March 7, 2016
REVIEW OF THE CANADA PETROLEUM RESOURCES ACT
BY THE MINISTER’S SPECIAL REPRESENTATIVE

ISSUES DISCUSSION

INTRODUCTION
In July 2015, Rowland Harrison Q.C. was appointed as Minister’s Special Representative
(MSR) “to conduct a comprehensive review of the operations of the Canada Petroleum
Resources Act [CPRA], to engage with aboriginal groups, stakeholders and other interested
parties as appropriate, and to provide recommendations as to whether potential amendments
should be made to the Act as it applies to the Arctic offshore” (Review). A copy of the Terms of
Reference (TOR) is attached. The MSR is required to deliver a single report to the Minister by
May 31, 2016.
As a first step towards fulfilling the mandate to engage, the MSR has held a number of
preliminary discussions with several interested parties. Discussions with interested parties are
ongoing. These discussions suggest it would be helpful to outline the issues that have been
identified to date.
The following is not a preliminary or interim report and should not be interpreted as
reflecting any views on the MSR’s part on the merits of, or possible recommendations on, the
issues discussed. The issues identified are not intended to constitute a final list of issues – parties
may continue to raise other issues as the Review proceeds.
ROLE OF THE CPRA
The primary purpose of the CPRA is to establish a legislative framework for authorizing
the issuance by the federal government of petroleum exploration and production rights in frontier
lands.
While the CPRA has a particular purpose, it is a component of a broader legislative and
policy framework. In the North, this framework includes relevant land claims agreements and
Canada’s Northern Strategy (http://www.northernstrategy.gc.ca/index-eng.asp), as well as other
federal legislation of general application, such as the Oceans Act.
The CPRA also operates in parallel with the Canada Oil and Gas Operations Act, which
is the primary source of regulatory authority for regulating petroleum exploration, development
and production operations. The CPRA, however, is not itself directly concerned with regulating
the terms and conditions on which these operations may be undertaken.
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 TERMS OF REFERENCE
The MSR’s mandate is to undertake a “Comprehensive Review of the Operations of the
Canada Petroleum Resources Act in the Arctic.” The Review is thus focused on the CPRA and its
specific role in “the Northern oil and gas regime.” Broader issues, such as whether oil and gas
exploration and development should be authorized in any specific Arctic area, are not directly
within the scope of the Review. The Review will, however, consider the CPRA as a component
of the overall framework within which broader issues may be addressed.
Some parties have questioned the appropriateness of the TOR and the scope of the
Review. The TOR were established by the Minister and it is not within the MSR’s mandate to
revise them.
SCHEME OF THE CPRA
The scheme of the CPRA is permissive, or enabling

the Act does not mandate that

exploration rights must be issued. A decision to initiate the rights issuance processes under the
Act is at the discretion of the Minister. No criteria are prescribed by the Act for the exercise of
that discretion; nor does the Act prescribe any restrictions on the Minister’s ability to require, as a
matter of administrative policy, that certain steps be taken before initiating a rights issuance
process. The Minister may be constrained by other legislation and general government policies in
exercising the discretion to initiate the rights issuance process, but the CPRA itself does not limit
that discretion.
Similarly, the CPRA provides a broad discretion with respect to the terms and conditions
to be included in any interest, provided such terms and conditions are specified in the relevant
call for bids.
It is noted that the Minister has available various mechanisms for applying particular
policies under the current Act, such as regulations, guidance documents and policy statements.
These characteristics of the CPRA are particularly relevant in the context of this Review.
Specifically, some of the issues that have been raised to date (such as the level of deposits and
security requirements; the calculation of allowable expenditures; and information and reporting
requirements with respect to operations; etc.) could arguably be addressed as matters of
administrative policy, within the framework of the Act as currently written, without legislative
amendment.
Parties should be mindful in their submissions of the distinction between, on the one
hand, issues that would need to be addressed by legislative amendment and, on the other hand,
issues that could be addressed by the adoption of particular administrative policies under the
current Act. At the same time, parties may argue that particular matters should be provided for
directly in the Act, even if such matters could be addressed by the exercise of administrative
authority that currently exists.

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 “ORIGINAL POLICY INTENT”
Paragraph 2 of the TOR requires an assessment of the Act’s “contribution to achieving the
original policy intent of the Government of Canada…”
The CPRA does not include a statement of purpose or objectives, beyond the introductory
statement that it is an “Act to regulate interests in petroleum in relation to frontier lands…”
However, as noted in the January 11, 2016 Guidance document, the introduction of the Act in
1985 was accompanied by a policy statement “Canada’s Energy Frontiers: A Framework for
Investment and Jobs” (tabled October 30, 1985): http://www.aadncaandc.gc.ca/eng/1315410409776/1315410817938. As reflected in the title of that policy
statement, the policy focus at that time was on the potential for oil and gas development on
frontier lands.
It has been suggested in discussions to date that such a policy focus should no longer be
the primary underpinning of the CPRA and that the Act should reflect broader contemporary
concerns and current government policies, particularly relating to the environment and climate
change.
It has also been suggested that regional or strategic environmental assessments should be
undertaken before rights issuance processes are initiated under the Act.
Parties might consider whether addressing such issues would require amendment of the
Act or whether, as discussed above, these issues might be addressed by the adoption of
administrative policies within the provisions of the current Act. In the case of matters that could
perhaps be addressed within the framework of the Act as presently written, should such matters
nevertheless be incorporated into statutory provisions by amendment of the Act?
SPECIFIC ISSUES
The following is a summary of the specific issues that have been raised in discussions
with interested parties to date. As noted, this is not presented as a complete or final list.
Interested parties may continue to raise issues as the Review proceeds.
1. Is the overall permissive, or enabling, approach of the CPRA to rights issuance
appropriate in the context of current broader policies, including policies with respect to
the North, the environment and climate change?
2. Does the current hierarchy of rights under the CPRA (exploration licence, significant
discovery licence, production licence) broadly continue to be appropriate and effective?
3. Is the current rights framework under the CPRA congruent with current regulatory
requirements for the approval of exploration, development and production operations in
the Arctic?

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 4. Are there specific elements of each of the three principal types of licence under the
CPRA that should be changed and which changes would require amendment of the Act?
5. The CPRA prescribes a maximum term of nine years for exploration licences. It is argued
that this term is insufficient in the context of potential activities in deeper water in the
Beaufort Sea, and having regard to current regulatory processes and expectations for
drilling activities in that physical environment. Should this limit be increased (which
would require amendment of the Act)? If so, to what maximum term? Should a revised
maximum term be applied across all frontier lands within the authority of the Minister of
Indigenous and Northern Affairs under the CPRA? Should any revised maximum term be
applied to current exploration licences? If so, automatically by operation of an explicit
amendment to the CPRA or as a matter of discretion? If as a matter of discretion, based
on what criteria?
6. Should the indefinite duration of significant discovery licences (SDLs) be reviewed? If
so, on what terms? Should the Act provide for rentals to be applied to SDLs? Should any
revised terms for SDLs be applied to existing SDLs? Would the application of revised
terms to existing SDLs infringe on “vested rights”?
7. Should the definition of “significant discovery” – and in particular the element of “flow
testing” and the phrase “geological feature” – be reviewed to ensure it is consistent with
current technological knowledge?
8. Should the CPRA be amended to provide for the restriction of declarations of significant
discovery (and significant discovery licences) to specific geological horizons?
9. Should the CPRA include any mechanisms for simplifying the complex ownership
patterns that exist in some northern interests issued under the Act, including possibly
amending the provisions with respect to unitization?
10. Should the provisions of the CPRA with respect to the Environmental Studies Revolving
Fund (ESRF) be revised, both with respect to the overall scheme and specifics such as
maximum amounts?
11. Do the provisions of the CPRA with respect to information filing and release need to be
revised?
REVENUE SHARING
Revenue sharing has been raised as a matter that should be considered in the Review.
This is a policy matter that arises outside the CPRA and is beyond the scope of this Review.
PROCESS AND DATE FOR SUBMISSIONS

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 The MSR’s mandate includes engaging with Aboriginal groups, stakeholders and other
interested parties. The MSR is pursuing this responsibility through informal consultations,
including bilateral meetings and receiving written submissions.
The MSR believes he has been in direct contact with all interested parties who have been
identified to date. Any interested party who has not been contacted is asked to contact the MSR
by email or phone. The MSR is available to meet with any interested party with whom he has not
yet met.
Several parties have indicated that they intend to present written submissions. Such
submissions should be forwarded no later than Monday, April 11. (Parties are encouraged to
provide any written submissions sooner.) This will allow sufficient time for follow-up
consultations on any elements of the written submissions that the MSR may wish to clarify or
explore further, in order to meet the deadline of May 31, 2016 for MSR’s report to the Minister.

Rowland J. Harrison, Q.C.
Minister’s Special Representative
CPRA Review
rowlandharrison@shaw.ca
403-251-6273
403-472-2436 (cell)
Mail or courier deliveries:
222 Bridle Estates Rd. S.W.
Calgary, AB
T2Y 0G1

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 Comprehensive Review of the Operations of the
Canada Petroleum Resources Act in the Arctic
Ministerial Special Representative, Rowland Harrison Q.C.

Terms of Reference of the Review:

1.

Prepare a report that examines key legislation, regulation, policy and contractual
arrangements that comprise the Northern oil and gas regime.

2.

Assess the Canada Petroleum Resource Act’s contribution to achieving the original policy
intent of the Government of Canada, and more specifically, as those interests relate to the
Arctic.

3.

Analyze by comparison to the equivalent regimes of international jurisdictions with
petroleum activities in comparable environments (to the extent direct comparisons are
possible).

4.

Communicate and engage directly with Aboriginal communities, stakeholders and other
interested parties, taking into account the interests of rights holders under relevant selfgovernment and comprehensive land claim agreements.

5.

Give consideration to changes to the oil and gas management regime and
recommendations, including potential legislative amendments in support of Canada’s
interests in oil and gas matters in the Arctic.

6.

A report, to be delivered by May 31, 2016 should provide analysis of the Canada
Petroleum Resources Act and recommendations on potential changes.

7.

Geographic Scope: This study is directed at frontier lands under the responsibility of the
Minister of Indigenous and Northern Affairs, with an initial focus on the Beaufort Sea.

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