Alberta Record

· Order in Council / Prompt Payment and Construction Lien (Prescribed Persons, Entities and Project Agreements) Regulation · in-force

Prompt payment construction lien regulation 2023

This Order in Council establishes a new regulation under the Prompt Payment and Construction Lien Act, creating exemptions from the Act's 31-day payment limitation for specific large-scale industrial projects and entities.

Moderate impactCentralization of powerThe public, directly

What changed

  • A new regulation, the Prompt Payment and Construction Lien (Prescribed Persons, Entities and Project Agreements) Regulation, is enacted under the Prompt Payment and Construction Lien Act.
  • The regulation defines conditions under which the 31-day payment limitation specified in section 32.1(6) of the Act does not apply.
  • Exemptions are granted to persons or entities that enter into project agreements to finance and undertake improvements, and to the project agreements themselves, provided they meet specific criteria.
  • Exemption criteria include capital expenditures of at least $5 billion, contributions to significant job creation and economic growth, and demonstration of technologies for environmentally sustainable oil/gas development or greenhouse gas reduction.
  • Dow Chemical Canada ULC and its Path2Zero Expansion Project are explicitly listed in the Schedule as an exempted entity and project agreement.
  • The regulation includes an expiry clause, setting its termination date for October 31, 2033, to ensure a review of its ongoing relevancy.

Why it matters

  • The regulation introduces specific exemptions to the Prompt Payment and Construction Lien Act, altering standard payment timelines for certain large-scale industrial projects.
  • It provides a mechanism for the government to grant specific entities and projects relief from statutory payment deadlines, potentially affecting cash flow and risk distribution within the supply chain for these projects.
  • The criteria for exemption prioritize projects with substantial capital investment, job creation, and environmental technology development, aligning with specific provincial economic and environmental objectives.
  • The explicit naming of Dow Chemical Canada ULC's Path2Zero Expansion Project indicates a targeted application of the regulation to a specific, large-scale industrial development.
  • The expiry clause ensures a mandated review of the regulation's effectiveness and necessity within a decade, allowing for future adjustments or repeal.

Rights affected

  • Access to information — The ability to see public records and government decisions.

Other governance concerns

  • Potential for uneven application of prompt payment rules based on project size and type.
  • Reduced payment certainty for contractors and subcontractors on exempted projects.
  • Government discretion in defining which projects and entities receive exemptions.
  • Transparency regarding the criteria and process for granting future exemptions.

Primary sources (1)