FEDERAL REG

SOR/2017-116: Canada – Nova Scotia Offshore Marine Installations and Structures Occupational Health and Safety Transitional Regulations — Regulations Amending Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act

REGISTRATION OF FEDERAL REGULATION - VIA PART II OF THE GAZETTE

Registered
June 2, 2017


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the regulations.) Issues On December 31, 2014, the Offshore Health and Safety Act (OHSA) came into force, amending the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the Accord Acts) with the addition of Part III.1 in each Act.... (Click for more)


Published on June 15, 2017

Bill Summary

SOR/2017-116: Canada – Nova Scotia Offshore Marine Installations and Structures Occupational Health and Safety Transitional Regulations — Regulations Amending Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the regulations.) Issues On December 31, 2014, the Offshore Health and Safety Act (OHSA) came into force, amending the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the Accord Acts) with the addition of Part III.1 in each Act. The OHSA and supporting transitional occupational health and safety regulations created a new statutory occupational health and safety (OHS) regime in the Canada-Newfoundland and Labrador and the Canada-Nova Scotia offshore areas (Accord areas). Since the coming into force of the transitional regulations, there have been a high number of applications for regulatory substitution from the transitional regulations made by proponents of offshore exploration and development activities. The high number of applications for regulatory substitution stems from a limited number of sections of the transitional regulations that relate to requirements that can be unsuitable and unnecessarily burdensome for short-term workplaces (e.g. ships involved in exploration and construction activities), thereby creating challenges with respect to compliance. In addition, the transitional regulations incorporate by reference, in a static manner, a number of technical codes or standards that have been either superseded or withdrawn and not supported any longer by the standard-setting body. Amendments to the transitional regulations are needed to address these unintended consequences. Background The new OHS regime applies to all workplaces that have employees involved in the exploration or drilling for, construction and development, production, conservation or processing of petroleum in the offshore area, and also to employees and other passengers in transit to and from offshore workplaces, and between those workplaces. The OHSA provided for a suite of transitional regulations for each of the Accord areas to enter into force on the same day to support the new regime while new and modernized regulations are developed. The suite of transitional regulations includes, for each of the respective Accord areas, the Offshore Marine Installations and Structures Occupational Health and Safety Transitional Regulations, the Offshore Marine Installations and Structures Transitional Regulations and the Diving Operations Safety Transitional Regulations (collectively referred to herein as the “transitional regulations” or “TOHSR”). The TOHSR are in effect until they are replaced with permanent regulations or five years after their entry into force (December 31, 2019), whichever comes sooner. The TOHSR are largely based on existing federal regulatory requirements, including the Oil and Gas Occupational Safety and Health Regulations, which are made under the Canada Labour Code and apply to employees working in petroleum resource activities in Canada’s frontier lands and offshore areas outside of the Accord areas. The TOHSR are prescriptive in nature and include static references to a vast number of technical codes and standards. Part III.1 of the Accord Acts includes a provision that permits the Chief Safety Officer (CSO) of one of the offshore Boards (i.e. the Canada–Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) or the Canada-Nova Scotia Offshore Petroleum Board) to permit a substitution for any given requirement in the TOHSR, provided the proponent has demonstrated to the satisfaction of the CSO that health and safety will be maintained. The process for requesting regulatory substitution is known as a regulatory query (RQ). Every application for regulatory substitution received by the offshore Board must be posted publicly for a period of 30 days to allow for public comment. In addition, the application for regulatory substitution must be posted in printed form in a prominent place at the affected workplace and a copy provided to the established workplace committee and to any union representing employees in the offshore area. In 2015, more than 135 applications from industry proponents requesting regulatory substitution were received by the two offshore regulators, with the majority being received by the C-NLOPB, relating to exploration and development activities. The RQs were predominantly related to the 11 geophysical and construction programs planned for the 2015 season in the Canada-Newfoundland and Labrador offshore area, involving 10 ships (i.e. ships used for construction or for seismic or geotechnical work). All of these programs were considered to be “short-term” programs, each lasting less than six months. Following the public notice period, and upon review of the extensive supporting technical material, the CSOs approved (some with conditions) nearly all of the processed applications for regulatory substitution related to exploration and development programs planned for the 2015 season. The TOHSR have requirements that apply not only to the health and safety of the employees on board an offshore marine installation or structure, but also requirements related to aspects of the design, inspection and maintenance of the marine installation or structure. Ships used for construction or for seismic or geotechnical work are types of offshore marine installations or structures that present short-term workplace settings that differ in many ways from a long-term workplace setting, such as an onshore building or a longer-term offshore marine installation or structure. Ships are generally designed, built and maintained in accordance with classification society rules (class rules). Classification societies are international, nongovernmental organizations that establish and maintain technical standards for the construction and operation of ships. In addition, these ships generally operate under international standards for maritime safety and/or flag state requirements for occupational health and safety. Compliance with domestic codes and standards related to design, operation and maintenance of the marine installation or structure, particularly those that relate more to long-term workplaces, can often pose difficulty, where the workplace in question is a ship. Ship configuration and design/operation/maintenance standards cannot easily or quickly be changed to meet the regulatory requirements without it being cost-prohibitive and potentially hazardous to do so for short-duration programs. By contrast, longer-term workplaces, such as fixed and floating production installations, are generally designed and built to operate their full life in the offshore areas, which allows for domestic codes and standards to be the basis of the design criteria; therefore, compliance with domestic requirements is achievable. As a result, in order for these short-term workplaces to be compliant with the regulatory requirements in the offshore areas, the industry proponent must first identify areas of non-compliance and make an application to the regulator for permission to deviate from the regulatory requirement. Each section of the regulations that requires substitution must be applied for under its own separate application, for each ship, and the proponent must provide sufficient technical demonstration, as well as information regarding the health and safety consequences that might reasonably be anticipated, that the health and safety of employees at the workplace would not be compromised should a substitution be granted. The vast majority of requests for regulatory substitution stemmed from 14 sections of the transitional regulations. These were noted to be high-volume “repeat” regulatory substitution areas, and are the primary focus area of these amendments, with some regulatory requirements involving as many as 13 separate applications for regulatory query. Regulatory requirements related to food handling/safety, marking of electrical hazardous areas, firefighting and fire-protection equipment, immersion suits and portable tools are a few of the areas that were subject to over 10 separate applications each in 2015, with many of the applications consistently proposing substitutes that are aligned with internationally accepted standards for maritime safety. The process for having a regulatory substitution approved requires significant attention and time from both the industry proponent and the regulator in order to determine, through sufficient technical demonstration, that the health and safety of employees in the workplace would not be compromised should a substitution be granted. Given that select sections of the TOHSR are unsuitable for ships, the regulatory substitution process required for these particular short-term workplaces created an administrative burden on proponents of exploration and development programs and the regulator, constituting an unintentional barrier to exploration in the region. Industry proponents were vocal in their concern that the process for application and approval of regulatory substitution applications had the potential to create project delays and result in a significant increase in exploration costs. Given the short weather window available in the Accord areas to acquire seismic or geotechnical data, concern was also raised that the additional administrative burden related to the RQ process may result in compressed timelines to acquire the full data set, potentially jeopardizing or unnecessarily extending some exploration programs. Some industry proponents looked to means other than the RQ process to bring their ship into compliance with the transitional regulations in areas where the regulatory requirement did not pertain to design or fixed equipment. These industry proponents chose to withdraw their application for regulatory substitution and, rather, purchase/rent new equipment that would comply with the regulations. Portable tools, and protective headwear, eyewear and footwear were some examples of the equipment that industry proponents chose to store and replace with new equipment instead of going through the lengthy RQ process. However, the process of substituting familiar equipment and tools with new and unfamiliar equipment and tools also has the potential to create a new hazard, as the familiarity of employees with the material is potentially reduced. Objectives The objective of these amendments is to reduce unnecessary burden on industry, while maintaining an equivalent level of protection of employee health and safety. Specifically, these amendments seek to ensure that the regulatory requirements can reasonably be met by all offshore workplaces and seek to avoid creating new hazards caused by the introduction of unfamiliar tools and equipment to workplaces involved in short-term activities. Description The amendments provide greater flexibility in the regulatory requirements for those sections of the regulations that have been subject to repeat applications for regulatory substitution, so that all offshore workplaces can reasonably meet the requirements while ensuring an equivalent level of protection of employees’ health and safety. Flexibility for industry has been accomplished in three ways, depending on the nature of the requirement: recognition of international standards for maritime safety for the shipping industry; recognition of international equivalencies for technical standards; and modernization of regulatory requirements to allow for more appropriate application and updating of references to technical standards to allow for the most recent version of the standard to prevail. Recognition of international standards for maritime safety for the shipping industry Where a regulatory requirement was deemed to be unsuitable for short-term workplaces (i.e. ships), an alternate requirement has been included in the regulations as an option for compliance. This provides an equivalent level of protection for employees’ health and safety and is appropriate for ships operating both domestically and internationally under short-term programs, such as seismic, construction and geotechnical ships. The International Convention for the Safety of Life at Sea (SOLAS), a convention to which Canada is a signatory, prescribes minimum safety standards for ships; these standards are recognized in select areas of the TOHSR. For other areas, standards developed by the International Maritime Organization (IMO), a special agency of the United Nations responsible for developing standards for international shipping safety, have been recognized. These areas include fire-protection and firefighting equipment, marine abandonment immersion suits and life-saving appliances (i.e. life jackets). Where appropriate, these international standards have been supplemented with additional requirements necessary to ensure the amended regulations are appropriate for the unique hazards that exist in the offshore areas. Recognition of international equivalencies for technical standards The application of the TOHSR to short-term workplaces, such as the seismic and construction programs carried out in 2015, highlighted the need for recognition of international equivalencies of certain domestic standards referenced within the regulations. Regulatory substitutions were required in order for these short-term workplaces to avoid having to replace existing tools and equipment with new tools and protective equipment that would comply with the domestic standards referenced in the transitional regulations. Globally, there are many technical standard publishing bodies that produce standards for the specification, guidelines or characteristics for materials, products and processes, and, in the case of standards related to occupational health and safety, many of these are considered to provide an equivalent level of protection for workers. Moreover, progress has been made by many of these standards organizations to move toward harmonizing standards, to ensure a globally consistent practice that reduces barriers to trade. Where international standards have been deemed through the RQ review process to be equivalent to the respective referenced standard in the transitional regulations, these amendments recognize many of these equivalencies by permitting compliance with either the domestic or equivalent international standard(s). This recognition provides flexibility for the workplace to comply with one of the multiple equivalent standards listed in the amended regulations, thereby reducing the likelihood that new and unfamiliar tools and equipment will be introduced to the workplace. Modernizing of requirements Experience with the transitional regulations highlighted that a number of regulatory requirements were in need of modernization, either to update a version of the technical standard referenced, to ensure the requirement could be more appropriately applied to all types of workplaces identified under the Accord Acts; or to provide a performance-based requirement that sets a goal to be achieved, rather than requiring a prescriptive means of achieving the goal. Where standards have been incorporated by reference, the amendments update the reference to be ambulatory in nature, allowing the most recent version of the technical code or standard to prevail. Finally, these amendments correct a small number of minor errors that existed in the original publication of the regulations: incorrect numbering referencing and/or incomplete sentences. “One-for-One” Rule The OHSA introduced transitional regulations that increased administrative burden on business. The administrative burden associated with the transitional regulations was not monetized, nor was it disclosed in a publicly available Regulatory Impact Analysis Statement. While these amendments relieve some of that burden, Natural Resources Canada will not be given credit for an “OUT” under the “One-for-One” Rule. Industry and stakeholders were consulted on the draft regulatory amendments, to seek their views on the removal of unnecessary administrative burden introduced by the transitional regulations. During the July 2015 stakeholder consultation session, industry was very clear that the issues related to the application of the transitional regulations to short-term workplaces, and the related RQ process, was an administrative burden that had the potential to raise exploration costs significantly. For example, anecdotal evidence provided by the C–NLOPB indicated that one operator stated that their estimated costs associated with RQs for one seismic program were approximately $250,000, which included RQ administrative and technical work, occupational health and safety inspections and renting or buying additional equipment. Assuming exploration activity levels remain constant in the next three years while permanent regulations are developed, and using the 2012–2015 average number of seismic/geotechnical programs, the annual cost relief to industry for exploration activities could be estimated at $250,000 per seismic program for an estimated total cost savings of $2 million per year. Given this annual estimate, the estimated cumulative cost burden relief to industry for exploration activities during the remaining transitional period is in the range of $6 million. In addition to the cost burden relief for exploration activities, there will also be a cost burden relief for planned construction programs. The burden relief is not limited to industry. The C–NLOPB estimated that its staff spent a total of 525 hours, or 70 days, of the 2015 seismic season working on the RQs related to the transitional regulations. This is estimated to be equivalent to approximately $85,000 in total cost of staff time. Given this value, the estimated cumulative cost burden relief to the regulator during the remaining transitional period is $255,000. Total estimated cost burden relief for the remaining transitional period is estimated to be at least $6.255 million. Small business lens The small business lens does not apply to the TOHSR amendments, as they do not impact small businesses. Consultation A stakeholder consultation session was carried out in July 2015 to provide stakeholders with an opportunity to provide in-person input to the three governments (Canada, Newfoundland and Labrador, and Nova Scotia) on industry’s experience to date with the transitional regulations. Industry clearly communicated its desire to see changes to the existing issue of applying the transitional regulations to transient ships. It was expressed that an interim solution, such as a regulatory amendment, should be strongly considered. Labour groups present at the stakeholder consultation session did not express any concern that the substitutions from the regulatory requirements, or the draft amendments, would pose new risks to the health and safety of employees. In December 2015, key stakeholders were engaged to obtain feedback on the draft amendments. Teleconference sessions were held with the Canadian Association of Petroleum Producers (CAPP), Unifor, the Newfoundland and Labrador Federation of Labour, various geophysical contractor companies with previous and/or planned work in the region, the Newfoundland & Labrador Oil & Gas Industries Association (Noia) and The Maritimes Energy Association. In addition, the draft amendments were provided in electronic format to each of the existing workplace committees in the two Accord areas. Feedback during the engagement sessions was positive, with stakeholders acknowledging their support of the action the three governments were taking in proposing amendments to the TOHSR. Stakeholders noted that the amendments were reasonable and provided necessary flexibility for workplaces in meeting regulatory requirements. CAPP and Noia provided written feedback and recommendations on the draft amendments. This feedback was considered and, where appropriate, incorporated into the draft amendments. In addition, and as part of the RQ process, the general public was provided a 30-day opportunity to comment on each of the processed applications for regulatory substitution. There were no comments received on any of the proposed substitutions. Pursuant to subsection 6(2) of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, the Government of Nova Scotia was consulted prior to prepublication of the draft regulations, and remains supportive of the regulatory amendments. Pursuant to subsection 7(2) of the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act, the Government of Newfoundland and Labrador was consulted prior to prepublication of the draft regulations, and remains supportive of the regulatory amendments. Both of the offshore Boards were also consulted on the draft amendments, and remain supportive of them. Canada Gazette, Part I These amendments were prepublished in the Canada Gazette, Part I, on December 31, 2016. Four submissions were received during the 30-day public comment period, including the Government of Newfoundland and Labrador, The Maritimes Energy Association, CAPP, and a combined submission from Noia and Subsea 7. The comments provided were all supportive of the action being taken by the Government of Canada and its provincial government partners to amend the transitional regulations in the interim to provide greater flexibility for all workplaces to comply. Stakeholders noted that those sections of the regulations that were causing the high volume of RQs were appropriately addressed in the amendments. Concerning the amendments that relate to updating the reference to standards from static to ambulatory, feedback was provided from certain stakeholders on ways to further modernize these requirements. This feedback will be considered in the ongoing development of the permanent regulations that will replace the TOHSR by the end of 2019. Following consideration of stakeholder comments, three revisions were made to the draft amendments: Part 6 of the Offshore Marine Installations and Structures Occupational Health and Safety Transitional Regulations prescribes the levels of lighting required in an offshore workplace in Nova Scotia and Newfoundland and Labrador. Section 52, within Part 6, specifically exempts the application of these lighting requirements to the bridge of an offshore drilling unit or a flotation production facility. At the request of stakeholders, this section has been modified to clarify that only offshore drilling units that are considered “navigable” (i.e. that are mobile) are exempted from the lighting requirements, and not those offshore drilling units that are fixed. This change was required so that fixed installations, which may also have drilling units, are not included in this exemption as they, unlike navigable drilling units, have been and can be designed to meet the requirements of Part 6. Fixed installations are usually designed to spend their entire lifecycle in one offshore area, whereas floating installations can jump from jurisdiction to jurisdiction and are therefore equipped to meet baseline international standards. It is therefore possible to design a permanent installation from the outset to meet the requirements, and less so for temporary mobile units. Subsection 3(1)(b) of the transitional regulations, which relates to firefighters helmets and visors, has been revised to reference the National Fire Protection Association (NFPA) standard 1971, Standard on Protective Ensembles for Structural Firefighting and Proximity Fire Fighting, rather than the Canadian Standards Association (CSA) standard Z94.1, Industrial Protective Headwear – Performance, Selection, Care and Use, as the CSA standard explicitly excludes firefighting helmets from the scope of its standard. Stakeholders, as well as the Government of Nova Scotia (during the development of their mirror provincial regulations), noted that the more appropriate standard to reference for this purpose was NFPA 1971. The Canada-Nova Scotia versions of the amendments to the transitional regulations were revised to reflect a set coming-into-force date of August 23, 2017, or if they are registered after that day, on the day they are registered. This change allows the federal versions of the amendments to enter into force concurrently with the provincial versions. The draft amendments previously indicated that the coming-into-force date of the federal regulations would be the day on which the regulations are registered. For the Canada-Newfoundland and Labrador versions, this continues to be the coming-into-force date. The Government of Newfoundland and Labrador have not published their own mirror regulations, but rather, have directly referenced the federal versions for the interim period. Rationale These regulatory amendments provide more suitable requirements for all offshore workplaces to comply, while maintaining an equivalent level of safety for employees. Although the current transitional regulations are designed and intended to protect the health and safety of employees who work in the offshore, for short-term workplaces that are ships, the transitional regulations require, at times, replacing familiar tools and equipment on board with new and potentially unfamiliar tools and equipment. This has the potential to introduce more risk to both the workplace and the employee, as their competence and familiarity with the tool or equipment may be reduced, therefore increasing the potential for an incident to occur. These amendments provide flexibility for compliance that would permit the use of certain tools and equipment certified to equivalent international standards, thereby enhancing the level of safety in those workplaces that are involved in short-term petroleum activities in the Accord areas. In addition, the transitional regulations imposed certain requirements that were unsuitable, and potentially unachievable, for short-term workplaces. This created unnecessary administrative burden for industry proponents, requiring that they make detailed technical applications for regulatory substitution, and for the regulator, who had to analyze and process the applications, for areas that were recognized to be unsuitable and potentially reasonably unachievable for ships. These amendments modify requirements that were deemed unsuitable for certain workplaces by providing alternate requirements that maintain the safety and security of employees. Industry proponents clearly communicated to governments that the issues related to the application of the transitional regulations to ships, and the related RQ process, were an administrative burden that had the potential to raise exploration costs significantly, should planned seismic programs be delayed due to the administrative process related to RQs. The cost of having a seismic or construction ship moored in port awaiting an authorization could prove extremely expensive, thereby increasing the overall cost of petroleum exploration in the Accord areas. These amendments provide immediate burden relief to impacted parties, by reducing the administrative burden associated with the RQ process. This will, arguably, reduce costs and unnecessary barriers to offshore exploration. In addition, it is expected that these amendments will reduce the strain on resources experienced by the offshore Boards, thereby reducing operational costs and allowing resources to be allocated to other core mandate duties. The continued experience with the transitional regulations will help to inform the development of the permanent regulations. Implementation, enforcement and service standards The Canada–Newfoundland and Labrador Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board are the joint independent agencies of the Government of Canada and Newfoundland and Labrador and Nova Scotia, respectively, which are responsible for the enforcement of the Accord Acts and the regulations that fall thereunder. Contact Kim Phillips Senior Regulatory Officer Offshore Petroleum Management Division Natural Resources Canada 1801 Hollis Street, Suite 700 Halifax, Nova Scotia B3J 3C8 Telephone: 902-402-0285 Email: [email protected] Footnote a S.C. 2014, c. 13, s. 84 Footnote b S.C. 1988, c. 28 Footnote c S.C. 2014, c. 13, s. 56 Footnote d S.C. 2014, c. 13, s. 84 Footnote e S.C. 1988, c. 28 Footnote 1 SOR/2015-2

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