FEDERAL REG

SOR/2016-260: Port of Prince Rupert Liquefied Natural Gas Facilities Regulations

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
September 30, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues There are currently two liquefied natural gas (LNG) facilities that are proposed to be built and operated on federal lands at the Prince Rupert Port Authority (the Port) in Prince Rupert, British Columbia (BC). These proposed LNG facilities would convert natural gas, transmitted by pipeline from northern ... (Click for more)


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Published on September 30, 2016

Bill Summary

SOR/2016-260: Port of Prince Rupert Liquefied Natural Gas Facilities Regulations

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues There are currently two liquefied natural gas (LNG) facilities that are proposed to be built and operated on federal lands at the Prince Rupert Port Authority (the Port) in Prince Rupert, British Columbia (BC). These proposed LNG facilities would convert natural gas, transmitted by pipeline from northern BC into LNG for shipping to overseas markets. The two facilities are: Pacific NorthWest LNG located on Lelu Island (Pacific NorthWest LNG Project); and British Gas Group located on Ridley Island (Prince Rupert LNG Project). The Province of BC has a comprehensive regulatory framework that is capable of regulating these proposed LNG projects. Under BC law, the British Columbia Oil and Gas Commission (BC OGC) is authorized to regulate LNG facilities in the province. The Port of Prince Rupert Liquefied Natural Gas Facilities Regulations (the Regulations) incorporate by reference the provincial regime and allow for the regulation of the design, construction, operation and maintenance of LNG projects proposed on federal lands at the Port of Prince Rupert. While the facilities are proposed for construction on federal lands, a coordinated regulatory approach between the federal and provincial governments will ensure that these large scale industrial LNG projects are designed, constructed and maintained in a manner that protects the environment and safety of Canadians. The explicit authorization of the BC OGC to administer regulatory oversight over the proposed LNG activities at the Port on behalf of Canada supports this goal. Background The Port is a Canada Port Authority (CPA), one of 18 major ports in Canada established under the Canada Marine Act (CMA). CPAs operate largely on federal real property which is administered by the Minister of Transport. CPAs have delegated authority to manage the federal lands including the authority to lease and licence the property as well as to authorize activities on the land. CPAs are considered key economic drivers and vital to Canada’s domestic and international trade. There is a growing trend of increased project development at CPAs that is related to new opportunities in the energy sector. LNG development, in particular, offers BC and Canada an opportunity to access new overseas markets for Canada’s vast natural gas resources. There are 19 potential LNG projects planned in BC. Objectives The primary objectives of the Regulations are to (1) establish a federal regulatory regime for LNG projects at the Port of Prince Rupert that applies the existing BC provincial regulatory regime, to the extent there is no similar federal health, safety and environmental legislation that would apply otherwise, with some adaptations and exclusions; (2) create legal certainty authorizing the BC OGC to administer regulatory oversight (construction, operation, maintenance), including enforcement, over these proposed LNG projects at the Port on behalf of Canada while preserving the regulatory role of the Port in respect of navigation and shipping related activities and management of Port lands; (3) provide certainty and confidence for investors, developers and the public that there is a clear regulatory regime in place to adequately regulate the LNG projects at the Port; and (4) promote consistency in the regulation of LNG projects in the province of BC whether on federal or provincial lands. Description The Regulations are made pursuant to the CMA, the principal legislation that governs CPAs. The Regulations only apply to LNG facilities located on federal port lands at the Port and incorporate by reference, with some adaptations and exclusions, the existing BC regulatory regime. A description of the BC acts and regulations that will be incorporated, including adaptations and exclusions, is provided in Table: Proposed federal regulations — Incorporated British Columbia acts and regulations. The Regulations enhance safety and environmental protection on federal port lands with respect to the construction, operation and maintenance of LNG activities on federal port lands. The Regulations apply in addition to all current legislation regarding environmental protection and safety on federal port lands. Table: Proposed Federal Regulation — Incorporated British Columbia acts and regulations This table presents description of Incorporated Acts and Regulations. Incorporated acts and regulations Description Oil and Gas Activities Act and its regulations The Oil and Gas Activities Act (OGAA) governs oil and gas activities, including "Liquefied Natural Gas activities" as defined in the Regulations, as well as "related activities." This Act would be incorporated other than a few excluded sections regarding provincial public inquiries, preliminary plans for pipelines, pipeline permits, and issuance of certificates for site restoration for Port lands. All regulations made under this Act would be incorporated, other than the sections dealing with oil and gas wells, pipelines, road construction and maintenance, site restoration, and provincial public inquiries. Environmental Management Act (EMA) and its regulations. This Act and its regulations provide statutory authority to manage environmental impacts. The excluded sections under the Act are related to municipal waste management, contaminated site remediation, area based management and provincial inquires. These are not needed because the Port, as manager of the federal lands, would be responsible. Administrative Penalties (Environmental Management Act) Regulation This Regulation establishes administrative penalties that may be issued for breaches of certain provisions of EMA and applicable prescribed provisions of the regulations made under EMA as well as penalties for breaches of permits and approvals made under EMA. Conservation Officer Service Authority Regulation under EMA This Regulation empowers provincial conservation officers to enforce the provisions of EMA related to the proposed LNG facilities. Environmental Data Quality Assurance Regulation under EMA This Regulation sets procedures for submitting environmental monitoring data as a requirement of an order, permit, licence, approval or certificate under an enactment administered by the minister responsible for the EMA, and enables the province to recover the costs of reviewing. Hazardous Waste Regulation under EMA This Regulation sets out requirements and standards for the handling of hazardous waste and hazardous waste facilities and storage. Permit Fees Regulation under EMA This Regulation sets application and annual fees for permits to discharge waste including an approved waste management plan, an operational certificate and an authorization to discharge under a regulation. It includes specified air emissions. Public Notification Regulation under EMA This Regulation requires the LNG proponents to notify the public with respect to any application of a permit, approval or amendment regarding waste discharges. Waste Discharge Regulation under EMA This Regulation prescribes industries and activities requiring permits or other approval for discharge of waste into the environment. Spill Cost Recovery Regulation under EMA This Regulation sets out the costs related to spill response actions for which a person or persons may be required under the EMA to compensate the province. Drinking Water Protection Act and its regulations. This Act and its regulations regulate drinking water systems and prohibit their contamination. Under the Regulations, this Act and its regulations only apply to the construction and operation of work camps in relation to LNG activities at the Port. “One-for-One” Rule The “One-for-One” Rule does not apply to these Regulations, as there is no change in administrative costs to business. There are no additional costs to LNG industry with respect to the Regulations. The Regulations incorporate the provincial regulatory regime. The costs of complying with the Regulations are equal to costs incurred by LNG proponents if the projects were located on lands subject to provincial jurisdiction. Small business lens The small business lens does not apply to these Regulations, as there are no additional costs of complying with the Regulations. The costs of complying with the Regulations are equal to costs incurred by the LNG proponents if the proposed projects were located on lands subject to provincial jurisdiction. There are no additional costs to the LNG proponents. Consultation The parties primarily affected by the Regulations are the LNG project proponents, the Province of BC, including the BC OGC, which will administer and enforce the regulatory regime, and the population of surrounding communities in Prince Rupert, BC. Consultations for an environmental assessment under the Canadian Environmental Assessment Act, 2012 for the proposed Pacific NorthWest LNG Project were completed and the project conditions were approved. Further, consultations have taken place with potentially affected stakeholders with respect to the federal TERMPOL process (Technical Review Process of Marine Terminal Systems and Transshipment Sites). The TERMPOL process is a voluntary technical review designed and led by Transport Canada (TC) to appraise the proposed shipping and transshipment site to identify navigational issues and make any other recommendations to support a safe shipping environment. In addition, TC established a federal-provincial working group, in November 2013, made up of key representatives from the Province of BC, Environment and Climate Change Canada, the BC OGC and the Port in order to develop the Regulations. Representatives from the working group have met with the LNG facilities and pipeline proponents to communicate the intent and nature of the Regulations. TC also sent letters to the First Nations that are located in Prince Rupert to explain the intent and nature of the Regulations and invite early engagement as part of the Canada Gazette, Part I, process. Prepublication of the Regulations in the Canada Gazette, Part I, was done on June 20, 2015. During the period that followed, five comments were received from a First Nation, a non-governmental organization, the province of BC, an LNG project proponent and a private citizen. Some comments encouraged strengthening the environmental protection provisions of the Regulations. As a result of these comments, TC added the BC Spill Cost Recovery Regulation to the regulations being incorporated by reference. Finally, the federal government and BC have committed to ongoing collaboration regarding the incorporation by reference of BC’s Greenhouse Gas Industrial Control and Reporting Act and its regulations, more specifically: Greenhouse Gas Emission Control Regulation, Greenhouse Gas Reporting Regulation and Greenhouse Gas Emission Administrative Penalties and Appeals Regulation. Further comments noted that the Regulations would not address key issues such as project siting, security and project decommissioning. TC considered these comments and concluded that existing federal legislation in force at the Port of Prince Rupert addresses these matters: project siting and shipping routes would be considered under the Canadian Environmental Assessment Act, 2012. Security at ports and marine terminals is governed by the Marine Transportation Security Act, whereas safety is governed mostly by the CMA. The Port Authority Operations Regulations make port authorities responsible for ensuring port lands are appropriately remediated when projects are decommissioned. Rationale The Regulations promote consistency in the regulation of all LNG facilities in the province of BC regardless of location and allow for the establishment of a regulatory regime for LNG projects at the Port in a timely manner. Making a regulation that incorporates the existing BC regulatory regime allows the federal government to capitalize on the BC OGC’s expertise and experience in the gas sector. Adopting the provincial regulatory regime saves the federal government tax dollars, resources and time by permitting the BC OGC to provide LNG regulatory oversight on its behalf rather than developing an additional, similarly modeled federal regime. There are no additional costs to the federal government as the provincial regulatory body, the BC OGC, will perform administrative and enforcement activities under the Regulations. The BC OGC operates on a cost recovery basis and is funded through the application of industrial fees and levies paid by the LNG proponents. As well, all fines and penalties associated with enforcement would go to the BC Consolidated Revenue Fund. These Regulations will ensure that the LNG projects at the Port are built and operated in a safe manner, protecting the environment and Canadians. A similar regulatory model was used for the proposed Kitimat LNG facility located on Haisla Nation reserve lands in Kitimat, BC. Regulatory and non-regulatory options considered The federal government could have chosen to establish its own comprehensive regulations and create an agency dedicated exclusively to regulate LNG facilities on federal land across Canada. This approach was not deemed practicable as it would be time consuming and costly to tax payers and it would have also risked delaying the ability to meet commercial timelines for the proposed LNG projects. The proposed approach is consistent with the Government of Canada’s commitment to improve conditions for business investment and it will help reduce duplication and costs between federal and provincial jurisdictions for the regulation of these proposed LNG projects. Implementation, enforcement and service standards The BC OGC is now the principal regulatory agency responsible for overseeing the construction, operation, maintenance and enforcement of the LNG facilities at the Port, on behalf of the Government of Canada. The provincial officials have the required knowledge and expertise necessary to administer and enforce these types of regulatory initiatives as they already have regulatory authority over LNG projects in the Province of BC under the incorporated OGAA. The Port and federal agencies such as TC, Environment and Climate Change Canada and the Department of Fisheries and Oceans maintain their regulatory oversight, including in respect of matters concerning navigation and shipping, protection of the marine environment and federal lands under their jurisdiction. The incorporated BC acts and regulations include mechanisms for ensuring compliance and for detecting and penalizing non-compliance. The Regulations require LNG proponents to obtain various licenses and approvals, to keep records and provide information and allow the BC OGC to fine and implement financial penalties for non-compliance and offences. The incorporated provisions under OGAA provide for a comprehensive enforcement and contravention regime. The Agreement for Administration and Enforcement of Federal Regulation under the CMA (the Agreement) will, soon after the coming into force of the Regulations, be entered into between the governments of BC, the Port, BC OGC and Canada. Its objectives are to promote consistency in the regulation of all LNG facilities, including those on federal property, in the Province of BC, and to resolve any issues that might arise in relation to the application of the Regulations in the most expeditious and cost effective manner. The Agreement establishes an on-going regulatory oversight management committee comprised of officials from TC, the Port, the BC OGC and the Province of BC. The management committee would meet on an on-going basis to discuss the administration and enforcement of the Regulations as well as anticipated changes that may be required to the Regulations. Contact Tamara Rudge Director Ports Policy Transport Canada Place de Ville, Tower C, 25th Floor 330 Sparks Street Ottawa, Ontario K1A 0N5 Fax: 613-998-1845 Footnote a S.C. 2014, c. 39, s. 231 Footnote b S.C. 1998, c. 10

This Bill does not amend any statutes.

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