Some Day the Sun Will Shine and Have Not Will Be No More (43 page)

  1. It is the objective of this Accord that consensus be sought and
    reached between the two governments with respect to fundamental
    decisions as defined in clause 25. Where agreement cannot be reached
    between governments on a fundamental decision within thirty days
    following receipt of the Board’s decision, the following shall
    apply:

    1. in the national interest, and subject to clause 26 (b),
      the Federal Minister will be responsible for approving a
      fundamental decision taken by the Board until a period
      when national self-sufficiency and security of supply
      are reached, or,
      having been reached,
      are lost. Once Canada reaches a period in which
      self-sufficiency and security of supply are reached, the
      Provincial Minister will have the power to approve a
      fundamental decision taken by the Board, subject to the
      normal exercise of the Government of Canada’s authority
      over exports. The determination of whether
      self-sufficiency and security of supply, as defined in
      clause 28, have been reached will be made in the manner
      set out in clause 27; and

    2. the Provincial Minister will be responsible for
      approving fundamental decisions taken by the Board
      primarily affecting the mode of development as defined
      in clause 25 (c), subject to the Federal Minister’s
      right to override the Provincial Minister’s approval or
      veto if it unreasonably delays the attainment of
      self-sufficiency and security of supply.

  2. In the absence of agreement, the determination of whether
    self-sufficiency and security of supply as defined in clause 28 have
    been attained, and whether a decision by the Provincial Minister has
    caused an unreasonable delay in the attainment of self-sufficiency
    and security of supply, will be made by a three person arbitration
    panel as provided for under clause 5 of this Accord. Both
    governments agree to accept the decision of the arbitration panel as
    final and binding for the purposes of this Accord.

  3. National self-sufficiency is achieved in any calendar year when the
    volume of suitable crude oil and equivalent substances available
    from domestic Canadian hydrocarbon productive capacity is adequate
    to supply the feedstock requirements of Canadian refineries
    necessary to satisfy the refined product requirements of Canada.
    Suitable crude oil and equivalent substances are those which are
    appropriate for processing in Canadian refineries and which are
    potentially deliverable to Canadian refineries.

    Security of supply is realized when the achievement of
    self-sufficiency as defined above is anticipated in each of the next
    ensuing five calendar years, giving full consideration to
    anticipated additions to productive capacity, and anticipated
    adjustments to refining capacity.

    In determining the above requirements, the volumes of crude oils
    having the quality characteristics required for the production of
    speciality refined products and which are not available from
    Canadian sources shall be excluded.

  4. To minimize the regulatory uncertainty faced by
    industry associated with potential shifts in the role of Federal and
    Provincial Ministers, the determination of self-sufficiency and
    security of supply will be fixed for periods of five years. Each
    determination shall be conclusive and binding on the parties. For
    the first 5-year period, which commences on the proclamation of
    legislation implementing this Accord, both governments agree that
    the requirement of selfsufficiency and security of supply has not
    been met.

  5. In the event of a sudden domestic or import supply shortfall, the
    Board will undertake to increase production, if requested by the
    federal government, consistent with good oil field practice. In
    addition, should Canada’s obligations under the International Energy
    Agency (IEA) oil-sharing agreement be triggered, the Federal
    Minister would, during the period these obligations continue, be
    able to direct the Board to take such measures as are necessary to
    comply with Canada’s obligations under the IEA and as are fair and
    equitable in relation to other hydrocarbon producing regions of
    Canada.

  6. The contribution of petroleum resources from the offshore area to
    the achievement of selfsufficiency and security of supply shall be
    equitable in relation to the other hydrocarbon producing regions of
    Canada.

    SUSPENSIVE VETOES
  7. Where a government exercises its authority under this Accord
    with respect to a fundamental decision, the other government may
    delay the execution of that decision for a period of three months in
    order to give further opportunity to reach consensus.

    MINISTERIAL DIRECTIVES
    1. In the public interest, Ministers may jointly direct the Board
      in writin concerning:

      1. fundamental decisions (described in clause 25);

      2. the public review process (clause 34);

      3. Canada and Newfoundland benefits; and

      4. studies and the provision of policy advice.

      The Board shall carry such directives into effect.

    2. During the first month of each calendar year
      the Board shall provide to both Ministers a plan outlining the
      Board’s intentions regarding the areas to be made available for
      exploration and development during that calendar year. If, upon
      review, it is felt that the proposed plan does not provide for an
      adequate level of effort towards the achievement of selfsufficiency
      and security of supply, the appropriate Minister as determined under
      Clause 26 (a) may reject the plan and inform the Board of the
      reasons for so doing and the Board shall bring forward an alternate
      plan consistent with these views.

    PUBLIC REVIEW
  8. In relation to any prospective development, the Board shall
    conduct a public review. If the Board decides that it is in the
    public interest, It may waive the holding of a public review,
    subject to clause 33 (a). If a public review is conducted, the Board
    may:

    1. establish terms of reference and a timetable that will
      permit a comprehensive review of the project, including
      aspects falling within the retained jurisdiction of the
      Federal and Provincial Governments;

    2. name a commissioner or panel, and may request both
      governments to confer upon the commissioner or panel
      powers of inquiry under the Public Enquiries Act of
      Newfoundland and Labrador or the Inquiries Act of
      Canada;

    3. name to a panel members proposed by the Federal and
      Provincial Governments, in recognition of their
      jurisdiction;

    4. require a project proponent to submit a preliminary
      development plan, and as needed an environmental impact
      statement and a socio-economic impact statement,
      including a preliminary benefits plan; and

    5. cause the commissioner or panel to hold public hearings
      in appropriate locations in the province and report to
      the Board and the relevant Ministers.

    Not more than 270 days shall elapse between the receipt of the plan
    by the Board and its decision with respect to the plan.

    PRICING
  9. The Government of Newfoundland and Labrador will be
    a full participant in negotiations and consultations with the
    Government of Canada from time to time in the same manner as the
    governments of other producing provinces for the establishment of
    the price of oil and natural gas in the offshore area.

    REVENUE SHARING
  10. The principles of revenue sharing between Canada and Newfoundland
    with respect to revenues from petroleum-related activities in the
    offshore area shall be the same as those which exist between the
    Government of Canada and other hydrocarbon producing provinces with
    respect to revenues from petroleum-related activities on land. The
    federal legislation implementing the Accord, therefore, will permit
    the Government of Newfoundland and Labrador to establish and collect
    resource revenues and provincial taxes of general application as if
    these petroleum-related activities were on land within the province,
    through incorporation by reference of Newfoundland laws (as amended
    from time to time), or through other appropriate legislative
    mechanisms.

  11. On the basis of the foregoing, Newfoundland shall receive the
    proceeds of the following revenues from petroleum related activity
    in the offshore area:

    1. royalties;

    2. a corporate income tax which is the same as the
      generally prevailing provincial corporate income tax in
      the province;

    3. a sales tax that is the same as the generally
      prevailing provincial sales tax in the province;

    4. any bonus payments;

    5. rentals and licence fees; and

    6. other forms of resource revenue and provincial taxes of
      general application, consistent with the spirit of this
      Accord, as may be established from time to time.

  12. The Board shall collect royalties, bonus payments, rentals and
    licence fees. These revenues and other offshore revenues referred to
    in clause 37 shall be remitted to the Government of Newfoundland and
    Labrador.

    EQUALIZATION OFFSET PAYMENTS
  13. The two governments recognize that there should not be a dollar for
    dollar loss of equalization payments as a result of offshore
    revenues flowing to the Province. To achieve this, the Government of
    Canada shall establish equalization offset payments. These payments
    shall commence on April 1 of the first fiscal year following the
    attainment of cumulative production of fifteen million barrels of
    offshore production of oil or the energy equivalent production of
    natural gas and shall be in two parts.

    Offset payments (Part I) will
    be made equivalent to the loss in fiscal equalization payments
    resulting from any future changes to the floor provisions of the
    Federal-Provincial Fiscal Arrangements and
    Federal Post-Secondary Education and Health Contributions
    Act
    , 1977, as amended 1982, with respect to the phaseout
    of equalization entitlements, if the changes are detrimental to
    Newfoundland. These Part I offset payments will apply for a period
    of twelve years from commencement of production. In addition, the
    Government of Canada will make offset payments (Part II) equivalent
    to 90 percent of any decrease in the fiscal equalization payment to
    Newfoundland in respect of a fiscal year in comparison with the
    payment for the immediately preceding fiscal year, as calculated
    under the prevailing Federal-Provincial Fiscal Arrangements and
    Federal Post-Secondary Education and Health Contributions Act, 1977,
    as amended from time to time and, taking into account for both
    years, the offset component entitlement under Part I.

    Beginning in
    the fifth fiscal year of offshore production, this offset rate shall
    be reduced by ten percentage points and by ten percentage points in
    each subsequent year.

    CROWN SHARE
  14. The costs and benefits of any Crown share in the offshore area
    which may be retained by the Government of Canada will be
    established by the Canada-Newfoundland Atlantic Accord
    Implementation Act. The costs and benefits thereof will be shared
    equitably by both governments.

    CROWN CORPORATIONS
  15. Crown corporations and agencies involved in oil and gas resource
    activities in the offshore area shall be subject to all taxes,
    royalties and levies.

    DEVELOPMENT FUND
  16. The Government of Canada and the Government of Newfoundland and
    Labrador hereby establish an Offshore Development Fund. The purposes
    of this Fund are to defray the social and economic infrastructure
    costs related to the development of oil and gas in the offshore area
    in the period before production begins, and to ensure that the
    provincial economy is well positioned to reap the economic benefits
    of offshore development. This Fund shall be in addition to the
    funding provided by the Government of Canada for regional
    development and other similar initiatives in Newfoundland.

    The Fund
    will consist of a $300 million grant, cost shared 75 per cent
    federal and 25 per cent provincial. Contributions to the Fund will
    be made over a five year period commencing April 1, 1985 on a
    schedule to be agreed by Ministers on the basis of project
    requirements.

  17. A Development Fund Committee comprised of two representatives from
    each of the Federal and Provincial Governments shall be established
    to monitor and review the implementation of this Fund.

  18. Both Ministers may propose projects, normally falling within
    provincial jurisdiction, for funding. Expenditures will be made by
    mutual consent.

    OIL POLLUTION AND FISHERIES COMPENSATION REGIME
  19. The legislation implementing the Accord will establish an oil
    pollution compensation regime with respect to absolute liability for
    oil spill damages and debris, requiring appropriate financial
    security. Together with the relevant provisions of the Canada
    Shipping Act that establish the Maritimes Pollution Claims Fund, or
    its successors, and any industry-sponsored programs for
    non-attributable damages, this shall be accepted as the basis of an
    oil spill damage compensation regime that recognizes the various
    causes and sources of pollution damage.

  20. This regime shall include provisions to compensate fishermen with
    respect to absolute liability for attributable oil spill and
    debris-related damages. The Board shall also promote and monitor
    industry-sponsored fishermen’s compensation policies for damages of
    a non-attributable nature.

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