By Sadira Jan, Dave Randell, Nancy Rubin, G. John Samms, Kimberly MacLachlan, and  Jamie Gamblin

Bill C-49 received Royal Assent and will amend the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act to allow for offshore renewable energy development in Nova Scotia and Newfoundland and Labrador. The changes are a welcomed addition to Atlantic Canada’s energy landscape.

Introduced in May 2023, Bill C-49 passed through various stages in the House of Commons and the Senate. Nova Scotia recently passed its mirror legislation which has not yet been proclaimed into force in the Advancing Nova Scotia Opportunities Act (Bill 471).  Newfoundland and Labrador have yet to introduce their mirror legislation.

Expanded regulation

Bill C-49 renames the offshore petroleum energy regulators in Nova Scotia and Newfoundland and Labrador (the Canada-Nova Scotia Offshore Petroleum Board (“CNSOPB“) and the Canada-Newfoundland and Labrador Offshore Petroleum Board (“CNLOPB“)) to the Canada–Newfoundland and Labrador Offshore Energy Regulator and the Canada-Nova Scotia Offshore Energy Regulator to oversee offshore renewable energy projects (the “Regulators“).

• Bill C-49 defines an offshore renewable energy project as any research or assessment conducted with respect to the exploitation or potential exploitation of renewable energy resources to produce an energy project (unless it is conducted by or on behalf of a government or educational institution) and the actual exploitation, storage, or transmission of an energy product produced from a renewable resource (NS – section 109(3); NL – section 3 (3)).
• To date, oil and gas activities in the offshore areas of Nova Scotia and Newfoundland and Labrador have been regulated through the CNSOPB and CNLOPB including licensing, compliance, exploration and decommissioning. (See June 1, 2023 update.)

Full and fair participation for Canadians

Canadian corporations and residents will have full and fair participation in offshore renewable energy work and projects including in the course of employment and in the supply of goods and services. Bill C-49 focuses on the participation of under-represented groups. The impacts of offshore renewable energy projects on fishing activity will also be considered important in the issuance of submerged land licences (NS – section 98.7; NL – section 96.6).

Submerged land licensing

Bill C-49 establishes the process for issuing submerged land licences and an associated revenue regime for such licences.

• Submerged land licences may be limited to particular technologies or types of renewable energy resources as defined in the licence (NS – section 91(3); NL – section 88(3)).
• A submerged land licence will not be required for research, or assessments conducted in relation to the exploitation of a renewable resource that does not require attaching a facility or structure to the seabed (NS – section 91(4); NL – section 88(4)).
• A submerged land licence in relation to Crown reserve land will not be issued unless a call for bids process is conducted by the Regulators (NS – section 93(1); NL – section 90(1)) or an exception applies (NS – section 97(1); NL – section 94(1)).
• A submerged land licence (or shares in a submerged land license) may only be held by a “corporation incorporated in Canada” (NS – section 98.6; NL – section 96.5).
• The consolidation of two or more submerged land licences into one licence (NS – section 98.4(3); NL – section 96.3 (3)) is permitted.

Environmental and health and safety priorities

The environmental protection and occupational health and safety regimes have been expanded to include offshore renewable energy projects.

• The Regulators may, by order, prohibit work in offshore areas if there is an environmental or social issue of “serious” nature, or dangerous or extreme weather conditions (NS – section 59(1); NL – section 56(1)).
• The Regulators may make regulations prohibiting an offshore renewable energy project or the issuance of interests if the offshore area is identified as an area for environmental or wildlife conservation or protection (NS – section 59.1; NL – section 56.1).
• Interest owners may be required to surrender or cancel their interests for environmental or wildlife conservation or protection (NS – section 59.2 (1) and (4); NL – section 56.2(1) and (4)). Compensation may be awarded to an interest owner if an interest is cancelled or surrendered as a result (NS – section 59.3; NL – section 56.3).
• There is a prohibition on any “debris” being left in offshore areas (NS – section 188.18(1); NL – section 183.18(1)). Debris is defined as any facility or structure that has been abandoned without authorization or any material that has broken away or has been displaced from an abandoned facility (NS – section 188.17(1); NL – section 183.17(1)).
• The Regulators have the authority to direct public inquiries if a spill, debris, accident, or incident results in death or injury or there is danger to public safety or the environment (NS – section 188.23(1); NL – section 183.23(1)).

Transboundary hydrocarbon management regime

Bill C-49 establishes a transboundary hydrocarbon management regime in an offshore renewable energy context to regulate fields or pools that straddle international and domestic administrative boundaries, new methods of showing hydrocarbon accumulations in geological features, and limits the duration of future significant discovery licences to 25 years. A “significant discovery” is defined as a discovery that demonstrates the existence of hydrocarbons that has the potential for “sustained production.”

• Transboundary means a pool [or field] that extends beyond the Regulators’ jurisdiction.
• While transboundary pools are to be exploited as single pools, they can be subject to joint exploitation with a joint exploitation agreement, unit agreement, and unit operating agreement having been entered into and approved (NS – section 188.05(1) and (2)); NL – section 183.05(1) and (2)).
• With advice from the Regulators, the Federal and Provincial Ministers may enter into joint exploitation agreements with respect to transboundary pools extending into foreign government territory (NS – section 188.06(2); NL – section 183.06(2)).
• On May 17, 2005, Canada and France signed an agreement relating to the exploration and exploitation of transboundary hydrocarbon fields off the coasts of Newfoundland and Labrador, Nova Scotia and the French islands of St. Pierre et Miquelon. While originally for petroleum resources, this agreement will presumably extend to offshore renewable energy projects with these amendments.

Additional changes

Bill C-49 also provides for the following amendments:

• Adds clarity around the role of the Federal and Provincial Ministers and Regulators with respect to regional and strategic assessments for offshore renewable energy projects. The Regulators may conduct regional and strategic assessments with respect to existing or future offshore renewable energy work (NS – section 142.018(1) and 142.019 (1); NL – section 138.017(1) and 138.018(1)). The Federal and Provincial Ministers may also enter into agreements with jurisdictions authorized under other Federal or Provincial legislation to conduct these assessments (NS – section 142.018(2) and 142.019 (2); NL – section 138.017(2) and 138.018(2)).
• Allows the Governor in Council to make regulations to regulate offshore infrastructure access (including the enforcement of tolls and tariffs). There is limited information on this at this time and we will continue to monitor.
• Allows the Crown to rely on the Regulators to consult with the Indigenous peoples of Canada with respect to potential adverse impacts of work or activity in offshore areas on existing Aboriginal and treaty rights (as outlined in the Constitution Act, 1982) and to accommodate those adverse impacts, as appropriate (NS – section 18.1; NL – section 17.1).

This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Energy Group.

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