Copyright of the Daily Oil Bulletin 2017
Regulatory Gaps Remain In Oilsands Development Framework, Says U Of C Law Professor
Although a single-window Alberta Energy Regulator (AER) has provided greater regulatory efficiencies, it may have come at the cost of some checks and balances in the system, says an associate professor of law at the University of Calgary Haskayne School of Business.
“Streamlining . . . and [reducing] complexity shouldn’t come at all costs,” Nickie Nikolaou told a ConocoPhillipsIRIS (International Resource Industries and Sustainability Centre) seminar this week discussing gaps in the regulatory framework for the Alberta oilsands.
“When we had a multi-layered regulatory system, yes it was complicated and cumbersome but it still provided some checks because you had more than one regulator,” she said. “One of the big concerns — the jury is still out on this — is whether we have lost some checks and balances on the system by moving away from a multi-regulator system to a single regulator.”
In her presentation, Nikolaou, an affiliated faculty member with the Canadian Institute of Resource Law, looked at current gaps in the Alberta oilsands development framework since she first analyzed the issue in a 2007 paper. One of its conclusions was that the regulatory system was extremely complex.
At that time, there were three players in the project approval stage —Alberta Sustainable Resources Development, the Energy and Utilities Board and Alberta Environment — all operating under different pieces of legislation and “there was lots of duplication.” For example, while the EUB had to do a review of an oilsands project, Alberta Environment also had to do an environmental assessment under its legislation. Industry also had to report on emissions to multiple different regulators.
Citing a need to streamline and clarify the regulatory framework, after extensive consultation, a government task force recommended a single-window regulator.
In 2013, the Alberta legislature approved the Responsible Energy Development Act (REDA) creating the AER which is responsible for the entire lifecycle of oil and gas development, from exploration to abandonment. The AER has authority under both resource-specific regulation such as the Oil Sands Conservation Act and under general public lands and environmental legislation which includes water and air approvals for energy projects.
“We have made strides and it is a bit better but it is still complicated and complex and a lot of that complexity comes from the very nature of the development itself,” Nikolaou suggested.
While oilsands operators and members of the public in theory don’t have to deal with more than one entity for all their licences and permits and approvals, “you still have to go to a myriad of legislation, regulations, guidelines [and] policy documents,” she said. “It’s not as if there is an Oilsands Development Act where we can go to find all the answers we want.”
In her 2007 paper, Nikolaou also identified a lack of plans and detailed policy for oilsands development during a period of intense interest in the resource. Within a four-month period, for example, three major oilsands mines were approved.
The paper pointed out that the regulator at the time, the EUB, said it was difficult to decide whether to approve some projects as it did not have regional land plans or specific policy direction from the government in terms of acceptable development limits in the region.
“There still is a lot of work to do with respect to regional land use planning but in terms of what I considered in 2007 … at least we have a plan now,” she said.
In 2009, the government approved the Alberta Land Stewardship Act and it committed itself to implementing integrated resource management as the only way to properly address all the socio-economic and environmental policies and the impact of multiple activities on the landscape. “When it was passed, it really was a revolutionary [approach] in terms of integrated resource management.”
The legislation also provided for the development of regional land use plans in the province. The first, which was adopted in 2012, was the Lower Athabasca Regional Plan (LARP) that covered most of the oilsands region. There also are three management frameworks under LARP that deal with oilsands mine tailings, air emissions and surface water quality and quantity.
“The LARP is definitely a good thing; it’s a start and it’s definitely better than what we had before which was no regional land use plans,” according to Nikolaou. However, some commentators have said the LARP doesn’t go far enough and it is not specific or comprehensive enough, the seminar heard.
Regional land use planning is needed in order to properly address cumulative effects, she said. “If we continue to try to develop things on a project-by-project basis, we are not getting it.”
In terms of climate change, the provincial government has a policy designed to reduce greenhouse gas emissions from oilsands operations. “Once again the statute is far from perfect and critics have basically criticized the statute in particular for failing to place an absolute cap on emissions at both a facility level and at a regional level,” she said.
The Alberta government recently passed the Oilsands Emissions Act, which imposes a limit of 100 megatonnes of CO2 equivalent per year on the entire oilsands industry that currently produces about 70 megatonnes of emissions annually. However, “we don’t know exactly how this emissions limit is going operate in practice,” as the regulations have yet to be developed.
There still are issues around public consultation, including the disposition of mineral rights which she identified a decade ago, said Nikolaou. “By the time things get to the AER, the company has already acquired the mineral rights from the government, so often it is thought that, all things being equal, that will tilt the balance toward approving a project instead of not approving it.”
In addition, the AER has broader discretion than the previous board which makes it difficult for members of the public to find out if they are entitled to a public hearing or to their cost if they participate in a public hearing, she said.
It’s important that the public be involved in decisions on public lands to ensure transparency and accountability and that the involvement of people who are informed and who have expertise will make for better decisions, Nikolaou argued. “The public nature of the oilsands resource and the land and air and water requires a mandate in some form of public debate.”
However, rather than opening up the legislation dealing with some of the issues related to who is entitled to appear before a public hearing and claim participation costs, the Responsible Energy Development Act actually narrowed the scope,giving the AER broad discretion to deny a hearing even to someone who is directly and adversely affected by a proposed development, she said.
The regulator, for example, can say that a person’s objections have been addressed to the satisfaction of the AER or cite any other factors it considers appropriate. As a result, some environmental and First Nations groups have been denied hearings before the AER even if they have been able to establish that some of their members are directly and adversely affected, according to Nikolaou.
Additionally, while there is a provision under REDA for a person who is directly affected to appeal a decision of the AER, it is internal to the AER whereas in the past there was an opportunity to appeal their case to the separate and independent Environmental Appeals Board. “So we have lost the check and balance that we used to have in the previous system.”