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RECENT REGULATORY AND LEGISLATIVE DEVELOPMENTS 417 RECENT REGULATORY AND LEGISLATIVE DEVELOPMENTS OF INTEREST TO ENERGY LAWYERS L.E. SMITH, Q.C., MARIE H. BUCHINSKI, AND DEIRDRE A. SHEEHAN* This article identifies recent regulatory and Cet article identifie les derniers développements legislative developments of interest to oil and gas réglementaires et législatifs d’intérêt pour les avocats lawyers. The authors survey a variety of subject areas, travaillant dans le domaine pétrolier et gazier. Les examining decisions of key regulatory agencies such as auteurs examinent plusieurs domaines, étudiant les the National Energy Board, the Ontario Energy Board, décisions d’organismes de réglementation importantes the Alberta Energy Resources Conservation Board, the comme l’Office national de l’énergie, la Commission Alberta Surface Rights Board, and the Alberta Utilities de l’énergie de l’Ontario, le Alberta Energy Resources Commission, as well as related court decisions. In Conservation Board, le Alberta Surface Rights Board addition, the authors review a variety of key policy and et la Alberta Utilities Commission, et les décisions legislative changes from the federal and provincial relatives des cours. En outre, les auteurs traitent de levels. plusieurs changements importants sur le plan politique et législatif des niveaux fédéral et provinciaux. TABLE OF CONTENTS I. INTRODUCTION ............................................. 418 II. REGULATORY DECISIONS AND RELATED JURISPRUDENCE ............ 418 A. NATIONAL ENERGY BOARD ............................... 418 B. FEDERAL COURT ....................................... 451 C. ENERGY RESOURCES CONSERVATION BOARD ................. 455 D. ALBERTA SURFACE RIGHTS BOARD ......................... 472 E. ALBERTA COURT OF QUEEN’S BENCH AND ALBERTA COURT OF APPEAL .......................... 476 F. CANADA-NEWFOUNDLAND AND LABRADOR OFFSHORE PETROLEUM BOARD AND THE CANADA-NOVA SCOTIA OFFSHORE PETROLEUM BOARD ............................ 490 G. ONTARIO ENERGY BOARD ................................ 491 H. ENVIRONMENTAL APPEALS BOARD ......................... 494 III. LEGISLATIVE DEVELOPMENTS ................................. 496 A. FEDERAL ............................................. 496 B. ALBERTA ............................................. 498 C. BRITISH COLUMBIA ..................................... 502 D. SASKATCHEWAN ....................................... 503 E. ONTARIO ............................................. 503 IV. DEVELOPMENTS IN POLICY, DIRECTIVES, AND GUIDELINES ........... 504 A. NATIONAL ENERGY BOARD ............................... 504 B. ENERGY RESOURCES CONSERVATION BOARD ................. 508 C. SURFACE RIGHTS BOARD ................................. 515 * Bennett Jones LLP. The authors would like to acknowledge the contributions of our colleagues Karen Beattie, Celeste Hutchinson, and Sean Assié in the preparation of this article. 418 ALBERTA LAW REVIEW (2010) 48:2 I. INTRODUCTION The purpose of this article is to highlight and discuss regulatory and legislative developments of interest to energy lawyers that have arisen during the 12-month period from May 2009 through to April 2010. This article focuses primarily on decisions of the National Energy Board (NEB) and the Energy Resources Conservation Board (ERCB), and appellate reviews of those decisions. In addition, this article highlights changes to regulatory policies and procedures for each of these regulators and reviews recent decisions and policy initiatives of other regulatory agencies in Canada that will be of interest to those involved in the energy industry. II. REGULATORY DECISIONS AND RELATED JURISPRUDENCE A. NATIONAL ENERGY BOARD The year 2009 marked the 50 year anniversary of Canada’s energy regulator, the NEB. More than 50 years ago, on 23 April 1959, the Minister of Trade and Commerce — the Honourable Gordon Churchill — made a motion to introduce into the House of Commons a measure “to provide for the establishment and operation of a national energy board.”1 Bill C-49 was first introduced on 19 May 1959,2 identifying in the Explanatory Note the proposed establishment, operation, and authority of the NEB: The purpose of this Bill is to establish a National Energy Board which shall, in order to assure to the people of Canada the best use of energy resources in this country, regulate in the public interest the construction and operation of oil and gas pipe lines subject to the jurisdiction of the Parliament of Canada, the tolls charged for transmission by such pipe lines, the export and import of gas, the export of electric power and the construction of those lines over which such power is exported. The Board shall also study and keep under review all matters relating to energy within the jurisdiction of the Parliament of Canada, and shall recommend to the Minister of Trade and Commerce such measures as it considers necessary or advisable in the public interest with regard to such matters. The Bill also authorizes the extension of the export and import provisions to oil.3 The inaugural meeting for the first members of the Board was held in Ottawa on 14 August 1959 following receipt of royal assent on 18 July 1959 for the National Energy Board Act.4 Moving into its fifth decade of regulatory leadership,5 the NEB continues as an independent federal regulatory agency. Regulating energy infrastructure, the Board integrates into its decisions environmental, social, and economic considerations in order to assess the overall public interest.6 1 House of Commons Debates (23 April 1959) at 2965 (Hon. Gordon Churchill). 2 Bill C-49, An Act to provide for the Establishment of a National Energy Board, 2d Sess., 24th Parl., 1959 (assented to 18 July 1959). 3 Bill C-49, An Act to provide for the Establishment of a National Energy Board, First Reading (19 May 1959) Explanatory Note. 4 S.C. 1959, c. 46, as am. by R.S.C. 1985, c. N-7 [NEB Act]. 5 NEB, “Welcome from Chairman & CEO Gaétan Caron,” online: NEB <http://www.neb-one.gc.ca/clf- nsi/rthnb/50yrs/chrwlcm-eng.html>. 6 On 1 April 2010, the NEB’s Strategic Plan 2010-2013 came into effect, clarifying how the Board approaches its regulatory mandate, which includes the promotion of safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest. See NEB, Strategic Plan 2010-2013 (Ottawa: NEB, 2010), online: NEB <http://www.neb-one.gc.ca/clf-nsi/rthnb/ RECENT REGULATORY AND LEGISLATIVE DEVELOPMENTS 419 Under the umbrella of its enabling and related legislation, the NEB regulates various aspects of the energy industry, including construction and operation of international and interprovincial oil, gas, and commodity pipelines; the construction and operation of international and designated interprovincial power lines; pipeline traffic, tolls, and tariffs; exports and imports of natural gas; and exports of oil, natural gas liquids, and electricity.7 The NEB regulates frontier oil and gas activities that are not otherwise regulated under joint federal/provincial accords and has responsibilities pursuant to certain sections of the Northern Pipeline Act, the Canada Oil and Gas Operations Act, and the Canada Petroleum Resources Act for both crude oil and natural gas exploration and production in certain areas off of Canada’s Arctic coast and frontier lands.8 While the NEB has always considered that it must examine potential environmental impacts under its public interest mandate, additional environmental responsibilities arise under the Canadian Environmental Assessment Act and the Mackenzie Valley Resource Management Act.9 The following discusses Board decisions and other developments of interest since 1 May 2009. 1. NEB DECISION OH-1-2009: TRANSCANADA KEYSTONE PIPELINE GP LTD.10 On 27 February 2009, TransCanada Keystone Pipeline GP Ltd. (Keystone) filed an application with the NEB requesting approval pursuant to s. 52 of the NEB Act for the construction and operation of the Keystone XL Pipeline (Keystone XL); pursuant to Part IV of the NEB Act for approval of market-based negotiated tolls; and pursuant to the CEAA for a determination that the construction and operation of Keystone XL would not, or was not likely to, cause significant adverse environmental effects. a. Project Description and NEB Findings Keystone XL was proposed as an addition to the existing “Base Keystone,” which remained under construction at the time the Keystone XL application was filed with the Board and which included both the original Keystone Pipeline and the Cushing Expansion Project.11 Keystone XL would require the construction of approximately 529 km of new 36- inch pipeline and related facilities. Keystone XL would have an initial capacity of 700,000 bpd with a price tag of $1.7 billion. Once constructed, Keystone XL would transport crude oil from Hardisty, Alberta to the Canada/U.S. border at Monchy, Saskatchewan, through to whwrndrgvrnnc/strtgcpln-eng.pdf>. See also Gaétan Caron, “Regulating for Performance” (Address to NEB Forum 2009, Calgary, 27 May 2009), online: NEB <http://www.neb-one.ca/clf-nsi/rpblctn/ spchsndprsnttn/2009/rg/tngprfrmnc/rgltngprfrmnc/rgltngprfrmnc-eng.html>. Chairman Caron noted that “[s]afety is, and always will be, of paramount interest to the NEB.” 7 See NEB, Annual Report to Parliament: 2009 (Calgary: NEB Publications Office, 2010) at 7, online: NEB <http://www.neb-one.gc.ca/clf-nsi/rpblctn/rprt/nnlrprt/2009/nnlrprt2009.pdf>. 8 Northern Pipeline Act, R.S.C. 1985, c. N-26; Canada Oil and Gas Operations Act, R.S.C.