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ТЕКСТ № 13

REGULATORY REQUIREME>TS FOR SAFETY

A>D EMERGE>CY PREPARED>ESS12

1. Introduction

The system under which the oil and gas industry is regulated in Canada addresses matters of safety and emergency preparedness at every stage of operations. Thus, there are many laws, regulations, guidelines and the like which address these issues. This paper can only illustrate the type of approach that is taken to these matters in Canadian law. The paper uses the National Energy Board as an example of an agency involved in this aspect of the regulation of oil and gas activity in Canada.

2. Jurisdiction of the >ational Energy Board a. Constitutional Limitations

The National Energy Board's authority to regulate for safety and emergency preparedness is necessarily limited by the Canadian Constitution. Canadian provincial governments have extensive authority over the development of oil and gas resources within their boundaries. On the other hand, the federal government has exclusive authority to regulate and manage resources on lands owned by it (for example, nearly all of Canada that lies north of the 60th parallel, which is referred to as «the North»), as well as interprovincial and international pipelines.

b. Statutory Limitations

Much of the federal government's regulation of the oil and gas industry is carried out by the National Energy Board (NEB). But the NEB can only do what it has been empowered by federal legislation to do. Any regulatory activity, for which justification cannot be found in law, is by definition beyond the jurisdiction of the NEB and could be reversed by court order.

12 This paper was prepared by Janet Keeping, Research Associate and Director of Russia Programs, Canadian Institute of Resources Law, Calgary, Alberta, Canada.

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It is quite common for Canadian law explicitly to narrow the extent of an agency's powers. This has been done in the case of the NEB. Through the combined effect of several laws, the NEB cannot exercise authority over oil and gas operations offshore eastern Canada. Authority over this area has been given to agencies specially created for this purpose. (These are the Canada-Newfoundland Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board.)

3. Drilling and Production

a. Overall Assessments of Safety

Some of the detailed regulatory requirements that apply to drilling and production will be described in this section of the paper. But it is important to note that the National Energy Board is under an obligation to assess the overall safety of any work program for which its approval is sought. The Canada Oil and Gas Operations Act requires that before it issue approval for any proposed work the NEB «consider the safety of the work or activity by reviewing… the system as a whole and its components, including its installations, equipment, operating procedures and personnel».

b. Drilling

Through amendments to several laws, the National Energy Board was recently given the authority to administer the regulation of oil and gas operations in the Canadian North. Drilling for oil and gas in this part of Canada must conform to the «Canada Oil and Gas Drilling Regulations» which were put into effect «for the purposes of safety and the protection of the environment as well as for the production and conservation of oil and gas resources». These regulations were made pursuant to the Canada Oil and Gas Operations Act. In Canadian law, if subordinate legislation is to be created, a statute must explicitly give a specific body the power to make subordinate legislation regarding the subjects enumerated in the statute. In this way, regulations are authorized by the legislative branch (in this case, the federal

Parliament which enacted the statute) even though that body may have no role in their actual formulation.

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The regulation making power in the Canada Oil and Gas Operations Act is given to the federal Cabinet13. The same Act gives the National Energy Board the power to make «guidelines and interpretation notes» for the purposes of explaining how regulations made under the Act will be administered. Generally speaking, the status of guidelines and interpretation notes in Canadian law is unclear. Ordinarily they do not have the same legal force as do regulations or legislation. Because their legal status was unclear, federal «guidelines» regarding environmental impact assessment generated lengthy and controversial litigation several years ago. However, where the relationship between the regulator and the industry being regulated is cooperative, serious misunderstandings are less likely: industry participates in the making of new law and thus is predisposed to conform to it.

The «Canada Oil and Gas Drilling Regulations» contain a host of provisions which seek to ensure the safe conduct of operations. Many of these are technical requirements (much better understood by the engineer than the lawyer), such as the part of the regulations entitled «blowout preventer requirements» or those which address the protection of permafrost. But other parts of the regulations are aimed at the safety and training of personnel. The topics addressed in this part of the regulations include training programs for personnel, safety drills, protection against poisonous gas, the necessity for adequate rest and protective clothing, restrictions on smoking within a certain distance of a drill site, the safe handling of explosives and the availability of life-jackets.

The Canada Oil and Gas Operations Act provides significant penalties for violations of itself, regulations made under it, a decision of a government official issued pursuant to the Act or regulations, or an order of the National Energy Board. A conviction can result in a fine of up to a million dollars (Canadian) or imprisonment for up to five years, or a combination of the two.

The Act contains another mechanism for enforcement of safety measures. It allows the NEB to appoint «safety and conservation of-

13 Statutes may give regulation making power to other bodies. For example, as is mentioned in the text of the paper, the National Energy Board Act gives the NEB the power to make regulations regarding a number of subjects.

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ficers» who have broad powers to inspect facilities and demand the production of documents and samples. Safety and conservation officers may order a stop to oil and gas operations that they believe are likely to cause serious injury. The Act explicitly prohibits the continuation of operations that are made the subject of such an order.

c. Production

The National Energy Board is in the process of preparing new regulations for eventual enactment by the federal Cabinet. They are to be called the «Canada Oil and Gas Drilling and Production Regulations». These are intended to replace the drilling regulations referred to above, as well as another set of regulations having to do with production and conservation matters.

Part II of these draft regulations contains a requirement that companies carrying out oil and gas operations («operators») maintain a manual to cover both expected («normal») and any unexpected («abnormal») circumstances that might arise. Operators are also required to obtain the approval of the Board for a safety plan, as well as an environmental protection plan and where appropriate an ice management plan. The draft regulations specify some of the things that must be covered by the safety plan.

One matter that must be addressed by the safety plan is how the operator proposes to deal with contingencies that might arise during drilling or production, such as the following:

1)a serious injury or death,

2)a fire or explosion,

3)a significant problem with an offshore installation,

4)a well blow-out, or

5)a spill of oil or another pollutant.

An important element of any operator's planning for an emergency is how that planning fits with the contingency plans formulated by others. For this reason, the draft regulations require that the operator's contingency planning address «coordination with any existing municipal, provincial or national contingency plans».

4. Transportation by Pipeline

There are many aspects of pipeline construction and operation that give rise to concerns about safety and to the possibility of

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emergencies. The National Energy Board regulates interprovincial and international pipelines pursuant to powers given to it by the National Energy Board Act. For example, this statute requires that not only must Board approval be obtained for construction of a pipeline, once constructed Board approval must be obtained before the pipeline can be used. In order that this approval be granted, the Board must be convinced that the pipeline can be operated safely. The Board remains empowered to ensure the safety of pipelines throughout the period of their operation. The statute states that «To promote safety of operation of a pipeline, the Board may order the company to repair, reconstruct or alter part of the pipeline and may direct that, until the work is done, that part of the pipeline shall not be used or [that it shall be used only] in accordance with such terms as the Board may specify».

The National Energy Board Act also gives the NEB the power to make regulations governing all aspects of a pipeline's construction and use. Properly made, these regulations have the force of law. The statute states that such regulations are to have as part of their purpose «the protection of property and the environment and the safety of the public and of the company's employees…"

One set of regulations issued by the NEB is called the «Onshore Pipeline Regulations». Along with many other things, these regulations require companies operating pipelines to prepare (and keep up to date) manuals covering many different matters. Where the Board asks, a company must submit these manuals for its approval. Some of the things that must be addressed by the manuals are: 1) a description of communication facilities and their operation, 2) procedures and equipment for accident prevention and fire protection, 3) monitoring and surveillance programs for the protection of the pipeline and the environment and 4) emergency procedures.

A whole section of these regulations is devoted to specifying what must be included in a company's emergency procedures. Included here are such things as

1)the instructions and warnings to be given to persons reporting an emergency,

2)the initial action to be taken on discovery of an emergency,

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3)the plans for cooperation with appropriate public agencies during an emergency,

4)a description of the types and locations of available emergency equipment,

5)the procedures to be followed at the site of the emergency,

6)contingency plans for the immediate protection of the environment and evacuation procedures.

The regulations require pipeline companies to conduct programs for training their employees in the safe operation of the pipeline. The regulations state that the company «shall require its employees to attend the safety training programs… and to have a good knowledge of the subject-matter of those programs». There are also detailed requirements as to the fashion in which accidents must be reported.

The NEB is empowered to appoint inspectors whose responsibility it is to ensure compliance with laws and regulations regarding the construction and operation of pipelines, as well as safety and environmental protection more generally. Inspection officers have powers analogous to those of NEB «safety and conservation officers» whose mandate was mentioned earlier.

5. Conclusion

This paper has described some aspects of the Canadian approach to ensuring safe oil and gas operations and a satisfactory level of emergency preparedness. It has used the National Energy Board as an example of how Canadian governmental agencies have been empowered by legislation to impose safety and emergency preparedness requirements on all facets of the exploitation of oil and gas.

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Васильев Сергей Константинович Куряков Валерий Николаевич

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