Canada: ER Announces Increased Scrutiny And New Requirements For Licensees

On December 6, 2017, the Alberta Energy Regulator (AER) announced the release of a new edition of Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals (the updated Directive 067). The AER's stated intention in releasing the updated Directive 067 is to ensure that the "privilege" of holding an AER licence or approval "is only granted to, and retained by, responsible parties."

There are several significant changes contained in the updated Directive 067.

First, the updated Directive 067 has added a new basic requirement for licence eligibility: that in "the AER's opinion, the applicant does not pose an unreasonable risk." This new requirement provides the AER with broad discretion to determine whether an applicant poses an unreasonable risk. Factors that may be considered by the AER in assessing an applicant's risk include compliance history (including that of its directors, officers, shareholders and affiliates); corporate structure; financial health and indebtedness (including that of its directors, officers, shareholders and affiliates); and involvement of the applicant's directors, officers, or shareholders in entities that have undergone insolvency.

These new considerations are reflected in the revised application requirements found in Schedule 1 of the updated Directive 067.

Second, existing licensees with eligibility as of December 6, 2017, have until January 31, 2018, to provide an updated Schedule 1 to the AER addressing the new information requirements.

Third, licensees must now meet the Directive 067 licence eligibility requirements on an ongoing basis and must provide the AER with an updated Schedule 1 within 30 days of any "material change".

Fourth, failure to provide the updated Schedule 1 (either by the January 31, 2018, deadline or within 30 days of any "material change") may result in the AER either revoking or restricting licence eligibility. Information provided by way of an updated Schedule 1 may also result in the AER revoking licence eligibility, or restricting licence eligibility by imposing terms and conditions, where the AER believes that the change has resulted in an "unreasonable risk".  Licensees may request an advance ruling from the AER on whether it would consider that a proposed material change would result in the licensee posing an "unreasonable risk".

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