SLIDE 1
Agenda
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- 1. Introduction
2.
Regulatory considerations
3.
Environmental considerations
- 4. Aboriginal law considerations
Regulatory, Environmental and Aboriginal Law Considerations for - - PowerPoint PPT Presentation
Regulatory, Environmental and Aboriginal Law Considerations for - - PowerPoint PPT Presentation
Regulatory, Environmental and Aboriginal Law Considerations for Internal Auditors Jeremy Barretto and Tom McNerney November 18, 2015 IIA Breakfast Meeting 12145880 Agenda 1. Introduction Regulatory considerations 2. Environmental
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- 1. Introduction
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- Focus on energy infrastructure and resource
projects
Regulatory law – regulatory permitting, hearings or
investigations
Environmental law – environmental assessment,
approvals, species at risk and contaminated sites
Aboriginal law – Aboriginal Consultation, benefits
agreements and litigation
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Energy Infrastructure Developments in Canada
- Policy is driving the need for new infrastructure projects to
increase export opportunities
- Several major projects have been initiated in response to this
identified need
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LNG GAS OIL KITIMAT LNG (CHEVRON, APACHE) PACIFIC TRAILS PIPELINE (CHEVRON, APACHE) NORTHERN GATEWAY (ENBRIDGE) LNG CANADA (SHELL, MITSUBISHI, KOGAS, PETROCHINA) COASTAL GASLINK PIPELINE (TRANSCANADA) TRANS MOUNTAIN EXPANSION (KINDER MORGAN) PACIFIC NORTHWEST (PROGRESS/PETRONAS) PRINCE RUPERT GAS TRANSMISSION (TRANSCANADA) KEYSTONE XL (TRANSCANADA) PRINCE RUPERT LNG (BG GROUP) WESTCOAST CONNECTOR (SPECTRA ENERGY) ENERGY EAST PIPELINE (TRANSCANADA)
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LNG Projects Regulatory Status
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PROJECT PROPONENTS STATUS Aurora LNG Nexen (CNOOC), INPEX, JGC Corporation Approved BY NEB on May 1, 2014 Kitimat LNG Chevron Canada and Woodside Petroleum Ltd. Front-end engineering and design LNG Canada Shell, Mitsubishi, KOGAS, Petrochina Environmental Assessment complete, other permitting underway Pacific Northwest LNG Progress/Petronas, SINOPEC Awaiting CEAA decision in early 2016; potential construction start date of 2016 Prince Rupert LNG BG Group Environmental Assessment Douglas Channel Energy BC LNG, LNG Partners of Houston, Golar LNG Project in doubt Other LNG Projects – Triton LNG; WCC LNG; Woodfibre LNG; Woodside LNG; Discovery LNG; Kitsault Energy Ltd; Stewart Energy LNG; Orca LNG Ltd; Cedar 1, 2, & 3 LNG Export; Steelhead LNG; WesPac LNG; H-Energy; Bear Head LNG.
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Risks for New Energy Infrastructure Projects
- There are a variety of risks for new infrastructure
projects:
Regulatory Litigation Political Geographical Capital 6
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- 2. Regulatory Considerations
- Typical regulatory process
1.
Submitting an application for an energy or resource development to the applicable regulatory authority (e.g. SAGD – Alberta Energy Regulator (AER), Inter- provincial pipelines – National Energy Board)
2.
Parties with standing can intervene in the regulatory process
3.
Decision by regulatory authority with or without a hearing
4.
Potential appeals of regulator’s decision
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Example: Trans Mountain Expansion Project
- Application for the Project filed on December 16, 2013
- 159 open houses or workshops
- 24,000 points of engagement with Aboriginal groups
- 2,118 Applications to Participate
- Board granted participation status in the TMEP regulatory process to
more than 400 intervenors and 1,250 commenters
- Two excluded periods from statutory timelines under the NEB Act
- NEB is required to release its report by May 20, 2016
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Regulatory reform in Canada
- In recent years, governments have identified several issues
with the regulatory system:
Overlap/inefficiencies between federal
government/provinces and amongst provincial agencies
Uncertainty of regulatory outcomes Process was taking too long for major approvals Insufficient clarity around Aboriginal consultation
requirements
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Regulatory Reform in Canada (con’t)
- Regulatory reforms have been introduced to:
Make the review process for major projects more
predictable and timely with fixed timelines
Reduce overlap and inconsistency between multiple
government reviews of the same project
- Example: AER- single regulator of energy development
in Alberta—from application and exploration, to construction and development, to abandonment, reclamation, and remediation
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Further Regulatory Reform
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- Alberta
Review of agencies boards and commissions,
including Alberta Energy Regulator
Climate change and royalty review panels
- Federal
Review of changes to environmental assessment,
fisheries and navigable waters laws
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Questions internal auditors should be asking
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- What is the scope and timelines for the regulatory
review process?
- Are there any forthcoming regulatory changes
which could affect our project cost and schedule?
- Have we engaged with stakeholders (including
- pposition) to reasonably address concerns? What
are the outstanding concerns and associated risks?
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Environmental Considerations
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- Environmental assessment is a statutory process to
consider and mitigate environmental effects of a proposed development (can be in conjunction with
- r separate from other regulatory processes)
- Changes to regulatory regimes and legislation raise
uncertainty regarding newly combined processes and Aboriginal consultation requirements
Opposition to energy and resource development
projects based on environmental concerns
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Environmental Risks
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- Species at risk
- Water use
- Climate change
- Upstream effects
- Abandonment
- Other issues
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Best Practices for Mitigating Environmental Risks
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- Attempt to coordinate the environmental
assessment and regulatory requirements early in the process
- Make reasonable attempts to address landowner
concerns (e.g. water, flaring and emissions issues) and document consultation
- Have a regulatory and litigation strategy to deal
with potential legal challenges
Example: Enbridge Line 9B
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Questions internal auditors should be asking
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- Have we coordinated our environmental
assessment and regulatory requirements?
- Have we reasonably addressed stakeholder
concerns?
- Have we assessed and quantified our
abandonment and reclamation liabilities?
- Could our Project be affected by future changes to
environmental laws (e.g., climate change)?
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- 4. Aboriginal Law Considerations
Historical Treaties
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Modern Treaties
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Background of Aboriginal Issues
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- Historically, Aboriginal groups were not involved in
government decision-making and had limited
- pportunities to influence resource development
- Following the Constitution Act, 1982, there was
increased recognition among Aboriginal groups and Canadian society as a whole of Aboriginal rights and the need to respect them
- Past 30 years have seen trend towards more and
more litigation surrounding natural resource projects and greater cohesion amongst Aboriginal populations wanting more involvement in processes
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Aboriginal Consultation Requirements
- Aboriginal and Treaty Rights
Constitutionally entrenched collective rights First Nation, Inuit, and Métis
- The Crown’s Duty to Consult and Accommodate
Arises when government is asked to grant an approval that may
adversely affect Aboriginal or treaty rights
The scope of duty is proportionate to the strength of the
asserted right and the seriousness of the potential impact (spectrum)
Crown often delegates procedural aspects of consultation to
project proponent
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What does consultation and accommodation look like?
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- Providing information to the Aboriginal community
- Identifying the community’s interests and
concerns
- Taking action to avoid or mitigate negative impacts
from the project
- Consultation requirements are clear at law, do not
give a veto to Aboriginal groups
- Thoroughly document all communications during
the consultation process
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Recent Cases
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- Tsilhqot’in
first finding of Aboriginal title by the Supreme
Court of Canada.
- Keewatin
provinces have the jurisdiction to take up Treaty
lands for resource development
- 2015 Trends
More clarity from Courts regarding roles of parties
in consultation, injunctions and remedies
- Buffalo River Dene Nation v Saskatchewan, 2015
SKCA 31
- Adam v Canada (Minister of the Environment), 2014
FC 1185
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Agreements with Aboriginal Groups
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- Agreements are a tool that can be used to
document mitigation measures, manage risk and formalize relationships
- Agreements can vary considerably in scope and
complexity – from non-binding relationship building protocols to sophisticated commercial-like agreements
- The type of agreement chosen should reflect the
level of consultation required and be appropriate for the particular circumstance
- Trends: revenue sharing, community ratification
processes, detailed dispute resolution clauses to avoid arbitration or court and concerns regarding anti-bribery laws
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Extractive Sector Transparency Measures Act
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- The Act requires certain entities with connection
to Canada, that are engaged in commercial development of oil, gas or minerals in Canada or elsewhere, or that control such entities, to report payments made to any government, whether foreign or domestic, in excess of $100,000 in a given year
- Reports are to be made available to the public.
- Reporting to an “Aboriginal government” will be
required two years after the Act is brought into effect
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Questions internal auditors should be asking
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- Have Aboriginal groups affected by the project
been adequately consulted? What are the risks?
- Have we satisfied funding commitments to
Aboriginal groups and disclosure requirements?
- Do we have to report any payments to Aboriginal
governments under the Extractive Sectors Transparency Measures Act?
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Brion Energy Corp: Dover Commercial Project and Pierre River Mine Shell Canada Ltd: Jackpine Mine Expansion Chevron: Canadian Arctic Offshore Drilling KM LNG & Apache: Kitimat BC LNG Project Nalcor Energy: Lower Churchill Hydroelectric Project Next Era: Southern Ontario Wind Projects Translate: 660 MW Sarnia Regional Cogeneration Project BluEarth Renewables: Bull Creek Wind Project Quicksilver Resources: Fortune Creek Gas Plant Project De Beers Canada: Snap Lake Mine Gahcho Kue Diamond Mine Baffinland Iron Mines Corp.: Mary River Iron Ore Project ConocoPhillips: Parsons Lake Natural Gas Field Five Nations Energy Inc.: Greenfield power transmission project BC Hyrdro: Encanto/Muskogawen First Nation Potash Project Goldcorp: Redlake Project New Brunswick Forest Products Association Inc: Aboriginal Litigation Cliffs Natural Resources: Northern Ontario Chromite Mine Coalspur Mines: Vista Coal Project Kinder Morgan: TransMountain Expansion
Osler’s National Environmental, Regulatory and Aboriginal Experience
New Gold: Rainy River Project EnCana: Deep Panuke Sable Offshore Energy Project Vale: Thompson and Birchtree Mines & Pipe-Kipper Project Alderon: Kami Iron Ore Project Hydro One: Bruce to Milton Transmission Project & East-West Tie Project Shell Canada Ltd: Niglingtak Project Vale: Kroneau Potash Project Vale: Totten Mine Shale Gas inquiry before the BAPE Northcliff Resources: Tungsten Project Rubicon Minerals: Phoenix Project Chieftan Metals Inc.: Tulsequah Chief Project Northwest Transmission Line Project
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Ask Osler
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