The government of Alberta has enacted an exemption to the Prompt Payment and Construction Lien Act for Dow Chemical’s Path2Zero Expansion Project, making Alberta the only province to provide such an exemption for a project from a private corporation.
I. Prompt Payment and Exemptions
On August 29, 2022, the Prompt Payment and Construction Lien Act (the “Act”) came into force in Alberta. The Act replaced the previous Builders’ Lien Act, and imposed payment timelines, a new adjudication process and the progressive release of holdback charges. Subject to regulations, the Act specifically requires that owners receive invoices at least every 31 days, with invoices requiring payment within 28 days of receipt.
The Act allows the government of Alberta to pass regulations exempting “prescribed person or entity, whether incorporated or not, that enters into a prescribed project agreement to finance and undertake an improvement or to a prescribed class of such persons, entities or project agreements” from the 31 day invoicing requirement under the Act. In late 2023, the Prompt Payment and Construction Lien (Prescribed Persons, Entities And Project Agreements) Regulation (the “Regulation”) came into effect, which provided for an exemption to the 31-day limitation for Dow Chemical’s Path2Zero Expansion Project in Fort Saskatchewan, Alberta.
As of January 2024, Ontario, Saskatchewan and Alberta have each implemented prompt payment regimes. In addition, the federal government enacted the Prompt Payment for Construction Work Act for projects under federal jurisdiction, and three other provinces (Manitoba, Nova Scotia, and New Brunswick) have prompt payment legislation that has not yet come into force. Prompt payment legislation is becoming increasingly common as industry and legislators continue to push toward increasing security of payment and creating dispute resolution measures within the construction industry.
Exemptions to prompt payment legislation are not uncommon in and of themselves. For example, Saskatchewan’s Builders’ Lien Regulations provide exemptions for (1) mining and mineral extraction (with the exception of oil and gas), and (2) contracts for power generation and transmission infrastructure made pursuant to the Power Corporation Act. Alberta’s exemption for Dow Chemical stands in contrast to industry-wide exemptions or those for crown corporations such as SaskPower; Alberta is the only Canadian jurisdiction to create an exemption for a specific project or for a specific private corporation.
II. Future Project Exemptions
The Regulation allows for the government to specify projects for exemption which (1) exceed $5 billion in costs, (2) contribute to economic growth, and (3) involve technologies which “assist in the environmentally sustainable development of oil or natural gas” or reduce greenhouse gas emissions. The Regulation currently limits the exemption to the Path2Zero Expansion Project, however, the government could choose to exempt future projects which meet that criteria. As currently stands, we look to the government’s next course of action regarding what specific projects, if any, will be exempt from the Act.
For more guidance on how to navigate this legislation and possible exemptions, our Construction Projects group would be happy to hear from you.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.