What You Need to Know About Alberta’s New Energy Regulator

By Alasdair G. MacKinnon

During the hectic early weeks of last December, while most of us were out shopping for Christmas presents and preparing for the upcoming holiday, government officials in Alberta were putting the finishing touches on a different kind of gift package.

The Responsible Energy Development Act of Alberta was given Royal Assent on December 10, 2012 and became law with little fanfare. But, its low-key unveiling should not be seen as a reflection of the impact this important legislation will have on farmers and landowners in Alberta — and potentially across Canada.

This new act is changing the provincial regulatory landscape in Alberta with respect to oil and gas exploration and development. Essentially, it creates a one-stop-shop for energy companies that are currently wrapped in a web of government bureaucracy as they try to obtain all of the necessary permits. The act also addresses concerns of the public by establishing an enforcement agency to deal with the oil and gas industry that will enforce a number of provincial environmental statutes under one roof.  

The fact that Alberta isn’t the only province in Canada with a thriving energy industry means that this new model, if deemed a success, could become a template for neighbouring oil-and-gas producing provinces.

This new legislation has been in the works since 2010, when the provincial government in Alberta initiated a task force to study how the oil and gas industries were regulated in the province. After an extensive consultation process, the task force made six recommendations to the government. All were adopted, and they form the core of this new legislation. In essence, the new Responsible Energy Development Act, also known as Bill 2, promises to:

• Establish a single upstream oil, gas, oil sands and coal regulator (a one-stop shop for industry);

• Establish a common risk assessment and management approach;

• Establish a performance measurement framework and public reporting mechanism;

• Establish a Policy Management Office;

• Provide a clear public engagement process;

• Develop an effective mechanism to address landowner concerns.

Given the recent enactment of this legislation, many agricultural producers are watching the rollout of these recommendations very closely. Having worked for the past 10 years as an Inspector with the Natural Resources Conservation Board regulating the Agricultural Operation Practises Act of Alberta, I would often hear the frustrations of farmers and landowners trying to obtain fair oil and gas lease agreements and rent reviews. Producers also struggled to figure out which government agency had jurisdiction over what part of the puzzle. These stakeholders should benefit as much as industry from the more streamlined approach of this new Act.    

Yet, for now, we watch and wait. While the new act has become law, the regulations for Bill 2 have still to be issued and the agency itself is a work in progress. Government officials have said they hope to have the agency in place by June 2013; however, it will likely be sometime before we know the full impact of Bill 2.    

While question marks remain, there are some things we do know. First, this new one-stop-shop regulator will be the decision-maker for all oil, gas, oil sands and coal development projects under the existing Energy, Public Lands, Water and Environmental provincial statutes of Alberta. In other words, it will handle everything — from application to reclamation. It brings together under one roof the regulatory functions of the current Energy Resources Conservation Board (ERCB) and the Environment and Sustainable Resource Development Ministry. As such, this new regulator will have the authority to administer the Public Lands Act, the Environmental Protection and Enhancement Act and the Water Act of Alberta as they relate to energy development.

This act gives landowners the option of registering any of their new surface rights agreements between themselves and the oil or gas companies wanting to do activity on their land. If the landowner believes that the company is not complying with the written clauses and provisions of the agreement, they can request that the new regulator investigate this alleged non-compliance. If the regulator agrees, it may issue an enforcement order directing the company to honour the written provisions of the agreement. If an outstanding issue cannot be resolved, the legislation gives the new regulator the authority to require that both parties participate in an alternative dispute resolution (ADR) process.  

For landowners to take advantage of this enforcement arm, however, they must make sure their land use agreements are clearly written — with specific detail and timelines. The regulator cannot enforce lease agreements with fuzzy details or clauses, or that are based on verbal agreements. Only what’s clearly spelled out can be enforced. This puts the onus on the landowner to make sure these agreements are written with clarity. Talk to an expert such as an AGRI-TREND Land-Coach for help negotiating and drafting your lease agreements, and assisting with rent reviews.  

The energy exploration and development landscape in Alberta is rapidly evolving here and now. The shape that this new energy regulator eventually takes will play a pivotal role in how this evolution affects the key stakeholders — farmers and landowners in Alberta, and beyond. Stay tuned, we will keep you posted.        

 

Alasdair G. MacKinnon is a Senior Technical Advisor and Government Sector Liaison with AGRI-TREND Land Resources. For more information on Bill 2 or other surface rights or surface land negotiation, contact Alasdair at 403.505.2772 or This email address is being protected from spambots. You need JavaScript enabled to view it.. For questions on AGRI-TREND’s land coaching services, contact Tyler Fletcher, AGRI-TREND® Land-Coach®, at 780.656.0507 or This email address is being protected from spambots. You need JavaScript enabled to view it..