Canada: British Columbia Makes Major Changes To Environmental And Energy Law

Copyright 2008, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Environmental Law, June 2008

The spring of 2008 has proven to be a significant period in the development of environmental, energy and natural resources law in British Columbia. Eleven pieces of legislation impacting these fields were introduced and all but one of them had been passed by the Legislature when it adjourned on May 29, 2008. In addition to five statutes specifically aimed at controlling the emissions of greenhouse gases in the province, amendments were made to the regulation of energy, oil and gas, natural resources and the powers of local governments respecting the environment. The following summarizes these legislative initiatives.

GREENHOUSE GAS EMISSIONS

Bill 16: Greenhouse Gas Reduction (Renewable And Low Carbon Fuel Requirements) Act

The Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act allows the province to set standards for the amount of renewable fuel that must be contained in British Columbia's transportation fuel blends, reduce the carbon intensity of transportation fuels and meet its commitment to adopt a new low carbon fuel standard similar to California's. Fuel suppliers are required to carry an average of 5% renewable fuel content by 2010. The Act also sets requirements for reduced "carbon intensity", which is calculated based on the ratio of the greenhouse gas emissions attributable to the fuel proportionate to the energy provided by the fuel in its expected use. The Act allows fuel suppliers to transfer the equivalent of C0² credits to one another.

The Act will come into force by regulation.

Bill 18: Greenhouse Gas Reduction (Cap And Trade) Act

The Greenhouse Gas Reduction (Cap and Trade) Act enables the province to participate in the Western Climate Initiative cap and trade system which is currently under development. The Western Climate Initiative is a partnership which includes seven U.S. states (California, Oregon, Washington, New Mexico, Arizona, Utah and Montana) and two Canadian provinces (B.C. and Manitoba).

The Act establishes a cap and limit on emissions. Operators (a term to be defined by regulation) will be required to retire "compliance units" for a given period. A British Columbia compliance unit will be equal to one tonne of carbon dioxide or its equivalent. Three types of units will be established:

• BC Allowance Units issued by the government according to the cap specified in a given compliance period
  
  
• BC Emission Reduction Units which are off-set credits from approved emission reduction or removal projects in British Columbia, and
  
  
• Recognized Compliance Units issued under other cap and trade systems, such as those established by the Western Climate Initiative.
  
  

The specific benchmarks for the hard caps have been left to regulations.

A degree of flexibility is included by permitting regulated emitters to buy and sell emission allowances or buy off-set units from other regulated emitters. Large emitters will be subject to a cap as the province will issue a limited number of tradable compliance units for a given period of time.

Administrative penalties as well as offences set up by regulation will apply as consequences of non-compliance.

Bill 31: Greenhouse Gas Reduction (Emissions Standards) Statutes Amendment Act, 2008

The Greenhouse Gas Reduction (Emissions Standards) Statutes Amendment Act, 2008 introduces amendments to the Environmental Management Act, Forest Act, and Forest and Range Practices Act (the Amendment Act).

The amendments to the Environmental Management Act require owners or operators of waste management facilities of certain classes to manage greenhouse gases produced from waste handled in their facilities. The specific actions that must be taken will be set out in regulations.

Operators of coal-based generating facilities will be prevented from introducing emissions of prescribed greenhouse gases from the facility that are attributable to the use of coal for the generation of electricity. An exception exists for that prohibition if an equal amount of greenhouse gas emissions from the facility is captured and stored, or captured and sequestered, in accordance with regulations. Operators of these facilities will be required to submit a report to a Ministry director.

Electricity generating facilities are required to have zero emissions. Those facilities that have attributable greenhouse gas emissions must apply emission off-sets in accordance with the regulations to net those emissions to zero.

The amendments establish administrative penalties for the failure to apply emission off-sets. Maximum fines for offences are C$1-million and/or imprisonment for not more than six months.

Amendments made to the Forest Act and Forest and Range Practices Act include:

• provisions encouraging the use of wood residue as a potential energy source
  
  
• the creation of a new tenure which will provide access to unwanted timber left at the roadside or landing
  
  
• permitting access to roadside and landing waste
  
  
• updating scaling requirements to permit the measurement of wood chips and other materials
  
  
• the Chief Forester's partition of the allowable annual cut will be enforced for purposes such as the harvest of beetle-attacked timber, and
  
  
• forest licenses for successful applicants of a BC Hydro call for power.
  
  

Bill 37: Carbon Tax Act

The Carbon Tax Act (the Act) creates a comprehensive, revenue-neutral carbon tax. According to the Ministry of Finance, the carbon tax is tied to reductions in personal and business taxes.

The Act imposes a tax on the purchase of fuel. There are certain prescribed exemptions in the Act where the tax on fuel is not payable. Tax rates for the next five years are set out in a schedule to the legislation.

The Act also establishes an administrative scheme for the imposition and collection of the tax as well as an appeal mechanism.

The Act also imposes an obligation on the Minister of Finance to prepare a carbon tax plan for the next three fiscal years to be presented to the Legislative Assembly. The plan will include projections respecting revenue to be raised by the carbon tax and proposed reductions in provincial revenues to make the carbon tax revenue. The plan will also be required to set out the amount raised by the carbon tax; the amount of reduction in provincial revenues that resulted from the financial measures proposed in a prior plan; and the amount, if applicable, by which the carbon tax revenues in a fiscal year exceeded the amount of reduction in provincial revenues.

Bill 39: Greenhouse Gas Reduction (Vehicle Emissions Standards) Act

The Greenhouse Gas Reduction (Vehicle Emissions Standards) Act sets pre-determined greenhouse gas emissions standards on automobile "fleets". The standards are based on a "fleet-average" approach, permitting manufacturers to keep selling vehicles that exceed the allowed emissions, as long as they stay within the new average standards by selling enough low-emission vehicles for their fleets. The province is empowered under the Act to require larger vehicle manufacturers to include a percentage (or set number) of zero-emission vehicles in their fleets per year. According to the Ministry of Environment, the Act will make British Columbia's vehicle greenhouse gas emissions standards equivalent to those laid out in California's 2004 Regulation. Seventeen other U.S. states have also adopted or are in the process of adopting the California model. Twelve of Canada's 13 provinces and territories also support California tailpipe greenhouse gas standards. The Act contains enabling provisions that will allow the province to establish additional elements of the California regime by regulation.

ENERGY

Bill 15: Utilities Commission Amendment Act, 2008

The Utilities Commission Amendment Act, 2008 requires the British Columbia Utilities Commission (the Commission) to consider the BC Energy Plan objectives and principles in long-term plans, project approvals and energy supply contracts. The Commission is also required to conduct an inquiry regarding B.C.'s long-term transmission requirements.

Public utilities must consider the government's goal that British Columbia be electricity self-sufficient by 2016 and maintain self-sufficiency after that year when planning for the construction or extension of generation facilities and energy purchases. Other provisions dictate that any authority subject to the Act must achieve electricity self-sufficiency by 2016 and maintain it in each calendar year after it is achieved. The bill also requires those subject to its provisions to pursue actions to meet prescribed targets in relation to clean or renewable resources and use the prescribed guidelines in planning for the construction or extension of generation facilities and energy purchases. The installation of "smart meters" must be completed by the end of the 2012 calendar year.

The Act creates a mechanism for introducing a mandatory reliability standard for British Columbia's bulk electricity system. The Commission is empowered to determine whether the rules established by the North American Electricity Reliability Corporation and/or the Western Electricity Coordinating Council, in contemplation of being enacted as mandatory reliability standards for planning and operating the North American power system, are in the public interest and whether they should be adopted in British Columbia.

The Commission is granted authority to deny an energy supply contract if it is not in the public interest. Guidance as to what is in the public interest is provided within the Act and includes consideration of:

• the government's energy objectives
  
  
• the most recent long-term resource plans filed by the public utility (if any)
  
  
• whether the energy supply contract is consistent with specific statutory requirements (if applicable)
  
  
• the interests of persons in British Columbia receiving service from the public utility
  
  
• the quantity of energy to be supplied under the contract
  
  
• the availability of supplies of the energy referred to
  
  
• the price and availability of any other form of energy that could be used instead of the energy referred to in the application, and
  
  
• the price of the energy in the application.
  
  

OIL AND GAS

Bill 20: Oil And Gas Activities Act

The Oil and Gas Activities Act will replace the Pipeline Act and the Oil and Gas Commission Act. The Act consolidates the powers and duties of the Oil and Gas Commission (OGC) as well as the rules regulating persons carrying out an oil and gas activity in the province.

The OGC is empowered to issue, suspend, cancel and amend permits. The Act provides specific guidance as to the factors to consider in performing this function, including whether the party has:

• contravened the Act, regulations, a permit or an authorization
  
  
• engaged in a pattern of conduct that shows that the party is unfit to have a permit, and
  
  
• initiated an activity allowable by a permit but then fails to carry out or continue that oil and gas activity.
  
  

Existing permits under the Petroleum and Natural Gas Act and the Pipeline Act will be grandfathered.

Permit holders are required to minimize damage, disturbance and related waste at sites of oil and gas activities. Other restoration activities are specifically required whenever a permit or authorization expires, is cancelled, or spent.

The Lieutenant Governor in Council is given greater power to make certain orders regarding pipeline permit holders. Possible orders by the Lieutenant Governor in Council include:

• the extension or improvement of a pipeline
  
  
• the requirement to sell gas to a person or local authority, and
  
  
• the construction of pipelines to communities situated immediately adjacent to pipelines as long as the construction would not place an undue burden on the pipeline permit holder.
  
  

The Lieutenant Governor in Council is also empowered to make regulations for the purposes of environmental protection and management respecting actions that a permit holder carrying out an oil and gas activity must take or refrain from taking.

The Act also gives the Lieutenant Governor in Council the power to regulate certain aspects of pipelines subject to the National Energy Board Act.

The Act creates an informal administrative review process for determinations made under its provisions by an OGC-designated review official. The Act also imposes administrative penalties for the contravention of its provisions. Due diligence is a defence to these administrative penalties. Offences under the Act may result in a fine of up to C$1.5-million and/or three years imprisonment.

The Act will come into force by regulation of the Lieutenant Governor in Council.

Natural Resources

Bill 29: Environmental (Species And Public Protection) Statutes Amendment Act, 2008

The Environmental (Species and Public Protection) Statutes Amendment Act, 2008 amends the Environmental Management Act, the Park Act, the Wildlife Act, and the Wildlife Amendment Act, 2004. The amendments are designed to fill in regulatory gaps for managing alien species, such as snakes and tigers, and protecting public and native wildlife. Under previous legislation, alien species were not able to be regulated because they did not fall under the definition of "wildlife" in the Wildlife Act.

A new authority is created to regulate ownership of harmful alien species and double fines for wildlife violations. Park rangers will also enjoy greater enforcement powers. New rules will be introduced regarding feeding of wildlife, hunting, and the guide outfitting industry. The Minister of Environment will be able to prohibit or regulate the keeping of listed alien species, making it an offence to acquire, possess or sell them, except as authorized in regulation. Maximum fines under the Wildlife Act have been increased from C$100,000 to C$250,000 with a maximum imprisonment term of two years – up from one year.

Amendments to the Environmental Management Act clarify the scope of the government authority concerning spill response and cost recovery, and enhance regulation-making powers for results-based regulations and Minister's codes of practice. It clarifies the government's ability to carry out long-term habitat remediation and wildlife rehabilitation where necessary, and recover the costs related to this work. A new authority will be put in place to make regulations requiring covenants on land title. This provision will facilitate long-term monitoring and restoration requirements to safeguard the environment after a waste discharge or after the closure of a waste management facility.

Bill 30: Resource Road Act

The Resource Road Act consolidates road-related parts of five separate pieces of legislation. According to the Ministry of Forests and Range and the Ministry of Energy, Mines and Petroleum Resources, the Act sets out the standards that operators will be required to meet to enhance the safety of those using resource roads. This is the only piece of environmental legislation from the spring 2008 legislation agenda that has not yet been passed.

A Road Resource Authority is created to administer the legislation. Only bodies prescribed under the Act will be permitted to construct, modify or maintain a resource road. The Act includes provisions for issuance, amendment or transfer of resource road permits.

Persons using resource roads must have due regard for safety, especially taking into account the nature and condition of the road, and the use to which it is being put, including the amount of traffic that is expected to be on it.

Maintenance requirements are also laid out in the legislation and a user may be required to contribute to recovery of capital costs of the resource road it is using. Persons designated to maintain a resource road may temporarily close it, restrict access to it, or remove motor vehicles or animals. The deactivation of roads and inspection of resource roads are also provided for.

The Act provides the government with stop work, intervention and contravention orders and associated administrative penalties. These penalties may include a suspension of all or part of a road authorization. Offences under the Act may result in a maximum fine of C$1-million and/or imprisonment for up to three years. Due diligence is a defence to both administrative penalties or offences.

The Act creates a new tribunal, the Resource Road Appeal Tribunal, empowered to hear appeals of orders under it.

Bill 38: Protected Areas Of British Columbia (Conservancies And Parks) Amendment Act, 2008

The Protected Areas of British Columbia (Conservancies and Parks) Amendment Act, 2008 created 11 new "Class A" provincial parks and 70 additional conservancies, adding almost one million hectares to B.C.'s parks and protected areas network. The Minister of Environment described the move as one of the largest single additions to the protected areas system of the province in history, more than doubling the number of conservancies in the province to 135 and bringing the number of Class A parks to 604. In total, more than 990,000 hectares will be added to the BC Parks system.

Local Governments

Bill 27: Local Government (Green Communities) Statutes Amendment Act, 2008

The Local Government (Green Communities) Statutes Amendment Act, 2008 amends the Community Charter, the Greater Vancouver Sewerage and Drainage District Act, the Greater Vancouver Water District Act, the Local Government Act and the Vancouver Charter.

Certain notable amendments are:

• the introduction of a requirement that local governments include greenhouse gas emission targets, policies and actions in their Official Community Plans and regional growth strategies
  
  
• the granting of permission to local governments to use development permits in support of energy and water conservation and the reduction of greenhouse gases, and
  
  
• the encouragement of alternative transportation options for off-street parking.
  
  

Development Cost Charges will be waived for those developers building small housing units, defined as 29 square metres or less. Local governments will also be empowered to waive or reduce Development Cost Charges for green developments including small lot subdivisions and affordable rental housing.

A press release from the Ministry of Community Service says that the goal of the Amendment Act is to "help municipalities and regional districts create more compact, sustainable and greener communities."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.