Everything, everywhere, all at once

The All-over-the-Place GNL Energy Circus

Equinor official Tore Loseth explains the decision to delay Bay du Nord. “We felt it was very important to be open and honest.” Federal labour minister Seamus O’Regan called it ”sadistic.” Image: VOCM

The political energy circus was in town last week.

The federal government introduced changes to the law governing the offshore regulatory board last week. Both the feds and the province have talked about this since 2021 but they’ve said nothing useful to understand what was going on.

Federal natural resources minister Johnathan Wilkinson showed up for a quickie newser in St. John’s that involved lots of vague word-strings from both the fed and the provincial crowd filling in for coherent sentences. Wilkinson couldn’t take questions because his genius handlers had squat the media time in the 20 minutes right before his address to the local energy conference.

Major story about Newfoundland and Labrador.  Oh-by-the-way newser. No details.  No time for q’s from local reporters, which is just as well since there were no a’s either.

Hard to miss the message.

Sent loud and clear.

Meanwhile in Ottawa, there was a tech briefing on the legislation to which the comms geniuses offered not a thought to include reporters from Newfoundland and Labrador. The crowd in Ottawa generally know little of Newfoundland and Labrador beyond cliche, know less of the offshore, and care less about all of it.. The result was that no one in Newfoundland and Labrador listening to the political blah blah and yada yada had any idea what the hell was happening. That showed in the reporters questions, which then showed in what they passed on to the rest of us.

Message sent.

Loud and clear.

Even by the end of the week, Premier Andrew Furey  - one of the guys behind the announcement - could not offer more to the locals than some muttering about jaws of land and inshore something or other. No talk of why all this was important given the law involved and the Atlantic Accord in 1985.  No explanation of what exactly the provincial government was doing, why it was doing it, and how this related to all the windy stuff going on with the deal involving  Furey’s Freebie Fishing Trip Buddy.

That meant - in simplest terms - that neither Furey nor anyone around him understood whatever is going on well enough to put what they were doing into plain words. And to be really clear, it also means that, given the events of the week, none of them thought they needed to explain it to the rest of us anyway. After all, even if the politicians don’t get the details, hopefully someone in the government does and could put it in English. That means someone had to decide consciously *not* to tell us what is going on without our land and our money and our future.

There is undemocratic and then there is anti-democratic.  The latter one involves personal choice. Since 2003, the political class in Newfoundland and Labrador are decidedly anti-democratic.  They choose not to tell the rest of us lots of things.  Get as mad as you want about Hydro privatisation, Meech Lake and Charlottetown, the end of denominational schools, early 1990s changes to the Lands Act.  You knew about them because the politicians at the time thought you deserved to know in advance and to take part in the discussion if not the decision. Some of the political plans stopped in the face of public opposition.

Since 2003…?  The politicians and bureaucrats choose not to tell us, which is why reporters last week were just supposed to show up, record the smiles and the platitudes, and then read the scripted news release to the rest of us. That’s their job, as the Pols see it. Otherwise, piss off.

Federal labour minister Seamus O’Regan said Equinor’s announcement that the operators had paused the Bay du Nord project for sensible reasons was “sadistic.” Brilliant some reporters said because it made for a cute story. Three obvious things you have to choose not to see to make that childish comment from a federal cabinet minister – about something that’s literally none of his federal ministerial business by the way - cute or clever.

First,  Tore Løseth, Equinor’s rep, dealt head-on with the bad news.  Came to St. John’s to deliver it.  Said plainly what was going on and why.  Explained why it was hard news but that the company owed it to people to be blunt.

“I planned on giving a very different speech here at the conference, but it's a very recent decision," Løseth told the energy conference in St. John’s the day after news broke of the project delay at Bay du Nord. *Owed* it to them.

That's why we had to communicate as soon as we had that decision and that happened to come at the same time as this conference. But we felt it was very important to be open and honest of course with all our employees and the stakeholders around us.

Second,  Løseth also explained why things were delayed three years.  Costs are rising to a point where the project is not feasible in the current scheme given likely future revenue.  So, they take out their sharp pencils and do what they’ve done on other projects, which he named:  rework it so it does make sense.

That’s what you do in the globally competitive private sector where costs matter.  Might be hard to grasp in Newfoundland and Labrador, where government subsidies are the answer to everything to avoid change. Lots of people nodded last week at the idea that the answer to changes in global airline travel costs ands likely permanent changes in air travel mean the local government needs to lose hundreds of millions of  taxpayers’ money taxpayers don’t have so a handful of people can fly on two routes that not enough people have ever flown on really to warrant a direct flight from St. John’s to London-Gatwick and New York-Newark. Not about bringing tourists in, either.  The tourism thing is just cover, by the way. Not about getting people here. The subsidy is really about making it easier for the handful of outbound travelers to get out.

Third,  Seamus wasn’t talking about what Løseth said. One half of the Kennedy Brothers Cosplay Team took the shot because Løseth mussed up all the vacuous happy-sounding drivel sessions O’Regan was part of in the run up to the coming federal and provincial elections election.

What I don't understand is the timing of this announcement and why it would happen on the day that so many people were congregating and celebrating the amazing work that's happening

“To my mind, the timing [emphasis added] is nothing short of sadistic,” O’Regan said. “I don't know what they were thinking.” That’s O’Regan’s headspace. He told you what he was thinking. The timing was not a problem for the audience so much as for the politicians. Hard to miss the contrast, now, between Løseth’s and Equinor’s respect for Newfoundland and Labrador compared to the big middle finger that Squeamish and his pal Wilkinson, Andrew Furey in tow, had given the same people only a day before.

Seamus musta been worried people might actually get the message he and his friends sent.  Otherwise, there’d be no need for a federal minister to call “sadistic” respectfully telling people bad news they deserved to hear. If that’s sadism, baby, then beat us more.

Meanwhile, the other half of Team Kennedy Cosplay [Hint: two links, look at the pictures] promised that this project will get done, no matter how much it costs taxpayers. No shit.  Not a word of a lie or an exaggeration.  Andrew Furey stood in front of an international crowd and said, "Make no mistake — this is valuable now, it will be valuable tomorrow and [Bay du Nord] will get done.”

Despite not knowing of Equinor’s decision until the rest of us did, Furey wrote a blank cheque to the operators. Dwight Ball did the same thing in 2012 and again in 2015 about Muskrat Falls.  Cannot afford to let it fail.  Once the Liberals were in power, Ball wouldn’t even take a pause to catch his breath, take a second look at the plans and see if they needed reworking.  Nope.  Just spent whatever it ok to let exactly the same people keep making exactly the same mistakes until the tab hit $15 billion for a project still not finished and still not working.

Furey had a choice. Could have said that the government would work with the company but.  Big but.  But, there is no bottomless pit of government money. But the project needs to work financially for everyone. And that includes taxpayers.  We’ve made the mistake before… and so on.

But nope.

Make no mistake: … it will get done.

Message sent loud and clear.

Message received five by five.

Offshore wind energy has been a potentially lucrative source of energy for over a decade. When the Government of Newfoundland and Labrador was chasing Muskrat Falls, Americans were building wind farms offshore places like Rhode Island.

In Canada, as the experts think “Offshore Wind [sic] projects invoke the authority of numerous Federal departments, including: Transport Canada, Fisheries and Oceans Canada, Environment and Climate Change Canada, and Public Services and Procurement Canada.” The reality is that offshore energy development that isn’t oil and gas crosses both  federal and provincial jurisdictions.

Some provinces are farther head in developing ocean-based energy projects than others are.  Nova Scotia, for example, has had a marine energy law in place since 2018, focused particularly on tidal energy.  Nova Scotia is focused on tidal power in the Bay of Fundy, though.  Anything else,  that is, anything that involves development of the seabed seaward beyond the high water mark is entirely in federal jurisdiction.  That’s why it wasn’t surprising last year when the feds announced they would be regulating offshore wind energy developments through the offshore regulatory board in Nova Scotia under its equivalent of the 1985 Atlantic Accord. 

And they’d do the same thing in Newfoundland and Labrador, with the provincial government nodding along in agreement.

What’s actually going on only came clear in the federal and provincial energy noise last week.  The signs were small.  Andrew Furey mentioned there’d be a memorandum of agreement coming soon with Ottawa.  Odd.  Until now they’d only spoken of the 1985 Atlantic Accord that defines the offshore area as starting at the low water mark and heading seaward.  Not much to discuss, and certainly not much in the way of a memorandum of understanding,  a second agreement.

Second oddity.  There was talk of amending the federal legislation that governed the offshore board.  But no mention of any provincial legislative changes that should have come in the session just finished.

Third oddity, related to both, the feds were changing legislation without a finished agreement with the province.

Then there was Furey jabbering about the jaws of land. Classic tell. Using jargon.  Trying to make it look like you are cool. Use the words the in-people know.  It’s a status thing, not an understanding thing.

To understand, you need a bit of back story.

In 1983, both the federal and provincial governments claimed the legislative jurisdiction over the offshore.  The provincial government made a reference to the Court of Appeal in St. John’s on the question of control of the territorial sea and the continental shelf.  The federal government made a reference to the Supreme Court of Canada about the continental shelf. The  two cases worked their way through the process. Both courts decided that the offshore fell under federal jurisdiction and most assume that was the end of it. 

Except it wasn’t.  The Newfoundland and Labrador Court of Appeal had a different question.  They also looked at the territorial sea, the amount of the adjacent ocean, the airspace above it and the seabed and below that fall under either federal or provincial legislative jurisdiction.   Coastal states have an adjacent territorial sea. The current Law of the Sea, 1982 allows 12 miles.  In 1949 it was only three miles, but that’s something.  It followed logically that before 1949,  Newfoundland had it.  So, what happened to it in 1949?

Airspace wasn’t on the table in the court case and it had already been settled that the airspace above Newfoundland and Labrador was federal. But out to sea, things weren’t entirely clear. What the Court found was largely ignored by the subsequent Supreme Court of Canada reference, but it was no less important.

The Court of Appeal found that “[as] to the territorial sea, we are of the opinion that the seabed and subsoil thereof were vested in the Crown in right of Newfoundland prior to Union with Canada and their continued ownership by Newfoundland was preserved by Term 37 of the Terms of Union with Canada.”

The court then added that it had been asked to decide this question:

Do the lands, mines, minerals, royalties or other rights, including the right to explore and exploit and the right to legislate, with respect to the mineral and other natural resources of the seabed and subsoil from the ordinary low-water mark of the Province of Newfoundland to the seaward limit of the continental shelf or any part thereof belong or otherwise appertain to the Province of Newfoundland?

The court gave a two part reply.  Beyond the territorial sea limit of three miles – that is, the territorial sea recognised in 1949 – was the federal government’s jurisdiction.  But inside three miles from the coast, “In respect of the lands, mines, minerals, royalties and other rights, including the right to explore and exploit and the right to legislate, with respect to the mineral and other natural resources of the seabed and subsoil from the ordinary low-water mark of the Province of Newfoundland to the seaward limit of the territorial sea, [they are within Newfoundland and Labrador’s legislative jurisdiction], subject to any interference with these rights which might arise from any valid legislation of the Parliament of Canada in respect of the territorial sea and inland waters.”

Since there was no appeal of the Court of Appeal decision to the SCC, *that* remains the extent of the province’s jurisdiction.  Unique in Canada but reflecting the unique circumstances that existed at the time of Confederation in 1949 when a separate country became part of Canada.  No other province has the same grounds for such a claim.

The Atlantic Accord defined the offshore area to include the territorial sea of Newfoundland and Labrador but only as far as it involved oil and gas and other mineral resources under the seabed.  It was a concession by Newfoundland and Labrador to a greater end, namely the right to the riches much further offshore.  But remember that was just an agreement:  it did not change the constitutional status of the territorial sea adjacent to Newfoundland and Labrador out to three miles.

None of this really mattered until someone started to think of another development that wasn’t even a vague thought in the 1980s and before.  No one thought of building huge wind mills on the seabed. Well, in newfoundland and Labrador, the waters adjacent to the island and the coast of Labrador fall under the province’s jurisdiction three miles out to sea.  That actually made things much easier since a seaward development would need to bring the electricity ashore in most cases and if there was a landward development, like say for hydrogen plants, you really have to use land.

In Newfoundland and Labrador, all of that was provincial.  Huge advantage.  While everywhere else, you’d wind up dealing with the feds And the province, a developer looking at Newfoundland and Labrador found a one-stop shop.  Bonus. 

Except the provincial government didn’t have an onshore energy regulator let alone one that covered all of the province’s jurisdiction.  Indeed, even as recent as this last month, the politicians and bureaucrats specifically avoided creating the kind of single regulatory structure that would encourage investment, development, and jobs.

On paper,  there was the Public Utilities Board.  But in practice, there was a swamp of political and bureaucratic panjandrums to wade through.  Cabinet ran some of it. Underneath were petty empires and backwaters for land title, environment, and everything else. All of it was dominated one way or another by the state-owned energy company.  Massively bureaucratic – which meant slow and inefficient - like the government-owned liquor maker/regulator, NALCOR-Hydro liked to skew the system to limit competition for itself, no matter the cost to taxpayers or other implications. That meant that the process was not clear.  The costs were not clear. There was room for political interference, needless delays, and extra costs.

Where Newfoundland and Labrador had an advantage, it’s not clear if the province still has that advantage. Consistent with the everywhere,  everything, all over the place, at the same time way things have been in Newfoundland and Labrador for the past three years with energy policy. Last week there was a flood of news about wind, offshore oil, and hydro.  Plus, there are changes to the offshore oil and gas regulatory regime as well not needed to deal with the wind thing.  Part of it relates to the area around St. Pierre et Miquelon. Just a flood of stuff, so much so that this is the first column.  There’ll be another one or two based on what was in the news last week.

Just a firehose of stuff.  As far as wind energy goes, there is a new section of the federal Accord enabling legislation that refers to areas seaward of the low water mark “that are not within the Province.”  There is also a section that lets the federal Cabinet make regulations describing what that area looks like.  There are hints of this idea that Newfoundland and Labrador extends out to the Three Mile Limit. But not clear what it means exactly. All under the offshore board or not?

You get the sense that – as with everything related to wind Furey and his Followers are lashing stuff together on the fly. Rushing big topics like this is never good. But off we race.  Even so, you have to wonder how complicated it can be to get the agreement *before* the announcement. After all, this business about the Three Mile Limit – if that’s what Furey was talking about – is not that tough. The measurements used to fix Canada’s territorial sea of 12 miles are already known to the same federal officials who will draw the new maps.  It’s not hard to measure three miles out from the same baselines.  Actually, an easy thing to do in the midst of really complicated stuff.

As for bays that are more than six miles across at the mouth, the federal and provincial governments merely need to agree to accept the baselines used to measure the 12 mile limit and then measure three out from there. Canada already gets to enclose bays and similar features using the 12 Mile Limit so Newfoundland and Labrador’s provincial territory is easiest to measure using the same baselines. There’s even a rationale for it, if you need one.  Had Newfoundland and Labrador remained a separate country after 1949, it too would have gained the same 123 mile limit Canada claimed from the 1950s onward.

The image shows the 12 mile territorial sea as measured currently.  You can see I already captures the bays around Newfoundland and much of the coast of Labrador, well out to sea.  Newfoundland and Labrador’s space would be one quarter of the red zone closest to land. There’d be a bit of work on the west coast of the island since that area has not been determined yet, but it is not a heavy or complicated job. Lots of confusion about something that really doesn’t need more confusion.

If this inshore zone winds up being everything from the low water mark outward, and it will be regulated by the offshore board, then Newfoundland and Labrador will definitely be at a disadvantage.  Well, more of a disadvantage than it already is with its confused regulatory regime for onshore wind development anyway. Wind development seaward of the low water mark would have to go through the offshore energy board, complete with the Impact Assessment Agency veto for a federal minister even though the space is entirely provincial. 

The real cost of this agreement would come in the money sections.  They all refer to a right of the federal government to levy the royalties.  If the provincial territory gets lumped in with the federal bits, then that would be a de facto recognition of the federal government’s ownership of the territory inside the provincial territorial sea.

Revenues reserved

97.1 (1) There is reserved to His Majesty in right of Canada, and each holder of a share in a submerged land licence is liable for and shall pay to His Majesty in right of Canada, in accordance with subsection (2), the revenues, interest and penalties that would be payable under any Act of the Province and any regulations made under that Act in respect of any offshore renewable energy project as if that project were carried out within the Province.

“As if the project were carried out within the province”

That’s the killer bit right there.

In the dispute over offshore oil and gas 40 years ago, there was definitely something there. The 1984 deal gave nothing to gain almost everything the provincial government wanted. In this case, the provincial government would be trading away the entire zone where offshore wind development is likely to take place – that is, with sight of land and within bays around the coast – in exchange for nothing but a vague hope.  The proverbial bird in the hand. With nothing at all except whatever vague words the politicians would use to justify the give-away.

The language of the section doesn’t even acknowledge the provincial control of the territorial sea out to three miles for matters under provincial jurisdiction. There’s no reference to it at all.  In fact, the whole notion of Newfoundland and Labrador having jurisdiction out to sea is  treated as a secret. In that secrecy, there’s much room for mischief.

That’s the message that people get.  Not what is said.  But what is unsaid. Politicians said a lot last week.  But it’s the unsaid stuff the rest of us heard. That’s the stuff we worry about.  In the silence, mischief reigns.

---