A Tale of Two Models: The Timing of Major Energy Project Reviews

 Jonathan Drance, Glenn Cameron and Kurtis Reed - 

Last year, we surveyed the time that it took to conduct and complete major energy project reviews in Canada, both at the federal and provincial levels (the Project Survey), for a presentation that we made to the Canadian Energy Law Foundation in June 2016,. [1]

We found that major energy project reviews at the federal level took materially longer and that the time for completing the review process was less predictable than at the provincial level. [2]

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Amendments To Ontario's Net Metering Regulations

Lanette Wilkinson

On July 1, 2017, amendments to Ontario’s net metering regulations (O. Reg 541/05) come into effect.  As a result of these amendments, it is no longer necessary that equipment be 500 kilowatts or less in rated capacity to be eligible for net metering.  Instead, a renewable energy generation facility of any size will be eligible for net metering, provided that it generates electricity primarily for the generator’s own use (with surplus electricity being conveyed to the distribution system) and provided that the generator is not party to any agreement, other than a net metering agreement, for the sale of electricity into the distribution system.  In addition, the amendments allow generators to use energy storage in combination with renewable energy systems.  To the extent that net metering customers have existing net metering arrangements, they will have the option to enter into new agreements for the purpose of being billed on a net metering basis in accordance with the updated provisions of the net metering regulation.

The Ontario Energy Board (OEB) is conducting a policy consultation to determine implementation matters relating to these amendments and to assess whether changes to its policies and codes need to be considered.  Further information on the OEB’s net metering consultation can be found on the OEB’s website.

Climate Change, Carbon Pricing and Corporate Disclosure

Jason Kroft, Jonathan Drance and Luke Sinclair -

The Paris Accord proposes to regulate global carbon emissions and is premised on the belief that limiting the impact of climate change requires that the global average increase in temperature remain below 2°C, relative to pre-industrial levels. In Canada, the federal government has proposed to implement the Paris Accord principally through the pan-Canadian carbon price framework, which requires that each province implement its own carbon pricing regulations. These must be in place by January 1, 2018, with a mandatory minimum floor price of $10/tonne in 2018, rising to $50/tonne in 2022. As of January 1, 2017, each of Quebec, Ontario, Alberta and British Columbia have a carbon pricing regulatory framework in place, with the remaining provinces promising to follow suit prior to the January 1, 2018 federal deadline.

The proposed federal pricing will make Canada one of the highest carbon pricing jurisdictions globally. Still, doubt remains whether a carbon price of $50/tonne will be sufficient to allow Canada to meet its commitments under the Paris Accord and Canada is not alone in this regard. Many other countries could have difficulty implementing a carbon price sufficiently high enough to allow them to meet their commitments under the Paris Accord. All of this suggests that, absent a global shift in climate policy, we could well experience a steady increase in the price of carbon over the coming years. Suncor, for example, anticipates carbon prices will rise to $65/tonne by 2035.1

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The Timing of Major Energy Project Reviews

Jonathan Drance, Glenn Cameron and Kurtis Reed-

In recent years the timeline to complete Canadian regulatory reviews of proposed major projects – and particularly environmental assessments which are the key part of the project review process – has become a major political issue. Over the last decade or so, project proponents have consistently raised concerns about the speed and unpredictability of the results of project review processes –principally at the federal level.1

Complaints have also been made, and lawsuits have been commenced, by opponents of those projects including environmental groups, First Nations bands, and other interested parties alleging procedural and other flaws in the project review process – again principally but not exclusively at the federal level.

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All Wells May Not End Well: Alberta Court of Appeal Rules that Receivers and Trustees Can Orphan "Bad" Wells

 David M. Price, Allison M. Sears and Sarah M. Graham

In a much anticipated decision, a 2-1 majority of the Alberta Court of Appeal (the ABCA) has upheld the Alberta Court of Queen’s Bench (ABQB) decision in Re Redwater Energy Corporation, 2016 ABQB 278. The ABCA found in favour of receivers, trustees and secured creditors on the basis that the Bankruptcy and Insolvency Act (the BIA) takes precedence over the provincial oil and gas regulatory schemes, making such schemes inoperative to the extent that they purport to require trustees and receivers to comply with abandonment, reclamation and remediation requirements of disclaimed assets. This decision will continue to prevent the Alberta Energy Regulator (the AER) from refusing to transfer licensed assets in an insolvency process unless ongoing environmental obligations tied to disclaimed licensed assets are met. The ABCA’s split decision also likely signals a period of continued uncertainty as it is reasonable to expect that the AER and the Orphan Well Association (the OWA) will be seeking leave to appeal this decision to Canada’s top court. Moreover, whatever happens in Alberta will impact policy in the other western Canadian provinces.

Background and ABQB Decision

In 2015, Grant Thornton Limited (GTL) was appointed as receiver (the Receiver) of the assets of Redwater Energy Corporation (Redwater). The Receiver advised the AER that it took possession and control of only 20 of the 127 AER-licensed assets belonging to Redwater. In fact, the Receiver took possession of the most valuable assets and disclaimed the remainder. In response, the AER issued abandonment and closure orders regarding the licensed assets of which the Receiver indicated it did not assume possession. GTL later disclaimed the remaining 107 AER-licensed assets in its capacity as Redwater’s trustee in bankruptcy, informing the AER that it did not intend to comply with the abandonment and closure orders as it had legitimately renounced those properties.

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FAQs about shareholder meetings

Chip Johnston - 

We have compiled a quick reference guide for 35 of the most frequently asked questions about shareholder meetings, including questions concerning who can speak at meetings, whether shareholders can replace the Chair, and whether shareholders can move to remove directors at meetings. We have also included a sample chair’s script for an annual meeting.

Please note, these materials have been prepared for use by corporations incorporated under the Business Corporations Act (Alberta) (the ABCA), whether or not they are listed on a Canadian exchange.

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Fifteen key legal developments for oil & gas companies

Chip Johnston, Jennifer McPherson, Alexandra Low - 

We have summarized key developments in Canadian law from the fourth quarter of 2016, relevant to the oil and gas industry. The fourth quarter brought a number of developments in the legal landscape, particularly in the regulation of public M&A, the approval of two key pipelines, and the emergence of guidance relating to private company governance.

Public Markets M&A

1. In InterOil, the Yukon Court of Appeal prevented ExxonMobil from acquiring InterOil by arrangement, despite the fact that the transaction had been approved by InterOil’s shareholders, based on the objections of InterOil’s former CEO. The analysis in the judgment suggests that issuers should seek a fairness opinion that offers detail regarding the economic analysis supporting the fairness conclusion in order to reduce activist leverage. It also tends to support the view that the payment for a fairness opinion should not be made on a success basis, and that targets should bring evidence supporting the deal to the court hearing meant to approve the transaction

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The Relevance (and Likelihood) of Action on Carbon in a Post-Trump World

Jason Kroft, Jonathan Drance and Luke Sinclair -

The election of Donald Trump and his recent cabinet nominations of individuals who have been described in the mainstream U.S media climate skeptics, including Scott Pruitt (Environmental Protection Agency), Rick Perry (Department of Energy) and Rex Tillerson, the former CEO of ExxonMobil (Department of State), has many questioning the integrity of proposed domestic and international carbon pricing schemes. As a result of the election, the conversation has turned away from the recent momentum of post-Paris climate mandates, to the ramifications if the United Stated decides to abandon its climate commitments. In light of Trump’s inauguration as the 45th president of the United States, it is worthwhile to examine the outlook for carbon regulation and pricing in a post-Trump world. Many market analysts initially expect that the direction of the Trump administration on climate change will have potentially far-reaching implications. We will examine this topic and the sub-themes we identify below in follow-up blog pieces in the weeks ahead.

Federal Action and State Actors

In the United States, the federal government’s ability to influence climate change regulation is largely accomplished through the conduit of the EPA and the Clean Air Act. The new U.S. Federal government will certainly have an impact on the direction of the EPA and the administration and implementation of the Clean Air Act. Many of the obstacles that have prevented environmental regulation in the past (and which critics have cited as reasons for slow action at the federal level in the U.S. on climate change and similar matters) will work against reversing the regulation and regulatory landscape in place in the future. In a recent interview, Ms. McCarthy (the current head of the EPA under the Obama administration), stated that just as she had to provide a scientific foundation for her regulations to curb carbon dioxide emissions, the Trump administration would be required by the Clean Air Act to show that any attempt to tear up the regulations is supported by science. In other words, an onerous standard of proof can act as a double edged sword, one that makes change difficult in either direction.

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Quebec's new Petroleum Resources Act

Erik Richer La Flèche

In the early hours of Saturday, December 10, 2016, a bleary-eyed Quebec National Assembly voted 62 to 38 to adopt Bill 106, An Act to implement the 2030 Energy Policy and to amend various legislative provisions. The Minister of Natural Resources and Wildlife had introduced the bill on June 7, 2016 and the Government had very much wanted it to be passed by the end of the year. Energy policy has been a subject of much debate in Quebec for the better part of a decade and after numerous policy papers, expert panels, public consultations and other tergiversations, the Government was eager to remove a potential irritant from the political scene. The next Quebec election is scheduled for October 2018 and Premier Couillard’s Liberals want the final years of their mandate to have a happier tone than the first three, when the focus was the cleanup of Quebec’s public finances, replete with painful service and budget cuts. With Quebec having largely righted its financial affairs – at the time of writing, unemployment is at a 34-year low and tax revenues have materially increased – it was time to clear the tables.

The legislative process has been arduous. Bill 106 is an unusual statute, akin to an omnibus bill. It deals with four energy-related but nonetheless discrete subjects. The first three are relatively uncontroversial and supported by a wide-ranging consensus. The same cannot be said of the fourth chapter, which contains Quebec’s first-ever law dedicated to the exploration and production of oil and gas: the Petroleum Resources Act (the PRA).

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Supreme Court of Canada dismisses appeal challenging the Alberta Energy Regulator's immunity provisions

Vincent Light and Keith Miller - 

On January 13, 2017, the Supreme Court of Canada released its judgment in Ernst v Alberta Energy Regulator, dismissing the appellant’s claim against the Alberta Energy Regulator (AER) for damages for alleged breaches to her right to freedom of expression under section 2(b) of the Charter. Nevertheless, as we note below, there was no clear majority view on the Court with respect to the issue of whether the AER’s immunity provision is constitutional and the final resolution of that issue may need to wait for another case.


Ms. Ernst brought her claim against the AER for allegedly punishing her because she publicly criticized the AER, and for preventing her from speaking to key offices within the AER organization for a period of 16 months. Ms. Ernst had also alleged that the AER was negligent in the administration of a regulatory regime allowing hydraulic fracturing and drilling close to her property, and for preventing her from speaking to the AER. Her statement of claim alleged that the AER’s restrictions limited her ability to lodge complaints, register concerns and to participate in the AER’s compliance and enforcement process, thereby constituting a breach of her right to freedom of expression under section 2(b) of the Charter.

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