By Dave Randell, John Samms & Jayna Green

A recent Government of Newfoundland and Labrador (“GNL”) announcement affirms the Province’s swift and ambitious approach to offshore wind development. While it may come as a shock to those who were envisioning that offshore wind energy would be wholly regulated by the Canada-Newfoundland and Labrador Offshore Energy Regulator (“Offshore Energy Regulator”), the Memorandum of Understanding (“MOU”) signed December 6, 2023 by the Federal and Provincial governments intends to ensure that offshore renewable energy project approvals within inland Provincial bays will not be subject to legislative delays.

Described as a direct signal to investors that Canada and the GNL are affirming their shared commitment to jointly manage the Province’s offshore renewable energy resources, the MOU establishes a framework for regulation of offshore renewable energy projects within the designated offshore renewable energy area (“ORE Area”).

The ORE Area

The ORE Area is defined as an area to be excluded from the application of the Accord Acts for offshore renewable energy (“ORE”) projects. The area consists of 16 Provincial bays, including Bonavista Bay, Pistolet Bay, Bay of Islands, Bonne Bay, Hare Bay, Ingornachoix Bay, White Bay, Notre Dame Bay, Trinity Bay, Trepassey Bay, St. Mary’s Bay, Placentia Bay, Fortune Bay, St. George’s Bay, Port au Port Bay and Conception Bay.

Defining the ORE Area is one of the core purposes of the MOU. Exact coordinates and limits of the ORE Area will be determined by professional surveyors appointed by the signatories, and those limits will be implemented through regulations under the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, as amended by Bill C-49.

Application of the MOU

But why is delineating the ORE Area significant, and what does this mean for those looking to operate in the ORE space within the Province? The preamble of the MOU indicates that the current “offshore area” defined in the Accord Acts and Bill C-49 for the purposes of petroleum resource regulation includes Provincial inland bays, meaning those resources are subject to joint regulation by the (former) Canada-Newfoundland and Labrador Offshore Petroleum Board (“C-NLOPB”). The MOU ensures that ORE projects within this “offshore area”, now captured by the “ORE Area” definition, will be regulated by the Province alone. With sole regulatory authority, the GNL will be able to dictate the pace of project approvals and other regulatory issues without having to wait for Bill C-49 and mirror legislation to come into force.^[1]

Under the Accord Acts and the Bill C-49 amendments, the Offshore Energy Regulator retains authority to regulate all aspects of offshore oil and gas projects, including licensing, compliance, exploration and decommissioning. Lawyers from Stewart McKelvey’s Energy Group have followed the impacts of Bill C-49 closely, and earlier this year noted that Bill C-49 would expand the mandates of the C-NSOPB and C-NLOPB to provide for regulation of ORE projects. The Province’s announcement affirms that the MOU is possible because of Bill C-49 and represents a commitment to joint management for ORE projects not captured under the ORE Area.

Additional impacts

Two other critical aspects of the MOU breathe life into the GNL’s methodical approach to ORE Area project regulation: the “Land Tenure and Lifecycle Project Regulation” and “Revenue Framework.”

The Land Tenure and Lifecyle Project Regulation represents the systems and all administrative practices associated with calls for bids, issuance of licenses, leases, grants or other instruments required for ORE Area projects. The MOU indicates that the Province will have sole regulatory authority over the Land Tenure and Lifecycle Project Regulation, reiterating that the Offshore Energy Regulator will not have regulatory authority over ORE projects within the 16 inland bays.

Additionally, the Province will work to create a “Revenue Framework” that will govern the collection of revenues from ORE projects within the ORE Area, ensuring that Newfoundland and Labrador will receive ORE resource revenues as if those projects stemmed from onshore resources. Design and implementation of the Revenue Framework will be governed by the regulatory authority of the Province.

Conclusion

While more details about the ORE Area and Provincial regulatory regime are sure to follow, Stewart McKelvey Energy Group lawyers are equipped and dedicated to assist those looking to navigate the progressing regulatory schemes in the offshore wind and renewable energy space.

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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[1] The House reading of Bill C-49 was completed on October 17, 2023. It remains under consideration of the Standing Committee on Natural Resources of the House of Commons.