The Alberta Environmental Monitoring, Evaluation and Reporting Agency is fighting back against a report that called the organization "a failed experiment."

Environment Minister Shannon Phillips announced Tuesday she was disbanding the agency and placing responsibility for oilsands monitoring under her department.

The agency's former chairman, Lorne Taylor, said the move came as a total surprise.

"We were all shocked because we had never heard any concerns with her that she was unhappy with anything," Taylor said.

Taylor, the former environment minister under Progressive Conservative premier Ralph Klein, said Phillips first told him about the disbandment only a week ago, in their first meeting since the minister's appointment in June.

Taylor sent a press release Wednesday calling the change "a house of cards that will collapse under scrutiny and the pressure of local communities and stakeholders." He said a new government-led monitoring system would not be based on a foundation of independence and transparency.

"The inevitability of it is both telling and alarming."

Environment Minister Shannon Phillips said the board was interviewed as part of the review of agencies, boards and commissions. She says she has a number of issues with AEMERA.

"It was very slow to start, and there were a number of gaps that were identified in terms of the collection of data and analysis of data," she said.

"In addition to that, there were a number of redundancies and duplications and so on that were identified. And that's why, as part of the overall review of agencies,boards and commissions to ensure that we are doing things in a more efficient way, that we took that decision."

Under the new system, the province will retain AEMERA's independent scientific review panel. But that panel, now headed by a chief scientist, will report directly to the department.

Industry pays $50 million to the agency, while the province contributes another $28 million to fund the expansion of environmental monitoring across the province.

The report was written by Paul Boothe, director of the Lawrence National Centre for Policy and Management at Western University's Ivey School of Business, and a former deputy minister for Environment Canada.

In it, he called AEMERA.needlessly expensive, poorly co-ordinated and split by bureaucratic infighting.

"It is hard to escape the conclusion that AEMERA is a failed experiment in outsourcing a core responsibility of government to an arm's-length body," he wrote.

"Three years and tens of millions of dollars later, the results are an organization that is still struggling to get established, dysfunctional relationships with its two key partners ... and a failure of all three parties to realize the promise of the ... plan to bring critically needed, world-class environmental monitoring to Alberta's oilsands."

But AEMERA says Booth's report is full of factual errors and not peer-reviewed.

The organization claims Booth is in conflict of interest because he was with Environment Canada when the Joint Oil Sands Monitoring Program was put in place.