Canada-British Columbia equivalency agreement consultation: release of methane from the oil and gas sector

Official title: An agreement on the equivalency of federal and British Columbia regulations respecting the release of methane from the oil and gas sector in British Columbia, 2020, between the Government of Canada as represented by the Minister of Environment ("Canada") and the Government of British Columbia as represented by the Minister of Energy, Mines and Petroleum Resources ("British Columbia")

Whereas Canada and British Columbia are parties to the Pan-Canadian Framework on Clean Growth and Climate Change and reducing the release of greenhouse gas emissions in the oil and gas sector is a matter of significant importance to Canada and to British Columbia (“the parties”);

Whereas Canada adopted the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector), S.O.R 2018-66 (the “federal methane regulations”) made under subsection 93(1) of the Canadian Environmental Protection Act (CEPA), S.C1999, c. 33 and published in the Canada Gazette, Part II, Vol. 152, no. 1 on April 26, 2018;

Whereas the federal methane regulations will come into force on January 1, 2020, subject to subsection 58 (2) of the federal methane regulations which states that: sections 26, 27 and 37 to 41 of these regulations and paragraphs 32(p), (q), (v), (w) and (x) of the schedule to the Regulations Designating Regulatory Provisions for Purposes of Enforcement (Canadian Environmental Protection Act, 1999), as enacted by section 57 of these regulations, come into force on January 1, 2023;

Whereas on December 17, 2018, B.C. Reg 286/2018 was deposited with the Registrar of Regulations, making amendments effective on January 1, 2020 to the Drilling and Production Regulation, B.C. Reg/2010 (“DPR”) made under the Oil and Gas Activities Act, S.B.C. 2008, c. 36, (“OGAA”);

Whereas under section 10 of the Canadian Environmental Protection Act, the government of Canada as represented by the Minister of the Environment may agree in writing with a provincial government that there are in force by or under the laws applicable to the jurisdiction of the provincial government, provisions that are equivalent to a regulation made under subsection 93(1) of the Canadian Environmental Protection Act and provisions that are similar to sections 17 to 20 of the Canadian Environmental Protection Act for the investigation of alleged offences under environmental legislation of that jurisdiction;

Whereas the parties agree to enter into an equivalency agreement (the "agreement") recognizing that the provisions in the DPR and the federal methane regulations are equivalent within the meaning of section 10 of CEPA, and the Governor in Council may, by order under subsection 10(3), declare that the federal methane regulations do not apply in the area under the jurisdiction of the province of British Columbia.

Therefore, the parties agree:

1.0 Definitions

"CEPA” means the Canadian Environmental Protection Act, S.C. 1999, c. 33, as amended.

“DPR” means the Drilling and Production Regulation, B.C. Reg. 282/2010, as amended.

“Federal methane regulations” means Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) S.O.R 2018-66, as amended.

“OGAA” means the Oil and Gas Activities Act, S.B.C. 2008, c. 36, as amended.

2.0 Equivalency

2.1 As of January 1, 2020, considering the coming into force of the B.C. Reg. 286/2018 and of section 13 of Bill 56- 2018: Oil and Gas Activities Amendment Act, S.B.C., 2018, c. 54, amending and adding sections 61.1 to 61.4 to the OGAA, the parties agree that there are provisions in OGAA and the DPR under the laws of British Columbia that are equivalent to the relevant provisions of the CEPA and the federal methane regulations, for the purposes of Section 10 of the CEPA, by reason of the fact that the following criteria have been met:

1. Equivalency: reduction of emissions of methane (in CO₂e)

   In order to demonstrate the equivalency of outcomes between implementation of the DPR and of the federal methane regulations, Environment and Climate Change Canada has modelled both the provincial and the federal regulations using the departmental reference case as published in Canada’s 3rd Biennial Report to the United Nations Framework Convention on Climate Change (UNFCCC) using the same methodology and data and DPR will result in methane emission reductions (in CO₂e) that meet the expected impact in terms of methane emission reductions (in CO₂e) of the federal methane regulations for the time period of Jan 1, 2020 until Jan 1, 2025.

   The reduction of methane emissions (in CO₂e) will be achieved through the implementation under the DPR of similar regulatory requirements as in the federal methane regulations, namely:

   • leak detection requirements by facility type as well as timely inspections and equipment repair

   • restrictions and limits on natural gas venting from oil and gas facilities

   • prohibiting venting of natural gas from pneumatic controllers for new facilities and imposing the use of low-bleed equipment or prohibiting venting of natural gas at certain pneumatics at existing installations

   • restrictions on the use of pneumatic pumps using natural gas

   • imposing inspections and the maintenance of seal and packing systems at centrifugal and reciprocating compressors

   • additional provisions for glycol dehydrators and compressor starts are set under the DPR

2. Citizen’s request for investigations

   The OGAA provides a mechanism similar to that provided in sections 17 to 20 of the CEPA at sections 61.1 to 61.4 of the OGAA. The OGAA provisions stipulate that an application may be made by a resident to the Oil and Gas Commission, upon which the commission will be required to make an investigation related to the alleged offence and report to the applicant outlining the progress of the investigation and the action, if any, that is or will be taken.

3. Sanctions and enforcement programs

   A penalty and enforcement regime applicable to the oil and gas industry in BC is set out under the OGAA which applies for any contravention to orders made by the commission arising out of the application of the amendments to the DPR respecting reduction of emissions of hydrocarbons.

3.0 Information-sharing

3.1 The parties will share information with each other respecting the administration of this agreement.

3.2 British Columbia will provide to Canada on an annual basis:

1. the number of existing facilities and wells as of January 1st of the year, the number of new facility and well permits issued in the preceding year, and number of closures of facility and wells, segregated by well type and facility classification as defined in the DPR

2. information supporting the evaluation of the effectiveness of the DPR in reducing methane emissions (in CO₂e), including the methodology, analysis undertaken and results of calculations of emission reductions, and

3. a summary of compliance verification activities and enforcement measures, including the number of inspections of facilities and wells, the inspections by type of facilities and wells, the equipment repairs completed to comply with the DPR requirements, the number and type of non-compliance events and the penalties and convictions

3.3 Canada will provide written notice to British Columbia of relevant proposed and actual amendments to the federal methane regulations.

3.4 British Columbia will provide written notice to Canada of proposed amendments to sections 61.1 to 61.4 of the OGAA and to the DPR, and of any standards or guidelines which are incorporated by reference into the relevant provisions of the OGAA and the DPR.

3.5 The parties recognize that their respective access to information and privacy legislation will apply to all information received under this agreement.

4.0 Entry into force and termination

4.1 This agreement comes into force on the date of registration of the order made under subsection 10(3) of the CEPA and published in the Canada Gazette, Part II, declaring that the provisions of the federal methane regulations do not apply in British Columbia.

4.2 This agreement terminates five (5) years after the date of its coming into force or may be terminated earlier by either party giving the other at least three (3) months written notice.

4.3 This agreement will be reviewed annually.

5.0 Amendment

5.1 The parties may amend this agreement by the mutual written consent of the parties.