Alberta En­ergy Reg­u­la­tor is just a tooth­less tiger

Tax­pay­ers left hold­ing bag, Fraser Thom­son writes.

Edmonton Journal - - OPINION - Fraser Thom­son is a lawyer with Eco­jus­tice, Canada’s largest en­vi­ron­men­tal law char­ity.

The Alberta En­ergy Reg­u­la­tor (AER) was formed in June 2013 to much fan­fare. Rest as­sured, it promised Al­ber­tans, the AER would be a “best-in-class reg­u­la­tor” that would en­sure oil pro­duc­ers fol­low the rules or face “strong con­se­quences.” At last, it vowed, the fox would no longer guard the hen house.

Un­for­tu­nately, as many Al­ber­tans al­ready know, the AER has failed to live up to these am­bi­tious prom­ises and has shown time and time again that, de­spite its blus­ter, it is just an­other tooth­less reg­u­la­tor.

As a pub­lic in­ter­est lawyer, I’ve see first-hand how the AER’s fail­ures af­fect real peo­ple, like two of my clients who op­er­ate a cat­tle ranch near Pincher Creek.

Their fam­ily has been forced to live with a now-aban­doned sour gas well — po­ten­tially con­tam­i­nated with toxic drilling waste, salts, met­als, and hy­dro­car­bons — on their prop­erty for gen­er­a­tions. In Septem­ber 2015, the AER or­dered the li­censee of the well site to com­plete a de­tailed en­vi­ron­men­tal study by the end of Novem­ber 2015 — a dead­line it ig­nored.

Even af­ter the AER set a sec­ond dead­line and granted the com­pany a time ex­ten­sion, it has yet to com­plete the study. The AER has no plan on how to make the com­pany com­ply. Most com­pe­tent reg­u­la­tors es­ca­late en­force­ment when an op­er­a­tor does not fol­low its or­ders. But in the case of the AER, its penalty for not obey­ing an or­der is an­other or­der to “try again.”

This case is only one ex­am­ple of the AER’s failed en­force­ment.

In July 2014, the AER an­nounced that ap­prox­i­mately 37,000 of 80,000 in­ac­tive wells were not in com­pli­ance with le­gal re­quire­ments. While the num­ber has since been re­duced to 13,000, it should give us pause that a self-pro­claimed world-class reg­u­la­tor would count only five of every six wells in com­pli­ance a suc­cess.

Mean­while, in­ac­tive wells — even those in com­pli­ance — re­main a prob­lem. There are still more than 80,000 in­ac­tive well sites in Alberta, roughly the same num­ber as when the AER was formed.

The AER’s sys­temic in­abil­ity to hold pol­luters ac­count­able does not just af­fect prop­erty own­ers di­rectly im­pacted by oil and gas oper­a­tions. It cre­ates a bur­den every tax­payer in Alberta will be forced to shoul­der.

We’ve seen a surge in si­t­u­a­tions in which AER warn­ings and or­ders have had no ef­fect and the end re­sult is to trans­fer hun­dreds of wells over to the Or­phan Well As­so­ci­a­tion. This leaves fi­nan­cial re­spon­si­bil­ity for these sites to be borne by other in­dus­try mem­bers, the Alberta pub­lic, and Cana­dian tax­pay­ers. In the last two years, tax­pay­ers have had to prop up the Or­phan Well Fund with a $235-mil­lion loan from the Alberta gov­ern­ment and a $30-mil­lion grant from the fed­eral gov­ern­ment.

In these si­t­u­a­tions, the AER had nu­mer­ous en­force­ment tools at its dis­posal, but sim­ply re­fused to use them. To add in­sult to in­jury, the AER has re­peat­edly snubbed calls to adopt a pol­icy of col­lect­ing full fi­nan­cial se­cu­rity for the re­me­di­a­tion of oil and gas sites up­front to pre­vent this prob­lem from re­oc­cur­ring.

En­force­ment is not its only trou­bling prac­tice. The or­ga­ni­za­tion has a his­tory of back­ing down from its own rules.

Take for ex­am­ple its new el­i­gi­bil­ity re­quire­ments for li­censees, which by the AER’s own ad­mis­sion it ig­nored in al­low­ing well transfers to com­pa­nies that would soon be in­sol­vent. Also, in the last year, the AER has ap­proved oil­sands tail­ings man­age­ment plans for four of the province’s big­gest oil com­pa­nies — even though the AER says that they do not meet re­quire­ments.

Three years ago, Premier Rachel Not­ley echoed the con­cerns of many Al­ber­tans over the AER’s con­flict­ing man­date and sug­gested that it be split in two. Not­ley’s as­sess­ment of the AER’s abil­ity to pro­tect the en­vi­ron­ment was blunt: “You can’t do that job when your over­ar­ch­ing man­date is to pro­mote en­ergy devel­op­ment.”

Those words ring par­tic­u­larly true.

If the AER will not en­force the law, per­haps it is time to fire the fox and put some­one new in charge of pro­tect­ing the hen­house.

The AER had nu­mer­ous en­force­ment tools at its dis­posal, but sim­ply re­fused to use them.


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