Introduction

By News Release issued June 17, 2013 by the Alberta Energy Regulator (the “AER”  or “Regulator”), notice was provided that the AER had “officially launched today after the Government of Alberta proclaimed the Responsible Energy Development Act, ushering in a new era in energy regulation.”1

In the June 2013 edition of this Oil and Gas Bulletin (found here), we discussed the proclamation of the Responsible Energy Development Act 2 (“REDA”) as of June 17, 2013 (save and except for Part 3 and other specified sections), and the making of four Regulations under REDA.

As stated in that Bulletin, at this time, the new single regulator, the AER, has only assumed the energy development regulatory functions currently administered by the ERCB. The enforcement of “private surface agreements” under Part 3 of REDA will only become available, and the AER’s assumption of regulatory functions and responsibilities from AESRD under the Environmental Protection and Enhancement Act 3, the Water Act 4 and the Public Lands Act 5, and from Alberta Energy under Part 8 of the Mines and Minerals Act 6, will only occur, once the corresponding sections of REDA have been proclaimed in force.

As stated in the News Release, the launch of the AER on June 17 is “the first step in a [three- phase] approach towards full implementation of the AER with additional regulatory functions to be added over the coming months”.7  It is not entirely clear what steps will comprise the other two phases, although the proclamation of Part 3 of REDA and the sections dealing with the AER’s assumption of regulatory functions and responsibilities from AESRD and Alberta Energy, are expected to comprise one or both of these.

This Bulletin is intended to provide an update summarizing further developments in connection with REDA and the AER, including:

  1. The appointment of the members of the AER Board of Directors;
  2. The appointment of the chief hearing commissioner and other full time hearing commissioners; and
  3. The making of two new Regulations under REDA: the Alberta Energy Regulator Rules of Practice, and the Alberta Energy Regulator Administration Fees Rules.

Appointment of AER Board of Directors

Under REDA, the Lieutenant Governor in Council must appoint a board of directors of the AER, consisting of a chair and at least 2 other members8, responsible for the general management of the business and affairs of the AER.9 To this end, on June 12, 2013, Cameron B. Bailey, Fred Estlin and Andrew Neigel were each appointed for a 2 year term, and David A. Chalack, Elizabeth (Liz) Dowdeswell, Peter Flynn and Sheila O’Brien were each appointed for a 3 year term.10 Earlier, in April of 2013, Gerri Protti11 was made Board Chair and Jim Ellis12 was named the Chief Executive Officer of the AER.

As stated by Energy Minister Ken Hughes:

With these appointments, we have built a team that will truly usher in a new era of energy regulating for the province…This team, led by Board Chair Gerry Protti and CEO Jim Ellis, will ensure our province leads the country, and the world, in balancing resource growth with our strong environmental commitment.13

Appointment Of Hearing Commissioners

Under REDA, the Lieutenant Governor in Council must establish a roster of hearing commissioners consisting of a chief hearing commissioner and such other individuals as are appointed.14 To this end, on June 12, 2013, Bradley T. McManus was appointed chief hearing commissioner, and Alex Bolton, Robert C. McManus, Barbara McNeil and Christine Macken were each appointed “full- time” hearing commissioners for a 1 year term.15 It has been reported that part-time hearing commissioners will be appointed in the near future.16

A panel of one or more hearing commissioners selected by the chief hearing commissioner from the roster will conduct hearings of applications, regulatory appeals and reconsiderations under REDA.17

Two Additional Regulations Made Under REDA

In addition to the four Regulations identified in our June 2013 Bulletin18 (found here), by Ministerial Orders dated May 28, 2013, the

Minister of Energy has made the following two new Regulations:

  1. Alberta Energy Regulator Rules of Practice, Alta Reg 99/201319 (the “AER Rules of Practice”); and
  2. Alberta Energy Regulator AdministrationFees Rules, Alta Reg 98/201320 (the “AER Administration Fees Rules”).

These new Regulations, each in force as of June 17, 2013, are similar to and replace the corresponding Regulations previously in place21 under the now repealed Energy ResourcesConservation Act 22 (the “ERCA”).

  1. AER Rules of Practice

While the AER Rules of Practice are similar to their predecessor in place under the ERCA23 (the “ERCB Rules”), there are some differences between them. What follows is a short summary of some of the more significant changes, as well as other commentary comparing the two sets of Rules.

  1. Public Interest

Section 1 of the ERCB Rules provided as follows:

These Rules must be liberally construed in the public interest to ensure the most fair, expeditious and efficient determination on its merits of every proceeding before the Board.

Consistent with the removal of the reference to “public interest” in section 3 of the Responsible Energy Development Act General Regulation 24, section 1 of the ERCB Rules has not re-appeared within the AER Rules of Practice.

  1.  Standing and Rights Afforded an Intervener

In the November 2012 edition of this Oil andGas Bulletin (found here), we commented on the absence from REDA of the equivalent of section 26(2) of the ERCA, which affords a person standing where a decision on an application may directly and adversely affect the rights of that person.25

Section 34(2.1) of REDA, which was a late addition to the legislation26, provides that if the Regulator conducts a hearing on an application27, a person who may be directly and adversely affected by the application is entitled to be heard at the hearing. Under section 18 of the AER Rules of Practice, if the Regulator sets an application down for a hearing, the Regulator shall give a person who is entitled to be heard a reasonable opportunity of learning the facts bearing on the application, a reasonable opportunity to furnish evidence, an opportunity of cross-examination if the person will not have a fair opportunity to contradict or explain the facts or allegations in the application without cross examination of the person presenting the application, and an adequate opportunity of making representations in the Regulator’s presence.

These two sections largely contain the equivalent of old section 26(2) of the ERCA.

  1. New Deadlines

Consistent with the unprecedented level of sweeping regulatory reform at both the provincial and federal levels in the past year28, with the objective of streamlining the regulatory process for major economic projects, a number of time limits have been introduced in the AER Rules of Practice, including the following:

  • Under sections 28 and 35, the Regulator shall, within 90 days from the date of the conclusion of, respectively, a hearing of an application or reconsideration, make and publish a written decision;
  • Under section 33, the Regulator shall, within 90 days from the date of the conclusion of a regulatory appeal, make and publish a written decision;
  • Under section 45, unless the Regulator permits otherwise, no party may file a document, statement of concern or submission after the time limit set out in the notice of hearing has elapsed; and
  • Under section 53(1), unless the Regulator otherwise directs, if a party intends to present documentary evidence at an oral hearing or electronic hearing, or is directed to do so by the Regulator, the party shall file the documentary evidence and serve a copy of it on the other parties before the hearing takes place and in accordance with any time limits set out by the Regulator. Old section 17(3) of the ERCB Rules, under which parties were permitted to file documentary evidence after a hearing had begun, has not been re-introduced in the AER Rules of Practice, although presumably, the Regulator retains the ability to direct that this occur.
  1.  Expert Witnesses

Under section 22 of the AER Rules of Practice, the Regulator may require expert witnesses  from different parties to confer with each other in advance of the hearing for the purposes of narrowing issues, identifying points on which their views differ or agree and preparing joint written statements to be admissible as evidence at the hearing.

Under section 23 of the AER Rules of Practice: a) witnesses sitting as one or more witness panels may be directed to comment on the views of other witness panel members and to make concluding statements; b) with leave of the Regulator, witnesses may pose questions to other witness panel members; and c) on completion of the testimony of the witness panel, the witness panel members may be cross examined and re examined in the sequence directed by the Regulator.

No counterpart to either of these sections previously existed in the ERCB Rules.

  1. Other Changes

Other changes and things of note include the following:

  • Under section 3(2) of the AER Rules of Practice, applications must now be served on:
    • the registered owner of the land on which the energy resource activity that is the subject of the application is or will be located29; and
    • any other person that the Regulator requires,

as opposed to any person whose rights may be directly and adversely affected by a decision of the ERCB, which was formerly the case under the ERCB Rules30;

  • Sections 35, 36 and 37 of the ERCB Rules, allowing the ERCB to direct the parties to participate in a settlement meeting, and providing for the filing and acceptance or rejection of a settlement proposal, have not been re-introduced in the AER Rules of Practice;
  • Section 37(2) of the AER Rules of Practice, the equivalent of which did not exist under the ERCB Rules, addresses conflicts of interest of hearing commissioners by prohibiting any hearing commissioner having an interest in the subject matter of a hearing or other proceeding, whether directly or because of the hearing commissioner’s position, affiliation or involvement in or with an organization, firm or business, from participating in the panel of hearing commissioners that conduct the hearing or other proceeding;
  • Under section 49(4)(a) of the AER Rules of Practice, the prerequisites for the granting of a request for confidentiality have been re-worded from the previous test under the ERCB Rules; and
  • Under section 59 of the AER Rules of Practice, the Regulator may award an advance of  funds to a participant if the participant demonstrates not only a need for financial assistance to address relevant issues to the proceedings, which was the case under section 52 of the ERCB Rules, but also that the funds are required for reasonable costs directly and necessarily related to the proceedings.
  1. AER Administration Fees Rules

In accordance with the Energy ResourcesConservation Board Administration Fees Rules, by Notice mailed April 30, 2013 to operators  of facilities in the oil and gas, oil sands and coal sectors, an industry levy was charged to fund the revenue requirement of the Energy Resources Conservation Board (the “ERCB”) for 2013.31 The fees were allocated on an industry sector basis, and calculated having regard to the ERCB’s operational requirements for each sector. Payment was due May 30, 2013. Unlike prior years, where the ERCB’s annual costs were funded by both government and industry, its revenue requirement for 2013 (determined to be almost $155 million) was funded solely by industry, in accordance with announcements made by the Government of Alberta in its 2013 Budget.

Following the proclamation of REDA on June 17, 2013, an assessment of the funding requirements for the operations of the AER must now be determined and all of the ERCB’s funding transferred to support the AER’s operations.32

Apart from adding “all wells categorized by the Regulator as commingled at December 31 of the base year” to the list of excepted wells in section 3(4)(d), and providing in section 8(7) that the Regulator may conduct the hearing of an appeal from a notice of an administration fee “orally, including by telephone, or in writing”, there are no changes of significance to the AER Administration Fees Rules, relative to the predecessor Regulation under the ERCA.