Three Ways to Improve Alberta’s Energy Regulator

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.

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.
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About the Author

Working in Alberta, Barry Robinson sees the harm that oil and gas development is causing to rivers, air, farmland, diverse wildlife and rural communities. In 2009, he launched a private prosecution against Syncrude for the deaths of 1,600 ducks in one of the company’s tailings ponds. The case resulted in the largest environmental fine in Canadian history.

 

Barry began his legal career after working in Alberta’s forestry industry and as an environmental consultant. Wanting to leave a better world for his children and grandchildren, Barry was instrumental in setting up the first recycling programs in Calgary in the 1980s and uses solar energy to power his home. Barry has a special interest in ensuring that the oil and gas industry in Alberta is held to strict environmental standards.

– See more at: https://www.ecojustice.ca/people/barry-robinson/#sthash.kFLAW8xg.dpuf

This article was originally published on the Ecojustice website at ecojustice.ca.

 

Dangerous Goods Conference – April 28th

If you would still like to attend the upcoming 2nd Dangerous Goods Conference in Mississauga, Ontario on April 28th 2017 then IDC Technologies are offering a last minute 50% off special. Please send the attached registration form directly to conferences@idc-online.com to redeem your discount.

NOTE: 50% off the full price = $400 (+ HST) for a full day of training featuring nine local dangerous goods specialists.

 

Conference presentation topics:

  • Overview of the Upcoming Regulatory Proposals and Transportation of Dangerous Goods (TDG) Safety Awareness Program
  • WHMIS 2015 – Harmonization or Discord?
  • Overview of Transport Canada Air Cargo Security Program vs Transportation of Dangerous Goods Regulations
  • Hazardous Waste, Ontario Subject Waste and Dangerous Goods – Relationships and Classification
  • Conducting Dangerous Goods Emergency Response Drills and Exercises
  • Metal and Metal Compounds – The Environmental Hazards
  • The Profession of Emergency Management and its Application to the Dangerous Goods Business
  • Lithium Battery Regulation: Achieving Safety or a False Sense of Security?
  • A Global Perspective on the Shipment of Class 7 Dangerous Goods

For more information, contact:

 

Sarah Montgomery, Conference Manager
IDC Technologies

EIT: www.eit.edu.au

IDC: www.idc-online.com

 

Quebec announces $175 Million Clean-up Fund

The Government of Quebec recently announced it is setting aside $175 million over the next five years to fund the clean-up of vacant land.  Of that the total sum, $120 million will be spent on cleaning up contaminated lands owned by the province and the remaining $55 million will be used to subsidize the clean-up of properties owned by municipalities and, in some cases, private property owners.

The government sees the clean-up funds as an investment in development that will spur growth and create jobs.  Quebec’s Environment Minister, David Heurtal, stated in a news conference that the estimated value of the land that goes undeveloped because of contamination at $2 billion.

A similar program run in Quebec between 2007 and 2015 in which $60 million in provincial monies was used to clean-up 155 hectares (380 acres) of land.  It was estimated that the $60 million invested by the Province for clean-up the lands resulted in $1.6 billion in private investment.

The announcement won praise from both the Union of Quebec Municipalities and the President of the Chamber of Commerce representing east Montreal.  They both stated that the fund will bring economic opportunities and create jobs.

Contamination found in sediment of Rideau Canada in Ottawa

As reported by the CBC, Parks Canada (the Canadian equivalent of U.S. National Park Service) is testing the sediment along the Ottawa stretch of the Rideau Canal to determine the extent of contamination along the waterway.  Also, Ontario Ministry of the Environment officials are investigating game fish in the canal to determine if they are safe to eat.

The contaminated sediment was first discovered in November of 2016 when workers doing repairs to the canal accidently churned up bottom sediment that contained contaminants.  Testing of the water found heavy metals and polycyclic aromatic hydrocarbons (PAHs).

The newest set of tests is designed to determine the extent of the contamination the area.  The stretch of contamination is the section of the Rideau Canal in downtown Ottawa.  It is suspected that the sediment could be contaminated along several kilometres.

Parks Canada has known for some time that the bottom sediment of the canal has been impact by past industrial activities that existed on its banks including a paint factory, regular train traffic, and steam-powered vessels hauling industrial goods.  The recent repair activities, however, have raised the profile of the issue and raised some concerns amongst fisherman and users of the canal.

With respect to the Ontario Ministry of the Environment and Climate Change (MOECC) investigation on game fish, there is concern that game fish caught along the Canal could have ingested contaminated sediment.  The study will determine the level of contamination in various fish species along the Rideau Canal.

The federal Ministry of the Environment, Catherine McKenna, stated “The sediments in question are low risk to health but of course we are monitoring them and we’ll continue to do so.  Parks Canada is going to be working hard making sure that the conditions are safe and taking appropriate measures.”

The Rideau Canal is a Canadian National Historic Site and a World UNESCO Site.  It cuts through the heart of the Nation’s Capital and is a very popular for skating in the winter and all sorts of activities in the summer.

Concerns with Canada’s Arctic Oil-Spill Response Plans

The World Wildlife Fund  Canada (WWF-C), the Canadian arm of the international not-for-profit environmental activist organization, recently issued a report on Canada’s preparedness for cleaning up an oil spill in the Arctic.  In short, the WWF-C is of the view that remote Arctic communities face almost certain environmental catastrophe in the event of an oil spill from large shipping vessels.

The report chronicles research done by the WWF-C on the state and availability of oil-spill response equipment, training resources, and the communications infrastructure in the Arctic.  Report researchers found major issues in all areas related to spill response in Canada’s Arctic.

Gaps in oil spill response capacity are outlined in two parallel WWF-C assessments for the Beaufort region in the western Arctic and Nunavut in the east.  The reports found that:

  • Only a small number of coastal communities have access to the most basic oil-spill response equipment from the Canadian Coast Guard.
  • The communities that do have equipment say it is irregularly maintained, too few community members are trained to use it, and that some communities don’t have a key to access the storage containers.
  • Harsh weather conditions, periods of prolonged darkness and the presence of sea ice make most standard oil-spill response equipment ineffective.
  • Remote locations mean response times for large-scale cleanup and storage equipment can be more than 10 times longer than in waters south of 60 degrees’ latitude.
  • Lack of reliable communications infrastructure makes it difficult for communities to call for assistance, and for responders to communicate with those on land during an oil-spill response.

The report states that first responders in the Arctic are typically members of the community and that they lace effective and reliable equipment to contain and clean-up an oil spill.  Heavy fuel oil (HFO) is the standard marine fuel for cargo ships, tankers and large cruise ships.  It is also one of the world’s dirtiest, most polluting ship fuels, and the most difficult to clean up.

The report also contains are review on the consequences of an oil spill in remote communities.  Firstly, an oil spill would contaminate habitat for arctic wildlife and destroy fish habitat.  Secondly, it would likely contaminant a wider area as it would get trapped under sea ice and potentially travel hundreds of kilometres.

A third report prepared by WWF-C outlines a framework for creating oil spill response plans in Nunavut’s remote communities.  Recommendations from the reports include:

  • Phase out the use by ships of HFO, the most toxic and difficult to clean up of any marine fuel in the Arctic.
  • Align response time standards in the North with those south of 60 degrees latitude.
  • Develop community-based response plans.
  • Increase funding for training of community responders.
  • Consult with Inuit organizations on decisions that affect Arctic communities, and use both scientific and traditional knowledge to identify preferred shipping routes and areas to be avoided.

Though the chances of a large-scale oil spill in the Arctic are currently small, the consequences would be significant.  As sea ice melts and ship traffic increases, there is an opportunity now, while traffic is still relatively low, to put measures in place to respond to spills, or prevent them from happening in the first place. Because sparsely populated Arctic communities assume the risk of spills, they need both adequate equipment and response plans specifically tailored to the extreme Arctic environment.

Ontario Statistics on Environmental Fines and Penalties

Berkley Canada recently published a white paper that provides information on environmental fines and penalties in Ontario for 2016.

In the report, it states that historical evidence shows that fines and penalties have been used sparingly in Canada when compared to Europe or the USA. In notes that in late 2014, Canada’s use of fines and penalties changed dramatically. That year, Environment Canada imposed its largest penalty to date, a $7.5 million fine against Bloom Lake General Partners (a subsidiary of Cliffs Natural Resources) for breaches of the Fisheries Act and Metal Mining Effluent Regulations.

 

Berkley, an insurance company, notes that that landmark decision attracted significant attention within the environmental and legal community. The result was a very quick move by industry to limit risk through the use of environmental insurance.

The report is intended to provide readers with additional context regarding how fines and penalties are being used by Canadian regulators post 2014.  To that end, we note the following facts:

1.     Between 1991 and 2009 the average quantum of fines and penalties issued by all federal and provincial regulators in Canada was $1.4 million per year.

2.     Between 1991 and 2009 Ontario issued a total of $14.7 million in fines and penalties (average of $816,667 per year).

3.     In the years 2014 and 2015 Ontario issued a total of $2.9 and $3.2 million in fines and penalties, respectively.

4.     17 large (> $75,000) fines and penalties were issued by all federal and provincial regulators in Canada in 2015. The 17 fines and penalties totalled $3,836,750.

5.     Based on the number of fines and penalties issued in 2015, Ontario was the most active jurisdiction, followed by Alberta and British Columbia.

Examining large (> $75,000) fines and penalties by Province for 2015, Berkley Canada noted the following:

Ontario: $2,418,750 in fines (focus: air emissions such as dust, smoke and chemicals)

Alberta: $745,000 in fines (focus: Fisheries Act)

British Columbia: $540,000 in fines (focus: Fisheries Act)

Newfoundland: $100,000 in fines (focus: waste management)

Ontario saw a 10% increase in the total value of fines and penalties issued in 2015 versus 2014. Comparing this to the average yearly fines and penalties issued between 1991 and 2009, Ontario saw an increase of 290% in 2015 versus the long term historical average.

In 2015, the value to large fines and penalties outside of Ontario also increased, exceeding historical averages by some $2.4 million.

In the view of Berkley Canada, Canadian regulators are making greater use of fines and penalties than at any other time in the past.  As such, Berkley Canada is of the opinion that this risk should continue to be of particular focus to companies operating in Canada.  Environmental managers and committees should continue to monitor, evaluate and look for ways to improve operations so as to reduce the risk of incurring an environmental fine or penalty.  Lastly, insurance brokers and risk managers should examine the use of environmental insurance as a backstop to a company’s environmental management system.

With regards to environmental insurance, Berkley Canada notes that it is important to understand that carriers make use of a non-compliance or wrongful act exclusion.  This exclusion precludes cover when a pollution condition is caused by an Insured’s wilful action or non-compliance.  As an example: an Insured elects not to operate an emission control device that is required per its air emission permit. The resulting pollution condition (discharge of a contaminant above the applicable regulatory standard) would be excluded from cover via the non-compliance or wilful act exclusion as the Insured deliberately elected not to operate the needed engineering control.

Berkley Canada states in the report that while it should not be surprising that an insurance carrier would exclude loss arising out of a deliberately caused pollution event, the carrier’s intent is quite different when it comes to covering fines and penalties that result from an accidental (as opposed to deliberate) event.  Insurance Carriers offering fines and penalties coverage do intend to insure fortuitous events causing pollution that result in the imposition of fines and penalties.

An insurer’s coverage response is determined on a case by case basis, after careful review of both the particular facts and circumstances of a claim and the insurance policy terms and conditions. The table on the following page summarizes actual recent loss scenarios. We have included a column to help illustrate when fines and penalties cover may be afforded.

Berkley Canada notes in its report that they are not aware of what, if any, insurance coverage was available in these scenarios, but were simply noting the likelihood the facts describe a fortuitous event, and the potential coverage response based on a policy providing fines and penalties cover.

UPS Expands Capabilities on Shipping of Dangerous Goods

UPS recently announced that it has expanded its global dangerous goods shipping program by adding more than 400 new commodities that can be accepted in its global air network and more than 300 products across its ground network in Europe.

The company also increased the allowable quantity of select dangerous goods accepted for shipment.

There is a growing demand from companies in a variety of industries to ship products that are classified as hazardous goods.  For example, healthcare companies need to transport chemicals to clean laboratory equipment.  Industrial manufacturing companies transport paint, compressed gases, adhesives and batteries, among other items. UPS can now help these businesses ship between 36 countries.

UPS is confident it can ship the dangerous goods without incident has it provides extensive employee training and takes extra precautions to ensure dangerous goods are safely transported. The company’s integrated transportation network utilizes leak-proof packaging, fire-resistant containers and fire containment covers.

Court Ruling Requires Neighbors to Contribute to Contamination Investigation Costs

What does a New Jersey Appellate Court decision mean for the New Jersey Spill Act?

A recent Appellate Division decision may spur contribution suits under the New Jersey Spill Compensation and Control Act (the Spill Act). In Matejek v. Watson (N.J. Super. Ct. App. Div., Mar., 3, 2017), the appeals court held that a property owner may compel neighboring property owners to share in the costs of investigating potential environmental contamination prior to establishing liability for the pollution.

CONTRIBUTION CLAIMS UNDER NEW JERSEY SPILL ACT

The Spill Act renders “all dischargers [of contamination] jointly and severally liable for the entire cost of a cleanup.”  The statute, N.J.S.A. 58:10-23.11f(a)(2)(a), also authorizes a private cause of action by a responsible party for contribution from other responsible parties.

In this case, the New Jersey Department of Environmental Protection (NJDEP) removed five underground storage tanks, one from each of five adjoining condominium units, after oil was discovered on the surface of a nearby brook.  After confirming the absence of oil in the tributary, the NJDEP took no further action, and its file remained open.

Approximately seven years later, plaintiffs Greg and Renee Matejek sought to remove the cloud on the title of their condominium unit, which was one of those impacted.  They filed a complaint under the Spill Act against the owners of the other four units.  The suit sought to compel the other owners to participate in and equally share in an investigation and, if necessary, remediation of the contaminated property.

The trial court found that even though the precise source of the contamination had not yet been determined, the fact that the NJDEP had removed all five tanks was sufficient to impose on the impacted parties the obligation “to participate in the investigation process.”  The court ordered the plaintiffs to retain the services of a licensed site remediation professional (LSRP) to investigate and prepare a report to the parties as to whether remediation was required.  If remediation was required, the court order compelled the division of the costs equally among the five owners.  One of the owners appealed, arguing that there was no evidence that they caused the contamination, in whole or in part.

APPELLATE DIVISION AFFIRMS ORDER TO SHARE INVESTIGATION COSTS

The Appellate Division affirmed the lower court ruling, citing that it found “nothing in the letter or spirit of the Spill Act that would preclude the issuance of such a remedy.”

While the court acknowledged that the “plaintiffs’ suit varies from what the Legislature likely anticipated when authorizing a private cause of action for contribution,” it further noted that the plaintiffs would have no other way to remove the encumbrance other than to solely bear the expense of investigation and remediation.

“We agree with the trial judge that such a scenario leaves plaintiffs with no adequate remedy at law.  And we agree that, in such circumstances, a court may provide a remedy that fairly and justly alleviates the inequitable burden that a narrow interpretation of the Spill Act would impose,” the court explained.  In affirming the trial court’s ruling, the Appellate Division further wrote that “we do not interpret the Spill Act as being so narrow or ineffectual as to permit a private action only on proof that another caused contamination in whole or in part.”

The Appellate Division also agreed with the trial court’s assumption that additional environmental litigation is likely in the future, including the possibility that the parties might seek further adjustment of their rights depending on the outcome of the investigation.  “By affirming that judgment, we also do not foreclose that possibility nor limit the scope of any future litigation or the potential issuance of a remedy for those property owners who may be exonerated by the investigation to follow,” the court noted.

IMPACT ON ENVIRONMENTAL LIABILITY

The Appellate Division’s decision is significant in that it makes it possible for responsible parties to seek contribution much earlier in the remediation process.  In certain circumstances, responsible parties may now be required to share in the investigation costs without a prior determination of liability.  While such costs may be recouped once the exact cause of the contamination is proven, the court’s decision in Matejek v. Watson could still cause legal headaches for commercial and residential property owners.

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About the Author

Dan McKillop has more than fifteen years of experience representing corporate and individual clients in complex environmental litigations and regulatory proceedings before state and federal courts and environmental agencies arising under numerous state and federal statutes.  Dan’s additional areas of expertise include issues pertaining to federal and state Hazard Communication and Right-to-Know requirements, occupational safety and health issues, asbestos requirements, and underground storage tank regulations.  Dan is a Director of the New Jersey State Bar Association Environmental Law Section.  Dan graduated cum laude from Pace University School of Law in 2001, where he earned certificates in both Environmental Law and International Law.  Dan previously earned his Bachelor’s degree in Government and International Studies from the University of Notre Dame.  He can be contacted at 201-806-3364 and at dmckillop@sh-law.com.

This article was originally published on the Scarinci Hollenbeck website  at https://scarincihollenbeck.com/.

Free Online Emergency Response Tools

FLIR recently announced the launch of its new educational resource, FLIR PRIMED – Prepare, Recognize, Input, Monitor, Experience, Decision – a free, online tool that provides First Responders with best practices for HAZMAT accidents and Chemical, Biological, Radiological, Nuclear and/or Explosives (CBRNE) attacks.

Throughout FLIR PRIMED’s video series, Grant Coffey, retired Portland Fire & Rescue Hazmat Team Coordinator and CBRNE expert for nearly 40 years, delivers industry insights and real-life experiences designed to keep responders prepared, by staying current with the industry standards and best practices. In addition, each episode will conclude with a free field checklist, or downloadable guide, to increase subject knowledge for a safer and more successful response.

The first three episodes of FLIR PRIMED, along with free downloadable checklist and guidebooks, are available NOW at www.flir.com/PRIMED

  • Episode 1: PRIMED – A tool you can use right now to stay prepared.  Grant introduces you to PRIMED – a tool responders can use right now to stay prepared.
  • Episode 2: STOP – What are the cues and clues.  When responding to a scene, STOP! Grant discusses the cues and clues responders should pay attention to.
  • Episode 3: RAD – Turn it on and put it on.  Radiation is not well understood. Grant covers the important safety basics responders need to know.

The next seven episodes of FLIR PRIMED will air between April 24 – June 26 on the FLIR PRIMED page and an additional 20 videos will be release into the second half of 2017, featuring guest appearances by other industry leaders.

Questions or topics viewers would like to see featured on FLIR PRIMED can be submitted toPRIMED@flir.com.

Webinar on Vapour Intrusion

Land Science® is presenting a webinar on vapour intrusion and the impact on environmental due diligence.  The event will take place on Wednesday, April 26th at 2 pm Eastern (11 am Pacific).  The key speaker at the webinar is Dr. Kenneth S. Tramm, a founding Principal with Texas-based engineering firm, Modern Geosciences.  Dr. Tramm specializes in air quality monitoring, environmental due diligence, risk-based closures, and remediation design.  Dr. Tramm’s presentation will provide us with an update on how Vapor Intrusion is impacting the Environmental Due Diligence industry.

Joining Dr. Tramm will be Thomas Szocinski, Director of Vapor Intrusion at Land Science, who will review vapor intrusion mitigation solutions currently available.