Project Law Blog

BC Supreme Court Revisits Issue of Federal Paramountcy

Posted in Aboriginal, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory, Regulatory Compliance
Comment

On January 14, the Supreme Court of British Columbia found that the Province had improperly abdicated its decision making authority with respect to the Enbridge Northern Gateway Project by entering into an Equivalency Agreement with the federal government. Furthermore, the Court found that the Province had breached its duty to consult with First Nations by not consulting with First Nations on the Province’s decision not to terminate the agreement and take steps to impose conditions on the project.

The Enbridge Northern Gateway Project is an interprovincial pipeline, and as such it falls under the exclusive jurisdiction of the Federal government. In order to proceed, the Project requires an environmental assessment under the Canadian Environmental Assessment Act, 2012 (“CEAA 2012”) and a Certificate of Public Convenience and Necessity from the National Energy Board (“NEB”) under the National Energy Board Act (“NEB Act”). The environmental assessment was completed on December 19, 2013 and was approved by the Minister on June 17, 2014, with 209 conditions attached to the Project. The NEB issued a Certificate of Public Convenience and Necessity on June 18, 2014.

By agreement dated June, 2010, the British Columbia Minister of Environment, as represented by the Executive Director of the British Columbia Environmental Assessment Office (“BCEAO”), reached an agreement with the NEB confirming that projects such as transmission pipelines that are within the jurisdiction of the NEB Act would not require an assessment or certificate under the British Columbia Environmental Assessment Act (“BCEAA”). Madam Justice Koenigsberg’s decision in Coastal First Nations v. British Columbia (Environment), 2016 BCSC 34 takes issue with this agreement.

Madam Justice Koenigsberg found that the BCEAA is legislation with a purpose of general environmental regulation that coexists with the federal regulation of interprovincial projects. She found that the BCEAO did not have the authority to abdicate its authority to grant a certificate for the Project and thereby foreclosing its ability to impose conditions on the Project.

In our view, the decision is inconsistent with the recent decision of the BC Supreme Court in Burnaby (City) v. Trans Mountain Pipeline ULC, 2015 BCSC 2140, in which the Court found that the doctrine of federal paramountcy applied to the effect that the NEB Act’s jurisdiction over interprovincial pipelines trumped provincial laws where those laws interfere with the core functioning of a federal undertaking. The Court went on to say that the provincial laws remain valid, but are rendered inoperative where their application would interfere with the federal undertaking. Finally, the Court found that the doctrine of interjurisdictional immunity applied to prevent provincial laws from improperly trenching on a protected core of exclusive federal jurisdiction.

Presumably, the same principles apply in the Coastal case. The Project is a federal undertaking, and as such lies within the jurisdiction of Parliament. To the extent that any provincial laws interfere with that jurisdiction, federal paramountcy renders the provincial laws inoperative. Furthermore, the doctrine of interjurisdictional immunity applies to prevent the provincial law from interfering with interprovincial pipelines – which are a protected core of federal jurisdiction pursuant to the NEB Act.

With respect to the duty to consult, the Court found that the Province was not required to consult with First Nations in entering into equivalency agreements, but would be required to consult where the operation of those agreements had the potential to adversely affect First Nations’ claims or rights. Under the circumstances, the Court found that it was a breach of the duty to consult for the Province not to consult with First Nations with respect to its decision not to terminate the Equivalency Agreement and impose conditions on the project. This issue is arguably moot, given the Court’s declaration on the requirement for a provincial certificate summarized above.

Implications

In the absence of an appeal, the result of the decision is that all projects that meet the thresholds of reviewable projects under the BCEAA require an Environmental Assessment Certificate, regardless of whether those projects are federal undertakings subject to exclusive federal jurisdiction. While the Province may consider a federal assessment in determining whether or not to issue a Certificate, the project may nevertheless be subject to potentially inconsistent conditions imposed by federal and provincial regulators. It remains to be seen whether the decision will have practical implications for the Northern Gateway Project, which is fully authorized to proceed under federal jurisdiction.

Federal Government Releases Guiding Principles for Project Review

Posted in Aboriginal, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory, Regulatory Compliance
Comment

In a set of press releases issued today (here and here), the Government of Canada announced 5 principles that it says will guide its discretionary decision-making for projects being reviewed in environmental assessment, along with a set of interim measures it says will be implemented in two existing pipeline reviews.

While today’s announcements will likely have an impact on the Government of Canada’s approach to its participation in existing pipeline reviews conducted by the National Energy Board (NEB), as well as its approach to decision making once the NEB makes a recommendation to cabinet as to whether those projects should proceed, today’s announcements do not change any of the regulations or legislation governing environmental assessments currently being conducted. One possible exception is that the Minister of Natural Resources has indicated he will seek an extension to the legislated time for the Government to make a discretionary and final decision on the Trans Mountain Expansion Project and the Energy East Pipeline by 4 and 3 months, respectively (likely under section 52(7) of the National Energy Board Act), as well as an extension of the NEB’s time to review the Energy East project by 6 months (likely under section 54(3) of the National Energy Board Act). The reference to “seeking” an extension is that the Minister cannot extend the timelines he is seeking on his own – the extension must be granted by cabinet.

The purpose of seeking an extension of the timelines for review is to allow deeper consultation with First Nations and gather input from the public. The Government has also indicated that it will assess the upstream greenhouse gas emissions associated with the Trans Mountain and Energy East pipeline projects, though it is not clear how those assessments will fit into the context of the current reviews, given that the NEB has consistently ruled that consideration of upstream greenhouse gas emissions is not within the scope of its environmental assessment of pipeline projects.

Importantly, the Government of Canada has indicated that project reviews currently underway will not need to restart – apart from the extension of timelines, existing reviews will carry on under the existing regulatory framework. It seems likely, however, that we can expect to see actual changes to the regulatory framework for environmental assessment of major projects in the future. For now, while the Government of Canada’s attitude towards project reviews may have changed, the written rules have not, or at least, not yet.

Losing the Battle but Winning the War?

Posted in Aboriginal, Constitutional Law, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory
Comment

On November 4, 2015, the Yukon Court of Appeal released its decision in the Peel River case that we first reported on here.  The decision focussed on whether the Yukon Government properly followed the land use planning process set out in three modern land claims agreements in the development of a land use plan for the Peel River region.  The Court of Appeal largely agreed with the lower court that the Yukon Government had not followed the proper process in making extensive changes to a land use plan prepared by an independent regional planning Commission.  However, the Court of Appeal also confirmed that the Yukon Government has a broad power to make land use decisions for Crown lands in the territory, as long  as those decisions are made in a manner consistent with the treaties, interpreted in a generous, purposive manner, and consistent with the honour of the Crown.  Accordingly, the Court of Appeal sent the parties back to the point at which the process failure began, in contrast to the trial judge, who would have sent the parties back to the final stage of the land use planning process. As a result, while the Yukon Government may have lost the process battle, it won the war over the more fundamental issue of its power to make land use decisions for Crown lands in the territory.

Background

As set out in more detail in our previous post, this case in involved the interpretation of provisions in final agreements between Yukon First Nations and the Yukon Government that established a consultative process for the development of a land use plan in the Peel Watershed. The process allowed the parties to create an independent planning Commission to create an initial recommended plan, and required Yukon to consult on that plan before approving, rejecting, or proposing modifications to it (section 11.6.2 of the Final Agreement). In response to the Yukon’s decision at that stage, the Commission was then required to reconsider as necessary and propose a final recommended plan, followed by another obligation on Yukon to consult on that plan before final approval, rejection or modification by Yukon (section 11.6.3.2 of the Final Agreement).

In this case, the Yukon provided very general suggestions at the 11.6.2 stage, and then proposed its own plan at the 11.6.3.2 stage. The trial judge found that to be “an ungenerous interpretation not consistent with the honour and integrity of the Crown”, resulting in the government usurping the Commission’s role and the planning process by introducing new land use planning tools and concepts at the final stage of the process. As a result, the trial judge quashed the Yukon’s plan and remitted to process to the 11.6.3.2 stage. It is this choice of remedy that marks the significant difference between the trial judge and the appeal court in resolving this case.

Image from the Peel Watershed Planning Commission’s December 2005 "Issues and Interests Report."

Image from the Peel Watershed Planning Commission’s December 2005 “Issues and Interests Report.”

The Decision

In its decision, the Yukon Court of Appeal confirmed that the Yukon Government has a broad power to modify plans proposed by regional planning commissions.  However, it must do so at a point the in the planning process that allows for proper consultation with affected First Nations and communities, and allows those parties to understand and respond meaningfully to the proposed modifications.  In this case, this meant providing detailed proposals for modifications, and written reasons explaining those modifications, to enable meaningful consultation (the 11.6.2 stage).  However, once those consultations are complete, and a revised plan is received from the planning commission, the Yukon government could exercise its powers to reject the revised plan, or to modify the revised plan to incorporate modifications on which the government had adequately consulted.

Implications

Because this case deals with the unique wording of the land use planning provisions of the Yukon treaties, its direct impact outside the Yukon may be limited.  However, the case is consistent with other past case law and may have the following implications:

  • The decision recognizes that the final decision-making authority over the management and use of public lands and resources rests with government.
  • At the same time, governments must exercise that decision-making authority in a manner that is consistent with the ongoing reconciliation of societal interests with Aboriginal rights and interests.
  • The honour of the Crown requires transparency in government communication with First Nations — stating government’s proposed measures in a specific and clear enough manner that First Nations being consulted under the proposed measures and can comment effectively on those measures.
  • The decision emphasizes the need for government decision-makers to provide proper reasons in support of decisions that may affect Aboriginal interests (see for example West Moberly and Adam).  The courts want to see how a government has arrived at its decision, and how governments balanced Aboriginal rights and interests with broader societal interests in arriving at that decision.  Reconciliation of those rights and interests can be demonstrated where adequate reasons are given.

In the result, the Yukon Court of Appeal’s decision represents another step in understanding governments’ powers over public lands and resources, as well as governments’ continuing obligations under modern treaties to reconcile Aboriginal rights and interests with broader public interests. For project proponents – particularly in the north where many modern treaties have been entered into – the message remains that treaty rights can apply to Crown lands and that First Nations may have a right to participate in decision-making for the management of public lands and resources.  Project proponents and governments must therefore pay close attention to any applicable treaties in areas where they wish to work and must be satisfied that the processes set out in the treaties are being observed in a manner that reflects ongoing Aboriginal interests in decisions affecting Crown lands within their traditional territories. If those processes are not being observed, then it is possible, as in this case, that the parties may be forced to return back to the point at which the failure began.

AER Releases Draft Requirements for Oil Sands Tailings Management

Posted in Oil & Gas Law, Project Development, Project Permitting, Regulatory, Regulatory Compliance
Comment

On September 17, 2015, the Alberta Energy Regulator (the “AER”) released its draft Directive Fluid Tailings Management for Oil Sands Mining Projects (the “Draft Directive”). The Draft Directive establishes new requirements that operators must meet to manage tailings during and after mine operations, including application filing requirements, the review and approval processes and performance reporting for fluid tailings volume profiles. Once finalized, the Directive will also inform the AER’s surveillance and compliance management responses.

Background

The Draft Directive is part of the AER’s phased approach to implement the Lower Athabasca Region: Tailings Management Framework for Mineable Athabasca Oil Sands (the “Framework”) issued by the Government of Alberta in March 2015.  The Framework sets out the government’s policy to manage fluid tailings volumes in order to manage and decrease liability and environmental risk resulting from the accumulation of fluid tailings on the landscape.

Notably, the Framework requires operators to demonstrate that all fluid tailings will be treated and reclaimed progressively during the life of the project and that they will be in a ready-to-reclaim state within 10 years of the end of mine life.  The Framework also provides direction on reclamation towards various end land uses and promotes outcome-based, proactive management strategies while requiring additional monitoring and reporting.

The AER is responsible for developing and implementing requirements to achieve the Framework’s objectives and outcomes. The Framework also specifically charged the AER with undertaking a review of Directive 74: Tailings Performance Criteria and Requirements for Oil Sands Mining Schemes (“Directive 074”) and amending, as appropriate.  In response, the AER suspended Directive 74 and started working on the new directive.

Directive 074 used a specific strength measurement for the capture of the clay particles within fluid tailings. The Framework requires the use of the volume of fluid tailings as the metric to track reduction of fluid tailings.  To introduce consistency in reporting and replace the old determination of fluid tailings volume, the AER has adopted Canada’s Oil Sands Innovation Alliance’s Guidelines for Determining Oil Sands Fluid Tailings Volumes, June 2015 (the “COSIA Guideline”). The AER considers the measurement tools in the COSIA Guideline to be comparable to those promoted in the Framework.

The Application Process

The Draft Directive requires the submission of a detailed application that includes new and legacy fluid tailings volume profiles in accordance with the COSIA Guideline, a tailings management plan (“TMP”) and a map of a project’s treated tailings deposits and fluid tailings ponds. The Draft Directive also requires the demonstration of progressive reclamation and ready-to reclaim tailings within 10 years of the end of mine life.

The AER requires the application to contain sufficient information to demonstrate that the TMP is aligned with existing approvals under the Environmental and Protection Enhancement Act, the Water Act and the Oil Sands Conservation Act (the “OSCA”)Any inconsistencies between the TMP and existing approvals must be identified and may require a future amendment application in order to manage risks more thoroughly.

Oil sands projects operating as of the effective date of the final directive must submit an application to the AER by March 31, 2016 that demonstrates that outcomes of the Framework will be met including social, environmental and economic policy outcomes. Projects which have been approved but are not yet operating have until one year prior to bitumen production to submit their application.

For the submission and review of a TMP, the AER will follow the established application and review process for OSCA applications. The application will first undergo a preliminary review to ensure it is administratively complete. The AER will then proceed with a detailed technical review. The AER may request supplemental information to clarify issues or obtain additional information and may approve or deny the application with conditions.

AER Seeking Public Feedback

The AER is seeking feedback on the Draft Directive from oil sands operators, aboriginal groups, environmental nongovernmental organizations, affected municipalities and multi-stakeholder community groups. Comments are accepted until November 17, 2015.

A multi-stakeholder technical advisory committee has also been established. The Draft Directive will be reviewed and amended taking into account policy direction from the Government of Alberta, observations on the effectiveness of requirements and feedback from stakeholders. The AER is then expected to post a summary of the feedback received from stakeholders and finalize the directive. Review of the initial TMP for each operating oil sands operation is expected in 2016.

Enforcement of the Directive

New details on the surveillance and compliance management system, the 5-year review plan and changes to the Mine Financial Security Program to include incentives to manage fluid tailings will be released in the 2016 edition of the directive. The AER has indicated that failure to meet reclamation deadlines may range from financial penalties to production cutbacks. Enforcement tools available to the AER include more frequent and detailed inspections, enforcement orders, shutting down operations, administrative penalties and prosecution. Generally, the larger the fluid tailings volume, the more severe the management response will be.

Implications

The implementation of both the Framework and the Draft Directive clearly signal a major shift in tailings management for oil sands development in the Lower Athabasca region. Operators will want to track the changes closely as the implications to existing and new operations will be significant in the years to come.

Bulletin 2015-28: The AER Will Be Publishing Participation and Procedural Decisions

Posted in Aboriginal, Administrative Law, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Public Utility, Regulatory, Regulatory Compliance
Comment

On September 23, 2015, the Alberta Energy Regulator released Bulletin 2015-28: “Posting of Participation and Procedural Decisions” a significant change in the AER’s practice with respect to the publishing of its decisions. Until now, relatively few AER decisions were directly available on the AER’s website. To date, only five AER decisions from 2015 have been published. The inaccessibility of AER decisions has been previously criticized by some observers. The Bulletin announces that, effective immediately, the AER will post both participation decisions and substantive procedural decisions made by AER hearing panels on the AER’s website.

The Bulletin explains that when the AER decides to hold a hearing, it must consider any requests to participate in the hearing and decide on the nature and scope of participation. These decisions, previously known as “standing decisions”, are referred to by the AER as participation decisions. Participation decisions also include the AER’s decisions on requests for regulatory appeals. The AER will consider these requests, in accordance with the Responsible Energy Development Act, its rules and regulations, and issue a written decision with reasons.

Substantive procedural decisions determine the course of a proceeding or the filing of information for a proceeding. Examples include confidentiality orders, the setting or extending of deadlines and determining the scope of issues to be discussed in a hearing. The Bulletin clarifies that this category of decision reflects the AER’s interpretation and application of the Alberta Energy Regulator Rules of Practice.

The AER will continue to provide both participation decisions and substantive procedural decisions directly to applicants, participants and persons directly affected by a decision. However, statements of concern and other documents filed in relation to a proceeding will not be posted, and will only be available by filing an information request with the AER, in accordance with previous practice.

Both participation decisions and substantive procedural decisions will be available through the “Applications & Notices” tool of the AER’s website, under the “Decisions” tab.

For many in Alberta’s energy sector, the posting of AER participation and procedural decisions, often seen in letter format, has been a long-awaited step in the AER’s promise to deliver greater transparency and accountability in its decision-making process. The publication of these participation and procedural decisions will provide industry and stakeholders with greater access to the AER’s interpretation of its home statute, rules, regulations and directives.

Some categories of decisions and documents, filed in the course of application proceedings, are not covered by the Bulletin. As noted, statements of concern continue to be unavailable directly on the AER’s website. Also, the Bulletin does not indicate whether the AER’s decisions in response to statements of concern or its decisions on whether to hold a hearing are considered “participation decisions” and will be made available on the AER’s website. Finally, it is also unclear whether the Bulletin will have retrospective effect; in other words, whether past participation and procedural decisions of the AER will be made available. Nonetheless, publication of participation decisions and substantive procedural decisions represents a helpful step forward for industry and stakeholders.

Supreme Court Determines Regulator Discretion is Wide and the Prudency Test is Ongoing

Posted in Administrative Law, Public Utility, Regulatory, Regulatory Compliance
Comment

The past week has seen three significant decisions relating to the manner in which the rates of public utilities are to be determined in Canada. Although one can argue about whether the decisions clarify and confirm existing law or create new law, no one can reasonably dispute that utilities face new challenges to establish rates that will allow them to recover all of their capital and operating costs as a result of these decisions.

On September 18, 2015, the Alberta Court of Appeal handed down its decision in FortisAlberta Inc. v Alberta (Utilities Commission), 2015 ABCA 295. Nearly all Alberta electric and gas utilities participated to argue strongly that they should be able to continue to recover capital costs of facilities committed to the service of customers and determined by the regulator to be in the public convenience and necessity even if those assets later ceased to be useful in providing public utility service due to an unanticipated event. The AUC held that utilities must remove from their rate base any assets that are no longer used and useful and further, that there is no ongoing right to be compensated for the unrecovered costs. The Alberta Court of Appeal accepted that decision was reasonable and dismissed the appeal from it.

Adopting similar logic, on September 25, 2015 the Supreme Court of Canada (SCC) upheld the Alberta Utilities Commission (AUC) and Ontario Energy Board (OEB) decisions in two cases involving the prudence of operating costs (ATCO Gas and Pipelines Ltd. v Alberta (Utilities Commission), 2015 SCC 45 and Ontario (Energy Board) v Ontario Power Generation Inc., 2015 SCC 44). In those decisions, the SCC held that the AUC and the OEB had not acted unreasonably in denying the utilities the ability to recover operating costs (COLA benefits in relation to company pension expenses which had yet to be finalized, in the Alberta case, and, wage costs under a collective agreement which were entirely foreseeable and, at the time of hearing, largely unavoidable but which the utility had failed to establish were prudently incurred, in the Ontario case). The utilities’ argument that the costs should be presumed prudent until proven otherwise was expressly rejected by the regulator and that was held to be reasonable by the Courts.

The burden of all three of these decisions is likely to be felt in all Canadian jurisdictions and can be reduced to the following propositions:

  1. The Courts will defer to the regulator’s interpretation of its statute wherever discretionary language is used. Thus, on policy issues in most cases, the regulator will be a Court of first and last resort;
  2. The onus to prove prudency or reasonableness (for operating costs) or usefulness (for recovery of capital costs) rests squarely on the utility and it will have to be able to defend all of its costs both at the time of commitment and for so long as they remain;
  3. The bounds on what is or what is not prudent and what the utility must show to demonstrate prudence are to be established by the regulator. So long as the regulator’s decision is justified in a coherent and transparent manner, it is likely not to be interfered with by the Courts.

The implications of these determinations for utilities when seeking approval of its rates are these:

  1. Significant prehearing efforts will need to be made to determine what costs are and are not a potential concern to the regulator;
  2. The evidence supporting cost-recovery will need to demonstrate a sharp focus on the ratepayer perspective. That demonstration will best be achieved through contemporaneous documents that evidence efforts to achieve appropriate objectives on a long-term least cost basis;
  3. Efforts will need to be made to educate regulators on the need to avoid using hindsight to review all decisions made by the utility or otherwise respond to short term conditions when setting long term rates; and
  4. Utilities should assess the additional risk those decisions impose on their operations and seek adjustments to their ROE as appropriate in light of those assessments.

“Free, Prior and Informed Consent” to become part of Alberta law?

Posted in Aboriginal, Administrative Law, Constitutional Law, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory, Regulatory Compliance
Comment

On July 7, 2015, Alberta’s Premier Rachel Notley directed her Cabinet Ministers to review their Ministries’ policies, programs and legislation that may require changes based on the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UN Declaration). Premier Notley tasked her Ministers to “engage directly with Indigenous people to find a common and practical understanding of how the principles of the UN Declaration can be implemented in a way that is consistent with our [Canadian] Constitution and with Alberta law.” Premier Notley’s direction highlights the government’s commitment to working with indigenous peoples as “true partners.”  The governmental review is due February 1, 2016.

The UN Declaration

The UN Declaration was passed by the United Nations in 2007, and was intended to provide a standard of achievement for member nations in dealing with indigenous populations within their nations.  The UN Declaration addresses a wide spectrum of indigenous people’s individual and collective rights, ranging from the right not to be forcibly relocated to allow resource development to occur, to a right of self-determination.

A key aspect of the UN Declaration is its treatment of how indigenous peoples should be involved in decision-making about resource developments possibly affecting their rights. The UN Declaration speaks to the need to obtain the “Free, Prior and Informed Consent” (FPIC) of indigenous communities to development activities that could affect their traditional lands, territories and resources. Some pertinent references to FPIC include:

Article 19: States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them.

Article 28(1):  Indigenous peoples have the right to redress, by means that can include restitution or, when this is not possible, just, fair and equitable compensation, for the lands, territories and resources which they have traditionally owned or otherwise occupied or used, and which have been confiscated, taken, occupied, used or damaged without their free, prior and informed consent.

Article 32(2): States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources.

How the UN Declaration — including FPIC — applies, or should apply, in Canada, has been a matter of debate since it was passed. Aboriginal groups believe that the UN Declaration recognizes that governments should obtain their consent in making decisions that affect their rights. However, the Supreme Court of Canada has recognized that the Crown’s duty to consult and accommodate constitutionally-protected Aboriginal and treaty rights does not require governments to obtain consent, except in limited circumstances (for example, where Aboriginal title has been established).

As a result, Canadian governments have been cautious to formally adopt the UN Declaration.  In 2010, the federal government adopted the UN Declaration, but was careful to state that the UN Declaration was a non-binding document which was not consistent with international law, and which did not change Canadian law. The federal government adopted the UN Declaration as an “aspirational” document that Canada would interpret consistent with the Canadian constitution and legal framework.

Note that the UN Declaration does not define or expand on the use of the term “their lands or territories.” Accordingly, the question of to what extent FPIC applies in the context of indigenous title to traditional lands that may have been ceded through historical or modern treaties is left unanswered.

Implications for Resource Development in Alberta

What does it mean for the Government of Alberta to “implement” the UN Declaration?  At this early stage in the governmental review, the implications are uncertain.

Currently, Alberta’s aboriginal communities have a right to meaningful consultation and to be accommodated if their treaty or Aboriginal rights have the potential to be impacted. Implementation of a requirement for Aboriginal consent to government decisions affecting treaty or Aboriginal rights would have significant consequences for project development in Alberta.

However, other elements of the UN Declaration — such as the implicit recognition that indigenous peoples should share in the benefits from resource development activities affecting their lands or rights — may be less controversial. Canadian case law recognizes compensation as a possible form of accommodation by government. The Government of British Columbia has negotiated resource revenue sharing agreements with Treaty 8 First Nations in northeast BC, and some modern land claims agreements north of 60 provide for territorial governments to share resource revenues with aboriginal groups. These measures have helped to develop aboriginal support for resource development activities affecting their traditional lands and treaty rights.

In committing to implement the UN Declaration, the Government of Alberta has taken on the very difficult task of balancing aboriginal rights and expectations against the need to foster an economic and regulatory climate that allows continued development of Alberta’s natural resources. The recommendations arising from the governmental review will be closely watched by aboriginal groups as well as oil and gas companies and other resource developers in the Province.

Alberta to Double Price of Carbon

Posted in Oil & Gas Law, Project Development, Project Permitting, Regulatory, Regulatory Compliance
Comment

On June 25, 2015, Alberta’s Environment Minister announced that the province will make changes to current climate change legislation, including the doubling of carbon levies from $15/tonne to $30/tonne by 2017. The government also stated that larger emitters will be required to reduce emissions intensity of greenhouse gases by 20 percent by 2017, up from the current 12 percent reductions currently prescribed in the regulations.

To accomplish these changes, the Alberta government has renewed the Specified Gas Emitters Regulation (“SGER“) for two years. Currently, “heavy emitters” (facilities that emit more than 100,000 tonnes of greenhouse gases a year) are required to reduce baseline emissions intensities by 12 percent. Specifically, the SGER requires that the net emissions intensity for established facilities cannot exceed 88 percent of the baseline emissions intensity for the facility for any particular year. The SGER offers some leeway for facilities that fail to meet emissions targets, such as purchasing “fund credits” at $15/tonne, making use of available emissions performance credits (awarded to facilities which have shown a reduction greater than 12 percent) or submitting offset credits.

Under the proposed changes, heavy emitters will be required to reduce emissions intensity by 15 percent in 2016 and 20 percent in 2017. Further, the price of “fund credits” will increase to $20/tonne in 2016 and $30/tonne in 2017. The timing of the proposed changes has not yet been announced.

The renewal of SGER for two years allows time for the government’s comprehensive review of Alberta’s climate change policies. This review will be undertaken by an advisory panel chaired by Andrew Leach, an environmental economist at the University of Alberta. The review is intended to develop a more advanced climate action strategy, one that could include enacting an economy-wide price on carbon pollution, phasing out coal-fired power, prioritizing renewable energy, building energy-efficient homes and businesses and investing in public transit.

Bulletin 2015-20: Release of Revised Joint Operating Procedures for First Nations Consultation on Energy Resource Activities

Posted in Aboriginal, Consultation, Environmental, Mining, Oil & Gas Law, Project Development, Project Permitting, Regulatory
Comment

On June 9, 2015, the Alberta Energy Regulator (“AER”) and the Aboriginal Consultation Office (“ACO”) released revised Joint Operating Procedures for First Nations Consultation on Energy Resources Activities (the “Revised Operating Procedures”).  Bulletin 2015-20, detailing the revisions, was released by the AER on June 10, 2015.  The Revised Operating Procedures explain how the AER and ACO will administer and coordinate their respective operations on matters relating to First Nations consultation.   The Revised Operating Procedures replace the first version of the Joint Operating Procedures for First Nations Consultation on Energy Resource Activities (“Original Operating Procedures”) dated December 10, 2014 and released on February 4, 2015.  A Lawson Lundell Project Law Blog on the Original Operating Procedures can be found here.

The principal revision to the Original Operating Procedures is the replacement of the requirement to submit a declaration.  Section 4 of the Original Operating Procedures required that a “First Nations Consultation Declaration” be completed and submitted and that proponents swear that the First Nations Impacts and Mitigation table “…accurately documents the potential adverse impacts on the existing rights of aboriginal peoples … or their traditional uses”.  This was controversial as the declaration required companies to swear they had accurately documented all impacts in respect of each Aboriginal group regardless of whether consultation was required by the ACO.

The Revised Operating Procedures have eliminated the declaration requirement and now require instead, the submission of an “application supplement” on First Nations consultation.  Section 4 of the Revised Operating Procedures states that “for all applications under the specified enactments submitted to the AER, except those applications for activities listed in appendix C of the Consultation Guidelines, an application supplement on First Nations consultation is required…”

Section 2.3 of the Revised Operating Procedures “First Nations Impacts and Mitigation Table” further provides that in the application supplement, the applicant must identify whether First Nations consultation was required. If First Nations consultation was required, the applicant must (1) complete the First Nations impacts and mitigation table contained in the supplement; (2) provide the information in a separate document attached to the supplement; or (3) attach the ACO Report containing the ACO’s findings on consultation adequacy and any advice to the AER to the supplement.

The Revised Operating Procedures, including the new requirement for an application supplement, come into effect on July 1, 2015.

Canada Throws Hat into the Emissions Reduction Ring

Posted in Environmental, Mining, Oil & Gas Law, Project Development, Regulatory, Regulatory Compliance
Comment

On May 15, 2015, the federal government announced that it will commit to reducing its greenhouse gas emissions by 30 per cent below 2005 levels by 2030.  New regulations for Canada’s oil and gas sector, as well as regulations on natural gas electrical plants, will be introduced.  Canada’s Environment Minister, Leona Aglukkaq, stated that she will be meeting with provincial environment ministers in June to discuss potential avenues to reduce emissions.

The 30 per cent target is a significant increase over Canada’s current target to reduce emissions by 17 per cent below 2005 levels by 2020.  To put the 30 per cent reduction into perspective, according to recent reports, Canada will have to reduce its emissions from the 726 megatons emitted in 2013 to 515 megatons in 2030 in order to meet its target.  In comparison, the United States has pledged to cut its emissions by 26 to 28 per cent from 2005 levels by 2025.  Additionally, Mexico has pledged to cut emissions by 25 per cent by 2030 and the European Union has agreed to reduce its emissions on 1990 levels by 40 per cent by 2030.

To meet its goal, Canada will have to rely heavily on the provinces to reduce emissions within their own boundaries.  Ontario recently set its own 2030 target of a 37 per cent reduction from 1990 levels, while British Columbia had previously committed to a 33 per cent reduction from 2007 levels by 2020.  In Alberta, the oil and gas industry anxiously awaits the changes in climate change policy promised by the new NDP government, including possible cancellation of the carbon capture and storage program and phasing out of coal fired electricity generation.  Alberta is the number one greenhouse gas emitter amongst the provinces, with 267 megatons emitted in 2013.  This figure is expected to rise to nearly 300 megatons by 2020.

Notably, on June 2, 2015, Alberta’s newly enacted Environment Minister announced that new climate-change regulations would be introduced by the end of June.  Details remain to be seen, but an increase in the current $15-a-tonne levy for carbon emissions from major industries is expected.

Whether Canada can hit its new target remains to be seen.  According to Environment Canada, Canada’s emissions are actually projected to increase slightly between 2015 and 2020, when they are projected to reach 727 megatons.  There is no question, however, that Canada’s emission target will continue to gain international and domestic scrutiny, particularly with the upcoming G7 conference in Germany on June 7 and 8, 2015, and the United Nations Climate Change Conference being held in Paris in late November, 2015.