Canada: FAQs About AMPs (Administrative Monetary Penalties) In The Canadian Offshore

Last Updated: June 13 2016
Article by Wylie Spicer

Administrative monetary penalties, or "AMPs", are a new phenomenon in the Canadian offshore. AMPs were introduced to the Newfoundland & Labrador and Nova Scotia offshore in February 2016 as part of the toughening-up of the offshore regulatory regime under the Energy Safety and Security Act amendments to each of the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the legislation implementing the Atlantic Accord and the Canada-Nova Scotia Offshore Petroleum Resources Accord respectively). But AMPs have been used in both federal and provincial legislation for years: federally, they are used as an enforcement mechanism in many situations, including in the enforcement of agrifood, nuclear safety, and immigration legislation; provincially, they are used as an enforcement mechanism in health and safety (for example, in Nova Scotia and Alberta) and environmental protection (for example, in Alberta) legislation.

Here are five frequently-asked questions about the new AMPs in the Canadian offshore to help offshore operators know what to expect.

  1. What are AMPs? AMPs are monetary penalties that a regulator is authorized under the relevant legislation to impose on an infringer without the need for the regulator to prosecute the alleged infringer in a court. This authority appeals to regulators because they can avoid the cost and time of initiating prosecutions for infringements; but parties exposed to AMPS are sensitive to this lack of court oversight, however, and thus to the fair and impartial application of AMPS by the regulators. For the most part, AMPs are authorized in legislation that relates to regulated activities, and are typically imposed on individuals and businesses licensed to undertake those regulated activities.. Generally, AMPs are intended as a compliance-promoting, as opposed to a punitive, measure and the imposition of an AMP doesn't create a criminal record. In keeping with this general approach, the use of AMPs in the Canadian offshore context is intended to promote compliance with the Accords, not to punish violators, and to strengthen safety and environmental protection of Canada's offshore oil and gas sector. Thus, the application of the AMPs in this context focuses on regulatory requirements related to safety, protection of the environment and resource management.
  2. For what sorts of violations can an AMP be issued in the Canadian offshore context and how are they issued? An AMP can be issued for a contravention of:

    • A provision of the Part of the relevant Accord Act related to Petroleum Operations/Resources.
    • A direction, requirement or Decision or Order made under that Part.
    • A term or condition of an operating license or authorization that is issued, or of an approval or exemption that is granted, under that Part.
    AMPs are issued in the form of a Notice of Violation (NOV) that includes: the name of the person believed to have committed the violation; the relevant facts surrounding the violation; the amount of the penalty, including identification of the mitigating and aggravating factors the issuer applied; and how to pay the penalty and how to request a review.
  3. What are the potential penalties? The penalties that can be levied via an AMP vary greatly depending on the circumstances, but the maximum that can be imposed against an individual is $25,000 and against a corporation or any other person is $100,000. Regulators typically make the AMPs they impose publicly available on their websites. Since neither the Canada-Newfoundland & Labrador Offshore Petroleum Board (C-NLOPB) nor the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) have yet imposed any AMPs, they don't have any listing on their respective websites; however, the National Energy Board (NEB) website offers an example of what we would expect the Boards to make available when they do impose AMPs.
  4. Is an AMP final or can it be reviewed? An AMP isn't final. If an AMP recipient wants to have it reviewed by the "next level", the recipient must submit request a review to the applicable Offshore Petroleum Board within 30 days from the date it receives the AMP. The Boards are empowered to either refer this review to the Board itself to conduct the review, or to designate a person to conduct the review. It remains to be seen how this will work in practice, but either way, operators will want assurance that the 'reviewer' had no part in imposing the AMP in the first place. A further review to the Supreme Court of the applicable province is permitted. Interestingly, the legislation limits a further review in Newfoundland and Labrador to the "Trial Division of the Supreme Court of Newfoundland and Labrador" but limits a further review in Nova Scotia only to the "Supreme Court of Nova Scotia", which could be interpreted as including both the trial and the appeal court.
  5. What are the defences to an AMP? There aren't many. In particular, certain of the "usual defences" aren't available in relation to AMPs. For example, the familiar "due diligence" defence often available to regulatory offences isn't a defence to an AMP under the Accord Acts. Similarly, the reasonable honest belief in the existence of facts that if proved would have exonerated a person against whom an AMP has been imposed also isn't a valid legal defence to an AMP under the Accord Acts.

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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