Canada–Newfoundland and Labrador Offshore Petroleum Cost Recovery Regulations

Link to law: http://laws-lois.justice.gc.ca/eng/regulations/SOR-2016-21/FullText.html

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Canada–Newfoundland and Labrador Offshore Petroleum Cost Recovery Regulations

SOR/2016-21CANADA–NEWFOUNDLAND AND LABRADOR ATLANTIC ACCORD IMPLEMENTATION ACT
Registration 2016-02-19
Canada–Newfoundland and Labrador Offshore Petroleum Cost Recovery Regulations
P.C. 2016-69 2016-02-19Whereas, pursuant to subsection 150(1) of the Canada–Newfoundland and Labrador Atlantic Accord Implementation ActFootnote a, a copy of the proposed Canada–Newfoundland and Labrador Offshore Petroleum Cost Recovery Regulations, substantially in the annexed form, was published in the Canada Gazette, Part I, on July 11, 2015 and a reasonable opportunity was afforded to interested persons to make representations to the Minister of Natural Resources with respect to the proposed Regulations;
Return to footnote aS.C. 1987, c. 3; S.C. 2014, c. 13, s.3
And whereas, pursuant to subsection 7(1)Footnote b of that Act, the Minister of Natural Resources has consulted the Provincial Minister with respect to the proposed Regulations and the Provincial Minister has approved the making of those Regulations;
Return to footnote bS.C. 2015, c. 4, s. 38
Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Natural Resources, pursuant to section 29.1Footnote c of the Canada–Newfoundland and Labrador Atlantic Accord Implementation ActFootnote a, makes the annexed Canada–Newfoundland and Labrador Offshore Petroleum Cost Recovery Regulations.
Return to footnote cS.C. 2015, c. 4, s. 39Definitions

Marginal note:Definitions

1 The following definitions apply in these Regulations.

Act
Act means the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act. (Loi)
actual full cost
actual full cost means the full cost confirmed by the Board’s audited financial statements. (coût entier réel)
direct regulatory activities
direct regulatory activities means the activities that are required for the Board to fulfill its regulatory responsibilities such as assessing applications, issuing licences, granting approvals and authorizations, verifying and enforcing compliance with the Act and providing information, products and services. (activités de réglementation directes)
indirect regulatory costs
indirect regulatory costs means the costs that support the Board’s direct regulatory activities such as office accommodation, supplies and equipment, professional services, communications, travel, management, training, administration, human resources services, finance, information technology services, hardware and software, the preparation of documents (including policies, standards, guidelines, procedures and notices) and the provision of technical expertise (including any advice relating to legislation or regulations) to the Federal Minister or the Provincial Minister at that Minister’s request. (coûts de réglementation indirects)
project
project means the work or the activity referred to in paragraph 138(1)(b) of the Act. (projet)

Part 1 Regulatory Activity Plan Charges

Estimated annual charge

Marginal note:Regulatory activity plan

2 For each new project relating to development, production, abandonment, exploratory drilling or multi-year or complex seismic programs in respect of petroleum operations, on receipt of a project description or letter of intent, the Board must

(a) prepare a regulatory activity plan;

(b) calculate the estimated annual charge payable by the applicant or the operator for the project by determining the estimated full cost, including indirect regulatory costs, associated with the implementation of the regulatory activity plan based on

(i) the cost of the estimated total number of units of time necessary to be spent in that fiscal year on direct regulatory activities for the project, and
(ii) any other costs, excluding costs calculated under other cost recovery methods; and

(c) notify the applicant or the operator, in writing, of the regulatory activity plan and the estimated annual charge payable.

Marginal note:Existing project

3 For each existing project that was previously under a regulatory activity plan, after approval of the Board’s budget in any given fiscal year following its submission in accordance with subsection 27(2) of the Act, the Board must

(a) prepare a new regulatory activity plan;

(b) calculate the estimated annual charge payable by the applicant or the operator for the project by determining the estimated full cost, including indirect regulatory costs, associated with the implementation of thenew regulatory activity plan based on

(i) the cost of the estimated total number of units of time necessary to be spent in that fiscal year on direct regulatory activities for the project, and
(ii) any other costs, excluding costs calculated under other cost recovery methods; and

(c) notify the applicant or the operator, in writing, of the new regulatory activity plan and the estimated annual charge payable.

Marginal note:Recalculation

4 If an applicant or operator proposes changes to its project that are not reflected in the regulatory activity plan, the Board may recalculate the estimated annual charge for that project and adjust the payable amount accordingly.

Quarterly Invoicing

Marginal note:Invoice

5 (1) The Board must, on a quarterly basis, prepare and send an invoice for an amount equal to 25% of the estimated annual charge payable to each applicant or operator who has been notified under paragraph 2(c) or 3(c).

Marginal note:Payment within 30 days

(2) Within 30 days after the date of the invoice, the applicant or the operator must pay the amount invoiced.

Annual Charge Adjustment

Marginal note:Annual adjustment

6 (1) Each year, following the end of the fiscal year, the Board must, for each project under a regulatory activity plan,

(a) calculate the actual full cost associated with the implementation of the regulatory activity plan;
(b) calculate the charge adjustment, if any, by subtracting the estimated annual charge, calculated in accordance with paragraph 2(b) or 3(b), from the actual full cost; and
(c) notify the applicant or the operator in writing of the amount of the actual full cost and the amount of the charge adjustment.

Marginal note:Effect of adjustment

(2) If the actual full cost calculated under paragraph (1)(a) is

(a) less than the estimated annual charge, the difference is credited to the applicant’s or operator’s account and must be refunded as a credit on the next invoice; or
(b) greater than the estimated annual charge, the Board must invoice the applicant or the operator for an amount equal to the difference and the applicant or the operator must pay that amount to the Board within 30 days after the date of the invoice.

Part 2 Formula Fees

Interpretation

Marginal note:Interpretation

7 In this Part,

(a) base units of time are the number of units of time published by the Board in accordance with section 8 based on the Board’s estimate of the time required for it to undertake direct regulatory activities in relation to each activity set out in the tables to section 9;
(b) variable units of time are the number of units of time published by the Board in accordance with section 8 based on the Board’s estimate of the time required for it to undertake direct regulatory activities in relation to the variables set out in column 3 of the table to subsection 9(3);
(c) the effective rate is the rate published by the Board in accordance with section 8 based on the estimated sum of the costs incurred by the Board’s undertaking of all direct regulatory activities and of the Board’s indirect regulatory costs minus the sum of the costs incurred by the Board’s undertaking of regulatory activities that are not recovered by the Board at the request of the Federal Minister and the Provincial Minister and divided by the total number of units of time spent by the Board for those direct regulatory activities; and
(d) the heavy burden coefficient is a multiplier that the Board may apply to a fee for an activity if the Board is of the opinion that the fee must be increased to reflect the additional number of units of time spent by the Board to undertake direct regulatory activities as a result of non-compliance with the Act, negligence or lack of effort by an applicant or operator in responding to any of the Board’s questions during an application process or activity.

Publication

Marginal note:Publication by Board

8 Each year the Board must publish, by electronic or other means that is likely to reach applicants and operators,

(a) the base units of time for each activity set out in the tables to section 9;
(b) the variable units of time for each activity set out in the table to subsection 9(3); and
(c) the effective rate.

Formulas

Marginal note:Basic formula

9 (1) The fee for each activity set out in the table to this subsection is determined by the formula

A × C
where


is the base units of time related to each activity; and


is the effective rate.

TABLE

Item
Activity

1
Application for a declaration of significant discovery

2
Application for a declaration of commercial discovery

3
Application for a significant discovery licence

4
Application for a licence for subsurface storage

5
Application for a production licence

6
Application for an amendment to a licence or a consolidation of licences

7
Registration of a transfer

8
Registration of a security notice

9
Registration of an interest

10
Recording of a notice

11
Registration of an instrument other than a transfer or security notice

12
Application for an extension, by order, of the term of a production licence

13
Application for allowable expenditures

Marginal note:Formula without variable units of time

(2) The fee for each activity set out in column 2 of the table to this subsection is determined by the formula

A × C × D
where


is the base units of time related to each activity;


is the effective rate; and


if applicable, is the heavy burden coefficient.

TABLE

Column 1
Column 2

Item
Category of Activity
Activity

1
Geological operations authorization (with field work)
Geochemical study

2
Geophysical (without field work)
Geophysical study

3
Geological (without field work)
Purchase of geological studies

4
Geological (without field work)
Isotope age dating

5
Geological (without field work)
In-house geological studies

6
Geological (without field work)
Petrography

7
Geological (without field work)
Paleontological or palynological study

8
Geological (without field work)
Other geophysical activity

9
Annual compliance fee
All geophysical projects

Marginal note:Formula with variable units of time

(3) The fee for each activity set out in column 2 of the table to this subsection is determined by the formula

(A + B) × (C × D)
where


is the base units of time related to each activity;


is the variable units of time multiplied by the number of primary vessels or aircraft to be used in each activity;


is the effective rate; and


if applicable, is the heavy burden coefficient.

TABLE

Column 1
Column 2
Column 3

Item
Category of Activity
Activity
Variable

1
Geophysical operations authorization (with field work)
2-D seismic reflection survey (primary activity)
Primary vessel

2
Geophysical operations authorization (with field work)
3-D seismic reflection survey (primary activity)
Primary vessel

3
Geophysical operations authorization (with field work)
4-D seismic reflection survey (primary activity)
Primary vessel

4
Geophysical operations authorization (with field work)
Seafloor gravity survey (primary activity)
Primary vessel

5
Geophysical operations authorization (with field work)
Seismic refraction survey (primary activity)
Primary vessel

6
Geophysical operations authorization (with field work)
Controlled source electromagnetic survey
Primary vessel

7
Geophysical operations authorization (with field work)
Other geophysical program
Primary vessel

8
Geophysical operations authorization (with field work)
Aeromagnetic survey (primary activity)
Aircraft

9
Geotechnical authorization (seabed survey)
Piston core
Primary vessel

10
Geotechnical authorization (seabed survey)
Shallow seismic, seabed survey
Primary vessel

Payment of Fees

Marginal note:Fees calculated under section 9

10 (1) On the submission of an application in respect of an activity set out in any table to section 9, the applicant must pay to the Board the fee determined in accordance with that section.

Marginal note:Heavy burden coefficient

(2) If the Board uses a heavy burden coefficient to calculate an additional charge in respect of an activity, the Board must invoice the applicant or the operator and the applicant or the operator must pay that amount to the Board within 30 days after the date of the invoice.

Part 3 Geodata Centre

Definition of daily access rate
11 In this Part, the daily access rate is the rate established and published by the Board by electronic or other means that is likely to reach applicants and operators.

Marginal note:Sample access fee

12 Any person, except a person requesting access for an academic purpose, the Federal Minister and the Provincial Minister, who accesses a physical sample at the geodata centre must pay the daily access rate for each day the sample is accessed.

Part 4 Other Charges

Marginal note:Reimbursement of Board costs

13 The Board may require reimbursement for 100% of its costs for activities that are not set out in Parts 1 to 3 and that are related to the following:

(a) any verification of compliance under the Act involving travel to another location by the Board’s staff;
(b) the Oil and Gas Committee;
(c) any technical analysis or process review that is related to a specific project and that is requested by an applicant or operator;
(d) any public review, written or oral hearing or inquiry that is related to a specific project and that is required or initiated by the Board;
(e) a participant funding program that is part of an environmental assessment conducted under the Canadian Environmental Assessment Act, 2012; and
(f) information, products or services that are requested by a person.

Part 5 General

Interest

Marginal note:Compound interest rate of 1.5%

14 Interest on an amount owing to the Board must be calculated and compounded monthly at the rate of 1.5% and is payable and accrues during the period beginning on the due date and ending on the day before the day on which the payment is received by the Board.

Remittance of Fees and Charges

Marginal note:Remittance

15 For the purposes of section 29.3 of the Act, the fees and charges obtained in accordance with these Regulations must be remitted on a quarterly basis subject to the Board’s operational requirements.

Part 6 Consequential Amendments, Transitional Provisions and Coming into Force

Consequential Amendments to the Newfoundland Offshore Area Registration Regulations

16 [Amendment]

17 [Amendments]

18 [Amendment]

19 [Amendment]

Transitional Provisions

Marginal note:Non-application of section 3

20 (1) Section 3 does not apply to a project that relates to development, production, abandonment, exploratory drilling or multi-year or complex seismic programs if the applicant or the operator has paid 100% of the Board’s estimated costs for the project for the fiscal year in which these Regulations come into force.

Marginal note:Presumption

(2) All existing projects relating to development, production, abandonment, exploratory drilling or multi-year or complex seismic programs that are under the Board’s regulatory authority before these Regulations come into force and that do not have a regulatory activity plan are considered to have been previously under a regulatory activity plan for the purposes of section 3.

Coming into Force

Marginal note:S.C. 2015, c. 4

Footnote *21 These Regulations come into force on the day on which section 39 of the Energy Safety and Security Act comes into force but if they are registered after that day, they come into force on the day on which they are registered.
Return to footnote *[Note: Regulations in force February 27, 2016.]