Canada: The National Energy Board’s New System Of Administrative Monetary Penalties

On February 16, 2013, draft Administrative Monetary Penalties Regulations (AMP Regulations) were published in the Canada Gazette, Part I, setting out necessary details for a new enforcement tool in the form of administrative monetary penalties (AMPs). The National Energy Board (NEB) invited public comment on the AMP Regulations within 30 days following the date of publication. The regulations are expected to be in place by July 2013. These regulations follow the passage of the Jobs, Growth and Long-term Prosperity Act in June 2012, by which Parliament amended the National Energy Board Act (NEB Act) and gave the NEB the authority to establish a system of AMPs. AMPs are monetary sanctions similar to fines, which may be issued by a government department directly to a person who commits a violation, and in this circumstance are meant to encourage compliance with the NEB Act and its regulations, as well as orders, decisions, certificates, licenses and permits issued under the NEB Act.

The NEB has indicated that the purpose of AMPs is to encourage compliance, deter future non-compliance, and prevent harm, with a focus on ensuring the safety of workers and the public, and the protection of the environment.1 The proposed AMPs are meant to promote compliance, not to punish those who commit violations.2

National Energy Board Act AMP Framework

The NEB Act provisions establishing the legal framework for AMPs are sections 134 to 154 of the revised Act, but are currently not in force (see coming into force section below). The general violation provision is found at section 136 and provides that a person (i.e., a legal person, which includes individuals and certain other entities such as corporations) who contravenes specified provisions of the NEB Act or its regulations, any order or decision made under the NEB Act, or fails to comply with the terms of a certificate, licence or permit, is guilty of a violation and liable to a penalty. Maximum penalties are established in section 134(2) of the NEB Act as $25,000 in the case of an individual and $100,000 in the case of any other person, such as a corporation, for each violation.

The new provisions of the NEB Act create an "absolute liability" scheme, meaning that the violation itself is enough to establish liability. The NEB Act specifically excludes the possibility of a due diligence defence for violations.3 This means that efforts to prevent a violation will not be considered in determining whether a person is guilty of a violation. As discussed further below, preventative measures may, however, impact the amount of the penalty.

The NEB Act amendments also impose officer and director liability with respect to any violation committed by a corporation, if the officer or director directed, authorized, assented to, acquiesced in or participated in the commission of the violation.

The AMP Regulations provide the specific acts or omissions that will constitute a violation. They also establish the method for determining the amount of a penalty and identify the required content of violation notices.

Enforcement

The NEB's current compliance scheme has a number of enforcement tools. These tools include issuing advisories, requesting corrective action, issuing orders to restrict operations, or pursuing court-based proceedings. The introduction of AMPs completes an "enforcement toolkit" that spans a spectrum of possible responses to non-compliance.4 These options are not mutually exclusive and any may be used alone or in combination with others to promote compliance. The NEB has indicated that it will continue to employ these other measures and has published criteria that will guide its use of AMPs.5 The NEB has stated that AMPs will be used when compliance is not obtained using other compliance tools, when harm is caused or is likely to occur because of non-compliance, or any other situation where an AMP is the best way to obtain compliance or deter future non-compliance.6

The one qualification on the NEB's ability to use multiple enforcement tools is with respect to offences under the NEB Act. Violations that are subject to an AMP are not necessarily offences under the Act, but in some cases may qualify as both. In such cases, the NEB may elect to proceed by way of an AMP, but by doing so may not also proceed with the violation as an offence.

Designated Violations

The AMP Regulations designate certain acts and omissions as violations, including:

  1. The contravention of the NEB Act or its regulations as set out in Schedule 1 to the AMP Regulations;
  2. The contravention of any order or decision made under the NEB Act; and
  3. The failure to comply with any term or condition of any certificate, licence, permit, leave or exemption that is granted under the NEB Act.

Schedule 1 of the AMP Regulations lists 194 specific provisions of the NEB Act and its regulations which will qualify as a violation. These include provisions of the Onshore Pipelines Regulations, 1999, National Energy Board Processing Plant Regulations, National Energy Board Pipeline Crossing Regulations, Part I, National Energy Board Pipeline Crossing Regulation, Part II, and the Power Line Crossing Regulations.

Calculating Penalties

Under the AMP Regulations, designated violations are classified as either Type A or Type B. The significance of the classification is relevant in the calculation of the appropriate penalty. Type A violations attract lower penalties, in the range of $250 to $3,000 for individuals and $1,000 to $12,000 for any other person, for each violation. Type B penalties are significantly higher, ranging from $1,000 to $25,000 for individuals and $4,000 to $100,000 for any other person, for each violation. Under the NEB Act, a violation that continues for more than one day constitutes a separate violation for each day.7 Committing one of the designated violations can expose companies and individuals to significant financial penalties, compounding each day the violation continues.

The AMP Regulations employ a unique method for calculating the penalty for a violation, which is dependent on an assigned gravity value. The AMP Regulations incorporate a table identifying nine criteria that will attribute a positive (+) or negative (-) gravity value (previous violations, benefit derived, mitigation efforts, negligence, reporting, cooperation with the NEB, steps taken to prevent recurrence, violation of a minor nature, and any other aggravating or mitigating factors). The gravity value has the effect of moving the penalty up or down the scale found in Schedule 2 to the AMP Regulations and allows the NEB some flexibility in attributing a penalty. This means that despite the "absolute liability" nature of an AMP, efforts to prevent violations and mitigate their effects are encouraged under the AMP Regulations and may affect the amount of a penalty.

It should be noted that the AMP Regulations do not provide for compliance agreements with individuals and small businesses. In its discussion paper issued in 2012, the NEB had proposed that the AMP scheme allow for a penalty to be reduced or eliminated if the individual or small business came into compliance within a time set by the agreement.8 Compliance agreements are not included in the proposed AMP Regulations.

Content of Violation Notice

Any person or corporation facing an AMP is to be provided with a notice of violation, which must identify the amount of the penalty, manner of payment, the person believed to have committed the violation and the relevant facts.

Importantly, a notice of violation must notify persons of their right to a review with respect to the penalty. Failure to request a review will result in a person being deemed to have committed the violation and being liable for the penalty in the notice. The right to a review is significant, as a review requires, depending upon the case, that the NEB review and determine whether the person actually committed the violation or whether the amount of the penalty was appropriate, or both. This gives a person the opportunity to dispute the violation itself, or to challenge the amount of the penalty based on the gravity value attributed to the violation.

Coming into Force

As previously noted, the amendments to the NEB Act that create the AMP scheme (sections 134 to 154) are not currently in force. It is expected that these sections will be brought into force by Order in Council just before or at the same time that the AMP Regulations are enacted, which is expected to be by July 2013.

Footnotes

1 National Energy Board, Proposed National Energy Board Administrative Monetary Penalties, online: National Energy Board < http://www.neb-one.gc.ca/clf-nsi/rpblctn/ctsndrgltn/dmnstrtvmntrypnlts/cntctsamp-eng.html >.

2 National Energy Board Act, RSC 1985, c N-7, s 136(2).

3 Ibid, s 140(1).

4 National Energy Board, Regulatory Impact Analysis Statement: Administrative Monetary Penalties Regulations, Canada Gazette Part I, February 16, 2013.

5 Supra note 1.

6 National Energy Board, FAQs on the NEB's Administrative Monetary Penalties, online: National Energy Board < http://www.neb-one.gc.ca/clf-nsi/rthnb/nws/fqs/dmnstrtvmntrypnltsfq-eng.html#s8 >.

7 Supra note 2 at s 141.

8 National Energy Board, Administrative Monetary Penalties under the National Energy Board Act: Discussion Paper, online: National Energy Board < http://www.neb-one.gc.ca/clf-nsi/rpblctn/ctsndrgltn/dmnstrtvmntrypnlts/dmnstrtvmntrypnlts-eng.pdf >.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions