Canadian Energy Law : Lawyers & Attorneys for Environmental Energy Law

On July 18, 2011, The Environmental Review Tribunal (ERT) issued its highly anticipated decision in Erickson v Director, Ministry of Environment. The ERT found that the applicant in this case did not meet the burden of showing that the project will, more likely than not, cause serious harm to human health. However, the decision is by no means a conclusive endorsement of the safety of wind turbines.

The high-profile appeal alleged that Suncor’s Kent Breeze Wind Project (Project) posed negative human health risks as approved by the Minister of the Environment (MOE) under Ontario Regulation 359/09 (REA). Over 17 days between February 1 and May 26, 2011 the ERT heard testimony of leading experts from around the world on the potential health effects of wind turbines.

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On June 17, 2011, Texas Governor Rick Perry signed Bill HB 3328 into law, making Texas the first state to require public disclosures of the chemicals used in hydraulic fracturing, or "hydrofracking," operations.  Hydrofracking is the process of using pressurized fluids to create fractures in rock to assist in the recovery of hydrocarbons.  The new disclosure requirements are a result of heightened public concern about potential contamination of water resources from hydrofracking fluids.

The legislation creates two avenues of disclosure.  First, for chemicals subject to Material Safety Data Sheets ("MSDS"), the legislation requires the well operator to post the list of chemical ingredients on a publicly-accessible website.  Second, for non-MSDS chemical ingredients intentionally included in the fluid, the legislation requires the information to be provided to the Texas Railroad Commission in a publicly-accessible form.  In order to balance the disclosure requirements, the legislation creates a process to protect trade secrets that may be at risk due to the disclosure obligations.  As well, the total volume of water used for hydrofracking operations must be posted and filed with the Texas Railroad Commission.

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Dallas-based Mesa Power Group LLC ("Mesa") has filed a Notice of Intent with the Canadian federal government indicating that it will challenge Ontario's Green Energy Act ("GEA") and Feed-in Tariff Program ("FITP") for alleged violations of the North American Free Trade Agreement ("NAFTA").

Mesa had two proposed wind projects in the Bruce transmission region of Western Ontario which were not recipients of FITP Power Purchase Agreements ("PPA") with the Ontario Power Authority ("OPA").

In its Notice of Intent filing, Mesa claimed that changes made by OPA to the rules for awarding PPAs in the Bruce transmission region violated Article 1105 of NAFTA with respect to non-discriminatory treatment of investors of another NAFTA signatory.  Mesa also claimed, among other things, that the GEA contains "buy local" performance requirements that contravene Article 1106 of NAFTA.

Mesa stated that it expects to file a formal NAFTA Notice of Arbitration some time after October 3, 2011.

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Michael Mestinsek

Holders of natural gas rights in PNG leases in Alberta are applauding the July 7, 2011 decision of Madam Justice Kent of the Alberta Court of Queen's Bench in the well-known series of cases involving coal rights owners and natural gas rights holders (the "CBM Actions").

In late May and early June, 2011, Justice Kent heard applications brought by natural gas rights holders seeking summary judgment for a declaration that, for leases which specifically grant natural gas to the lessee, the lessees of natural gas are entitled to produce coalbed methane ("CBM") from the subject lands.  At issue was the meaning of the newly amended Alberta Mines and Minerals Act ("MMA"), and specifically, Section 10.1 which provides, among other things, that CBM is and has always been "natural gas."

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Andrew Sullivan -

Beginning November 1, 2011, many wind and solar PV generators will be required to submit real-time meteorological and output data to the IESO.

The market rule amendment is part of IESO plans for renewable integration. As part of this integration, the IESO is seeking to implement centralized forecasting. Instead of providing energy forecasts, renewable facilities will be required to submit real-time, site specific data (“dynamic data”) to the IESO that will be used to produce variable generation forecasts provided by a third-party.

The requirements will apply to all wind and solar facilities connected to the IESO-controlled grid in addition to embedded non-market participants with an installed capacity over 5MW.

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As we previously reported here, Quebec’s draft Regulation respecting a cap-and-trade system for greenhouse gas emission allowances (the Regulation) will come into force on January 1, 2012, subject to amendments. 

The cap-and-trade system (System) will require the registration of “emitters,” which is broadly defined as persons and municipalities who produce more than 25,000 tonnes of CO² equivalent per year at an establishment, and who i) conduct an enterprise in electric or natural gas utilities, mining, oil and gas exploration, steam and air conditioning supply, manufacturing or gas pipelines; ii) acquire electricity generated outside of Quebec, or iii) manufacture and distribute hydrocarbon fuels in Quebec.

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The Federal Court heard an application from First Nation and environmental groups (“Applicants”) on June 22 and 23, 2011 seeking to compel the federal Minister of Environment (“Minister”) to recommend the Governor in Council to issue an emergency order protecting herds of Woodland caribou in northeastern Alberta under Subsection 80(2) of the Species at Risk Act ("SARA").

Boreal Woodland caribou were listed on SARA’s Threatened Species list in 2003, and under Section 42 of SARA, the Minister had until 2007 to include a proposed recovery strategy for the species in the public registry. As the Minister has yet to perform that duty, the Applicants argued that the Minister must now recommend an emergency order that will commence measures to protect the Woodland caribou’s habitat. However, the Minister is taking the position that the species do not face an imminent threat to their recovery and that an emergency order is not warranted.

This application is of particular interest to oil and gas operators, as an emergency order under SARA may include provisions prohibiting activities that may adversely affect a species and their habitat on both federal and non-federal lands.
 

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On July 6, 2011, Quebec's Ministry of Sustainable Development, Environment and Parks announced that it has published a draft regulation on greenhouse gas (GHG) cap-and-trade based on the Western Climate Initiative (WCI) guidelines, for a 60-day public consultation.

Once the consultation period has expired, the regulation to be adopted will enable Quebec to be ready to set up the carbon market as soon as January 1, 2012. As noted in yesterday's blog entry, in order to synchronize with California, the first year of the program will be transitional. This will allow emitters and market participants to familiarize themselves with how the system works and enable them to transition to their obligations under the GHG cap-and-trade system that will come into force on January 1, 2013. They will be able to register as system users, take part in pilot project auctions and exchange (buy and sell) GHG emission allowances through the market.

Industrial sites that annually emit 25,000 or more tons of equivalent CO2 in greenhouse gas will be subject to the system for capping and reducing their emissions.

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Cora Zeeman -

On June 29, 2011, the California Air Resource Board announced that it is delaying the start of the state's cap and trade program until 2013, a year later than was originally envisioned. CARB will initiate the cap and trade program in 2012 but use that year to test various aspects of the program; no greenhouse gas (GHG) emissions reductions will be required until 2013. However, the 2014 reduction target of 6% below business as usual and the goal of reducing emissions to 1990 levels by 2020 are unchanged.

In the announcement, CARB Chair Mary Nichols said that the delay is necessary because it is so critical that the cap and trade regime be a success. CARB will be initiating all elements of the cap and trade program in 2012, including establishing market oversight mechanisms, conducting trainings, holding auctions and developing linkages with partners in the Western Climate Initiative (WCI), to ensure all aspects of the program operate as intended.

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Yesterday the Ontario Power Authority offered Feed-in Tariff contracts to 19 large scale on-shore wind projects and 6 ground-mount solar projects, totalling nearly 1,046 MW of new renewable energy projects. 750 MW of wind-based contracts were offered in the Bruce Area and the remaining 296 MW were offered in the West of London Area, 27.5 MW for ground-mount solar and 268.4 MW for on-shore wind.

The biggest winner of the contract offers is Boulevard Associates Canada, Inc., with 335 MW offered in the Bruce Area. International Power Canada, Inc. received offers for 198 MW in the West of London Area.

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Canada's National Energy Board ("NEB") has issued a series of pressure restrictions to five pipelines as part of a broader safety strategy.  Traditionally, the NEB has sparingly enacted measures to reduce the flow of oil and gas, but several major spills in the last year have prompted the preventative response.

Pipeline age has been a factor in the issuance of restrictions, indicating that pre-1970 flash-welded pipe is of greater concern.  Most of the restrictions have required a 20 percent reduction in throughput until operators satisfy certain conditions that include "an engineering assessment that indicates that the pipeline remains fit for its intended service."

Brenda Kenny, Chief Executive of the Canadian Energy Pipeline Association ("CEPA") says the scrutiny is welcomed and operators are supportive of strong regulation, but CEPA has not seen any evidence that such reductions are necessary to ensure a high level of safety.

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Amendments to the Renewable Fuels Regulations under the Canadian Environmental Protection Act will set a coming-into force date of July 1, 2011 for the requirement that diesel fuel and heating distillate oil contain on average 2% renewable fuel by volume.

As we reported earlier here, this requirement will only apply to primary suppliers who produce or import more than 400 cubic meters of diesel fuel and/or heating distillate oil per year.

The amendments will provide a permanent exemption for diesel fuel and heating distillate oil sold in or delivered to Newfoundland and Labrador to account for logistical challenges in blending biodiesel in that region.  As well, temporary exemptions will be provided until December 31, 2012 for diesel fuel and heating distillate oil sold in or delivered to Quebec south of 60 degrees North, New Brunswick, Nova Scotia and Prince Edward Island, giving time to refiners to install biodiesel blending infrastructure.

Canada's Minister of the Environment, Peter Kent, stated that the renewable fuel content requirements will help reduce greenhouse gas emissions by approximately four megatonnes per year.

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Calgary partner Stuart Olley will be speaking at the Andean Energy Summit  in Bogota on July 13 and 14. In its 5th year, the Andean Energy Summit will address the financial, regulatory, technological and operational challenges facing oil & gas, electric power and renewable energy operators in the Andes and Central America. For access to a 25% discount (tickets only) on attending the summit, please send an email to sstone@stikeman.com.

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