Introduction

The Minister of Natural Resources of Canada, Jonathan Wilkinson introduced on May 30, 2023 legislation to allow for offshore wind energy development for the first time in Atlantic Canada. Bill C-49, An Act to amend the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act^[2] will amend the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act^[3] and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act^[4] which do not, in their present form, permit the approvals of offshore wind energy projects.

Currently the Atlantic Accords Acts implement agreements between Canada and the respective provinces on the joint management of offshore petroleum resources. Bill C-49 would modernize the Atlantic Accord Acts by notably establishing a framework for the development and regulation of offshore renewable energy projects in both provinces and their offshore areas. Bill C-49 also expands regulation of current petroleum projects and clarifies jurisdictional rules regarding domestic and internal sea boundaries.

The New Regulatory Framework

The expansive amendments introduced by Bill C-49 are expected to streamline applications for seabed rights approvals by introducing a single “submerged land” licence to carry out offshore renewable energy projects. This system would replace this existing tenure system whereby multiple licenses are issued in the context of petroleum project development.

Under Bill C-49, regulatory authority for offshore wind power would be granted to the two existing jointly managed offshore boards that are currently exclusively responsible for regulating offshore oil and gas projects: the Canada-Nova Scotia Offshore Petroleum Board^[5] and the Canada-Newfoundland and Labrador Offshore Petroleum Board.^[6] As part of the amendments, these boards will be renamed the Canada-Nova Scotia Offshore Energy Regulator and Canada-Newfoundland and Labrador Offshore Energy Regulator, (the “Regulators”).

The Regulators would have the power to govern various aspects of offshore renewable energy activities, such as safety, environmental protection, decommissioning, and royalties. The Regulators would also have the authority to conduct environmental assessments, public hearings, and dispute resolution processes related to offshore renewable energy projects.

Exploration, development, and production of offshore renewable energy resources, such as wind, tidal, or wave energy would be authorized by way of an application to the Regulators, but the decision to issue calls for bids would be subject to the approvals of both the federal and provincial ministers.

Changes to Existing Regulations

Bill C-49 proposes amendments to the existing regulation of offshore petroleum activities, to align them with the new provisions on offshore renewable energy. Some of the amendments include:

• new or amended consultation requirements with the provincial governments, Indigenous peoples, and others before issuing authorizations or making regulations on offshore petroleum activities;
• expanded powers for the Regulators to act and regulate offshore petroleum activities, such as safety, environmental protection, decommissioning, and royalties; and
• additional measures on environmental assessments, public hearings, and dispute resolution processes related to offshore petroleum projects.

New Regulation and Environmental Standards

Bill C-49 also includes a series of broader changes to environmental, jurisdictional and enforcement aspects of the existing legislation. Key changes to the management rules for transboundary offshore pools and fields are expected ensure consistency and cooperation among the relevant jurisdictions.

In keeping with other recent federal bills, Bill C-49 would expand existing enforcement and compliance tools, such as inspections, audits, orders, administrative monetary penalties, and offences, to ensure the safety and environmental protection of offshore activities.

Procedurally, Bill C-49 also contemplates additional protection of confidential information and new rules on the disclosure of information in the public interest, subject to certain exceptions and procedures.

From an environmental perspective, Bill C-49 would have Marine Protected Areas^[7] standards apply to all offshore areas governed by the regulations. Offshore wind farms should be permitted within Marine Protected Areas. Bill C-49 also clarifies that offshore renewable energy activities would not be considered key industrial activities, but related activities which conflict with conservation objectives set out by the federal government may nevertheless be prohibited.

The new federal impact assessment process will be applicable to offshore energy development. For petroleum projects, future significant discovery licenses will be limited to 25 years, replacing the indefinite term currently in place. Existing significant discovery licenses, however, would remain exempt from the 25-year limit.

Compensation for Existing Rights

Before initiating a call for bids, Bill C-49 will require designated government authorities, namely the federal or provincial ministries, or the Regulators, to identify suitable areas for development, conservation, or fishing. The proposed legislation does not, however provide details on potential compensation for members of the fishing industry who may be excluded from offshore areas due to renewable energy project approvals.

The chair of the Canada Nova Scotia Offshore Petroleum Board has stated that the terms and conditions associated with seabed licenses and compensation schemes are still being determined by the governments. There are no indications in Bill C-49 that the compensation process would involve third-parties, such as wind farm developers.

Next Steps

Overall, Bill C-49 represents an ambitious effort to modernize the regulation of offshore energy resources. By establishing a unified federal-provincial regulatory framework and introducing new environmental safeguards, the bill aims to promote sustainable development, enhance cooperation, and ensure the responsible and efficient management of resources. Both the Newfoundland and Labrador and the Nova Scotia governments are expected to introduce similar legislation to complete the framework proposed in Bill C-49.

While Bill C-49 has yet to be adopted, Nova Scotia has already set a target of issuing five gigawatts of licences for offshore wind by 2030^[8] under the Marine Renewable-energy Act, with a stated aim^[9] to encourage green hydrogen production. Leasing under this scheme would be expected to commence as of 2025.

In connection with this initiative, the Nova Scotia government released, on June 14, 2023,^[10] Module 1^[11] of the Nova Scotia Offshore Wind Roadmap,^[12] which details the province’s vision for the offshore wind industry, regulation and investment possibilities. This module outlines remaining work required to complete the legislative and regulatory regime for offshore wind projects. The other two modules, to be published later this year, will provide guidance on infrastructure, supply chain, public consultation and environmental issues.

1. This article was originally published by McCarthy Tétrault LLP (27 June 2023), online: <www.mccarthy.ca/en/insights/blogs/canadian-energy-perspectives/prepare-offshore-winds-canada-introduces-bill-c-49-amending-atlantic-accords-acts-regulate-offshore-wind-energy-projects-atlantic-canada>.

* Dominique Bilodeau, Louis Boulanger, Kimberley Howard, and Jacob Stone are Partners with McCarthy Tétrault. Elena Drouin is an Associate with the firm.

1. Bill C-49, An Act to amend the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act and to make consequential amendments to other Acts, 1^st Sess, 44^th Parl, 2023 (first reading 30 May 2023).
2. Justice Laws Website, “Canada-Newfoundland and Labrador Atlantic Accord Implementation Act (S,C, 1987, c. 3)” (18 august 2023), online: Government of Canada <laws.justice.gc.ca/eng/acts/c-7.5/>.
3. Justice Laws Website, “Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (S.C. 1988, c. 28)” (18 august 2023), online: Government of Canada <laws-lois.justice.gc.ca/eng/acts/C-7.8/index.html>.
4. Canada-Nova Scotia Offshore Petroleum Board (CNSOPB), online: <www.cnsopb.ns.ca/>.
5. Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), online: <www.cnlopb.ca/about/board/>.
6. “Marine Protected Areas” (8 February 2023), online: Government of Canada <www.dfo-mpo.gc.ca/oceans/mpa-zpm-aoi-si-eng.html>.
7. Nova Scotia Premier’s Office, “Province Sets Offshore Wind Target” (September 2022), online: Province of Nova Scotia <novascotia.ca/news/release/?id=20220920003>.
8. Keith Doucette, “Nova Scotia sets five-gigawatt target for offshore wind power by 2030” (20 September 2022), online: Atlantic <atlantic.ctvnews.ca/nova-scotia-sets-five-gigawatt-target-for-offshore-wind-power-by-2030-1.6076109>.
9. Natural Resources and Renewables (Nova Scotia), “Province Releases Offshore Wind Road Map” (14 June 2023), online: Province of Nova Scotia <novascotia.ca/news/release/?id=20230614004>.
10. Natural Resources and Renewables (Nova Scotia), “Nova Scotia Offshore Wind Roadmap, Module 1” (May 2023), online (pdf): Province of Nova Scotia <cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/demand-side-management/acc-models-latest-version/2022-acc-documentation-v1a.pdf>.
11. “Offshore Wind”, online: Province of Nova Scotia <novascotia.ca/offshore-wind/>.