Canada-Quebec Accord on Quebec's Offshore Petroleum Resources Announced
The Honourable Christian Paradis, Minister of Natural Resources, and Nathalie Normandeau, Quebec Deputy Premier, Minister of Natural Resources and Wildlife and Minister responsible for the Northern Plan, announced yesterday that the Governments of Canada and Quebec have reached an important accord on the development of oil and gas resources in the Gulf of St. Lawrence (the "Accord").
The Accord, under the auspices of seeking to attain self-sufficiency and improve the security of petroleum resources, has the stated objective of allowing the development of oil and gas resources in the Gulf of St. Lawrence (the "Accord Area") in a manner which protects fisheries and the environment and which recognizes Quebec as the principal beneficiary of the activities related to the development of such resources, as well as of the revenues derived therefrom, as if these resources were situated on land.
Taking care not to upset the constitutional status quo regarding the status of the Gulf of St.Lawrence, the Accord envisions the development of a shared management structure which would avoid administrative overlap (the "Joint Canada-Quebec Secretariat"). In addition, regulatory functions would be jointly governed by the National Energy Board ("NEB") and the Régie de l'énergie (through the "Canada-Quebec Joint Regulatory Office").
The Accord sets out shared responsibilities regarding any decisions relating to the development of offshore petroleum resources in the Gulf of St.Lawrence, which would be made along the following lines:
Federal responsibilities include decisions taken under the authority of federal laws of general application which are not specific to the exploration or production of petroleum, as well as decisions relating to the application of the Canadian fiscal regime, such as federal taxes.
Provincial responsibilities include the royalty regime and other types of revenue of a provincial nature; decisions taken under the authority of provincial laws of general application which are not specific to the exploration or production of petroleum; and decisions relating to the application of the Quebec's fiscal regime, such as provincial taxes.
Joint ministerial responsibilities are also envisioned and the federal and provincial ministers of natural resources would jointly have to make any decisions regarding the mandate, membership and all other decisions relating to the proper functioning of the Joint Canada-Quebec Secretariat. Further, before taking a decision regarding benefits plans for the area affected by the Accord, the Canada-Quebec Joint Regulatory Office would ask the two ministers to jointly approve such plans, as defined in the Canada Oil and Gas Operations Act (R.S., 1985, c.O-7).
As for the regulatory responsibilities of the Joint Canada-Quebec Regulatory Office, it has been mandated to propose a specific collaboration agreement which is to emphasize transparency and efficiency for industry. In addition, it is expected to coordinate the exercise of the regulatory functions provided under their respective enabling legislation.
ENVIRONMENTAL AND FISHERIES PROTECTION
Prior to the issuance of any future petroleum exploration permits for projects situated in the Accord Area, the Accord envisions mandatory joint strategic environmental assessments, to be carried out in accordance with applicable federal and provincial legislation, such as the Canadian Environmental Assessment Act (S.C. 1992, c.32) and Quebec's Environment Quality Act (R.S.Q., c.Q-2).
LABOUR RELATIONS AND OH&S
The Accord confirms that Quebec's labour laws are to apply to the Accord Area in the same manner as they apply elsewhere in Quebec. Further, in order to ensure worker safety and security, and to avoid the risk of uncertainty that an eventual duplication of federal and provincial legislative regimes regarding these issues could cause, the Governments are to proceed with a review of certain relevant statutes, in particular the Canada Labour Code (L.R., 1985, c.L-2) and related regulations regarding occupational health and safety for petroleum activities. Prior to the required legislative framework being put in place, the NEB (through the Joint Canada-Quebec Regulatory Office) is to apply Part II of the Canada Labour Code and related regulations regarding occupational health and safety for petroleum activities in the Accord areas.
As per the stated objectives of the Accord, Quebec is to benefit from all revenues derived from the development of petroleum resources, including royalties, bonuses, forfeitures, license fees and other forms of revenue, as if these resources were on land. In order to do so, the province is to establish the royalty regime for petroleum development in the Accord Area, and assure its application.
In order to preserve the respective positions of the Governments, the funds resulting from petroleum development activities are to be deposited into the Consolidated Revenue Fund of Canada, and then deposited to Quebec's Consolidated Revenue Fund.
Finally, the Accord confirms that it does not apply to taxation by the Governments in the Accord Area. The Governments only agree to negotiate an agreement or agreements separate from the Accord on the imposition and administration of corporate income and sales taxes and the sharing of tax revenues within the Accord area.
Commenting on the Accord, Minister Paradis stated that "This is an important day that is the result of a great deal of hard work [...] under a co-management framework, Quebec will derive significant financial benefits from resource-related activities."
As for Minister Normandeau, she added that "This is an historic day for Quebec. After more than 12 years - and thanks to the tremendous work of our two governments - we are very proud to announce that the Province of Quebec has an agreement that will give us 100 percent of the revenues from the development of our oil and gas in the Gulf. It's truly a great day for Quebec,"
The Accord comes as the Quebec government is undertaking a strategic environmental evaluation before allowing the development of oil and gas in the Accord Area, the results of which are to be known in 2012.