The Energy Resources Conservation Board proposes to repeal provincial legislation

Proposal commented on: ERCB Bulletin 2010 – 42, Invitation for Feedback on Draft Legislative Amendments for Removing Industrial Development Permits for Energy Resource Use

Yes. That’s right. In Bulletin 2010-42 issued on December 2, 2010 the ERCB announced that it is “proposing to remove industrial development permits (IDP) legislation from its mandate”. If that wasn’t clear enough the Bulletin goes on to state that “The ERCB is proposing to repeal Sections 28 to 31 of the CCA, [Coal Conservation Act, RSA 2000, c. C-17], Section 43 of the OGCA, [Oil and Gas Conservation Act, RSA 2000, c. O- 6] and Section 12 of the OSCA [Oil Sands Conservation Act, RSA 2000, c. O- 7]. The ERCB is also proposing to modify the definitions of a “processing plant” and “oil sands products” under the OSCA to provide greater clarity as to what types of facilities would fall under the ERCB’s jurisdiction.”

There’s nothing here about the ERCB recommending to the Department of Energy or to the cabinet that the government of the day consider introducing amendments in the legislature to these three statutes. But that of course is the procedure that will have to be followed, unless I have just missed a change to the law making rules in the province so that they now read (at least in the case of energy statutes) that such laws are now made “by and with the advice and consent of the ERCB”. But that would require a constitutional amendment so I don’t think that they slipped that one by me.

Does any of this matter? Am I elevating form over substance? Is this just a rant? I don’t think so. The ERCB is a creature of statute. It may be “arms length” from government in the sense that the government and the Minister of Energy cannot tell the Board how to decide a particular application (which is perhaps why the province wants to control decision-making in relation to CCS projects more directly, a matter I commented on in my blog on Bill 24) but ultimately the mandate of the Board is set by legislation and the Board does not control the content of its own legislation. It can interpret it, and it can make regulations; and sometimes there is room for argument about whether a matter should be dealt with by a change to the legislation effected by the legislature or by the Board through regulation: see Giant Grosmont Petroleums Ltd. v. Gulf Canada Resources Ltd., 2001 ABCA 174. But none of this justifies the un-democratic, anti-rule of law claim that the Board is considering repealing part of its mandate.

And now for the substance. Is this a good idea? Should the province amend the OGCA, the OSCA and the CCA to de-regulate the use of energy by industrial and manufacturing facilities in the province? There is, no doubt, much to be said for such a move. We typically subject industry to regulation where there is a market failure and there is no evidence of market failure here, at least as the problem is framed by the legislature. But if we think of the market failure as the failure of the market to take account of the costs associated with carbon emissions then we might have the basis for a regulatory approach which would scrutinize such applications from that perspective. In such a case the Board would be charged with asking questions such as: what alternative non-carbon fuel sources have been considered; is the applicant adopting best practices in relation to attaining high levels of energy efficiency; where there are carbon dioxide emissions what measures does the applicant propose to capture those emissions or to offset those emissions? Similarly, we might also extend the purview of the Board’s review so as to have it scrutinize more closely proposals to use natural gas to create steam for in-situ oil sands operations. In short, given the post-Kyoto, post-Copenhagen and shortly to be post-Cancun world in which we live, a world in which the externalities associated with emissions from burning carbon-based fuels are coming under closer rather than laxer international regulatory scrutiny, this is hardly the time to be removing a level of domestic regulatory scrutiny. Perhaps instead we should be re-framing this scheme for reviewing industrial and manufacturing projects (and indeed large energy extraction projects such as in-situ operations) that consume carbon-based fuels so that the review focuses more directly on the greenhouse gas emissions associated with these applications rather than simply “(a) the efficient use without waste of the energy resource, and (b) the present and future availability of hydrocarbons in Alberta” (OGCA s.43(6)).


About Nigel Bankes

B.A., M.A. (Cantab.), LL.M. (UBC). Professor. Chair of Natural Resources Law. Member of the Alberta Bar. Please click here for more information.
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