In March of 2010, the Alberta Government initiated a comprehensive review of the policies and procedures governing the exploration for and development of oil and gas in the Province. The goal of the ‘Regulatory Enhancement Project’ or ‘REP’ was to streamline the overall regulatory process so as to increase Alberta’s economic competitiveness. The REP included stakeholder workshops and forums moderated by Sierra Systems. FHOA participated in a number of these sessions in 2010. Unfortunately, the moderator had no interest in subsurface issues and allowed the sessions to be totally dominated by anecdotal surface owner and first nation complaints.
In May of 2011, the Government released a discussion document setting forth the six recommendations of the REP task force and seeking input from stakeholders with respect to the implementation of the following recommendations:
1. Establish a new policy management office to ensure the integration of natural resource policies and provide an interface between policy development and policy assurance.
2. Establish a single regulatory body with unified responsibility for policy assurance (regulatory delivery) of upstream oil and gas development activities.
3. Provide clear public engagement processes that enable parties to engage effectively at the policy development and policy assurance stages.
4. Ensure a systemic and common risk assessment and management approach is used across the entire Policy Development and Policy Assurance System.
5. Adopt a performance measurement framework and a public reporting function to measure and communicate the effectiveness of the system and identify opportunities for continuous improvement.
6. Ensure an effective mechanism to address landowner concerns is developed.
The Freehold Owners Association submitted a response in which it supported the proposed new single regulator and policy management office but focused on the need for an effective mechanism to address the concerns of all landowners, including freehold mineral rights owners (see FHOA Submission - June, 2011).
In the fall of 2012, the recommendations of the REP were adopted by the Alberta Government with the introduction of Bill 2, The Responsible Energy Development Act. Pursuant to Bill 2, the roles of Alberta Environment and Sustainable Resource Development (“ESDR” – the entity which grants surface leases and regulates reclamation of these lands) and the Alberta Energy Regulator (formerly known as the “Energy Resources Conservation Board”) (the “AER (formerly known as the “ERCB”)”) are transferred to a single entity, the Alberta Energy Regulator (the “AER”) and the AER's (formerly known as the “ERCB”) enabling legislation (the Energy Resources Conservation Act or ERCA) is repealed. All of the AER (formerly known as the “ERCB”) responsibilities under the Coal Conservation Act, the Oil and Gas Conservation Act, the Oil Sands Conservation Act and the Pipeline Act together with all of the ESRD’s responsibilities in respect of energy activities under the Water Act, the Public Lands Act and the Environmental Enhancement and Protection Act (the “EPEA”)are now the responsibility of the AER whose mandate is to “provide for the efficient, safe, orderly and environmentally responsible development of energy resources in Alberta” (Bill 2, S. 2).
Upon introduction, Bill 2 was severely criticized by environmental groups, surface owner organizations, legal experts and opposition parties in the legislature.
Environmentalists focused on the lack of any public interest test in the ERA’s mandate (Section 3 of the repealed ERCA had required the AER (formerly known as the “ERCB”) to make decisions “in the public interest, having regard to the social and economic effects of the project and the effects of the project on the environment”.
Surface rights organizations focused their criticisms on the fact that Bill 2 provides for a person who is “directly and adversely affected” by an application to file a statement of concern with the AER whereas the requirements under the EPEA were only that the person be “directly affected”.
Most of the criticism of Bill 2 by legal scholars and surface rights advocates has been directed to S. 34 of the bill which arguably eliminates the automatic right to a hearing for a person directly and adversely affected by an application to the ERA – a right which previously existed under S. 26 of the ERCA. S. 34 provides as follows:
(1) Subject to subsection (2), the Regulator may make a decision on an application with or without conducting a hearing.
(2) The Regulator shall conduct a hearing on an application
(a) where the Regulator is required to conduct a hearing pursuant to an energy resource enactment,
(b) when required to do so under the rules, or
(c) under the circumstances prescribed by the regulations.
(3) A hearing on an application must be conducted in accordance with the rules.
Following the legislative endorsement of certain amendments, Bill 2 received Royal Assent on December 10, 2013. The Government intends to proclaim the Act in June, 2013 after the rules under which the AER is to function have been finalized.
FHOA has not joined in the chorus of criticism of Bill 2. A more responsible and efficient oil and gas regulatory system is clearly in all of our best interests, provided the system is fair. When formulated, the rules governing such matters as AER notices, hearings, costs and alternative dispute resolution could significantly improve the fairness of the regulatory environment for freehold mineral owners.
On February 14, 2013, the Government announced it would be holding a series of public consultations throughout Alberta during February and March of 2013 seeking input from stakeholders on the rules (http://www.energy.alberta.ca/Initiatives/RegulatoryEnhancement.asp).
The Government’s website also provides an opportunity for individuals unable to attend any of the public sessions to provide input online (see “Take the Survey”).
A number of the issues which FHOA considers appropriate with respect to AER rules are set forth in our February 18, 2013 newsletter (see Alberta’s New Single Energy Regulator)
FHOA urges all freehold owners to either complete the online survey or attend one of the public consultation sessions and express your views on the rules.