[authors: Brad Gilmour, and Shawn M. Munro]

On October 24, 2012, the Alberta government introduced Bill 2, the Responsible Energy Development Act¹ (REDA). REDA proposes to create a single regulator to manage the development of energy resources, including oil, gas, oil sands and coal, as well as energy resource activities requiring approval or subject to regulation. REDA does not apply to hydro energy. The Regulator will assume all functions of the Energy Resource Conservation Board (ERCB), as well as of Environment and Sustainable Resource Development (ESRD) for energy resources. The scope of REDA includes not only those energy resource enactments traditionally administered by the ERCB like the Oil and Gas Conservation Act, the Oil Sands Conservation Act, and the Pipeline Act, but also other specified enactments – including the Environmental Protection and Enhancement Act (EPEA), the Public Lands Act (PLA), the Water Act (WA), and Part 8 of the Mines and Minerals Act – all in respect of energy resources and energy resource activities only.

This proposed move to a single regulator aims to ensure that Alberta remains competitive in terms of attracting investment for resource development. A task force established to canvass stakeholder opinions regarding the current regime observed a desire for a simplified, more transparent system that uses a single, consistent set of processes.² In addition, stakeholders sought increased clarity regarding policy decisions around the management and development of energy resources to ensure that those policies are consistently applied in the context of regulatory approvals.³

Key aspects of the current regulatory regime will remain in place, with the primary change being the oversight and administration by a single body of most regulatory aspects associated with the life-cycle of energy resource activities. For example, existing authorization and approvals processes will be similar but will in many cases require only one application; hearings will still be used in the case of objections to energy resources activities; and such activities requiring approval prior to the establishment of the Regulator will continue to require approval under the new regime.⁴ There are, however, numerous other important changes proposed in REDA. The specific circumstances under which hearings will be held, timing and processes involved, cost awards, and other procedural matters will be dictated by rules and regulations yet to be released. At this time, however, there are a number of important proposed changes evident in REDA in addition to the inclusion of specified enactments like EPEA, the PLA and the WA in relation to energy resources and energy resource activities.

Changes to Board Composition and Powers

The role of ERCB Board members in overseeing the administration of the ERCB and ruling on applications has been split. Under REDA, a Board of Directors (comprised of one Chair and at least two others) will be responsible for overseeing the day to day business affairs of the Regulator. REDA states that the mandate of the Regulator is to consider and decide applications under energy resource enactments and other specified enactments in respect of energy resource activities. The Board of Directors may authorize directors or any officer or employee to carry out any power, duty or function of the Regulator.

Hearings will be conducted by Hearing Commissioners. REDA provides for the conduct of hearings in respect of applications, regulatory reviews and reconsiderations, as well as inquiries initiated by the Regulator or the Minister. Hearings may be conducted before one or more Hearing Commissioners, as selected by the Chief Hearing Commissioner from a roster established by the Lieutenant Governor in Council. Directors may not serve as Hearing Commissioners.

The ERCB currently enjoys broad regulation-making power stemming from express provisions of various acts and a comprehensive mandate.⁵ Under REDA, provisions borrowed from the Energy Resources Conservation Act referencing Board authority replace the word “regulation” with the word “rule,” for which the Regulator must provide written notice to the Minister prior to enacting. Generally speaking, this rule-making power is limited to procedural issues such as administration fees, the content and form of submissions, intervener costs and timeline for rendering decisions. The only express regulation-making power set out in REDA is vested in the Lieutenant Governor in Council and relates to more substantive matters, such as the powers and jurisdiction of the Regulator under various applicable enactments and circumstances under which hearings will be conducted.

Notices of Questions of Constitutional Law

Currently the ERCB is authorized by the Designation of Constitutional Decision Makers Regulation under the Administrative Procedures and Jurisdiction Act to determine questions of constitutional law. The scope of this authorization, and similar authorizations for other regulators, has been the subject of considerable debate in circumstances where tribunals have been asked to assess the adequacy of Crown consultation of aboriginal interests. REDA expressly states that the Regulator has no jurisdiction with respect to assessing the adequacy of Crown consultation associated with the rights of the aboriginal peoples as recognized and affirmed by the Constitution Act. This appears to indicate that constitutional challenges by First Nation and Métis interests, alleging inadequate consultation by the Crown in relation to applications for the approval of energy activities, must be dealt with through the Courts.

Regional Planning

Regional planning represents an important shift in the regulation of Alberta resource development. This approach is premised on the recognition that all industrial activities produce effects on Alberta’s environment.⁶ Regional plans aim to create processes and standards motivated by policies that apply to the region as a whole, rather than piecemeal approvals under various environmental legislation. For example, REDA specifically requires the Regulator to act in accordance with the Alberta Land Stewardship Act⁷ (ALSA), an Act which allows the government to give direction pursuant to provincial goals regarding the economy and environment. REDA further acknowledges the importance of ALSA and regional planning by providing the Regulator with authority to direct compliance with ALSA and by expressly establishing penalties for breaches of regional plans.

Private Surface Agreements (PSAs)

Under REDA, an owner or occupant of land will be able to register privately arranged surface agreements with the Regulator. Where a registered PSA exists, the owner or occupier of the land can request that the Regulator determine whether or not the other party to the agreement is in breach of any of the terms or conditions. If a breach is found, the Regulator can issue an order directing the other party to comply.

Changes to Enforcement

Under various consequential amendments to other legislation by REDA, enforcement penalties are substantially increased. Corporations found guilty of an offence can be fined up to $500,000 and individuals may be subject to fines of up to $50,000, per day. This is a significant increase from penalty amounts currently levied by the ERCB under various legislation regulating energy activities. Furthermore, any person who, in the opinion of the Regulator, has received proceeds derived directly or indirectly from breaches of an ALSA regional plan, REDA or any enactment prescribed in the regulations, or non-compliance with other terms, orders, etc., may have to provide an accounting of the proceeds and pay a penalty in that amount.

Legislative Status

Bill 2, the proposed REDA, has passed first reading in the Alberta Legislature. Second and third readings are required prior to Royal Assent and the Act thereafter coming into force on proclamation. Various amendments to other legislation are included in Bill 2. As noted, various rules and regulations will need to be developed or adopted from existing regulatory requirements.

Conclusion

The proposed creation of a single regulator entails important changes to the manner in which applications relating to energy resources and energy resource activities are processed. Bennett Jones LLP has a dedicated group of regulatory and environmental lawyers, with experience in all aspects of energy development. If you would like more information on how these changes will impact your current or planned operations, please contact one of the contacts below or any other member of our Regulatory Department.

Notes

1. Bill 2, Responsible Energy Development Act, 1s Sess, 28th Leg Alberta 2012.
2. Alberta Energy, Enhancing Assurance: Developing an integrated energy resource regulator, Discussion Document (Alberta: 2011); online: http://www.energy.alberta.ca/Org/pdfs/REPEnhancingAssuranceIntegratedRegulator.pdf
3. Ibid.
4. Ibid.
5. See Giant Grosmont Petroleums Ltd v Gulf Canada Resources Ltd, [2001] AJ NO 864 (CA) (29 June 2001).
6. Supra note 2.
7. Alberta Land Stewardship Act, SA 2009, A-26.8.