On March 31, 2014, the Alberta Energy Regulator (“AER”) completed its transition into the principal regulator of the entire life cycle of oil and gas development in Alberta. The effect of the AER’s expanded jurisdiction is to consolidate decision-making relating to environmental and energy permits from disparate government bodies.

The AER is now a full life-cycle regulator: from application and exploration, to construction and development, to abandonment, reclamation, and remediation.”[1]

How it Happened

  • In June, 2013, the AER was launched to replace the Energy Resources Conservation Board (“ERCB”).
  • On November 30, 2013, the AER assumed responsibility for decisions relating to energy resources activities under the Public Lands Act and Part 8 of the Mines and Minerals Act.
  • On March 31, 2014, the AER assumed responsibility for making decisions under the Environmental Protection and Enhancement Act and the Water Act insofar as such decisions relate to an energy resource activity.
  • On April 15, 2014, the fully-empowered AER made its first big move by releasing a revised version of its Directive 60, which regulates venting, flaring and incinerating by upstream petroleum producers.[2] Among other things, the revised Directive 60 strengthens regulations for mandatory conservation of solution gases for certain projects, regardless of economics. This change was a direct result of the public hearing that followed the widely-publicized issue of concerns in the Peace River about odours and emissions from nearby heavy oil producers.

Some Limits on AER Jurisdiction

It is clear that the AER does not have jurisdiction to assess the adequacy of Crown consultation;[3] however, it is unclear whether it has jurisdiction to consider other constitutional issues, particularly as they may relate to Aboriginal rights. Last October, the Alberta Court of Appeal granted leave for a First Nation to appeal a decision of the then-ERCB regarding approval of a SAGD oil sands project in north-eastern Alberta.[4] The ERCB had held that it did not have the jurisdiction to determine the scope of the First Nation’s treaty rights, and also did not have the jurisdiction to determine whether its approval of the SAGD project would unconstitutionally infringe on federal jurisdiction over “Indians and Lands Reserved for Indians”.[5] In granting leave to appeal, the Court of Appeal held that there is “a live issue respecting the [AER’s] interpretation of its power to decide constitutional issues”.[6] The case was billed as “the dispute the entire oil industry is watching”;[7] however, the parties settled the case before the appeal was heard. As a result, the issue and it remains unsettled.

Concluding Thoughts

The AER has come a long way from the ERCB founded in the 1930s with a mandate to conserve hydrocarbons from being wastefully flared in the Turner Valley oilfields. As described above, the AER now has a comprehensive and wide-reaching mandate. Given the broad regulation-making powers in the AER’s governing statute, the AER’s functions will no doubt continue to evolve.[8] Watch this space for further updates.