The pros and cons of Alberta’s Bill 2

The pros and cons of Alberta’s Bill 2
New energy legislation in Alberta is designed to streamline the process for approving oil and gas projects — a process that is notoriously complex and timely — by creating a single regulator. But not everyone is happy about the upcoming changes.

Bill 2, or The Responsible Energy Development Act, received Royal ascent in December but is not expected to come into effect until June (at the earliest). Between now and then, the industry is in wait-and-see mode.

Essentially, the Alberta Energy Regulator will assume the roles of the Energy Resources Conservation Board and Alberta Environmental and Sustainable Development.

While many industry stakeholders want to see a more efficient, streamlined process for project approvals, the new legislation has also drawn opposition — particularly from property rights activists and environmental groups. The Wildrose Party of Alberta, the province’s official opposition, says the bill doesn’t protect the interests of landowners and ensure environmental stewardship.

“It’s a pretty complex undertaking,” says John Olynyk, head of Lawson Lundell’s aboriginal law Group and a member of the firm’s energy law, environmental law, and climate change groups. “One of the reasons the Alberta government is interested in streamlining things is because there are tens of thousands of energy-related approvals granted every year — it doesn’t take a whole lot of inefficiency to add up to a big problem just given the volume.”

Bill 2 means there would be one stop for project approvals. “(Government and industry) feel provisions related to a single energy regulator provide those stakeholders with more certainty,” says Pat Burgess, head of the Calgary energy infrastructure and mining industry group with Gowling Lafleur Henderson LLP.

The idea is this will speed up the process of project approvals for industry participants. It will help industry engaged in projects — as well as opponents to those
projects — to better identify their issues up front, prior to projects starting.

Currently, when there are problems or perceived problems, those are addressed while the projects are already in course.

The legislation could provide more certainty in terms of how and when oil and gas companies can get their petroleum products to coastlines. “Without certainty investors and pricing become issues,” says Burgess. “Certainty is very important for getting projects done and moving things forward.”

One of the concerns a proponent of an energy project has is that “you go down to the ERCB and have a public hearing on an oil sands project and are beaten to death by various parties and get approval with a bunch of conditions,” says Michael Styczen, an associate with Davis LLP in Calgary, practicing corporate and commercial law in the energy sector. Then the proponent has to get a number of smaller approvals from different regulators, who in some cases may want to go over the whole approval process again.

The substance of the law isn’t changing; approvals will still be made on the same basis. “What’s changing is government is monkeying around with the process by which approvals would be granted,” says Styczen. While they’re consolidating processes under a single regulator, this will also involve writing new rules and new processes.

“I don’t know if I’d want to be the first energy project to go under a new process like this,” says Styzcen. “In the past, even if it was complicated, at least the rules were well known and tested in the courts.”

A new regulator with a new mandate and new rules is ripe for various stakeholders taking a run at all sorts of procedures.

“One thing they haven’t done is set out standard timeframes for getting approvals,” added Styzcen. Currently it can take a long time to get an approval, “but even more frustrating is you don’t know how long it could take — six weeks or six years.” When the federal government rewrote the rules around pipeline approvals, it required approvals to be given in 18 months to two years. “That’s something the provincial government hasn’t done,” says Styzcen.

For those opposed to the legislation, one of the concerns is under the current system they have a number of places to go for an appeal. Under the new legislation, there’s one single point of contact for appeals. So, if a landowner believes he hasn’t been rightly compensated, he’d have to ask for reconsideration of that decision by the same board that made the decision in the first place.

On the plus side, the act will allow private landowners to register their agreements with the new regulator, which today are considered private documents. “Today those agreements cannot be enforced by the ERCB,” says Olynyk. “It doesn’t have jurisdiction.” Not only will landowners be able to register these agreements with the new regulator, but the regulator can also enforce those agreements, which gives landowners a certain level of protection, he added.

Another concern is the new legislation limits who has standing at the board. Currently, anyone affected by a project would have the right to appear at the proceedings; under the new legislation this will be limited to those who are “directly and adversely affected.”

“I’m guessing that might cut back on public interest litigants,” says Styzcen. “Under the old rules it had been hashed out and people knew who had standing and who didn’t have standing.” Not having all of those voices at the table might lead to litigation, he added.

“Under the old act, one of the primary goals of the regulator was to consider whether the project was in the public interest,” says Styzcen. In the new act, the language has changed.

“The new regulator’s mandate is significantly narrower under section 2 of the act. I thought it was an interesting change that they took out the words ‘public interest’ as a primary consideration of the regulator. I wonder if the objective is to foster energy projects and push projects along, and provide a process that’s favourable to
industry.” It’s a subtle change, he added, but it changes the focus of the regulator.

Another concern is that the way the new authority is set up, the provincial government appoints a board, and the board appoints a CEO. So, while it’s independent of government, it’s still appointed by the government, and that has some groups concerned.

A press release states the new regulator will operate at arm’s length and not as part of government, with a strong, independent board of directors. “On the other hand they’ve given themselves the power to set the direction for the regulator and what the regulator ought to consider,” says Styzcen.

So while government can’t direct the day-to-day operations of the new regulator, it can ensure the regulator’s decision-making is consistent with government policy. “I don’t know if that’s a bad thing or not — you don’t want a regulator doing anything it wants, but this is pretty explicit in giving directions to implement government policy,” says Styzcen.

Perhaps one of the biggest concerns relates to consultation with First Nations. As a matter of law, it’s possible for tribunals to make a determination as to whether the Crown provided adequate consultation with First Nations. But with Bill 2, government clearly states in the legislation under s. 21 the new regulator will not have the authority to make determinations as to the adequacy of Crown consultations.

What that means is if aboriginal groups are concerned they haven’t been adequately consulted in the process, they can’t take their complaint to the new regulator to make a determination. Instead they’ll have to wait until a decision is made and then take that decision to court, says Olynyk.

Though the new regulator may not have jurisdiction in this area, aboriginal groups are likely to participate in hearings so they aren’t vulnerable to the charge they turned down the opportunity to have their concerns addressed through the regulatory process — should they consequently launch an appeal.

“I don’t think many aboriginal groups are happy about it because it does force them to go to court,” says Olynyk. “It was open to the Government of Alberta to leave (it in); it was a conscious decision on government’s part to expressly state they do not have that jurisdiction.”

Government is “almost inviting First Nations to start court proceedings separate from this,” says Styzcen. “It will be another area ripe for challenge.”

It’s likely the new legislation will require tweaking to deal with any gaps or oversights. So far, proposed amendments include restoring the right of Albertans to be notified and have a hearing if they would be directly affected by an energy project, as well as legislating a standard timeline for project applications.

“You wonder if the government tried to do too much — not just (create) a new regulator, but also try to deal with things like standing and getting rid of the idea of public interest and changing rules around appeals,” says Styzcen. “Taking on a smaller project might have been a better approach than rewriting all the rules all
at once.”

But, he adds, there’s something to be said for one-stop shopping — and that is likely to appeal to almost everyone involved.

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