On January 28, 2011, the Minister of Energy, Ron Liepert, announced that the Alberta Government had accepted the recommendations of the Regulatory Enhancement Task Force, including the proposal to consolidate a variety of upstream oil and gas regulatory functions into the authority of a single regulator. These changes are intended to streamline the approval process for projects, resulting in more consistency, less duplication and greater certainty to the regulatory regime in Alberta.
Background
In March 2010, the Alberta Government released a report entitled "Energizing Investment: A Framework to Improve Alberta's Natural Gas and Conventional Oil Competitiveness" (for more on this report, please refer to the Osler Update of March 17, 2010, Alberta Competitiveness Review: Streamlined Regulatory System & Lower Royalties). As a result of this report, the Minister of Energy established the Regulatory Enhancement Task Force (the Task Force) which was instructed to do a comprehensive upstream oil and gas regulatory review. The Task Force was specifically requested to make recommendations to resolve any gaps, overlaps, inconsistencies and duplications in Alberta's strategic policies around the oil, gas and oil sands sectors, and potentially other resource sectors, as well as recommend ways to enhance regulatory delivery through performance measures and benchmarks.
Current Regulatory Framework
Regulation of upstream oil and gas is presently divided between Alberta Environment, which manages air and water resources and the reclamation and remediation of oil and gas facilities; Alberta Sustainable Resource Development, which regulates forest resources, biodiversity, land-use and the management of public lands; Alberta Energy, which manages Crown mineral rights and royalties; and the Energy Resources Conservation Board, which regulates oil and gas activities generally. Upstream oil and gas development often requires interaction with each of these regulators at various times during project development and there is some uncertainty surrounding their respective roles and responsibilities. In addition, there have been concerns that information is not adequately shared between the regulators and that proponents improperly incur costs for duplication of efforts and delay.
Task Force Recommendations
The Task Force released its final report on December 31, 2010. The final report contained six key recommendations:
- Creating a Policy Management Office to ensure the integration of all natural resource policies (as opposed to separate and occasionally inconsistent policies on resource development from each provincial regulator);
- Consolidating all policy implementation functions with a single provincial regulator. This would encourage more consistent decision-making, reduced duplication and stronger coordination of applications, approvals, monitoring, compliance and other implementation activities throughout a project's lifecycle. Functions that would be consolidated with the new regulator would include disposing of public lands, licensing water rights, reviewing project applications, reviewing environmental impact assessments, issuing project approvals, conducting compliance monitoring, and issuing reclamation and remediation certificates;
- Creating clear public engagement procedures that would enable the public to engage meaningfully in the policy development and policy implementation phases. Engagement on policy development would be coordinated by the new Policy Management Office and would be available to the general public, while engagement in the policy implementation stage would follow current public participation rules that limit engagement to stakeholders directly affected by a proposed development;
- Implementing a common risk management framework – as opposed to different risk approaches currently being taken by each regulator. The Task Force noted that an example of this approach will be streamlining the environmental assessment process for in situ oil sands operations to reflect their similarities to conventional oil and gas development in terms of environmental risk;
- Adopting a Performance-Measurement Framework, whereby projects and the regulatory system as a whole are both evaluated independently by the new Policy Management Office to assure Albertans that the regulatory system is effectively and efficiently delivering on integrated policy outcomes; and
- Creating a more effective process for landowners to resolve disputes with oil and gas companies arising out of private agreements between those parties.
The Alberta Government has accepted each of these recommendations and will be implementing them through legislative changes in the spring of 2011.
Implications for the Upstream Oil and Gas Industry
The implementation of these recommendations will result in significant changes to the regulatory regime in Alberta for upstream oil and gas projects. The changes should streamline the regulatory approval process and reduce the delays associated with involvement by multiple regulators. These changes should also add greater certainty to the approval process. However, previous initiatives to streamline regulatory processes have not always achieved the desired effect. If the implementation of the recommendations is not properly carried out, the regulatory process could be negatively impacted. Project proponents should keep a close watch on the implementation of these recommendations and engage with the Alberta Government as necessary to ensure that the implementation of these recommendations improves the regulatory regime as intended.
Martin Ignasiak is a partner in Osler's Calgary office whose practice focuses on regulatory and environmental law. Terri-Lee Oleniuk, focuses on project-related issues concerning natural resource development with a specialization in regulatory, environmental and Aboriginal law issues. Alexander Duncanson completed his LL.B. (with distinction) at the University of Calgary.
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