Alberta Environmental Monitoring Agency Soon To Be Operational

The Alberta Environmental Monitoring, Evaluation and Reporting Agency, or AEMERA, will be operational as of April 28, 20141, the date that the Protecting Alberta’s Environment Act comes into force.

As previously reported in our Fall 2013 Newsletter (located here), the Alberta Environmental Monitoring, Evaluation and Reporting Agency (“AEMERA” or the “Agency”) aims to promote the use of scientific methods to report, analyze and evaluate Alberta’s environment.2 The Agency will do so by gathering comprehensive data from land, air, water and biodiversity, some of which is already being collected by industry and researchers in the oil sands area in the Lower Athabasca region. These ongoing efforts will be supplemented throughout the province as the Agency expands its supervision of Alberta’s environment.

The Agency, established under the Protecting Alberta’s Environment Act3 (the “Act”)4, is part of the integrated resource management system that documents cumulative effects in Alberta. In accordance with the Act, AEMERA: a) will be an independent agency with directors appointed by the Cabinet5; b) will be able to collect fees for services requested of it6; and c) will collect, review and disclose data to the public at a frequency determined by AEMERA in consultation with the Minister.7 To ensure the accuracy of the data collected by the Agency and to provide for a periodic review of the Agency’s scientific basis and the components of its monitoring, evaluation and reporting activities, the Act also provides for the appointment of the Science Advisory Panel8, a panel of eight members which, once appointed, will review the scientific integrity of AEMERA’s activities.

Building on Alberta’s Integrated Resource Management System, AEMERA will largely comprise one of three pillars identified by the Alberta Government to administer this system, the Comprehensive Environmental Monitoring System (which will integrate with the other two pillars: the Land-Use Framework, and the Enhanced Energy Regulatory Process). AEMERA will employ a system of comprehensive scientific monitoring to assess the cumulative impacts of activities over the long-term, which is anticipated to assist in the sustainable management and development of Alberta’s resources. The data is to be provided in an open and transparent manner to the general public in an effort to informall stakeholders.

As mentioned in our previous article9, the Lower Athabasca Region’s reporting regime is already underway through the Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring (“JOSM”), which is anticipated to be fully implemented by 2015. AEMERA’s initial focus will be to assume, on behalf of Alberta, responsibility over the JOSM activities in the short-term, with subsequent expansion to oversee environmental reporting throughout the entire province of Alberta thereafter. Areas requiring greater attention will be identified in conjunction with the Alberta Energy Regulator and regional planning groups under the Alberta Land-Use Framework. Dr. Lorne Taylor, formerly Alberta’s Minister of Environment between 2001 and 2004, during which time the Water for Life strategy in Alberta was initiated, was appointed Chair of AEMERA’s board of directors. Dr. Greg Taylor, former Dean of Science at the University of Alberta, was appointed Vice-Chair of AEMERA’s board. Both have been appointed for a three-year term.10

There are a number of keys in order for the program to be successful, the first being its independence and perceived independence (some environmental groups have raised concerns with the Ministerial appointments of the Chair and Vice-Chair, and with the source of funding11). We expect that the success of the program will largely be dependent upon the scientific reliability of the data made publicly available by AEMERA, public buyin and clear sources of sufficient and ongoing funding.

Canada’s Aging Oil & Gas Infrastructure: Who Will Pay?

A significant portion of Canada’s oil and gas infrastructure is fast approaching its functional end of life. In Alberta, Canada’s largest oil and natural gas producing province, approximately 30% of its pipelines are greater than 25 years old, while 5% are greater than 50 years old. The potential environmental and other liabilities associated with this infrastructure, from both a regulatory and civil perspective, are significant. As the frequency of environmental incidents involving this infrastructure increases, complex legal and practical issues will begin to emerge at an accelerating pace, which will have to be addressed.

With respect to Alberta’s legislative and regulatory framework, on June 17, 2013, the Responsible Energy Development Act (“REDA”) was proclaimed in force.12 With the implementation of the final of three phases on March 31, 2014, the Alberta Energy Regulator (“AER”) has, under REDA, become Alberta’s single regulator13 of energy developments situated within Alberta’s provincial boundaries.14

In addition to REDA15, the AER has been delegated regulatory authority under the Pipeline Act and the Oil and Gas Conservation Act with respect to all pipelines, and all wells and facilities, respectively, falling within provincial jurisdiction. To the extent there exists an environmental component to an incident, the AER also has jurisdiction under the Environmental Protection and Enhancement Act. Under these Acts, the AER has broad authority to order, among other things, the discontinuance and abandonment of pipelines, wells and facilities, the suspension of operations, and the clean-up of spills, with the ability to effect these things itself and recover the costs incurred from the parties involved.

The regulators in Canada’s other key oil and gas producing Provinces have been given similarly broad legislative regulatory powers regarding infrastructure under their jurisdiction, as have a number of Federal agencies responsible for the regulation of interprovincial and international oil and gas infrastructure. In addition, given the concurrent federal and provincial jurisdiction over Alberta’s environment, there also exists the potential for the application of Federal legislation directed primarily at environmental and wildlife protection, and the concurrent involvement of Federal agencies in the case of an environmental incident involving a provincially regulated pipeline, facility, well or other oil and gas infrastructure.

Not surprisingly, the insolvency of an industry participant may impact the recovery by parties, including Crown agencies, of costs incurred in the course of addressing an infrastructure incident. A number of recent decisions have considered issues involving what some have termed the “untidy intersection” of orders issued under the Companies Creditors Arrangement Act and environmental remediation orders issued by regulators, directing the remediation of contaminated property.16 Where Government agencies are unable to recover costs incurred in these and other circumstances, resort may be had to the orphan fund, established to fund the costs related to abandonment, reclamation and suspension of orphaned wells and other facilities.17

Layered on this regulatory framework is a complex private framework under which Canadian oil and gas industry participants may attempt to limit their exposure to this liability and pursue cost recovery from current or past owners under statute, contract, common law property principles, and tort.