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Trust Alberta’s Energy Regulator to Safeguard Coal Mines?

The Kenney government says yes, but the agency has a messy track record.

Andrew Nikiforuk 3 Feb

Tyee contributing editor Andrew Nikiforuk is an award-winning journalist whose books and articles focus on epidemics, the energy industry, nature and more.

In the growing Alberta debate about open-pit coal mining in the eastern slopes of the Canadian Rockies, the Kenney government says Albertans have nothing to worry about.

The Alberta Energy Regulator is there to safeguard the process, it says.

In particular, the United Conservative Party government claims on Facebook and other sites: “All coal development continues to be regulated by the Alberta Energy Regulator, which evaluates energy development to ensure it is safe and environmentally responsible.”

And, as UCP MLA Jordan Walker has posted on Facebook:

“The Alberta Energy Regulator is an independent regulator that carefully assesses mining project proposals and holds public consultations on mining and energy project applications. Alberta’s regulatory process is strict, thorough and independent. Project decisions are made by subject matter experts, not politicians.”

Albertans might therefore be interested in a broader picture of their province’s energy regulator and the turmoil, scandal and name changes it has undergone over the past 15 years.

Caught spying on citizens

The AER used to be called the Energy and Utilities Board. After it was caught illegally spying on Albertans in 2007, Justice D.W. Perras described the behaviour of the regulator as “repulsive.”

Lawsuit immunity and ‘no duty of care’

The Energy and Utilities Board became the Energy Resources Conservation Board. When the ERCB failed to investigate extensive groundwater contamination caused by fracking in central Alberta, landowner Jessica Ernst sued the regulator, Alberta Environment and Encana for damages to her groundwater. (Full disclosure: I wrote a book about Ernst and her legal battle.)

Soon after that lawsuit went public, the regulator again changed its name and regulations. In 2013 it became the Alberta Energy Regulator governed by the new Responsible Energy Development Act.

The new act removed the regulator’s former mandate to “provide for the economic, orderly and efficient development in the public interest.”

It also contained what some bureaucrats called an “Ernst clause” that prevented landowners and citizens from suing the regulator for wrongdoing and negligence.

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Alberta landowner Jessica Ernst sued Alberta’s energy regulator for letting fracking damage her property. Alberta court rulings concluded the regulator was legally immune and had ‘no duty of care’ to citizens or the environment. Photo: Colin Smith.

In addition, the Responsible Energy Development Act transferred water and environmental protections from Alberta Environment to the energy regulator. Gerald Protti, then a registered oil lobbyist in Ottawa and former Encana executive, was put in charge of implementing the new changes.

A series of Alberta court rulings on the Ernst lawsuit said the regulator was legally immune from lawsuits and that the agency had “no duty of care” to Albertans or the environment.

In 2017, a related ruling by the Supreme Court of Canada effectively put the operations of the regulator above Canada’s Charter of Rights and Freedoms, in the view of some legal experts.

‘Public money spent inappropriately’

In 2019 a series of independent investigations into the management of the regulator found that it “engaged in activities outside of its mandate and public money was spent inappropriately.” It also found that “controls and processes to protect against potential conflicts of interest failed.”

Questions about independence, impartiality

The regulator’s subject experts include John Weissenberger, Jason Kenney’s former campaign director. Weissenberger, now the regulator’s vice-president of technical science, has called himself a “political activist” and is a climate change skeptic.

Critics have pointed out that Alberta’s energy regulator once was funded partly by the government, but today it’s entirely funded by industry, casting doubt on its “balance.”

David Goldie, the regulator’s board chair, is a former Encana executive, as was previous board chair Gerald Protti.

More than 90 per cent of projects that come before the agency are approved. The UCP campaigned on reducing the agency’s staff and budget, because it didn’t think it was approving projects fast enough.

But simply greenlighting new production isn’t necessarily healthy for an industry, critics have pointed out. The regulator approved every oilsands project during the bitumen boom 20 years ago. The industry eventually found itself overproducing bitumen at a time of increased price volatility. In making its decisions, the regulator does not conduct basic cost-benefit analyses.

On coal: ‘Engaged and supportive’

In a 2019 corporate presentation, Atrum Coal, which wants to industrialize 230 square kilometres of the Rocky Mountain eastern slopes with open-pit mines, stated, “Alberta regulators are engaged and supportive.”

In fact, the regulator has granted Australian coal firms exemptions on rules that would have prevented them drilling and exploring on public lands during sensitive times for wildlife, and done so at such a speed that environmental groups say they were given no time to raise concerns.

The regulator, notes the Alberta Wilderness Association, hasn’t dealt with an application for an open-pit coal mine in the eastern slopes in 44 years, because the Coal Policy forbade such applications.

The regulator has no real expertise in mountain top removal, mountain hydrology, climate change, water security, or for that matter selenium toxicity, the major legacy of open-pit coal mines. Typing the word selenium in the regulator’s search engine turned up nothing.

The regulator’s jurisdiction over coal mines is governed by the Coal Conservation Act, which says its core purpose is to “ensure the orderly, efficient and economic development of Alberta coal resources in the public interest.”

In other words, the Coal Conservation Act begins with the premise that mining for coal is always in the public interest, explains Gavin Fitch, one of the province’s top regulatory lawyers. “So when the [regulator] holds a hearing (as it did, jointly with the federal government, for the Grassy Mountain project) for the purpose of determining whether a project is in the public interest, the starting point is that coal development, per se (i.e., before consideration of environmental issues), is in the public interest.”

Tens of billions in unfunded cleanup costs

The Alberta Energy Regulator is responsible for overseeing the cleanup and reclamation of 10 major oilsands sites and 18 legacy coal mines. It hasn’t done a competent job.

In 2019, the auditor general reported the regulator had collected $1.4 billion to cover liabilities greater than $28 billion. The auditor general added that, “If a mine operator cannot or does not fulfill its reclamation obligations, Albertans may have to pay the costs to complete conservation and reclamation work.”

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Alberta faces cleanup costs of at least $58 billion, with only a fraction set aside to pay them. Overseeing the problem is the Alberta Energy Regulator’s job. Photo via Shutterstock.

In 2018 Robert Wadsworth, the regulator’s vice-president of closure and liability, admitted in a public presentation that the cost of cleaning up aging oil and gas infrastructure wasn’t $58 billion — the official number usually cited by Alberta officials — but probably closer to $260 billion. These liabilities are largely unfunded. The regulator then said Wadsworth had it wrong and stuck to its $58-billion figure.

Wadsworth is no longer with the regulator as of last August.

There is no coherent plan by the regulator to address the massive economic and environmental liabilities of unreclaimed wells and facilities. Alberta received $1 billion in federal funding last year to clean up abandoned wells but is struggling to carry out the task.

Alberta’s auditor general has been investigating the regulator’s failure to reclaim tens of thousands of abandoned oil and gas wells and is expected to report this year.

No, it wasn’t the regulator that rescinded the Coal Policy

Roger Reid, UCP MLA for Livingstone-Macleod, recently told his constituents that it was the “AER’s decision to rescind the 1976 Coal Policy.”

That is not true.

Energy Minister Sonya Savage signed the order cancelling the Coal Policy in May 2020, not the regulator.

The Coal Policy was a strict energy and environmental rule that protected 1.5 million hectares of the eastern slopes from open-pit mining.

Reid has further told constituents the rescinding of the Coal Policy “does not allow coal companies to bypass the strict environmental rules.”

Shortly after the Kenney government cancelled the Coal Policy, the Alberta Energy Regulator did cancel Directive 061, a detailed 300-page document which governed plans for coal mines.

It was replaced by a 42-page manual.

The regulatory lawyer Fitch has read the manual and concludes it “contains virtually no information requirements. Rather, it states that mine permit applications must meet application requirements outlined in the Coal Conservation Rules — a regulation that has been in place since 1981. In other words, the [regulator] has eliminated the extensive application requirements of Directive 061 and replaced them with nothing.”  [Tyee]

Read more: Energy, Politics, Environment

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