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Government Releases Rules and Regulations for New Alberta Energy Regulator


June 13, 2013

By Evan Dixon and Michael Barbero

On October 24, 2012, the Government of Alberta introduced the Responsible Energy Development Act, (“REDA”). On June 5, 2013, the Provincial Government announced that REDA would come into force on June 17, 2013, with the exception of Part 3 (Enforcement of Private Surface Agreements) and certain other sections.

As we reported earlier, the REDA creates a single regulator that will assume the regulatory functions of the Energy Resources Conservation Board, which will be dissolved. The new entity, the Alberta Energy Regulator (“AER”), will also take on the regulatory functions of Alberta Environment and Sustainable Resource Development in relation to energy projects.

The Government has taken a phased approach to the implementation and rollout of the AER. Phase I, currently underway, involves the launch of the AER and its governance model. Phase II, expected in Fall 2013, will see the AER take over responsibility and operations of Alberta Environment and Sustainable Resource Development. The final phase, expected to occur in Spring 2014, will see the transfer of environmental and water authorization and related functions, as they relate to energy projects, to the AER and will complete the process of creating a single regulator for all upstream oil, oil sands, natural gas, and coal development in Alberta.

In order to facilitate this phased approach the Government of Alberta has instituted a series of regulations and rules. The first such regulations and rules were released by Order in Council on May 29, 2013. These included the Alberta Energy Regulator Rules of Practice, General Regulations, Security Regulations, Transition Regulations and Miscellaneous Regulations, all of which will help to facilitate the creation of the AER and the transfer of jurisdiction to it.

REDA’s Regulations
The new regulations are primarily designed to meet the logistical issues surrounding the new AER.

  1. Responsible Energy Development Act General Regulation, A.R. 90/2013. This regulation makes provision for the AER’s handling of applications. Section 3 is noteworthy as it set out the factors the AER must consider in an application or in the conduct of a regulatory appeal, namely; (1) the social and economic effects of the energy resource activity; (2) the effects of the energy resource activity on the environment; and (3) 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.
  2. Miscellaneous Corrections (Alberta Energy Regulator) Regulation, A.R. 89/2013, made under the Regulations Act. This regulation serves to amend numerous other regulations and to reflect the introduction of the AER.
  3. Transition Regulation, A.R. 92/2013. This regulation addresses the logistical issues surrounding the transition from the ERCB to the AER. Proceedings which had not been concluded prior to the AER’s inception are to be completed by the AER under the new rules. Further, the regulation makes provision for the deemed appointment of all current ERCB Board Members as Hearing Commissioners of the AER for the limited purpose of completing current on-going hearings, inquiries or proceedings.

Alberta Energy Regulator Rules of Practice
The AER’s Rules of Practice closely parallel the existing ERCB Rules of Practice with some notable exceptions, including:

  1. Section 7 and 8 of the Rules of Practice address the AER’s holding of hearings in relation to applications as well as establishing the process by which hearing commissioners will be appointed to a hearing Panel. Section 7(1) is of particular significance in light of the removal of automatic standing rights previously found in Section 26(2) of the Energy Resources Conservation Act from REDA. Under the new rules, the AER may set an application down for a hearing if a Statement of Concern (SOC) is filed by an intervener. However, the AER will have discretion to proceed without a hearing if it determines that the person who filed the SOC has not demonstrated that they may be directly and adversely affected by the energy activity, or if the AER determines that the SOC is frivolous, vexatious or without merit, or that the concerns raised have been addressed.
  2. Section 22 adopts the practice of “hot-tubbing” experts. Under the new rules expert witnesses may be required to meet in advance of a hearing so as to narrow issues. Moreover, Section 23 of the new Rules provides for greater interaction and direct conversation between witnesses and experts during a hearing. Specifically, under Section 23, witnesses are permitted to directly comment on the views of other witnesses and to even pose questions to members of opposing witness panels with leave.

Changes have also been made to the cost award provisions. These changes suggest that a party’s conduct in a proceeding will continue to be an important factor in whether costs are awarded and the amount of any costs awarded. Of particular note are:

  1. Section 54 specifically allows the AER to consider non-compliance with the Rules as a factor in assessing the award of costs in a proceeding.
  2. Section 64 provides that the AER may consider, in addition to the factors previously considered by the ERCB, a party’s failure to admit anything that should have been admitted, whether a party took any step or stage in the proceeding which was improper, vexatious or unnecessary or taken through negligence, mistake or excessive caution.

McLennan Ross will continue to monitor the transition to the AER as it continues to evolve. For further information about this recent development in environmental law and how you operation may be affected, please contact Ron Kruhlak in Edmonton, Gavin Fitch in Calgary, John Donihee in Yellowknife, or any member of our Energy & Environmental Regulatory Practice Group.

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