The Federal and Nova Scotia regulations that require oil and gas
companies to submit seismic data to Nova Scotia's offshore oil
and gas board are not ultra vires, the Nova Scotia Supreme
Court recently held in Geophysical Service Inc. v. Canada
– Nova Scotia Offshore Petroleum Board, 2014 NSSC 172
[GSI v. Canada – NS OPB] .
In an earlier post (
Seismic Data Held by a Board: A Warning Before You Look), we
described how Geophysical Service Incorporated (GSI), a geophysical
services company headquartered in Calgary that creates and markets
offshore seismic data, has commenced about two dozen lawsuits
against oil and gas companies, off-shore regulatory boards, and at
least one province. In these claims, GSI asserts that it retains
full rights of ownership in seismic data shot by GSI for its own
use and licensed to third parties, notwithstanding that the data
has been disclosed to Canadian regulatory authorities pursuant to a
regulatory framework requiring the same.
This recent decision out of Nova Scotia marks an important step
in considering the underlying legal merit of GSI's claims.
In GSI v. Canada – NS OPB, the Court considered
GSI's challenge to the Canada-Nova Scotia Offshore Petroleum
Board's authority to make certain regulations relating to the
collection and storage of seismic data generated by private
companies. In particular, the Court considered whether sections of
the relevant regulations were vires or ultra
vires (within the powers or beyond the powers of) the enacting
legislation (identical Federal and Nova Scotia Acts). The impugned
sections require oil and gas operators to submit seismic data to
the Board. Under the scheme of the legislation, a period of
"privilege or confidentiality" applies to such data for
10 years. Thereafter the Board may put it in the public domain.
The part of the statutes pursuant to which the challenged
regulations were made states that:
... the Governor in Council may, for the purposes of safety and
the protection of the environment as well as for the production and
conservation of petroleum resources, make regulations ...
concerning the exploration and drilling for, and the production,
processing and transportation of, petroleum and works and
activities related to such exploration...
After canvassing principles of statutory interpretation,
including that subordinate legislation accord with the purposes and
objects of the parent enactment, the Court noted that the purposes
and objectives of the relevant legislation were clearly the
"exploration for and the development and ultimate production
of petroleum products from Nova Scotia's offshore
resources." Against GSI's protestations, the Court found
that seismic surveys constitute an early part of
"exploration". The Court concluded by stating:
I find that the impugned Regulations are vires and are
part of the overall legislative and regulatory scheme of the Acts.
The fact that the information supplied by the Applicant to the
Board for many years, pursuant to authorizations and upon agreed
terms and conditions, is no longer confidential are the rules of
the industry in Nova Scotia. They are the "governing
authority's rules" and they are enabled by the governing
statutes. They are the same rules by which the Applicant undertook
to participate in this exploration more than a decade ago.
As a result, while numerous GSI claims remain outstanding,
including those based on contractual claims brought against
licencees of seismic data, this important decision indicates that
at least the Federal and Nova Scotia provisions that require
companies to provide seismic information to Nova Scotia's Board
are vires the enacting legislation.
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.
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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.
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