JASPER RESEARCH SEMINAR 2024 – PAPERS OVERVIEW
All times are in Mountain Time (MT).
THURSDAY, JUNE 13
8:45 AM – 9:30 AM
THE EXPANDING SCOPE OF REDWATER
Robyn Gurofsky (Fasken), Jassmine Girgis (University of Calgary), Walker MacLeod (McCarthy Tetrault LLP), Orest Konowalchuk (Alvarez & Marsal ULC).
It has now been five years since the Supreme Court of Canada released its landmark decision in Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5 (“Redwater”). The ruling represented a sea-change in the treatment of abandonment and reclamation obligations in insolvency proceedings and had a profound impact on all participant in the energy and natural resource sectors. The importance of Redwater to Canadian energy law can hardly be overstated; at the time of writing, the case has been cited in at least 86 reported appellate and superior court decisions. The judicial application of Redwater has, unsurprisingly, been particularly vigorous in Alberta, with a number of recent
appellate decisions applying that case in the context of insolvent companies engaged in the petroleum and natural
gas industry.
Following Redwater the Alberta Energy Regulator has made substantive changes to its license transfer process and a new line of case law has developed that applies Redwater to the ongoing issues arising in the oil and gas sector, including assessing different stakeholder interests, considering the extent of estate assets available to satisfy environmental obligations and confirming the meaning of “contingent” when referring to these obligations. In each case, the limits of the Redwater decision have been established. More recently, in Qualex-Landmark Towers v 12-10 Capital Corp. 2023 ABKB 109, the Alberta Court of King’s Bench departed from the trajectory of the post-Redwater case
law by extending the reach of the super-priority claim for environmental obligations outside of a formal insolvency proceeding. This decision, which is subject to appeal, saw the plaintiff corporation was granted a pre-judgment attachment order over funds equal to the estimated cost of remediating environmental contamination emanating from the defendant’s lands, on the basis that environmental tort claims may ultimately obtain “super-priority” at a later date.
The clarifications provided to Redwater through subsequent decisions specific to the energy industry can be viewed as helpful. However, the judicial creation of a super-priority in favour of private parties seeking ordinarily-unsecured damages claims for environmental claims brings with it a corresponding increase in uncertainty and risk for secured lenders, which will undoubtedly result in negative impacts on access to credit and costs of borrowing. Upsetting commercial certainty in this manner is likely to negatively impact the exploration and production lending industry in Canada. The issues raised in these decisions extend far beyond bankruptcy and are amongst the most important in the future of Canadian energy and environmental law. The authors will review the post-Redwater authorities (including Qualex and any resulting appeal decision), the importance of these on the Canadian energy sector and the concerning nature of the uncertainty being created by the expanding or creeping impact of Redwater to the energy sector.
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9:45 AM – 10:30 AM
THE PUSH FOR ELECTRIFICATION AND A NET ZERO GRID – DEVELOPMENTS, REACTIONS AND IMPLICATIONS
Deirdre Sheehan, Vivek Warrier, Laura Scott (Osler, Hoskin & Harcourt LLP)
To achieve its goal of a net-zero emissions national economy by 2050, the Government of Canada has announced that a critical component of its federal energy transition plan is
the early development of additional low- or non-emitting electricity generation. To mandate this development, Canada has proposed the the Clean Electricity Regulations (CER), under the Canadian Environmental Protection Act, 1999 (CEPA). Beginning January 1, 2035, subject to available exemptions, the CER would effectively prohibit electricity generation that is not low- or non-emitting.
This comes at a time when Canadian jurisdictions from coast-to-coast-to-coast are planning for aggressive growth of their electricity supply to meet increased electrification
demands and are experiencing transitional impacts arising from changes in generation, transmission and distribution. The federal government’s proposal to directly regulate the
generation of electricity – a matter that falls under provincial Constitutional jurisdiction – has raised the ire of a number of provincial governments and sharpened the divisions
between competing federal and provincial interests and policies. The federal government and certain provincial governments are currently divided on the necessary pace and technological direction of the transition from emitting to low- or non-emitting electricity generation.
This paper explores the pace of change in Alberta, Alberta’s review of its electricity framework (from generation to distribution) – including, the renewable generation project
approvals pause, the Alberta Utilities Commission inquiry into the “economic, orderly and efficient” development of generation, the Alberta Electric System Operator’s (AESO) expediate review of existing market structure, and the government’s review of the Transmission Regulation. However, Alberta is not alone amongst Canadian provinces grappling with these issues.
This paper explores the implications of policy and legislative initiatives across Canada for both the electricity industry and consumers. Trends and issues explored will include the
changing generation supply mix and the retirement of coal and other emitting generation; needed investment in electric transmission and distribution infrastructure to support capacity, reliability and grid resiliency; how to address the potential for electricity scarcity, such as managing new load connections and demand-side management; measures
aimed at facilitating greater customer choice; and reactions and initiatives aimed at addressing affordability.
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10:30 AM – 11:15 AM
THE DECLINE OF THE DUE DILIGENCE DEFENCE
Matthew Keen, Michael Manhas (Norton Rose Fulbright Canada LLP), and Yasser Bouhid (Rio Tinto Alcan Inc.)
Due diligence is an organization’s first (and often only) line of defence against administrative penalties and regulatory charges. The defence’s role is increasingly important
for energy companies, given the general expansion of the administrative state and the growing use of charges to address non-compliance. A successful prosecution
potentially carries serious consequences, including significant financial penalties, ongoing reputational harm, lost eligibility to participate in public tendering and grants,
and even imprisonment for directors and officers.
Yet several recent decisions have dramatically curtailed the availability of the due diligence defence, seemingly requiring organizations to possess perfect foresight into how events
will unfold – often in times of crisis and when organizations are faced with competing priorities and legal obligations. But if evidence of an offence is proof the defence cannot be
made out, then the defence for all intents and purposes no longer exists.
In this paper, we juxtapose several recent, limiting prosecution decisions against the leading cases, including the – nominally – guiding case R v Sault Ste. Marie. We
critically examine the public policy origins of due diligence as a defence, highlighting how the specific concerns that originally animated the defence (in particular: promoting
responsible operations and corporate accountability) are more important than ever, yet are increasingly undermined by the curtailment of the defence. Throughout, we take a
particular focus on why the defence plays such a key role in the energy context, while also tracking key developments in the defence more broadly, including the recent case of
R v. Greater Sudbury (City). We conclude by considering the role of the defence going forward, providing practical advice for organizations to lay the groundwork now – to
the increasingly limited extent possible – to mitigate risk going forward.
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11:30 AM – 12:15 AM
RECENT JUDICIAL DECISIONS OF INTEREST TO ENERGY LAWYERS
Archer Bell, Karen Fellowes, K.C. and Natasha Doelman (Stikeman Elliott)
Energy lawyers are frequently met with challenging legal issues within a rapidly changing regulatory and legal environment. It is essential to stay up to date on the latest
caselaw from Courts across Canada, and this paper reviews and summarizes recent judicial decisions across a wide range of subject-matter. The authors review cases dealing with
arbitration, Indigenous law, environmental law, bankruptcy and insolvency, contracts, corporate law including plans of arrangement, royalties, taxes, employment and others. Several themes emerge, including the increasing focus on environmental priorities and the expansion of director and corporate responsibility.
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FRIDAY, JUNE 14
8:30 AM – 9:15 AM
EVOLUTION OF FEDERAL ENVIRONMENTAL IMPACT LEGISLATION IN CANADA
Brad Gilmour (Osler, Hoskin & Harcourt LLP), E. Bruce Mellett, Sean Assié (Bennett Jones)
Federal and provincial governments across Canada have enacted comprehensive environmental assessment processes to evaluate the benefits and burdens of
significant proposed infrastructure and resource activities. In recent years, federal processes have become a focal point for jurisdictional tensions, including conflicts over the
regulation of major projects, natural resource development, and greenhouse gas emissions. In the wake of the Supreme Court of Canada’s landmark reference opinion in Reference
re. Impact Assessment Act, 2023 SCC 23, this paper follows the evolution of federal environmental impact legislation from its inception during the 1980s to the impugned legislation.
Beginning with the development of the Environmental Assessment and Review Process Guidelines Order and its subsequent legal challenge in Friends of the Oldman River Society v Canada (Minister of Transport), 1992 CanLII 110 (SCC), we provide a high level overview of the successive legal and procedural frameworks of the Canadian Environmental Assessment Act, 1992, Canadian Environmental Assessment Act, 2012, and the current Impact Assessment Act, with attention to the jurisdictional issues considered in the Court’s 2023 reference opinion and anticipated amendments to the present Act. As federal legislation shifted from procedures supporting an existing affirmative federal regulatory duty to a comprehensive scheme for assessing and regulating designated projects, it became disconnected from the principles established in Oldman River. We consider how this shift occurred, and what may be needed to return federal legislation to its constitutional boundaries.
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9:30 AM – 10:15 AM
PATENT LITIGATION IN THE ENERGY SECTOR: INSIGHTS AND STRATEGIES FROM THE LAST DECADE
Kendra Levasseur, Tim Ellam KC, Steven Tanner (McCarthy Tetrault LLP), Nina Lindop, Cara Patterson (Enbridge Inc.)
Over the past decade, energy companies in every sector have become embroiled in high stakes patent litigation. Bitumen producers, gas transporters, LNG developers and
downhole tool makers have all found themselves as litigants in patent lawsuits. The stakes are enormous, as a successful patentee may obtain a permanent injunction restraining key
economic activity and can claim financial compensation that extends into the tens or sometimes hundreds of millions of dollars. The incentives to settle can be high even where the patentee is a so-called “patent assertion entity” with no legitimate business in the energy sector. Given these stakes, companies have devoted large sums of money to ensuring successful litigation outcomes when they have been sued. But what lessons can be learned from the past decade of patent litigation in the energy sector to avoid litigation altogether? What can energy companies do, now, to prevent claims for patent infringement or position the business to maximize the chances of success if it is targeted by a “patent assertion entity” or anyone claiming that their patent rights have been infringed? This paper canvasses the legal risks that Canadian energy companies face in relation to patent infringement actions and puts those risks into historical context. This paper also canvasses the last decade of patent litigation in the energy sector to identify strategies that companies can implement to best position themselves to defend against patent infringement claims.
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10:15 AM – 11:00 AM
A PLAYBOOK FOR INTERNATIONAL RISK MITIGATION: INVESTOR-STATE TREATIES AND CONTRACTUAL PROTECTIONS
Rachel Howie, Catherine Gilfedder, Dr. Diora Ziyaeva (Dentons)
International energy ventures are frequently long-term, costly, risky endeavours. But the opportunities they offer are immense, and so one must go where the resource or
prospect is, often in challenging jurisdictions. This can put those looking to pursue opportunities in the difficult position of having to balance commercially lucrative opportunities
while mitigating risk and protecting project viability in unfamiliar environments. This challenge is compounded by many recent changes in Canada and globally regarding
protections are available for energy companies (for example in bilateral investment treaties or multilateral investment treaties such as the Energy Charter Treaty) and how traditional protections are applied in a modern context.
This article explores recent developments in investorstate disputes and what those trends mean for companies involved in extractive resources and energy sectors. We cover the types of protections generally available to energy companies operating internationally, transactional considerations and ways to best leverage contractual protections to mitigate future risk, in particular with respect to newer initiatives in critical minerals, energy technologies developed as part of the energy transition, and where there are related agreements or multiple interests involved. We also examine both developments in Canada with respect to the treaties impacting Canadian energy and resources companies operating internationally (e.g. the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the replacement of North American Free Trade Agreement (NAFTA) with the Canada-United States-Mexico Agreement (CUSMA)) and the related impacts for international energy companies pursuing opportunities in Canada, in particular those
seeking opportunities to invest in newer technologies as part of the energy transition. We also canvass recent developments and perspectives from around the world to
highlight treaty protections available to energy companies that stakeholders should be aware of over the next few years. Lastly, this paper discusses strategies for addressing
a potential dispute while in its early stages based on typical requirements under investor-state treaties
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11:15 AM – 12:00 PM
RECENT REGULATORY AND LEGISLATIVE DEVELOPMENTS OF INTEREST TO ENERGY LAWYERS
Jessica Mercier (Imperial Oil Limited), Nicole Bakker, Elyse Bouey (Blake, Cassels & Graydon LLP)
This paper provides a high-level overview of regulatory and legislative developments between April 2023 and March 2024 which may be of interest to Canadian energy
lawyers. It includes discussions of recent regulatory decisions, changes to regulatory and legislative regimes impacting energy law, and highlights several ongoing
regulatory and legislative developments to watch in the coming year. Topics of note include anticipated legislation and policy changes relating to federal climate change
and decarbonization initiatives and sector-specific developments related to carbon capture, utilization and storage, electricity generation and transmission, mineral resource development, oil and gas, and pipelines. The authors also comment on a number of developments relevant to Indigenous law and environmental law
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SATURDAY, JUNE 15
9:00 AM – 10:00 AM
RICHARD RIEGERT MEMORIAL LECTURE:
CANADA’S CLEAN ENERGY TRANSITION POST-IRA
Cameron MacCarthy, Arba Radaj, Cailin te Stroete (Borden Ladner Gervais LLP)
The U.S. Inflation Reduction Act (IRA) represents the “single largest investment in Climate and energy in American history.” The IRA pledges $370 billion in investments to
lower energy costs for families and small businesses, foster private investment in clean energy solutions across all sectors and regions, and generate high-paying jobs. Its
overarching goal is to slash carbon emissions by roughly 40 percent by 2030.
As Canada charts its own course towards net-zero energy production, it must also assess the impacts of the IRA on Canada’s energy sector’s competitiveness. This paper seeks
to provide policymakers with valuable insights through a thorough examination of literature, policy analysis, and case studies.
The paper explores Canada’s existing federal and provincial initiatives, including carbon pricing and clean energy programs, investment tax credits, and targeted clean energy programs. It examines the IRA’s overall objective, the key energy provisions within the IRA, and the realized and expected environmental and economic impacts on the
U.S. energy sector, Canada’s energy sector, and the global energy market. Global energy policy trends are analyzed to inform key considerations for Canada in its transition to netzero energy production.
Based on this analysis, the paper proposes policy considerations aimed at boosting Canada’s competitiveness while striving for its net-zero emissions goal. It provides
detailed insights into strategic considerations, propose possible policy changes, and conducts a cost-benefit analysis of recommended policies.
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Questions?
If you have questions regarding the CELF Jasper Research Seminar, please contact us at seminars@energylawfoundation.ca or at 1-800-281-0697.
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