Vol. 149, No. 25 — June 20, 2015

Port of Prince Rupert Liquefied Natural Gas Facilities Regulations

Statutory authority

Canada Marine Act

Sponsoring department

Department of Transport

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

There are currently four liquefied natural gas (LNG) facilities that are proposed to be built at Prince Rupert, British Columbia (B.C.). These proposed LNG facilities would convert natural gas, transmitted by pipeline from northern British Columbia, into LNG for shipping to overseas markets. Two of the facilities would be located on federal lands at the Prince Rupert Port Authority (the Port). The two facilities that would be located wholly on federal port lands are

The third facility would be located largely on provincial lands but would have a marine jetty located on a water lot within the jurisdiction and administration of the Port. The third LNG facility is proposed by Aurora Liquefied Natural Gas Ltd. (Aurora LNG Project) and would be located on Digby Island.

The fourth facility would be located largely on lands owned by the City of Prince Rupert and in provincial waters within the navigational jurisdiction of the Port. A small portion of this project, the material off-loading facility, may be constructed on lands within the administration of the Port. The fourth LNG facility is proposed by WCC LNG Ltd. and would be located principally in Tuck Inlet, north of Prince Rupert Harbour.

The Province of British Columbia has a comprehensive regulatory framework that is capable of regulating these proposed LNG projects. Under B.C. law, the B.C. Oil and Gas Commission (B.C. OGC) is authorized to regulate LNG facilities in the province. There is currently no comparable federal regulatory regime specifically designed to regulate the design, construction, operation and maintenance of LNG projects proposed on federal port lands.

Constitutional questions can arise as to the jurisdiction and application of provincial law on federal port lands. It was determined that a coordinated regulatory approach between the federal and provincial governments was required to ensure that these large-scale industrial LNG projects are designed, constructed and maintained in a safe manner protecting the environment and safety of Canadians. The explicit authorization of the B.C. 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. CPAs operate largely on federal real property, which is administered by the Minister of Transport. CPAs have delegated authority to manage the federal lands, to lease and license the property, as well as to authorize activities on the land. CPAs are considered key economic drivers and are 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 British Columbia and Canada an opportunity to access new overseas markets for Canada’s vast natural gas resources. There are 19 potential LNG projects planned in British Columbia.

Objectives

The primary objectives of the Port of Prince Rupert Liquefied Natural Gas Facilities Regulations (the Regulations) are to

Description

The Regulations would be made pursuant to the Canada Marine Act (CMA), the principal legislation that governs CPAs, and they will only apply to LNG facilities located on federal port lands at the Port. The Regulations would incorporate by reference, with some adaptations and exclusions, the existing B.C. regulatory regime. A detailed description of the proposed B.C. acts and regulations to be incorporated, including adaptations and exclusions, is provided in Table 1: Proposed federal regulations — Incorporated British Columbia acts and regulations.

All current federal and provincial laws will continue to apply on their own force. For greater certainty, these B.C. acts and regulations are being incorporated to ensure that any regulatory gaps are adequately addressed and that the proposed LNG projects at the Port will be effectively regulated.

The approach undertaken as part of these Regulations has been to incorporate by reference the laws of the B.C. provincial acts and regulations that are applicable to oil and gas activities and that are not inconsistent with any federal laws. Furthermore, some of these incorporated laws are clearly applicable to the type of LNG activity intended to be regulated, whereas others clearly do not apply to the contemplated LNG activities. When an incorporated B.C. law clearly does not apply to the LNG activities intended to be regulated, it has not been specifically excluded in the Regulations.

The Regulations would enhance safety and environmental protection on federal port lands with respect to the construction, operation and maintenance of LNG facilities on federal port lands. The Regulations would apply in addition to all current laws and regulations regarding environmental protection and safety on federal port lands.

Table 1: Proposed federal regulations — Incorporated British Columbia 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.
Conservation Officer Service Authority Regulation, under the EMA This Regulation empowers provincial conservation officers to enforce the provisions of the EMA that are related to the proposed LNG facilities.
Environmental Data Quality Assurance Regulation, under the 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 the EMA This Regulation sets out requirements and standards for the handling of hazardous waste and for hazardous waste facilities and storage.
Permit Fees Regulation, under the 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 the EMA This Regulation would require 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 the EMA This Regulation prescribes industries and activities requiring permits or other approval for discharge of waste into the environment.
Drinking Water Protection Act and its Regulation This Act and its Regulation regulate drinking water systems and prohibit their contamination. Under the Regulations, this Act and its Regulation would 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 this proposal, as there is no change in administrative costs to business.

There will be no additional costs to LNG industry with respect to the Regulations. The Regulations would incorporate the provincial regulatory regime. The costs of complying with the Regulations would be equal to costs carried 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 this proposal, as there are no additional costs of complying with the Regulations.

The costs of complying with the Regulations would be equal to costs carried by the LNG proponents if the proposed projects were located on lands subject to provincial jurisdiction. There will be no additional costs to the LNG proponents.

Consultation

The parties primarily affected by the Regulations are the LNG project proponents, Pacific Northwest LNG, Prince Rupert LNG, Aurora LNG, WCC LNG, the pipeline partners (Spectra Energy and TransCanada Pipelines Limited), the Province of British Columbia, including the B.C. OGC, which will administer and enforce the regulatory regime, and the population of surrounding communities in Prince Rupert, British Columbia.

Consultations regarding the proposed LNG projects are ongoing as part of the federal environmental assessment process, with legislated timelines pursuant to the Canadian Environmental Assessment Act, 2012.

Consultations were also undertaken as part of the public hearing process required for the export licences that have been granted by the National Energy Board (NEB). For the three projects, two submissions were received, which were for the Pacific Northwest facility from the Industrial Gas Consumers Association of Alberta and the Chemistry Industry Association of Canada.

Consultation is currently underway with 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.

TC established a federal-provincial working group, in November 2013, made up of key representatives from the Province of British Columbia, Environment Canada, the B.C. OGC and the Port in order to develop the Regulations. The working group has 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.

Rationale

There is no federal regulatory regime specifically designed to adequately regulate the design, construction, operation, maintenance and enforcement of LNG projects on federal port lands. The proposed regulatory option would clarify the application of provincial law allowing for the establishment of a regulatory regime for LNG projects at the Port in a timely manner. Making a regulation that incorporates the existing B.C. regulatory regime would allow the federal government to capitalize on the B.C. OGC’s expertise and experience in the gas sector. As well, it will promote consistency in the regulation of all LNG facilities in the province of British Columbia regardless of location.

The federal government will save tax dollars, resources and time by adopting the provincial regulatory regime by permitting the B.C. OGC to provide LNG regulatory oversight on its behalf. There are no additional costs to the federal government as the provincial regulatory body, the B.C. OGC, will perform administrative and enforcement activities under the Regulations. The B.C. 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 B.C. 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, British Columbia. Regulations made under federal legislation incorporate by reference the B.C. regulatory regime with some necessary modifications as specified in those regulations, which helps to support the B.C. OGC role in providing regulatory oversight.

Regulatory and non-regulatory options considered

The federal government could have chosen to establish its own unique regulations and create an agency 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 taxpayers and it would also have risked 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 B.C. OGC would be 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 British Columbia under the incorporated Oil and Gas Activities Act.

The Port and federal agencies, including TC, Environment Canada, and Fisheries and Oceans Canada, would maintain their regulatory oversight, including in respect of matters concerning navigation and shipping and protection of the marine and terrestrial environments under their jurisdiction.

The incorporated B.C. legislation would include mechanisms for ensuring compliance and for detecting and penalizing non- compliance. The Regulations would require the LNG proponents to obtain various licences and approvals, to keep records and provide information and allow the B.C. 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 Canada Marine Act (the Agreement), which is between the governments of British Columbia, the Port, B.C. OGC, and Canada, is currently being developed. The objectives are to promote consistency in the regulation of all LNG facilities in the province of British Columbia and to resolve any issues that might arise in relation to the application of the Regulations.

The Agreement establishes an ongoing regulatory oversight management committee comprised of officials from TC, the Port, the B.C. OGC and the Province of British Columbia. The management committee would meet on an ongoing basis to discuss the administration and enforcement of the Regulations as well as anticipated changes that may be required to the Regulations.

Contact

Frank Cosentino
Director
Ports Policy
Transport Canada
Place de Ville, Tower C, 25th Floor
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Fax: 613-998-1845
Email: TC.LNGregulations-GNLreglements.TC@tc.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to section 64.1 (see footnote a) of the Canada Marine Act (see footnote b), proposes to make the annexed Port of Prince Rupert Liquefied Natural Gas Facilities Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Tamara Rudge, Director, Port Policy, Department of Transport, 25th Floor, 330, Sparks Street, Ottawa, Ontario, K1A 0N5 (email: TC.LNGregulations-GNLreglements.TC@tc.gc.ca).

Ottawa, June 11, 2015

JURICA ČAPKUN
Assistant Clerk of the Privy Council

PORT OF PRINCE RUPERT LIQUEFIED NATURAL GAS FACILITIES REGULATIONS

INTERPRETATION

Definitions

1. The following definitions apply in these Regulations.

“incorporated laws”
« texte législatif incorporé »

“incorporated laws” means the statutes and regulations of British Columbia, or the portions of them, that are in force and that are specified in the schedule, as amended from time to time and as adapted by sections 11 to 21.

“liquefied natural gas activity”
« activité de gaz naturel liquéfié »

“liquefied natural gas activity” means the processing or storage of natural gas or, to the extent that they relate to the process of liquefying natural gas and making it available for transfer onto a ship, either of the following activities:

“port of Prince Rupert”
« port de Prince Rupert »

“port of Prince Rupert” means the navigable waters under the jurisdiction of the Prince Rupert Port Authority and the real property and immovables that the Port Authority manages, holds, or occupies as set out in its letters patent.

“liquefied natural gas related activity”
« activité connexe au gaz naturel liquéfié »

“liquefied natural gas related activity” means a related activity under the British Columbia Oil and Gas Activities Act, S.B.C. 2008, c. 36, the carrying out of which is required for or facilitates the carrying out of a liquefied natural gas activity.

British Columbia Interpretation Act

2. The incorporated laws are to be interpreted in accordance with the British Columbia Interpretation Act, R.S.B.C. 1996, c. 238, as amended from time to time, and, for that purpose, references to “enactment” in that Act are to be read to include the incorporated laws.

British Columbia statutes and regulations

3. Unless otherwise indicated in these Regulations, the statutes and regulations referred to in sections 14 to 21 are statutes and regulations of British Columbia.

DESIGNATED CLASS OF UNDERTAKING

Paragraph 64.1(2)(a) of the Canada Marine Act

4. For the purposes of paragraph 64.1(2)(a) of the Canada Marine Act, liquefied natural gas activities and liquefied natural gas related activities at the port of Prince Rupert are designated as a class of undertaking to which these Regulations apply.

APPLICATION OF LAWS

Incorporation by reference

5. (1) Subject to subsection (2), the incorporated laws apply to liquefied natural gas activities and liquefied natural gas related activities at the port of Prince Rupert.

British Columbia Drinking Water Protection Act

(2) The provisions of the British Columbia Drinking Water Protection Act, S.B.C. 2001, c. 9, that are incorporated laws, and the regulations made under that Act that are incorporated laws, apply only to the construction, operation and use of a work camp in connection with the carrying out of a liquefied natural gas activity or liquefied natural gas related activity at the port of Prince Rupert.

Incorporation of related matters

6. (1) Unless otherwise provided by these Regulations and subject to any adaptations set out in sections 11 to 21, the following are to conform to the laws of British Columbia, whether or not those laws have been specified in the schedule:

Related powers, duties or functions

(2) For the purposes of subsection (1), a person or body that has a power, duty or function under a law of British Columbia has the same power, duty or function in respect of any actions taken under that subsection.

Interpretation

7. (1) The incorporated laws are to be read without reference to any of the following:

Exception

(2) Despite paragraph (1)(b),

Specified officials and bodies

(3) For greater certainty, a person or body that has a power, duty or function under a law of British Columbia incorporated by reference in these Regulations has the same power, duty or function under these Regulations, subject to the adaptations set out in sections 14 to 21.

References are to laws as incorporated and adapted

(4) If a law of British Columbia is incorporated by reference in these Regulations, a reference to that law in an incorporated law or in any notice, form, instrument or other document issued under an incorporated law is to be read as a reference to that law as incorporated by reference in and as adapted by these Regulations.

Offence

8. (1) A person who contravenes a provision of an incorporated law within the port of Prince Rupert is guilty of an offence punishable on summary conviction under these Regulations if similar acts or omissions outside the port of Prince Rupert would have constituted an offence under the equivalent provision of the British Columbia law, or the provision of the British Columbia law that was adapted for the purposes of these Regulations, and is subject to the same fines or term of imprisonment, or both, set out in the British Columbia law that would have applied for the contravention of the equivalent provision of the British Columbia law, or for the provision of the British Columbia law that was adapted for the purposes of these Regulations.

Administrative monetary penalty

(2) A person who contravenes a provision of an incorporated law within the port of Prince Rupert is liable to the same administrative monetary penalty as set out in the British Columbia law that would have applied if the contravention had occurred outside the port of Prince Rupert with respect to the equivalent provision of the British Columbia law, or the provision of the British Columbia law that was adapted for the purposes of these Regulations, if similar acts or omissions would have been punishable by administrative monetary penalty under the British Columbia law.

Financial requirements under lease

9. If an incorporated law requires a cash deposit or other financial security to be given, that requirement does not displace, but applies in addition to, the requirements of any lease of the lands or navigable waters at the port of Prince Rupert in relation to cash deposits or other financial security.

TRANSITIONAL PROVISION

Previous permits, authorizations, orders and exemptions deemed valid

10. Any permits, authorizations, orders or exemptions — including any amendments to them — issued by the British Columbia Oil and Gas Commission in relation to liquefied natural gas activities and liquefied natural gas related activities at the port of Prince Rupert before the day on which these Regulations come into force are considered to have been issued under these Regulations and to be valid for the purposes of these Regulations.

ADAPTATIONS APPLICABLE TO ALL INCORPORATED LAWS

Exclusion

11. Unless otherwise provided by these Regulations, a provision of an incorporated law that imposes an obligation, liability or penalty on an owner, occupier, public authority, public body or unspecified person or entity does not apply to Her Majesty in right of Canada or to the Prince Rupert Port Authority.

Limitation on searches and inspections

12. A power to search or conduct inspections under an incorporated law, including the power to enter premises, does not include the power to enter or search, or to inspect anything in, a federal government office or an office of the Prince Rupert Port Authority without the consent of the person who is or appears to be in charge of those premises.

Limitation of documents

13. A power to seize, remove or compel the production of documents under an incorporated law does not include the power to seize, remove or compel the production of a document in the possession of the federal government or the Prince Rupert Port Authority without the consent of the person in possession of the document.

ADAPTATION TO THE ENVIRONMENTAL MANAGEMENT ACT

Adaptation to the definition “waste”

14. The definition “waste” in section 1(1) of the Environmental Management Act is to be read without reference to paragraph (g).

ADAPTATIONS TO THE OIL AND GAS ACTIVITIES ACT AND THE REGULATIONS MADE UNDER IT

OIL AND GAS ACTIVITIES ACT

General adaptation

15. For the purposes of the portion of the Oil and Gas Activities Act, and the regulations made under that Act, that are in force and that are specified in the schedule, the port of Prince Rupert is considered private land.

Reliance on Prince Rupert Port Authority authorizations

16. Instead of granting a permit or giving an authorization under the Oil and Gas Activities Act, the British Columbia Oil and Gas Commission may rely on a permit issued, or other authorization given, by the Prince Rupert Port Authority before the day on which these Regulations come into force.

Adaptation to definition “land owner”

17. (1) The definition “land owner” in section 1(2) of the Oil and Gas Activities Act is to be read to mean the Prince Rupert Port Authority.

Adaptation to definition “specified enactment”

(2) The definition “specified enactment” in section 1(2) of the Oil and Gas Activities Act is to be read with reference only to the Environmental Management Act.

Adaptation to definition “specified provision”

(3) The definition “specified provision” in section 1(2) of the Oil and Gas Activities Act is to be read without reference to paragraphs (b) to (e) of that definition.

Adaptation to section 34

18. Section 34 of the Oil and Gas Activities Act is to be read as follows:

34. A permit holder must not begin or carry out an oil and gas activity or related activity on or under an area of the port of Prince Rupert unless the permit holder has an agreement with the Prince Rupert Port Authority authorizing the permit holder to enter, occupy and use the area.

Adaptation to section 56(1)

19. In section 56(1) of the Oil and Gas Activities Act, a reference to “government” is to be read to include Her Majesty in right of Canada.

Adaptation to sections 74(2)(a) and 76(6)(a)

20. In sections 74(2)(a) and 76(6)(a) of the Oil and Gas Activities Act, a reference to “person” is to be read to exclude Her Majesty in right of Canada.

EMERGENCY MANAGEMENT REGULATION

Adaptation to section 3(1)(c)

21. Section 3(1)(c) of the Emergency Management Regulation is to be read as follows:

COMING INTO FORCE

Registration

22. These Regulations come into force on the day on which they are registered.

SCHEDULE
(Section 1, subsections 5(2) and 6(1) and section 15)

BRITISH COLUMBIA STATUTES AND REGULATIONS INCORPORATED BY REFERENCE

Incorporation of the Drinking Water Protection Act and the regulations made under it

1. The Drinking Water Protection Act, S.B.C. 2001, c. 9, other than sections 31(4) and 38, and the regulations made under that Act, are incorporated by reference.

Incorporation of the Environmental Management Act and the regulations made under it

2. The Environmental Management Act, S.B.C. 2003, c. 53, other than sections 23 to 64, 89 to 91 and 113, and the following regulations made under that Act are incorporated by reference:

Incorporation of the Oil and Gas Activities Act and the regulations made under it, with exceptions

3. The Oil and Gas Activities Act, S.B.C. 2008, c. 36, other than sections 12, 23, 28, 41 and 43, and the regulations made under that Act, other than the following provisions, are incorporated by reference:

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