The Government of Alberta recently introduced Bill 2, the Responsible Energy Development Act, designed to create a single regulatory agency for the province’s energy resources, including all hydrocarbons but excluding hydro power.  The government has targeted June, 2013 for the new legislation to come into force.

The new agency, to be termed the “Alberta Energy Regulator,” will replace the province’s Energy Resources Conservation Board (ERCB), and will also exercise certain of the functions currently vested in the Ministry of Environment and Sustainable Resource Development.

Mandate of the New Regulator

In some respects the new regulator will look a good deal like the ERCB; however, its mandate will be broader. Respecting energy resource activities, it will have the power “to consider and decide applications and other matters under the Environmental Protection and Enhancement Act.”  The exact scope of the regulator’s powers, and what is to be left in the hands of the Department, will depend on more detailed provisions, and regulations, yet to be published.

The new regulator will be responsible for the management of water “in respect of energy resource activities,” and for that purpose will be given the power to decide applications under the Water Act. At present, the government is responsible for the development of water management plans, and exercises control over water licences. Details of exactly how control over water resources will be exercised once the new Act comes into force, still have to be worked out.

Constitution of the Regulator, and Relationship With the Provincial Government

Like the ERCB, the regulator is to be established as a corporation. However, unlike the ERCB its business and affairs will be managed by a board of directors, who will be appointed by the Lieutenant-Governor in Council – in effect, the cabinet. The day-to-day operations of the regulator will be in the hands of a chief executive officer appointed by the board.

While the board will be not be an agent of the Crown, the responsible minister will have the power, when he or she considers it appropriate, to give directions to the regulator for the purposes of:

  1. providing priorities and guidelines for the regulator to follow in the carrying out of its powers, duties and functions, and
  2. ensuring the work of the regulator is consistent with the programs, policies and work of the government in respect of energy resource development, public land management, environmental management and water management.

This residual power is designed to ensure that the regulator is not acting at cross-purposes with the Alberta Government on important policy matters.

Funding of the Regulator

The regulator is not to be funded entirely out of general revenues of the province. Like the ERCB, it will be given the power to set and collect administrative fees with respect to energy facilities and projects in order to help defray the net expenditures of its operations.

Standing, Hearings and Regulatory Reviews

The proposed Act adopts a test similar to the one found in the Energy Resources Conservation Act (“person who may be directly and adversely affected”) to define who should be given standing in relation to an application which comes before the regulator.

Like the ERCB, the regulator will not be required to hold a hearing in all cases. Rules and regulations that have yet to be promulgated may provide some guidance concerning the situations when a hearing will be required.

A noteworthy difference from the ERCB is that the quasi-judicial and administrative functions of the regulator will be split. Hearings will not be conducted by board members. Instead, a separate roster of hearing commissioners will be appointed by the cabinet.

The Bill gives affected persons the right to seek a “regulatory review” by the regulator of certain decisions they feel affect them. A regulatory review may or may not involve a hearing, but in all cases where such a review is conducted the regulator will be required to publish its decision or otherwise make it publicly available.

Appeals

The rules relating to appeals are similar to those found in the Energy Resources Conservation Act. A decision of the regulator will be appealable to the Court of Appeal, with leave of that Court, if it involves a question of jurisdiction or a question of law.

Decisions of the regulator will be immune from judicial review.

ADR

The regulator is expressly given the authority to use alternative dispute resolution techniques when it considers it appropriate to do so, and may incorporate the terms of an agreement reached as a result of an ADR in one of its decisions.

Information-Gathering and Studies

Historically, functions that the ERCB has fulfilled very effectively are conducting studies and collecting information relating to the province’s energy resources, which it makes available to the public. It is apparent that these functions will continue under the new regulator.

Inquiries and Co-operative Proceedings

The regulator will also be given the authority, similar to that which the ERCB has often exercised over the years, to hold public inquiries and to make recommendations to the government on measures relating to energy resources or the injection of substances into underground formations.

Like the ERCB, the regulator will be empowered to participate in regulatory reviews, inquiries or other types of proceedings jointly with another agency of the province or of the federal government. Joint or co-operative proceedings may be organized by the regulator on its own initiative or they may be required by the provincial government.

Surface Agreements

An interesting innovation is that the surface landowner or occupant who is a party to a private surface access agreement may complain to the regulator if he or she believes the operator is not complying with the provisions of the agreement. If the regulator finds that the operator is not complying, it may issue an order directing it to do so.

The legislative purpose is not to remove the jurisdiction of the Surface Rights Board. However, the Bill as drafted would allow a landowner to register a surface access agreement with the regulator. Presently, it is not apparent what the effect of registration will be or whether, or in what circumstances, such agreements will be open to public inspection. Depending upon the answer to these questions, which may depend upon regulations to be enacted, this registration provision could raise concerns among operators about the confidentiality of surface access agreements.