Introduction

In the July 2012 edition of this Oil and Gas Bulletin (found here), we discussed the provincial regulatory streamlining reforms proposed under the Regulatory Enhancement Project.

In the November 2012 edition of this Bulletin (found here), we discussed Bill 2: Responsible EnergyDevelopment Act (“REDA”). Under REDA, a single provincial regulator will be created, the Alberta Energy Regulator (the “Regulator”), which will assume the regulatory functions and responsibilities of the Energy Resources Conservation Board (the “ERCB”), Alberta Environment  and Sustainable Resource Development (“AESRD”) and Alberta Energy under Part 8 of the Mines and Minerals Act, for upstream oil, gas, oil sands and coal development. The appointment of a single energy regulator had been one of 6 recommendations made by the Regulatory Enhancement Task Force (the “Task Force”) in the second of its 3 reports.

In keeping with the Alberta government’s June 2013 timeline, by Order in Council dated June 4, 2013, REDA, with the exception of Part 3 and other specified sections, was proclaimed in force as of June 17, 2013. Part 3, entitled “Enforcement of Private Surface Agreements”, which was excepted from the proclamation, will enable an owner or occupant of land to register a private surface agreement with the Regulator, which may then be enforced by order of the Regulator. The remainder of the excepted sections largely pertain to the Regulator’s assumption of regulatory functions and responsibilities from AESRD under the Environmental Protection andEnhancement Act, the Water Act and the Public Lands Act, and from Alberta Energy under Part 8 of the Mines andMinerals Act (which deals with approvals and other matters pertaining to exploration). In short, on June 17, 2013, the Regulator will only assume the energy development regulatory functions currently administered by the ERCB.

Additionally, four Regulations have now been made under REDA, all of which come into force on June 17, 2013. These Regulations are the focus of this Bulletin.

In our November 2012 Bulletin, we commented that a number significant matters, including matters discussed and recommended in prior Task Force reports and other government documents, had not found their way into REDA. These matters included public interest as a factor to be considered by the Regulator when conducting a hearing, inquiry or investigation, and the degree of interaction between the Policy Management Office and the Regulator, which goes to the issue of regulator independence (as noted in that Bulletin, REDA contains no mention at all of the Policy Management Office). Since under REDA, broad powers exist for the making of Regulations which could address these and other matters, the content of the Regulations has assumed particular significance. While the Policy Management Office is still not mentioned in either REDA or the Regulations made to date, the issue of public interest as a mandate of the Regulator has arisen, as discussed below.

The New Regulations Under Reda

On May 29, 2013, the Lieutenant Governor in Council made the following Regulations under REDA:

  1. Miscellaneous Corrections (Alberta EnergyRegulator) Regulation, Alta Reg 89/2013;
  2. Responsible Energy Development Act GeneralRegulation, Alta Reg 90/2013;
  3. Security Management for Critical UpstreamPetroleum and Coal Infrastructure Regulation, Alta Reg 91/2013; and
  4. Responsible Energy Development Act TransitionRegulation, Alta Reg 92/2013.

What follows is a brief summary of each.

  1. Miscellaneous Corrections (Alberta Energy Regulator) Regulation

This Regulation builds upon the consequential amendments set out in sections 85 to 111 of REDA. Under it, amendments, largely housekeeping in nature to reflect the proclamation of REDA, have been made to 48 Alberta energy-related Regulations, including the Oil and Gas Conservation Regulations, Oil Sands Conservation Regulation and Pipeline Regulation.

  1. Responsible Energy Development Act General Regulation

 

  1. Section 3 – Public Interest

Section 112 of REDA repeals the Energy ResourcesConservation Act (the “ERCA”). In our November 2012 Bulletin, we stated that nowhere in REDA is section 3 of the ERCA re-introduced, obligating the Regulator to give consideration to whether an energy resource activity is in the public interest when conducting a hearing, inquiry or investigation. We pointed out, however, that under REDA, broad powers exist for the making of Regulations, which could include mandatory consideration of public interest.

While not expressly referring to “public interest” as section 3 of the ERCA does2, section 3 of the Responsible EnergyDevelopment Act General Regulation states that for the purposes of section 15 of REDA, where the Regulator is to consider an application or conduct a regulatory appeal, reconsideration or inquiry in respect of an energy resource activity under an “energy resource enactment”3, the Regulator shall consider: a) the social and economic effects of the energy resource activity; and b) the effects of the energy resource activity on the environment.4 These are the same two factors that the ERCB must currently have regard to under section 3 of the ERCA, when considering whether  a proposed energy resource project is in the public interest. Section 3 of the Responsible Energy Development ActGeneral Regulation has added a third factor, the impacts on a landowner as a result of the use of the land on which the energy resource activity is or will be located.5

It is unclear why the Alberta government has chosen to omit any reference to “public interest” in REDA or the Regulations made under REDA, but include the factors  set out in section 3 of the ERCA which the ERCB must have regard to when considering whether a project is in the public interest. While the omission of any reference to “public interest” in both REDA and the Responsible EnergyDevelopment Act General Regulation can be assumed to be deliberate and purposeful, it is not entirely certain what effect this omission will have. Unless otherwise clarified, this is an issue which will likely have to be determined by the Regulator or the Courts at some point in the future.

  1. Section 4 – Hearings Required for Regulatory Appeals

Section 4 of the Responsible Energy Development ActGeneral Regulation sets out when hearings are required for regulatory appeals under section 40 of REDA.

Under section 38(1) of REDA, an “eligible person” may request a regulatory appeal of an “appealable decision” by filing a request with the Regulator in accordance with the rules. An “appealable decision” is defined in section 36(a) of REDA as:

  1. a decision of the Regulator in respect of which a person would otherwise be entitled to submit a notice of appeal under section 91(l) of the Environmental Protection and EnhancementAct, section 115 of the Water Act or section  121 of the Public Lands Act, if the decision was made without a hearing (this portion of section 36(a) has not yet been proclaimed in force),
  2. a decision of the Regulator that was made under an energy resource enactment, if that decision was made without a hearing, or
  3. any other decision or class of decisions described in the Regulations.

Under section 4 of the Responsible Energy DevelopmentAct General Regulation, the Regulator is required to conduct a regulatory appeal with a hearing if it appears that the concerns of the eligible person requesting the regulatory appeal have not been addressed through an alternative dispute resolution process, or otherwise resolved by the parties.6

  1. Section 5 – Applications for Leave to Appeal

In accordance with section 5 of the Responsible EnergyDevelopment Act General Regulation, an application for leave to appeal from a decision of the Regulator must be filed and served within 1 month (currently, 30 days under section 41(2) of the ERCA), and made returnable within2 months, from the date the decision was made by the Regulator.

  1. Other Sections

Section 6 of the Responsible Energy Development ActGeneral Regulation specifies the particulars which must be published by the Regulator under section 76 of REDA, in connection with any enforcement action taken under REDAor any other enactment. Under section 7, the Regulator may provide to the Minister a statement of concern received which, in the opinion of the Regulator, contains information pertinent to policy development. Under section 8, the Regulator may provide in an order or direction that the  order or direction or portion of it is to come into force at any of the times set out in section 8, extend the time specified, or provide that the order or direction or portion of it is to have force for a limited time only.

The Responsible Energy Development Act General Regulation expires on May 31, 2018.

  1. Security Management for Critical Upstream Petroleum and Coal Infrastructure Regulation

The Security Management for Critical Upstream Petroleumand Coal Infrastructure Regulation addresses, among other things, security measures for critical facilities in the event of threats of terrorist activity. This Regulation mirrors the current Regulation of the same name under the ERCA. As with the Responsible Energy Development Act General Regulation, this Regulation expires on May 31, 2018.

  1. Responsible Energy Development Act Transition  Regulation

Under the Responsible Energy DevelopmentAct Transition Regulation:

  • every proceeding commenced under the ERCA (including the proceedings identified in sections 2(3) and 6 of this Regulation) that has not been completed by the ERCB before June 17, 2013, shall be completed by the Regulator in accordance with REDA;
  • each member of the ERCB who, before June 17, 2013, is conducting a hearing, inquiry or other proceeding under the ERCA that has not yet been completed, is deemed to be appointed as a hearing commissioner and a member of a panel under REDA for the purpose of completing the hearing, inquiry or other proceeding;
  • every decision or other action made or taken by the ERCB in a proceeding that has not been completed before June 17, 2013, continues as a decision or other action of the Regulator;
  • a delegation under section 14 of the ERCA that is in effect on June 17, 2013 continues as an authorization under section 6 of REDA until it is terminated, revoked, rescinded or expires;
  • notices given or required to be given, fees payable or owing and penalties payable or owing under the Energy Resources Conservation Board AdministrationFees Regulation as of June 17, 2013, are deemed to have been given or to be required to be given or to be payable or owing under the Alberta Energy Regulator Administration Fees Rules (which has yet to be made); and
  • as of June 17, 2013, an award of costs under section 28 of the ERCA continues as a costs order under the Alberta Energy Regulator Rules of Practice (which has yet to be made) and may be enforced in accordance with those Rules.

It is anticipated that these transition provisions may give rise to some confusion, including in cases where the proceeding was commenced under the ERCA but not completed prior to June 17, 2013.

Other Anticipated Regulations and Rules

In addition to the Security Management for CriticalUpstream Petroleum and Coal Infrastructure Regulation, there are currently 2 other Regulations under the ERCA – the Energy Resources Conservation Board AdministrationFees Regulation, and the Energy Resources ConservationBoard Rules of Practice. It is anticipated that the equivalent of both of these Regulations, which are referred to in the Responsible Energy Development Act Transition Regulation, will be made very shortly under REDA.

In addition to Regulations made by the Lieutenant Governor in Council, the Regulator has jurisdiction to make Rules regarding certain matters set out in REDA.7 We will be monitoring this, as well as all further developments regarding the Alberta Energy Regulator.