Thursday, June 13, 2019
FORGING A CLEARER PATH FORWARD FOR ASSESSING CUMULATIVE IMPACTS ON ABORIGINAL AND TREATY RIGHTS
Presenters: Bryn Gray (McCarthy Tétrault LLP), Stephanie Axmann (McCarthy Tétrault LLP), Kim Howard (McCarthy Tétrault LLP) & Diana Audino (Enbridge)
The consideration of cumulative impacts on asserted or established Aboriginal and treaty rights continues to be a challenging issue for Indigenous consultation and accommodation relating to energy projects in Canada.
Cumulative impacts have become an increasing focus of Indigenous groups in project reviews, in some cases being referred to as “death by a thousand cuts”. Project proponents and governments continue to grapple with how best to address this issue which typically raises matters that go well beyond an individual project or decision. In Chippewas of the Thames, the Supreme Court of Canada confirmed that consultation is focused on the specific Crown decision at issue but that it may be “impossible to understand the seriousness of the impact of a project on s. 35 rights without considering the larger context”. Canada’s highest court confirmed that cumulative impacts and historical context may inform the scope of the duty to consult but declined to elaborate on how they may inform and should be considered in consultation and/or accommodation. The federal and provincial governments have similarly not provided sufficient guidance on this issue or delineated the roles and responsibilities as between proponents and the Crown.
The presenters will review how the assessment of cumulative impacts on Aboriginal and treaty rights has been considered to date in Canadian jurisprudence, how this compares to the assessment of cumulative environmental impacts in policy and practice, and how this issue should be addressed going forward. The presenters will also consider best practices and the appropriate roles and responsibilities of the Crown and project proponents in addressing this important issue.
LET’S TALK ABOUT ROYALTIES: THE CONTINUED UNCERTAINTY SURROUNDING THE CREATION AND LEGAL STATUS OF THE OVERRIDING ROYALTY
Presenters: David LeGeyt, Ashley Weldon & Tasha Wood (Burnet, Duckworth & Palmer LLP), Jessica Kennedy (Osler, Hoskin & Harcourt LLP)
The overriding royalty is a critical component of Canada’s oil and gas and mining industries. Historically, the common law held that overriding royalties were creatures of contract and could not become interests in land. Due to industry custom and the evolving nature of the common law, this historical view evolved to recognize that in certain circumstances some overriding royalties could, in fact, be interests in land. Unfortunately, the circumstances in which this is possible continue to be the subject of significant legal uncertainty and debate. This paper investigates the historical nature of the overriding royalty, engages in a review of its common law character and development, and attempts to more fulsomely discuss the implications of the Supreme Court of Canada’s decision in Bank of Montreal v Dynex Petroleum Ltd, which purported to “change the rules of the game”, despite the failure of subsequent courts to apply it properly.
Recently, the Ontario Court of Appeal in Third Eye Capital Corporation v Dianor Resources Inc and the Alberta Court of Queen’s Bench in Re Manitok Energy Inc signalled a return to the simplified approach to the creation and identification of overriding royalties as interests in land. This paper, therefore, concludes with a discussion of the recent case law and consideration of the treatment of royalties in Ontario and Alberta (Dianor and Manitok, respectively). Both of these cases involved disputed royalties in the context of receiverships and the Court’s authority to vest off such royalties.
Regardless of whether the Supreme Court ultimately decides to grant leave in the Dianor case, the underlying legal substance of an overriding royalty, the reasons for its troubled judicial history in Canada, and the incidents of its current characterization are matters of great interest and importance to the energy and mining industries in Canada.
OVERVIEW OF THE NEW LEGAL ERA FOR PROJECT DEVELOPMENTS IN THE NL OFFSHORE
Presenter: Todd Stanley, Q.C. (Cox & Palmer)
The paper will discuss how we are at the beginning of a new legal era for the development of petroleum projects in the Newfoundland and Labrador offshore. The legal context for development has changed significantly from that which existed for the current projects, both in terms of changes to the regulatory regimes which govern the economics, assessment and approvals of such projects, as well as the introduction of entirely new legal issues. These changes, coupled with other fundamental differences in development activities, means the existing projects can be recognized as belonging to an era which has now passed.
The paper will include a brief overview of the non-legal changes expected in future development activity, which include new locations and reservoirs, greater depths, and shorter expected delays between discovery and development. The focus on the paper will be on the changes which have also occurred to the various regulatory regimes governing offshore development. This will include the changes to the royalty and environmental assessment regimes (pre-Bill C-69) since the existing developments proceeded through the assessment and approval stages, and the potential further changes that Bill C-69 may bring. It will also highlight the entirely new issues that will be faced by offshore developments, including the introduction of indigenous consultation requirements and the implications of activity beyond the 200 nm limit. The cumulative implications of these changes on development activities will be reviewed with the conclusion of the paper to be an assessment as to how much the experience gained from the original era projects can be relied upon as the new projects progress.
Friday, June 14, 2019
AN EXAMINATION OF THE REGULATORY AND COMMERCIAL CHALLENGES AND OPPORTUNITIES ARISING IN THE CONTEXT OF PRIVATE POWER PURCHASE AGREEMENTS FOR RENEWABLE ENERGY
Presenters: Simon Baines (Osler, Hoskin & Harcourt LLP) & Shaun Wrubell (BluEarth Renewables)
In recent years there has been a significant increase in the amount of renewable power procured in the US under corporate or private power purchase agreements (PPAs). Despite an equally dramatic increase in the number of renewable energy projects planned for development in western Canada over the past few years, we have not seen a corresponding growth or development in the market for private PPAs. Renewable energy procurement has largely remained the purview of government and other public institutions.
However, recent public procurement processes in Alberta and Saskatchewan have been significantly oversubscribed, with far more projects proposed for development than governments are willing to buy. In order for those projects that are unsuccessful in securing a government contract to proceed, a private offtaker (a PPA) is likely required.
In this paper we briefly review the growth in this industry in the US, and then consider how Canadian renewable energy developers and customers could potentially follow suit. We touch on the regulatory structures that facilitate private PPAs, and then examine commercial challenges and opportunities facing potential developers and customers. These challenges and opportunities present risks for developers and customers, and we look at some of the common terms of a PPA that are designed to manage and allocate these risks between the parties. Our objective is to provide potential developers and customers with a better understanding of how a private PPA functions in the hope that better understanding will facilitate transactions in and the growth of this industry.
UNDER CONSTRUCTION: A CLOSE EXAMINATION OF RECENT CONSTRUCTION LAW DEVELOPMENTS AND THEIR IMPACT ON THE OIL AND GAS INDUSTRY
Presenters: Kevin Barr & Theron Davis (Borden Ladner Gervais LLP)
The oil and gas industry continues to generate some of the largest construction projects in the nation. These complex undertakings are subject to a host of statutory schemes, incorporate hundreds of contracting parties, and almost inevitably result in litigation. Canadian courts have recently delivered a number of construction related decisions that impact tendering, arbitration, liens, and bonding in the oil and gas industry.
For example, the law in respect of contract tendering has recently examined the factors an owner may reasonably consider in selecting the winning bid. These include past experience with the bidder, implementation of reprisal clauses, and the right to waive material defects in the tenders. Mandatory arbitration clauses have become increasingly prevalent in oil and gas contracts. Varying decisions with respect to commencing, consolidating, or staying arbitrations in face of a multiplicity of proceedings have created procedural dilemmas for associated contracting and non-contracting parties alike. A residual discretion in Alberta’s arbitration legislation was recently relied upon to prevent the manifestly unfair or unequal treatment of parties to an arbitration agreement in the context of an oil sands extraction facility expansion. When a dispute arose between multiple parties following the failure of a pipeline, the Alberta Court of Appeal considered the benefits and risks of Pierringer Agreements when settling multi-party litigation. The Alberta Court of Queen’s bench, in a series of decisions, addressed work that would qualify as being “in connection with” the recovery of a mineral as per the Alberta Builder’s Lien Act. The majority of the Supreme Court of Canada recently upended decades of jurisprudence, to overhaul the rights and responsibilities attached to labour and material bonds. According to the dissenting opinion of Justice Karakatsanis, by placing a duty to disclose on obligees the court has mutated a beneficial risk-management tool into a liability.
These recent decisions demonstrate a tension between the prototypical freedom to contract and the judiciary’s proclivity towards correcting perceived failings of the construction industry. Disputes arising from construction projects in the oil and gas industry have taken centre stage in bringing about incremental change in the law. In order to mitigate against the resultant uncertainty, owners and contractors should mind the nuances in how the fundamental rules of construction law are applied. This paper explores the application of first principles to identify themes commonly adopted by the bench and makes recommendations for where the case law may be going in the future.
FINANCING DISPUTES: THIRD-PARTY FUNDING IN LITIGATION AND ARBITRATION
Presenters: Rachel Howie (Dentons Canada LLP) & Geoff Moysa (Bentham IMF)
Disputes with joint venture partners, counterparties or governments over energy and infrastructure projects can put corporations and their stakeholders in a difficult position. Litigation and arbitration are expensive and time-consuming, but can be necessary to protect project and even company viability, and at the same time can yield significant returns. In recent years third-party funding has emerged in Canada as a tool to effectively turn disputes into assets, allowing companies to pursue meritorious claims off-balance sheet and without the attendant risk of adverse costs exposure while freeing up capital for core business goals.
This paper explores the developing law and business of third-party funding in Canada, beginning with describing the existing and developing models of third-party funding such
as paying for legal fees and disbursements (including expert reports and arbitrator fees), covering adverse costs exposure and security for costs orders, providing working capital, and providing portfolio funding for bundles of claims. The paper will then discuss the development and current state of the legal framework and case law in Canada governing third-party funding, including the evolution of the law of maintenance and champerty and a discussion of key legal and ethical issues engaged by third-party funding arrangements including confidentiality, privilege, the disclosure of funding arrangements, potential conflicts of interest, and control of the progression and potential settlement of the dispute.
We will also review the developing case law and regulatory framework around third-party funding across different contexts such as class proceedings and insolvency, where court approval of funding agreements may be required, and commercial litigation, intellectual property disputes, and domestic and international arbitration, where there may be other unique considerations. The specific applications of third-party funding to energy and resource claims will also be detailed, and we will provide a practical discussion on bringing and responding to third-party funded claims, including risksharing and alignment, funder due diligence and the funding agreement negotiation processes.
Saturday, June 15, 2019
RECENT JUDICIAL DECISIONS OF INTEREST TO ENERGY LAWYERS
Presenters: Bryan Walker & Lucy L’Hirondelle (Norton Rose Fulbright Canada LLP)
This article summarizes a number of recent judicial decisions of interest to energy lawyers. The authors review and comment on the past year’s case law in several areas including Indigenous law, alternative dispute resolution, bankruptcy and insolvency, contractual interpretation (including Operator Agreements), competition law, corporate separateness, damages/limitations of liability, torts, and selected developments relating to summary dismissal.
Specific topics addressed include the interpretation of exclusion clauses in the context of claims for lost profits, rights and obligations of oil and gas companies placed into receivership, the reaffirmation of the principle of corporate separateness, confirmation that environmental cleanup costs take priority over creditors in bankruptcy situations, confirmation that the development, passage, or enactment of legislation does not trigger the duty to consult, apportionment of liability, and Pierringer agreements.
RICHARD RIEGERT MEMORIAL LECTURE: ADDRESSING END OF LIFE OBLIGATIONS POST REDWATER
Presenters: Keely Cameron & Robert Wadsworth (Alberta Energy Regulator)
The Supreme Court of Canada recently issued the much anticipated decision in Orphan Well Association, et al. v. Grant Thornton Limited, et al., 2019 SCC 5. The decision addressed the question of who should bear the cost of addressing the end of life obligations associated with wells licensed to an insolvent licensee. The decision has provided clarity regarding the duty to address end of life obligations during an insolvency, what the effect of a renouncement under the Bankruptcy and Insolvency Act is and clarified the Abitibi test for determining when a regulator is acting as a creditor. This presentation reviews the implications of the decision for future insolvencies and how liabilities are managed in the future.
RECENT REGULATORY AND LEGISLATIVE DEVELOPMENTS OF INTEREST TO ENERGY LAWYERS
Presenters: Lars Olthafer, Katie Slipp, Terri-Lee Oleniuk, & Dufferin Harper (Blake, Cassels & Graydon LLP)
This article discusses select regulatory and legislative developments from May 2018 through April 2019 of interest to energy lawyers. New legislation and regulatory decisions having significant implications for energy regulation at the federal and provincial levels are reviewed. Topics addressed include climate change regulation, project impact assessment, major pipeline project updates, aboriginal rights and title, abandonment and reclamation obligations and liability, emissions regulation, renewable energy programs, oil production curtailment, electrical market regulation and surface rights, among others.