The Minister of Natural Resources introduced legislation on
Thursday, January 30, 2014 that would see important changes to
Canada's offshore oil and gas regime. The Energy Safety and
Security Act (the Act) contains amendments to the Canada
Oil and Gas Operations Act and the Canada Petroleum
Resources Act, along with the federal Accord Acts governing
exploration and production offshore Nova Scotia and Newfoundland
The amendments specifically introduce a 'polluter-pays'
principle into the federal government's offshore oil and gas
regime. This principle is supported by increasing the amount of
security an operator will have to post in advance of drilling, as
well as an increase to operators' liability.
The current regime allows regulators to determine the amount of
security, with no set minimum, that an operator will be required to
post in order to undertake exploration activities. The amendments
set a minimum $100 million of security, which the regulator may
exceed at its discretion.
The Act raises to $1 billion the cap on liability, without proof
of fault or negligence, for damages caused by a spill. Previously,
these caps had been $30-million offshore in Newfoundland and
Labrador and Nova Scotia and $40 million in the Arctic. Unlimited
liability in the case of fault or negligence remains. In addition,
an operator seeking authorization to drill offshore must
demonstrate that it has the financial resources to meet the
greatest of the liability obligations it will assume.
Under current legislation, regulators must appeal to the courts
in order to impose fines and penalties on parties that contravene
the statutes and regulations. The amendments empower regulators to
impose fines of up to $25,000 on individuals and up to $100,000 on
corporations or other entities for regulatory contraventions.
Transboundary Pools and Fields
The Act includes new provisions that will apply to pools or
fields that are within the jurisdiction of both the National Energy
Board (the NEB) and another regulator. These provisions include
processes to determine which regulator will have jurisdiction over
the pool or field and processes to unitize such a field, including
pursuant to an order from a regulator.
The NEB exercises jurisdiction over oil and gas production
onshore in the Northwest Territories and Nunavut. Offshore, both
the Canada-Newfoundland Offshore Petroleum Board (the CNLOPB) and
the Canada-Nova Scotia Offshore Petroleum Board (the CNLOPB) govern
oil and gas operations in the waters off their respective coasts.
The NEB has jurisdiction over Canada's remaining offshore
waters. As such, the transboundary rules would apply to offshore
pools that underlay both NEB and CNLOPB or CNSOPB jurisdiction,
such as in the Gulf of St. Lawrence or off the northern coast of
Quebec and Labrador.
The Act will also harmonize the environmental assessment process
of the regulators, in particular to provide that the CNLOPB and the
CNSOPB can be responsible for conducting environmental assessments
pursuant to the Canadian Environmental Assessment Act,
2012. The Act also establishes timelines for
environmental assessments and creates participant funding
The amendments to be made pursuant to the Act will require
operators to post more security up front, and be exposed to greater
environmental liability in the event of a spill. The new provisions
relating to transboundary pools and fields could have a significant
impact on affected resources, particularly in the Gulf of St.
Lawrence where there are many competing jurisdictions. The
amendments relating to environmental assessments are consistent
with the federal government's earlier amendments intended to
streamline the process and to ensure that environmental assessments
are being conducted by the most appropriate
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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