On February 12, 2016, the Alberta Energy Regulator (“AER”) overhauled its compliance and enforcement program with the release of the Integrated Compliance Assurance Framework (“ICAF”) and Manual 013: Compliance and Enforcement Program (“Manual 013”).The ICAF and Manual 013 supersede and replace Directive 019:Compliance Assurance (“Directive 019”). The AER indicated that the purpose for rescinding Directive 019 is that it contained no rules or requirements and provided guidance based only on the ERCB compliance assurance process.
The ICAF outlines the AER’s strategy and approach to ensuring its rules and directives are followed. Previously, the AER had been conducting compliance and enforcement work using both the Energy Resources Conservation Board (“ERCB”) and Alberta Environment and Sustainable Resource Development systems, which had the potential to lead to inconsistent responses from AER staff when encountering noncompliant events. The ICAF describes the AER’s general process for promoting compliance (education), verifying compliance (prevention), and compelling compliance (enforcement) of the AER’s rules and procedures.
Manual 013 provides specifics on how the AER will administer its compliance and assurance program. Notable changes to the AER’s compliance and enforcement program include:
- an inspection and audit program that focuses on highest-risk energy development activities;
- issuing a notice of noncompliance as a single approach to dealing with all incidents of noncompliance;
- a triage process for escalating noncompliance events;
- a standardized investigation process, and
- clarification on the intent and purpose of the AER’s compliance and enforcement tools.
In Directive 019, the AER used a “Risk Assessment Matrix” to predetermine the level of risk inherent in the noncompliance event. The AER then sent out a notice of low or high risk noncompliance, and included specific requirements in those notices to be completed by an energy operator to become compliant. The risk rating of an AER (and prior to June of 2013, ERCB) requirement was predetermined, and once the facts of a given noncompliant event were established, AER staff had no discretion in applying a different risk rating.
Under Manual 013, upon learning of a noncompliant event, the AER will immediately issue a standard notice of noncompliance to an energy operator, and the AER will use its new triage assessment to evaluate the significance of noncompliance. The triage assessment will be applied by AER staff across the board for noncompliant events, and five questions will be used to assist AER staff in determining the appropriate response:
1) Did the noncompliance cause significant impact to the environment, public safety, or an energy resource?
2) Has the operator conducted an unauthorized activity that would not have been approved?
3) Is there evidence that suggests that the noncompliance was done knowingly, willfully, or with demonstrated disregard for requirements?
4) Does the operator have a history of noncompliance related to the current noncompliance?
5) Has the operator knowingly provided false or misleading information while addressing a regulatory requirement?
The AER program staff first determines whether any of the above triage factors are applicable to the potential noncompliance activity. If they determine triage factors do not apply, then the matter is placed into Compliance Stream A and an investigation is not warranted. If it is determined that the triage factors do apply, then the matter is referred to the Environmental and Operational Performance (“EOP“) Investigation Manager who then assesses the triage criteria and the need for an investigation. If no investigation is warranted, then the matter goes to Stream A. If investigation is warranted, the matter is then referred to either Stream B (where AER program staff conduct investigations) or to Stream C (where the EOP Investigation Team conducts investigations). The Investigation Team is a unit of the EOP branch of the AER that deals with critical and high-priority investigations.
If there is uncertainty as to the applicability of the triage factors, consultation is undertaken with the AER Compliance Assurance Team who determines whether or not the triage factors apply, and consequently, which stream the matter will be referred to.
Notably, the ICAF and Manual 013 do not contain a list of events that would be considered noncompliant. For a list of noncompliant events and their associated level of risk, the AER has created the aforementioned Risk Assessment Matrix, found here.
Given that this matrix was in place before the changes to the AER’s compliance and enforcement program were announced, it is likely that it will be revamped in the near future. Manual 013 now has categories of prioritizing investigations of “medium” and “critical” priority, in addition to low and high priority. Further, the AER has indicated that this matrix is not exhaustive of noncompliant events, and that Manuals 001, 002 and 005 contain a list of further noncompliant events.