Recent AER Decision Sides with Landowners

Ackroyd is pleased to announce an important decision of the Alberta Energy Regulator rendered on March 28, 2018. The Ackroyd Team, consisting of Bill McElhanney, Richard Secord, Ifeoma Okoye, Joe Wadden, Alex Yiu and Eric Pentland, represented a number of landowners who reside where proposed critical sour oil wells were to be drilled near their homes, farms and ranches.

The decision is a rare outright denial of a company seeking to acquire a permit to drill, in this case, highly toxic H2S oil wells. Usually companies gain approval with conditions, but in this case the company was completely denied the approval it sought.

There are several important lessons from this decision, which we believe will be of assistance to our aboriginal and landowner clients:

First, the panel was critical of the company in terms of its implementation of AER Directive 056 “Energy Development Applications and Schedules” which provides directions with respect to consultation. The Panel stated the following:

“Applicants are required by Directive 056 to implement an effective consultation plan before filing an application. The Directive 056 requirements are considered the minimum acceptable consultation and notification for routine applications and are clearly identified as the starting point for effective participant involvement, which is expected to take place throughout the life cycle of the project.” (emphasis added)

This statement is important as it sets out a responsibility for operators to approach landowners before filing their applications and it states that this responsibility extends throughout the life cycle of the project.

The Panel goes on to say “It is through consultation that issues are raised so that proponents are able to understand concerns and address them effectively. Directive 056 provides that ‘in some areas of the province, public expectations regarding personal consultation and notification may be higher than in others.’” This is again a direction to Companies that they must effectively consult with landowners.

Second, the AER was critical of the lack of consultation with the County as it related to the emergency response plan in the event of an incident. The Panel stated:

“Bashaw’s lack of consultation with the County meant that the County did not have an understanding of its role in emergency response. This was of concern to us because the County and Bashaw would each have important obligations in the event of a serious emergency and would have to mount a coordinated response.”

This is of importance to landowners who may be impacted by various breaches, such as pipeline ruptures, but who may not have been involved in any dialogue with the company with respect to emergency response plans. We see this as a landowner’s key to having the companies address this serious issue with them at the very earliest convenience.

Finally, the Panel was concerned not only about the impacts on the individuals in an emergency situation but also with respect to their animals and how effective evacuation would occur. The Panel stated:

“We accept the accounts of the landowners that many of their concerns, including spotty cell phone coverage, health and mobility issues, plans for evacuation of horses and companion animals, and egress towards the well site were not sufficiently taken into consideration by Bashaw in its emergency response plan.”

In conclusion, we believe this decision is significant for landowners in that anybody who is operating on a person’s property owes a significant duty to consult and to incorporate that person’s concerns with respect to emergency response planning and evacuation.

The full decision can be found here and the Alberta Energy Regulator’s press release can be found here.