By Barry Robinson, Ecojustice.

The Alberta Energy Regulator (AER) is Alberta’s one-stop regulatory body for the oil and gas industry. When it was created in 2013 by the merging of the former Energy Resources Conservation Board and parts of Alberta Environment and Parks, the AER made bold claims about transparency, enforcement and becoming a “world-class” regulator.

Unfortunately, the AER has failed to live up to its promises. The AER has shown over and over again that it is either unable or unwilling to enforce its own laws, directives and orders. The AER has become a toothless regulator.

As a public interest lawyer I see first-hand how the AER’s failures affect Albertans.

Take for example two of Ecojustice’s clients. Tony and Lorraine Bruder operate a cattle ranch near Pincher Creek. A preliminary environmental site assessment conducted at an abandoned sour gas well site on their property showed that the site was potentially contaminated with drilling waste, salts, metals, and hydrocarbons, including polycyclic aromatic hydrocarbons — all nasty things that you do not want on your property.

In September 2015, as a first step towards cleaning up this mess, the AER ordered Nomad Exploration Ltd., the licensee of the well site, to complete a more detailed environmental study by the end of November 2015.

Nomad ignored that order. Over the next few months, we repeatedly asked the AER what it was going to do about Nomad’s failure, but the AER took no action.

Finally, in May 2016, the AER ordered Nomad to prepare a plan by the end of June 2016 to complete the more detailed environmental study — that is, to prepare a plan to do the very thing the AER had already ordered Nomad to do six months earlier.

Most competent regulators escalate enforcement when an operator does not follow its orders — when you do not follow the rules, the consequences get more severe. In this case, the AER de-escalated enforcement. The penalty for not completing the detailed environmental study was just an order to “try again.”

This time, the AER said that Nomad must include in the plan a schedule to complete the detailed environmental study by the end of August 2016. After an extension of time and a couple of failed attempts, Nomad never did provide the AER with a schedule to complete the study. The AER then ordered Nomad to complete the study regardless by January 3, 2017, but then at Nomad’s request extended that date to February 15, 2017.

And guess what — Nomad again failed to meet that deadline.

Three Ways to Improve Alberta’s Toothless Energy Regulator #abpoli #abandonedwells @ecojustice_ca https://t.co/Zi2xiTuCrq

— DeSmog Canada (@DeSmogCanada) April 7, 2017

When we recently asked the AER what they were going to do about this continued non-compliance by Nomad, the AER’s response was “the AER is continuing to gather and assess the relevant facts and information in order to determine the most appropriate response moving forward.”

In other words, 18 months after ordering Nomad to complete the detailed environmental study, the AER still does not have a plan on how to enforce that order.

The Bruders’ case is only one example of a much broader and systemic problem of lack of enforcement by the AER. 

In July 2014, the AER announced that approximately 37,000 wells out of 80,000 inactive wells were not in compliance with the requirements for inactive wells. How does a regulator, that bills itself as “world class,” allow almost half of all inactive wells in the province to be out of compliance?

More recently, we have seen situations where the AER issued numerous warnings and orders to companies with no effect, with the end result that the only option was to transfer hundreds of wells to the Orphan Well Association, leaving financial responsibility for these sites to be borne by other industry members, the Canadian taxpayer, and eventually the Alberta public. The AER has numerous enforcement tools at its disposal but it simply refuses to use these tools to ensure compliance.

Which leads me to my response to the question, “How do you solve a problem like the AER?”  In a recent letter to Shannon Phillips, the Alberta Minister of the Environment and Parks, and Margaret McCuaig-Boyd, the Minister of Energy, we made three recommendations.

First, before drilling a well, the operator should have to deposit sufficient funds with the AER to pay for the clean-up. Then, when an operator refuses to carry out the clean-up work, or goes bankrupt, the AER would hold the necessary funds to complete the work.

Second, in 2014, the Responsible Energy Development Act stripped the Minister of Environment and Parks of her power to enforce environmental orders against energy companies and gave those powers to the AER. Given that the AER appears unwilling to use those tools, we think that those powers should be given back to the Minister.

Third, we think that it is time to consider whether the AER should continue to exist. If the AER is unwilling to enforce Alberta’s laws and its own directives and orders, perhaps the AER’s role should be transferred to the Departments of Energy and Environment and Parks.

In a recent publication, Jim Ellis, the President and CEO of the AER, said that regulators like the AER “hold a moral and ethical obligation to initiate bold and courageous action to improve the human condition.”

Perhaps before the AER embarks on the lofty goal of changing the world, they should get the simple stuff right — like enforcing the law.

Image: Pumpjack in rural Alberta. Photo: Kris Krug/DeSmog Canada

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The federal government has repeatedly decided to forego prosecution for oil, gas and pipeline industry violations, according to Environment Canada documents released to Postmedia News through Access to Information legislation.

According to the documents the federal government issued 'warning letters' to companies like Devon Canada, a tar sands oil producer, and Gibson Energy, a midstream pipeline operator, after two separate oil spills proved the companies' respective facilities were in violation of the federal Fisheries Act. Violations of this sort can attract fines of up to $1 million, or three years imprisonment, the letters warned.

According to Postmedia's Mike De Souza, letters of this kind were sent to several companies in Alberta, Saskatchewan and Quebec for various offenses including the pollution of air and water as well as inadequate emergency preparedness and shoddy record keeping.

Environment Canada indicated warning letters are effective in gaining industry's attention. Prosecutions, on the other hand, are both expensive and time consuming. Yet, the released documents suggest that when it comes to monitoring and enforcement of industry's actions, the government may not be acting in the public's interest.

"Our goal isn't to prosecute for the sake of prosecuting (or) make the numbers look good in that sense," Heather McCready, a manager from the ministry's enforcement branch, told Postmedia. "Our goal is to bring people into compliance as quickly as possible."

"It's about protecting the environment. It's not about racking up points. So a warning letter can be a very effective tool to do that."

The Canadian Association of Petroleum Producers (CAPP), Canada's largest oil and gas lobby group, suggested the provincial and federal governments use a "compliance oriented approach" of enforcement to minimize risk.

However, Parliament's environment watchdog, Scott Vaughan the federal Commissioner on Environment and Sustainable Development, released an audit of Environment Canada in 2011, claiming the department's enforcement program is "not well managed to adequately enforce compliance with the Canadian Environmental Protection Act."

The conclusion of Vaughan's report stated Environment Canada did "not have adequate information on whom it is regulating and who is not complying" with the Act and that in many cases there was "no evidence that the Directorate had applied key management controls intended to ensure that enforcement officers carry out their enforcement activities…or that enforcement officers followed up on their enforcement actions to verify whether violators returned to compliance."

Environment Canada, the report held, was not in any position to know if its methods had improved compliance or minimized risk to Canadians and the environment, because the department simply wasn't monitoring its own activities, adequately training its employees or engaging in enforcement planning and targeting.

Vaughan told Postmedia: "Warning letters can work. There's absolutely no doubt (about that)." Adding, that one would "need to go back and figure out if the problem has been fixed."

Environment Canada's capacity to do so has been increasingly diminished after a series of funding cuts – millions of dollars worth – have rid the ministry of enforcement officers trained to test pollution and gauge the nature of an offense according to existing public health and safety standards.

Existing environmental legislation also took a significant hit last year with the passage of Omnibus Budget Bill C-38 which significantly reduced federal oversight of industrial projects while speeding up the process of their approval.

According to De Souza, Environment Canada officials "initially declined to answer questions about the nature of its warning letters in July 2012, prompting Postmedia News to make multiple requests for the records related to the oil and gas industry using federal access to information legislation…Environment Canada took about five months to process the access to information requests and release its warning letters."

Environment Canada also rejected the findings of Vaughan's audit, claiming the Department "disagrees with the audit's contention that the issues indentified prevent the Department from planning its enforcement activities to effectively target the highest risks to human health and the environment." Based on this contention Environment Canada wrote, "the Department does not accept the enforcement audit findings or conclusions."

Yet Vaughan maintains Environment Canada lacks the resources to monitor and enforce environmental regulations. According to Postmedia, "Vaughan concluded that inspectors needed special training to enforce 30 existing regulations on toxic substances but did not have this training for 16 of the listed substances and were lacking some critical laboratory facilities required to do their jobs."

As Vaughan stated, "there are some big gaps…Putting more money into something in itself doesn't necessarily make it fixed. So we said you have some pretty big gaps and you need to fix those gaps."

"There are some nasty stuff that these regulations (are intended to control) – asbestos, dioxins and furans – things that have been listed as toxic," Vaughan said. "They harm human health, they potentially cause cancer and so the regulations are there. Having a regulation on paper only goes so far and you need inspectors and you need a system to go in to make sure they have the full force of the law."

As the recently released documents demonstrate, however, Environment Canada's regulation remains largely on paper, where issued warnings take the place of strengthened monitoring, enforcement and, crucially, prosecution of polluters.

Vaughan recently announced his decision to resign from his position as Commissioner on Environment and Sustainable Development, two years before the end of his term. Vaughan has been treated with "disrespect" by the Harper government, while former governments met with him regularly for briefings and to discuss his reports.

Last spring, Environment Canada Minister Peter Kent suggested Vaughan's 2012 report, which discussed federal policies on climate change and contamination, was not credible.

Vaughan will take on a new position as president and CEO of the International Institute for Sustainable Development.

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