The Feds Finally Take the Plunge: Bill C-69 & The New Federal Offshore Renewable Energy Regime
February 20, 2018
By Sara Mahaney, at McInnes Cooper
The Canadian federal government has finally revealed how it proposes to regulate offshore renewable energy developments in federal waters. On February 8, 2018, the federal government tabled the new Canadian Energy Regulator Act (CERA), Part 2 of Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts. CERA will repeal the National Energy Board Act and replace the National Energy Board with the Canadian Energy Regulator. Part 5 of CERA details how the federal government will regulate offshore renewable energy projects and offshore power lines situate in federal waters.
Following closely on the heels of Nova Scotia’s newly enacted regime for the development of marine renewable energy projects in provincial waters, with CERA the federal government will fill part of the current regulatory gap for offshore renewable energy projects in federal waters. However, CERA doesn’t address certain necessary elements of a federal regime, such as land rights issuance. Further, there is a view that federal-provincial collaboration is the best route to charting a course for the good governance of Canada’s emerging ocean economy; however, CERA is a solely federal regime. Here’s how the federal government proposes it will regulate offshore renewable energy projects and offshore power lines in federal waters.
Regulated Activities. CERA regulates “offshore renewable energy projects” carried on in the “offshore area” and “offshore power lines”.
- Offshore Renewable Energy Projects. CERA defines “offshore renewable energy projects” to mean any of the following activities that are carried on in the offshore area: any research or assessment conducted in relation to the exploitation or potential exploitation of a renewable resource to produce energy; any exploitation of a renewable resource to produce energy; any storage of energy produced from a renewable resource; or any transmission of energy produced from a renewable resource that is not transmitted to a province or a place outside of Canada.
- Offshore Area. CERA defines the “offshore area” as Canada’s internal waters or territorial sea that are not situated in a province, and the Continental Shelf of Canada and the waters situated above it. Thus, CERA will not apply to, for example, the Bay of Fundy, which is historically part of the provinces of Nova Scotia and New Brunswick.
- Offshore Power Lines. CERA defines “offshore power lines” as facilities constructed or operated for the purpose of transmitting electricity from an offshore renewable energy project to a province or a place outside Canada.
Commission to Regulate Activities. Under CERA, the new Canadian Energy Regulator will have a Commission composed of up to seven full-time Commissioners, one of whom must be an Indigenous person. It is this Commission that is empowered to regulate offshore renewable energy activities under CERA.
Authorizations Regime. The proposed regime would implement an Authorization system for certain works or activities, and prohibits such activities without an Authorization issued by the Commission. Under CERA, the Commission may, on application, issue an Authorization for works or activities that are proposed to be carried on both:
- In the offshore area in relation to an offshore renewable energy project or to an offshore power line.
- To construct, operate or abandon any part of an offshore power line that is in a province.
However, as noted earlier, CERA does not address land rights issuance: the allocation of space in the offshore area for the placement of facilities.
Authorization Application Process. CERA also establishes the process by which a proponent must apply for an Authorization:
- Impact Assessment. Where an Authorization application relates to a “designated project” under the new Impact Assessment Act (Part 1 of Bill C-69), the Commission must decide to issue an Authorization or dismiss it based solely on the review panel’s report, and within seven days after the Minister’s decision statement under the Impact Assessment Act is posted online. Whether activities relating to an offshore renewable energy project or offshore power line trigger an Impact Assessment isn’t yet known because the new designated projects list under the new Impact Assessment Act has not yet been determined. The current designated projects list under the existing Canadian Environmental Assessment Act, 2012 (to be replaced by the new Impact Assessment Act) includes certain electrical transmission lines and certain tidal power generating facilities, so it’s likely that at least some activities relating to offshore renewable energy projects will be included, depending on the nature of the project.
- Non-Impact Assessment. Where an Impact Assessment is not triggered, in considering an Authorization application the Commission must take into account a number of factors, including:
- Any traditional knowledge of the Indigenous peoples of Canada that has been provided to the Commission.
- Scientific information and data.
- Environmental effects.
- Safety and security of persons and the protection of property and the environment.
- Health, social and economic effects.
- Interests and concerns of the Indigenous peoples of Canada and the effects on their Section 35 Constitutional rights.
- Environmental agreements entered into by the Government of Canada.
- Any relevant regional or strategic assessments under the Impact Assessment Act.
Where no Impact Assessment is required, the Commission must make its decision to either issue the Authorization or dismiss the application a maximum of 300 days after the day on which the applicant has provided a complete application. The Minister can, however, extend this time limit and, notably, the Commission’s failure to comply with this time limit doesn’t affect its jurisdiction to deal with the application.
Liability & Financial Requirements. The Act provides for liability and financial requirements that are similar to those of the offshore oil and gas regulatory regime, including:
- Liability. Any loss or damage caused by debris carries with it no-fault liability for the Authorization-holder up to the limit of $1 billion in non-Arctic waters. Liability for fault or negligence attributable to the debris is unlimited and is determined according to the degree of a person’s fault or negligence.
- Financial Requirements. Applicants for an Authorization must provide proof that the applicant has the financial resources necessary to pay an amount that the Commission determines, in the form and manner prescribed by regulation or, in the absence of regulations, that which the Canadian Energy Regulator specifies. The applicant must also provide proof of financial responsibility in the amount the Commission determines in the form of a letter of credit, guarantee or indemnity bond or in any other form satisfactory to the Canadian Energy Regulator. While the amounts and degree of financial resources and responsibility aren’t currently known, these features are similar to those contained in the offshore oil and gas regimes in the Atlantic provinces and likely will be prescribed in regulations.
Please contact your McInnes Cooper lawyer or any member of the Renewable Energy Team @ McInnes Cooper to discuss this topic or any other legal issue.
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