responses and underlying data, it is
difficult to assess the reliability of the statistics generated by the VRI
survey. Without the underlying
data, a statistic generated from that data is of little assistance to the
Commission. For these reasons,
the Commission places no weight on the statistics generated by the VRI
 The subjective opinions in the
MRSB Report, including the VRI survey, are contrasted with other credible
and objective data that is contained in the report.
That data was capable of being tested and verified if the
intervenors had chosen to do so.
Statistics from governmental sources, such as StatsCan, the
Department, and Tourism PEI are credible and independent.
Reliability is therefore inherent within these types of
information. None of the
parties challenged the reliability of this objective data.
In addition, no party presented data that contradicted these
governmental sources. The
Commission therefore finds that it is entitled to admit and weigh the
objective data contained in the MRSB Report and, in particular, the
information from StatsCan, the Department, and Tourism PEI.
Burden of Proof
 At the hearing, there was some
disagreement between the parties as to the "burden of proof" for the
application. Parkland argued
that it was only required to substantiate its case.
According to Parkland, it is open to the Commission to draw
inferences from historical data and from the record generally.
For its part, Cape d'Or argued that the intervenors were not under
any obligation to provide evidence and that the burden of proof rested
solely on Parkland. In other
words, as the applicant, Parkland had to prove its case for public
interest, convenience and necessity.
 An applicant seeking approval from
the Commission bears the legal and evidentiary burden of substantiating
its application. However, the
Commission agrees with Parkland that it is only required to substantiate
its case and that inferences can be drawn from historical data.
In fact, the Commission has previously held that "certain
assumptions based on historical data must obviously form part of the
decision-making process in the case of non-established situations."11
Care must be taken not to import a
strict judicial understanding of burden of proof into this type of
regulatory hearing. An
applicant must substantiate their application; however, an applicant
cannot be expected to assume the burden of proving exactly what will
happen at some future point in time.
 Finally, while the Commission
agrees with the intervenors that they were under no legal burden to prove
anything, evidence may nonetheless be expected from intervenors when they
wish to rebut historical data or the inferences to be drawn from that
data. For example, in
the face of evidence that the consumption of gasoline and diesel is
increasing in a particular area, intervenors cannot simply speculate that
consumption will eventually decrease to defeat an application.
Ordinarily, evidence that is both reliable and specific to the
local market will be required in order to rebut these types of inferences.
That evidence may be in the form of data to the contrary, evidence
from within the industry or local market, or an expert.
Public Interest, Convenience, and
 The following factors, specific to
the Parkland application were considered by the Commission in coming to
its finding that Parkland substantiated its application and demonstrated
that the granting of a license would satisfy the public interest,
convenience and necessity test set forth in section 20 of the
Petroleum Products Act.
Record of Performance
 The Commission finds that Parkland
has a demonstrable record of performance in the operation of retail
petroleum outlets and in the petroleum industry in general.
Parkland currently operates 1,850 retail petroleum outlets across
the country. Parkland also has
a record of environmental compliance.
There was uncontested evidence before the Commission that Parkland
conducts regular environmental audits.
 The public interest is advanced by
retailers with demonstrable experience and expertise in the industry.
Trends in Petroleum Sales
 The Commission is satisfied that
the sales of gasoline and diesel in the local area have gradually
increased over the last five years.
For example, Exhibit C-11 demonstrates that gasoline and diesel
volumes increased between 2013 and 2017 for the five retailers that are
closest to the proposed location.
It is reasonable for the Commission to infer that this increase in
volume over the last five years is a signal of demand from the motoring
 Some of the intervenors submitted
that the Commission cannot draw inferences from this data.
For example, Mel's argued that traffic volumes and petroleum demand
will decline as a result of the introduction of a price on carbon and
increased motor vehicle efficiency.
Cape d'Or also produced two reports from the United States that
stated petroleum demand would decline over the next decade.
The reports cited the rising price of oil, fuel efficiency
improvements, and alternative fuel vehicles as factors that will lead to a
reduction in demand.
 These objections can be addressed
summarily. First, Cape d'Or
acknowledged that the reports did not consider local issues or the
particular market in Prince Edward Island.
The Commission is therefore unable to assume that the conclusions
found in these reports are transferrable to the local market.
Second, the Commission did not have any evidence regarding the
impact of a carbon price and vehicle efficiency on demand for gasoline and
diesel in Prince Edward Island.
In the absence of evidence as to transferability and causation in
our local market, the Commission simply cannot speculate that these
factors will reduce demand for petroleum in this area going forward.
That evidence may someday be available, but it was not presented to
the Commission in this application.
 The Commission has not been
provided with any cogent evidence that would displace the logical
inference from the historical data.
There is a general upward trend in the volume of gasoline and
diesel sold in this local area.
This is a sign of continuing demand from the motoring public.
Trends in Traffic and Population
 The application by Parkland is
supported by expected changes in traffic patterns around the proposed
location and population growth in the general area.
 The redevelopment of Highway 1 is
expected to have a significant impact on local traffic trends:
First, a median has been
constructed to divide the lanes of travel on Highway 1, which prevents
access to existing retail outlets by left-turning vehicles.
Choice by the motoring public will therefore be restricted.
Second, the routing of Highway 1
will be modified by the construction of a bypass around the Town of
Cornwall. The MRSB Report
states that, according to estimates from the Department, 8,000 vehicles or
53% of traffic will be re-directed to the new bypass.
A large segment of the motoring public will therefore be routed
around an existing retail outlet in Cornwall.
 Several interveners submitted that
the median would not affect the behaviour of the motoring public in a
material way. For example,
MacPhail provided relevant and practical evidence that motorists were
already generally reluctant to turn left across two lanes of oncoming
traffic on Highway 1. In other
words, the median would just make impossible what had otherwise been
impractical. This is true.
However, it also cannot be denied that the addition of the median
has the physical effect of restricting choice for the motoring public.
The proposed location which is immediately adjacent to the
roundabout is accessible to the motoring public travelling inbound from
Cornwall and outbound from Charlottetown.
In addition, for those vehicles expected to bypass the Town of
Cornwall, Parkland would be a new option for retail petroleum service.
 The Commission also finds that the
evidence demonstrated a general increase in the volume of motor vehicles
in Prince Edward Island. The
MRSB Report stated that, according to the Department, the number of
vehicle registrations and the number of new vehicles sold in the province
has increased from 2011 to 2016.
Tourism PEI has also noted an increase in traffic on the
Confederation Bridge from 2014 to 2016.
While these types of general patterns are relevant, the Commission
also observes that they are not determinative.
Objective data that is related to the area in the immediate
vicinity of the proposed location is more valuable to the Commission.
 There was evidence before the
Commission that the population of the surrounding area is trending
upwards. The data from
StatsCan shows that the population of Charlottetown and Cornwall has
increased from 2011 to 2016 (4.4% and 3.6%, respectively).
For its part, Cape d'Or argued that this increase was a result of
urbanization and therefore not sustainable.
However, no evidence was presented to the Commission in support of
those assertions. The
Commission did, however, hear evidence that the area surrounding the
proposed location was undergoing a substantial amount of commercial
development. To cite one
example, there was evidence that a six-storey hotel was being constructed
on the lot adjacent the proposed outlet.
When taken together, it is reasonable to infer that this population
growth and development will contribute to demand from the motoring public.
 In summary, the redevelopment of
Highway 1 will have the effect of reducing the number of retail petroleum
outlets available to a large segment of the motoring public.
When this is combined with the increasing population, increasing
traffic, and increasing commercial development in the immediate area,
there is a strong evidentiary basis to infer that demand from the motoring
public will also increase. The
interest, convenience, and need of the motoring public would be served by
an additional retail outlet.
Promotion of Competition and Services Presently Available
 The Commission is satisfied that
the introduction of a retail petroleum outlet under the Ultramar brand
will increase choice for the motoring public and foster marketplace
competition in the immediate area.
 Parkland will introduce a new
brand - Ultramar - to the local area.
While there are Ultramar outlets located in Charlottetown at
University Avenue and St. Peter's Road, none are located within the area
that is reasonably expected to be served by the proposed location.
Accordingly, there is no concern of the market being dominated by a
single brand or retailer.
Adding another national brand to the local area will increase choice for
the motoring public.
 The proposed outlet will also
provide some new services and programs that will further enhance consumer
choice. For example, the
outlet will provide an onsite carwash service, offer a discount program at
the pump, and be open for 24 hours a day.
A convenience store will also be operated; however, such a service
is already found onsite at each of the existing retail outlets in the
 By granting the application,
competition will be encouraged in the local area to the benefit of the
motoring public. Consumers
will have additional choices and the benefit of a broader network of
outlets that provide a suite of services and programs.
Accessibility and Safety of the Proposed Location
 The Commission is satisfied that
the proposed outlet will be safe and accessible for the motoring public.
The evidence before the Commission demonstrated that the City of
Charlottetown confirmed that the three points of access to the proposed
location were reviewed by an expert and determined to be safe.
The City further confirmed that it was confident that its traffic
impact study addressed all of the traffic engineering concerns related to
the proposed location. The
Commission has not been provided any objective, expert, or professional
evidence to the contrary. The
safety and accessibility of the proposed outlet has therefore been assured
by the City.
Totality of the Record
 After considering the record as a
whole, the Commission is satisfied that section 20 of the
Petroleum Products Act
has been satisfied.
Other Issues Raised by the
 Several intervenors submitted that
the application ought to be rejected because:
first, statistics suggest that
existing retailers are operating below capacity and therefore have the
ability to meet the future needs of the motoring public; and
second, Parkland would not be
offering any new service to the local area.
The Commission does not accept
these submissions for the reasons that follow.
Capacity of Existing Outlets
 Cape d'Or, Mel's, and the
Association placed much emphasis on the fact that retailers in the local
area are operating below their capacity.
The intervenors argued that an additional outlet was not necessary,
and that the presence of an additional outlet could negatively impact the
other existing outlets.
However, there was no evidence before the Commission that an existing
outlet would close as a result of a new outlet being approved.
 Similar arguments have previously
been made to the Commission.
While the Commission has recognized that negative impacts on existing
retailers are relevant to its analysis, the Commission has also concluded
that section 20 of the
Petroleum Products Act focuses on the needs of the
motoring public and not the needs of existing retailers.
In order to prevent approval of a new retail outlet, the evidence
must demonstrate that service to the motoring public will be diminished:
While concerned about the
viability of each and every existing retail outlet, the Commission's
statutory mandate relates primarily to the motoring public at large and as
such their interest, convenience and necessity. As per previous Commission
Order P.920211-2 (February, 1992 Irving Oil Limited), the Commission is of
the opinion that it is only when the evidence clearly indicates that a new
license will result in the closure of an existing outlet, which in turn
will result in diminished service to the motoring public at large, that
this detrimental effect takes a greater significance.
In this case the evidence given relating to any anticipated
detrimental effect to existing outlets was insufficient to warrant
declining the applications on that basis alone.12
 In this case, none of the
intervenors stated that they would be required to close in the event that
the application by Parkland was approved.
The Commission also received no evidence of any projected future
losses for existing retailers.
In the absence of such evidence, the Commission is unable to place
significant weight on the current capacities of, and future potential
losses to, existing retailers.
 Finally, the Commission observes
that competition is intended to be fostered by the
Petroleum Products Act.
As recognized by section 18 of the
Petroleum Products Act, no
license confers any perpetual or exclusive right upon a retailer.13
In other words, the
Petroleum Products Act does not require an
applicant wait until other existing retailers are operating at (or
exceeding) their capacity before it can apply to enter the market.
Rather, an applicant must demonstrate that a new outlet is in the
public interest and serves the convenience and needs of the motoring
Duplication of Services
 Many of the intervenors submitted
that Parkland will duplicate services that are already provided by
existing retailers in the area.
For example, Mel's argued that its outlet includes both diesel and
gasoline, offers a convenience store, includes quick service restaurant,
provides a number of loyalty programs, and provides a cross-promotion for
car wash services. It was
therefore submitted that the motoring public is already being served by
existing retailers. Parkland,
for its part, countered that it is not required under the
Petroleum Products Act to offer new or different services.
 The Commission does not agree that
Parkland will simply replicate the services being provided by other
retailers in the area. For
example, the proposed outlet will provide an onsite car wash, offer a new
national brand, and be open to the public for 24 hours a day.
The end result will be increased choice in the area for members of
the motoring public.
 An application under the
Petroleum Products Act cannot be defeated solely because an applicant will offer
services similar to those already available to the motoring public.
While the addition of new or different services will generally be
in the interest of the motoring public, it does not follow that the
provision of the same or similar services will generally not be in the
interest of the motoring public.
After all, each retailer - existing and proposed - is operating the
same type of business in the same regulated market.
Each application must therefore be assessed in its entirety and on
its own merits.
 The Commission finds that the
introduction of an additional retail outlet - even one that offers
services and programs that are substantially similar to those offered by
existing outlets - will benefit the motoring public in a local area that
is directly affected by highway redevelopment, population growth, and new
 In conclusion, the Commission
finds that Parkland has substantiated its application.
The Commission is also satisfied that the proposed outlet will
serve the interests, needs, and convenience of the motoring public in this
area. Redevelopment of Highway
1, changing traffic patterns, growing population, increasing vehicular
traffic, and new commercial development in the immediate area are all
reasonably expected to increase demand for petroleum in this area.
The motoring public will therefore benefit from the addition of a
modern, 24-hour retail outlet that offers a new brand, is located at a
safe and convenient site, and is operated by an experienced retailer.
R.S.P.E.I. 1988, c. P-5.1.
2 R.S.P.E.I. 1988, c. P-5.1,s.9.
3 Ibid., s. 11.
Ibid., s. 18.
Ibid., s. 20.
Order PC10-01 at para. 53.
Ibid. at para. 54.
Ibid. at para. 55.
11 Order P. 990707.
Order No. PC10-01 at para. 66.
R.S.P.E.I. 1988, c. P-5.1, s. 18.
considering the application, the submissions by the parties, and all of the
evidence at the hearing herein;
for the reasons given in the annexed Reasons for Order;
The license for the proposed
retail petroleum outlet located at the intersection of Capital Drive and
Maypoint Road in Charlottetown, Prince Edward Island, being tentatively
identified as 400 Capital Drive, and operating in the name of Parkland
Fuel Corporation, as an Ultramar retail outlet with four pump islands
consisting of a total of eight nozzles serving gasoline and diesel and
operating on a twenty-four hour per day basis is hereby approved subject
to the condition that the following information be provided to the
Commission within 180 days of the date of this Order:
applicable filing fee;
a copy of preliminary approval
from the Department of Communities, Land and Environment relating to
the installation of petroleum storage facilities;
a copy of the building permit
or approval in principle for the retail petroleum outlet from the City
of Charlottetown; and
proof of ownership of the
lands by Cordova Realty Ltd. and a copy of the lease agreement between
Cordova Realty Ltd. and Parkland Fuel Corporation.
DATED at Charlottetown, Prince
Edward Island, Wednesday, June 27, 2018
BY THE COMMISSION:
J. Scott MacKenzie, Q.C. Chair
M. Douglas Clow, Vice-Chair
John Broderick, Commissioner
Terry McKenna, Commissioner
Section 12 of the
Island Regulatory and Appeals Commission Act reads as follows:
12. The Commission may,
in its absolute discretion, review, rescind or vary any order or
decision made by it or rehear any application before deciding it.
Parties to this proceeding
seeking a review of the Commission's decision or order in this matter may do
so by filing with the Commission, at the earliest date, a written Request
for Review, which clearly states the reasons for the review and the nature
of the relief sought.
Sections 13(1) and 13(2) of the
Act provide as
13.(1) An appeal lies
from a decision or order of the Commission to the Court of Appeal upon a question of law or jurisdiction.
appeal shall be made by filing a notice of appeal in the Court of Appeal within twenty
days after the decision or order appealed from and the rules of court respecting appeals apply with the necessary changes.
NOTICE: IRAC File Retention
In accordance with the
Commission's Records Retention and Disposition Schedule, the material
contained in the official file regarding this matter will be retained by the
Commission for a period of 2 years.