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 considerations 3. 4. Aboriginal law considerations 2
1. Introduction • 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 3
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 LNG GAS OIL KITIMAT LNG (CHEVRON, PACIFIC TRAILS PIPELINE NORTHERN GATEWAY APACHE) (CHEVRON, APACHE) (ENBRIDGE) LNG CANADA (SHELL, COASTAL GASLINK PIPELINE TRANS MOUNTAIN EXPANSION MITSUBISHI, KOGAS, (TRANSCANADA) (KINDER MORGAN) PETROCHINA) PACIFIC NORTHWEST PRINCE RUPERT GAS KEYSTONE XL (TRANSCANADA) (PROGRESS/PETRONAS) TRANSMISSION (TRANSCANADA) PRINCE RUPERT LNG (BG WESTCOAST CONNECTOR ENERGY EAST PIPELINE GROUP) (SPECTRA ENERGY) (TRANSCANADA) 4
LNG Projects Regulatory Status PROJECT PROPONENTS STATUS Aurora LNG Nexen (CNOOC), Approved BY NEB on May 1, INPEX, JGC Corporation 2014 Kitimat LNG Chevron Canada and Front-end engineering and Woodside Petroleum Ltd. design LNG Canada Shell, Mitsubishi, KOGAS, Environmental Assessment Petrochina complete, other permitting underway Pacific Northwest LNG Progress/Petronas, Awaiting CEAA decision in early SINOPEC 2016; potential construction start date of 2016 Prince Rupert LNG BG Group Environmental Assessment Douglas Channel BC LNG, LNG Partners of Project in doubt Energy Houston, Golar LNG 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, & 5 3 LNG Export; Steelhead LNG; WesPac LNG; H-Energy; Bear Head LNG.
Risks for New Energy Infrastructure Projects • There are a variety of risks for new infrastructure projects: Regulatory Litigation Political Geographical Capital 6
2. Regulatory Considerations • Typical regulatory process Submitting an application for an energy or resource 1. development to the applicable regulatory authority (e.g. SAGD – Alberta Energy Regulator (AER), Inter- provincial pipelines – National Energy Board) Parties with standing can intervene in the regulatory 2. process Decision by regulatory authority with or without a 3. hearing Potential appeals of regulator’s decision 4. Page 7
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 Page 8
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 9
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 10
Further Regulatory Reform • 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 11
Questions internal auditors should be asking • 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 opposition) to reasonably address concerns? What are the outstanding concerns and associated risks? 12
Environmental Considerations • Environmental assessment is a statutory process to consider and mitigate environmental effects of a proposed development (can be in conjunction with or 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 13
Environmental Risks • Species at risk • Water use • Climate change • Upstream effects • Abandonment • Other issues 14
Best Practices for Mitigating Environmental Risks • 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 15
Questions internal auditors should be asking • 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)? 16
4. Aboriginal Law Considerations Historical Treaties 17
Modern Treaties 18
Background of Aboriginal Issues • Historically, Aboriginal groups were not involved in government decision-making and had limited opportunities 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 19
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 20
What does consultation and accommodation look like? • 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 21
Recent Cases • 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 22
Agreements with Aboriginal Groups • 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 23
Extractive Sector Transparency Measures Act • 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 24
Recommend
More recommend
